Everything You Need to Know About Zero-hours Contracts

As a small business owner, you may only need to hire workers on a casual basis. This is where the zero-hours contract comes in. In this post, we’ll take a look at the zero-hours contract and how it can benefit your organisation.

What is a Zero-hours Contract?

There is no legal definition for zero-hours contracts, but the Chartered Institute of Personnel and Development (CIPD) describes such arrangements as “an agreement between two parties that one may be asked to perform for another, but there is no minimum set of contracted hours.” An individual on a zero hours contract can be a worker, an employee or self-employed.

The exact terms of zero-hours contracts can vary from one organisation to another. Some contracts will require an individual to accept accept work if it is available, while other zero-hours contracts won’t. In general, however, zero-hours contracts allow employers to engage individuals on an as-needed basis. If there is no work for an individual on a zero-hours contract to do, they are not paid.

Why Use Zero-hours Contracts?

When used in a way that provides benefits for both the employer and the individual, zero-hours contracts can help improve employee engagement and reduce the costs associated with hiring agency workers. Zero-hours contracts are best suited to organizations with unpredictable work volumes where workers are only needed on a casual basis.

Another good way to use these types of agreements is during the start-up phase of an organisation, when funding can fluctuate wildly; zero-hours contracts can be used to employ individuals as needed while key team members are retained on permanent employment contracts.

If Zero-hours Contracts are So Great, Why All the Controversy?

Zero-hours contracts have been the subject of much controversy in recent years, with companies like Sports Direct, Amazon and McDonald’s facing widespread criticism of their use of such agreements. One of the main criticisms of zero-hours contracts is that the agreements provide little security for workers, thereby putting them at risk of exploitation. Others, however, say zero-hours contracts have helped create a more flexible workforce that has reduced unemployment rates while allowing individuals greater life-work balance.

So are zero-hours contracts good, or are they bad? The answer, of course, is: it depends. Generally, these types of work agreements work best when when the flexibility they provide satisfies both the organisation and the individual. When used responsibly, our zero-hours contract template can help you build a stable and motivated team while giving you the flexibility to hire extra workers only when you need them.