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The use of variable-hour contracts is being limited

Blogs May 29, 2018


Employment law

Variable working time contracts are often referred to as zero-hour contracts. On 4 May, Parliament approved laws that limit the working-time arrangements of variable-hour contracts. The most important changes for the employer concern the Employment Contracts Act, the Working Hours Act, and the Act on Occupational Safety and Health Enforcement and Cooperation on Occupational Safety and Health at Workplaces. The laws will come into force on 1 June 2018.

Variable working time condition and fixed need for labour

The variable working time condition is defined as an arrangement in which working hours are determined according to the hours offered by the employer, between a minimum and maximum amount (e.g., 0-40 hours or 10-20 hours per week). The concept of variable working time also covers workers who are called to work if necessary.

Variable working time can no longer be agreed at the employer’s initiative if the employer has a fixed need for labour. In practice, this means, for example, that a worker cannot agree to work between 0 and 20 hours per week if the employer knows that he or she needs the employee regularly, such as for 20 hours per week. In this case, a part-time, 20-hours per week contract must be made with the employee.

However, if the need for labour genuinely varies, variable working time contracts can still be used. In this case, the lower limit of the working time condition must not be lower than the actual need for labour. The employer’s labour needs and use of the working time condition therefore depend on each other. If the need for labour varies, for example, from 10 to 30 hours per week, the employee must be guaranteed contractual working time of 10 to 30 hours per week instead of 0 to 30 hours.

When using variable working time contracts, employees must be informed of the situations that lead to, and the extent of, the employer’s labour needs. However, this is not sufficient if working times from the last six months show that the agreed working hours do not reflect the employer’s true need for labour. In such situations, the employer must negotiate a change in the working time condition to reflect their true labour needs if an employee so requests. Negotiations should normally take place within 1-2 weeks of the request. An employee is also entitled to use an assistant in the negotiations. However, if no agreed minimum working time is reached, the employer must provide written reasons for how the current working time condition still corresponds to their labour need. The occupational health and safety authority may ultimately impose a penalty payment to enforce the obligation.

Salary during sick leave and notice periods

An employee working variable hours is, in certain circumstances, entitled to sick pay. This is the case if a shift that overlaps with sick leave has been entered into the duty roster. In addition, an employee is entitled to sick pay if the shift has been otherwise agreed on or it is clear given the circumstances that the employee would have been fit to work. Sick pay is determined in the same way when an employee has agreed to low, fixed working hours (in practice, no more than 8 hours per week), but has been offered four times this in overtime in the six months prior to the sick leave (in practice, 32 hours of overtime offered in an 8 hour working week).

An employer may also be obliged to compensate an employee who is working variable hours for loss of earnings due to under-working. Such an obligation arises if the employer offers an employee less hours during their notice period than they have worked on average during the last 12 weeks. Similarly to sick pay, the employer has an obligation to compensate for loss of earnings during a notice period due to under-working if a fixed working time of up to 8 hours per week has been agreed with the employee and the amount of overtime completed over the previous six months has on average exceeded agreed working hours by four times.

Changes to the Working Hours Act

In the future, an employer can unilaterally decide to only plan shifts that the meet the minimum working hours for an employee who works variable hours. If the employer wants to plan more shifts for the employee, the employer cannot unilaterally decide this. The employee should be given the opportunity to inform the employer, by a deadline set by the employer, to what extent and under what conditions they can take on extra work. Only then can shifts that exceed the minimum working hours be added to the binding duty roster. Moreover, an employee who works variable hours cannot give permanent consent to taking on extra work. Consent may only be given for each occasion separately or for a short period of time at a time.

The amendments to variable working hours do not, in principle, concern casual workers who have a framework contract in place and with whom a new fixed-term contract is created for each period of work. However, it should be noted that in this case, every fixed-term contract must have a legitimate reason (e.g., covering for leave), as required by law, and fixed-term contracts cannot be used to cover the employer’s permanent labour needs.