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Zero hours contracts can strengthen employment when used correctly

View profile for Philip Richardson
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Redundancy guide for employees

Recent Office of National Statistics (ONS) data has revealed a sharp rise in the number of people working on zero-hours contracts to over 900,000. It is not the first time this contentious topic has made the headlines. Sports Direct recently caved into pressure and offered its directly employed, casual retail staff at least 12 guaranteed hours of work a week instead of zero-hour contracts. While this only affected some of the company’s staff, it is still being hailed as a significant breakthrough by opponents of zero-hours contracts.

The ONS figures show that 2.9 per cent of the UK’s workforce are not guaranteed minimum hours of work – a 21 per cent increase on the same period last year. The numbers are much higher in the hospitality and leisure sector, and in agriculture.

But, regardless of the recent backlash, there is still a place for a more flexible approach in the workplace. If zero-hours contracts are used correctly, they can benefit both the employer and employee. They can stop workers from being tied to one employer and allow them to take up jobs on a temporary basis with no commitment, as and when they require work. Equally, there is no obligation on the employer to offer work. The arrangement provides much more flexibility, saving potential costs as well as limiting employer liability. Many appreciate this flexibility, especially because it allowed the UK to bypass higher levels of unemployment during the recession. The arrangement gives employers the opportunity to recruit according to business needs.

But the statistics do show some worrying trends. The ONS report revealed that two-thirds of the increase (66 per cent) in people working under zero-hours contracts were among those who had been in their role for more than a year. It is becoming increasingly clear that those taking up such contracts, some without realising they are doing so, are women, people in full-time education, or those in younger or older age groups. While such groups may appreciate the flexibility, the concern is that some employers may exploit the use of zero-hours contracts and such practices may also be discriminatory.

Increasingly there are cases of people on zero-hours contracts where the way they work indicates they should be entitled to similar rights to other employees. Under zero-hours contracts they are being denied these benefits. The fact that an individual is said to be engaged on a casual or zero-hours contract does not determine his or her employment status. If employees are getting regular work and hours, regardless of the contract they are engaged under, they may benefit from the additional rights an employee has. Whether or not an individual is an employee, a worker, or neither, will depend on the reality of the employment relationship and, in particular, whether or not there is mutuality of obligation between the organisation and the worker.

For example, in Pulse Healthcare v Carewatch Care Services, the claimants were engaged under an arrangement that was called a ‘zero-hours contract agreement’ but, in reality, they had worked fixed hours on a regular basis over a number of years. Once the rota had been prepared, the claimants were required to work and the employer was required to provide that work. The Employment Appeal Tribunal concluded they were employees.

For the more vulnerable in the society, zero-hours contracts can be a cause of anxiety about how many shifts will be available and what their take-home pay will be at the end of the week. Zero-hours contracts can be a welcome option for the flexibility they offer but equally, as more employers make use of them, the government and courts may need to do more to protect vulnerable workers and penalise companies that abuse their use.

This article first appeared on CIPD People Management on 23rd September 2016