Understanding employment contracts

& zero hours

Mahtab Khan

© Change Agency 2013

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Employment contracts - elements Statement of particulars & contract variation Types of employment contracts Summer 2013 statistics sparking the debate Who is on them? Why are they controversial? What are zero-hours contracts? When are zero hours contracts used? Rights & responsibilities

Overview

Not justoffer, acceptance & condition

Employment contracts

1. Express terms2. Statutory terms3. Incorporated/

negotiated4. Implied terms

4 parts (terms)

e.g.syou must wear uniformprotective clothing…mustn’t carrying cash

Express terms – verbal & written

Because the law says so(dictated by statute)e.g.No smoking in the workplace

Statutory terms

Things that have been put into contracts from work rules/collective agreements e.g.machine operators will not drink alcohol

Incorporated/negotiated terms

(cause most difficulty)terms that are not set out in writing or agreed orally, but may be too obvious to need to be recorded e.g.

You will not steal from work

Implied terms

Written statement of employment particulars An employer must give employees a ‘written statement of

employment particulars’ if their employment contract lasts at least a month or more. This isn’t an employment contract but will include the main conditions of employment.

The employer must provide the written statement within 2 months of the start of employment.

If an employee works abroad for more than a month during their first 2 months’ employment, the employer must give them the written statement before they leave.

1 of 3 from gov.uk website

A written statement can be made up of more than one document (if the employer gives employees different sections of their statement at different times). If this does happen, one of the documents (called the ‘principal statement’) must include as a minimum:

the business’s name the employee’s name, job title or a description of work and start date if a previous job counts towards a period of continuous employment, the date the

period started how much and how often an employee will get paid hours of work (and if employees will have to work Sundays, nights or overtime holiday entitlement (and if that includes public holidays) where an employee will be working and whether they might have to relocate if an employee works in different places, where these will be and what the

employer’s address is

2 f0 3 What a written statement must include

how long a temporary job is expected to last the end date of a fixed-term contract notice periods collective agreements pensions who to go to with a grievance how to complain about how a grievance is handled how to complain about a disciplinary or dismissal

decision

3 0f 3 As well as the principal statement, a written statement must also contain

information about:

For example: an employer may want to reorganise the business due to

economic circumstances. This might mean changing working hours or pay

an employee may seek improvements in their pay or holidays, or want to change the hours they work due to domestic responsibilities.

An existing contract of employment can be varied only with the agreement of both parties. Changes can be agreed either on an individual basis or through a collective agreement. When any change to a contract of employment occurs the employer should give written notification of the changes, within one month of the change taking effect.

There are some important steps you must take if you wish to try and change a contract - especially around consulting with employees. These are set out in the Advice leaflet - Varying a contract of employment.

varying or changing it

Full timePart timeFixed termCasual

Types of employment contracts

The number of 16 to 24-year-olds on zero hours contracts rose from 35,000 in 2008 to

76,000 in 2012. from BBC.co.uk

5 Aug 2013 Up to one million workers in the UK are on zero

hours contracts – four times more than previously thought, according to CIPD research.

The latest figures from the institute found that 3 to 4 per cent of the country’s workforce are on zero hours contracts. This suggests that the Office for National Statistics’ calculation of 1 per cent – or 250,000 zero hours workers – is an underestimate.

One million workers on zero hours contracts, finds CIPD study.Employers’ use outstrips official estimates, research reveals

Figures from the Office for National Statistics show that 250,000 UK workers are on zero-hours contracts. That represents around 1% of the UK workforce.

But a survey of employers by the Chartered Institute of Personnel and Development estimates that the real number is more than one million, with one in five employers having at least one employee on zero-hours.

It found that a third of voluntary sector organisations used zero-hours contracts, along with a quarter of public sector employers and 17% of private sector firms.

How many?

Jessica age 22 "You can't live without worrying if you

can pay your rent," said 22-year-old Jessica.

"It's all right for students or people who live at home but if you have to support yourself then you need security and a set wage every month."

Younger workers are far more likely to be given this type of contract with one in every three zero

hours workers now under the age of 25

Recent high-profile cases include retailer Sports Direct, which employs 20,000 of its 23,000 workforce on zero-hours contracts.

Pub chain JD Wetherspoon has 80% of its staff on zero-hours contracts.

Cinema company Cineworld a number of London councils, and

Buckingham Palace are also among those using the contracts.

There is concern that zero-hours contracts do not offer enough financial stability and security.

Some workers on zero-hours contracts are not being given enough hours. The CIPD research found that 16% of zero-hours workers said their employer often fails to provide them with sufficient hours each week.

Employees on zero-hours contracts also do not have the same employment rights as those on traditional contracts, and critics are concerned that the contracts are being used to avoid an employer's responsibilities to its employees.

Why are they controversial?

The CIPD also warns that employers may take advantage of zero-hours contracts by using them as a management tool - offering more hours to employees that "behave" and fewer to those who cause trouble.

It is also concerned that things like mortgages and credit cards may be more difficult to come by without the guaranteed income of a traditional employment contract.

Dave Prentis, general secretary of the Unison union, also points out that the popularity of zero-hours contracts calls into question the government's unemployment figures. The suggestion is that zero-hours contracts mean people are counted as employed, when they are actually receiving insufficient hours and pay.

Shadow Business Secretary Chuka Umunna said a future Labour government would not ban zero hours contracts but he was exploring ways of reducing their use, such as establishing a statutory code of practice or forcing employers to offer workers permanent contracts after a certain period.

He said: "The huge spike in the use of zero-hours contracts has brought increased reports of abuses and bad practice. There should be zero tolerance of such abuse."

http://www.bbc.co.uk/news/business-23575177

Closer look

Zero-hours contracts, or casual contracts, allow employers to hire staff with no guarantee of work.

They mean employees only work as and when they are needed by employers, often at short notice, and are only paid for the hours they work.

Some zero-hours contracts oblige workers to take the shifts they are offered, others do not.

Sick pay is often not included, though holiday pay should be, in line with working time regulations.

What are zero-hours contracts?

Zero hours contracts normally mean there is no obligation for employers to offer work, or for workers to accept it.

Most zero hours contracts will give staff 'worker' employment status.

Zero hours workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time.

Zero hours workers are entitled to annual leave, the National Minimum Wage and pay for work-related travel in the same way as regular workers.

Zero hours contracts - key points

The term 'zero hours' is not defined in legislation, but is generally understood to be an employment contract between an employer and a worker, which means the employer is not obliged to provide the worker with any minimum working hours, and the worker is not obliged to accept any of the hours offered.

It is important that both the employer and worker are aware of the fact that a zero hours contract can make their relationship different to other employment contract arrangements.

What are they?

Zero hours' contracts can be used to provide a flexible workforce to meet a temporary or changeable need for staff.Examples may include a need for workers to cover: unexpected or last-minute events (e.g. a restaurant

needs extra staff to cater for a wedding party that just had their original venue cancel on them)

temporary staff shortages (e.g. an office loses an essential specialist worker for a few weeks due to bereavement)

on-call/bank work (e.g. one of the clients of a care-worker company requires extra care for a short period of time).

When are zero hours contracts used?

to actively monitor your need for zero hours contracts. In many cases, it may be more effective or appropriate to make use of agency workers, or recruit staff on fixed-term contracts – or it may turn out that the need is permanent and therefore a permanent member of staff can be recruited.

Important

Easily accessed pool of staff to assist when demand arises

No ongoing requirement to provide guaranteed levels of work for staff

Can be cheaper alternative to agency fees

Considerations for the employer

Provides flexible employment on same basic terms as most workers

No ongoing requirement to accept offers of work and no consequences

Gives employment experience and skills

Considerations for the worker

Depending on the specific agreements in the contract, a 'zero hours' contract might mean that the contract only exists when the work is provided.

Where a zero hours contract does mean that the contract only exists when the work is provided, a full calendar week without work from Sunday to Saturday is required to bring about a break in employment.

When employment is continuous, certain employment rights accumulate over time. e.g. after their first year, workers don't need to accrue their annual leave before taking it.

Equally, when employment is broken, an employer has certain responsibilities too. This includes a need to pay the worker for any accrued and untaken holiday pay.

Breaks between employment

In most cases zero hours contracts mean that an employer recruits a 'worker.' However the way the relationship with that worker develops may enhance the employment status to that of an 'employee', who has additional employment rights, e.g. employee status provides statutory notice rights.

Developments that contribute to such a change could include subjecting the worker to disciplinary procedures or punishing them in some way if they don't accept all the hours they are offered…

Employment status

(in the contract) as well as in practice. Where there is a dispute over this, an employment tribunal may decide for themselves what contractual relationship exists between employer and worker and any associated employment rights, including enhancements such as accruing the right to take maternity leave or pay and the right to request flexible working.

Zero hours status also has to stand up on paper

Any worker or employee starts to accrue their annual leave from the moment they begin working. This includes anyone working on a 'zero hours' contract.

If the 'zero hours' contract means that employment is continuous then the worker should arrange when they take the annual leave with you

If the zero hours contract means that the employment will be broken on occasion then a worker should receive a payment for any accrued but untaken annual leave.

Zero hours workers are entitled to annual leave

If the zero hours contract is a genuinely casual arrangement, the worker is not obliged to accept any of the hours offered.

There is a risk that a worker who persistently refuses work when an employer offers it may ultimately influence the employer to terminate the arrangement. However, it is not good practice for an employer to try and force the worker to work, as this may call into question whether or not this is a genuinely casual arrangement, and it is also unlikely to help with staff morale and productivity.

Zero hours workers are not obliged to accept work

There are specific rules concerned with travelling time and the National Minimum Wage (NMW), which mean that a worker (with the exceptions of a workers commute) should be paid at least NMW when travelling as a requirement of their job e.g. when a care worker is travelling between customers for the same employer. This right is the same for those on zero hours contracts…

Zero hours workers have the same statutory rights around travelling time or waiting

between jobs as other workers

it is generally the case that a worker who is required to be 'on-call' and remain on the employer's premises should be receiving at least the National Minimum Wage on average for doing so. Again, there is no special different rule for zero-hours contracts, the right is the same.

However an employer needs to consider any contractual enhancement to these basic rights. For example, permanent workers may have additional pay or conditions attached so the employer needs to ensure that they do not inadvertently discriminate against workers with specific protected characteristics (like age and sex).

Equally

bcda

thank you for your attention© Change Agency 2013

Mahtab Khanmahtab@the-change-agency.co.uk