With the use of zero-hours contracts 'ZHCs' increasing and new regulations in this area coming into effect, employers should ensure compliance with the new rules.
Since our previous article, the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (the 'Regulations') came into force on 11 January 2016. The Regulations provide opportunities for redress for both employees and workers (the distinction is important - see below) where their ZHC contains exclusivity clauses.
The use of exclusivity clauses in ZHCs has attracted a great deal of criticism over recent years. As a result, the Employment Rights Act 1996 was first amended last year to make exclusivity clauses in ZHCs unenforceable, including those in existing contracts. Despite this change, exclusivity clauses continued to be used. However, the Regulations now provide greater legal protection for employees and workers as follows:
- Employees now have the ability to bring a complaint of automatic unfair dismissal before the employment tribunal where the reason, or principal reason, for their dismissal was due to them breaching the terms of an exclusivity clause contained within their ZHC. An employee does not require 2 years' continuous employment service to bring this claim.
- Workers (which includes employees) can bring an additional complaint within the employment tribunal where they have been subjected to any detriment as a result of any act, or deliberate failure to act, by an employer as a consequence of the worker's failure to comply with an exclusivity clause caused within the ZHC.
Where an employment tribunal finds either of the complaints well-founded it can award compensation as a remedy, calculated on a just and equitable basis.
Tips for employers
Given the possibility of claims of unfair dismissal being brought by employees, employers are advised to set out very clearly the employment status of those engaged on ZHCs and, where appropriate, limit this to that of a 'worker'. Further tips for employers include:
- Consider whether ZHCs are actually suitable for the business, or whether other means of permanent or temporary employment may be better suited? Employers need to remember that ZHCs are contracts for casual work under which they are not obliged to provide a minimum (or any) amount of work to the worker and the worker is not obliged to accept any work offered
- Use ZHCs only where necessary, and where the required flexibility benefits both the employer and the worker
- Consider carefully the employment status of individuals working on ZHCs at regular intervals to ensure this hasn't changed
- Ensure line managers are trained to deal with ZHCs in practice and are aware of the new sanctions
- Consider whether it would be prudent to provide reasonable compensation where any pre-arranged work is cancelled at short notice (as recommended by CIPD), and ensuring a fair system of how work is offered to zero-hours workers.
Irrespective of the increased legislation in this area, where ZHCs are used properly they will continue to remain a useful tool for employers. In addition, research by the CIPD has found that many zero-hours workers do find that their use provides them with higher job satisfaction and a better work-life balance when compared to permanent employees.