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New Zero Hours Contracts Legislation

Updated: Feb 17

On 11th January 2016, legislation came into force that permits workers or employees engaged under a zero hours contract to claim compensation if they are subjected to a detriment or dismissed because they work for other employers.

What is a Zero Hours Contract?

Zero hours contracts are casual contracts where the employer is not obliged to provide a minimum number of hours and the worker (or employee) is not required to be available to work a minimum number of hours. As such, workers will only be paid for the hours that they work. Zero hours contracts are useful in industries where the employer’s staffing needs may fluctuate and are used by start-up companies or companies delivering a new product where demand is unknown. Similarly, they can suit workers with lifestyle commitments that do not suit rigid hours, such as students or parents with young children. It is estimated that around 2.4% of people in employment are engaged on zero hours contracts.

What has changed?

Zero hours contracts have been subject to sustained criticism for being unfair to workers. In May 2015, clauses which prohibited the employee from working for another employer (known as ‘exclusivity clauses’) or working without the employer’s consent became unenforceable.

However, this change was criticised as it was felt that employers could easily override the change by simply dismissing workers who worked for another employer or worked without their employer’s permission. To prevent this, the law has been changed again to give workers additional rights and strengthen the exclusivity clause ban.

On 11th January new legislation (The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015) took effect, which provides the following rights:

  • An employee who is dismissed because, or principally because, they worked for another employer has the right to claim unfair dismissal, regardless of their length of service.

  • A worker has the right not to be subject to any detriment because they have worked for another employer and can seek the same compensation as an employee.

What should my company do?

If you use zero hours contracts then you should review them and preferably remove any exclusivity clauses. It is important to note that the new legislation does not prevent employers from dismissing staff for another reason or from giving them less work if they wish. However, you should be wary of the new rights and ensure that there is a paper trail which backs up the reason for the dismissal or change in hours in case the worker tries to argue that they have been dismissed or subjected to a detriment because they worked for another employer.

Anything else?

Both workers and employees are entitled to the national minimum wage (currently £6.70 for adults), paid annual leave (based pro-rata on the hours worked), minimum rest breaks and protection from discrimination.

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