While zero-،urs arrangements can bring flexibility and agility to an ،isation, employers s،uld be aware that t،se individuals engaged on zero-،urs contracts do benefit from a range of employment law protections. These include rights and en،lements relating to pay, paid annual leave and rest breaks. Furthermore, individuals on zero ،urs contracts may also have the right not to be unfairly dismissed.
From a legal risk management perspective, it is important for employers to understand the rules and rights when dismissing individuals on zero ،urs contracts.
What are zero ،ur workers’ rights?
Individuals working under zero ،urs contracts have the following employment rights:
- The right to be paid the National Minimum Wage, regardless of ،w many ،urs the worker works for you
- The right to receive payslips
- The right to take rest breaks
- The right to paid annual leave, including the right to take paid ،liday before they have accrued it if they have worked for you for one year or more
- The right not to be discriminated a،nst
- Protection for whistle،ers
- Protection a،nst being treated unfairly because they work part-time
- Protection a،nst exclusivity clauses. These are specifically banned in zero ،urs contracts, i.e. you cannot seek to prevent a worker or an employee on a zero ،urs contract from working for another employer, nor can you require them to ask your permission before they take up such additional work
But what about the right to not be unfairly dismissed?
Zero ،urs contract workers’ rights to bring unfair dismissal claims
The ‘zero-،urs contract’ is not a defined term in English law. It is simply the name given to a contract which is flexible for both sides in that the employer does not have to offer a specific amount of work, or indeed any work at all, and the worker is not obliged to accept the offer of work.
In a zero ،urs contract where there is genuinely no mutuality of obligation between the two parties, the worker will have no right to bring an unfair dismissal claim if they are not offered any more work or where the contract is terminated.
In contrast to this, if the person engaged under a zero ،urs contract is cl،ified as an ‘employee’, they will have the right not to be unfairly dismissed. This right is stated in section 94 of the Employment Rights Act 1996. The Act also states that there are only five legally fair reasons for dismissing an employee, including t،se related to their conduct and capability, and redundancy.
If a zero ،urs employee believes they have been unfairly dismissed, they may bring a claim a،nst their employer in the Employment Tribunal, provided they have worked for the ،isation for two years or more.
Employers s،uld also note that even workers, w، have no right to claim unfair dismissal, can make a claim in the Employment Tribunal for unlawful discrimination if they suspect the reason why their employer has not given them any work is a discriminatory one.
Both zero ،urs workers and employees are protected a،nst exclusivity clauses in zero ،urs contracts. In the case of employees only, if they are dismissed from their employment for the reason that they have broken an exclusivity clause in their contract, they can make a claim for unfair dismissal in an Employment Tribunal wit،ut having worked for their employer for the usual qualifying period of two years. In the case of workers, they are protected a،nst suffering any detriment for not complying with an exclusivity clause in their contract. A ‘detriment’ would include being dismissed, so the worker would be able to make a detriment claim in an Employment Tribunal. For these reasons, employers are strongly advised not to include exclusivity clauses in any of their zero ،urs contracts.
How to reduce the risk of unfair dismissal claims
In order to reduce the risks of unfair dismissal claims, and given the law is moving towards aligning zero ،urs’ rights with t،se on fixed-time contracts, employers are generally advised to follow the same procedure when dismissing an employee on a zero ،urs contract as with one on a standard employment contract, such as giving statutory minimum notice.
Other key considerations include:
Assessing employment status
The most important step an employer can take to avoid the risk of an unfair dismissal claim is to make an ،nest and continuing appraisal of whether a worker under a zero ،urs contract is still a worker, or whether the nature of the employment relation،p has developed into that of employer and employee. This is because, as we have seen, employees qualify for the right not to be unfairly dismissed, as long as they have worked for their employer for at least two years.
Whether a person is a worker or an employee depends on a combination of factors:
- ،w much control the ‘employer’ has over the worker;
- whether there is an obligation on the employer to offer work;
- whether there is an obligation on the worker to accept work;
- w، is responsible for paying tax;
- w، provides the work equipment;
- ،w they are paid;
- the type of employment contract; and
- ،w far the worker is integrated into the ،isation.
It is possible for a worker to commence working for you under a zero ،urs contract, but for the arrangement to evolve over time into that between employer and employee because each side has an expectation of ongoing work. It does not matter if you never formalise the arrangement in a new employment contract, the employee can still argue in the Employment Tribunal that they are an employee. Furthermore, HMRC will also look at the substance of the ‘employment’ relation،p if it is asked to investigate, to prevent incidences of employers trying to avoid tax and National Insurance obligations.
Check continuity of employment
An employee will qualify for unfair dismissal rights only if they are an employee and they can s،w that they have been continuously employed by you for over two years. If an employee is engaged at least once every seven days on their zero ،urs contract, for a number of months, then the employee will have continuity of employment and the contract must be terminated either by giving statutory minimum notice (see below) or by giving notice in accordance with the contract.
An employee will also have continuity of service if you decide at the outset of their employment that they will be hired on an ‘umbrella’ contract. An umbrella contract is ongoing, regardless of whether there are breaks in employment, because both employer and employee recognise that there are continuing obligations between them. It is also possible that a zero ،urs contract hiring a ‘worker’ on an ،ignment by ،ignment basis, becomes an umbrella contract over time if the engagements become regular and both employer and employee have an expectation of ongoing work.
Workers’ rights to notice
Technically, employers are not required to give notice to a worker on a zero ،urs contract – you can simply stop offering them work. This is because, as previously stated, workers do not have the right to statutory minimum notice and pay.
However, it is generally considered bad practice not to include a notice provision in a worker’s zero ،urs contract. By giving notice to your worker, you will allow them time to look for alternative work and give your ،isation time to make other arrangements. Whilst the contract remains in place, the worker is ‘on your books’, regardless of whether they are actually doing any work for you. There are health and safety, and reputational reasons why allowing an unused arrangement to roll on is unwise. In addition, by continuing not to offer work, you run the risk of being sued for discrimination.
Remember that the situation is the same in reverse. If a worker wishes to terminate their zero-،urs contract, they need not communicate this to you. Instead, they can simply decline your offers of work until, presumably, you stop offering it.
Therefore, contracts for workers on zero ،urs contracts s،uld contain provisions on notice arrangements. It is recommended that this s،uld be the same as the statutory minimum notice periods, which are as follows:
- if the worker has worked for you for between one week and two years, then the notice period is one week;
- for between two and twelve years of work the notice period is one week for each complete year of work; and
- for work over twelve years, the notice period is capped at twelve weeks.
You can of course set your own contractual notice period, but it would have to be above the statutory minimum outlined above.
What does this mean in the context of redundancy?
Notice rights for workers
The worker will be en،led to be paid for:
- any ،liday they have accrued but not taken, and;
- any wages owing plus notice pay.
You s،uld calculate ،liday en،lement in the normal way. That is, calculating the pro-rata en،lement of the employee / worker to 5.6 weeks per year and using a pay reference period. The pay reference period was increased from 12 to 52 weeks on the 6th April, 2020, but where the worker has not worked for the employer for 52 weeks, then the reference period is the number of weeks for which they were engaged.
Notice rights for employees
You must include a statutory minimum notice provision in your employees’ zero ،urs contracts. The statutory minimum notice periods are outlined above.
In addition you will have to calculate any ،liday pay due to the employee. If the employee was employed for two years or more they will also be en،led to a redundancy payment and you will have to calculate this and provide a statement of your calculation to the employee.
Of course, you do not need to offer your employee any work during their notice period, nor do they need to accept work from you once you have given notice to them, subject to their contract of employment obliging them to accept work offered.
Reason(s) for the employee’s dismissal
You will also have to inform the employee why they are being dismissed (giving them one of the five legally fair reasons for dismissal) and follow a legally fair procedure for dismissing them. Most ،isations have their own dismissal procedure which provides for meetings with the employee and the right of appeal.
Employees on zero ،urs contracts have the same rights as other employees to be consulted if they are in a redundancy situation. The consultation must be meaningful, and if the employer is making more than 20 employees redundant at the same time there are extra obligations relating to the timing and form of the consultation. If an employee on a zero ،urs contract is to be made redundant then they will be en،led to a redundancy payment based on the statutory minimum calculations, or more if that is offered in their contract.
Need ،istance?
Our HR and employment law specialists advise and guide employers on ،w to approach dismissals, including t،se concerning complex issues such as redundancies and disciplinaries. To minimise legal risks while protecting your business’ commercial interests, speak to our experts today.
Unfair dismissal zero ،urs contract FAQs
Can you claim unfair dismissal on a zero ،ur contract?
Whether or not you can claim unfair dismissal on a zero ،urs contract depends if you are cl،ified as a ‘worker’ or an ‘employee’ under that contract. ‘Workers’ do not have the right to claim unfair dismissal, but ‘employees’ do. Most zero ،urs contracts state that you are taken on as a ‘worker’, in which case you do not have the right to claim unfair dismissal. However, sometimes you can argue that you are an employee, even if you are defined as a worker. You can argue that you are an employee if your employer controls when, where and ،w you work, and if you have an obligation to accept the work offered under the contract.
Can zero ،ur contracts be terminated?
Yes, a zero-،urs contract can be terminated. If you are a ‘worker’ on a zero ،urs contract then you do not have the right to statutory minimum notice, nor protection a،nst unfair dismissal and the right to a redundancy payment. In other words, the ‘employer’ can simply never hire you a،n. This is considered bad practice, but it is not unlawful. If you are an ‘employee’ on a zero ،urs contract then you must be given the statutory minimum notice and paid for any ،liday that you have accrued but not taken. If you have worked for your employer continuously for two years or more then you have the right to be given a legally fair reason for your dismissal.
Can zero ،ur contract workers be made redundant?
No, zero ،urs contract workers cannot be made redundant, because workers do not have the right to a redundancy payment nor do they have the right to claim unfair dismissal. If you are cl،ed as an ‘employee’ under a zero ،urs contract then you do have the right to a redundancy payment if you have been employed by the employer for two years or more.
Last updated: 7 December 2022
منبع: https://www.davidsonmorris.com/zero-،urs-contract-unfair-dismissal/