Zero hours contracts: unfair and uncertain or great for flexibility?

Employers can be confused about what a zero hours contract actually is and simply it means that workers are not guaranteed to be offered any hours. However, if hours are offered and they become regular, an employee/employer relationship may begin. It is always the work in reality that is considered, not just the terms of a contract.

Two recent cases demonstrate that it is possibly not the zero hours contracts in principle that are the problem, but the way they are sometimes used that causes issues.

A large retailer has been at the forefront of negative attention when it was reported that 90 per cent of its workers were on zero hours contracts. This publicity led to workers being offered 12 hour minimum hour contracts if they wished to move to regular hours.

In contrast, a fast food retailer who also had approximately 90 per cent of workers on zero hours contracts offered fixed hours to their workers and an overwhelming majority opted to stick with zero hours. However, the company did stress that hours were well planned in advance so that workers knew their working hours in advance each week.

Importantly, steps are being taken to ensure that the use of these types of contracts is fair and that potential for exploitation is reduced:

  • 2015: legislation was introduced preventing employers from enforcing 'exclusivity clauses' in a zero hours contract, so an employer can no longer restrict workers from accepting work elsewhere;
  • 2017: Taylor Review recognises flexibility for the gig economy but states ‘Government must take steps to ensure that flexibility does not benefit the employer, at the unreasonable expense of the worker, and that flexibility is genuinely a mutually beneficial arrangement’.
  • 2017: Taylor Review suggests that the rates of pay offered should be reviewed and that regular hours could be requested following a qualifying period.
  • Going forward: Government review of the Taylor Review which will no doubt bring further changes.

What does this mean for organisations?

Organisations with a large number of workers on zero hours and casual contracts should now consider auditing current arrangements to check whether the status of all workers and employees is correct. As part of this, an impact assessment should take place so organisations are informed and prepared in advance for the potential impact of the proposed changes.

For organisations looking to introduce these contracts they should consider it very carefully as part of the workforce planning process. Zero hours contracts are not an easy fix and can be detrimental to morale and productivity if not managed correctly.

It is clear that zero hours contracts can and do work in some circumstances. As with any working relationship, we simply need to ensure good management practices and a fair arrangement that benefits both the employer and the worker.

For more information on zero hours contracts and the potential upcoming changes please contact Steve Sweetlove.