Clear ground rules for zero hours contracts

Ministry of Economic Affairs and Employment 18.5.2018 12.24 | Published in English on 24.5.2018 at 11.26
Press release
Clear ground rules for zero hours contracts

There will be clearer ground rules for zero hours contracts. The President of the Republic approved the legislative amendments concerning variable working hours contracts on 18 May 2018. The amendments will enter into force on 1 June 2018.

The amendments will apply to zero hours contracts and other contracts where working hours are flexible instead of fixed (e.g. 0–40 hours per week or 10–30 hours per week). It will also apply to employees who work on demand. These kinds of employment contracts are called variable hours contracts in the legislation entering into force on 1 June. The amendments will redress the defects detected regarding the use of zero-hours and similar contracts.

Clearer zero hours contracts

As of 1 June, there will be rules governing the employer’s possibilities to initiate a variable hours contract. Employers may no longer propose variable working hours if they have a permanent need for labour. There is, therefore, a correlation between the employer’s need for labour and the working hours clause. If the employer has a fixed need for labour, the working hours, too, should be fixed. However, if the need for labour varies, the employer can propose variable working hours corresponding with its need for labour.

The lower limit for variable working hours may not be lower than the employer's actual need for labour. If the employer’s need for labour varies between 20 and 30 hours, it may not propose a contract for 0–30 hours.

The primary aim is to prevent employers from circumventing the employment protection rules by using variable hours contracts.

If the employer initiates a variable hours contract, it must provide the employee with a written statement detailing when and to what extent the employer has need for labour. This obligation should ensure that both parties have the same expectations regarding the contents of the employment contract.

The employer must give a statement of its need for labour even in case of variable hours contracts entered into before the amendments enter into force on 1 June 2018. The statement must be issued within six months of the entry into force of the amendments. If a variable hours contract entered into before 1 June 2018 does not comply with the new requirements, the employer has six months to give the employee an opportunity to change the contract so that it correspond with the employer’s need for labour.

Entitlement to sick pay clarified

The amendments will clarify the sick pay entitlement of employees who have a variable hours contract. An employee is entitled to sick pay if the incapacity falls on a day of a scheduled work shift entered in the shift roster, or the work shift was otherwise agreed on, or if the circumstances clearly indicate that the employee, if able, would have been at work at the time.

Compensation for loss of income during notice period

Period of notice is meant to give the other contract party time to adjust to the consequences of a terminated employment relationship. However, sometimes employees do not have any actual adjustment period because their employer does not give them any work during the period of notice.

In response, the Employment Contracts Act was amended so that the employer must compensate the employee for loss of income if, during the period of notice, the employer offers the employee work for a lower number of hours than the average number of working hours in the 12 weeks preceding the employee’s last work shift.

More predictability with shift rosters

According to the current legislation, all workplaces must have a shift roster indicating, among other information, the start and end of working hours. The shift roster must cover as long a period as possible, and the employees must get it at least one week before the start of the roster period.

The provisions on shift rosters were amended with regard to variable hours contracts, employees should get information about their work shifts earlier than the current practice. Another aim was to clarify the current legal situation with regard to the distinction between regular working hours and extra hours.

Moreover, an employee who has a variable hours contract may not consent to work unlimited extra hours.

Clear unemployment security

Employees who have a zero hours contract can already now receive adjusted unemployment benefit if there is only little work on offer. However, if an employee terminates a zero hours contract the subsequent period without unemployment benefit may sometimes be unfair. As of 1 June, there will be no period without benefit when an employee gives notice in a situation where he or she has not been offered work for more than 18 hours during any of the 12 weeks preceding the resignation. The number of hours is the same as the time-at-work condition for receiving unemployment benefit.

This does not mean that all employees who resign would be entitled to unemployment benefit directly without a period without benefit. The new provisions do not apply to employees who have been guaranteed a specific number of hours in their employment contract.

Inquiries:
Nico Steiner, Senior Specialist, Legal Affairs, Ministry of Economic Affairs and Employment, tel. +358 29 504 9001