Which Contract?

It would be hard to ignore the recent hype regarding zero hours contracts and their use in the workplace, with a large interest in the way Sports Direct have been managing their staff contracts. The issue isn't going to go away easily, with it being a primary discussion point with Unions, and all political parties. 

Zero hours contracts are a useful way of setting on employees when you are either unsure about the amount of work being available, or where there are seasonal or project related adjustments in the amount of work available.

A zero hours contract means that although the person has gained employment, there is no guarantee regarding the number of hours they are required to work, although they are expected to be available to carry out that work when required. It is worth remembering that once someone has a contract of employment with you, they are employed by you; therefore they should receive the same benefits, terms and conditions as if they were working full time or part time etc, but on a pro rata basis. This means they can accrue holiday pay, and they are also accruing length of service.

Used in the right way, zero hours contracts give both the employee and employer a greater level of flexibility they wouldn't normally have on a standard contract, which is incredibly important to businesses that are trying to expand, or to supply increased demand when it is uncertain how long increased demand will last.  Although reports on the UK economy are positive, we all know the economy is still fragile and confidence in some areas still low.  Zero hours contracts work for some, but maybe not for others so it is about personal circumstance and whether this type of contract is suited to both parties.

There are other types of contract, if there is a requirement to move away from the standard full or part time contracts, that employers should also consider as an alternative:

• Annualised hours contracts; where the agreement is that an employee works X number of hours during the course of a 12 month period
• Flexible hours contracts; where the agreement is that an employee works X number of hours per week/month but these may not be carried out on the same days/weeks each week/month.
• Minimum hours contracts; where the agreement is that an employee works a minimum of X number of hours per week but may also have opportunity to work longer hours

In all the above contracts, including zero hours contracts, it is possible to stipulate the maximum number of hours you would require someone to work per week/month. You can also set out in the contract how other terms and conditions such as holiday entitlement will be calculated; for example, holiday can be accrued per hour worked, or calculated in blocks based on the average working hours during the preceding 12 weeks. 

To completely outlaw the use of zero hours contracts could have a huge impact on organisations’ ability to meet fluctuations in demand, and therefore stifle growth in some industries.  However, employers do need to be educated as to the appropriateness of their use in workplace and whether they are relevant to their specific circumstance.  Legislation that targets a particular type of employment contract would, in our view, be disastrous for the small business as it further removes flexibility, which is often an absolute necessity if businesses are to flourish.