Should You Use Zero Hour Contracts in Your Hospitality Business?

A zero hour contract is a relatively new type of employment contract which has attracted a lot of publicity in the media in the UK recent years. If you’re an operator you might be wondering exactly what a zero hour contract is and whether it’s something that you should use in your business.

In this article, we’ll explain exactly what a zero hour contract is and look at the advantages and disadvantages of this model for hospitality businesses.


What is a zero hour contract?

A zero hour contract is one which governs the terms and conditions under which people are engaged for work. It’s essentially the same as any other employment contract but with one important difference – it does not specify any minimum hours or specific times of work.

Under this contract, the employer doesn’t guarantee the individual any hours of work and the individual is not obliged to work any defined hours for the employer. It’s designed to cover casual working arrangements and allows an employer to offer work only as and when it arises. The individual then chooses whether to accept or reject the offer of work.

Without exception, individuals engaged under a zero hour contract must be paid at least the National Minimum Wage and have the same statutory employment rights as any other worker – including rest breaks, paid holidays and protection against discrimination.


Zero hour contract advantages and disadvantages

The main advantage of a zero-hour contract for both parties is the flexibility it offers.

For businesses where demand is variable or unpredictable, this contract can allow the employer to bring in extra staff as and when needed without committing to permanently raising their wage costs. It can also be significantly cheaper for a business to engage people on a zero hour contract than bringing in agency staff. For this reason, these contracts are sometimes used by new, young or growing businesses who are still building a customer base and don’t yet have recognisable trading patterns. They’re also commonly used by seasonal businesses or those which host special events. For example, hospitality venues hosting weddings or functions might engage some staff using this contract solely to cover these events.

However, it is important for employers to remember that such workers are not obliged to accept any work offered to them. This means that there is a risk that the business might not be able to guarantee a sufficient number of staff will be available when they are needed. It’s not uncommon for workers who work under zero hours contracts to be students, have other jobs, do self-employed work, or have caring commitments. The right to refuse a request to work allows them to prioritise other commitments and businesses cannot compel anybody to agree to work at any given time.

The law currently also says that exclusivity clauses cannot be applied to zero hours contracts. In theory this means that a business could find its staff are also working next door, or for a major competitor.

Whilst some employees do enjoy the flexibility offered by a zero hour contract, others will prefer more consistency in their working lives. Businesses which only offer a zero hours contract may find that it’s harder to recruit people who are looking for guaranteed work and a guaranteed minimum income.

Similarly, the temporary nature of zero hours contracts and the lack of security they offer workers have been linked to higher levels of turnover in many industries. Businesses using these contracts may find that they end up training staff only for them to move elsewhere to pursue more permanent or secure work as they become more capable and experienced.


Best practice and alternatives to zero hour contracts

Zero hours contracts should never be used as a substitute for proper business planning or to avoid an employers’ obligations. In order to minimise turnover, maximise quality recruitment and avoid potential legal issues, businesses should consider whether they really need to use a zero hours contract or if there are better ways of meeting their staffing needs.

Employers should also be aware that Employment Tribunals will often look at the ‘custom and practice’ of work when ruling on contractual disputes. If employees have been working the same hours for an extended period then it’s possible they could be legally deemed to be their contracted working hours – regardless of what the initial document they signed says. For this reason, it’s important to review any zero hours engagement regularly to ensure that it is still fit for purpose.

Contracts of work can be amended or rescinded at any time by mutual consent so it’s also possible for an employer to offer somebody a permanent contract with stipulated hours at any time if circumstances change and a more stable and consistent working arrangement would benefit both parties.

In the same way that businesses can have both full and part-time employees, it’s entirely possible to engage staff on different types of contracts. Some businesses have a core of staff on permanent contracts with stipulated hours and will only use a zero hours contract for additional staff required on a casual basis. Examples could include hotels who use casual bar or waiting staff for functions, or retail businesses who need extra staff to cover the Christmas period.

Similarly it’s possible to have part-time staff engaged for a minimum number of hours and ask them to work additional hours from time to time. Other alternatives to a zero hours contract might include the use of shorter fixed-term contracts, ensuring contracted working hours for permanent staff are aligned with seasonal trading patterns, or using agency staff where the need for extra staff is infrequent or sudden and unexpected.

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