Zero-hours contracts are not without their risks

14th August 2013

There has been much talk in the press recently about the use of “zero-hour” contracts, following a CIPD report that there may be as many as 1 million UK workers employed under such contracts., covered by the BBC.

Vince Cable in particular has raised a suggestion that they are being used inappropriately by many employers resulting in an imbalance in the employer-employee relationship.

According to Adam Pike, a solicitor in the Ansons employment law team,

“Anyone carrying out work under a zero-hours contract is unlikely to be classed as an employee, but rather as a worker. This may sound like a matter of semantics, but from a legal perspective it is extremely important to determine what type of relationship exists as the rights attaching to each specific status vary greatly.”

For example, only employees are entitled to maternity and other family leave rights. They are also entitled to receive a statutory redundancy payment, and can bring a claim for unfair dismissal. Workers do not benefit from such rights, although they are entitled to receive the national minimum wage and a minimum period of paid annual leave.

The general outcry in the press seems to relate to this specific distinction, and the suggestion appears to be that those employed under zero-hour contracts are being unfairly deprived of employee status.

Zero-hour contracts were traditionally used where the work offered was irregular or on an ad hoc basis. If, as has been suggested, such contracts are actually being used in situations where a full-time contract could be offered instead, this may constitute improper use.

In the majority of cases those working under zero-hour contracts will be treated as workers rather than employees. Although improper use is not illegal, employers using such contracts should be mindful of the fact that simply labelling the relationship as a “zero-hours” contract, does not necessarily make it so.

An employment tribunal will always look behind the wording of the contract itself and examine the individual circumstances of each case. Furthermore, there is a risk that during the term of the appointment the working relationship may change, and circumstances could arise which result in those providing their services to be classed as employees rather than workers.

In order to be classed as an employee rather than a worker, three specific elements must be present. These are: 

  • the requirement for the individual to provide their services personally, rather than being able to send someone in their place;
  • an obligation on the employer to provide work and an obligation on the individual to do that work if provided; and
  • a level of control exercised by the employer over when and how the employee carries out the work. 

If an employee can demonstrate all three of the above it is likely that they will be classed as an employee rather than a worker, and will benefit from much greater protection under the law.

Therefore, whilst many employers will continue to enjoy the flexibility provided by zero-hour contracts, they should not simply assume that their liability is limited just because the contract has “zero-hours” written at the top of it.

If you are an employer or an employee and have a query about your rights and obligations under your contract of employment, our employment law solicitors at our Cannock and Lichfield offices will be able to assist you.

For further, please contact Adam Pike in the employment law team, on 01543 431 197 or email