Knowledge Hub | Articles

24 July 2013

Tougher review needed on zero-hours contracts

The recent publicity that has arisen from zero hours contracts would suggest that this type of contract is not working for everyone and in fact there are many more zero hour contracts in place than thought.  However it is important to note that zero hour contracts can be effective. Many companies find that they fit in well with their culture and often employees receive a fixed pattern of work.

However as the publicity suggests, many individuals feel that they are being held ‘hostage’ or feel vulnerable with this arrangement, with many employees afraid to turn down work in case they are ‘removed’ from rotas. Some may feel that they have no option but to accept these zero hour contracts, although many find it difficult to make childcare arrangements around shifts offered at the last moment. One of the implications of these contracts is that employees do not receive redundancy pay when work runs out, because employers say that the contract has not been terminated, the absence of work not being inconsistent with a zero hours contract.

Arguably some protection should be put in place to ensure that individuals are not being abused by these contracts. For example, ensuring that the hourly rate and pay is comparable to those on permanent or full time contracts. Additionally, some mechanism to determine whether an employee should be entitled to redundancy pay after a certain period would be of benefit. This would support both employees and employers if an unfair dismissal claim was made. Another area of abuse suggests that employees are required to remain on premises or on call when employed under these contracts without pay.

The Government has called for evidence as to how zero hours contracts are working in practice but whether any action will be taken thereafter remains to be seen.  In general, Government policy appears to be aimed at removing red tape and reducing employment rights rather than increasing them.

Although these contracts are not currently unlawful, businesses should watch this space as to how the Government responds in practice to the evidence collated. The best way to ensure you are meeting legal requirements is to take advice from someone who will invest time in understanding your business priorities and aims and ensure that contracts are fit for purpose.

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