Zero Hour Contract Meaning: Everything You Need to Know
A zero-hours contract means workers are supposed to remain available for work but are not guaranteed work.3 min read
2. Zero-Hours Contract Facts
3. Do Zero-Hour Contract Employees Have Rights?
4. Why Zero-Hour Contract Use is Growing
A zero-hours contract means workers are supposed to remain available for work but are not guaranteed work. The amount of work they are given may vary, so there is no guarantee of the amount of pay they will be receiving.
How a Zero-Hours Contract Works
When an employee agrees to a zero-hour contract, an employer can call them in whenever they are needed. However, the employee is not paid for the hours they do not work, even though they must be available during that time. There are typically no benefits given to zero-hour employees, such as holiday pay, paid sick days, or redundancy pay.
Why would a worker agree to a zero-hour contract? If they are unemployed, a zero-hour contract at least gives them an opportunity to earn money occasionally, keeping their skills current. There is also a possibility that this work may lead to full-time work in the future.
Employers benefit from zero-hours contracts because they don't have to pay workers when they are not needed. They only need to pay employees when they work and can expect these employees to be available at any time, on short notice. Some contracts require an employee to take every shift they are offered, while others allow them to decline shifts if they do not wish to work at that time.
Zero-Hours Contract Facts
In the UK, it's estimated that for approximately 905,000 workers, a zero-hours contract is their main employment source. Of all people surveyed on zero-hours contracts, 32 percent have indicated that they would prefer more hours.
Although unemployment rates have returned to the levels they were at before the recent recession, the number of people who have part-time employment and are unable to find full-time employment has not changed. Neither has the percentage of people who have accepted temporary jobs because permanent ones are not available.
Do Zero-Hour Contract Employees Have Rights?
Every employee in the UK has rights, including zero-hours contract workers. However, the extent of these rights is dependent on the way your employment is defined — an employee, self-employed, or a worker.
One difference between “employees” and “workers” is that employees have contracts with their employers guaranteeing that they will receive paid work that they cannot decline. Workers, on the other hand, have the ability to decline work if they wish. Therefore, most people with zero-hour contracts are considered “workers.” Also, if the contract states that a person is not required to accept the work they are offered, but they are punished in some way if they decline work and generally work a set schedule of hours, he or she might be legally considered an employee.
Whether an individual is a worker or employee, they have certain rights. For example, they must be paid minimum wage, receive rest breaks, and have protection against being over-worked and against unlawful deductions from their wages. In the past, employers were able to prohibit workers from seeking work from other employers, but since May 2015, that has not been allowed.
Why Zero-Hour Contract Use is Growing
The zero-hour contract was introduced during the recession so employers didn't have to pay their employees when the company's workload decreased. Although it seems unfair because the employee has no guarantee of work, it has pushed many workers to consider themselves independent contractors or freelancers.
Although the economy has improved, zero-hour contracts are still expected to remain in frequent use. Here are a few reasons why:
- Zero-hour contracts give employers flexibility so they only have to pay workers when needed, increasing employment when workloads increase and decreasing during slow times.
- “Per project” work has been popular in certain industries, particularly in creative fields, but has been spreading to other industries as well.
- The rise of online work and telecommuting allows for workers and clients to be located anywhere, as long as internet access is available. This reduces the barriers for skilled people to find contract work.
- Workers with specialized skills can demand higher pay rates when they are given flexible amounts of work rather than guaranteed hours as an employee.
- Workers are getting accustomed to the idea of being independent entrepreneurs instead of employees.
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