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What is a zero-hour contract?

By 14/09/2022September 20th, 2022Legal, Talent Management
What is a zero-hour contract and how does it work?

What is a zero-hour contract & how does it work?

Zero-hour contracts are designed to offer the opportunity for a more casual agreement between employers and employees. This type of contract works well when organisations have changing workloads and expectations. However, zero-hour contracts have become quite a controversial subject in the UK.

In this post, Natural HR looks at what zero-hour contracts are, how they work, their legality, and more. Keep reading to find out everything you need to know about this type of contract.

What is a zero-hour contract?

A zero-hour contract is a type of employment contract in which the employer is not legally obliged to offer the employee a guaranteed amount of working hours. There is no minimum amount of monthly working hours in these contracts, which allows employers to save on labour costs when workloads are volatile. These contracts are generally used for “on-call” work or short-term projects.

While employers are not required to offer any guaranteed work hours, the employee is not obliged to accept any work offered to them. They can also work for other employers, making this casual contract mutually beneficial for both employers and employees.

Note: A self-employed individual does not fall under this category. While they can accept a zero-hours arrangement, they remain self-employed.

How do zero-hours contracts work?

In this employment contract type, the employer will offer the individual work when it is available, and the employee can choose to accept the work or not. These contracts are more like casual agreements, but the employer must pay at least minimum wage for whatever hours are worked.

Are zero-hours contracts legal?

Zero-hour contracts are legal in the UK. That said, they are rather controversial. With trade unions, newspapers and other workers’ bodies condemning them as exploitative, zero contract hours have come under fire. In 2015, it became illegal to offer zero-hour contracts that prohibited an employee from working with another employer at the same time.

Holiday entitlement for zero-hours contracts

Like most other workers, those with zero-hour contracts are entitled to 5.6 weeks of paid holiday every year. Their labour rights entitle them to a week’s pay for each week of statutory leave they take. The week’s pay is calculated according to the average hours the individual works in a week and how they are paid for the hours.

Should you offer zero-hour contracts?

If your organisation has regularly changing workloads it may be worth considering offering employees zero-hour contracts. However, these contracts are not always popular, and you may find fewer talented people to fill the roles you need. In addition to this, because employees can decline the jobs offered to them, you may find yourself stuck without the staff you need.

If you need help setting up contracts and managing staff, get in touch with us today. Our HR software was created by HR professionals to makes human resources easy and straightforward.

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