Zero hours contracts have historically been used in retail and the care industry as they can provide a benefit to businesses when managing fluctuations in demand. However it is the Government’s view that over the last few years and during the recent recession, these have been exploited by businesses.

Further to a Government consultation, the Small Business Enterprise & Employment Bill 2014-15 has gathered momentum and is now subject to debate in the House of Lords and if approved will become new law.

At present there is no clear definition of Zero-Hours Contracts. Typical definitions include that it is an arrangement where there is no guarantee of work by a business and the individual is paid for only the work he/she carries out. Some Zero-Hours Contracts include exclusivity clauses requiring individuals to be available for work when or if called on by a business.

The Bill’s main controversial areas are the introduction of a definition of Zero hours contracts and the introduction of provisions to outlaw exclusivity clauses.

The proposed definition is “a contract of employment or a worker’s contract under which a worker undertakes to perform work when that work is offered by an employer but there is no certainty of work.”

Whilst the Bill seeks to put forward a definition which we can only assume is intended to remove ambiguity, this definition does not address the question as to whether those individuals on Zero Hours Contracts are actually Employees or Workers.

Those individuals who have Employee status have much greater protection in law than Workers. The Bill’s definition therefore only serves to further add to the complexity of Employment Status and the impact this has on other areas including but not limited to continuity of employment, unfair dismissal, discrimination, national minimum wage and pensions auto enrolment.

The Bill proposes a ban on exclusivity clauses requiring an individual to be available for work and solely for that business.

The new proposals do allow for limited exception to this however it is clear that this will be a condition to be justified and with a very strict application. This will inevitably cause difficulty as the fact remains that some businesses will find it genuinely difficult if workers work for other competing businesses.

It is imperative that businesses keep up to date with these imminent changes.

If you require a review of existing Zero-Hours Contracts or advice and assistance with drafting or implementing Zero Hours Contracts, contact Victoria Mitchell, Associate Partner & Head of Employment at Farleys Solicitors LLP on 01254 229833 or at