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Zero Hours Contracts: Saviour or Conman of the Employment Market?

A recent debate that has sprung up involves the issues revolving around the zero-hours contract; as you may well be aware, these offer no guaranteed hours or times of work, instead relying on the worker to make themselves available for work allocation throughout the day. As a result, a worker could be offered no work and subsequently no pay. These contracts have become popular in areas such as catering and retail; one company that employs this method with almost its entire workforce is Sports Direct, a retailer that has become the target for much of the criticism and controversy surrounding this topic.

The reason for this recent interest is the publication of figures from a survey held by the Chartered Institute of Personnel and Development (CIPD) that puts the number of zero-hour contracts at about one million in the UK (about 3% of the workforce). This is around four times the number the Office of National Statistics’ Labour Force Survey indicated in 2012.

There have been critics and defenders from all sides, with the Labour party being especially scathing about this method of employment, arguing that they strip workers of their rights; Ed Miliband described it as exploitation. Stephen Timms, the Shadow Work and Pensions Minister, blamed zero-hour contracts for the ‘underemployment crisis’ as many workers were unable to work the hours they would willingly do so otherwise. The Shadow Health Secretary, Andy Burnham, has called on Labour to pledge a ban on zero-hours contracts at the next election to re-establish Labour as the ‘party of work’. Others have accused Labour of hypocrisy in light of the fact that (Allegedly) Labour let Councils use these contracts.

On the other side of the fence, the Confederation of Business Industry (CBI) has said that the British labour market’s flexibility is a major factor in economic recovery. John Cridland, the director general of CBI, argued that the contracts kept people in work, thus lowering unemployment. Business secretary Vince Cable has argued that, whilst regulations need to be set in place to ensure workers are protected from exploitation, an outright ban is unnecessary, as zero-hours contracts ‘can work for the employer as well as the worker.’

So what are the pros and cons of zero-hours contracts?

The main argument in favour of for zero-hours contracts is that of flexible working hours. This is more of a benefit for the employer in any given situation, especially in industry where work comes and goes in waves. As a worker is only paid for the work done under a zero-hours contract, the employer doesn’t have to worry about paying a worker when there is no work being done.

Another pro for employers – though not for workers – is that zero-hours contracts are seen as drastically reducing the legal obligations of the employer. Contracts will often refer to the individual as a ‘worker’, limiting their rights and entitlements, such as sick and holiday pay.

The arguments against these contracts revolve predominately around “the theory versus reality” debate; the theory is good but the reality is not. Whilst zero-hours contracts offer flexible working hours, the method of calling a worker up as and when they’re needed to work offers neither predictability nor stability. A contract doesn’t need to specifically state that the worker cannot work for other employers whilst under a zero-hours contract, but the need for constant availability at any time of day implies this restriction. Flexible hours are also particularly difficult on those workers with children, especially those with young children where last minute childcare would be difficult to find.

In theory, workers can refuse the offer of work from an employer at any time, but the reality of this refusal brings up its own issues, with workers who turn down an offer of work not being called again. The reality of these contracts also rears its head in the offers themselves. Ideally, employers phone any workers available to work for the given hours needed. But in practice, this may lead to discrimination and bias, with employers calling up favoured workers, avoiding those who do not fit the company mould.

Despite the National Minimum Wage requirements also applying to zero-hours contract workers, as well as health regulations set in place in the working environment, the limitation of rights and entitlements is a main argument used by much of the opposition. It is this that has the organisation 38 Degrees backing a former employee in a case against Sports Direct for its liberal use of these contracts.

Rachel O

Rachel O”Connell, Solicitor and Director, Just Employment Solicitors.

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