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Zero hour contracts

Zero hour contracts

Employers warned to check zero-hour contract terms as Sports Direct faces 'multi-million pound' bonus claim.

Employers who offer different benefits to workers on zero-hour contracts than they offer to permanent employees should beware employment law rules that equalise the treatment of part-time and comparative full-time workers.

The term 'zero-hours' is not defined in UK employment law, but generally refers to a flexible employment arrangement without guaranteed hours. 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. Individuals who are party to a zero-hour contract are not obliged to accept any work that is offered.

The majority of zero-hour contracts give staff ‘employee’ status for employment law purposes and over time, ‘employee’ relationship with equivalent rights could develop. Recent press reports reveal that almost 300 Sports Direct workers on zero-hour contracts, all of whom have a minimum of five and a half years of continuous service with the retailer, are bringing claims against the company. The law firm representing these workers has said that the first batch of 30 claims could be worth over £1m in compensation for missed bonuses, with many more claims to follow.
This case highlights the issue that employers need to be aware of the application of protections offered to part-time workers. Part-time workers must not be treated less favourably than comparative full-time workers, albeit that the pro-rata principle applies.

Critics of the contracts say that businesses use them to avoid giving workers proper 'employee' status and thus deny them eligibility for the full range of employment rights. However, business groups claim that the contracts give firms the flexibility to cope with fluctuations in demand.

The Government also intends to ban the use of 'exclusivity clauses' in zero-hour contracts, which are used to prevent a contracted worker who is not guaranteed a minimum number of hours from taking on another job.

According to guidance on ‘zero hour’ contracts by the government-backed conciliation service ACAS, a worker with a ‘zero hour’ contract has more limited employment rights, including rights to sick pay and paid annual leave. However, factors that could lead to an employment tribunal finding that an 'employee' relationship exists include an obligation on the worker to accept work that is offered, or subjecting a worker to disciplinary procedures.

For more information about any aspect of employment law, please contact Chris Wiper on 01325 466461 or email chris.wiper@close-thornton.co.uk

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