Going from zero to hero

The general election is a distant memory; Summer has passed and we’re turning our thoughts to winter heating bills and avoiding Christmas shopping. But one recurring pre-election theme rumbles on, and that’s zero hours contracts.

You may be surprised to hear that around 744,000 people are on zero hours contracts (an increase of 19% from last year). This accounts for 2.4% of the total UK workforce, and there are signs that employers are increasingly turning to these sorts of controversial arrangements to cut workers’ pay and conditions.

Does zero hours mean zero work?

Sometimes yes, sometimes no.

Hardly a satisfactory answer, but we’re afraid it’s the only one we can offer you. Where there’s a zero hours contract in place, the employer doesn’t have to offer work and the worker doesn’t have to accept it. That’s about the size of it.

One of the clear redeeming features is the flexibility that zero hours contracts create. This is why they’re so well liked by many employers, because it means they can vary the size of their workforce at the drop of a hat. This style of working also suits some workers (albeit the minority).

However, all too often it’s the employer who enjoys the flexibility while the worker has to settle for insecurity.

Who’s affected?

Zero hours contracts are most commonly used in hotels and the leisure industries, as they often need to cover temporary staff shortages, or a seasonal or event-related need for more staff. (Say the wedding party’s original venue has been double-booked and they need somewhere new in a hurry – all of a sudden there will be a need for a few extra staff on little notice. Calling in people on zero hours contracts can be the answer.)

Following closely behind are health and education as more and more employees of the NHS, the care industry and universities are on zero hours contracts.

Any sector, in fact, where demand rises and falls, lends itself to the model. And as the model grows in usage, the more other industries will begin to adopt it.

So, what’s the problem?

On first glance, it may seem like a rather good arrangement – someone gets offered work and they’re free to choose whether they do it or not. Perfect: they may be feeling a bit tired that day or a mate might have just managed to secure Cup final tickets. But it’s not so great if no work is actually offered; the bills still have to be paid. It’s an uncertain, precarious situation.

Employee or worker?

Most zero hours contracts give “worker” employment status rather than employee status, which impacts on employment rights. A worker is unlikely to have any unfair dismissal protection or redundancy payments, and any breaks in their contract could affect rights that accrue over time.

Crucially, a worker might well be unable to meet the earnings threshold for National Insurance contributions with a knock-on effect of losing out on maternity, sick pay and contribution to a State Pension.

On the up-side, they would be entitled to annual leave, the national minimum wage and pay for work-related travel – but this may be small comfort if they’ve had to incur childcare and travel costs when work is cancelled at short notice. Not to mention the disrupted lifestyle with no ability to plan from one day to the next.

Exclusivity in zero hours contracts

Earlier this year it became illegal for employers to prevent zero hours contract workers from working for another employer. Surely that’s a good thing, we hear you say. Well yes, sort of. In reality it does very little to improve a workers’ rights. It also presents quite a challenge for a worker to juggle more than one employer when they’ve no idea where the next piece of work is coming from.

What’s in a definition?

In an effort to make us all feel more warm and fluffy towards zero hours contracts, the government recently introduced a statutory definition of what they actually are, something that had been previously lacking.

Great, this should help to sort things out, shouldn’t it? But the definition basically states (once you untangle the language) that the employer does not have to offer work. Thanks for clarifying, but we already knew that.

We had hoped that the definition might address the employment status of a zero hours contract worker. This, after all, is what causes the most amount of worry and uncertainty for people. No such luck. We’re still waiting for that, so we have to hope that the employment courts will clear things up. It remains the case that it’s very difficult to establish that someone working under a zero hours contract has employee status. The contract – and the actual circumstances – need to be looked at carefully.

Where do we stand now?

Not very far away from where we stood before, if truth be told. Technically, zero hours contracts are now regulated, but that regulation is hardly watertight. What’s to stop a cunning employer (admittedly one with a rather Victorian outlook on employment) from getting round the ban on exclusivity clauses by drafting a contract with very low fixed hours?

However, the signs are that the government is minded to bring zero hours contracts under control. They haven’t quite figured out how to do it yet, but employers would be ill-advised to try to beat the system on a technicality. What may really be needed is a fundamental reform of employment law. But don’t hold your breath…

More on zero hours contracts

Ever the voice of reason, we at Simplify the Law believe that zero hours contracts can be a good and useful tool to help businesses and individuals prosper. They need to be used wisely and even-handedly, but we know that our readers are all models of wisdom and even-handedness. So that’s OK.

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