Extending Rights to Workers and Employees on Zero Hours Contracts – Employers Take Note

We previously reported on the ban on exclusivity clauses in zero hours contracts, which was introduced by the Small Business, Enterprise and Employment Act 2015 and came into force in May 2015.

In such contracts, any provision which prohibits the worker from doing work or performing services under another contract or under any other arrangement, or prohibits the worker from doing so without the employer’s consent is unenforceable and void.

In October 2015, the Government published guidance for employers on the use of zero hour contracts as well as the draft Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015.

Guidance for Employers on the Use of Zero Hour Contracts

The guidance sets out what the contracts are, how they affect employment rights, appropriate use and recommended best practice.

Zero hours contracts are deemed to be unsuitable where they are used as an alternative to a permanent arrangement or as a mechanism to allow employers avoid their responsibilities or to run the core business.

The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015

The draft regulations entitle individuals on zero hours contracts not to be unfairly dismissed or subjected to a detriment for a reason relating to a breach of an exclusivity clause in a zero hours contract. No qualifying period of continuous employment is necessary to bring such claims.

Accordingly, if an individual is dismissed for failing to comply with an exclusivity clause in a zero hours contract, they may bring a claim for unfair dismissal. Equally, if an individual suffers a detriment as a result of failing to comply with an exclusivity clause, they may bring a claim for suffering a detriment. However, the right to bring a claim for unfair dismissal will only apply to employees working on a zero hours contract.

Remedies to be awarded by an Employment Tribunal include making a declaration as to the rights of the complainant and the employer, as well as compensation. For detriment claims, the Tribunal may award compensation it considers just and equitable in all the circumstances. Compensation may include any expenses reasonably incurred by the complainant as a consequence of the act, or failure to act, and any loss of benefit which the complainant might reasonably be expected to have had but for the act or failure to act.

Where the detriment the worker suffered is the termination of their contract but the contract is not regarded as a contract of employment, compensation must not exceed the basic and compensatory awards for unfair dismissal. The normal rules in cases where there has been a failure to mitigate will also apply.

Considerations for Employers

The draft regulations were laid before Parliament on 19 October 2015 and have not yet been considered by the Joint Committee on Statutory Instruments and so may still be subject to substantial amendments.

In the meantime, when offering a zero hours contract, employers should make every effort to follow the Guidance and consider carefully the potential implications of the Regulations.

Employers need to consider:

  1. whether the terms of zero hours contracts includes exclusivity clauses.
  2. whether the terms of a zero hours contract should include confidentiality clauses.
  3. whether the individual is an employee or worker.
  4. if the individual is an employee, how employment entitlements will be accrued, i.e. redundancy pay.
  5. the process to be adopted concerning when work will be offered and assurance that they are not obliged to accept work on every occasion.
  6. the process to be adopted when employees or workers on a zero hours contract decline work.
  7. the process to be adopted when the individual’s contract is to be brought to an end.

For advice on how to address issues relating to Zero Hours Contracts, please contact a member of the Employment Team at Devonshires Solicitors LLP.

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