Employment rights: Zero-hour contracts

Published: 23/11/2014

Zero-hour contracts have been in the news a lot recently with Labour leader Ed Miliband publically slamming retailer Sports Direct by branding it a ‘terrible place to work’.

The sports apparel retailer, despite being one of the UK’s biggest employers, is alleged to have 17,000 of its 20,000 staff on zero-hour contracts, meaning the majority of its workforce has no guarantee of work or income. How is this legal you ask? Our Everyday Legal team explains all:

What are zero-hour contracts?

Zero-hour contracts, or casual contracts, are contracts where the employee has no guarantee of work. Instead they are called in by their employers, when they are required to work, often with little or no notice. Employees are not paid for these waiting times and can be sent home at any time and only paid for the hours worked regardless of the supposed shift length. They are often not entitled to:

• Sick pay
• Maternity/Paternity leave
• Time off for emergencies.

They also do not have automatic right to protection from unfair dismissal, a minimum notice period or the right to statutory redundancy pay.

While employees do not have to come in when they are asked, there is often a fear that if they turn work down they may go down the pecking order next time work is available.

Who uses zero-hour contracts?

Zero-hour contracts and benefits

There is a real lack of transparency and confusion around zero-hour contracts and benefits. As a person on a zero-hour contract, your working hours will likely change, sometimes considerably, on a week-by-week basis. One week you could work 25 hours, the next 4! So how do you know if you are entitled to benefits and, if so, how much should you be getting?

The government has taken steps to try and address this problem by introducing Universal Credit, a culmination of six existing benefits:

• Jobseeker’s Allowance
• Housing Benefit
• Working Tax Credit
• Child Tax Credit
• Employment and Support Allowance
• Income Support.

According to a spokeswoman from the Department of Work and Pensions (DWP):

“Universal Credit payments will adjust automatically depending on the hours a person works to ensure that people whose hours may change are financially supported and do not face the hassle and bureaucracy of switching their benefit claims.”

Universal Credit will be paid on a monthly basis, usually directly into your bank or building society. If both you and your partner are entitled to Universal Credit, you will receive a single payment which covers both of you.

Be aware though that Universal Credit is being introduced in stages so you will only be eligible to claim if you live in one of the pilot areas. Click here for more information about Universal Credit, to see if you are eligible and to register.

Exclusive no more

Some zero-hour contracts have an exclusivity clause. This means that workers are not allowed to look for or secure additional work to boost their income. However this practice is to be banned, giving zero-hours contract workers far more flexibility to secure full or part time employment.

It is estimated that 125,000 zero-hour contract workers are currently bound by an exclusivity clause.

There is also a consultation planned to stop any potential loopholes which would allow employers to get round the ban by offering ‘one-hour contacts’.

But unions and campaign groups are not appeased and continue to press for zero-hour contracts to be banned or, in the very least, guarantee workers with a minimum number of hours.

No doubt this is a highly contentious topic at the moment and, as soon as there is any new information about zero-hour contracts, Everyday Legal will update you.