Guide to Zero-Hour Contracts

A zero-hours contract is a formal agreement between an employer and a worker that doesn’t have guaranteed hours on behalf of the employer; there is also no responsibility on behalf of the employee to accept the hours available. To this end, a zero-hours contract is a fully flexible agreement between two service providers; one of a number of benefits of zero-hours contracts.

There are no obligations from either side in a zero-hours contract, this offers very good flexibility and benefits. However, it also means there are fewer employment benefits. This depends on how you are contracted with an organisation, but at a basic level, as a ‘worker’, you are only entitled to the UK’s basic employment rights, and other advantages of zero-hours contracts.

Rights under a zero-hours contract

There are some horror stories that go around stating that you have no rights under a zero-hours contract and that it’s the riskiest way to offer services. That is not the case. In fact, workers and employees who use zero-hours contracts have many of the same rights as those on permanent contracts: at least at a basic level.

There is a distinction between a ‘worker’ and an ‘employee’ when it comes to zero-hours contracting. As a worker, you will be entitled to rest breaks, annual leave, discrimination protection, and the National Minimum Wage. As an employee, you are also entitled to these rights with the addition of statutory sick pay, maternity and paternity pay, adoption and shared leave pay. You are also entitled to request flexible working, emergency time off and redundancy pay.

Working for more than one employer

A zero-hours contract is a flexible agreement with inconsistent work and hours. To earn a living many workers and employees need to take on work from other places: but is this allowed under a zero-hours contract? Most people are unsure, but the answer is a resounding yes. When you have a zero-hours contract your employer cannot prevent you from working elsewhere by putting a clause in your contract or dismissing you for it unfairly.

If you have a zero-hours contract there is nothing to stop you from contracting with another service provider. This works well for zero-hours workers because they can organise their work commitments based on the amount of work available at different times. Remember, there is no obligation on a zero-hours worker to accept the work on offer.

Rest breaks

When it comes to taking breaks in your job, most employers have certain rules about when and for how long you can take them. Under UK law, employees are entitled to one uninterrupted rest break for twenty minutes for every six hours they work. This is no different for workers and employees on zero-hours contacts.

Moreover, workers and employees on zero-hours contracts are entitled to the same rest breaks between normal working days and shifts working days. In the UK this is set at one day off for every six days worked. Or two days over a two-week period. It is not commonly known or understood that zero-hours workers have almost all of the same basic employment rights as permanent workers.

Zero-hour contracted employees and their rights

Those who work zero-hours contracts are afforded the same legal rights as permanent staff in the UK; however, not all of the rights and benefits afforded to permanent staff are transferable to zero-hours contractors. Furthermore, there is a difference between the status of ‘worker’ and ‘employee’ on zero-hours contracts, and this affects employment rights.

Despite the small differences in employment rights, zero-hours contractors are given statutory employment rights under UK law. This means they have basic rights relating to working hours, days off, working conditions, maternity or paternity leave, and certain protections against things like unfair dismissal.

So, what are the precise employment rights of zero-hours workers and employees, and how do they differ from those on temporary and permanent contracts? In the sections below we look at bullet-point lists of these important aspects of UK employment law and zero-hours contracts.

First, let’s look at the rights of zero-hours contract ‘workers’.

These are:

• Receiving the National Minimum Wage.
• Protection against unlawful wage deductions.
• A statutory minimum level for paid holiday.
• A statutory minimum level of rest breaks.
• No more than 48 hours of work per week.
• Protection against unlawful discrimination.
• Protection against whistleblowing.
• Protection against less favourable treatment.

The cover offered under the status or ‘worker’ for zero-hours contracts is a basic level of cover that every worker or employee is entitled to under UK law. This is useful to know, especially for zero-hours workers who may be unfamiliar with their rights. In the case of ‘employees’ on zero-hours contracts, the stipulation differs again. These workers are entitled to statutory rights as well, with some additions.

These are:

• Statutory sick pay.
• Time off for emergencies.
• Statutory maternity and paternity leave.
• A minimum notice period for ending employment.
• Statutory redundancy pay.
• Protection against unfair dismissal.
• The right to request flexible working.

Although these rights are an additional entitlement for employed zero-hours workers, they may not come into force right away. Some of the rights, such as flexible working hours, might require a particular length of service before they become active. The main difference between the two types of contracted worker is that employed zero-hours staff may be expected to take work when it is offered or be available for work.

The rights that apply to both workers and employees are:

• National Minimum Wage.
• Protection from unlawful deductions.
• Protection from unfavourable treatment.
• The statutory minimum amount of paid holiday.
• Right to work no more than 48 hours per week.
• The right to opt-out of a 48-hour average workweek.
• Statutory minimum length of rest breaks.
• Protection against whistleblowing.
• Protection against unlawful discrimination.

When you agree to a zero-hours contract with employers it’s important you understand what type of zero-hours contractor you are. This category affects the employment rights you’re entitled to; it can also affect the quantity of work you take on and the holidays you receive.

If you aren’t aware of your zero-hours employment rights it can lead to issues within your employment as well as problems and inconveniences in your life. Don’t take any chances with your contract – make sure you know your rights.

Who is employed on zero-hour contracts?

Since 2000 there has been a net increase of over 820,000 people on this type of employment contract, particularly in the catering and retail sectors. These are industries that are strongly influenced by seasonal demand and have flexible staffing requirements as a result. Zero-hours contracts offer these industries and others the chance to recruit staff casually and cherry-pick their workload.

But it isn’t just the companies that profit from zero-hours contracts. These types of contracts suit many individuals as well. In particular, students, semi-retired people, freelancers and women. These categories have crossover reasons for working zero-hours contracts; they also have unique, independent reasons as well. Below we take a closer look at who is employed on zero-hours contracts.

Students

Although zero-hours contracts offer some basic employment benefits to workers and employees, they are still thought of as ‘bad’ or ‘exploitative’ in some quarters. The reason for this is because of the nature of the work offered under them. Although there is no obligation to accept work, someone might find themselves on full-time hours without the safety of a permanent contract.

But for students with unpredictable schedules a zero-hours contract is the perfect solution. Around 22% of zero-hours contracts were in accommodation and food in 2020, suggesting casual student work. If a student works for a restaurant at the weekend, for instance, they can choose how many days to work depending on their university workload. It means they can pick and choose their work freely, without the commitment of a temporary or permanent contract.

Semi-retired people

Regardless of the backlash and criticism of zero-hours contracts from the media and some politicians, they remain an important part of the UK workforce. This is probably because of the changing nature of employment in Britain as well as the notable benefits that zero-hours contracts offer to both companies and workers. As well as students, these contracts benefit other demographics, such as semi-retired people.

A semi-retired person might be an ageing professional who still has some time left before they can collect a pension. They don’t have full-time hours, but their experience and knowledge is of great value to their profession. Someone like this might pick up a job on a zero-hours contract to help make up the difference before they can claim their pension. The flexibility is also very useful.

Freelancers

The idea that freelancers can benefit from zero-hours contracts is a bit of an oxymoron. The reason is that you can hardly be a freelancer if you also have a zero-hours contract with employment rights. This is true in part, but it depends largely on the attitude of the individual and their priorities.

Someone who is primarily a freelance worker may also take on work with a zero-hours contract if it supports that person’s business goals. In effect, a zero-hours contract is not much different from any other freelance contractual agreement they might make; the difference is they have a level of flexibility over accepting and rejecting work.

Parents

Parents who juggle dozens of things and still manage to work. They have to look after kids, look after homes, look after themselves, look after a significant other, and still bring in some money to support the household. Life should be a little bit easier on parents, which is where zero-hours contracts can help.

Zero-hours contracts offer a genuine two-way flexibility between employers and contracted workers. If a parent needs a bit of extra time in their day, they only have to make a phone call or send a message and their schedule is clear. This was never possible before, even in friendly part-time work situations.

The benefits of zero-hour contracts

According to some articles and media outlets zero-hours contracts are a blight on the world of work. They argue that the contracts don’t provide workers with proper rights and create a culture of uncertainty. In reality, these contracts are very beneficial to both employees and employers. Read on to find out why.

Employees

Flexibility: Zero-hours contracts are especially flexible which appeals to some people more than others. In particular students benefit from these types of contracts as they can work around busy study periods and take time off when they choose. They are also well suited to anyone who wishes to work outside a standard 9-5 schedule.

Opportunities: A zero-hours contract can be an excellent way to get your foot in the door at a company you aspire to work at in the future. It is always good to learn the culture of the company and get to know some of the colleagues and management you would work with on a permanent contract. Whenever an opening comes up you will have an advantage over others who apply from outside.

Extra income: With a zero-hours contract there are no set hours to work and you can cherry-pick your workload. This makes it easier to take on more work when needed and to work for other companies that pay a little better for your services. This would not be possible on a standard temporary or permanent contract.

Employers

Seasonal staff: In some industries, retail in particular, The busiest time for retail is in the autumn and in the lead up to Christmas. During this period shops will need a large team of support staff they won’t be able to keep on in January. With zero-hours contracts they can hire casual workers ethically.

Special events: Another reason a company might use zero-hours contracts is to hire a team of workers to launch a special event of some kind. It could be the launch of a new product or service and they expect high demand. The zero-hours support staff can cover this work, but if the product is unsuccessful there will simply be fewer hours available.

Absences: Often, companies have to juggle their staffing needs, especially when it comes to maternity, paternity and long-term sick leave. Using zero-hours contracts an employer can effectively cover the staff shortage for a period without needing to hire staff on temporary contracts.

The disadvantages of zero-hour contracts

Although there are many benefits to zero-hours contracts, they are something of a double-edged sword. Each advantage also brings a disadvantage. The flexibility, for instance, is excellent for students around exam time, but when a company needs them to work the Christmas period it might not be so convenient. This can lead to pressure and stress, along with uncertainty.  

Employees

Unpredictable hours: Some companies offer zero-hours contracts on the basis of on-call work. A worker should be available to accept work in a given period. Other companies offer hours. The trouble is that work and hours can be unpredictable.

Low income: Low income is another feature of zero-hours contracts. Workers on these contracts will typically be subject to low pay but it won’t be less than minimum wage under UK law. However, workers and employees shouldn’t expect much more than a basic minimum wage, often for long hours and unpredictable shifts.

Pressure: A zero-hours contract offers flexibility on both sides and there is no obligation for workers or employees to accept the work. This is stipulated in the contract. However, there may still be some pressure applied to workers to accept the work available. This can lead to friction and stress.

Employers

Unpredictable: For employers the uncertainty that arises from the flexibility principle of zero-hours contracts is also a disadvantage. When a company needs staff to cover at short notice or for a significant event, their zero-hours workers could be anywhere, unwilling to accept the work. This can lead to a loss of revenue and lost reputation.

Lack of control: Under ordinary temporary or permanent contracts a company has a level of control over staff but this is absent from a zero-hours contact. There’s no way to insist the work is carried out or to issue disciplinary procedures under this type of contract. Companies running zero-hours contracts should also know the risks.

Summary

A zero-hours contract is a new type of employment contract that offers more freedom and zero-hours benefits to workers and employers. It might be more useful to think of it as an agreement, since both parties have full autonomy over the work that is offered and accepted. Many people feel that zero-hours contracts are a bad thing because of the stripped back workers’ rights, but in practice there are many advantages of zero-hours contracts.

Contrary to popular belief, the workers and employees using zero-hours contracts have the same basic statutory rights as anyone employed in the UK. This means they are entitled to basic minimum wage and are protected against unfair dismissal. The benefits of zero-hours contracts don’t suit everyone, but for students, working parents, and many other demographics they are an ideal employment situation.