HR 7 September 2016

Should employers re-examine zero-hours contracts after the Sports Direct case?

Sports Direct
The decision to scrap zero-hours contracts by Sports Direct owners may encourage smaller employers to look again at the legislation
With retail giant Sports Direct pledging to offer casual retail staff guaranteed hours rather than zero-hours contracts, Peninsula HR Director Alan Price clarifies the differences for employers.

After a 2015 newspaper investigation found that Sports Direct paid warehouse staff effective hourly rates of 6.50 below the statutory rate of 6.70 the firm has now guaranteed workers will be paid above National Minimum Wage.

There is no specific legal definition of zero-hour contracts, however they are similar to normal employment contracts in so far as they both represent agreements between two parties to perform work in exchange for remuneration.

Zero-hours contracts are distinguished as they do not specify a minimum number of contracted hours, guaranteeing payment only for hours actually worked. A worker usually does not have to accept work offered to him or her, but must carry out work if they accept it.

Employers and workers can benefit from the convenient and flexible nature of zero-hours contracts. An individual can have a flexible working pattern, fitting work around other responsibilities, while their employer isnt obliged to offer a certain number of hours when work is scarce, for instance, but can do so in order to meet demand during busy periods.

As such, zero-hours contracts can appeal to employers as excellent ways to cover unexpected events, such as temporary staff shortages during heavy demand.

In the past, it was quite a common occurrence to see an exclusivity clause in a zero-hours contract, stipulating that a worker was not permitted to procure work for another employee, or to look for more work with another employer, without first getting permission from their existing employer.

In May 2015, exclusivity clauses were banned, and employers are no longer able to put them into operation. In order to allow workers to enforce new rights, a tribunal claim was created, coming into effect on 11 January 2016.

Zero-hours employees can therefore claim unfair dismissal if they are dismissed for taking on more work with a different employer, or for doing so without the existing employer’s permission.

Those working on zero-hours contracts who are not employees can make a claim for detriment at an employment tribunal if they are subjected to poor treatment because they have looked for more work. This claim can be made from day one of employment, as the usual two-year qualifying service does not apply.

Employers need to be aware that individuals on zero-hours contracts should not be treated any less favourably, as they have the same employment rights as workers on part-time or full-time contracts.

All zero-hours workers have the same rights to a 20-minute break every six hours of work, 11 hours of uninterrupted rest in every 24-hour period and 24 uninterrupted hours of rest in every seven-day period as other workers.

Additionally, like other workers, zero-hours staff are not allowed to work more than 48 hours per week unless they have been contracted out of that requirement. Zero-hours contract workers have the same right to 28 days’ annual leave (including bank holidays) although this is pro rata based on the average number of days they work per week.