What's so terrible about Zero-hours contracts?

Zero-hours contracts and more flexible working can benefit employer and employee alike, but greater clarity on the rights will help

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The use of zero-hours contracts by some retailers such as Sports Direct is a growing area of concern. Despite this, some employers still believe that zero-hours contracts can represent a good solution for all concerned and over a million British workers are thought to be employed on such contracts. News that Business Secretary, Vince Cable, is planning to review the use of such contracts is also welcome, if only because it is likely to bring additional clarity to the matter.

While zero-hours contracts have attracted considerable criticism, it is worth noting that they can bring specific benefits for employees. In particular, the flexible working arrangements provided by such contracts can appeal to students who value the choice they are given about when and how much they work because this means they can fit it around their studies. Working parents may also choose to work under such arrangements, simply because the flexibility of the contract means that they can manage their hours to fit around their home circumstances. The other benefit of a zero-hours contract is that it means people in full-time employment elsewhere can potentially supplement their income with a second job. 

Working under such contracts also allows employees to benefit from certain employment rights, such as paid holiday and redundancy rights, which would not necessarily apply if they were hired as a ‘casual’ worker. 

However, the fact that a growing number of retailers are choosing not to use zero-hours contracts may be an indication of the public concerns now being raised about their use. In most cases, these concerns stem from having workers on ‘standby’ to cover busy trading periods, which may make the system susceptible to abuse. For example, if the same few employees are used each time to cover the additional shifts, the system is no longer fair to everyone and this could potentially leave employers exposed to the risk of a discrimination claim. To minimise this risk, employers should regularly review workers on such contracts and aim to clear those who have refused shifts on more than three occasions from their books. They should also notify workers in advance that if they refuse shifts on more than three occasions, this could affect their employment status. Employers should also aim to manage staffing arrangements closely to ensure shifts are rotated appropriately

The other risk to employers is that they may mistakenly believe the contract with the employee is ‘casual’ when it is actually a zero-hours contract. In such cases, the employer may not be aware that the zero-hours contract gives the employee more benefits and employment rights. 

With a Government review pending, it is unlikely that employers will want to extend their use of zero-hours contracts. Most will prefer to wait until further rules regarding their use have been clarified. However, it would be shame if zero-hours contracts were dropped altogether. In today’s economic climate, it isn’t always viable for employers to employ all staff on permanent contracts with set hours and as long as the systems used to manage workers on such contracts are well managed, they can provide a good solution for all.

In the meantime, for those employers currently using zero-hours contracts, it would be wise to ensure that the terms and conditions are communicated clearly at the outset so employees understand their rights and what is expected of them. Equally, employers need to be clear about the differences between a ‘zero-hours’ contract and ‘casual’ working arrangements to avoid getting embroiled in potential employment-related disputes.

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