Updated: May 17
Zero hours contracts have been around for many years, and have been a source of controversy for just as long. What are they, what are the controversies, and how are they changing?
What Are They?
Zero hours contracts are based on flexibility. They establish a contract of employment between the company and the worker, guaranteeing rights such as holiday pay and the national minimum wage, without specifying a number of hours to be worked in each week. In theory this flexibility is a two-way street, with both the employer able to offer work only when it is needed and the employee able to turn down work if they are not available.
Zero hours contracts came into the limelight in the wake of the Global Financial Crisis of 2008. As rising unemployment led many workers to take jobs they previously would have passed on, and rising business costs led firms to move away from full time contracts and look to pay only for productive hours. In many people’s minds zero hours contracts are intertwined with the rise of the so-called gig economy, although most firms such as Uber and Deliveroo use a self-employment model, some do issue zero hours contracts.
Why The Fuss?
The root of concerns about zero hours contracts lies in the perceived imbalance. Many people, especially within the trades union movement say that since the employer has a variety of workers to offer hours, but the employee has only one employer, they are not really equal. Anecdotes have emerged of employees not being offered shifts for weeks after turning down hours.
The furore re-emerged in the spring of 2019, as Britain’s Trades Unions Congress (TUC) released research suggesting that employees on zero hours contracts are paid less than other workers and are more likely to work unsociable hours. The TUC has used this research to renew their calls for this type of contract to be banned. The renowned film maker Ken Loach added to these calls in May 2019 when he told the Cannes Film Festival that “zero hours contracts can kill people”.
Zero hours contracts have their defenders though. CIPD, the UK’s professional body for HR, has branded calls for a ban as counterproductive. The organisation points to its own research which found that two thirds of workers on zero hours contracts are satisfied with their job. CIPD explain this by pointing out that many zero hours workers are students, or care for children or elderly relatives. The real world has also backed up this position; in 2017 McDonald’s offered all of its zero hours employees the option of moving to a fixed hours contract and 80% chose to remain as they were.
What’s in The Pipeline?
The debate around zero hours contracts will roll on, but there are some changes in the law ahead already which will affect this type of contract. The British government has unveiled proposals in the wake of the Taylor Report into modern working practices that will clarify the rights of flexible workers.
Employees will now have the right to ask for a more stable contract after 26 weeks of employment, although given the CIPD research and McDonald’s experience it is unclear how many will take this up. The second part of the government’s proposals with an impact on zero hours contracts is that holiday pay will be based on the average hours worked over a 52 week period, instead of the current 12 weeks. This could see an increase in entitlement for zero hours employees of seasonal companies.
In April 2019 the EU also published a directive that will impact zero hours staff. Among the proposals, which the UK is likely to mirror even if it has left the EU before the directive takes effect in 2022, is a requirement to compensate employees if shifts are cancelled at the last minute. The proposal also forbids exclusivity clauses, meaning that employees may have a battery of zero hours contracts to ensure their income.
Stay in control
However complicated your staffing setup – whether you are using staff on zero hours contracts with varying hours, multiple staff on part time contracts, or a mix off full time, part time and flexible staff – staying on top of their annual leave is vital to your business. LeaveWizard is a purpose built annual leave and absence management platform that makes it easy to seamlessly incorporate the relevant regulations to all your employees. You can take a free product tour, of contact us to arrange a free demo by clicking here. I want to know more about managing annual leave for zero hour contracts