Government to call time on zero hours contracts

The issue of employees employed on ‘zero contracts’ or low hour contracts has recently been in the spotlight. The Government has approved draft legislation which if implemented would prohibit this practice, except in cases of emergency cover, short-term relief work for an employer or in cases of genuine casual work. The proposals will affect any employee on low hour contracts who consistently works more hours each week than is provided for in their contract of employment. The proposed changes will have a welcomed impact on those employed under zero hours and low hour contracts in Ireland.

A “zero hours contract” is essentially a contract with no guaranteed minimum hours for an employee. An employee is required to work on the basis of either (a) a certain number of hours per week, or (b) as and when required by the employer, or (c) a combination of both.

Zero-hour contracts have previously been a high profile issue in Ireland when in 1996 Dunnes Stores made a failed attempt to introduce them for their employees. Consequently, in 1997 the Government introduced the Organisation of Working Time Act 1997, which stipulates that employees must be compensated for 25 per cent or 15 hours of the time they had to be available or on call for.

In order to get around the 1996 legislation, employers have used “if- and- when- contracts”. This means that if the employee is available and the employer has hours, then the employer calls them for work.

This has the same effect as a zero-hour contract; it gives part-time workers no security of hours, and allows for people to be employed on low hours, which consequently means low pay.

Whilst Ireland has failed to implement the EU Part-Time Workers Directive, France on the other hand has, resulting in the implementation of ‘’honest contracts’’ across their workforce.  This means that if a worker gets a contract for ten hours per week, but they regularly work twenty hours, the extra ten hours are paid at double time, or time and a half.

What changes will the draft legislation introduce?

1. The legislation would prohibit the use of zero-hour contracts, except in cases where it is genuine casual work, emergency cover or short-term relief work for the employer
2. Staff called into work and then sent home will be entitled to compensation equivalent to three hours pay at three times the national minimum wage, or the rate that applies in an area covered by a legally-binding wage agreement
3. Workers will be entitled to clearer information about the nature and main terms of their employment arrangements within five days of commencing a job. This information includes, the full name and address of the employer, the expected duration of the contract (whether the contract is temporary or fixed-term), the rate or method of calculating pay, and expected length of the employees’ working day and week)
4. The proposed legislation also provides for the creation of a new right for an employee whose contract of employment does not reflect the actual hours worked by them on a consistent basis. For example, if an employee can establish that the hours they are contracted to work are not a true reflection of the hours they have actually worked, then the employee will have the right to be placed in a band of hours that reflects the actual hours worked over a reference period of 18 months. Proposals have also been made to have the Workplace Relations Commission responsible for the enforcement of this right. However, in cases of such a breach, employers will have a defence if they can demonstrate that significant adverse changes affected its business
5. Employers in breach of the proposed legislation will be guilty of a criminal offence, though the precise sanctions they will face have not yet been revealed.

It is anticipated that the draft legislation will improve employment protection for low-paid vulnerable workers, and would give them more certainty as to their working hours and their income. However, a balance must be found between protecting the rights of employees and minimising the impact on businesses.

For more information please contact Marc Fitzgibbon, Partner in our Employment Law Group.