Zero hour contracts are becoming increasingly popular across almost every industry thanks to the flexibility that they offer to both workers and employers alike. However, whilst there are many benefits of zero hour contract, there are also some disadvantages and risks that you need to be aware of before making the decision to enter into a zero hour contract.
In this article, we’ll talk you through the advantages and disadvantages of zero hour contracts for both the employer and the employee, as well as answering some of the most commonly asked questions regarding this type of employment contract. This will help you to make an informed decision for either yourself as a employee or for your business as an employer.
What Is A Zero Hour Contract?
Zero hour contracts, also known as casual contracts, are a type of employment contract where the employee is not guaranteed any number of hours of work. When work is available, it is offered to the employee who can accept or decline the hours.
As there are no contractually agreed hours, the employee may not be offered work during certain months. Likewise, the employee may choose not to work for a period of time even if the hours are offered to them.
The most common use for zero hour contracts is for seasonal work, where demand varies depending on the season. For example, retail stores may hire workers on a zero hour contract to cover the Christmas period, or a seaside attraction may take on employees on zero hour contracts during the summer months.
It is important to note that every employee who is hired on a zero hour contract is entitled to the same statutory employment rights as any other employee. This includes the right to earn National Minimum Wage, protection from discrimination and paid annual leave.
Pros And Cons Of Zero Hour Contracts For The Employer
If you are considering hiring workers on a zero hour contract, it is important that you are aware of both the pros and cons of doing so. To help you to make an informed decision about the right way forward for your business, we’ve put together the key advantages and disadvantages of zero hour contracts for employers.
Advantages Of Zero Hour Contracts For Employers
There are many benefits for businesses of employing workers on zero hour contracts. Let’s take a look at some of those advantages.
Flexibility – Hiring workers on zero hour contracts is a great way to ensure flexibility for your business in uncertain times. This is ideal for businesses that notice peaks and dips in demand, for example as a result of the seasons. You have staff available when you need them, but there’s no commitment to give them hours when things are quieter.
Affordable – Zero hour contracts can help to keep the costs down for your business. There’s no commitment to give your staff any contracted hours when things are quiet, you can simply pay them for the time you require. It is also cheaper than paying agency fees when you have a surge in demand.
Promotes growth – If you’re hoping to grow your business but you can’t afford to take on permanent employees, zero hour contract workers can enable you to grow your business without the commitment of permanent staff.
Can lead to permanent employment – As your business grows, you might choose to move your zero hour contract employees onto permanent full time contracts. You already know they’re great workers, so it is the perfect solution.
Disadvantages Of Zero Hour Contracts For Employers
Whilst there are many advantages of zero hour contracts for employers, there are also some disadvantages that you need to be aware of. Let’s take a look at the disadvantages of zero hour contracts for employers.
Higher staff turnover – Many workers see a zero hour contract as temporary employment, when they’re between jobs or on a summer break from university. This means that you may experience a higher staff turnover as workers find permanent employment elsewhere.
Less reliability – Whilst employing workers on a zero hour contract gives you more flexibility, it also gives employees flexibility, meaning that they can turn down shifts if they have prior commitments. This means that you might find yourself short staffed if workers don’t accept the hours that are offered to them.
Lack of consistency – When you have workers on a zero hour contract, you will find that you end up with different people doing the same job. This leads to the quality of the work varying depending on which member of staff is working.
Difficult to establish company values – When you have got a high staff turnover, it can be difficult to establish company values. This means that your customers may be left with mixed messages when it comes to the ethos of your business.
Complex holiday pay – Zero hour contract workers are entitled to annual leave or holiday pay in the same way as other workers. This is based on the hours that have been worked, so it can be difficult to work out holiday pay for employees on a zero hour contract.
Pros And Cons Of Zero Hour Contracts For Workers
It isn’t just businesses that need to weigh up the pros and cons of zero hour contracts – this is something that should be carefully considered by workers before they enter into this type of employment contract. To help you to decide whether a zero hour contract is right for you, we’ve put together a list of the advantages and disadvantages of zero hour contracts for workers.
Advantages Of Zero Hour Contracts For Employees
Some workers find that they benefit from being on a zero hour contract, thanks to the flexibility that it gives them and the extra income they can earn. Let’s take a look at some of the advantages of signing a zero hour contract as an employee.
Flexibility – As with employers, workers also benefit from the flexibility that zero hour contracts provide. As there are no set contracted hours, the employee has the ability to accept or refuse hours that are offered, meaning they can work on their own terms, around their family, studying or other commitments.
Extra income – Taking on a zero hour contract is a good way to earn extra money outside of your normal employment. Whether you take on evening shifts in a bar outside of your usual 9-5 or summer work during your summer break from university, a zero hour contract can be an effective way to earn an extra income in your free time.
New opportunities – If you are struggling to find permanent employment with a company you want to work for, taking on a zero hour contract can be a way to get your foot in the door with the potential of applying for a full time position in the future.
Experience – It can be difficult to secure employment in your chosen field, especially if you don’t have experience to back up your application. Taking on a zero hour contract can be a great way to gain experience in your chosen field, around your other commitments.
Disadvantages Of Zero Hour Contracts For Employees
Although there are several advantages of zero hour contracts for employees, there are also some disadvantages that you need to be aware of. After all, you can only make an informed decision if you understand both the pros and cons. Here are some of the key disadvantages of zero hour contracts for workers.
No set schedule – When you’re working on a zero hour contract, you are unlikely to have set hours. This can make it difficult to plan for childcare and around your other commitments, especially if you feel like you need to be on call in case you are needed to work.
Lack of security – As your hours aren’t guaranteed, you might feel like you lack security when you’re on a zero hour contract. Whilst one week you may work 40 hours or more, the next you might not work any hours, leading to financial instability.
Low income – Although some workers on zero hour contracts find that they are offered more than enough hours, you may find that there aren’t enough hours to go around, especially if there are many workers on this type of contract. This could leave you unable to pay the bills.
Increased pressure – When you are working on a zero hour contract, you can choose whether to accept or decline hours that are offered to you. However, many workers find that they feel pressured to accept hours for fear of not being offered hours in the future.
What Rights Do You Have On A Zero Hours Contract?
Zero hour contract workers are entitled to the same statutory employment rights as any other worker. This includes: