The main principles of Zero Hours Contracts:
With Effect from Tuesday 26th May 2015, legislation now bans the use of exclusivity clauses in Zero-Hour Contracts. This clause, if included, prevents workers on Zero Hour Contracts from working for another employer.
Zero Hour Contracts are used in a number of different industry sectors, often due to the changing demands of the business and the nature of the job roles. They provide greater flexibility and reduce costs to the business and offer flexibility to the workers.
There are no set or standard hours of work and the worker is not guaranteed a minimum number of hours on any week. Workers on a Zero Hours contracts may not receive any work at all from the Company on any particular week, however usually the Company would usually endeavour to give advance notice of the hours that a worker will be required to work/offered in a particular week.
The Worker is not obliged to accept the hours of work offered and the Company has no obligation to offer work on an ongoing basis.
Workers are only entitled to be paid in respect of the hours that they have worked.
Further regulations on Zero Hour Contracts are still awaited.
Codes of Practice for Zero Hour Contracts are also due to be developed on an Industry Sector basis, for employers and staff.
Holiday Pay Ruling
The introduction of the new holiday and overtime legislation on the 4th November 2014 means that employees holiday pay should reflect the employees ‘normal pay’ rather than just the employee’s basic salary.
So what regular payments should holiday pay include?
- Allowances linked to status or performance
- Shift Payments (for example unsocial hours payments)
- Travel Supplements (not expenses claimed)
- Contractual bonuses (at this stage not discretionary ones)
As this right stems from the European Working Time Directive which only gives the right to four weeks holiday to full time employees (not the 5.6 weeks for employees in England and Wales), the pay components listed above need only be paid for those four weeks of leave guaranteed under EU Law. Therefore any holiday days offered in excess to 20 days a year will not be affected.
What holiday pay must be compensated to employees following the change?
An employee must claim for the underpayment of holiday pay within three months of taking their last holiday. If more than three months has elapsed since their last holiday they cannot bring a claim. Providing there is no more than a three month gap between consecutive holiday periods the employee can claim for successive underpayments.
At the present time this has been limited to a 2 year period.
The calculation of a week’s pay will be the average amount the employee was paid in the 12 weeks immediately preceding the holiday.
Please note the requirement to pay ‘normal pay’ (including regular overtime) does not apply to bank/public holidays.
What action should employers take?
Employers need to understand how many employees the change to the ruling will affect by knowing what part of their workforce receives commission, undertakes regular overtime, or if their staff receive any other regular payments that are within scope.
Black Dog HR Consultancy Ltd can support you in doing this and furthermore assist you in updating all relevant documentation including your Company’s Terms and Conditions of Employment, Staff Handbooks and Holiday Policies, which clarify how the holiday pay calculations will be made. No matter what working pattern applies to your staff Black Dog HR Consultancy Ltd can assist you in calculating holiday pay and work with you to ensure your payroll system can cope with the new requirements as a result of this change.
Please feel free to call for advice on Tel: 01280 817341