Types of contracts

This is an agreement that involves a self-employed contractor carrying out a particular job or providing a specific service.  Unlike a contract of employment, there is no employment relationship. However, this distinction is not always clear, and industrial tribunals will often have to determine the correct employment status in, for example, claims of unfair dismissal.

This type of contract can be:

• for a fixed period and will end when a specific date is reached;
• for the purposes of fulfilling a specific task and will end when the task has been completed; or
• for a specific event and will end when the event does or does not happen.

Fixed-term employees:

• have the right not to be treated any less favourably than comparable employees on permanent contracts;
• who have been employed on successive fixed-term contracts (i.e. they have had the contract renewed previously or have been employed on more than one contract) for four continuous years can ask their employer for a statement confirming that they are permanent and/or are no longer on a fixed-term contract.

Employers:

• must issue the above statement or one that gives objective reasons why the contract remains fixed term within 21 days of an employee’s request;
• can keep an employee on a fixed-term contract only if they can objectively justify it at the point it was last renewed.    

A report on the transposition into Ireland and Northern Ireland of the European Fixed-term Work Directive and the Working Time Directive can be accessed in the ‘Related tools and publications’ section.

No accepted legal definition of this type of contract exists.  If in question, the key issue will be around the individual facts of each case.  

Generally, in employment law, there are three main categories of staff in a workplace — employees; workers; and independent contractors.  If someone is classified as being on a ZHC, it should not be automatically assumed that they are an employee with all the associated employment protection rights.  

In many cases, a ZHC staff member will be legally classified as a worker and will therefore have some, but not all, of the rights that an employee has.  Examples include statutory holiday entitlement and the national minimum wage.

This can be a complicated area of employment law, and it is only by answering key questions, such as those listed below, that the picture becomes clearer about the status of the ZHC staff member.  

• Do you have a contract of employment?
• What does the contract of employment state?
• Is what happens in practice different from what is stated in the contract?
• Is your employer obliged to provide work?
• Are you obliged to accept work?
• When is the obligation triggered?
• Have practices developed into a pattern over a period of time?
• Can you appoint a substitute or must you provide the service personally?
• Are you obliged to follow/use the internal rules etc. of the organisation?
• Do you use your own equipment or wear a uniform?
• What are your tax and National Insurance arrangements?

The advantages and disadvantages of ZHC 

Engaging staff on ZHCs can allow employers to respond quickly and effectively to fluctuations in their business needs.

The flexibility of ZHCs may suit the requirements of certain individuals and can help achieve a “home-work life” balance. The extra income can be attractive; when the individual is able to accept the work offered.

The downside of a ZHC for employers can be that the individual is not bound to accept the work offered; so may not be available to meet the business need. They may well be less committed to the business and retention and turnover issues may be prevalent.

For the individual a ZHC can create income risk; no guaranteed income from week to week may pose significant financial pressures. They are also not entitled to benefits that permanent employees avail of for example, pensions and redundancy rights.

The position in Northern Ireland

The Northern Ireland Assembly consulted in 2022 on proposed legislation to enhance the statutory protections for zero-hours workers, including call-out payments, banning exclusivity clauses and introducing the right to request a “banded hours” contract.

Proposed legislation called the Employment (Zero Hours Workers and Banded Weekly Working Hours) Bill (the Bill) is currently at an early legislative stage in the Northern Ireland Assembly. The Bill includes a number of proposed provisions to regulate the use of ZHCs, with the stated aim of creating a less precarious working environment for zero-hours workers (ZHWs), while allowing for a responsive and agile workforce.

If introduced, the Bill will end the use of exclusivity clauses, bringing Northern Ireland into line with the rest of the United Kingdom. While the Bill draws on the findings of the Taylor Review on modern working practices, it proposes a “banded hours” system, as currently used in the Republic of Ireland.

The Bill

The Bill sets out several key provisions to regulate the use of ZHCs including:

• Exclusivity clauses (terms in a ZHC which seek to prevent the ZHW from taking on other work) being made unenforceable with ZHWs being protected from detriment and dismissal if they breach an unenforceable exclusivity clause (dismissal in such a case being automatically unfair, requiring no qualifying period of service);

• An entitlement to three hours’ pay where a ZHW is called into work but is given less than one hour of work to complete; an

• The ability for ZHWs to request placement in a band of weekly working hours, based on their actual hours worked.