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Zero Hours Contracts – Zero Support or the Key to Happy Working?

Posted on Nov 29, 2013 by  | 0 Comments

Employers are often heavily criticised for using zero hours contracts in the workplace to exploit their workers, particularly in the hospitality industry and big fast food chains. Employers such as McDonalds, Dominoes and Burger King have demonstrated recently how there continues to be widespread use of these contracts, which some consider to be unfair. However, a report issued this week by the CIPD (in response to calls for the use of zero hours contracts to be heavily restricted) seeks to show that the zero hour contract can be equally attractive to employer and employee. The report seeks to dispel the myths and asserts that the zero-hours contract has been ‘unfairly demonised and oversimplified’.

There is no legal definition of a zero hours contract though it is widely recognised that it is a contract under which an individual agrees to work as and when required but is not guaranteed any specific hours. Most employers will engage the individual as a worker or on a self-employed basis which means that there is often no job security or payment for holidays, sickness absence or maternity. The contracts can vary, with differing obligations and restrictions on the individual as to whether they can refuse work or work elsewhere. Employers are often criticised for using this as a means of avoiding the creation of employment rights and job security. Often employers will not allow the individual to cancel a shift but will be permitted to do so themselves, even at the last minute and without providing any compensation to employees who travel to work and may be turned away. However, not all zero hours contracts are drafted in this way and the research findings by the CIPD show that many employees are happy with their flexible zero hours working arrangements and that the problem lies in the bad practice and poor management adopted by some employers who offer unfair terms to the worker’s disadvantage.

The key findings of the report are that:

  • 3.1% of the UK workforce is employed on zero hours contracts
  • 60% of zero-hours workers are satisfied with their job (as compared to 59% of the rest of the workforce).
  • 65% of zero-hours workers are happier with their work-life balance compared to 58% of average UK employees.
  • 52% say they would not like to work more hours than they do in a typical week.

However, it is recognised in the report (and in the accompanying guidance) that many contractual relationships formulated in this way are unfair and seeks to encourage businesses to review their current models and take into account the following principles:

  • Appropriateness: In some cases zero hours contracts will not be appropriate and they should not be used where a permanent and/or full time contract would be more suitable just to avoid the individual benefiting from employment rights. Managers should be trained to ensure that this is the case.
  • Exclusivity: Employers should not include a prohibition on working for other employers unless there is a good reason for doing so, for example, the protection of intellectual property or the protection of the business from competitors.
  • Cancellation Compensation: If the employer cancels agreed shifts at short notice, the individual should be compensated for travel expenses and at least one hour’s pay.
  • Equal Pay: Employers should ensure that individuals on zero hours contracts receive comparable rates of pay to anyone else doing the same work.

Where zero-hours contracts are used properly, they can allow employers to build up a flexible workforce, allowing them to adapt to fluctuating demands in the business. For example, where a business goes through seasonal or peak periods with constantly changing staffing demands, employers could rely on a bank of zero-hour staff but offer them the chance to select the shifts that suit them from a list of the hours required, taking into account other work, training, family or care commitments. Zero hours contracts are also becoming increasingly popular with the older workforce who may choose this type of flexible pattern instead of fully retiring. Peter Cheese, CEO of CIPD commented that ‘zero-hours contracts combined with good management can be an effective means of matching the needs and requirements of modern business and modern working lives across a wide range of employment sectors and job roles, in organisations of all shapes and sizes.

So, employers should not be put off the zero-hours approach and the case studies contained in the report demonstrate just how valuable they can be for some businesses. However, where they are used incorrectly, it is likely to attract bad press, a demoralised workforce and in some cases, possibly a claim against the employer in an Employment Tribunal if the individual can show that the circumstances of the working relationship are more akin to an employment relationship but with some of the fundamental rights stripped away.

If you are considering introducing zero hours contracts to your business or think that you may need a review of your current contractual model, please get in touch!

Hayley

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