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Countdown begins for zero-hours contracts

  • Ireland
  • General


Every week, large numbers of employees across Ireland have little certainty about their working hours.

Employment contracts which oblige employees to make themselves available for a certain number of hours per week, but where no minimum hours of work are guaranteed by their employer, are known as “zero-hours contracts”. These arrangements can make working life more precarious for employees and can result in income uncertainty. However, there is also evidence to suggest that many employees are engaged on such contracts by choice and that these arrangements provide flexibility to both employers and employees.

Just before Christmas, the Government published the Employment (Miscellaneous Provisions) Bill 2017 (“the Bill”), which signals the beginning of the end for zero-hours contracts. Once enacted, the Bill will ban the use of zero-hours contracts in almost all circumstances.

Prohibiting Zero-Hours Contracts

While the concept of zero-hours contracts has received negative press in the UK, in Ireland, the current law treats employees on zero-hours contracts more favourably than in the UK. At present, zero-hours contracts are permissible. However, employees are compensated where the hours actually worked fall below 25% of the hours for which they are required to be available.

The new Bill will prohibit zero-hours contracts in all circumstances, except in cases of genuine casual work or where they are essential to facilitate cover in emergency situations or short-term absences. Where zero-hours contracts would be permissible, for example, is in a residential care setting, where a member of staff must accompany a resident to hospital at short notice and an appropriately qualified substitute needs to be called in to cover the absence.

Work of a "casual nature" is also excluded from the proposed prohibition on zero-hours contracts. However, casual work has not been defined in the Bill. It is likely that this will be clarified as the legislation progresses through the Oireachtas in the early stages of 2018.

In light of the proposed prohibition, employers may wish to consider whether they can guarantee a minimum number of working hours for employees. For example, if an employee is currently engaged on a zero-hours contract but typically works 10-15 hours per week, an employer could consider setting the minimum number of contract hours at 5. By guaranteeing a minimum number of hours, the contract in question will no longer be a zero-hours contract. However, while this may be useful in side-stepping the prohibition on zero-hours contracts, employees may still be covered by the new requirements regarding banded hours, should the minimum number of hours set in the contract not reflect the actual hours worked by the employee.

Minimum Payment if Called to Work

A new minimum payment will be introduced for low paid workers who are called into work by the employer, but who are subsequently sent home again without work or any real compensation. If an employee has not worked at all in a week or has worked less than 25% of their contract hours, they will be entitled to a minimum payment (which is calculated by reference to the National Minimum Wage).

Employers may resist making this minimum payment if the circumstances were unavoidable due to exceptional or emergency circumstances. The minimum payment is not applicable to on-call work.

Banded Hours

In certain cases, the number of hours specified in an employee’s contract may not reflect the actual number of hours worked by that employee per week. This creates difficulties for employees in accessing credit, including mortgages.

Regarding the new proposals, the Minister explained that: “Under the Bill, where an employee’s contract provides for, say 15 hours per week, but they have been working an average of 30 hours per week over an extended period, they will be entitled to be placed in a weekly band of hours that better reflects the reality of their hours of work. In this case, they would be placed in the weekly band of 25-34 hours.”

The relevant bands are: (a) 1 - 10 hours; (b) 11 - 24 hours; (c) 25 - 34 hours; and (d) 35 hours and over.

An employer may refuse to permit a change of bands if there is no evidence to support the request, where there have been significant adverse changes to the business during the period or where the average hours were due to a temporary working situation that no longer exists.

Enhanced Anti-Penalisation Provisions

The Bill, once enacted, will also introduce strict anti-penalisation rights for employees who seek to assert their rights under the legislation. The intention behind this is to empower employees to exercise their rights without fear of reprisal.

Next Steps

The Bill has been allocated priority status and is expected to progress quickly towards enactment in 2018.

In the meantime, employers should familiarise themselves with the proposed changes and consider how their procedures/practices will need to be updated in order to comply with the impending legislation.

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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