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Zero-hours contracts – are their days numbered?

Last autumn I blogged about zero-hour contracts and considered whether they were as scary as they were being made out to be. The post can be found here and the answer at the time was, “probably not”. As a reminder, zero-hour contracts are normally like other contracts of employment except that they do not provide any number of guaranteed hours in a day or week.

Zero-hour contracts are now back in the headlines after a new report from the Office of National Statistics was published. As my colleague Gillian Mair blogged yesterday, the ONS estimates that there are currently 1.4 million zero-hour contracts being used by around 50% of the UK’s big companies. This is a much higher number than the one published in a report by the Chartered Institute of Professional Development last year, which estimated there are around 1 million zero-hour contracts in the UK.

The publication of the new ONS report has prompted the TUC general secretary, Frances O’Grady, to comment that “Insecure work with no guarantee of regular paid hours is no longer confined to the fringes of the jobs market.” Ed Miliband thinks the issue of zero-hour contracts is serious enough that he has made a pledge to include enacting a ban on the most “exploitative” types of zero-hour contracts in his government’s first Queen’s Speech if Labour wins the general election next year.

So, does all this hue and cry mean that it’s the final countdown for zero-hour contracts? My feeling is… probably not. Just as one person’s rubbish may be another person’s treasure, one person’s “insecure” zero-hour contract may be another person’s ideal employment opportunity as it allows them to arrange their work schedule around tricky family or study commitments. It may also be an employer’s flexible staffing solution to deal with market and seasonal fluctuations in demand.

However, depending on the terms of the contract, there can be legitimate concerns that they are “exploitative”. The main issues here are the worker’s employment status and the level of commitment expected from the worker by the employer. If the terms of the contract make it clear that there is no ongoing employment relationship when there is no work being carried out, this may prevent the worker from acquiring unfair dismissal, statutory maternity pay or statutory sick pay rights. In addition, if the worker is not free to refuse hours offered to them and they are not free to work for a different employer in between “jobs”, it’s clear that the employer is getting all the benefits of the flexibility associated with zero-hour contracts whilst the worker is getting none.

In an interesting and, some might say ill-timed, move, the UK Government finds itself in the firing line on this issue. The Government recently announced a change to the rules relating to job-seeker’s benefits. Under the old income-based jobseeker’s allowance, workers could refuse an offer of a zero-hour contract without facing a penalty. However, under the rules for the new universal credit system, jobseekers will risk losing their benefits for up to three months if they refuse a zero-hour contract which is considered to be reasonable for them. It has stated that a zero-hour contract containing an “exclusivity” clause, meaning that the worker cannot work for another employer when no hours are being offered, would not be reasonable and the jobseeker would not be penalised for refusing it.

All in all, the consensus view appears to endorse the use of zero-hour contracts which are evenly balanced between the needs of the employer and the worker whilst condemning the contracts which are unfairly tipped in the employer’s favour. This sounds like business as usual and means that it’s likely that the zero-hour contract still has a long, fruitful and flexible life ahead of it. We will see if this is borne out when the Government publishes its response to its consultation on zero-hour contracts.

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