Does the zero-hour contract debate equal zero return?
Recruitment expert Lucy Bristow discusses zero-hour contracts.
You will no doubt be aware of the debate in the last few weeks concerning the zero-hour contract.
Just to explain how it works. A zero-hour contract is a contract of employment which (while meeting the terms of the Employment Rights Act 1996) creates an ‘on call’ agreement between the employer and employee.
It does not oblige the employer to provide work or the employee to accept the work offered.
It is estimated that over 1 million of Britain’s workforce are in a zero-hour contract agreement, and a recent study by the Recruitment & Employment Confederation (REC) showed that over one quarter of companies in the UK are using it.
In fact as I write this the ONS has agreed to revise its original calculation of the number of zero-hour workers, believing the 1 million figure is now too low.
So why is it so controversial?
Well with big employers such as JD Wetherspoon, The National Trust, McDonalds and Sports Direct (who incidentally have 90% of staff on zero-hour) working on these flexible terms, we are talking about a big proportion of the economy.
It’s particularly popular in some of our biggest industries such as hospitality, retail, education and healthcare.
On face value it seems like an easy option for employers – to have flexibility in their work force without having to offer anything more than a job paid by the hour.
But even that is controversial.
Even though employers are obliged to pay the national minimum wage in some instances wages for zero-hour workers are 40% lower than those employees doing the same job on a standard employment contract.
Unfortunately, as with any term it is open to exploitation; there are reports that some employers use the contracts as a tool to reprimand staff; or if an employee refuses the offer of work (as is their right in this contract!) then they may be denied another offer.
And it’s a grey area legally. Under UK law there is a difference between a ‘worker’ and an ‘employee’ with the latter having more rights.
Some circles have called for the ban of zero-hour and use of part-time contract with guaranteed hours. And the business secretary, Vince Cable, has declared he is considering closer regulation of the contracts.
But there will always be the debate that excessive use of this work approach will not help to create a sustainable economy.
However, in the current economy of job insecurity and uncertainty surely the flexibility these contracts provide can benefit both the worker and the boss?
As with any terms of contract while it might not be for everyone if it works for you then that’s a good thing.”