ZERO HOURS CONTRACTS "NOT ALL BAD NEWS FOR WORKERS" ….

The subject of zero hours contracts is a hotly debated topic. Who are the winners and who are the losers? What longer-term effect may this have on the UK economy? How might this effect the property market as mortgages become hard to come by?

Maria Farnell, head of legal at Avensure, employment and health & safety specialists, gives her view on the hotly debated subject of zero hours contracts.

“MUCH MALIGNED as the ‘unacceptable underbelly’ of employment practice, zero hours contracts can be vital in ensuring business viability where staff requirements fluctuate.

“According to new research from the Chartered Institute of Personnel and Development (CIPD), they can also provide the flexibility many workers desire, as recognised by Business Secretary Vince Cable as he confirmed that there are no plans to ban them while announcing a 12-week consultation on the controversial form of contract.”

Zero contracts are in use across many sectors including retail, transport, catering and hospitality, and in the care, charity and public sector.  There are points in the calendar where their usage peaks, at Christmas in particular, and also during the summer holiday period. 

The Office for National Statistics previously estimated as many as 200,000 workers on zero hours contracts.

The CIPD’s new research confirms the figure is much higher with around one million people (3.1% of the UK workforce) on them. While the ethicality of such contracts continues to be the subject of debate, the CIPD’s research has painted a ‘reality check’.

Maria comments on the CIPD research:

“It highlights workers who are just as satisfied with their jobs as the average UK employee (60% v 59%) and happier with their work-life balance (65% v 58%). Almost half (47%) said they are satisfied having no set minimum contract hours, with 44% of those saying that’s because flexible working suits their circumstances.”

CIPD Chief Executive Peter Cleese insists zero hours contracts have been underestimated and unfairly demonised. The research findings suggest that, if used in the right way, they can provide flexibility for workers and employers alike.

“For the employer there are things to consider:

• Abuse of the balance of power to gain advantage from the contractual relationship must be avoided.

• Workers must be made fully  aware of their rights so the contracts are entered into with mutual
  agreement.

• Limit exclusivity clauses, which prevent workers working for other employers when you have no work
  available.

• Irregular and unpredictable hours can make it difficult to predict statutory holiday pay.

• The impact of pensions auto-enrolment. It may be difficult to determine when a zero hours worker reaches
  the qualifying earnings threshold to trigger auto- enrolment. If an auto-enrolled worker’s earnings drop
  before the threshold, employers may face unlawful deductions claims.

Maria advises:

“The government’s consultation on zero hours contracts will explore and tackle any abuses, particularly around exclusivity, to ensure fairness and transparency.

“In reaching its conclusions, the government must weigh the positives relating to the use of zero hours contracts alongside the controversial aspects of the practice. The outcome of its consultation must truly reflect the contractual relationship.

“If the consultation can establish the right balance, positive steps in the regulation of zero hours contracts should follow, making them a more popular way of agreeing working terms in an increasingly competitive market.”