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Zero Hours Contract

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explanation of zero hour contracts

What Is a Zero-hours Contract?

If you are a casual worker, then you are on a zero hours contract. You are entitled to annual leave and the national minimum wage. On paper zero hours’ contracts are not called “zero-hours contracts”. They are usually labelled as ‘casual work contract’, ‘as required/as needed’ or ‘flexible work’. Sections 27A and 27B of the Employment Rights Acts 1996(ERA 1996) define ‘zero hours contracts’ as :

a contract of employment or other worker’s contract under which

a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and

(b) there is no certainty that any such work or services will be made available to the worker.”

There is no ‘mutuality of obligation’ in a zero hours contract.  Mutuality of obligation is the obligation on an employer to provide work and the obligation on the individual to accept that work. It is the essence of an employment contract. For there to be a contract of employment, the employer is obliged to pay and the employee is obliged to do the work.  In a zero hours contract the employer does not have to provide the worker with any work or minimum working hours, and the worker is not obliged to accept any of the hours offered.

The lack of mutuality of obligation means that as a zero hours worker you are not an employee, but a worker. If you are a worker, you have completely different rights to an employee.  The best and most important employment rights are given to employees. Only employees can claim unfair dismissal or redundancy pay.

Working for More than One Employer Whilst on a Zero Hours Contract

You can work for more than one employer if you are on a zero-hours contract.  Any terms in a zero hours contract which stops a worker from working for another employer or from doing so without their employer’s consent unenforceable. [Section 27A(2) ERA 1996]

The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 give zero hour contracts a wide definition in order to expand the range of workers covered by the legislation. You can take an employer to the employment tribunal for a breach of the non-exclusivity provisions.

Zero Hours Contracts and Annual Leave

In Heimann v Kaiser GMBH [2013], the European Court of Justice ruled that member states can pass national laws to make sure that workers on zero-hours contracts are able to earn annual leave as they work in the same way that part-time workers accrue annual leave.

What Other Rights Do You Have?

Although exclusivity in zero hours contracts are banned, an employer can still place you on a contract which guarantees only a very small number of hours a week or not offer you any work if you work for another employer. The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 introduces a right for zero hours workers not to be subjected to a detriment on the grounds that they work or have worked for another organisation. The ban on exclusivity clauses is also extended to cover all contracts where a worker is not guaranteed a certain level of weekly income. There will be an exception to this provision where the rate of pay for each hour worked under the contract is at least £20. The right not to suffer a detriment will also apply to those earning less than this income threshold.

Under the Regulations, if you suffer a detriment because you have tried to work for other employers, you will be able to bring a claim to an Employment Tribunal in the same way as if you have suffered unlawful discrimination.  The Employment Tribunal will be able to award compensation based on your financial loss, together with a potential award for “injury to feelings”.  Employers may have to pay a further financial penalty if the Employment Tribunal decides that there were aggravating features related to the breach of your employment rights.

Last Updated: [11/09/2021]