The use of zero-hours contracts is widespread among food and drinks manufacturers, so the outcome of the consultation on zero-hours contracts that closes on 13 March could be significant for employers within the industry.

The consultation focuses on two issues: exclusivity and transparency. 

There is concern that some employers are using exclusivity clauses unjustifiably and the consequence for the worker, where no work is available, is particularly difficult. 

If workers are tied exclusively to one employer under a zero-hours contract that does not offer a minimum number of hours or even a guarantee of work, the workers are unfairly stopped from boosting their income during periods when they are not getting any or enough work to earn a living. This results in uncertainty of earnings for workers and can lead to concerns about how the workers’ benefits might be affected.

“There is a general lack of understanding, amongst both workers and employers, about the nature of zero-hours contracts”

The business secretary, Vince Cable, acknowledged that employers need flexible workforces and also that people should have choice in how they work, and that this should not be at the expense of fairness and transparency. 

The consultation proposes a range of options, including an outright ban on exclusivity, government guidance on the fair use of such clauses, or doing nothing and relying on existing legal constraints. 

While an outright ban on exclusivity would provide workers with a fairer deal and work in favour of those who appreciate flexible work opportunities, it would not achieve a balance between the concerns of workers and employers. 

If there were an outright ban on exclusivity, businesses would not be able to respond quickly and efficiently to constantly changing levels of demand. In order for zero-hours contracts to work for both employers and workers, it would be reasonable to introduce restrictions to limit the use of exclusivity clauses to certain justified scenarios; for example, where workers are entrusted with confidential information.

Information gathered by the Department for Business, Innovation and Skills also points towards a general lack of understanding, amongst both workers and employers, about the nature of zero-hours contracts, including employment status and entitlements. 

Most zero-hours contracts will give ‘workers’ employment status meaning that those working under a zero-hours contract will be entitled to the National Minimum Wage, protection from unauthorised deductions from pay, the right not be discriminated against unlawfully and rights under the Working Time Regulations. 

However the way the relationship between the employer and worker develops may enhance the employment status to that of an ‘employee’, who has additional employment rights. Where there is a dispute or uncertainty over employment status, an employment tribunal will have to decide what contractual relationship exists and whether there are any associated employment rights. 

The consultation proposes several options to improve transparency and understanding of zero-hours contracts by introducing improved government guidance and model clauses as well as a code of practice.

Wie-Men Ho is a principal associate at Eversheds LLP

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