Zero-hours contracts. Good, Bad or Ugly?
Love them or hate them, the number of zero-hours contracts is on the increase.
A recent survey by the ONS (Office of National Statistics) in March 2016 reported that over 800,000 workers in the UK said they were on a contract that didn’t offer a minimum number of hours, or a ‘zero-hours’ contract. Interestingly, 6,5% (13 of 197) of ONS workers in the Greater London area are themselves on zero-hours contracts.
Why do we have them?
Zero-hours contracts, or casual contracts, are usually for on-call work with no guarantee of the number of hours available. An example would be an interpreter. The need for this type of contract was brought about by unpredictable large fluctuations in the supply of work and the subsequent fluctuation in demand for workers.
Market asymmetry
Although the percentage of workers on zero-hour contracts is relatively small, their effect on the employment market is significant. It has been argued that zero-hours contracts lowers the national average wage, exerting a disproportionate effect on employment-market behaviour.
There are rules though
Recent government intervention made it illegal for employers to write harsh exclusion clauses into the contract, which in extreme cases had previously banned zero-hours workers from seeking employment elsewhere. The law now states that zero-hours workers can ignore any clauses in their contract which prohibit them from seeking or accepting work from another employer.
Zero-hours workers must be paid the national minimum wage and are entitled to statutory annual leave, similar to regular employees. Research has shown however, that zero-hour workers earn less per hour than their counterparts in full-time employment and they may not enjoy benefits such as sick pay and statutory notice periods.
Important points regarding zero-hour contracts
Although there is still no legal definition of zero-hour contracts
- The National Minimum Wage must be paid regardless of the number of hours worked
- Paid holidays do accrue during hours worked
- Workers may not be subjected to harsh exclusivity clauses
- Employers are responsible for the health & safety of zero-hours workers
Statistics
According a recent survey, a surprising number of workers reportedly prefer the freedom and flexibility on offer. Fast-food giant McDonalds employs around 100,000 workers in the UK. Approximately 80,000 of them are on zero-hours contracts. Of those workers surveyed in the UK, 92% were in favour of zero-hours contracts. It is believed that only 350 workers were interviewed so the survey may not be a true reflection.
In all instances, zero-hours contracts allow workers access to the job market without the rigidity of a full-time position. To those workers who might otherwise not seek full-time employment, for example students or young parents, zero-hours contracts fill an invaluable niche. There are convincing arguments from both sides.
Employers say that the unemployment rate is lower as a result of zero-hour contracts, due to the affordability of hiring a workforce where the workers have the flexibility to fit their work around other life commitments.
Although zero-hours contracts were initially viewed as exploitative, and frowned upon, it would appear that they do play a significant role in the UK employment sector. They will likely continue to offer an important employment gateway for a number fast approaching a million people.
Get in touch
If you’re uncertain of how to use zero hours contracts appropriately and ethically, or need a zero-hours contract drawing up, please get in touch on 01949 500949
