This week, regulations 2015 came into effect making any dismissal of an employee on a zero hours contract automatically unfair, if the principal reason for the dismissal is that the employee breached a contractual provision seeking to prohibit him/her from working for another employer. Such provisions are now unlawful. No qualifying period is required to bring such an unfair dismissal claim.
It is also now unlawful to subject a zero hours worker or employee to a detriment if they work for another employer in breach of a provision prohibiting them from doing so. In the case of workers (i.e. those who do not enjoy the protection of being an employee), detriment includes dismissal. Hence, they would be entitled to compensation if they were dismissed in breach of the new regulations.
It is worth taking stock of the existing law on zero hours contract before considering the impact of these changes.
Since 26 May 2015, exclusivity terms have been unenforceable in zero hours contracts. Exclusivity terms are any provision of a zero hours contract which prohibit the worker from doing work or performing services under another contract or under any other arrangement prohibits the worker from doing so without the employer's consent.
It is also important for employers to be aware that although exclusivity provisions are unenforceable against the worker, the law states that they are still relevant as evidence when an employment tribunal is determining whether an individual on a zero hours contract is an “employee” or a “worker”. This can still occur where the written contract does not include an exclusivity clause or even where it includes a specific ‘non-exclusivity’ clause but in practice the employer insists on exclusivity. The written contract is very relevant but it is not conclusive. In assessing employment status, employment tribunals consider the true nature of the employment relationship based on what is happening on the ground and the nature of the contract cannot be changed by attaching a different label to it.
This means that if, in practice, an individual is not free to refuse a shift or needs to find another colleague to cover his/her shift, or if he/she is not entitled to accept work elsewhere without prior permission, a tribunal could not only find that there is an unlawful exclusivity provision but also that this is evidence of a contract of employment.
This is important because employees have more employment rights than workers, including the right to bring claims for unfair dismissal.
Until the change in the law this week, an employee would usually have needed two years’ continuous employment on a zero-hours contract before s/he could bring a claim for unfair dismissal, unless s/he had complained about being treated less favourably as a part-time worker and had been dismissed as a result.
This means that no continuous service is needed before a claim for unfair dismissal could be brought on those grounds.
It is now crucial that employers ensure that neither their written zero-hours contracts nor their working practices could be interpreted as including exclusivity clauses.