BIS has published non-binding guidance for employers on zero hours contracts – ones where the employer does not guarantee any hours of work.
An exclusivity ban for all zero hours contracts has applied since 26 May this year. The ban covers contracts where a worker undertakes to carry out work conditionally on the employer making work available, but there is no certainty of any work. Exclusivity clauses – restrictions preventing workers from working for anyone else (or preventing them from doing so without the employer's consent) – are invalid and unenforceable. The government had previously said that, given the ease with which the exclusivity ban could be circumvented, it would introduce anti-avoidance rules, but as yet these have not surfaced.
The new guidance gives examples of "appropriate" and "inappropriate" use of zero hours contracts. In the first category are:
- Start ups – topping up permanent staff to manage fluctuating demand whilst building a customer base;
- Seasonal work, such as retail sales at Christmas or post-event cleaning services;
- Unexpected staff sickness;
- Special events; and
- Testing a potential new service.
Arrangements potentially in the "inappropriate" bracket are:
- Individuals working regular hours over a continuous period of time (12 months is the example given);
- Contracts to run the core business.
Suggested employment alternatives to zero hours contracts in these circumstances include overtime for permanent staff; part-time or fixed term contracts; annualised hours; and agency staff.
The guidance recommends that employers using zero hours contracts should consider telling the individuals whether they are employees or workers and what employment rights they will be entitled to as a result; glossing over the complexity of this issue and in particular the point that what the contract says will not of itself be determinative of the individual's employment status.
The guidance then goes on to discuss best practice, recommending that zero hours jobs should be clearly advertised as such and that work should not be cancelled at late notice unless unavoidable.
It is possible that the government may now assess to what extent the guidance is being followed before deciding whether further legislation is necessary.