Are Zero Hour Contracts Entitled To Annual Leave

Daniel Brown
• Friday, 11 December, 2020
• 7 min read

Holiday pay and entitlement are usually calculated based on the number of hours an employee works in a given period of time. In this post, we’ll explain how to calculate holiday pay and entitlement for zero -hours contract employees.

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In fact, breaks in their working can even affect the sort of rights that accrue with time. Their specific pay and entitlement is calculated based on the number of hours they work.

For full-time employees who work five days a week, the 5.6 weeks of annual statutory holiday entitlement equates to 28 days a year. But because they don’t work set hours, and because they may work a different number of days each week, it’s much easier to calculate their leave based on hours.

So zero -hours contract workers are entitled to a prorate amount of that 5.6 weeks holiday, which equates to 12.07% of the hours they work each year. So a zero -hours contract employee who works 10 hours in a week will accrue 72 minutes of paid leave.

You’ll have to do this calculation every week for every zero -hours contract worker on your books. To make things a little easier, we have a great holiday entitlement calculator you can use.

If you pay your zero -hours contract employees on a monthly basis, you can work out how much they’ve paid in a week by first calculating their average hourly pay for the last month. UK's law specifies that if a zero -hours contract employee hasn’t worked for four weeks, you may treat it as the end of their employment.

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Are bank holidays automatically included in a year’s leave entitlement? But we have seen a particular spike in requests for information and advice relating to employees working zero -hours contracts.

The Latest statistics indicate that there are closes to one million employees employed on zero -hours contracts. This stark rise over the last few years is likely because of employers’ perception of the lack of or reduced amount of obligations toward such workers.

So, whilst the principle is simple, sometimes the calculation for what the entitlement is and what the compensation is for leave when taken, can be quite complex. All employees (and workers) are entitled to 5.6 weeks paid annual leave per year.

However, the employer can agree to give a higher entitlement contractually. For example, giving paid annual leave on bank holidays in addition to the 5.6 weeks per year.

So, at the point that the employee wishes to take paid annual leave, the way to calculate the payment due is to add up the number of hours worked in the preceding 12 weeks and apply the same calculation. We hope this helps you to understand this tricky and sometimes misunderstood issue.

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Having completed degrees In Law, Criminal Justice and Federal Politics, Stuart finished his training at Manchester Metropolitan University in 2003. He was then awarded a scholar's bursary from the Honorable Society of the Inner Temple in October 2003 and called to the Bar of England and Wales.

Stuart's experience handling hundreds of cases enables him to identify risk efficiently, working closely with Moo repay's advice service to place our clients in strong positions should they ever be sued. At Moo repay, Stuart has practiced exclusively in Employment Law, representing employers regularly in Tribunals across the UK in cases covering Wages, Breach of Contract, Unfair Dismissal, Discrimination, Transfer of Undertakings, Whistleblowing, Working Time and many others.

‘ Zero hours contract’ is a non-legal term used to describe many types of casual agreements between an employer and an individual. For example, a self-employed plumber might take up work offered on a zero hours basis from a number of regular clients, but he remains self-employed.

Any individual on a zero hours contract who is a ‘worker’ will be entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination. Zero hours contracts can also provide a level of flexibility for the individual, which allows them to work around other commitments such as study or childcare.

Some types of work are driven by external factors that are out of the employer’s control and this can happen in a range of sectors including, for example, hospitality, leisure and catering. New businesses When a new business starts up it might need to build up a customer base to undertake work so, at first, they may need to employ people on zero hours contracts in addition to any permanent staff to manage fluctuating and unpredictable demands.

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Seasonal work or peaks in demand, where it is known that for short periods of time additional staff are needed to manage surges in demand such as retail sales at Christmastime or providing a cleaning service for example, following a festival or a New Year celebration. Unexpected sickness Employers may need to be ready to cover periods of unexpected staff sickness and be able to call on experienced staff, for example, a pharmacist in a chemist or a lifeguard at a leisure center.

Zero hours contracts are rarely appropriate to run the core business, but might be useful for unexpected or irregular events such as bereavement leave by staff, to deliver sufficient customer service during peaks in demand, or when preparing to open a new store. Many businesses provide a regular service or product and have a broadly predictable timetable or output and so permanent or fixed hour contracts can be more appropriate.

Whether the individual is an employee or worker and what employment rights they are entitled to if the individual is an employee, how statutory employment entitlements will be accrued where appropriate, for example, redundancy pay the process by which work will be offered and assurance that they are not obliged to accept work on every occasion if they so wish how the individual’s contract will be brought to an end, for example, at the end of each work task or with notice given by either party Those who work on a zero hours contract may have caring responsibilities or have studies and may need to plan for childcare or around exams.

Employers should consider putting into place a policy explaining the circumstances when and how work might be cancelled, and how they try to avoid this, and whether the individual can expect any compensation for caring costs they may have incurred. Those who take up work on a zero hours contract are often students, partially retired, or have caring commitments.

The Small Business, Enterprise and Employment Act prohibits the use of exclusivity clauses or terms in any zero hours contract. An employer must allow the individual to take work elsewhere in order to earn an income if they themselves do not offer sufficient hours.

An employer must not attempt to avoid the exclusivity ban by, for example, stipulating that the individual must seek their permission to look for or accept work elsewhere. Find out how to work out holiday pay for casual workers.

The statutory holiday entitlement of 5.6 weeks is equal to 12.07% of the total hours worked in a year. That means you owe your employee around 1 hour and 12 minutes holiday leave.

How to calculate zero hours contract holiday pay entitlement At the end of their contract, you should also pay them for any remaining holidays they haven’t used.

What happens if I don’t give zero hours contract workers holiday pay? If you don’t give eligible staff holiday pay or falsely claim they’re self-employed, so you don’t have to pay them, your staff could take you to an employment tribunal.

You might be under the impression that zero hours workers don't have any workplace rights. As workers, they're entitled to annual leave and the National Minimum Wage.

If a worker relies on multiple jobs to reach this wage, they might not be eligible for SSP. It's your responsibility to give zero hours contract workers sick pay, and you shouldn't try to trick them out of their SSP allowance either.

So, even though you might think you're saving money by not paying SSP, you could end up losing thousands... or even your business. You cannot do anything to stop a zero -hours worker from getting work elsewhere.

The law says they can ignore a clause in their contract if it bans them from: Zero -hours contracts can be a flexible option for both employers and workers.

Any holiday you've built up and not taken outstanding wages and notice pay (if you were employed for more than a month, or if your contract says so) For example, depending on your contract, after your first year you might not have to build up holiday before you can take it.

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