Zero hour contracts and anti-avoidance
Zero hour contracts have grown in popularity in recent years and are increasingly used by employers to provide flexibility of the workforce. As a result of their growth in popularity there are some employers who have been using zero hour contracts to avoid employee rights and there have been a few cases involving this issue and the government have been reviewing the use of these types of contract.
It was proposed to ban exclusivity clauses in zero hour contracts and as a result the ‘Banning Exclusivity Clauses: Tackling Avoidance’ consultation has been looking at the proposed ban and how this may be avoided by employers. The result is that the government has issued draft regulations containing anti-avoidance measures.
The Current Position
Currently there are no regulations regarding the use of zero hour contracts and what they should contain.
A zero hour contracts is generally accepted as being a contract of employment under which there is no guarantee of work from the employer, but which the employee agrees to work if offered.
In some cases employer’s will not guarantee any work to the employee but also prohibit them from working elsewhere, thus leaving an employee in a situation where they potentially have no regular work and are unable to work elsewhere, even when they have no work for the employer.
Following provisions in the Small Business, Enterprise and Employment Bill 2014-2015 there will be, once approved and implemented by parliament, a prohibition on employers restricting zero hours workers from working for other businesses.
The result will be that terms in a zero hour contract preventing an employee from working for another employer will be unenforceable, and it will be open to the Secretary of State to insert additional regulations which will ensure that employees can work elsewhere if employed for zero hours.
From the responses to the consultation it was apparent that employers would seek to avoid the ban on exclusivity clauses by offering a very low number of guaranteed hours to the employee, thus taking the contract outside the scope of a zero hour contract, or offering no work or fewer opportunities to employees who also worked elsewhere.
This will now be dealt with by giving employees the right to pursue a claim in the Employment Tribunal if they are subject to detriment as a result of working for another business. The employee will be entitled to compensation in these circumstances.
There will also be an income threshold at which the anti-exclusivity regulations will apply, thereby countering a situation where an employer offers an employee a guarantee of a low number of hours.
The Employment Tribunal will also be able to use their existing powers to issue financial penalties for employers seeking to avoid the ban.
The proposed changes, as detailed above have been set out in the draft Zero Hours Workers (Exclusivity Terms) Regulations 2015 which have been put forward for consideration by Parliament.
The regulations deal with one specific issue regarding the use of zero hour contracts but there are a number of issues that already cause confusion for employers and employees, including the calculation of holiday and benefits.
Being a topic that has been covered in the media it is also an issue that the various political parties have highlighted in their manifesto with some saying they would ban zero hour contracts altogether and others saying they would introduce tighter regulation on their use.
What is certain is that there will continue to be issues that arise with their use, and I am sure further Tribunal and Appeal Tribunal cases dealing with these new regulations.
You can read the full detail here https://www.gov.uk/government/consultations/zero-hours-employment-contracts-exclusivity-clause-ban-avoidance
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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.
The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.