Zero hours contract – avoid the ban!

  1. Zero hours

Over the past year there have been a number of studies, surveys and reports setting to try and understand the true extent of so called “zero hours” contracts.

The view point in August this year was that the number of people on zero hours contracts was far greater than previously thought with estimates that the true figure was over a million (estimated by the Chartered Institute of Personnel & Development – CIPD) as opposed to the Office of National Statistics (ONS) 2012 estimate of 200,000 (revised in August 2013 to 250,000).  Vince Cable announced a Government review into the use of zero hours contracts and a number of political parties called for their use to be banned, including Labour and the Green Party.

By September Ed Miliband had set out his plans to “ban employers from forcing workers to be available even when there is no guarantee of work, pledge to outlaw employers from requiring workers to work exclusively for one business, and promise to give anyone working for a single employer for more than 12 weeks on a zero-hours contract the automatic right to a full-time contract based on the average time worked over that period.”

The results of the most recent CIPD survey published this month have presented a surprising viewpoint in the debate.  Of the 2,500 workers surveyed, those on zero hours contracts were just as satisfied with their job as the average UK employee (60 per cent and 59 per cent respectively), and more likely to be happy with their work-life balance than other workers (65 per cent versus 58 per cent).

The research confirmed the CIPD’s previous estimate that there are approximately one million people – or 3.1% of the UK workforce – employed on zero hours contracts.

So, what is a “zero hours” contract?

The fact is, in law ‘zero hours contract’ does not have a specific meaning.  Contracts referred to as zero hours differ from organisation to organisation and “zero hours” staff may be engaged as employees or workers.

The most common reason for the use of “zero hours” is the employer’s need to have a flexible workforce; to respond to seasonality of work, peaks and troughs in demand.

Workers on zero hours contracts are often suited to this type of arrangement, allowing them flexible working patterns.

Poor practice in the use of zero hours contracts is the biggest concern.  It is my opinion that there is a genuine need to allow employers continued flexibility by using zero hours contracts, specifically in the tourism sector within Wales.  But employers need to understand their obligations.  If practices don’t improve we could face a ban or at the very least more complex legislation.  Straight forward good practice would help eliminate the protracted debate as to their effectiveness and value.

5 top tips when using zero hour contracts:

  1. Establish the employment status of the individual – are they an employee or worker?  This will determine the rights and protections afforded to them, including the right not to be unfairly dismissed (after two years’ service), the right to be paid the National Minimum Wage, the right to paid annual leave, the right to Statutory Sick Pay, or the right to statutory maternity, paternity, adoption leave/pay.
  2. Do not penalise workers if they are not available to work.
  3. Give workers appropriate notice of their shifts.
  4. Do not restrict zero hours workers from working for another employers.
  5. Ensure pay parity with permanent employees.

The CIPD have published a guide to zero hours contracts which can be downloaded from the Landsker website link? – click here

If you need to review your contracts or want advice on establishing the status of your workforce, please contact us at Landsker Business Solutions – www.landsker.co.uk – 01994 240631.

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