A zero-hour contract is the name given to a type of contract, where the employer purports to have the discretion to vary the employee's working hours, usually anywhere from full-time to "zero hours". These clauses spread widely in the United Kingdom after the global financial crisis, although under UK labour law they are of doubtful legality because it undermines the employee's reasonable expectation to a stable income. The employer typically asserts that they have no obligation to provide work for the employee. The employee may sign an to be available for work as and when required, so that no particular number of hours or times of work are specified. The employee is expected to be on call and receives compensation only for hours worked. Zero-hour contracts may be ideal for some people such as retirees and students who want occasional earnings and are able to be entirely flexible about when they work, but people in the general working population, including those with mortgages and responsibility for supporting a family, run the risk of unpredictable hours and earnings. The possibility of the use of such contracts by management as a tool to reward or reprimand employees for any reason or no reason raises issues about how workers can adequately assert their employment rights or maintain decent employment relations.
Itinerant day labourers and part-time workers are employed under terms similar to a zero-hour contract in many countries. The term "zero-hour contract" is British English for an employee who is on call with no set minimum hours or definite schedule who works under an employment contract which nevertheless meets the requirements of the Employment Rights Act 1996, a statute of the United Kingdom.
In the United Kingdom, under the National Minimum Wage Act 1998, workers operating under a zero-hour contract on stand-by time, on-call time, and downtime must be paid the national minimum wage for hours worked. Prior to the introduction of the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999 zero-hour contracts were sometimes used to "clock-off" staff during quiet periods while retaining them on site so they could be returned to paid work should the need arise. The National Minimum Wage Regulations now require that employers pay the national minimum wage for the time workers are required to be at the workplace even if there is no "work" to do. Some employees subject to a zero-hour contract have in some cases been told that they are required to obtain permission of their employer before accepting other work. In Autoclenz Ltd v Belcher  UKSC 41, the UK Supreme Court delivered a groundbreaking judgment on workers who were on a zero hour contract. Lord Clarke held, at paragraph 35, that in employment relations which are characterised by inequality of bargaining power, the written terms of a contract may not in truth represent what was the contract in law. In 2013 , the reasoning in Autoclenz was applied by Supperstone J in the Employment Appeal Tribunal to hold that a security guard who was given a zero hours contract was entitled to a stable working pattern: the contract's written terms were invalid. Together, this indicates that all zero hours contracts are potentially unlawful, and would entitle all workers to sue their employers for an unlawful deduction of wages if they are willing and able to work.
In 2011, zero-hours contracts were prevalent in many parts of the UK economy:
- in the hotels and restaurants sector, 19% of all workplaces (up from 4% in 2004)
- in the health sector, 13% (up from 7%)
- in the education sector, 10% (up from 1%)
For domiciliary care workers, the incidence was reported to be as high as 55.7% of all workers during the period 2008–12.
At the end of April 2014, the Office for National Statistics revised upwards the number of workers on such contracts from 580,000 to 1.4m, with a further 1.3m where no hours were worked. Some commentators have observed that the number of such contracts may be under-reported, as many people may be confusing them with casual employment, and may not be reporting them as temporary. The Chartered Institute of Personnel and Development (CIPD), based on a poll of 1,000 workers, reported in August 2013 that as many as 1 million workers in the United Kingdom, 3-4% of the workforce, work under the terms of a zero-hour contract. Based on a survey of 5,000 of its members Unite, Britain's largest labour union, estimates that as many as 5.5 million workers are subject to zero-hour contracts, 22% of those employed privately. The survey, conducted by Mass 1, showed that zero-hour contracts were more prevalent in northwest England, among young workers, and in agricultural work. Often holiday pay was denied and in most cases sick pay. The National Farmers Union, which represents farmers, supports zero-hour contracts as offering needed flexibility for tasks such as harvesting.
According to the CIPD research about 38% of those employed under zero-hours contracts considered themselves to be employed full-time, working 30 hours or more a week. 16% of those on zero-hours contracts felt they did not have an opportunity to work enough hours. About 17% of private employers used zero-hours contracts while they were used by 34% of non-profits and 24% of public employers. Zero-hours contract were frequently used by hotels, catering and leisure (48%), education (35%) and healthcare (27%).
Under UK law a distinction is drawn between a mere "worker" and an "employee," an employee having more legal rights than a worker. Whether a person working under a zero-hour contract is an employee or a worker can be uncertain; however, even in cases where the plain text of the zero-hour contract designates the person as a "worker" courts have inferred an employment relationship based on the mutuality of obligation between employer and employee.
Thus, when deciding whether a zero-hours contract constitutes a contract of employment, conferring employee status, the wording of the contract will not be determinative of whether there is, in practice, a mutuality of obligation. The tribunal will look closely at the reality of the agreement. If the reality is that there is a pattern of regular work which is regularly accepted, the tribunal may deem the contract to be one of employment.
Employers in the United Kingdom
Zero-hour contracts were being used in an increasing number of jobs after the global financial crisis in the private, non-profit, and public sectors in the United Kingdom:
- Sports Direct, a retailer, has 90% of its workers on zero-hour contracts
- In August 2013, The Guardian reported that J D Wetherspoon, one of the UK's largest pub chains, has 24,000 staff, or 80% of its workforce, on contracts with no guarantee of work each week.
- 90% of McDonald's workforce in the UK - 82,000 staff members - are employed on a zero-hour contract. According to a McDonald's spokesperson all work is scheduled in advance with no employees being "on call" and meets the needs of workers who desire or need a flexible schedule.
- Tesco uses zero hours contracts.
- A major franchise of Subway also uses the contracts, which state, "The company has no duty to provide you with work. Your hours of work are not predetermined and will be notified to you on a weekly basis as soon as is reasonably practicable in advance by your store manager. The company has the right to require you to work varied or extended hours from time to time." Subway workers are also required, as a condition of employment, to waive their rights to limit their workweek to 48 hours.
- Burger King franchisees and Domino's Pizza operations in the UK extensively use zero-hour contracts.
- The Spirit Pub Company has 16,000 staff on zero-hour contracts.
- Boots UK has 4,000.
- Buckingham Palace, which employs 350 seasonal summer workers, also uses them.
- The National Trust, a nonprofit organization which manages extensive historic sites and nature preserves in England, Wales, and Northern Ireland, which must deal with variable weather, uses zero-hour contracts but at the same benefits and pay as permanent employees. The Tate Galleries also use zero-hour contracts.
- All non-management staff at Curzon and Everyman cinema chains.
- Cineworld, a leading cinema chain, uses zero-hour contracts for 3,600 people, about 80% of its workforce, and Stephen Wiener, the founder, stated in August 2013 that he will continue using them.
The Workplace Employment Relations Survey conducted by the government of the UK in 2004 and 2011 shows that the proportion of workplaces that have some employees on zero-hours contracts has increased from 4% in 2004 to 8% in 2011. The survey found that larger companies are more likely to use zero-hours contracts. 23% of workplaces that have 100 or more employees used zero-hours contracts in 2011, compared to 11% of those with 50-99 employees and 6% of those with fewer than 50 employees.
A Channel 4 documentary broadcast on 1 August 2013 employed secret cameras in Amazon UK's Rugeley warehouse to document worker abuses and claimed that Amazon used "controversial" zero-hour contracts as a tool to reprimand staff, and were "tagging" employees with GPS and subjecting them to harsh working conditions.
Workers subject to zero-hour contracts are subject to exploitation as they may be denied work at any time for any reason, including declining to respond to a demand to work. A refusal to work in any one instance for any reason can result in a prolonged period of lack of work. Due to the uncertainty of the workers' schedules zero-hour contracts present problems for workers with children due to the difficulty of arranging child care. The rapidly growing use of zero-hour contracts was the subject of a series of articles in the late July 2013 by The Guardian and as of 2013 was of concern to Parliament. Vince Cable, business secretary of the government, is considering closer regulation of the contracts but has ruled out a ban. Labour MPs Alison McGovern and Andy Sawford have campaigned to ban or better regulate the practice.
The Institute of Directors, a chartered organization of British business leaders, has defended the contracts as providing a flexible labour market, citing the lack of flexibility in Italy and Spain. Jacob Rees-Mogg MP, a former investment banker, has also argued that they benefit employees including students by providing flexibility and could provide a route into more permanent employment.
- See E McGaughey, 'Are Zero Hours Contracts Lawful?' (2014) SSRN
- "Zero hours contracts hit 200,000". Recruiter. 3 April 2013. Retrieved 15 July 2013.
- "BBC News - Do zero hours contracts create real jobs?". BBC. 2012-08-14. Retrieved 2012-08-15.
- Guy Standing (9 April 2013). "Why zero-hours contracts remind me of the horrors of 1990s Russia". London: The Guardian. Retrieved 23 April 2013.
- Phillip Inman (30 July 2013). "Zero-hours contracts: what are they?: An employee can end up with no pay at the end of the week because the employer does not need to guarantee work". The Guardian. Retrieved 5 August 2013.
- "The rise of the "zero-hours" contract". Acas.
- Matthew Pennycook (25 June 2013). "The forward march of zero-hours contracts must be halted". The New Statesman. Retrieved 15 July 2013.
- Douglas Pyper; Daniel Harari (5 August 2013). "Zero hours contracts". House of Commons Library. Retrieved 5 August 2013.
- Pennycook et al. 2013, p. 6.
- "Zero Hours Contract Template".
- Borrer v Cardinal Security Ltd,  UKEAT 0416_12_1607 (16 July 2013)
- See E McGaughey, 'Are Zero Hours Contracts Lawful?' (2014) SSRN
- Piper & Harari 2013, pp. 4–5.
- Bessa et al. 2013, p. 22.
- Rowena Mason (5 May 2014). "Jobseekers being forced into zero-hours roles". Guardian newspapers. Retrieved 5 May 2014.
- Ian Brinkley (17 August 2012). ""Zero hours" contracts and the flexible labour market". The Work Foundation. Retrieved 1 May 2013.
- Ian Brinkley (13 June 2013). "' Zero hours contracts – nasty, brutish and unfair?". The Work Foundation. Retrieved 25 June 2013.
- Simon Goodley; Phillip Inman (5 August 2013). "Zero-hours contracts cover more than 1m UK workers: Poll of more than 1,000 employers reveals controversial contract used far more widely in the UK than government data suggests". The Guardian. Retrieved 5 August 2013.
- Sarah Butler (8 September 2013). "Zero-hours contracts: 5.5m Britons "are on deals offering little guaranteed work": Unite survey finds 22% of workers employed by private firms are on contracts promising less than three hours a week". The Observer, The Guardian. Retrieved 8 September 2013.
The government's refusal to address the growing scandal of zero-hours contracts is creating a sub-class of insecure and low-paid employment.
- "Employee". Guide Employment status. UK.Gov. Retrieved 8 August 2013.
- "The 2011 Workplace Employment Relations Study (WERS)". United Kingdom. 23 January 2013, updated May 2013. Retrieved 5 August 2013. Check date values in:
- Simon Neville (29 July 2013). "Pressure mounts on Sports Direct over zero-hours contracts: Unite demands meeting with company founder Mike Ashley over contracts that do not provide workers with set hours". The Guardian. Retrieved 5 August 2013.
- Neville, Simon (1 August 2013). "Zero-hours contract figures were wrong, ONS admits". The Guardian. Retrieved 26 June 2014.
- Matthew Pennycook (25 June 2013). "The forward march of zero-hours contracts must be halted". The New Statesman. Retrieved 25 April 2014.
- Simon Neville (6 August 2013). "Burger King and Domino's Pizza also using zero-hours contracts: British Retail Consortium calls on employers to act responsibly amid revelations about fast food chain workers". The Guardian. Retrieved 8 August 2013.
- Simon Neville (5 August 2013). "McDonald's ties nine out of 10 workers to zero-hours contracts". The Guardian. Retrieved 6 August 2013.
- Simon Neville (9 August 2013). "Curzon and Everyman cinema staff on zero-hours contracts". The Guardian. Retrieved 9 August 2013.
- Neville, Simon (15 August 2013). "Cineworld boss pledges to continue with zero-hours contracts". The Guardian. Retrieved 26 June 2014.
- Larry Elliott (4 August 2013). "Zero-hours contract workers - the new reserve army of labour?: Karl Marx would see zero-hour contracts for what they are: rank exploitation - the type of working conditions that spawned trade unions in the first place" (Economics Blog). The Guardian. Retrieved 5 August 2013.
- Jacob Rees-Mogg (6 Aug 2013). "Zero-hours contracts: why do Lefties always think they know best?". Daily Telegraph (London). Retrieved 16 August 2013.
- Simon Neville (7 August 2013). "Sports Direct former employee takes legal action over zero-hours contracts: Zahera Gabriel-Abraham quit her job at the retailer after suffering panic attacks she blames on lack of financial security". The Guardian. Retrieved 8 August 2013.
- E McGaughey, 'Are Zero Hours Contracts Lawful?' (2014) SSRN
- Douglas Pyper; Daniel Harari (4 July 2013). "Zero hours contracts". House of Commons Library. Retrieved 15 July 2013.
- Matthew Pennycook; Giselle Cory; Vidhya Alakeson (June 2013). "A Matter of Time: The rise of zero-hours contracts". Resolution Foundation. Retrieved 15 July 2013.
- Ioulia Bessa; Chris Forde; Sian Moore; Mark Stuart (February 2013). "The National Minimum Wage, earnings and hours in the domiciliary care sector". University of Leeds. Retrieved 15 July 2013.
- "Working at Sports Direct is no fairytale for part-timers"
- "Zero hours Britain: 'I didn't know week to week what I was going to get'"