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Insight

Zero hour contracts – the Government's response

Nick Thorpe
26/06/2014
Yesterday, the Government announced its long awaited response to its consultation on the use of zero hour contracts. Draft legislation was also put before Parliament setting out the proposed new Yesterday, the Government announced its long awaited response to its consultation on the use of zero hour contracts. Draft legislation was also put before Parliament setting out the proposed new rules.

The Government has confirmed that it will ban the use of exclusivity terms, preventing zero hour workers working for another employer even when no work is guaranteed. In its brief statement on the consultation's outcome, the Government also indicated that it was committed to increasing the availability of information for employees on zero hour contracts and would work with unions and businesses to develop a best practice code of conduct aimed at employers who wish to use zero-hour contracts.

The draft legislation for the first time provides a statutory definition for the term "zero hour contract".

A "zero hour contract" is defined as:

"… a contract of employment or other worker's contract under which:

(a)     the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and

(b)     there is no certainty that any such work or services will be made available to the worker."   

The definition would appear to exclude workers who are guaranteed a certain number of hours work, no matter how few; for example, a one hour fixed contract, with a commitment to work such additional hours as and when required, would appear to fall outside the definition. This has prompted some to say that the proposed ban on exclusivity terms could, on the face of it, be easily circumvented. However, the Government has indicated that it will issue a further consultation on how to prevent 'rogue employers' evading the exclusivity ban.

The Government's response stops short of some of the proposals put forward by Ed Miliband in April (see earlier blog). However, the draft legislation includes reserved powers for the Secretary of State to introduce additional legislation to modify zero hour contracts, impose financial penalties on employers, require employers to pay compensation to zero hour workers, and confer additional rights on zero hour workers. Further restrictions may therefore be proposed following further consultation and the development of a code of practice on the fair use of zero-hour contracts, which is due by the end of 2014.   

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