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A Quick Guide to Zero Hours Contracts

Friday, 6 September 2013

Zero-hours contracts are employment arrangements where the employee agrees to be available for work as and when they are required.

There are no contractual numbers of hours of work or times of work specified over the length of this type of contract, hence the name ‘zero hours’. The result is that the employee is effectively on-call should the employer need them to work for a particular number of hours.

If a worker is made to wait for work on the employer’s premises or is made to take breaks, then they must be paid under this type of contract.

Why Are Zero Hours Contracts Big News?

Recently The Office of National Statistics (ONS) revealed that in 2012 there were a quarter of a million Britons employed on zero-hours contracts, which is 50,000 more than their previous figures had estimated. This indicates that the use of such contracts by employers is on the rise.

Critics of zero-hours arrangements argue that due to the uncertainty and changeability of weekly work hours, employees’ incomes are inconsistent and often unpredictable.

Moreover, given that the employer is not obliged to offer sick leave or holiday pay, the use of these contracts has often been deemed exploitative, enabling employers arguably both to reduce their employment costs and avoid the responsibilities inherent in being a full-time employer.

High Profile Zero Hours Contracts Employers

A recent high-profile example of the use of zero-hours contracts in the retail sector includes the UK’s largest sports retailer Sports Direct, where 90% of the company’s 23,000 employees were on these type of contracts.

Former and current part-time staff members of Sports Direct have criticised zero hours due to the persistent uncertainty they create, exacerbated by the fact that employee work hours could be cut with less than a day’s notice under the terms of the contract. Employers have also been accused of using zero hours to cut work hours if sales targets are not met by workers, creating what the employees have deemed a ‘culture of fear.’

Zero Hours Contracts and Commercial Flexibility

Despite the criticisms, zero-hours contracts do provide valuable flexibility to businesses and are often a legitimate form of employment for companies in certain sectors.

Seasonal or demand-restrictive firms, such as hotels, resorts, gyms and certain types of retail outlet, depend on these contracts to fill roles at the last minute, enabling them to better respond to market demand while avoiding the cost pressures of hiring workers on fixed-hours contracts, as they cannot be sure there will be enough work available for the employees over the time period.

Flexibility for Employees

From the perspective of employees, the flexibility of zero-hours arrangements means that individuals who seek occasional work, as a form of supplementary income for example, can still find employment. Students, faced with the potential irregularity of study hours may take advantage of zero-hours contracts to adapt their working hours to better suit their academic schedules.

Comment

The business secretary Vince Cable has recently launched a review of zero-hour contracts, to better ascertain the effects of these arrangements on employers and employees. If you or your business may be affected and you would like advice, please contact us on 0207 611 4848.

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