Zero Hour Contracts and Redundancy

Unfortunately, employers are increasingly considering making redundancies because of the impact of the coronavirus pandemic.

One specific question that often comes up is ‘do zero hours contracts get redundancy pay?'

This is because zero hour contracts are still relatively new, with few employers having to make zero hour workers redundant historically.

Now, as employers look to cut costs by making staff redundant, probably for the first time, zero-hours and casual workers could be included in the process.

For more support on contracts and redundancy, stay with Peninsula and find out how you can stay compliant.

Are zero hours contracts entitled to redundancy?

Redundancy entitlement for zero hour contract staff depends on their employment status. Those on zero hours employment contracts can be workers or employees.

Employees are a specific form of employment stipulated in a contract of employment. Workers is a wider term and include any individual person who works for you, whether under an employment contract or other type of contract but is not self-employed.

Redundancy for zero hours contract only applies to zero hour employees.

The zero hours contract redundancy entitlement includes the right not to be unfairly dismissed by way of redundancy, and redundancy pay.

Statutory redundancy pay & zero hours contracts

When calculating redundancy pay for zero hours contracts, employers are often faced with a different type of calculation than for regular employees.

Although redundancy pay is calculated according to the same criteria as other contracted employees i.e., age, length of service and weekly pay, the details of the zero hours contract redundancy payment may be slightly trickier to determine.

Zero hour contract redundancy rights mean that weekly pay is calculated by finding the average of pay earned in the 12 weeks prior to the redundancy notice. It’s also likely that length of service will be taken as the start date of work, even though there may be gaps where no work was done.

Employment law on zero hour contracts

An employer could avoid paying the redundancy payment by bringing their zero hours contract workers off furlough and then simply not offering them any work. But that’s potentially open to a tribunal claim, as perhaps those workers should have been offered redundancy.

The safest approach is to put all at risk employees into the redundancy selection pool, regardless of their contract type. So, if you have a team of ten, made up of five full time and five zero hours staff, then you should put all ten at risk.

Equally, if you have just a few or a single zero hour position that bears no similarity to any jobs that are being made redundant, then you may be able to justify bringing these employees back on their zero hours terms.

Expert support on redundancy with Peninsula

Redundancy on a zero hour contract carries the same pitfalls as other redundancy procedures, so employers should make sure they are aware of their obligations, particularly in relation to employee consultation, when downsizing their workforce.

Let our expert HR team help you when calculating redundancy for zero hour contracts. We can advise on the steps you need to take. We’ll make sure you know the necessary steps and remove the stress from what is an already difficult situation.

Peninsula clients get access to 24/7 HR advice to lay out the steps you need to take and make sure you have all the paperwork in order.

And if you’re not yet a client, you can still enjoy a free advice call from one of our business experts. Simply call us on 0800 028 2420.