Nelu Abeygunasekera: Should zero-hours contracts include minimum benefits provision?

Don’t be fooled, just because an arrangement is referred to as a zero-hours contract, it does not necessarily mean this is the case.

Under a zero-hours contract, the employer is not obliged to provide a minimum amount of work and the worker is under no obligation to accept work that is offered. These contracts can have a number of advantages for both parties.

However, it is important to note that, although individuals employed under genuine zero-hours contracts are not employees, despite the urban myth, they may still have basic legal rights to minimum paid annual leave and auto-enrolment to a pension. Other benefits, such as bonuses, share schemes and private medical insurance, are contractual and each employer will need to decide whether to offer these rewards and incentives.

While the Chartered Institute of Personnel and Development’s (CIPD) Quarterly employee outlook survey (published in August) suggests there could be about one million zero-hours workers in the UK, it also shows that these individuals work an average of 20 hours a week, but just 14% report that their employer often fails to provide them with sufficient hours each week. 

If then, despite being on zero-hours contracts, individuals work on a regular weekly basis and do not have an option to refuse work, then employers should be aware there is a risk that such staff may be part-time workers. If so, part-timers must be treated at least as well as their full-time equivalents, which includes benefits, unless the reason they are not can be justified objectively. 

As zero hours is not actually defined in law, it is currently up to each employer to decide what, if any, benefits it offers to staff on these contracts. Striking a balance between running an efficient and dynamic organisation and developing staff engagement and motivation is not easy, but a discretionary bonus may well do it.

Nelu Abeygunasekera is a partner at Thomas Eggar LLP