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Zero-hours contracts

A new survey conducted by the Chartered Institute of Personnel and Development (CIPD) has suggested that there are many more people working on zero-hours contracts than was first thought.

The poll shows that as many as a million people in the UK could be employed on the contracts, which have proved controversial as they do not offer a guarantee of work and pay and workers on them often do not receive holiday or sick pay. The Office for National Statistics has increased its estimate of those on the contracts by a quarter, to about 250,000, but the CIPD figures suggest the figure could be much higher, as many as a million.

It emerged recently that the retailer Sports Direct employs almost 20,000 out of its 23,000 workforce on zero-hours contracts and pub chain JD Wetherspoon has about 80% of its workforce on them. Other organisations using them range from cinema chain Cineworld to Buckingham Palace, while most people working for McDonald’s are on zero-hour contracts.

What are zero-hours contracts and who benefits?

They are essentially contracts which set out the terms of a working relationship between employer and employee which will allow the firm to employ the worker on an informal, flexible basis. This means that there is no obligation on a firm to offer a worker a particular number of hours in a set week or month; equally the worker is not obliged to accept any work given.

Critics have called for the government to take a closer look at the contracts; the different forms they take, the advantages and disadvantages and the good and bad practice arising from them. In particular this should include the effect being on zero-hours contracts would have on a worker’s employment rights, earning capacity and personal well-being. Firms have been accused of using them to evade their responsibilities and cut staff benefits.

Advantages

Flexibility. There is flexibility on both sides. As already discussed there is no obligation to either offer a set number of hours or for this to be accepted by the employee. This enables the worker to hold down other employment or devote more time to family life outside of work.

Informality. There is the difference between a contract “of” service and a contract “for” service. Workers usually with a contract “of” service are required to work in a particular place and have certain duties which have to be undertaken. The formalities are different for more casual workers, who have a looser arrangement which aims to suit both parties.

 Disadvantages

Lack of rights. Those workers on these types of contracts will be covered by the Equality Act 2010 but are unlikely to receive protection against unfair dismissal, probably will not receive redundancy pay and won’t get protection from the TUPE regulations.

Flexibility. This can be an advantage of course but only if the employee prefers it for their own arrangements. Many workers prefer a certain number of set hours and the routine this gives, something they won’t receive under zero-hours contracts.

Uncertainty. Closely related to the above point, this can be a significant disadvantage to workers not knowing if or when they will be working.