Zero hours contracts update: a quick guide

Posted by HR GO Recruitment on 17 Jun 2015

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If your business employs people on zero hours contracts it’s worth knowing that there’s been a change in how these are managed under employment law. 

Zero hours contracts allow businesses to employ their staff with no commitment to the amount of hours offered. This also means that the employer does not have to provide the minimum working hours.

Some zero hours contracts contain exclusivity clauses, which stipulate that an employee can only work for one employer - even if that employer doesn’t offer them a consistent amount of hours per week.

As part of the Small Business, Enterprise and Employment Act 2015 these clauses are now banned.

In a nutshell, this means that:

• You can’t stop zero hours employees working elsewhere as well as for you.
• Zero hours employees needn’t ask for your permission to work elsewhere.

Why might you use zero hours contracts?

Zero hours contracts have surged in popularity recently as they can give flexibility for employers as well as workers.

Businesses can call on someone to work ‘ad hoc’ when needed, without having to guarantee them a certain amount of work (see www.gov.uk). Equally, that employee is totally within their rights to turn down work if and when it’s offered to them.

If you’re a business with fluctuating demand - especially in a seasonal sector like hospitality and tourism - this can be a handy and cost-effective way to meet short-term staffing needs.

In fact, according to a survey by the Office for National Statistics in August 2014, over half of UK hotel and catering businesses use zero hours contracts.

So why the ban on exclusivity clauses?

Zero hours workers get paid depending on how much they work. Understandably, there’s been concern that zero hours contracts don’t give enough financial stability and security.

On top of that, not offering enough work for someone to get by, then preventing them working for other businesses on top of that is morally dubious.

Only zero hours contracts including exclusivity clauses are banned. You can still ask zero hours staff to be available for work ‘as and when required’ - but you can’t prevent them from working for anyone else.

What might the changes mean for you?

At the moment, you can only impose an exclusivity clause in a zero hours contract if you offer someone a specified level of income every week (this is still to be decided but will probably be an agreed number of hours at National Minimum Wage level). So if you have zero hours staff you’d rather not work elsewhere - including for any of your competitors - you should look at ways to give them more guaranteed hours.

Perhaps paying workers more hours every week isn’t an option for your business. If you’re worried about any confidentiality issues of someone working for a competitor as well, one possible workaround may be to include ‘non-compete’ and confidentiality clauses in their contracts.

What’s the solution?

Using a temp employment business such as HR GO gives businesses and workers full flexibility.

Businesses can recruit the staff they need for short-term contracts and avoid any legal and ethical issues around zero hours contracts.

Meanwhile, workers get greater certainty as the business can assign them to a number of different contracts in any period so they always have as much work as they want and/or need.

More information

Speak to us to discover how using a temp employment business is the best option for recruiting short-term workers.

Find out more about the new zero hours contracts regulations at the Recruitment and Employment Confederation.