The use of zero hours contracts has been tossed into the spotlight in the course of the last few months pursuing exceptional media theory around the potential for them to be misused. Government held a consultation which got in excess of 36,000 reactions, Business Secretary Vince Cable has now affirmed that exclusivity clauses in zero hours contracts will be banned under the Small Business, Enterprise and Employment Bill 2014.
The Government has additionally published that it will work with business agents and unions to create a Code of Practice on the reasonable utilization of zero hour’s contracts before the end of 2014.
There is no clear definition of Zero hour contracts. In general we can say that it is a contract under which the employers do not guarantee any work to employee, neither employee is allowed to accept any work offered.
There is an estimate that more than one million people are working under Zero hour contract in UK.
It is assessed that there are in excess of 1 million people working under zero hours contracts in the UK, mostly in care, tertiary education, hospitality, and leisure and retail sector. This is not shocking in light of the variable workforce requests these sectors ordinarily encounter. Hiring workers under traditional employment contracts, which include guaranteed or defined hours of work, allows some flexibility, but most of time not enough. in the case of an unexpected spike or fall in demand the employer is left either scrambling around for extra workers at the last minute, or with more workers on their payroll than they have work for.
Zero hours contracts offer the perfect solution in these circumstances. They equip the employer to cater such situation by maintaining a workforce familiar with the organisation and the required levels of customer service.
Now where zero hour contracts facing dispute actually?
There are some zero hour’s contracts that contain contractual restrictions on the individual working for another organisation, even though there is no guarantee of work from the employer. In banning such clauses, the Government has sought to address concerns that some employers were using exclusivity clauses unjustifiably.
There is general lack of understanding amongst both workers and employers about the nature of a zero hours contract. In particular, there is confusion about the employment status and entitlements of an individual working under such contracts. For example, is the individual an "employee" or a "worker" under employment law (relevant because different employment rights apply to each category)? The Government’s proposals include several options to improve transparency including improved Government guidance and model clauses (possibly standard template zero hours contract clauses to be used on a voluntary basis), as well as an employer-led Code of Practice on the fair use of zero hours contracts.
It seems that a ban on the use of exclusivity clauses could create a problem for employers who have good and justifiable business reasons for imposing an exclusivity requirement where, for example, the worker has access to trade secrets and/or confidential information which legitimately require protection, or where there are competition issues.
So far there has been no suggestion from the Government that there will be any exemptions from the ban on exclusivity based on good business reasons, but this is something many employers are likely to be looking out for.
Employers who are using zero hours contracts shall keep a close eye on developments in this area and, in particular, the new Code of Practice and guidance to be issued later this year.