Zero-hours contract clause

A zero-hours contract is generally one where you’re not obliged to provide the worker with any work at all and the worker is not obliged to accept any hours offered. There are no guaranteed minimum hours of work. Therefore, in a particular week, the worker may work “zero” hours.

No guarantees

It’s for you to decide the best working arrangement for your staff to meet the needs of your business. A Zero-Hours Contract enables a flexible arrangement where the hours and days worked are variable and depend on business needs. In practice, zero-hours contracts are relatively rare because normally your staff will have regular working hours. In addition, you will probably find that most workers are not willing to agree a working arrangement where they have no income guarantee. That said, zero-hours contracts can be appropriate where you need to have a “bank” of workers that you can call on at short notice on a regular basis to cover periods of sickness absence, holidays or spikes of work activity.

Employment status

In some cases, workers employed under zero-hours contracts will still be employees because whilst you’re not guaranteeing them a minimum amount of work, you normally will offer them work if you have it available and you do require them to undertake the work you have offered. This is known as mutuality of obligation. However, where there’s no mutuality of obligation there can be no contract of employment. This may be the case where you’re not obliged to offer the worker any work that you do have available at any time and the worker, in turn, is fully entitled to decline any work offered without suffering adverse consequences (such as being removed from the “bank” of available workers). We’ve drafted our clause on the basis of there being no mutuality of obligation (which means the individual would have the status of a worker and not an employee). However, there’s no point in having an express clause to this effect if it’s a complete sham to try to avoid employment status as tribunals will look beyond the contractual wording and examine the realities of the parties’ relationship. In fact, the contractual wording won’t even be the starting point as assessing employment status is a matter of statutory interpretation, with the tribunal looking at the wording of the relevant legislation and taking a purposive approach; it’s not a matter of contractual interpretation. If you are going to exclude mutuality of obligation using our clause, be aware that all the other terms of the worker’s contract will need to be consistent with a worker’s contract and not a contract of employment, and the reality of the relationship must be that the individual is a worker. From 6 April 2020, all new workers must be issued with a written statement of employment particulars - see our Casual Worker Agreement. Careful drafting is required here to ensure that you don’t unintentionally issue a worker with a set of particulars which they may later rely on as evidence of an intention to create an employment relationship.

Standby time

Some employers require zero-hours staff to be on standby or “on call” at their business premises to work only if needed. Standby time at or near your business premises will trigger the provisions of the national minimum wage (NMW) and must be paid at least at NMW rates. Standby time away from your premises (such as at the worker’s home) does not normally trigger the NMW. Our clause contains an optional provision for an hourly standby allowance for standby time at or near your premises.

Outside business activities

As you’re not guaranteeing to provide the worker any minimum number of hours, our clause includes a paragraph stipulating that the worker is free to engage in other work or activity for other employers or to perform services under another contract or under any other arrangement. The law states that any clause in a zero-hours contract is unenforceable against the worker if it prohibits them from doing work or performing services under another contract or other arrangement, or if it prohibits this without your consent.

Other provisions

Other provisions that we’ve inserted into our clause cover how any work will be offered and the procedure for acceptance, what types of work might be offered (but with flexibility to vary this), pay, annual leave and how the contract can be terminated. Finally, we’ve provided that there’s no continuity of service between one work assignment and the next.