An estimated one third of hospitality businesses use zero-hours contracts. Business Secretary, Vince Cable recently announced a reform of such contracts. This article examines the upcoming change in the law and explains the rights of workers on zero-hours contracts. A zero-hours contract is an arrangement where there is no certainty work will be made available to the worker. Sometimes workers must be available when told, other contracts permit workers to reject work requests. Some prohibit the worker from working for more than one employer.

Advantages and disadvantages

Zero-hours contracts create a more flexible workforce. Employers can access a pool of staff when demand rises, for example, during the Christmas period. This resolves the problem of temporary staff shortages and is cheaper than paying agency fees.

The disadvantage is the negative PR employers using zero hours contracts often face. There has been public criticism of the lack of security of employment, certainty in working hours and earnings for the worker involved.

Reform

The Small Business, Enterprise and Employment Bill (expected to come into force in early 2015) states that a contractual term which prohibits workers from performing services under another arrangement (or prohibits doing so without consent) will be unenforceable.  Therefore, employees on zero-hours contracts will be free to work for more than one employer.

Vince Cable also announced the Government will work with unions and businesses to develop a best practice code of conduct aimed at employers who wish to use zero-hours contracts.

Worker rights

The main rights workers on zero-hours contracts have and that their employers should be aware of are as follows:

National Minimum Wage

Zero-hours workers have the right to be paid for any time they are at work premises waiting for work to arise if their contract does not provide otherwise. Employers must pay the usual hourly rate or, at the very least, the National Minimum Wage. The current minimum wage is £6.31 for people aged 21 and over, £5.03 for workers aged 18 to 20 and £3.72 for employees under the age of 18.

The Department for Business, Innovation and Skills has adopted a policy of “naming and shaming” employers who break minimum wage law. The latest June 2014 list included three hotels and one restaurant.

Working Time Regulations

Workers have the right to take an uninterrupted 20-minute rest break if their day’s working time exceeds six hours. A worker is entitled to daily rest of 11 uninterrupted hours in every 24-hour period and weekly rest of 24 uninterrupted hours in every seven-day period. Employees cannot work more than 48 hours per week unless they specifically contract out of the Regulations.

Statutory Holiday and Sick Pay

All workers are allowed 28 days’ (including bank holidays) holiday per annum. Holiday is calculated based on a statutory formula determined by days or hours worked. Employees are also entitled to statutory sick pay from the fourth day of absence where they have an employment contract, have been ill for at least four consecutive days and have average weekly earnings of at least the lower earnings limit (currently £109) on the basis of the previous eight weeks.

The future

Apart from a few other rights such as entitlement to minimum notice period there is a degree of freedom as to how zero-hours contracts can be drafted. Employers should carefully consider whether the benefits of zero-hours contracts outweigh the detriments to their business, and always ensure they grant workers their minimum rights. However, given the flexibility they provide employers and the potential boost to the economy it is likely that zero-hours contracts will continue to play an important role in the hospitality industry.