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Zero-hour contracts: why all the fuss?

06 Jun 2017

Figures based on an analysis of Office for National Statistics data reveal that in 2016, 910,000 people were on zero-hour contracts, an increase of 105,000 compared with the same period in 2015. 

Interestingly, the 2016 figures show that approaching half of the increase had been among workers aged 55 to 64, zero-hour contracts offering a flexible transition from full time work to retirement, thereby allowing them to top up their incomes. 

Not all zero-hour contractors are in low paid positions; one in six are in the three highest paying occupation groups. 

What are zero-hour contracts?

A zero-hour contract is where the employer is not obliged to provide any minimum working hours while the individual is not obliged to accept any work offered.

An individual on a zero-hours contract will either have a status of 'worker' or 'employee'.

Regardless of status, all individuals on zero-hours contracts are entitled to the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination.

In addition, those individuals who have employee status will be entitled to statutory employment rights.

Advantages for the employer

Zero-hour contractors provide flexibility in the workforce which is convenient for retailers managing fluctuating consumer demand, nursing and care homes needing to operate shift rotas and for those providing seasonal work.

Employers can call upon individuals who have experience working for the organisation and who can slot back in without the necessity of recruitment and training. 

Advantages for the employees

The flexibility provided to employees can be attractive to people such as students, those with caring responsibilities and for women who have been on maternity leave but do not want to commit themselves to regular contractual hours. 

So why the opposition?

Politicians, trade unions and others have raised concerns about the possibility of exploitation and the use of such contracts by management as a tool to reward or reprimand employees for any reason or for no reason. The Labour Party has now made a manifesto pledge to abolish the use of zero-hour contracts. Having said that, it has been reported that 60% of people on zero-hour contracts are happy with the hours they work. 

Exclusivity conditions

What was undoubtedly contentious was the practice of inserting exclusivity terms in zero-hour contracts preventing employees from accepting employment elsewhere. This practice was effectively banned in May 2015 under legislation which gave the Government wide-ranging powers to make further provisions in relation to zero-hours contracts in the future.

The exclusivity ban was subsequently given teeth last year when zero-hours workers were given the right to bring claims if they were dismissed or subjected to a detriment for failing to comply with an exclusivity clause.

What next?

The five day working week with fixed hours is still largely the model of employment for the majority of organisations. But with the growth of the gig economy, flexible working, independent contractors, personal service companies, hot desking and zero-hours contracts, it is important that employment law keeps pace with these changes to ensure that there is a legal framework and appropriate regulatory process in place.

This is likely to remain a contentious area with the recently published Work and Pensions Committee report highlighting a failure to protect workers in the gig economy. The Taylor review has also been tasked with looking at how employment practices need to change in order to keep pace with modern business models.

What remains to be seen is whether this change in the working model is creating more jobs or changing existing ones. As John F. Kennedy said, “No one gains from fair employment law and legislation if there is no employment to be had”.

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