What are the Consequences of Scrapping Zero-Hour Contracts

Employment LawThere has been a lot of discussion regarding the subject of so-called zero-hour contracts in recent years, and on 1st April 2015, Ed Miliband promised to ‘end the epidemic’ (of zero-hour contracts), which he claims are ‘undermining family life’, if Labour are successful in the forthcoming General Election. The implications of such a decision are explored in detail below.

What are zero-hour contracts?

Zero-hour contracts differ from normal contracts of employment in that they do not guarantee that work will be provided by the employer, and further provides that the employer will only pay for work done (instead of being obliged to pay a set weekly wage and holiday or sick pay). This provides the employer with a degree of flexibility, but may also result in the worker having a lack of ‘job security’.

What is Labour proposing?

In essence, a law shall be passed in Labour’s first year in government that would ensure that workers who work ‘regular hours’ will have a ‘regular contract’, and this legal right will apply to all workers after having worked for a period of 12 weeks.

What are the implications for businesses?

Many businesses rely on flexible workers and truly value the work that they do. However, a large numbers of these businesses cannot provide constant work for individuals working under zero-hour contracts.

Therefore, following the proposed changes, it may be necessary for employers to terminate employee contracts due to a lack of work available, and it is absolutely essential that employers seek legal advice prior to making such a decision.

For further information on these changes and how they affect your business as an employer, please contact Kay Kularia on 020 8891 6141 or email k.kularia@srb.co.uk.

What are the implications for Workers/Individuals?

On a zero-hours contract, it is likely that you are classed as ‘self-employed’. However, the facts of your particular working situation may suggest that you’re an employee instead of self-employed. This distinction is incredibly important in relation to the employment rights you are entitled to claim. If you’re an employee then you qualify to claim for unfair dismissal (after a year’s service), redundancy pay, and maternity leave (among other things).  Self-employees are entitled to none of these rights.

Following the changes, any worker that enters into a normal employment contract after the 12-week period with their employer shall be classed as an ‘employee’.

However, any zero-hour contract worker made redundant as a result of their employer being unable to offer them a full contract of employment should seek legal advice immediately.

For further information, please contact James Macdonald or Michael Latner in our employment team by calling 020 8891 6141 or e-mail j.macdonald@srb.co.uk or m.latner@srb.co.uk