The Evolution of Zero Hours Contracts

Question 1

A zero hours contract is a contract of employment wherein the individual is not guaranteed any work by the employer and is not obliged to accept the work offered by the employer. This essay examines whether zero hours contracts should be scrapped so that workers have legal protection from the inception of the employment relationship. This essay argues that there is a need for reforms in the area of zero hour contracts so as to improve protection of workers and to add to the reforms already undertaken.

The principal question is whether law on zero hours contracts is sufficient and provides adequate protection to the employees. Some of the objections to zero hour contracts, and indeed other similar temporary working conditions stem from the argument that law has so far failed to create a coherent approach to defining employee status which has implications for accessing employment rights. A study on zero hour contracts found that these are associated with indicators of inferior job quality such as low pay and underemployment. This in itself begs some attention to the legal protection of those who are working under zero hours contracts.

The statutory definition of a zero hours contract is provided in Section 27A of the Employment Rights Act 1996. Earlier, employers used to enter into zero hour contracts based on the premise that this avoided the requirement to abide by employee rights, however, the courts have enforced employer obligations under the concept of mutuality of obligations; in Wilson v Circular Distributors, the EAT held that the employer had an obligation to provide work when it was available and the employee had an obligation to undertake this work as per the contract and this mutuality of obligation could be used to describe the relationship between them as employment leading to the right to claim unfair constructive dismissal for the employee.

In Nicole Wippel v Peek, the European Court of Justice said that an individual employed under a zero hours contract can be said to be a worker for the purposes of the Directive 97/81/EC directive provided that the requirements of national law for the existence of an employment relationship are met with in the case. In Nicole Wippel, the applicant was employed on a zero hours contract and the contract did not stipulate hours of work or the manner in which the work was to be organised.

The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 is also relevant for understanding the scheme of protection of rights for workers in temporary or zero hours contracts. Part-time workers, including workers on zero hours contracts have the right not to be treated less favourably than their full-time colleagues; however, for establishing less favourable treatment, an actual full-time comparator must be identified under regulation 2(4)(a) who is employed by the same employer, has the same type of contract and is engaged in the same, or broadly similar work.

Courts have developed some principles in order to protect the rights of part time workers under certain circumstances. For example, in case of part time workers not being treated in the same way as full-time workers, courts tend to protect the rights of the part time workers to not be treated less favourably than full-time workers if the work they were doing was exactly the same and similarly important to the enterprise as a whole; this is applicable even where part-time and full-time employees are involved in the same work, but the full-timers do extra duties. Thus, if their work is broadly similar then part-time workers may not be treated as less favourably than the full-time workers. The protection to part time workers does not however extend to cases where the full time workers are involved in some works that the part time workers cannot do.

1. P Leighton and M Wynn, ‘Classifying Employment Relationships—More Sliding Doors or a Better Regulatory Framework?’ (2011) 40(1) ILJ 5.
2. Maria Koumenta and Mark Williams, ‘An anatomy of zero‐hour contracts in the UK’ (2019) 50(1) Industrial Relations Journal 20.
3. Wilson v Circular Distributors Ltd [2006] IRLR 38.
4. Case C-313/02 Nicole Wippel v Peek.
5. Roddis v Sheffield Hallam University [2018] UKEAT 0299/17.

Courts may also consider a zero hours contract to be a contract establishing a relationship of employment in certain cases so as to provide greater protection to the employee, regardless of the terminology used in zero hour contracts. For instance, in Autoclenz the contract purported to be a zero hours contract, but the Court held that despite this terminology used in the contract, the reality of the working relationship amounted to employment because of the regular working hours kept by the employee; as such, the employee was entitled to the protection of the employment relationship.

Zero hours workers have been held to be entitled to annual leave pay calculated under the WTR 1998 and ERA 1996 reflecting the number of hours they worked. The protection of rights for unfair dismissal has also been extended to those on zero hours contracts as in Obi v Rice Shack Ltd, wherein the worker was held entitled to be paid for the period of the disciplinary suspension even if on a zero hour contract. Benefits such as roll-up holiday pay into the individual's hourly rate are however not provided to workers under zero hours contracts and remains an example of how more protections are needed.

So far, reforms in the area of zero hours contracts have failed to provide enhanced protection to the employee. The one reform that has been made is a ban on exclusivity clauses in zero hours contracts by inserting Section 27A into Employment Rights Act 1996, which makes exclusivity terms unenforceable in zero hours contracts. Thus, as per Section 27A, provisions in a zero hours contract which prohibit workers from doing work or performing services for others are no longer enforceable against the workers. While this reform is welcome, it is not in itself sufficient to protect the rights of the employees. More reforms are needed, particularly reflecting on the dignity of the employees and human rights aspects of employee’s relationship to the employer and conditions of work. Some of these aspects are already recognised in case law; for instance, uber drivers’ right to minimum wage and holiday pay was recognised in Uber v Aslam.

Question 2

The issue in this situation relates to whether the conduct towards Amina by her line manager amounts to sexual harassment and whether the refusal of HR manager amounts to breach of rights on the basis of sex discrimination. The applicable law is found in the Equality Act 2010, Section 11, Section 26(1), and Section 27.

1. Matthews v Kent Fire Authority [2006] IRLR 367.
2. Moultrie v Ministry of Justice [2015] IRLR 364.
3. Autoclenz v Belcher, [2011] UKSC 41.
4. The Harpur Trust v Brazel [2019] EWCA Civ 1402.
5. Obi v Rice Shack Ltd [2018] UKEAT/0240/17.
6. Robinson-Steele v RD Retail Services Ltd and other cases [2006] IRLR 386.
7. Uber BV v Aslam [2018] EWCA Civ 2748.

With respect to the issue of sexual harassment, this has been defined in Section 26(1) of Equality Act 2010 as conduct by one person where they engage in unwanted conduct related to a relevant protected characteristic, with the purpose of violating the other person’s dignity, or creating an environment that is intimidating, hostile, degrading, humiliating or offensive for the person being harassed. For ascertaining whether sexual harassment has taken place, Section 26(4) provides that consideration must be given to the perception of the person alleging harassment, other circumstances, and reasonableness of the conduct to have that effect. In Reed and Bull Information Systems Ltd v. Stedman, the EAT held that whether some conduct was acceptable or offensive depends on the perception of the person who has been harassed and where the person has resigned because of sexually provocative remarks made to her, then it is she who has to decide what was acceptable or offensive to her.

In the present case, the facts of the case show that Amina who is a personal assistant of the concerned employer with a service of six years has been subjected to conduct by her line manager which can be defined as sexual harassment under Section 26(1) as the behaviour was unwanted, related to a relevant protected characteristic, violated Amina’s person’s dignity, and created an environment that can be termed as offensive. This conduct included making inappropriate suggestions, patting her leg and calling her a “good girl”. As noted by the EAT in one case, whether conduct is acceptable or offensive depends on the perception of the person who has been harassed, Amina’s discomfort with the situation can be assessed from the fact that she made a complaint to HR.

With respect to the second issue of the conduct of the manager, the employer is under legal obligation to respond to sexual harassment complaint. In one case, the court held that the refusal of the CEO to take action on complaint of sexual harassment and subsequently rape, amounts to sex discrimination as the employer had not gone through any form of due process. In Driskel v Peninsula Business Services, where the female employee was subjected to sexual harassment, her complaint was refused by the director of the firm, and she was dismissed, the EAT held that the director was wrong. The process that is to be followed in such cases was explained in Igen v Wong as a two stage process to first consider whether there was evidence from which it could be reasonably concluded that the employer had discriminated and, then to consider whether the employer had proved that there had been no discrimination on the grounds of sex. In B v A, it was held that if the employee did not receive less favourable treatment on the grounds of sex, then sex discrimination is not made out.

In the event that the employer refuses to file a complaint and proceed on it, the person concerned can also claim victimisation under Equality Act 2010. Section 27(1) provides that victimisation happens when one person subjects another to a detriment because the latter does a protected act, or there is a belief that they may do a protected act. For instance, if a woman makes a complaint of sex discrimination and then she is denied promotion or is informed that she may lose her job because of the complaint, this would amount to victimisation.

1. Reed and Bull Information Systems Ltd v. Stedman [1999] I.R.L.R.299.
2. Reed and Bull Information Systems Ltd v. Stedman [1999] I.R.L.R.299.
3. B v A [2010] IRLR 400.
4. Driskel v Peninsula Business Services IRLR 2000 151.
5. Igen v Wong [2005] IRLR 258.
6. B v A [2010] IRLR 400.

Employer can even be vicariously liable for sexual harassment of one employee by the other under Section 109 of the Equality Act 2010, which makes the employer liable for the wrongs of one employee towards the other. In Unite the Union v Nailard, the employer was held to be liable for the sexual harassment done by two of its employees against another; in this case, the employee who alleged harassment was transferred instead of action being taken against the employees who harassed her and the court held that the failure of her manager to take action on her complaint amounted to discrimination. In such cases, the employer can avoid liability only if it is able to establish that it took reasonable steps which is a defence in section 109 (4). Based on the authorities considered in this essay, it can also be argued that the manager telling Amina to forget about the incident and that it didn’t mean anything and not filing a formal complaint amounted to sex discrimination. Moreover, the statement of the manager that if she made a formal complaint that things could become very difficult for her and that she could even lose her job amounts to victimisation under Section 27 as discussed above.

To conclude this essay, it can be said that the conduct of the line manager can be assessed as sexual harassment based on the perception and discomfort of Amina at such behaviour. It can also be said that the HR manager faulted on the point of allowing a formal complaint and investigation which is required by the law contained in the Equality Act 2010 as well as authorities on sexual harassment and the obligations of the employer to conduct investigation. Amina may also claim liability of the employer for the sexual harassment on the basis of principle of vicarious liability in Section 109 of the Equality Act 2010.

Question 3

1. With reference to Denise and Hassan, the issue is that of sex discrimination on the basis of not providing equal pay for equal work. The applicable rule is contained in Article 157 (1) of the TFEU which provides that employees are entitled to equal pay for “equal work or work of equal value”. Courts have generally held that women employees who are not paid an equal amount of salary to the male employees for the same work, have a claim in discrimination. The Recast Directive 2006/54/EC also provides the principle of equal pay for equal work or work of equal value. The Recast Directive, Article 4 also provides that where job classification system is used for determining pay, the criteria for both men and women should be the same and seek to exclude any discrimination on grounds of sex. In this situation, Denise can claim that despite doing the same kind of work as Hassan, she is being paid less than Hassan. On this ground, she can claim discrimination. If it is claimed by the employee that she is being paid less than the male counterpart, courts would consider whether there is equality of the work value in which case it would be pertinent to compare their work profiles. Equality Act, Section 66 is applicable here and it provides that in case of equal work, a sex equality clause is implied automatically into the woman’s contract of employment. In such cases, the employer is required to provide equal pay, but no such liability arises in case of work not being like. In this case, both Denise and Hassan are employed by the same company in identical roles and Denise’s employment period is longer than Hassan’s. Based on the principle provided in Macarthys, it can be argued that not paying equal pay is discrimination based on gender. Her argument can be strengthened by the purpose of inclusion of Article 157(1) so that unfair manner of giving male employees more benefits than women directly or indirectly. Moreover, Denise can also claim discrimination on the basis of protected characteristic by not given equal pay for equal work in comparison with Hassan.

1. Nagarajan v London Regional Transport [1999] IRLR 572.
2. Unite the Union v Nailard [2018] EWCA Civ 1203.
3. Ibid.
4. Macarthys Ltd v Smith (1980) ICR 672.

2. An employment contract can be written or oral. A legally binding contract of employment between the employer and the applicant for a job is formed when the applicant accepts. This may be written or oral. In the event that the employer does not provide a written contract to the employee, they are required to provide to the employee with a ‘statement of written particulars of employment’ as per ERA 1996, Section 1 read with Sections 7A and 7B. This is to be done within two months of the commencement of employment. In this case, Patricia has been working for five months with the employer, which means that she has worked well above the two month period within which the employer was to provide her with a statement of written particulars of employment’. Therefore, there is a lapse on the part of the employer to provide this statement and Patricia can make a reference to the Employment Tribunal for the same as per Section 11 of ERA 1996. Even under an oral contract, the employee has rights under the common law. These rights include right to minimum notice period, holiday entitlement, national minimum wage, and other terms of work. Therefore, for the protection of Patricia’s right to notice before termination, it is not necessary that there should have been a written contract between her and the employer. As such, she can claim that the employer is in breach of her contractual right to notice as her employer informed her that she would no longer be required, was not given a proper notice before termination of her employment. She is entitled to a week’s notice as per Section 86 ERA 1996. She may also receive compensation for not being provided a statement of particulars if there is a favourable finding on her claim of dismissal.

1. Allonby v Accrington & Rossendale College (2004) C-256/01.
2. Crook v Dexter Paints Ltd COET 2089/166.
3. Morgan v Middlesborough Borough Council 2005 EWCA Civ 1432.
4. European Commission Employment, Social Affairs and Equal Opportunities, Opinion on The effectiveness of the current legal framework on equal pay for equal work of work of equal value in tackling the gender pay gap (European Commission Employment 2009).
5. Stack v Ajar-Tec Ltd [2015] EWCA Civ 46.
6. M Sargeant and D Lewis, Employment Law (Taylor and Francis 2020).
7. https://www.crosslandsolicitors.com/site/cases/Lancaster-and-Duke-Ltd-v-Wileman-EDT-minimum-notice Accessed 18 Dec 2020
8. Advanced Collection Systems Ltd v Gultekin UKEAT/0377/14/LA .

3. The issue pertaining to Linda is related to right to rest periods. The right to rest periods is provided under Directive (2003/88/EC) or the Working Time Directive which bars long working hours or inadequate periods of rest in between work activities. The Working Time Directive includes the provision in Maastricht Treaty, Article 137, which aims at improving working environment for benefit of workers' health and safety. The Working Time Directive is applicable to the UK as employers are mandated to provide periods of rests for workers and this is for all sectors of activity.As per the provisions of the Directive, workers are entitled to minimum of 11 consecutive hours of rest in a 24-hour period. For working hours that exceed 6 hours a day, a break has to be provided after 6 hours. Workers are not to be forced to work for more than 48 hours in a week. The Working Time (Amendment) Regulations 2003 give effect to the Directive (2003/88/EC). Significantly, rest periods do not include time spent resting on the premises of the employer as the worker needs to separate themselves from workplace so as to have real access to a rest period. However, employer can provide shorter breaks provided these breaks are adequate to providing rest and well being of the employee. In this situation, it can be clearly seen that Linda has been deprived of her rights under the Working Time (Amendment) Regulations 2003 as she works for more than 60 hours a week and does not proper break during her shifts. The manager’s refusal to allow a break for Linda and not allowing her leave after 6 months of work without leave amounts to breach of Linda’s rights under the Working Time (Amendment) Regulations 2003. Linda can make a formal grievance to the employer as per the ACAS Code.

1. Catherine Barnard, EC Employment Law (Oxford: Oxford University Press 2006) 587.
2. Directive (2003/88/EC), Article 1 (2).
3. Ibid, Article 3.
4. Ibid, Article 4.
5. Ibid, Article 6.
6. Catherine Barnard, EC Employment Law (Oxford: Oxford University Press 2006) 588.
7. Network Rail Infrastructure Ltd v Crawford [2019] EWCA Civ 269.
8. Miles v Linkage Community Trust [2008] IRLR 602.

Books

Barnard C, EC Employment Law (Oxford: Oxford University Press 2006).

Sargeant M and Lewis D, Employment Law (Taylor and Francis 2020).

Deakin S and Morris GS, Labour Law (Butterworths 1998)

Journals

Leighton P and Wynn M, ‘Classifying Employment Relationships—More Sliding Doors or a Better Regulatory Framework?’ (2011) 40(1) ILJ 5.

Koumenta M and Williams M, ‘An anatomy of zero‐hour contracts in the UK’ (2019) 50(1) Industrial Relations Journal 20.

Take a deeper dive into Navigating Employment Law: From Restrictive Covenants to TUPE Regulations with our additional resources.

Reports

European Commission Employment, Social Affairs and Equal Opportunities, Opinion on The effectiveness of the current legal framework on equal pay for equal work of work of equal value in tackling the gender pay gap (European Commission Employment 2009).

https://www.tim-russell.co.uk/upimages/employment%20guide.pdf accessed 10 Dec 2020

https://www.blake-group.com/sites/default/files/books/basic_emp_law_manual.pdf Accessed 10 Dec 2020

https://www.etui.org/sites/default/files/EuropeanLabourLawShort%20Web%20version.pdf accessed 14 Dec 2020