In recent months there has been a furore in the press, by politicians, trade unions and others about the rising use of zero hour contracts.  But what is this about and why all the fuss?

What is a zero hours contract? 

This is where an employer hires an individual to work for them, but the employer cannot say if, when or how many hours work per week they can give them – hence the term zero hours.

Most other forms of employment contract have a clear legal definition, the way they are structured, the relevant standard terms and statutory protection are known, but this is not the case for zero hour contracts.  Not only is there lack of clarity over the form the contract takes, but whether the person employed under them is actually an employee at all is also of doubt.  Many people fall into a category called worker, a kind of half-way house between employee and the self-employed, with the consequent less employment protection.

Why do these zero hours employment relationships exist?

Where they come into their own is the flexibility they afford BOTH the employer and the worker.  Increasingly, businesses and people are looking for greater working flexibility.  Aside from other forms of flexible working, Zero hour contracts are great for employers who have peaks or troughs in work but can’t easily predict when they are going to be.  It enables them to call upon individuals to work and be paid for it only when work is available.  This often appears more cost effective for them, and using the same workers mean knowledge of the job and the company’s ways of working is retained so the learning curve is flatter compared to bringing in unknown Agency workers.

If operated ethically, for the workers it doesn’t commit them to working regularly and shouldn’t require them to commit to working at any point unless they want to.  Equally, they should also be able to combine their work on the zero hours contract with other work.  This works well for individuals who don’t want (or need) to be tied to a regular work routine, but would like the opportunity to work to a schedule that suits their life style. However, the downside for the worker is that such working can in no way provide the certainty of a regular and guaranteed income that most people are looking for, and in many cases they are further restricted from many employment rights and benefits available to employees.

So, what’s the current fuss about?

Zero hours contracts have been around for many years and have come in and out of favour as an employer’s tool over that time. The ONS estimate that around 250,000 people are employed on zero hour contracts, although the CIPD believe the current number is closer to 1m. Either way, such working is becoming more common.

With their growing popularity comes the greater risk of such contracts being used exploitatively. Research undertaken over the last year or so by BIS supported by evidence gained through the ONS and studies done by the CIPD and the IoD, reveal that some employers seem to unfairly exploit these forms of working.

Some employers (including some household names) who widely use nil hour contracts push the flexibility it gives them by requiring the worker to work exclusively for them.  This seems fine and is not at all unusual in many employment relationships, until you realise someone on a zero hours contract might remain on long periods of standby waiting for a few hours or days of work without being able to work elsewhere in the meantime. Other employers might operate the contract in such a way that despite not being able to predict when work might become available nevertheless require the worker to be available to work when the work is offered.  So again this means such workers cannot take up other work or go about other life activities if there is a risk they are called upon to work and then cannot do so or risk being penalised as a consequence.

It’s these examples of less acceptably restrictive uses of the zero hours working that have prompted BIS to undertake a public consultation  to consider whether greater regulation of zero hours working is required in the UK, whilst supporting them in principle as valid employment contracts. Consultation concludes today, 13 March 2014, so we wait to hear the outcome.

If you are interested to know more about how zero hours contracts might suit your business call us on 01353 749620 to discuss, or use our web contact form.