Would you ever hire a person on a contract where there are certain company obligations but none at theirs? Sounds a little ridiculous, doesn’t it? But zero hour contracts are trending. With the employment equations changing as work from home becomes more popular, this contract enables the employer to hire a person and release payments only for the work done.
Now, this kind of arrangement may entail a few disadvantages as well. That is why you need to make an informed judgment, as to whether or not it will work for your organization. In this article, we will take you through 0 hour contracts, zero hour contract rights, zero hours contract employee rights, and much more.
What are Zero Hour Contracts?
First things first, let’s understand the zero hour contract meaning. Zero hour contracts are basically arrangements where an employer is only obliged to pay for the work done. Unlike a typical employment contract, this arrangement does not guarantee regular pay and working hours. Instead, the employee gets paid only for the number of hours or days worked, depending upon the 0 hour contract.
A major advantage of this kind of arrangement is that it saves considerable cost to the company and is especially useful for startups. Not only is there no obligation to pay a regular salary, but the company can also cut down on employee costs such as reimbursements and allowances. 0 hour contracts can also be a great option when you are looking to scale back finances and contracts.
What are Zero Hours Contract Employee Rights?
Even though zero hour contract employees are not entitled to benefits that full-time employees get, they do have some. Under the zero hour contracts, employees are clearly entitled to the following:
- Annual pay
- Rest breaks
- Sick pay
- Zero hour contract holiday facilities
What is a Zero Hour Contract Law?
Zero hour contracts, in essence, are meant to make life easier for both parties involved. But, given that these are flexible contracts, it is important to put down all provisions on paper. A comprehensive understanding of the zero hour contract law is required in this case.
Employers should carefully process all situations at hand and then figure out whether or not they want to go ahead with zero hour contract jobs. It is important to know that a zero hour contract law refers to the proper legal framework that an organization devises, rather than a fixed legal act. The resultant policy is a proper contract with all terms and conditions agreed upon, which paves the way for ethical employment. It also protects both parties from any unfair lawsuits.
The onus of creating zero hour contract law is on the employer. All the zero hours contract employee rights should be clearly mentioned as well. Take a look at the illustrative list created under a report by CIPD law, in collaboration with Lewis Silkin.
When Should an Employer Opt for Zero Hour Contracts?
Usually, employers list out zero hour contract jobs in industries like hospitality and tourism, to keep up with seasonal demand and reduce overheads. This gives both the employer and the employee a certain level of flexibility.
0 hour contracts are also a viable option when the employer wishes to fill a position temporarily, for instance, in the case of an employee being on maternity leave. In such cases, when the permanent employee goes on a longer leave, zero hour contract jobs are a great way to fill the position temporarily.
When Should an Employer Not Opt for Zero Hour Contracts?
It’s good to create zero hour contract jobs when you want flexibility. However, there are certain cases when you should not pick that option. When you want reliable work with a quality that is up to a certain standard, getting an employee on 0 hour contracts is not a good option. The reason is that a zero hour employee has much lesser accountability when compared to full-time employees.
There are times when 0 hour contracts turn out to be more expensive than full-time contracts, due to the unpredictability of hours. The work of zero hour contract employees can take longer than it would have done in the case of full-time employees.
The best way to honor 0 hour contracts is by knowing your business requirements and whether those will be fulfilled by such employees.
What are the Advantages of Zero Hour Contracts?
These contracts work very well for those industries and businesses where the workload is seasonal and cyclical. There is flexibility which allows the employer to only get peak work hours covered, instead of paying for the lull as well.
Hiring employees under 0 hour contracts ensures that full-time employees do not get overburdened when there is too much work. This increases the overall efficiency and productivity, leading to better results. This also impacts the employee retention rate favourably as employees who are happier and less stressed tend to be more loyal to the company.
Is Simple and Affordable
It has been established that 0 hour contracts do away with the need to pay uniformly across all seasons, regardless of the work requirement and volume. When the employee works, the employer pays. The financial relationship is simple and affordable for the employer. Further, zero hour contract employees are not entitled to the benefits such as notice periods, maternity pay, and more.
Contributes Towards Growth
0 hour contracts are extremely beneficial for new businesses that have just started and are not sure of the volume of work that they are looking at. They can, have employees at their disposal and only pay for the work done.
Apart from various advantages to the employer, zero hour contracts are also beneficial to the workers. It’s a good way for many who wish to start their careers and find a footing in the industry. It is also a great way to gain some experience. Further, employees under zero hour contracts have the advantage of flexibility.
What are the Disadvantages of Zero Hour Contracts?
Most of the time, it is difficult to plan the work and finances of a zero contract employee. This happens due to the unpredictability involved. You never know when you need assistance with work and when the finances would be flowing out accordingly.
Lack of Control
In a full-time arrangement, the employee is accountable and answerable to the employer for any work. The employee also works at the convenience of the employer. This is mostly not the case with zero hour contracts wherein the workers hold the fort and decide the timelines. The employers, too, have to let go of the control because they have to understand that they cannot demand work at the spur of the moment.
What are the Zero Hours Contract Employee Rights?
Ideally, there are four major rights that any zero hour contract employee deserves.
- No unfair dismissal
- Flexibility with respect to work
- National minimum wage
- Rest breaks
Apart from the aforesaid, there are certain optional rights that the organization may extend.
- Minimum holiday
- Health and safety protection
- Whistleblowing protection
Please note that the optional factors depend on the agreed terms between the employer and the employee.
When can a Zero Hour Contract Employee Become a Full-time Employee?
Now, this is where the employers need to closely watch the work and the subsequent payouts. If the employer thinks that the number of zero hours worked and being paid for are close to full-time hours, they can convert the contract.
It is important to continuously monitor zero hour contract workings. It not only explains the performance of zero hour contract employees but also highlights whether or not the employer should hire them on a full-time basis. It’s more reliable than the usual recruitment process that mainly works on instinct and assignments. Further, if the hours and work become more regular, it eliminates unpredictability.
Guide to Terminating a Zero Hour Contract
Having a complete contract that includes a termination clause makes terminating a zero hour contract easier.
The key to a zero hour contract termination lies in the original contract. Draft the policy in such a manner neither party terminates it at their own convenience. Further, in case the termination has to happen, there have to be compensatory clauses for that. The HR and legal team then draft the notice as per the discussion between the employer and the employee. Accordingly, the service termination happens.
In addition to the usual termination upon the end of the contract, a zero contract employee may also be bound by ethical obligations. Failing to comply with organizational ethics can also lead to the termination of the said employee.
Usually, a zero hour contract employee gets a minimum notice period of 7 days.
Are There Any Alternatives to 0 Hour Contracts?
Instead of hiring zero hours contract employees, with their flexibility and unpredictability intact, you can hire a fixed employee, albeit on a part-time basis. You’d know the hours and the financial obligation well.
Annualised Hour Contracts
Create a contract on the basis of how many yearly hours of work you’d require from the person.
Pay overtime to your existing employees so that they can extend hours and pitch in when the workload is more.
This one is another good way of dealing with the excess workload. Hire an agency and make use of their fixed and on-roll employees. This will do away with the unpredictability.
Do you Need Zero Hour Contracts?
If you are a small business or are just starting out, yes, this is a good option. You will only pay for the work done, as and when it happens. For the larger organizations, they can consider this for relevant departments, after taking a look at other options as well.
Do you have zero hour contracts? How do you create those and deal with the workers? Do tag us at @HarmonizeHQ and let us know