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Are zero hour contracts beneficial?

It’s HR focus week on Bdaily. Here, Amy Ross-Sercombe, an employment solicitor at Clough & Willis, asseses why employers and entrepreneurs need to carefully consider zero hours contracts.

Over the past few months, zero hours contracts have been in the news agenda with the arguments both for and against being hotly debated.

The Business Secretary Vince Cable has recently announced that the government will launch a consultation on tackling abuse of zero-hours contracts, but what exactly are they?

In short, employers who use this kind of contract do not guarantee to provide their workers with any work and they only pay for the work that’s actually done. However, the worker is expected to be available when - or if - called on by the employer.

Unions, think tanks and various MPs have criticised this practice with some referring to it as an abuse used solely to avoid giving workers employment rights.

Claims that it also means a lack of certainty around jobs and income have also been rife.

However, the Office of National Statistics estimates that there are now at least 200,000 staff employed in this way across the UK; whilst research by the Chartered Institute of Personnel & Development puts the figure at one million.

Stats like these suggest that not only do employers find that zero hours contracts make sense but workers do too. Whilst flexibility is crucial for businesses in such difficult economic conditions, they also help workers who are trying to juggle paid work with things like study or child care.

Aside from being able to adjust the size of the workforce at the drop of a hat, the benefits to business are that zero hours workers have fewer employment rights.

Whilst they are entitled to the national minimum wage, holiday pay and statutory sick pay, they are not entitled to key employment rights such as redundancy payments, maternity/paternity and other family friendly payments and they are also not protected from being unfairly dismissed.

It all sounds pretty rosy for the employer so far doesn’t it? However, businesses need to be aware that if this mutually beneficial arrangement goes sour then they could find that their worker has more rights than they thought.

The term “casual worker”, which is often used to describe workers on a zero hours contract, does not have a legal definition so this naturally leads to examination of their employment status when they seek redress for perceived poor treatment.

If the zero hours contract is not carefully drafted, or the reality of the working relationship does not match the intent set out in that contract, casual workers could – in the eyes of an employment judge - turn out to be employees with rights they can enforce.

To sum up, zero hours contracts may be the answer to an employer’s workforce problems but having the correct paperwork and managing the relationship properly is still the key to avoiding the Tribunal.

This was posted in Bdaily's Members' News section by Clough and Willis .