The emergence of the gig economy has led to atypical work arrangements. Full time and part time employment are no longer the only options for employers, with employees being hired for more specific tasks. Further, the unpredictable market has had a significant impact on how business’s manage their money. One option is to use zero-hour contracts as a means to reduce staffing costs. In this article, we’ll explain how zero-hour contracts work.
Get on demand legal advice for one low monthly fee.
Sign up to our Legal Advice Plan and access professional legal advice whenever you need it.
What are zero-hour contracts?
A zero-hour contract is a contract where the employer is not obliged to provide regular work for the employee. This contract allows a business to cut costs. Consequently, hiring workers on zero hour contracts can be cheaper than sourcing workers from agencies, as the business does not need to pay agency fees and commissions.
What am I entitled to under a zero–hour contracts?
Under the National Minimum Wage Standards, for each hour you work, you must be be paid at least the national minimum wage.
Entitlements for a worker under a zero-hour contract includes:
- Annual Leave
- Sick Pay
- Rest Breaks
Businesses are not obliged to provide many benefits that it offers full-time workers. Hence, this means you would not be able to claim for unfair dismissal, parental pay and leave, flexible working, or statutory minimum leave.
Pros for Employers
The biggest advantage of using a zero-hour contract is flexibility.
For any business, a zero-hour contract allows the business to respond quickly and effectively to the economic and business fluctuations. This contract allows employers to:
- Manage an unforeseen event
- Cover a particular event
- Cope with absences
- Deal with the build up to a busy period
- Provide flexibility
Cons for Employers
However, the flexibility of the contract may not produce the high standard of service delivery and quality of work that is set by the business. As such, if you are working under a zero agreement you are under no obligation to accept work.
Therefore, it may be difficult for employers to acquire someone to undertake the work needed, especially in cases where the business needs a person on short notice.
Furthermore, employers may find it difficult to calculate: holiday pay, and annual leave accrual. As well as, determining the employment relationship between engagements and employment status under the zero-hour contracts.
Pros for Workers
Likewise, flexibility is the biggest advantage for employees under this contract.
Zero hour contracts are attractive to university students or those seeking a part-time job, or have care responsibilities. These contracts provide them with the opportunity to work without needing to give up your other commitments.
Also, you are still able to turn it down if you are not able due to other prior commitments. However, this means that in the future the employer may not rely on you to provide you more hours.
Moreover, a zero-hour contract may give rise to potential permanent opportunities with a business.
Cons for workers
There is no doubt that zero hour contracts mean there is no real job security and fixed income. Additionally, workers under a zero hour contract can be given little notice of work, as well as have the risk that the job is cancelled at the last moment by the employer, leaving the worker with no work at all.
Furthermore, there is difficulty planning or scheduling ahead due to the unpredictability of working hours or jobs, thus leaving the worker in a vulnerable position.
Finally, employers should avoid cancelled shifts or assignments at the very last minute as this provides workers time to pick up another shift or assignment.
Final Words
In conclusion, employers should provide adequate notice as possible for any available work. This will allow for workers under this contract to arrange their own schedules so that they are available for the job.
Thus, zero hour contracts are a viable and feasible option that provides employers flexibility to manage their resources.
