Zero Hours Contracts
Contractors and Workers Rights
Understanding Rights on Zero Hours
Zero hour workers are likely to work fewer hours than fully employed workers, however they do retain a lot of the sames rights as them. Zero hour workers should only be used to fill in labour gaps i.e. seasonal workers. They should not fill in the core labour of your business.
Everyone on a zero hour contract has statutory employment rights, without exception. They’ll either have the status of a worker or an employee. Most will be classed as workers.
Those who are classed as workers will be entitled to at least:
- The national minimum wage
- Paid annual leave
- Rest breaks (rest at work, rest between shifts or working days and weekly rest periods)
- Protection from discrimination
- Statutory sick pay (SSP)
- Time off for emergencies involving dependents
- Parental leave
Workers, as described above, must be paid through a PAYE scheme. They are not to be confused with self employed staff. The main difference between zero hour workers and self employed workers is the control you have over the person’s work. If you want to be able to rely on staff to carry out regular work for you then you should opt for an employee.
How do you calculate holiday entitlement and pay of someone on a zero hours contract?
People on zero hour contracts are entitled to be paid just like regular staff. They must be treated as any other employee and are entitled to 5.6 weeks of paid holiday per year, which include bank holidays. This is calculated on a pro-rata basis, meaning the more hours worked, the more holiday entitlement the worker has accrued.
To work out holiday pay one commonly used method is the 12.07 per cent calculation. This is arrived at using the calculation of 5.6 (weeks of paid leave) divided by 46.4 (remaining weeks in the year). Using this method holiday is accrued at a rate of 12.07% per hour worked.
If a worker on a casual contract works ten hours in a week, then they would have accrued 1.2 hours holiday. (12.07% of 10). If the employee worked 30 hours, they would accrue 3.6 hours of holiday for that week.
To calculate average hourly pay rate, only the hours worked and how much was paid for them should be counted. Take the average rate over the last 52 weeks. If no pay was paid in any week, count back another week so the rate is based on 52 weeks in which pay was paid. You can count back a maximum of 104 weeks to find these.
If a worker has less than 52 weeks of pay, use the average pay rate for the full weeks they have worked.
To work out a week’s pay for someone who’s paid monthly, you can:
- Calculate the worker’s average hourly pay for the last month. Do this by dividing the month’s pay by the number of hours worked in the month.
- Calculate the weekly pay. Do this by multiplying the average hourly pay by the number of hours worked in a week.
Use the weekly pay calculation for each of the last 52 weeks to work out an average week’s pay.
What about breaks in employment?
The main difference between zero hours and the employed is the break in employment. A break in employment counts as seven consecutive days without work, from Sunday to the following Saturday.
If there’s a significant break in employment (four weeks is the standard), you must pay for any holiday they’ve built up and not taken.
Anything else I should know about holiday entitlement and pay?
The government says that zero hours contract holiday pay should be paid when annual leave is taken. You can’t include a sum for holiday pay in the hourly rate.