Guernsey: Zero-Hours Contracts - Could You Be A Rogue Employer?

Last Updated: 17 July 2014
Article by Emma Parr

For those of you who are regular readers of our monthly newsletter, you may recall our article of September 2013 in which we voiced our concerns about the increasing use of zero-hours contracts. Well, after listening to Business Secretary Vince Cable earlier this week, it seems that our concerns were well founded!

Despite proving popular with individuals as a means of boosting income and increasing flexibility in working conditions, it appears that many UK employers are taking advantage of this popular trend and using this type of contract to the detriment of their workers. In response, Mr Cable has outlined the UK Government's proposals for clamping down on this abuse by calling for a ban of exclusivity clauses and increasing the amount of information available to the public.

Many of you will no doubt be asking whether these proposals are really necessary. Quite frankly, in our professional opinion, the answer is a resounding "yes", and many UK workers employed on zero-hours contracts agree with us - 83% to be precise.

While the logic behind the use of zero hours contracts is intended to benefit both parties, from the cases that we see coming before us, some employers are using this type of employment contract as a means of restricting a worker's freedom to work for more than one employer; this is in complete contrast to the original intention. The only people truly benefiting from these contracts are the employers themselves.

In the UK, it is estimated that 1 out of every 5 zero-hours contracts contains an exclusivity clause preventing a worker from working for any other employer during the period of the contract. Fair enough, many would argue. However, what happens when that employer fails to then provide that worker with work and yet seeks to restrict his/her ability to source alternative employment? This is the dilemma that many workers now face and an issue that the UK Government hopes to address.

If an employer is not able to guarantee work to a worker retained on a zero-hours contract, then it is quite unreasonable for that employer to then prevent the individual from making a living elsewhere. Workers should be allowed to look for additional work and boost their income when a zero-hours contract fails to guarantee them a role and wage. It is hoped that once the UK's "Small Business, Enterprise and Employment Bill" comes into force later this year, employers will no longer be able to resort to such unscrupulous practices; if they do, severe financial penalties may be imposed.

The Government is also committed to ensuring that the public has access to clearer information on the use of zero-hours contracts so that they may make a fully informed decision as to what is best for them before entering into such an arrangement. Mr Cable is already consulting with trade unions and various businesses to develop a best practice "code of conduct". The aim of the code is to ensure that businesses and workers are completely clear on how each shall benefit from the use of such contracts; workers should be able to enjoy a flexible working environment safe in the knowledge that they are free to source alternative work in times of hardship, and businesses should be free to tap into specialist skills as and when they are required. Conversely, the worker must accept that work is not guaranteed and the employer must understand that he does not have exclusivity over that individual.

As part of this consultation process, Mr Cable will be considering any possible loopholes that a complete ban of exclusivity clauses may create. It has already been suggested by some employers that a business may evade the proposed ban by simply offering its workers minimal hour fixed-term contracts instead. This is, again, all the more reason why clarity needs to be provided and a best practice code should be drafted and made accessible to all. In a serious bid to clamp down on abuse in the workplace by rogue employers, Mr Cable believes that these latest proposals will go some way to preventing unscrupulous practices. It therefore remains to be seen whether the proposals will make any difference to the number of claims issued by aggrieved workers who have inadvertently fallen foul of an agreed exclusivity clause.

We can only hope that once further information becomes publicly available and UK employers are provided with a code of conduct setting out fair practice, the level of so-called rogue employers will significantly reduce.

But, what does this mean for us Channel Islanders? Although developments in UK employment law will not have any direct impact on businesses based in the Bailiwicks (Guernsey or Jersey), the fact remains that there are employers located in the islands which employ workers on zero-hours contracts, fail to provide them with work and do prevent them from working elsewhere. Consequently, it may not be long before a Channel Island Tribunal is asked to consider how a Channel Islander can be expected to make a living and boost his income, if subjected to unscrupulous restraints.

While there is no particular law on point, our Tribunals are at liberty to consider the UK's legal position and look to similar cases for guidance. Therefore, employers and workers may want to think carefully before engaging in zero-hours contract arrangements and take appropriate professional advice. If this position sounds familiar (whether you are worried about being seen as a rogue employer, or you have simply entered into a contract on the promise of work which has not materialised), feel free to give Collas Crill's Employment team a call and chat through the options.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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