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There is no legal definition of a zero-hours contract in either Northern Ireland or Great Britain employment law. In general terms, a zero-hours contract is one in which you do not have to guarantee the individual any work and the individual is not obliged to accept any work offered by you.

There is no exact legislation which specifically prohibits or addresses the unfair practices associated with the use of zero hours contracts. Zero hours contracts have attracted attention as they may leave some individuals who rely on them in a precarious position, where working does not bring the standard of living that it should. 

Employer responsibilities under zero-hours contracts

Zero-hours contracts are legal under domestic law. If you freely enter into a zero-hours contract with an individual, it is a legitimate form of contract between you and the individual.

There are concerns that individuals who work under zero-hours contracts have no protection under domestic employment law, or that they cannot be an employee. This is not a correct assumption - as in any employment relationship, the employment rights which an individual is entitled to will depend on their employment status.

It is likely that the majority of individuals on zero-hours contracts are either workers or employees.

In many cases, a zero-hours contract staff member will be legally classified as a 'worker' and thus will have some of the rights that an employee has such as statutory holiday entitlement and National Minimum Wage. However, the way the relationship with that worker develops may enhance the employment status to that of an 'employee', who has additional employment rights such as accruing the right to take maternity leave or pay and the right to request flexible working.

Advantages of zero-hours contracts

As an employer, the advantages of zero-hours contracts include:

Flexibility

Zero-hours contracts allow you to adapt to changes in demand, eg offering more work when new orders arrive and being able to scale back when they do not. Furthermore, you could use zero-hours contracts to increase the range of services offered such as creating specialist roles or having staff available in different geographical locations.

There are instances, such as students seeking summer employment, where, for example, the flexibility of a zero hours contract suits both parties and is therefore a situation that is broadly accepted.

Supporting expansion plans

Through this flexibility, your business could also grow, with limited risk in terms of recruiting permanent staff if you find that the additional services you planned are not taken up. On the other hand, if expansion is successful, zero-hours contracts provide a rapid pathway to fixed-term, annualised hours, full-time, or guaranteed hours of work.

Retention of skills

You could retain the skills and experience of staff who might wish to partially retire or who decide to work part-time.

Knowledge of the company and its culture

You could also retain a pool of trained and skilled staff, who know the culture of the business and its procedures, rather than agency staff who may not.

Disadvantages of zero-hours contracts

Sense of unfairness of zero-hours contracts

You should be aware of the welfare of any individual you employ on a zero-hours contract.

For example, not every zero-hours worker will be happy that they are on such a contract because of a lack of job security. In addition, the inclusion of exclusivity clauses, which means a worker cannot work anywhere else, in some zero-hours contracts has been banned in GB since 26 May 2015. This is currently under review by the Northern Ireland Assembly. Exclusivity clauses may in the future be banned in Northern Ireland in certain employment contracts.

It should also be made clear when advertising or interviewing for a job, or in the contract itself, that an individual is hired on a zero-hours contract, or that there is a possibility they could be offered no work or 'zero-hours'.

As an employer, you need to fulfil and understand your responsibilities towards individuals you hire on a zero-hours contract in terms of their employment rights such as the National Minimum Wage and holiday rights. See who should be paid the minimum wage and know how much holiday to give your staff.

Inflexibility and short notice for staff

Asking an individual to work at very short notice, which does not allow them to, for example, fulfil family commitments, eg to arrange childcare, could be problematic for them, causing tension, stress or upset. This can also lead to a feeling of always being on call and can make it difficult to plan ahead.

You should note that where there are long-term zero-hours contracts in place, where work is regularly offered and accepted, there is the potential for difficulties regarding the actual employment status of the individual on the zero-hours contract.