There is a common misconception – ask Sports Direct – that those on "zero hours" contracts have no rights at all.

There is no definition at law of a "zero hours" contract; the Government has defined it as a contract pursuant to which "the employer has no obligation to offer work to the worker and the worker has no obligation to accept any work that may be offered". Other definitions simply allude to the fact that the employee/worker has no set hours and no right to receive work – but may be obliged to accept any work that is offered.

Whether the individual is an "employee" or a "worker", will depend on the usual multiple test, including the "mutuality of obligation test" – not present in the Government's definition.

However, and something Sports Direct overlooked, "workers" have rights too – NMW; protection against: unlawful deductions, discrimination, automatically unfair dismissal; the right to: paid leave, part-time status protection, rest breaks, statutory minimum notice periods, collective redundancy consultation and TUPE.

The real mischief, as far as the government, provoked by the labour party, is concerned, behind zero hours and non-guaranteed hours contracts ("NGHC") – apart from obvious abuses – is that they tend to be linked to very low rates of pay (a result of the NMW) and taken up by the more vulnerable workers – women wanting part-time work, students and the elderly. The average number of hours worked by those on NGHCs, is 25 hours per week (compare fixed hours employees at 37 hours per week) and the average hourly pay is £8.83 (compare fixed hours employees at £13.39). These factors combine to make NGHC workers susceptible to the slightest change in mortgage rates, utility bill increases, as well as prime targets for "pay day loan" companies, creating the unvirtuous circle of servitude – and a population of workers afraid to complain about their lot.

The Labour Party's recently suggested panacea is more regulation, including: the right to demand fixed hours after six months on a NGHC; the automatic conversion of a NGHC to a fixed hours contract after 12 months (subject to opt out) and protections against: being forced to be on call; exclusivity of employer and cancellation of shifts at short notice, without pay/compensation.

There is, as yet, no mention of any anti-avoidance provisions, so the" astute" employer can just: offer a five month contract or terminate the worker in month 11.

For some, zero hours work; for others it can be a form of servitude. However, if you use such contracts, remember workers do have rights – subject, of course, to their ability to pay the Tribunal fees to enforce them: for failure to pay wages, notice pay, redundancy and ante-natal care (the most common complaints) an issue fee of £160 and a hearing fee of £230 equals £390, divide that by £8.83 means that such a worker has to do a minimum of 44 hours of work to afford the fees.

Maybe the pragmatic/cynical answer to the question in the title is "Yes"...but don't rely on it, these contracts are under scrutiny.

Practical tips

  • Plan ahead to move from the "exclusive" form of zero-hours contract, to an arrangement whereby the employee does not need to accept work that is offered, and can work for other employers. This may involve a closer analysis of when additional hours are needed, and which workers in the pool can work those hours.
  • Consider how important employee retention is in your business. If your business will suffer from having to terminate workers every five or eleven months, you will need to plan a move to fixed-hours contracts after these time periods elapse.
  • If you currently do not give workers the minimum statutory rights set out above, it would be prudent to remedy this position going forward to reduce the risk of future claims in the light of the Sports Direct litigation.

*The statistics and hourly rates are from ONS, LFS and/or the TUC.

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.