A simple explanation of zero-hour contracts in Australia

This Business Kitz blog will explain what a zero-hour contract is and the advantages and disadvantages. Implementing zero-hour contracts contribute to the reduction in significant staffing costs. With the constant pressure of the current economy, more people are turning to the gig economy to earn extra money to make ends meet. With the workforce evolving and with the traditional full-time and part-time employees no longer being the only option, employers are now hiring people for specific roles. Furthermore, the volatile market has had a big influence on how businesses handle their finances, which has resulted in the development of zero-hour contracts.

What is a zero-hour contract?

A zero-hour contract is one in which the employer is not required to supply the employee with regular work. This is beneficial to the business as it cuts costs. As a result, hiring workers on zero-hour contracts might be less expensive than recruiting individuals through agencies because the company does not have to pay agency fees and commissions.

What am I entitled to under a zero-hour contract?

Under the National Minimum Wage Standards, it is a requirement that you are to be paid the national minimum wage for each hour you work. Entitlements for a worker under a zero-hour contract include:

• annual leave;
• sick pay; and
• rest breaks.

Other than the entitlements mentioned above, employers are not required to provide other benefits that full-time employees are entitled to. This protects the business from employees being able to claim unfair dismissal, parental pay and leave, flexible employment or statutory minimum leave. 

What are the benefits for employers?

The biggest advantage of zero-hour contracts to employers is the flexibility it offers. It allows the business to respond quickly and efficiently to economic and business fluctuations easily. This contract allows employers to:

• Manage any unexpected events;
• Employ for one-off events;
• Cover employee absences;
• Deal with busy periods; and
• Provide flexibility.

What are the negatives for employers?

Whilst there are many positives to zero-hour contracts, it also includes some potential negatives. Due to the flexibility of the nature of zero-hour contracts, there is no guarantee of high standard service delivery or quality of work that is set, as there is no thorough training provided. People who work under zero-hour contract are also not obliged to accept all work they are offered. This may make it difficult for employers to obtain employees on short notice or during busy periods.

Another potential negative is that employers may also find it challenging to compute holiday compensation and annual leave accrual. In addition, the employment link between engagements and work status under zero-hour contracts must be determined.

Are zero-hour contracts worth it?

Employers should give as much warning as possible for any available job, in order to ensure they have the best chance of someone picking up the job. It is to be evoked that workers under this contract will be free to establish their own schedules and are not obliged to take any jobs.

Therefore, zero-hours contracts are a practical and suitable option that allows businesses the flexibility to manage their resources more effectively, whilst also benefiting the employee.

Legal advice

If you require assistance in entering or publishing a zero-hour contract and are unsure about your rights, you should seek legal advice. Our sister company, Legal Kitz can assist with ensuring that your matter in court is as timely and cost-efficient as possible. Click here to book a FREE consultation with one of our highly experienced solicitors today, or contact them at info@legalkitz.com.au or by calling 1300 988 954. If you would like to view legal templates that Business Kitz has to offer, click here.