Wed 17 Sep 2014

Zero hour contracts causing trouble again

The retailer Sports Direct is in the headlines for it's use of zero hour contracts. It had previously been reported in the media that Sports Direct had decided not to give individuals on zero hour contracts a share of the £160 million bonus it awarded to 2,000 permanent staff in 2013. This has now led to about 250 workers raising actions for breach of contract.

The majority of those working at Sports Direct are employed under zero hour contracts which do not guarantee a minimum number of hours of work, but expect workers to be available for work when asked.  Whilst Sports Direct's reason for excluding those on zero hour contracts from the bonus scheme is not clear, a possible argument might be that those working under zero hour contracts are not "employees" but "workers" and that the terms of the bonus scheme are such that only employees are included. It is because those working under zero hour contracts are often not deemed to be employees that they do not enjoy certain statutory employment rights such as maternity leave and pay.  However a solicitor at the law firm leading the claims has said “We believe that they had a contractual right to the bonus because regardless of the zero-hours label that the company has given their contracts they were all permanent employees of the company for the necessary number of years.”  It is likely that much will turn on the particular rules of the bonus scheme and on the reality of the working relationship between Sports Direct and those working under zero hour contracts. If the court takes the view that those working under zero hour contracts are actually employees, it may well be that they should have been included in the bonus scheme.

It is worth noting that the Government intends to ban the use of exclusivity clauses in zero hour contracts when the Small Business, Enterprise and Employment Bill comes into force. This will prevent employers stopping those working under zero hour contracts from performing work for other employers and is designed to stop the abuse of zero hour contracts.  A further Government consultation will be undertaken on how to prevent employers from circumventing the ban. It should also be noted that the Government is to produce sector specific guides for employers on the fair use of zero hour contracts. It is expected that the Small Business, Enterprise and Employment Bill will come into force in late 2014 or 2015.

Are you or your business affected by zero hour contracts?  

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