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Are you on a zero hour contract? If you are, read this.

Posted 28 October 2015

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Zero hour contracts can be a slippery slope into debt. Find out why here.

These days, you might feel lucky to have a job at all. But what happens if you have or are offered a job that has a zero hour contract?

This is a very important question when you consider that just recently a survey highlighted that nearly one in three people has experienced a sudden change in their income due to being on a zero hour contract.

What’s so bad about zero hour contracts?

The clue is in the name really – it’s a contract that agrees to give you zero guaranteed hours. So you can see how this could be a little tricky when it comes to managing your household budgets. Take this scenario for example. You could be merrily going along on a zero hour contact, but you’ve had at least 30 hours work each week. Suddenly there’s a drop in the amount of work your employer has and, as a result, your hours drop to virtually nothing too. The bad news about this situation is that when this happens, you get nothing – no pay at all! So you could go from having almost a full time wage to having zero in the space of a few days.

Now, if you’re careful and you’ve been able to put a little money aside to cover these periods – great! However, if you’re already in a vulnerable financial position and you have repayments to make on credit cards, loans or other borrowing each month then the loss of income could mean that those debts quickly become unmanageable.

What do you use to plug the gap?      

As we mentioned earlier, if you’re able to save a little for the times when you may get no hours, we’d advise you do it. But, if you can’t afford to and you do suddenly find yourself with no hours for a couple of weeks, how would you pay for the essential things you need, like rent, food and bills?

Well, if you’re like 8% of those recently surveyed, you might end up turning to credit to plug the gap – perhaps a credit card or a payday loan. While this can be a useful emergency filler, it should not become the norm. If it does, you run the risk of making your financial difficulties worse.

So what can you do to make sure you don’t end up in this position?


In the periods when your employer is able to offer you a lot of hours if you are lucky enough to have some disposable income, that’s the money that’s left after all your essential bills have been paid, at the end of the month, it makes sense to try and put some savings aside. Try to build up a little safety net that is equivalent to three months’ income. This amount could just help tide you over, if the worst happens and your hours drop suddenly.  

If you only earn enough to cover the essentials of your budget, but don’t have anything you can use to save with, you should check if you’re entitled to any benefits. You can find out by entering your details into the benefits calculator provided by the government.

Benefits and zero hour contracts

You may think that being on benefits excludes you from taking a zero hour contract. After all, each time your income changes you will have to inform the benefits office, so that they can calculate how much benefit you should receive. For housing benefit for example, they’ll do this by working out an average yearly salary, basing your housing benefit amount on that salary. As changes occur in your salary amount, your housing benefit amount will go up and down too.

So, while it’s not impossible to have a zero hour contract while you’re on benefits, you will need to make sure that you report changes in your wages to the benefits office as soon as they happen. Failure to do so could land you in hot water.

If you’ve slipped into problem debt because of a zero hour contract, or for any other reason, contact us to see how we can help. You can call, email or live chat with us – just choose which you’d prefer from the contact us links on the left of the page. 

You may need to think about a move

Imagine this scenario. You’re offered a zero hour contract, but your boss tells you that you’ll get at least 30 hours a week. Once you start, you find that for the first few weeks you’re getting the hours the employer promised, but these past few weeks you’ve only had five hours each week. A five hour shift makes it barely worth leaving the house, as you’ll pay out more in transport and childcare than you’ll earn. Maybe it’s time for a rethink.

Even though your boss is not obliged to give you one, there’s nothing wrong with asking why you’re no longer getting any hours. They may advise you that they don’t think it’s likely that you’re going to get further hours with them, or they may refuse to give you any reason at all as to why you suddenly have no work, in either case you may want to consider whether to look for a different job.

Or it could be that they tell you there’s just a temporary lull in work and it’ll all be back to normal in a couple of weeks’ time, in which case you might be inclined to stay.     

It’s not all doom and gloom

Of course, as well as there being negatives to zero hour contracts, there are also a number of positives too. One of the main ones being the amount of flexibility zero hour contracts offer. This can be great if you only want to work part-time because of the kids, or you have another job to go to, or you work from home as well. The law around zero hour contracts prevents your employer from banning you from working other jobs, and you are entitled to turn down any hours offered to you as well. However, you may find that your employer is less willing to offer hours to you in the future, if you do this, although they shouldn’t.  

What you are entitled to

Some people believe that zero hour contracts do not offer you some of the benefits of regular working contracts.  This is not true. When you are employed on a zero hour contract, you have what’s called ‘worker’ status. This means you are entitled to the same rest breaks, annual holiday of 28 days – pro rata, and sick pay, the same as your ‘employed’ status colleagues. And, most importantly, you are also entitled to minimum wage, which increased to £6.70 this month for those over the age of 21.

What you’re not entitled to

What you’re not entitled to are things like maternity pay, claiming for unfair dismissal, flexible working requests, statutory minimum notice periods or redundancy payments or any other benefit that accrues over time.  

Zero hour contracts can also be great when you’re not relying on just one source of income. For instance, if you fancy doing a few hours a week, while your kids are at nursery. Like with most things in life, it’s a great fit for some, and not so much for others.

by Shelley Bowers

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