Zero Hour Contracts - What Is All The Fuss About?

by Jacqueline McGuigan

ZHCs are on the rise, but a statutory framework is needed to make them part of a fair and flexible labour market

On 19 December 2013 the Department for Business Innovations and Skills launched a consultation on Zero

Hours Contracts (ZHCs). The reason was that, last summer, the government con- ducted an informal information gathering exercise on the use of zero hours employ- ment contracts, with the overarching aim of achieving a labour market that is flex- ible, effective and fair.

The government and trade unions tell us that the use of ZHCs among the private and public sector is on the increase, but it is not clear why. A survey of 5,000 mem- bers of Unite found that 22 per cent were on ZHCs earning an average of £500 per month, equating to an estimated 5.5 mil- lion people over the UK workforce.

So what exactly is a Zero Hours Con- tract? ZHCs are not defined in legislation but are generally understood to be an em- ployment contract between an employer and an individual where there is no obliga- tion for employers to offer work, or for the individual to accept it.

The government has identified concerns around the use of ZHCs in the areas of “exclusivity”, clauses preventing an indi- vidual from working for another employ- er, and “transparency”, in that individuals are not always clear on the terms, condi- tions and consequences of ZHCs and em- ployers do not always fulfil or understand their responsibilities.

The contracts are popular in hotels, restaurants, education and health. When used properly they offer flexibility to those who want to combine work with other commitments. When used improp- erly, they deny fair employment rights.

An individual’s rights will depend on his or her status as employee or worker. This distinction can prove vital, as the

difference between the two statuses will determine employment rights. ZHCs, for example, are not entitled to receive mini- mum notice periods, redundancy pay, protection from unfair dismissal, transfer of undertakings (TUPE) rights, or mater- nity/paternity/adoption leave and pay.

Barrister David Stephenson says he fears that “whilst some workers may welcome the flexibility of ZHCs, in the present cli- mate the vast majority have no choice but to accept what work is available”.

To address the concerns about ZHCs, the government sought views on a num- ber of options related to exclusivity and transparency. These include: banning the use of exclusivity clauses, issuing guid- ance and a Code of Practice on the fair use of exclusivity clauses, relying on exist- ing common law redress, improving the content and accessibility of information, advice and guidance about ZHCs, issuing a Code of Practice covering fair use of ZHCs, and producing model contract clauses.

Existing common law redress is both cumbersome and costly. Determin- ing the issue of employment status en- tails an Employment Tribunal (more on this on page 15) undertaking a factual enquiry which looks at a number of as- pects of the working relationship. The legal cost of this enquiry will be beyond the reach of many individuals who are working under ZHCs.

Barrister Claire Palmer says that it is a reality that many Zero Hours Contract employees “cannot enforce their rights due to cost”. However, she believes that exclusivity clauses are “likely to be struck down by a court as being an unnecessary restriction on trade”.

Introducing a statutory framework gov- erning the use of Zero Hours Contracts would thus go a long way to levelling the playing field and ensure that the UK labour market is flexible, effective and fair. l Jacqueline McGuigan is a solicitor at TMP Solicitors LLP

Case Study: Pulse Healthcare versus Carewatch Care Services & Others
This 2012 case involved a care package for a lady who suffered severe physi- cal disabilities and required around the clock care by no less than 15 persons working on shifts to look after her.

The carers signed a document entitled ‘Zero Hours Contract Agreement’. In the section headed ‘Hours of Employ- ment’ the words ‘Zero Hours’ were added. After an investigation, the Em- ployment Tribunal Judge said that the written contract of employment did not reflect the true position and that the

carers were employees. He said that, in reality, the carers worked fixed hours on a regular basis over a number of years. Once the rota was prepared, they were required to work and the employer was required to provide that work.

As “employees” they were subject to control and discipline, and were re- quired to provided a personal service. The finding of employee status was then appealed and Judge Richardson, hearing the appeal, found that the Employment Judge was entirely justified in saying that the expressed “Zero Hours Con- tract Agreement” did not reflect the true agreement between the parties. 

Legal Viewpoint: Rumble In The Courts


 by Jacqueline McGuigan

The legal system looks set to embark on a heavyweight contest between the justice system and the government.

On May 1, Judge Leonard QC sitting at Southwark Crown Court terminated a complex fraud trial because the defendants did not have advocates to represent them.

The defendants known as R v Crawley and others but more widely known as "Operation Cotton" are charged with offences of conspiracy to defraud after an investigation brought by the Financial Conduct Authority (FCA) which has its headquarters in Canary Wharf.

The defendants pleaded not guilty and they received legal aid to cover the trial costs.

The case was classified as a Very High Cost Case (VHCC) meaning an offence with which the defendant is charged is primarily or substantially founded on allegations of fraud or terrorism or other serious financial impropriety, or involves complex financial transactions.

In 2013 the Ministry of Justice (MoJ) announced their intention to cut fees paid to barristers in VHCCs by 30%.

The Bar announced their dissatisfaction with this decision and as a result barristers have declined to accept instructions for VHCCs.

Enter the ring, one Alexander Cameron QC (brother to Prime Minister David Cameron) who agreed to act pro bono (for free) for the defendants to argue that without suitable representation the defendants could not get a fair trial.

In the May 1 case, Alexander Cameron asked for it to be stayed ie termination rather than adjourned to January 2015 (or a later date) to enable the State to have available suitable barrister's to represent the defendants.

Alexander Cameron successfully argued that the defendants were entitled to the best possible choice of barrister to represent them and that there were no suitable barristers to represent them because of the dispute between MoJ and the Bar about the proposed legal aid cuts to VHCCs.

Judge Leonard QC found that the FCA as an arm of the State has a responsibility to provide adequate representation at public expense in the same way as the State.

The judge was compelled to conclude that to allow the State an adjournment to put right its failure to provide the necessary resources to permit a fair trial amounted to a violation of the process of the court.

Effectively, this meant that the case was terminated and the defendants walked free. Round one to Cameron.

The decision to stay the trial was appealed by the MoJ, FCA, and the Lord Chancellor.

The appeal was heard on May 13, headed by Lord Justice Levenson. The stay was overturned.

Essentially the appeal court found that the FCA is not an "arm of the state" and was not responsible for the provision of legal aid.

The court looked at the issue of delay and fair trial and dismissed as unsustainable Judge Leonard's finding that were was no realistic prospect of competent advocates with sufficient time to prepare being available in the foreseeable future.

Commenting generally on the dispute between the Bar and the Government over the VHCC fees, Lord Justice Levenson said that it was of fundamental importance that the MoJ, led by the Lord Chancellor and the professions, continued to try to resolve the impasse that stood in the way of the delivery of justice in the most complex of cases and that the maintenance of a criminal justice system depended on a sensible resolution of the issues.

Round 2 to Government.

In my opinion the decision is extremely important because the UK leads the world in its justice system and it is without precedent that a criminal case has been terminated because the State has failed to provide adequate resources to enable the defendant to have a fair trial.

This cost saving comes as a direct result of the Lord Chancellor's attempt to cut circa £220million from the Legal Aid budget without properly thinking through the consequences. Chris Grayling is the first politically appointed Lord Chancellor who is not a lawyer.

By cutting the legal aid budget and not properly thinking through the consequences has led to this court fiasco.

We all want a legal system that is fair and transparent. We want a system where the innocent walk free and the guilty are punished.

We do not want a system where people walk free because of government failings in its policy decisions. The right to have a fair trial is a fundamental right that goes way back to 1215 and is often referred to as the "rule of law".

The Lord Chancellor must, on taking office, swear to respect the rule of law.

Lord Justice Levenson found in R v Crawley that there was no question of a present breach of the right to have a fair trial and, he said, if this state of affairs continued in the future then a stay could be deployed.

While this would only be as a last resort and used in the most exceptional of circumstances nevertheless the door is left open if the dispute between the Government and the Bar is not resolved.

Result - a draw. Neither side can be said to be a winner.

Jacqueline McGuigan works for TMP Solicitors based at One Canada Square in Canary Wharf.

Legal Viewpoint: UKIP - People's Army or Barmy Army?

By Rob Virtue on June 6, 2014 10:20 AM | 

By Jacqueline McGuigan

What is it about Nigel Farage that gets people in a tailspin?

Is he the real deal or is he the temporary protest vote heading up a racist party?

After leading Ukip to a resounding victory in the European Elections with an impressive 4.3million votes for a "one man band" is Ukip a legitimate political party, offering an alternative vote to people who Boris Johnson described as a peasants' revolt, or is this a sinister racist party with an agenda to get rid of all the foreigners in the UK?

Leading up to the last few weeks in the European election the media reported on an almost daily basis examples of Ukip being a racist party.

We had Mr Farage saying at his spring conference that parts of Britain were becoming unrecognisable because of mass immigration.

He went further in a LBC interview saying that he would be concerned if a group of Romanian men moved next door to him.

This had a lot of people jumping up and down in the media and social media branding Farage a racist.

Labour leader Ed Milliband described the Romanian comment as a racial slur. Members of his party, namely David Lammy and Diane Abbott ,brandished his remarks as racist.

Prime Minister David Cameron said it was up to the voters to decide if Ukip was racist.

This seemed to me to be more about political posturing than truly believing that Ukip was a racist party in the sense of the British National Party. The good people of the UK know a racist political party when it sees one.

Trevor Phillips the former boss of the Equalities Commission speaking on the Andrew Marr show said he was not worried about Mr Farage himself being a racist but he was worried about the conversation that his party had provoked.

Mr Phillips said he would not being labelling Ukip racist as there was probably racists in every political party.

However he was worried about the use of the term "racist" to cover behaviour from being disobliging about Mexicans through to some of the things the political parties say about immigration, to street murders. He said this was beginning to be a problem as it was depriving the word of its moral force.

The ugly face of racism can be catastrophic, as shown by the IRR website.

The murder of Stephen Lawrence brought home the true reality of how dangerous and destructive racism can be.

As a discrimination lawyer this entire racist branding troubled me a great deal. It seemed to diminish the true meaning of what a "racist" is.

The term "racist" seemed to be banded around without any sense of the true horror of what racism actually means and what it can do to people and their lives.

I agree with Trevor Philips that Ukip is not a racist party. The media will be watching very closely to see how UKIP evolves in the lead up to the general election and whether the "peasants" will stand by their man.

Jacqueline McGuigan is principal solicitor at One Canada Square based TMP Solicitors in Canary Wharf.