Zero hour contracts and claiming unfair dismissal

Redmans Solicitors
August 26, 2012

Zero hour contracts are a hot (and relatively new) topic in the employment law world. They are typically used by employers to reduce the legal obligations that they are supposed to honour to their employees and have been much-criticised as a way or “ripping off” young workers. However, conversely, it has also been argued that they offer increased flexibility to workers. In this post we’ll take a look at zero hour contracts, and specifically at the following:

What is a zero hours contract?
Are you employed or self-employed if you’re on a zero hours contract?
How does being employed on a zero hours contract affect my employment rights?

What is a zero hours contract?

A “zero hours contract” is a specific type of contract. It differs from normal contracts of employment in that it does not guarantee that work will be provided and further provides that the employer will only pay for work done (instead of being obliged to pay a set weekly wage and holiday or sick pay). The use of these contracts is on the increase and it is especially popular for workers in the retail sector and financial sector.

Are you employed or self-employed if you’re on a zero hours contract?

Whether you’re self-employed or employed makes a huge amount of difference to the employment rights that you’re entitled to claim. If you’re an employee then you qualify to claim for unfair dismissal (after a year’s service), redundancy pay, and maternity leave (among other things). If you are self-employed then you qualify for none of these rights.

If you’re on a zero hours contract then the presumption is normally that you’re self-employed. However, the facts of your particular working situation may suggest that you’re an employee instead of self-employed. In order for there to be a contract of service (and therefore an employee) instead of a contract for service (and therefore self-employed) a number of things must be demonstrated:

Your employer has control over how you work (i.e. you have to perform specific tasks, work in specific places etc.)
There is a mutual obligation between the person providing the work and the person doing the work (i.e. your employer must provide you with work and remuneration and you, in return, must provide your personal services)

If you work set rotas, receive a relatively standard weekly wage and perform a specialist task for your employer then you may be deemed to be an employee, regardless of whether your contract is a zero hours contract (as in this recent Employment Appeal Tribunal case). However, if you provide your own work equipment, do not work regular hours for your employer and receive a variable income then you may be deemed to be self-employed.

How does being employed on a zero hours contract affect my employment rights?

As stated above if you’re working on a zero hours contract (and the facts of the matter don’t suggest otherwise) then you are likely to be self-employed (as there will not normally be sufficient mutuality of obligation present). This means that your rights at work are severely restricted – you don’t qualify for protection against unfair dismissal or for redundancy pay or maternity leave. This means that you are quite exposed. Zero hour contracts have been criticised for exactly this reason. However, such contracts can also be beneficial to both employers and employees. Principally, they offer both parties flexibility in their working arrangements.

Redmans are specialist employment solicitors in Richmond, London. They undertake no win no fee unfair dismissal litigation and are specialist compromise agreement solicitors.