Gig economy workers tend to be on zero hour or freelance contracts that don’t guarantee a minimum income Image: Viktor Forgacs
Zero hour contracts, often described as insecure work or casual contracts, are commonplace in the hospitality and retail sector, and can in theory offer flexibility for both employer and employee.
They are also increasing, with 3.9 per cent more people working zero hour contracts in August 2021 compared to the same period in 2019. The Trades Union Congress (TUC) says that as of March 2022, over a million people are working on zero hour contracts.
We’re here to answer your questions around zero hour contracts so you don’t get taken advantage of.
A zero hour contract refers to any type of contract where the employer is not obliged to provide any minimum number of working hours to the employee. So one week the employee could be asked to work 24 hours, the next it could be seven, and the next it could be dropped to none at all.
Equally, the employee is not obliged to work a set number of hours, so one week they might have high availability, and the next they may only have a couple of hours free to work.
The hospitality sector, care work, deliveries and NHS bank staff often rely on staff working zero hour contracts.
Are zero hour contracts legal in the UK?
Zero hour contracts are legal in the UK as long as the employer continues to abide by statutory rights afforded to all employees. These include the national minimum wage, paid holiday, and the right to take rest breaks.
Compared to other countries in Europe, the UK is somewhat of an anomaly. According to Full Fact “most EU countries outlaw these contracts, heavily restrict them, or don’t see them widely used”.
“The UK is one of around half a dozen European countries where zero hours contracts are both legal and fairly common”, the fact checkers said in 2016, prompted by former Labour leader Jeremy Corbyn’s claim that zero hours contracts are not allowed in 11 EU countries.
New Zealand was one of the first countries to ban zero hour contracts in 2016, making it illegal to offer someone work without a minimum number of hours.
Ireland banned zero hour contracts in almost all circumstances in 2019. The legislation also gave workers the right to compensation from their employer if they turn up for a shift but are sent home without work.
What rights do you have on a zero hour contract?
Do you get holiday pay on zero hour contracts?
Yes. All workers are entitled to holiday pay that builds up the more they work. People working zero hour contracts are entitled to the same annual leave as any other employee, however it is accrued in relation to the amount of time they work.
A person who works full-time is legally entitled to 28 days (including bank holidays) of paid days off. Employees on casual contracts accrue annual leave from the first day of their employment, just like a normal full-time employee.
According to HR company Moorepay, holiday is accrued at a rate of 12.07 per cent per hour, meaning that someone on a casual contract working ten hours in a week would have accrued 1.2 hours holiday. After seven weeks, they would have accrued enough holiday pay for a full day of paid holiday.
Employers may not be aware of, or choose to ignore, their casual workers’ holiday entitlements, so although they shouldn’t have to, workers on zero hour contracts may want to keep track of their hours and make sure they get the holiday pay they are entitled to.
Do you get rest breaks on zero hour contracts?
Yes. Under UK law, employees are entitled to one uninterrupted rest break for twenty minutes for every six hours they work. This is no different for workers and employees on zero hour contracts.
Do you get sick pay on zero hour contracts?
Technically yes, but it’s severely limited.
All employees are entitled to £96.35 a week statutory sick pay (SSP) for up to 28 weeks. This works out to less than £20 per day.
Staff are only entitled to SSP for the days they would have been scheduled to work and don’t get it for the first three days they’re off. They must also have earnt an average of at least £120 per week (before tax) in the past eight weeks.
Many who work on zero hour contracts only receive their shifts a week – or two – in advance, so with the first three days discarded, this up to four days of shifts on which to receive sick pay.
If an employee falls sick and can’t work on a Monday, and they have three shifts scheduled for the week, they will be entitled to statutory sick pay for the shifts they had been scheduled to work from Thursday onwards. If they were scheduled to work Thursday – Sunday, that works out to £54.77.
What about maternity and paternity leave?
Again, it’s complicated, but likely not.
The right to statutory maternity pay or sick pay still exists for those on zero hour contracts, however the requirements can be hard to meet for someone not receiving a guaranteed income.
To receive statutory maternity or paternity pay the employee must have been earning on average at least £112 per week, and have been employed continuously for at least 26 weeks by the 15th week before the baby is due.
If a member of staff doesn’t receive any shifts for a full calendar week – seven consecutive days from Sunday to the following Saturday – this usually counts as a break in employment.
Therefore if an employee has one week break in their employment during a certain period of their pregnancy, they may no longer be entitled to maternity pay.
Can you work for more than one employer on zero hour contracts?
Yes, and many workers do, as zero hour contracts rarely guarantee enough hours to live on alone.
Employers, by law, can’t stop someone working for another employer by putting an ‘exclusivity clause’ in their contract – something that full-time salaried jobs are able to do.
They are also not allowed to treat an employee unfairly if they do work for another employer, and could be taken to an employment tribunal if they do.
Can you refuse a zero hour contract?
An employee can refuse to sign a contract that does not guarantee them a certain number of hours, however there is no way of forcing an employer to provide a better contract.
People on zero hour contracts are often faced with the fear that if they complain to their employer about anything from unsociable hours to bullying, their hours could be cut.
One way to deal with bad treatment at work, particularly when working on insecure contracts, is to join a union, which will try to help you to get a better deal.
What are the disadvantages of a zero hour contract?
Employers hold all the cards when it comes to zero hour contracts, as they can choose how many, or how few hours an employee will be offered to work.
Recent research conducted by the Living Wage Foundation (LWF) found that a third of workers are given less than a week’s notice of their shifts – a figure that rises to half for low-paid workers. Not all of these workers will be on zero hour contracts, but it is a common reality for those who are.
Unable to depend on regularly scheduled hours or a guaranteed income, employees can find it difficult to plan their finances or balance work with other commitments such as childcare.
Nearly one in five of those who have experienced short shift notice periods or shift cancellations say they were forced to pay higher childcare costs as a result. The LWF say that a lack of notice for working hours levies an “insecurity premium”, amounting to around £30 a month for nearly half of all shift workers.
The Foundation, which calculates the national living wage – a separate amount to the government set national minimum wage that it believes is the minimum required to live off – is also calling on employers to commit to “Living Hours”. The agreement would see employers commit to providing workers with secure, guaranteed hours and notice of shift patterns – alongside paying the national living wage.
“Ministers must finally deliver the employment bill they promised more than two years ago to ban zero hour contracts. This includes bringing in decent notice of shifts and compensation for cancelled shifts,” said Frances O’Grady, general secretary of the TUC in response to the research.
Certain financial services including credit cards, bank loans and mortgages require proof of a stable income, which many zero hour contract workers cannot provide due to the lack of guaranteed hours in their contracts.
Employers can sometimes withhold hours from staff as a form of punishment if they are unavailable to work the hours their bosses want, or as a way of cajoling them into working.
Why do unions want zero hour contracts to be banned?
Trade unions including the TUC, Unison, Unite and GMB have called for years for an end to zero hour contracts.
The RMT’s Mick Lynch, recently called zero hour contracts “a national disgrace”. The railways union leader called for them to be made illegal in response to claims that striking railway workers were preventing people working on zero hour contracts to get to work, meaning they would miss out on a day’s pay.
“Those type of precarious contracts (mean) you’re at the beck and call of the employer, and there’s no balance in the workplace between what they can demand off you and what you can expect back for your labour.”
In a recent survey conducted by the TUC and the equality organisation Race on the Agenda (Rota), they were described as “the most egregious example of one-sided flexibility at work”, handing the employer total control over their workers’ hours.
The report also found that minority ethnic women are almost twice as likely to be on zero hour contracts as white men.
Over half of working people in the UK want a clampdown on zero hour contracts, according to a survey from the TUC and GQR Research.
The survey also found that 20 per cent of workers oppose banning zero hour contracts. At the same time, 70 per cent believed that workers should have the right to 28 days’ notice before shift patterns are allocated.
What is the government’s stance on zero hour contracts?
The government has been urged to use the much awaited Employment Bill to strengthen shift workers’ rights, including by banning zero hour contracts. The Bill was first announced in the 2019 December Queen’s Speech as a wide-ranging piece of legislation that would boost employees’ rights including make it a right to request a more predictable contract, however it has not progressed in 2021.
Labour reconfirmed its commitment to banning zero hour contracts if elected at its annual conference, where members also voted in favour of a £15 minimum wage.
Are there any advantages to zero hour contracts?
Zero hour contracts allow workers flexibility in how much time they want to commit to their work. For example students or parents may find them useful as they could pick up more hours during periods when they have more time available, and are not obligated to do a set amount at times when they are lacking in time.
This flexibility works both ways, giving employers flexibility in how many or few hours they allocate staff without having to give notice. Employers may ask staff to work 40 hours during a busy season, say at Christmas, and then drop those hours to minimal or zero once the rush has passed.
What’s the gig economy got to do with zero hour contracts?
Gig economy workers tend to be on zero hour contracts or short-term, freelance contracts rather than permanent jobs with a set number of hours. They are otherwise known as independent contractors.
However, people working in the gig economy are often paid per gig (or job) that they complete, rather than a set hourly rate. Some enjoy the level of flexibility this provides, as it is up to the individual how many, or few, jobs they undertake.