The Department of Business, Innovation and Skills (BIS) has published guidance on how zero hour contracts should be used. The guidance is aimed at employers and includes information on employment rights, appropriate use, best practice and exclusivity clauses. Further, the Government has recently published draft regulations designed to provide redress for zero hours workers who are dismissed or subjected to a detriment for not complying with an exclusivity clause.
Guidance for employers
BIS offers the following guidance for employers:
- Zero hours contracts are only appropriate in certain situations, for example, when the employee is engaged in seasonal work, a start up business or, a one-off special event. These contracts would not be appropriate for an individual who is contracted for permanent work, with regular hours, over a continuous amount of time.
- When recruiting for a zero hours contract, employers should clearly advertise the job as such and the individual should be informed that hours are not guaranteed.
- When offering a zero hour contract, employers should consider including specific information such as, whether the individual is an employee or worker, what employment rights they are entitled to, the process by which work will be offered and, how the individual's contract will be terminated.
- Cancelling work at late notice is not acceptable unless truly unavoidable and employers should give employees as much notice as possible when work is, or is not, offered.
- As an additional point, the guidance reminds employers that the Small Business, Enterprise and Employment Act 2015 (SBEEA) prohibits the use of exclusivity clauses in any zero hours contract. This means that an employer cannot stop an individual from looking for work, or accepting work from another employer.
Draft regulations to prevent avoidance of ban on exclusivity clauses
On 26 May 2015 the provision in the SBEEA banning exclusivity clauses in zero hours contracts came into force. The Government has consulted on the potential ways in which employers might seek to avoid the ban. It concluded that further measures were required, including financial penalties for employers who try to avoid the ban, and a right for zero hours workers not to be subjected to a detriment as a result of working for another employer.
The Government has now published the draft Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015. The regulations provide:
- A right for zero hours workers not to be unfairly dismissed if the reason, or principal reason, is that they have failed to comply with an exclusivity clause. There is no qualifying period of employment needed to bring such an unfair dismissal claim.
- A right for zero hours workers not to be subjected to any detriment because they have failed to comply with an exclusivity clause.
- Where an employer breaches these rights, the worker may issue a claim in the Employment Tribunal and seek a declaration and/or compensation.
Although zero hour contracts are most commonly associated with the public and voluntary sector, they are used by 17% of private firms. All employers, regardless of their size or sector, must pay attention to the BIS guidance and how the regulations will work in practice to avoid unintended consequences. For example, following the ban of exclusivity clauses, employers should review their employment contracts and ensure they are adequately protected in relation to confidentiality and competition issues, without falling foul of the regulations.