Myth Busting: Zero Hour Workers & Holidays
As employment law advisors, we see questions crop up time and time again about zero hour contracts and holidays. This isn’t in the least surprising as it is a tricky area with very little guidance. We also come across a lot of misconceptions which lead to incorrect practices taking place. The below sets common ‘myths’ around this topic, and what the correct position actually is.
Myth: My zero hour staff aren’t entitled to any holiday as they are casual and can have time off whenever they want.
Truth: All employees and workers are entitled to paid holiday, and that includes zero hour and casual staff. The minimum entitlement is 5.6 weeks per holiday year. Although the nature of a casual contract is often that the workers can refuse work offered to them and can therefore fit work around their own schedule, it is important to note that the entitlement is to paid leave, so they need to receive this.
The risk of not giving the correct amount of holiday is the same as if this wasn’t given to any other staff member – they can bring a claim against you for breaching the Working Time Regulations. Depending on the employment status of the individual, issues arising from the failure to pay holiday could also lead to constructive unfair dismissal claims.
Myth: There is no way to calculate holiday entitlement for my zero hour staff as I don’t know how many hours they will work through the year.
Truth: It is tricky, but it is possible. You won’t usually be able to set out an agreed number of days or hours in their contract in the way you would for staff with normal working hours. The Working Time Regulations also do not provide a calculation for employers to use in these situations, which isn’t helpful. The most accurate way to calculate entitlement is to keep a running total of the hours worked through the year, and calculate the accrual based on the actual hours worked.
Many employers use an accrual rate of 12.07% of hours worked (for example, if an employee has so far worked 150 hours in the year, you would calculate 12.07% of 150, which equals 18.2 hours of holiday accrued). This generally gives an accurate calculation, although it should be noted there are situations where it may not be correct, such as where workers are engaged under an umbrella contract or are part-year workers.
Calculating based on a running total of hours will take a certain amount of administrative organisation but is generally the easiest and most accurate method.
Myth: Instead of giving my zero hour staff time off for holidays, I can pay them for their holidays in their weekly or monthly pay instead.
Truth: Including an amount for holiday pay in workers’ hourly pay is known as paying ‘rolled up holiday pay’ and is unlawful. Holiday pay should be paid at the time that annual leave is taken. Before it was ruled that this practice is contrary to the Working Time Directive, it was commonly used for casual and temporary workers. Some employers who were not aware of the change in law have carried this on, however, if this is still in practice in your business, you should consider amending your contracts to reflect an actual holiday entitlement which employees can take off in line with your normal holiday policies.
Author: Anna Schiavetta, Employment Law Solicitor at Howarths