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Zero hour contracts: Zero hope?

About The Author

Georgia Mitchell (Writer)

Georgia is in her second year of Law at Newcastle University. She is currently pursuing a career as a commercial solicitor, and hopes to work abroad within the EU at some point in her future career. Outside of her studies, Georgia is an avid tennis fan.

‘Zero hour’ contracts are becoming an increasingly popular form of employment. The Unite union estimates up to 5.5 million employees are now on zero hour contracts. However, this type of contract has recently been enveloped with controversy, with many believing employees are being unfairly exploited by employers.

What exactly are these types of contracts and why are they becoming such a significant part of the working world?

Zero hour contracts provide neither an obligation for employers to offer work to employees nor an obligation for employees to accept work that is offered. Even though no certainty of work is supplied, they still meet the terms required in the Employment Act 1996, giving employees ‘worker’ employment status. This is achieved by providing a written statement of the terms and conditions of employment which contain provisions which create an ‘on call’ arrangement between the employer and employee.

They are said to be of some benefit to both the employer and employee. The employee still has the right to take annual leave and they are also entitled to the national minimum wage. Some employees find the flexibility of the contract to be very beneficial; there exists no ongoing requirement to accept offers of work and there are no consequences if they wish to decline such offers. In addition, the contracts can act as a reasonable alternative for Small and Medium Enterprises (SMEs) whose labour requirements are typically intermittent or temporary. Many employees choose to enter into such contracts as they afford people the opportunity to supplement their income alongside learning new skills and having time for other aspects of their lives such as voluntary or academic work.

Employers arguably benefit more from such arrangements which explains why employers frequently seek to utilise zero hour contracts. They are given an easily accessible pool of staff to assist them as demand increases, even if last minute. Furthermore, they have no ongoing requirement to provide guaranteed levels of work for staff. Many employers find this a cheaper alternative to agency fees, further explaining their appeal.

However, zero hour contracts have also been exposed to a plethora of criticism. Although employees are supposedly entitled to decline any offers of work they wish without any subsequent consequences, employees are at the risk of being denied further hours as a result. It is thought that this right which employees are awarded is in fact subject to exploitation, with refusal to work once leading to a prolonged period of a lack of work. Moreover, the lack of stability and certainty within these contracts is said to trigger financial difficulties among people who are dependent upon a monthly income. The flexibility is a somewhat ‘one-way’ benefit to employers which successfully allows them to respond to fluctuations in their workflow. They are able to hire a lot more staff than required to then have the choice to send any unrequired workers home, even if the employees have already travelled to their place of work.

The rapidly growing use of zero hour contracts has been of concern to Parliament. The Business Secretary, Vince Cable, is currently considering closer regulation of the contracts but he has ruled out a complete ban. It has alluded to under reviews by the government and CIPD research that there have been some “unethical practices” with regards to zero hour contracts such as allocation of shifts, not correctly calculating the accrual of holidays or the aforementioned penalisation for refusing work. It is hoped that Vince Cable’s official review will ensure that abuse of zero hour contracts is curtailed and make for a more stable and fair system for the employees.

Various Labour MPs, such as Andy Sawford and Alison McGovern, have campaigned to ban or better regulate the practice believing that an employee not being able to have a guaranteed salary is exploitative and unfair. Unions such as Unite are also against the contracts, leading a campaign against employers who hire staff without guaranteeing the set number of hours they will work and how much they will be paid. However, such actions from the union could be seen as quite hypocritical. Unite revealed last month that they use tutors who are employed on zero hour contracts, arguing that there were savings to be made and tutors are irregularly required. Although Unite insist they are not a zero-hour employer, this indisputably undermines their previous uproar to zero hour contracts.

However, are zero hour contracts being unfairly criticised?

A recent report from the The Chartered Institute of Personnel and Development (CIPD) suggests that those on zero hour contracts were just as pleased with their job as the average worker. The report also claims that the employees are more content with their work and life balance, with 4 out of 5 workers stating they have never been penalised if they were unavailable to work offered shifts. It should be highlighted that employees always have the freedom of choice. Although zero hour contracts are becoming abundantly more popular, they are not the only option for most, with conventional contracts still available for many careers as an alternative. Although there are evident criticisms encompassing these types of contracts, they appear to be more of a benefit than a burden to employees.

As long as employees continue to have the option to enter into a zero hour contract, it should cease to become a major issue. However, there is the risk that this type of employment could become more and more widespread. The contracts are unquestionably appealing to employers due to the freedom and flexibility it provides. They therefore could become too significant within the world of employment, replacing the traditional type of employment contract altogether.

Inevitably, there have been various proposals attempting to resolve the concerns surrounding zero hour contracts. The government is to launch a consultation on how to tackle abuses in zero hours contracts. The CIPD says efforts should be focused on “improving understanding of how the contracts are used within the law rather than trying to restrict their use through regulation”.

Even though I think employers should continue to primarily use agencies to employ their staff, a zero hour contract is not a negative alternative. Employers cannot be expected to consistently maintain a high level of staff to only to assure employees of their specific hours of work. Events will inevitably occur which will leave businesses under or over staffed and I do not think they should be made to lose profit to simply accommodate to everyone’s requirements. However, appreciating that some employers can purposely over-hire staff to protect themselves from employee shortages, perhaps some sort of hybrid arrangement could be implemented to place a cap on the maximum percentage of people a company can recruit according to their requirement. Employees have the option to enter into these flexible contracts and provided that they are properly informed of its risks and uncertainties, they serve to benefit both parties of the contract.

Further reading

Gravitate, Should we be in defence of Zero Hours Contracts?

Richard Dunstan, Zero-hours contracts: a snowball in hell?

Jon Thomas and Oliver Thring, Unite ‘hypocrisy revealed on zero-hour contracts

The Chartered Institute of Personnel and Development, Zero-hours contracts have been unfairly demonised and oversimplified

BBC News, Zero-hours contract workers happy, survey suggests

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Tagged: Commercial Law, Contract Law, Employment Law

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