BIS issues guidance on zero hours contracts

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A zero hours contract entails no obligation on an employer to offer set working hours to a worker. In return, the worker does not have to accept any hours offered by the employer. This arrangement has been widely criticised recently not least for its potential to exploit workers. However, if used properly, it can meet the needs of both employees and employers.

While statistics show that zero hours contracts comprise only a small percentage of the construction industry workforce in the UK, those employers who do utilise them should be aware of new guidance published by the Department for Business, Innovation and Skills (BIS) and aimed at employers. "Zero hours contracts: guidance for employers" includes information on employment rights, appropriate use of zero hours contracts, best practice and exclusivity clauses.

By way of brief summary, the guidance:

  • lists examples of situations when a zero hours contract might be appropriate including: new business start-ups, seasonal work, unexpected sickness, special events and testing a new service
  • states that, when offering a zero hours contract, employers should consider including information such as: whether the individual is an employee or worker and what employment rights they are entitled to; if the individual is an employee, how statutory employment entitlements will be accrued where appropriate; the process by which work will be offered; the assurance that they are not obliged to accept work on every occasion if they so wish; and how the individual's contract will be brought to an end;
  • advises that, when recruiting for a zero hours contract, the job should be clearly advertised as such and the individual should be clear that hours are not guaranteed. Cancelling work at late notice, or when the individual turns up at the place of work, is unacceptable unless truly unavoidable; and
  • advocates that employers should plan ahead and give as much notice as possible when offering work, as well as putting into place a policy explaining when and how work might be cancelled.

The Small Business, Enterprise and Employment Act 2015 prohibits the use of exclusivity clauses or terms in any zero hours contract. The guidance confirms that this means that an employer cannot stop an individual from looking for work or accepting work from another employer when engaged on a zero hours contract.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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