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The End of Zero Hour Contracts

The End of Zero Hour Contracts

The Employment (Miscellaneous Provisions) Act 2018 was signed into law by the President on Christmas day and is due to commence in the first week in March 2019. The Act seeks to regularise casual working and will have vast implications for employers in sectors such as hospitality, tourism and retail where the use of flexible working arrangements is common place.

The Act imposes statutory obligations on employers and there is a possibility of criminal sanctions for failure to comply. Employer’s obligations include the following: -

  •  Employers must furnish employees with a Written Statement” within five days (not working days) of commencing employment of the following core terms of employment: -
    • The full name of the employer and employee
    • The employer’s address
    • The expected duration of the contract
    • The rate/method of calculating pay
    • What the employer reasonably expects the normal length of the employee’s working day and week will be
  • Prohibition on “zero hours” contracts except in very limited cases such as genuine casual work, emergency cover or short –term relief work.
  • Introduction of a minimum payment for employees called into work but sent home without work and/or where an employer fails to require an employee work 25% of their contracted hours. In such circumstances, employees will be entitled to a minimum payment equivalent to 25% of the contract hours or 15 hours, whichever is lesser and calculated at 3 times the national minimum wage.
  • Where employees consistently work more hours than provided for in their contract they have a right to request to be placed in a band that reflects the hours actually worked in the previous 12 months. However the Act allows the employer to refuse to place the employee in the new band in the following circumstances: -
    • There have been significant adverse changes to the business; or
    • There has been an emergency or unforeseeable circumstances; or
    • The extra hours were due to a temporary situation which no longer exists
  • The Act introduces much stronger anti –penalisation provisions within the Organisation of Working Time Act and the Terms of Employment (Information) Act for employees who try to exercise their rights.

Sanctions

Failure to comply with number 1 above or employers who deliberately provide misleading or false information is punishable by a fine of up to €5,000 and/or a term of imprisonment of up to 12 months. An employee may bring a claim to the Work Relations Commission (WRC) and in addition to the above sanctions imposed on the employer, an employee may be awarded compensation to a maximum of 4 weeks remuneration. An employee with at least one month’s service may bring such a claim.

An Employee can bring a claim to the WRC for failure to comply with point 4 above. The adjudication officer can direct that the employee is placed in the correct band but there is no compensation available.

Where an employee makes a successful claim of penalisation to the WRC, the adjudication officer can award compensation as follows: -

  • Up to 2 years remuneration (under the amended Organisation of Working Time Act) ; or
  • Up to 4 weeks remuneration ( under the amended Terms of Employment (Information) Act)

Steps to be taken by employers

  1. Put procedures in place to provide new employees with the Written Statement as soon as they commence employment so as to ensure compliance with the short time frame of 5 days.
  2. Discontinue any “zero hours” arrangements
  3. Keep accurate records of weekly hours worked by each employee
  4. Review existing contracts of employment to ensure that employee’s contractual hours equate to the hours actually worked on a weekly basis and if applicable, amend band.
  5.  Employers should also ensure that employees are being paid the increased minimum wage which came into effect on the 1st January 2019

Employers need to be mindful of their statutory obligations when hiring workers on a casual basis. This Act imposes increased costs on employers and opens employers up to potential criminal prosecutions. As the old adage goes “fail to prepare....prepare to fail”.

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