Zero-hours contracts are becoming increasingly common in Northern Ireland.
There is no legal definition of a zero-hours contract in either Northern Ireland or Great Britain employment law. In general terms, a zero-hours contract is one in which you do not have to guarantee the individual any work and the individual is not obliged to accept any work offered by you.
Zero-hours contracts are legal under domestic law. If you freely enter into a zero-hours contract with an individual, it is a legitimate form of contract between you and the individual.
There are concerns that individuals who work under zero-hours contracts have no protection under domestic employment law, or that they cannot be an employee. This is not a correct assumption - as in any employment relationship, the employment rights which an individual is entitled to will depend on their employment status.
It is likely that the majority of individuals on zero-hours contracts are either workers or employees.
In many cases a zero-hours contract staff member will be legally classified as a 'worker' and thus will have some of the rights that an employee has such as statutory holiday entitlement and National Minimum Wage. However the way the relationship with that worker develops may enhance the employment status to that of an 'employee', who has additional employment rights such as accruing the right to take maternity leave or pay and the right to request flexible working.
Read more on employment status.
Advantages and disadvantages of zero-hours contracts
As an employer, the advantages of zero-hours contracts include:
- Flexibility - Zero-hours contracts allow you to adapt to changes in demand, eg offering more work when new orders arrive and being able to scale back when they do not. Furthermore, you could use zero-hours contracts to increase the range of services offered – such as creating specialist roles or having staff available in different geographical locations.
- Supporting expansion plans - Through this flexibility your business could also grow, with limited risk in terms of recruiting permanent staff if you find that the additional services you planned are not taken up. On the other hand, if expansion is successful, zero-hours contracts provide a rapid pathway to fixed-term, annualised hours, full-time or guaranteed hours work.
- Retention of skills - You could retain the skills and experience of staff who might wish to partially retire or who decide to work part-time.
- Knowledge of the company and its culture - You could also retain a pool of trained and skilled staff, who know the culture of the business and its procedures, rather than agency staff who may not.
However, you should be aware of the welfare of any individual you employ on a zero-hours contract.
For example, not every zero-hours worker will be happy that they are on such a contract because of lack of job security. In addition, the inclusion of exclusivity clauses in some zero hours contracts is banned in GB since 26 May 2015. This was formerly under scrutiny by the Northern Ireland Assembly and exclusivity clauses may in the future be banned in Northern Ireland.
It should also be made clear when advertising or interviewing for a job, or in the contract itself, that an individual is hired on a zero-hours contract, or that there is a possibility they could be offered no work or ‘zero-hours’.
As an employer, you need to fulfil and understand your responsibilities towards individuals you hire on a zero-hours contract in terms of their employment rights such as the national minimum wage and holiday rights.
Asking an individual to work at very short notice, which does not allow them to plan ahead, eg to arrange childcare, could be problematic for them, causing tension or upset.
You should note that where there are long term zero-hours contracts in place, where work is regularly offered and accepted, there is the potential for difficulties regarding the actual employment status of the individual on the zero-hours contract.
Know your legal responsibilities
- Do you need a licence?
- Get the right business insurance
- Comply with the law when providing goods and services
- Know your customers' rights
- Distance and online selling rules
- Understand pricing legislation
- Buying goods from outside NI
- Selling goods outside NI
- GDPR compliance checklist
- Pay your business rates
- Understand staff contracts and your responsibilities
- Taking on contractors and subcontractors
- What you need to do about health and safety
- Know your legal obligations on pensions
Understand tax and VAT
Sell and market your products or services