Changes to Zero-Hours Contracts

I’m sure you’ve heard of zero hours contracts.

They have been a hot topic among employment lawyers and HR specialists for a few years now. They also became a political “hot potato” during the recent general election.

Now the Conservative Government has introduced changes to the way they can be utilised by employers.

But how are these changes likely to affect their use?

What they were

Zero-hours contracts have not previously been defined in law.

They were generally understood to be employment contracts under which an employer was not obliged to provide a worker with minimum working hours. At the same time, the worker was not obliged to accept any of the hours offered.

And what they have become

New regulations came into force on 26 May 2015, giving definition to these contracts, as follows.

Where the worker’s “undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available” and “there is no certainty that any such work or services will be made available to the worker”.

Under these Regulations, provisions in such a contract (whether entered into before or after 26 May 2015) which prohibit a worker from “providing services under another contract or any other arrangement”, or require the employers consent to do so, will be “unenforceable”.

Loopholes appear

The Government argue this protects workers engaged under zero-hours contracts, allowing them to work under a series of agreements in order to maximise their earning potential.

However the Regulations provide no method of redress against an employer who fails to comply with them.

There is nothing within the Regulations to prevent an employer issuing contracts which require exclusivity while guaranteeing one hour of work each week; or from reducing or not offering hours to workers who work elsewhere.

Further, employers can still require workers under zero-hours contracts to be available for work if required, which could have the same effect as an exclusivity clause in practice.

Improvements around the corner?

The Government acknowledged during consultation that it will not be difficult for employers to avoid the ban on exclusivity.

In order to tackle this, the Regulations grant the Secretary of State wide-ranging powers to make further provisions in relation to zero-hours contracts in the future.

It is envisaged these powers will be used to tackle abuses of the current system.

Possible options are for workers to be given the right not to be subjected to a detriment as a result of working for another organisation; financial penalties for employers who abuse the Regulations; or compensation for workers who suffer a detriment as a result of such abuse.

However, at this stage, these are only possible options. Only time will tell whether additional legislation will be introduced.

A small step in the right direction

At face value, this is a step in the right direction in the protection of those working under zero-hours contracts.

However the lack of any method to enforce the protection, along with the substantial loopholes which remain open to employers, mean that the discussion about zero-hours contracts is likely to be far from over.

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