Variable hours employees

What is a ‘variable hours’ employee?

‘Variable hours’ employees are not guaranteed set hours and can work a varying number of hours during a working week. They have no fixed working pattern (i.e. they are not shift workers who work set hours).

A variable hours employee is usually an hourly-paid employee who:

  1. Has no set hours of work at all, though is expected to be available to work as and when required (i.e. a “zero hours'” employee); or
  2. Has a nominal number of contracted hours (to allow the employer to maintain flexibility), but is also required to work in excess of those hours; or
  3. Is responsible for determining their own hours of work, which will be dictated by their workload.

Variable hours employees may be available for work at any time during the week, if required, or at specific times only during the week.

The Working Time Regulations 1998

All workers qualify for 5.6 weeks paid annual leave (“holiday”) under the Working Time Regulations 1998 (“WTR”), regardless of how long they have been employed. This is called the statutory minimum holiday entitlement, and amounts to 28 days per year (inclusive of public holidays) for a full-time employee.

Note that the statutory entitlement is capped at 28 days, so an employee working a six-day week is still only entitled to 28 days rather than 33.6 days (i.e. 6 x 5.6 weeks) holiday.

The statutory minimum entitlement is pro-rated for part-time workers.

Some employers choose to give more generous holiday entitlement than the statutory minimum, which is known as contractual holiday entitlement.

There are specific rules set out in the WTR relating to statutory holiday entitlement. Any specific rules in relation to contractual holiday entitlement are usually set out in a contract of employment, or other written agreement between the employer and employee.

It is important to remember to distinguish between statutory and contractual entitlement. For example, the WTR do not allow statutory holiday entitlement to be carried over into the next holiday year, except in cases where the employee is not able to take the holiday due to being on another type of statutory leave (e.g. maternity or paternity leave). Nor do they allow for payment in lieu of holiday except on termination of employment. However, employers and employees are free to agree that any contractual holiday in excess of the statutory minimum can be rolled over to the next holiday year, or for a payment in lieu to be made instead.

In other words, the entire statutory minimum holiday entitlement must be taken in that holiday year.

Part-time workers discrimination

Unless they regularly work hours equivalent to full-time hours, variable hours employees are part-time workers for employment law purposes. They are therefore covered by legislation protecting part-time workers. You need to be mindful of this when dealing with their entitlements.

This note is written on the basis that variable hours employees will have statutory only holiday entitlement. However, if you have full-time employees doing similar work to variable hours employees, you should always pro-rate the full-time entitlement for variable hours employees. You should not single out variable hours employees and limit their entitlement to statutory only on the basis that they are variable hours employees, as this will give rise to discrimination claims under employment legislation.

Where you have full-time employees doing very different types of work to your variable hours employees, it may be possible to justify giving different entitlements. For example, a full-time manager could be entitled to 30 days plus public holidays, but a variable hours manual labourer could be entitled to the statutory minimum of 28 days inclusive of public holidays (pro-rated).

Weeks, days or hours?

The statutory entitlement to holidays is expressed in weeks (5.6 weeks) and days (28 days maximum). However, the only practical way of calculating entitlement for variable hours employees is to work in hours.