Zero-hour contracts: a necessity to survive or for a few to thrive?


Recent reports show that just under 700,000 people are now on zero-hour contracts as their main form of employment – an increase of more than 100,000 since 2013, when he number of people of zero-hour contracts was 1.9% of all people in employment. Now the figure stands at 2.3%.

Zero-hour contracts are controversial because they offer no guarantee of hours and only minimal benefits and protection. Campaigners argue that the contract places the worker in a vulnerable situation, which only intensifies if they agree to an exclusivity clause that prevents them from holding more than one job at any time. Clauses like this, that stifle an employee’s ability to improve their situation, are common inclusions in zero-hour contracts, and it is not surprising that political parties are jostling to be the first to remove the clause in the run up to the May election.

The use of zero hour contracts is on the rise, and not simply limited to back-street traders and suspect firms. Some of the Britain’s largest employers offer zero-hour contracts, including big retail names and services. Nor is it the reserve of certain industries.

The Office of National Statistics claim that over half of businesses in the hotel and catering sectors use the contracts, with similar figures for the care sector. Other big users of zero-hour contracts are universities and colleges, where teaching roles are now deemed temporary and subject to consumer need.

The benefits to businesses using zero-hour contracts are clear: a deregulated workforce, limited fixed costs, leaner operations and increased agility. Yet the benefits are not transferred to employees, who, without a fixed contract, are unable to plan their lives and participate in seminal life events, such as buying a house, paying for childcare etc. Too many live hand-to-mouth existences, getting by on a day-by-day basis rather than planning for their future. Furthermore, it is highly unlikely these employees will build up the skills and experiences that will help propel them out of a low-paid culture. Employers offering zero-hour contracts often don’t feel the need to invest time and resource in developing their employees. It is all too casual and risk free.

However, what does this mean for the UK at a time when driving up the nation’s skills and talent is critical to rejuvenating an ailing economy and stumbling enterprise? Where is the long-term planning in all this? Are zero-hours contracts a necessity to survive or for a few to thrive?

Advice to employers

It would be difficult to outlaw zero-hour contracts, despite recent demonization, and that, in particular situations, zero-hour contracts do have a place in the workforce. However it is important that employers are made aware that this type of contract does not exempt them from paying statutory entitlements.

Furthermore, employers need to be clear on the reasons as to why they require a worker to be on a zero hours contract and should not try to make this an exclusive arrangement, especially if there is limited work available. Employers will also need to be aware that, although a worker is on a zero-hours contract, when they start to work regular patterns this could imply fixed hours and potentially permanent employment status.