Zero- hour contracts are anything but a new phenomenon. Employment contracts of this kind have been around for many years. Yet the use of zero-hours contracts has risen sharply in recent years. The expression “zero-hours contract” is a colloquial term for an employment contract under which the employee is not guaranteed work and is paid only for work carried out. Under these contracts, an individual typically undertakes to be available for work but the employer does not undertake to provide any work and only pays for the hours worked.

So what is all the fuss about?

“According to the Office for National Statistics the number of people employed on zero-hours contracts rose from 134,000 in 2006 (0.5 per cent of the workforce) to 208,000 (0.7 per cent) in 2012.” Surely they can’t be that bad?

Though zero – hour contracts can be beneficial, they have some negative impacts that can severely affect workers. For example, those employed on zero-hours contracts receive lower gross-weekly pay (an average of £236 per week) than those who are not on such contracts (an average of £482 per week). This can be bad for families and single mothers as they would not get enough money to support the family, and therefore they could plunge such families into poverty.

In addition, those employed on zero-hours contracts work fewer hours on average (21 hours per week) than those who are not (31 hours per work). The growing use of such contracts may therefore be a contributory factor in rising rates of under-employment.

This can be seen as a positive impacts as it help less skilled people become employed which helps both the employer and the employee. Dani Novick, the managing director of Mercury Search & Selection saidFor people who are out of work, the opportunity of a zero-hours contract is a job opportunity, and for employers they offer a great deal of flexibility. So there is potential for a win-win situation” As stated, there are some negative impacts that can raise concern towards these contracts.

People believe that zero – hour contracts are not a fair way to hire people and can become a threat to human rights. Alan Padbury, the managing director of Westdale Press saidI don’t think it’s a fair way to hire anybody. I think it’s abysmal. If you’re going to employ someone, it should be based on a certain number of hours and a certain amount of money”

A recent survey stated that “67% say ‘zero-hour contracts are normally a bad thing – they don’t provide any security and allow employers to exploit their workers,’ including majorities from every party. Only 20% say ‘zero-hour contracts can be a good thing – they allow flexible working arrangements for people in jobs where the amount of work could vary from week to week and there may be periods with no work to do.” [1]

So why do employers still use them?

There are a number of reasons why zero-hours contracts are an attractive proposition for employers:

Zero-hours contracts allow an employer to maximise the flexibility of their workforce to more easily adjust to variations in demand. This is a particularly attractive proposition for employers during an economic downturn. If an employer has access to a pool of readily accessible labour through an increase in the number of those employed on zero-hours contracts, then staffing levels can be adjusted to better match demand and wage bill costs can be reduced.

Employers feel this is a fair way to employ people on a short term contracts that allows flexibility to both the employer and employee. This makes find jobs easier to find and helps low skilled people find low skilled jobs. So what is wrong with such contracts?

“Four out of five zero-hours workers said they were never penalised if they were unavailable for work because of other commitments. Four out of five zero-hours workers said they were never penalised if they were unavailable for work because of other commitments” [2]

  1. There is no guaranteed level of regular earnings that provides any certainty over meeting bills or planning for the future;
  2. While weekly income can frequently be inadequate, the need to be available for work when required by the employer hinders the ability of staff to take up other employment;
  3. Zero hours contracts have also shown themselves to be more open to abuse than regular permanent contracts. For example, scheduling of working hours in the homecare sector that allowed no time for travel time between home visits has led to staff working considerably beyond their paid hours in some cases.
  4. A multitude of employment rights that are usually clearly defined for permanent staff become variable and dependent on the irregular hours of work;

So what is the bottom line?

It is important not to assume that employment on a zero-hours contract is uniformly undesirable. Being on a zero-hours contract may suit individuals who only require occasional earnings, who can be entirely flexible about when they take work or who can cope with variations in their income from week to week. Zero-hours contracts may also suit groups of workers, for example students, whose work is seasonal in nature or, in some circumstances, older workers who wish to reduce their hours as they progress towards retirement.

A male domiciliary care worker in Edinburgh said “I really value the flexibility of working on zero-hours because it allows me to fit other things into my life and if I don’t get enough hours one week I can always make them up the next by taking on more. I can see that for families with a mortgage the situation would be seriously nerve-wracking and of course I have to trust my line-manager to deliver those hours and that’s far from ideal but it has worked for me so far.”

It is not hard to see why employers are turning to zero-hours contracts, particularly in today’s difficult economic climate. In allowing for maximum flexibility they allow employers to more successfully adjust to variations in demand, manage risk, reduce the costs of recruitment and training and, in certain circumstances, avoid particular employment obligations.

The government has recently made clear that it recognises it must give urgent consideration to what safeguards can be introduced to improve this situation and in the coming months we will be publishing our own recommendations to support such efforts.

Consultation Zero Hours Employment Contracts – Tell the Government what you think

 BY: Bilal Muhammad

[1] http://yougov.co.uk/news/2013/08/12/ban-zero-hour-contracts/

[2] http://news.sky.com/story/1173749/zero-hour-contracts-unfairly-demonised

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