Zero Hours and If and When Employment Contracts-the Legal Issues

zero hours contracts

Zero hours contracts.

If and When contracts.

What are they?

Why do they provoke such controversy among trade unions?

Are they useful for employers?

Why did a junior minister in the last government commission a report on them?

What was the surprise finding?

Let’s take a look.

What is a Zero Hours Contract?

In Ireland the only piece of legislation which refers to “zero hours working practices” is section 18 of the Organisation of Working Time Act, 1997.

Section 18 states:

18.—(1) This section applies to an employee whose contract of employment operates to require the employee to make himself or herself available to work for the employer in a week—
(a) a certain number of hours (“the contract hours”), or
(b) as and when the employer requires him or her to do so, or
(c) both a certain number of hours and otherwise as and when the employer requires him or her to do so,
and the said requirement is not one that is held to arise by virtue only of the fact, if such be the case, of the employer having engaged the employee to do work of a casual nature for him or her on occasions prior to the said week (whether or not the number of those occasions or the circumstances otherwise touching the said engagement of the employee are such as to give rise to a reasonable expectation on his or her part that he or she would be required by the employer to do work for the employer in the said week).
(2) If an employer does not require an employee to whom this section applies to work for the employer in a week referred to in subsection (1)
(a) in a case falling within paragraph (a) of that subsection, at least 25 per cent. of the contract hours, or
(b) in a case falling within paragraph (b) or (c) of that subsection where work of the type which the employee is required to make himself or herself available to do has been done for the employer in that week, at least 25 per cent. of the hours for which such work has been done in that week,
then the employee shall, subject to the provisions of this section, be entitled—
(i) in case the employee has not been required to work for the employer at all in that week, to be paid by the employer the pay he or she would have received if he or she had worked for the employer in that week whichever of the following is less, namely—
(I) the percentage of hours referred to in paragraph (a) or (b), as the case may be, or
(II) 15 hours,
or
(ii) in case the employee has been required to work for the employer in that week less than the percentage of hours referred to in paragraph (a) or (b), as the case may be (and that percentage of hours is less than 15 hours), to have his or her pay for that week calculated on the basis that he or she worked for the employer in that week the percentage of hours referred to in paragraph (a) or (b), as the case may be.
(3) Subsection (2) shall not apply—
(a) if the fact that the employee concerned was not required to work in the week in question the percentage of hours referred to in paragraph (a) or (b) of that subsection, as the case may be—
(i) constituted a lay-off or a case of the employee being kept on short-time for that week, or
(ii) was due to exceptional circumstances or an emergency (including an accident or the imminent risk of an accident), the consequences of which could not have been avoided despite the exercise of all due care, or otherwise to the occurrence of unusual and unforeseeable circumstances beyond the employer’s control,
or
(b) if the employee concerned would not have been available, due to illness or for any other reason, to work for the employer in that week the said percentage of hours.
(4) The reference in subsection (2) (b) to the hours for which work of the type referred to in that provision has been done in the week concerned shall be construed as a reference to the number of hours of such work done in that week by another employee of the employer concerned or, in case that employer has required 2 or more employees to do such work for him or her in that week and the number of hours of such work done by each of them in that week is not identical, whichever number of hours of such work done by one of those employees in that week is the greatest.
(5) References in this section to an employee being required to make himself or herself available to do work for the employer shall not be construed as including references to the employee being required to be on call, that is to say to make himself or herself available to deal with any emergencies or other events or occurrences which may or may not occur.
(6) Nothing in this section shall affect the operation of a contract of employment that entitles the employee to be paid wages by the employer by reason, alone, of the employee making himself or her self available to do, at the times and place concerned, the work concerned.

You will see from section 18 that an employee with a zero hours contract, as defined above, is entitled to compensation where the employee is required to be available to work (this is crucial) and the employer does not give him/her hours.

If this occurs, the employee is entitled to be paid for 25% of the hours they were required to be available or 15 hours pay, whichever is the lesser.

However, the critical aspect of this is that the employee must have been obliged to make themselves available to the employer, that is, they had no choice about working or not.

An employee who does come under the protection of section 18 is entitled to the full range of employment law protections in Ireland, for example, holiday pay, statutory leave etc.

What is an If and When Contract?

The key distinction between an If and When Contract and a Zero Hours contract is that there is no mutuality of obligation under an If and When contract.

This means that there is no obligation on the employer to offer work to the employee and, if he does, there is no obligation on the employee to accept. The fly in the ointment in this scenario, though, is that if there is no mutuality of obligation between employer and employee there is no contract of service.

And this means that the worker is not, in the eyes of the law, an employee and does not have the protection of employment law, including section 18 of the Organisation of Working Time Act, 1997 referred to above, or legislation deal with with holidays, working time, unfair dismissal, redundancy, notice periods, etc.

The reason for this is simply because the employer does not “require” the employee to be available (This section applies to an employee whose contract of employment operates to require the employee to make himself or herself available to work for the employer in a week-Section 18).

Mutuality of Obligation

Courts have held that where there is no mutuality of obligation no contract of service can exist.

And a contract of service is an employment contract.

Even if there is mutuality of obligation the relationship may not be one of employment, and other factors will be looked at by Courts.

But mutuality of obligation is an essential starting point without which the employer/employee relationship cannot exist. (Read the other factors which are considered in deciding whether the relationship is a contract of employment or independent contractor situation).

It’s worth noting, also, that a contract containing a statement that there is no mutuality of obligation between the parties will not necessarily be determinative of the issues if the reality of the situation is different and the employee is, in fact, obliged to be available.

The Surprising Finding

The surprising finding in the study carried out the University of Limerick into the prevalence of zero hours contracts, as defined in the Organisation of Working Time Act, 1997, despite political and media chatter, was that such contracts are rare.

Far more prevalent are If and When contracts and banded hours contracts in major retailers.

And, ironically, If and When contracts are far less attractive propositions than zero hours contracts as zero hours contracts have some statutory protection for the employee, while If and When contracts do not.

Read our disclaimer.

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