20.10.15 BIS Release Employer Zero-Hours Contract Guidance

On 15^th October 2015, the Department for Business, Innovation and Skills (‘BIS’) released an employers’ guide to zero-hours contracts. They describe the term ‘zero-hours contract’ as:

“a non-legal term used to describe many different types of casual agreements between an employer and an individual.”

Generally speaking, a zero-hours contract is one in which the employer does not guarantee the individual any hours of work and only offers work as and when it arises. The individual should be able to accept or decline the offer of work.

BIS’ guidance covers the following areas;

Employment rights
An individual employed via a zero-hours contract is entitled to statutory employment rights dependent on their employment status of a ‘worker’ or an ‘employee’. The employer should always pay the National Minimum Wage to individuals engaged via zero-hours contracts.

Appropriate use
Zero-hours contracts should only be used when it is appropriate to do so. They are useful in a handful of scenarios as they offer flexibility to both the employer and the worker;

• A new business start up
• Seasonal work
• Unexpected sickness
• Special events
• Testing a new service
• For individuals who have duties outside of work which follow irregular patterns, i.e. they care for a family member

Inappropriate use

Zero-hours contracts should not be used as a substitute for permanent arrangements if it is not justifiable - for example, where an individual has been asked to work fixed hours on set days over a 12 month period.

Alternatives
Wherever possible, employers should consider other terms of contracts. Examples of these are:

• Offering overtime to permanent experienced staff to deal with temporary fluctuations in demand
• Recruiting part-time employees
• Offering annualised contracts if there are known peaks of demand throughout the year
• The use of agency staff

Exclusivity clauses

Exclusivity clauses are prohibited in zero-hours contracts by the Small Business, Enterprise and Employment Act. Individuals must be able to work elsewhere and even if an exclusivity clause is included, then the law states an individual can ignore it. Employers must not attempt to mask an exclusivity clause, by, for example, stating that individuals must ask for permission to look for or accept work elsewhere.

View a full copy of the guidance here.