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Zero hours contracts in the news – plans to ban exclusivity arrangements

The rationale of zero hours’ contracts is the same as with all employment law. It’s the nature of the beast that the employer will always feel that the employee has more rights and vice versa. But what essentially runs through the core of this side of the legal system is a desire to keep the economy moving.

This is done by supporting businesses, particularly SMEs which are the mainstay of the British economy, making it easier for them to move forwards, while at the same time supporting individuals to stay in work if at all possible.

And so with zero-hours contracts, the usefulness was that, as with all flexible working, the employer is not locked into a salary it can’t afford and at the same time it’s better for the individual to be at work in some way than not in work at all. Zero-hours contracts are particularly useful in areas such as hospitality and retail, where the need for staff does, by its nature, come and go. But of course what was once a niche area has now become common and sadly, according to some employees, abused by employers.

The Office for National Statistics recently estimated that employers held 1.4 million contracts with workers that did not guarantee a minimum number of hours. And on top of this, many of these employers were taking advantage of their workforce and locking workers into exclusivity deals. So not only were they not always guaranteed work with their chosen employer, but if they were offered work elsewhere in the meantime, they weren’t allowed to take it.

And so Vince Cable’s announcement this month that he will ban exclusivity deals will arguably help employees. But will it benefit employers?

Many employers who take on zero-hours workers may not think they are employees and that therefore they do not have rights. However, this is not necessarily the case, and each relationship will be determined on its facts. More often than not, under the current rules, the zero-hours worker is more likely to be locked into having to accept work when it is offered and therefore would most probably be an employee while they are working. The more regular the work and the more mutual the obligation becomes to offer and accept that work, the more likely an employment relationship develops.

Arguably, the more flexibility the worker has to go to other places to work, the more right they have to say no and therefore the less mutuality of obligation there will be to one company, potentially benefitting the employer, who may be freed from already administratively burdensome tasks such as back-calculating pro-rated statutory holidays and pension entitlements.

On the other hand, it depends how the zero-hours contract is constructed and whether the worker is allowed to accept other work but only on certain days or at certain times. If the employee can argue mutuality of obligation with all the employers they work for, this will magnify the potential problem with regard to statutory and contractual rights.

Another possible pitfall of removing exclusivity from employers, where their zero-hours staff are deemed employees, is the Working Time Regulations. Of course, if there is no opt-out, an employee will potentially only be allowed to work 48 hours a week – over all jobs they are working. Each employer will need to be aware of the other jobs the employee is doing and make sure that all the terms they are signing include an opt-out from the 48-hour working week. If any of these terms do not include the opt-out, one of these employers could see sanctions.

There is no doubt that it’s an area rife for continued debate. However, there is one easy answer to addressing the uncertainty in the first instance: make sure you have clear and well-defined terms. Considering how many employers have fallen foul of having no service contracts in place at the beginning of employment, even with normal full-time staff, all potential issues should be discussed and covered off in each zero-hours contract, before they start work.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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