Flexibility continues to rock the business world 

 

The last 10 years has seen a huge rise in workplace flexibility thanks to advances in technology and societal trends, and also shifting perspectives and expectations. 

As a result, traditional 9-5 job roles are no longer classed as “the norm” and working from the office Monday-Friday is considered outdated, particularly to millennials. 

Instead, employees work from anywhere and everywhere... No longer chained to their desks, staff can relish in the freedom of office hotdesking and remote working, with many team members working from home as often as possible.  

 

Flexible employment – good or bad? 

Such flexibility within business has also seen a rise in flexible employment contracts. From zero-hour contracts, and compressed hours to flexi time. And while the likes of compressed hours and flexi time provide ideal working arrangements for parents, carers or people with personal health circumstances... Zero-hour contracts on the other hand are somewhat more controversial.  

 

Explaining zero-hour contracts...

Business leaders argue that zero-hour contracts offer workers and companies necessary flexibility.  

Critics say contracts are used to undercut wages, avoid holiday pay and boycott pension contributions. 

And workers say they face short-notice changes to working hours, not knowing how many hours they will work from one week to the next.  

Yet, despite this, almost 1 million UK workers are now on zero-hour contracts, of which more than 30,000 are NHS workers. 

 

Need guidance on zero-hour contracts?

Whether you’re a business owner employing people on zero-hour contracts, or you’re responsible for HR within a company, knowing how zero-hour contracts work in terms of how pay, and annual leave is calculated is a must. 

 

What is a zero hours contract? 

A zero-hours contract is a contract of employment or other worker contract under which:  

  • The undertaking to do work or perform work is conditional on the employer making work or services available to the worker, and  
  • There is no certainty that any such work will be made available to the worker. 

 

Why are zero-hours contracts useful?

Zero-hours contracts allow employers to:  

  • Avoid offering staff work if none is available 
  • Retain a large pool of staff at a reduced cost 
  • Take a flexible approach to managing their workforce during seasonal fluctuations 

 

Zero-hour workers & zero-hour employees...

Generally speaking, individuals on zero-hours contracts can either be a zero-hours employee or a zero-hours worker.

This employment status is determined by the structure of their contract. 

However, the real life nature of the employment relationship also plays a key role in determining someone’s employment status.

 

What are the employment rights of zero-hours employees?

Zero-hours employees: 

  • The right to protection from unfair dismissal 
  • The right to family friendly leave and pay 
  • The right to statutory minimum notice and redundancy pay 
  • The right to National Minimum/Living Wage 
  • The right to statutory sick pay 
  • The right to protection against discrimination and whistleblowing

 

Zero-hours workers:

  • The right to National Minimum/Living Wage 
  • The right to paid holiday 
  • The right to protection against discrimination and whistleblowing 
  • The right to refuse work that is offered to them 

 

How do you know which contract to use?

Contracts should appropriately fit the needs of the business and the nature of the employment relationship.  

 

Employee contracts – Provides employers with a greater degree of control over the individual as they are unable to refuse work that is offered. However, these do come with the added obligation to provide additional employee rights.  

 

Worker contracts – Offers less control as the individual should be able to refuse work when offered. However, employers have greater flexibility with dismissals and are not committed to provided extensive employee rights.  

 

Do bear in mind exclusivity clauses...

  • Exclusivity clauses are unlawful and should not be included in any zero-hours contracts according to Section 27A (3) Employment Rights Act 1996 
  • Employers cannot prevent an individual from taking on work under any other arrangement with another employer 
  • Individuals should not be unlawfully dismissed or subjected to a detriment for taking on this work 
  • There is no 2-year qualifying period to bring an unfair dismissal claim for this reason 

 

But how do you calculate holiday entitlement and pay?

  • Rules surrounding holiday and pay should be outlined in the zero-hours contract
  • Holiday entitlement is calculated by multiplying the number of hours worked by 12.07% - e.g. those who have worked 12 hours are entitled to 1.44 hours or 86.9 minutes of leave 
  • An individual’s hourly rate of holiday pay is a calculation of their average hourly pay they have earned in the past 12 weeks* 
  • *This will be increased to a 52-week period from 6th April 2020

 

What are the future rights for staff on zero-hours contracts?

The Taylor Review into modern working practices examined the complexities of zero-hours contracts.  

In response the Government released their ‘Good Work Plan’ intending to bolster the rights of zero-hours staff.

 

New worker rights have been introduced:

  • A right to receive an itemised payslip from 6th April 2019 – this payslip must state the number of hours worked which varies pay. 
  • Workers will have a day-one right to receive a written statement of main terms from 6th April 2020. 
  • New right to request a more stable contract after 26 weeks – no known start date. 

 

In summary...

  • Zero-hours contracts come in two main forms 
  • The true nature of the working relationship is key 
  • Zero-hours employees have more rights than zero-hour workers 
  • Mutuality of obligation should only exist for employees 
  • Future changes will result in a right to request a more stable contract for zero-hours workers

 

Conclusion

While there’s importance in implementing flexibility in modern-day business, zero-hour contracts bring with them somewhat of a sinister response. If your business must offer such contracts, it’s important that you follow the new legislation due to come into play on 6th April 2020.  

To learn more about the future changes due to take place, register for HR-Inform's free webinar here, which takes place on 24th March at 12.30pm.

 

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