At Access, we want to ensure hospitality businesses are well-equipped with the latest hospitality software to help them embrace the legislation changes around zero-hour contracts. With the help of our smart solutions such as Rotaready, CPL Learning and HR support, we can get you in the best position to start changing the landscape of zero-hour contracts in your hospitality business. In this article, we will explore more about zero-hour contracts, how employees may be affected and the best practices you can take to make the termination process fair, quick and easy.
What are zero-hour contracts?
Let’s start by unpacking the main features of a zero-hour contract. These are a type of employment where the employer is not necessarily obliged to provide employees with guaranteed working hours or set contracted hours for them to complete. Many sectors use zero-hour contracts to meet business demands, especially in the hospitality industry where 20% of its workforce are on zero-hour contracts, with 10% of them made up of young students.
Employers are also not required to give these employees a minimum amount of work and employees do not have to work when they are asked, meaning there are no legally binding conditions for both parties. Though this can be seen as a quick solution for businesses, especially in hospitality, the recent Employment Rights Bill will begin to enforce new changes for zero-hour contracts.
Fairly terminating a zero-hour contract
Now that the new changes from the Employment Rights Bill are going to come into effect in the next year, you might be thinking about starting to terminate your zero-hour contracts to improve your employees’ rights and provide more guaranteed work. But how much notice does an employee have to give on a zero-hour contract? Does the zero-hour contract come to a natural end? Do zero-hour contract employees get a P45? With these questions in mind, here are some of the main ways you can fairly terminate a zero-hour contract:
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Be concise – having simple and clear policies in the zero-hour contract will allow you to have more control over the termination process to avoid conflict and unfair dismissal accusations.
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Statutory minimum notice – include a notice period in your zero-hour contracts to give employees time to find alternative work.
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Termination documents – no matter what type of employment you are offering, all workers need to receive a P45 once their contract ends.
Legal considerations for employers
As employers in the hospitality industry, it is important to consider how your decisions may impact your employees and what measures you should take to adhere to the latest legislation updates. This includes employees being paid through PAYE so that the correct amount of tax and National Insurance is deducted from their wages. Zero-hour contracts are not legally defined within the law, so it is up to employers to make sure the employment requirements, rights and expectations of staff are communicated clearly.
Employers are also responsible in creating a safe working environment for all employees, even if they are on a zero-hour contract. Not complying with health and safety regulations could result in large penalties for the company and risks employees being subject to unsafe working conditions.
Employee rights when terminating zero-hour contracts
When thinking about terminating employees who are on a zero-hour contract, you must think about their rights and any repercussions you may face. Here are some of the main legal rights that zero-hour contracted employees are entitled to:
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Paid holiday – once a zero-hour contract is terminated, employers must pay out any holiday that has built up or not taken.
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Outstanding wages and notice pay – this applies if the worker was legally classed as an employee and has been employed for more than one month.
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Unfair dismissal – employees, not workers, on zero-hour contracts are still protected against any unfair dismissal if they have at least worked at the company for two years. However, the new 2024 Employment Rights Bill is changing this to become a day-one right.
Best practices for termination
The main focus you need to have when terminating zero-hour contracts is to ensure that the reasons are clear, fair and professional from the very beginning. By disclosing to the employee that work is not guaranteed, it does not have to be accepted and that the zero-hour contract can be subject to ending at short notice, you are in a stronger position to terminate their contract fairly and without any issues.
These terms should also be supported by additional policies such as cancelling work, if there will be a notice period and a compensation payout. As long as there is a fair and transparent line of communication between you and the employee, then the termination process should be quick and simple.
Are you ready to take control of your zero-hour contracts?
Employee contracts can be tricky, especially when there are blurred lines between the rights they are entitled to on zero-hour contracts or the legal considerations you need to take as an employer. In hospitality, where zero-hour contracts are very common, employers need to think about the best practices to protect themselves and their employees right from the start to ensure the termination process is fair and professional.
In this article, we have explored the best ways for hospitality employers to approach the termination of zero-hour contracts, the legal considerations they need to think about and what rights employees will have with these contracts.
At Access, we provide smart hospitality and HR software solutions to support hospitality businesses in managing their workforce effectively. From helping employers understand staffing needs to streamlining scheduling, training and HR processes, our tools are designed to support informed decision-making in a dynamic industry landscape.
Read more about how Access can help support your hospitality business with our Complete Tech Guide to Hospitality Compliance.