On the countdown to zero
Although ‘zero hour employment contracts’ have attracted negative attention in some quarters of the media, they can nevertheless prove a flexible tool in dealing with seasonal peaks and troughs in demand. Donal Hamilton of ByrneWallace Solicitors highlights what you need to know to make an informed decision on this particular contract
Print19 November 2013
Donal Hamilton is a solicitor in the Employment Law Department of ByrneWallace Solicitors www.byrnewallace.com
Zero hour contracts of employment have attracted much publicity recently, following the publication of a report suggesting that one million workers in the UK could be employed under these arrangements – far higher than previously estimated. Zero hour contracts are also widely used in Ireland and employers need to be familiar with their legal obligations and the legal risks they face when using such contracts.
What are zero hour contracts?
Zero hour contracts require employees to be available for work for a certain number of hours in a week, and/or as and when their employer requires. Under these contracts, employers are not obliged to provide work for their employees, and in the UK, employees are not entitled to receive any pay. However, the position is different in Ireland.
Zero hour contracts are viewed by employers as being flexible and efficient, as they allow employers to optimise staff numbers, and help them to cope with the seasonal peaks and troughs that are typical in many industry sectors. The flexibility of zero hour contracts can assist employers seeking to streamline their employment practices, and can help employers manage costs when faced with difficult economic pressures.
While some employees, such as students, can benefit from the flexibility of zero hour contracts, many employees and their trade unions are less enthusiastic.
“Floor payments”
Irish employers need to be aware that zero hour working practices in this country are regulated by legislation. Section 18 of the Organisation of Working Time Act 1997 requires “floor payments” to be made to employees engaged on zero hour contracts, even if they are not required to work in a particular week.
Where an employee has not been required to work for his/her employer for at least 25% of the time that they are required to be available for work under their contract, then their employer must pay them for 25% of their contract hours, or 15 hours, whichever is the lesser.
Similarly, where an employee is not required to be available to work for a stated number of hours, but is required to be available for work as and when his employer requires, then their employer must pay the employee for 15 hours, or 25% of the hours worked by another employee doing work of the same type that the zero hour employee is required to be available to do, whichever is the lesser.
This “floor payment” requirement is in stark contrast to the position in the UK.
Casual work
Employers will be relieved to hear that Section 18 does not apply to “casual” workers, regardless of whether those workers have a reasonable expectation of work in a particular week. Workers are “casual” workers where they have been working for their employer for less than 13 weeks, provided that any previous service they may have with their employer cannot reasonably be regarded as having been regular or seasonal employment. Collective agreements between employers and their employees/trade unions may define “casual” work differently.
In the case of ‘Contract Personnel Marketing Ireland v Marie Buckley DWT1145′, for example, the Labour Court found that a merchandiser working for a field marketing company whose working hours depended on client activity was not employed under a zero hours contract. The worker in this case could be offered work from time to time, but had no obligation to accept this offer of work, a fact which was fatal to her claim under section 18.
Other exclusions
Laid off workers, workers on short time, and workers who have not been required to work due to an emergency are excluded from section 18. Employers should note however, that there is Circuit Court authority which deals with the payment of wages to workers who have been laid off. Workers who are on call, i.e. required to be available to deal with emergencies, are not covered by the legislation.
Part-time workers
In certain circumstances, zero hour and casual workers may be protected by the Protection of Employees (Part-Time Work) Act 2001. This act protects part-time workers from being offered less favourable terms or conditions of employment, including rates of pay, than those offered to full-time employees doing the same or similar work, unless the difference in treatment can be justified by objective grounds.
Striking a fair balance
Clearly, Irish law provides far more protection for zero hour workers than UK law. While this removes some of the flexibility of zero hour contracts, arguably, it strikes a fair balance between the conflicting rights of employers and employees. Zero hour contracts, and other flexible working structures and practices, are both necessary, and welcome, in an economy where unemployment continues to be upwards of 13%.
However, as zero hour contracts have the potential to be used to exploit vulnerable workers, the media is beginning to highlight employers that use them. Employers are no longer therefore faced with a simple question of whether they can use zero hour contracts. Now, they must analyse the financial and organisational advantages of these contracts, and the industrial relations, public relations, and possibly reputational disadvantages, and decide whether they should use them. The answer will differ from industry to industry, and from employer to employer.
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