The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
Zero hours contracts always tend to be a hot news topic.
With interest in the contracts growing, the Government has published guidance for employers.
The guidance sets out where zero hours contracts may be appropriate and also sets out alternatives and best practice.
The guidance gives examples of where zero hours contracts might be appropriate:
- new businesses, where demand might be fluctuating and unpredictable
- seasonal work, for example around Christmas or harvest times
- employers needing cover for unexpected sickness in critical roles
- catering businesses using additional experienced staff when a special event is booked and
- a business testing a new service that they are thinking about providing, needing employees on an ad hoc basis.
‘Zero hours contract’ is a non-legal term used to describe many different types of casual agreements between an employer and an individual.
Generally speaking, a zero hours contract is one in which the employer does not guarantee the individual any hours of work. The employer offers the individual work when it arises, and the individual can either accept the work offered, or decide not to take up the offer of work on that occasion.
Regardless of how many hours are actually offered, the employer must pay at least the National Minimum Wage (NMW)
This guidance does not cover those who are genuinely self-employed and undertake work on a zero hours arrangement. For example, a self-employed plumber might take up work offered on a zero hours basis from a number of regular clients, but he remains self-employed.
Everyone employed on a zero hours contract is entitled to statutory employment rights. There are no exceptions.
A person will benefit from the employment rights associated with their employment status and individuals on a zero hours contract will either have the employment status of a ’worker’ or an ‘employee’.
Any individual on a zero hours contract who is a ‘worker’ will be entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination. To find more information on employment statuses and all the rights associated with them, see the employment status guidance.
Zero hours contracts are useful where work demands are irregular or where there is not a constant demand for staff. Zero hours contracts can also provide a level of flexibility for the individual, which allows them to work around other commitments such as study or childcare.
Some types of work are driven by external factors that are out of the employer’s control and this can happen in a range of sectors including, for example, hospitality, leisure and catering.
The following are all examples of when a zero hours contract might be appropriate, but it is not an exhaustive list. There are also other employment choices available to employers in these situations.
When a new business starts up it might need to build up a customer base to undertake work so, at first, they may need to employ people on zero hours contracts in addition to any permanent staff to manage fluctuating and unpredictable demands.
Seasonal work or peaks in demand, where it is known that for short periods of time additional staff are needed to manage surges in demand such as retail sales at Christmas time or providing a cleaning service for example, following a festival or a New Year celebration.
Employers may need to be ready to cover periods of unexpected staff sickness and be able to call on experienced staff, for example, a pharmacist in a chemist or a lifeguard at a leisure centre.
A wedding venue, restaurant or a bar may need to be able to call on trained and experienced staff when a wedding or function is booked.
Testing a service
A company may be considering testing a new service they are thinking about providing, but need to hire staff on an ad hoc basis before they can make a decision about rolling out the service.
Next week, we will look at the inappropriate use of zero hours contracts.
You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
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