Zero hour contracts

There have been discussions concerning zero hour contracts in the media recently. A number of  companies have been employing the majority of their staff on zero our contracts. The use of zero hour contracts are on the rise. According to the Charted Institute of Personnel Development there could be as much as a million ‘zero hour’ workers. Although it has its benefits, it has been criticised as workers can be exploited.

What is a zero hour contract?

A ‘zero hour’ contract is a term used to describe a contract where the employee is not guaranteed work and is paid only for the work they do. This creates an on-call arrangement where an employer will give the employee a few hours notice to come to work. The employer does not have to provide work for the employee and the employee does not have to accept it. Under the National Wage Regulations, workers must be paid the national minimum wage if they are at work and are required to be there.

Benefits

Zero hour contracts would benefit people who want flexibility and want occasional earnings. This could benefit students, who would like to fit work around their studies and it could appeal to parents with children. Another benefit for workers is that this contract could supplement a main income. People in full employment may be able to have a second job because of the flexibility of a zero hour contract. Additionally, it would help businesses meet demand. It allows businesses to respond to the peaks and lows of the economy by bringing in people who could have been out of work. Alexander Ehmann, Head of Regulatory Policy at the Institute of Directors said that: “Banning Zero Hours Contracts would hurt thousands of employees who rely on the flexibility such contracts allow and employers, especially small and medium sized firms, would struggle to hire the staff they need to meet varying demand”. It would also benefit businesses as it would cost less to hire staff on zero-hour contacts than fixed contracts.

Criticisms

Employers do not have to offer sick leave pay or holiday pay. However if court decides that there is consistent employment then it will override the contract terms. There is also a criticism that workers could be exploited as there is no guarantee on the number of hours workers can work.

The Future of Zero hour contracts?

Vince Cable, the business secretary, has said that the government may legislate on zero hour contracts. However he has ruled out a complete ban. Cable has been leading a review since June looking at changing rules for workers. This would include reviewing rules where workers can work only for one employer.

Labour has said there will be a zero hour summit on zero-hour contract abuse. Chuka Umuna MP suggested that zero hour contracts could cause difficulties for families. The shadow business secretary said “Zero-hours contracts are making hundreds of thousands of people worried about whether they will have enough work or be able to put food on the table for their children week by week”.

While change is welcomed, many people however do not wish for them to be banned. Andy Burnham, the shadow health secretary has called for them to banned. This would be unpopular with businesses and workers who need flexibility.

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