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Updated for 2017.
With the introduction of the Agency Workers Regulations in 2010, many Companies are believed to be using far more zero-hour contract workers now, instead of Agency temps. At Workline we get a lot of queries from people employed on zero-hour contracts, so here we look at these types of contracts in more detail.
There are basically three different types of working individuals:
It is important for the individual and the employer to establish their status, as:
(To read about Internships/Work Experience see our Interns article here. For more information on unpaid Volunteers and Voluntary Workers see our new article here)
You will generally be a Worker if employed on a zero-hour contract (some zero-hours contracts can be full employee contracts, although this is more unusual). A Worker is a broader category than an ‘employee’, introduced by European Union legislation (although there is no EU definition). A worker is anyone who works for an employer under a contract of employment (but this may be a written contract or not and the contract may not come directly from the Employer) and performs the work personally (which can include some freelancers).
Workers are usually:
In 2015 a Zero-Hours contract worker, who feared reporting allegations of sexual harassment by her line manager, in case she lost her job, was awarded £19,500 for sexual harassment (S v Britannia Hotels Ltd). The Tribunal was very critical of the employer’s investigation and there failure to follow up the worker’s complaints, the lack of any clear action against the alleged perpertrator and the long delay in completing the investigation.
In October 2015 the Government published Guidance for Employers on Zero-Hours Contracts – how to use, them, what are appropriate and inappropriate ways to use them. You can read the guidance here.
Unfortunately, there is no simple answer to this question.
If an employer engages people on an ad-hoc basis to help out during staff shortages or at busy times of the year, or when an emergency arises, knowing full well that the individual may or may not be available when the Employer needs them, then they will not be employees.
But, if the Employer regularises the arrangement with those workers and undertakes to provide them with work on specified days and at specified times of the week, on the understanding (accepted by the individual) that they will present themselves for work on those days and at those times, the chances are that the relationship between the employer and the workers will change to that of employer and employee.
The other factors that need to be taken into account in determining employee status include whether an individual is expected to carry out the work personally and whether the Employer has had sufficient control over the way the work was done.
As always, it will be for an employment tribunal to determine the true nature of the contractual relationship between an employer and a worker, if an agreement cannot be made between the Employer and Worker.
An important Tribunal Case at the end of 2012 found that six individuals employed on ‘zero hours contracts’ were actually employees.
In Pulse Healthcare Limited V Care Watch Care Services Limited plus others, the 6 individuals were engaged by Carewatch to provide 24 hour care to a severely disabled individual. Pulse took over the service contract from Carewatch and the individuals claimed they were employees and that their employment transferred under TUPE. Pulse argued they were not employees and did not have sufficient continuity of employment to claim unfair dismissal but the Employment Tribunal disagreed. The ET said there was sufficient mutuality of obligation for the claimants to be employed (i.e. they were required to personally perform the work, they were obliged to do the work and Carewatch undertook to offer the work). The ET also disagreed that the claimants were engaged on a succession of individual contracts as opposed to an ‘umbrella’ contract and therefore did not have sufficient continuity of service – the ET felt they were employed under a ‘global’ contract to provide a critical care package.
If it is established that the employment relationship has changed to that of an employer and employee then the start of the individuals continuous period of employment will also need to be established, in order to determine what statutory (and perhaps contractual) rights the individual has.
In an interesting 2013 case, Borrer v Cardinal Security Ltd, Borrer was a Security Guard for Cardinal Security for 4 years. His main place of work was at Morrisons in Brighton, where he worked for 2 years on a regular 48 hour week. His Contract with Cardinal (which could be described as a zero-hours contract) did not specify his hours of work but said “your working hours will be specified by your line manager”.
When working at Morrisons Brighton he was informed about his hours of work by text message from his manager or by contacting the control centre. In October 2011 Morrisons made a complaint about Borrer and requested that he be moved from the Brighton store (as they were entitled to under the contract with the security company). Mr Borrer worked for other clients and a few weeks later was offered a full time position with Morrisons Seaford store, where he worked for the next few weeks The Manager of the Seaford store was also unhappy with him and eventually Cardinal found him shifts at another of their clients. Borrer told Cardinal he was resigning because he was not being offered enough hours – during that conversation he was offered a full-time position of 38 hours per week at another store in Brighton. A week later he wrote to Cardinal confirming his resignation, claiming Cardinal were in breach of contract and rejecting their statement he was on a zero-hours contract.
The original Employment Tribunal found that there was nothing to imply that he worked a fixed number of hours per week (48) and there was no breach of contract, so he could not claim unfair constructive dismissal. The Employment Appeal Tribunal allowed the appeal and found that Borrer had been contractually entitled to work his claimed 48 hours per week (and there was no doubt he was an employee).
In 2015, in Smith v Carillion (JM) Ltd, the Court of Appeal confirmed that a contract could not be implied between an agency worker and the end-user of his services, unless it was necessary to do so. The Court also made it clear that is not against public policy for an end-user to obtain services by using agency staff, even if the purpose of doing so is to avoid legal obligations (which would otherwise arise if the agency worker was directly employed by the end-user). Although, in this case, there were various potential indicators that Mr Smith had employee or worker status with the end-user, the Court decided that none of these factors were necessarily inconsistent with a genuine agency worker arrangement.
In August 2013 a legal challenge was taking out against SportsDirect for their use of Zero-Hours contracts – see the details here.
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
Darren Fell, CEO of Crunch, said: "We welcome the government's commitment to adopt the recommendations from the Taylor report. We would however, urge caution that any response does not introduce more red tape, or reduce the ability for entrepreneurs to employ people flexibly."
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