19 April 2013 #Employment
According to recent reports 23% of large British firms (i.e. those with more than 100 staff) now engage individuals on so-called “zero hours” contracts. This is in contrast to 11% in 2004.
Zero hours contracts do not have a definite legal meaning. However, in practice, it is understood that it is a type of contract used by employers whereby workers agree to be available for work although have no guaranteed hours. The workers are then only paid for the hours they work. They are used increasingly by companies seeking labour flexibility to meet short-term staffing needs without taking on the obligations associated with contracts of employment. There is no obligation on businesses to provide work; and, in theory, no obligation on the worker to accept work.
Historically, zero hours contracts were used in cleaning, retail and catering/ hospitality sectors. However, more recently, charities and public sector organisations (including the NHS and education establishments) have also sought to adopt a zero hours model. Many attributing the increase to public spending cuts and privatisation. Owing to the current job market it seems that workers are willing to enter into these contracts despite having little or no certainty with regards to when they will receive a call to attend work. This may also deprive the workers from securing alternative employment where they need to remain available to attend work on short notice. As there is no guaranteed work flow, individuals may regularly find themselves out of work with no income.
Obviously, these contracts have received a controversial reception, particularly owing to the increase in their popularity. Most companies enjoy the flexibility and reduced associated employment rights. This is in stark contrast to commentators and trade unions who believe that, morally and ethically, workers are being deprived of legal protection. Labour MPs have also criticised the model as an attempt to avoid the agency workers regulations (where workers receive the same basic terms and conditions as other employees after a 12 week qualifying period).
Although companies believe the use of these contracts is a commercially attractive option, they do not come risk-free. The extent to which the offers of work become regular a worker could build up employment status and continuity of employment between assignments and, in effect become “employees”. This may entitle them to enhanced rights including redundancy pay and unfair dismissal protection. Therefore, businesses do not avoid the risk of challenge from disgruntled workers.