Zero-hour contracts are on the increase, but what are they

Recent media reports on the use of ‘zero-hour contracts’ in the NHS has brought to the forefront a largely unpublicised, but nevertheless, sharp increase in the use of this type of contract in recent years and, unsurprisingly, this news has been met with a great deal of controversy.

We asked our legal expert, Philip Landau, to answer some of the key questions…

So what are zero-hour contracts?

Unlike standard employment contracts, where there is a mutual requirement for the employer to provide work and the employee to work a set number of hours per week, zero-hour contracts enable employers to engage and pay a worker only as an when they are required – there is no mutuality of obligation. Accordingly, an individual working under such contract would not be guaranteed work and any work offered would not necessarily be on the same days or at the same time each week. By the same token, the worker would not be obligated to accept any work offered.

 

Where are they used?

The flexible nature of zero-hour contracts, which enables an employer to engage and pay for someone only at the times when there is the necessary demand, means that they are most commonly found in industries where high levels of activity are followed by quieter periods. For example, in agriculture, tourism and construction it is commonly acknowledged that there are set seasons which will be busier than others, therefore necessitating a short-term increase in the workforce. Lower-skilled industries such as catering, cleaning, security, and retail will also utilise this type of contract.

Why are they on the increase?

Zero-hour contracts were in regular use during the recession in the 1990s and thrive when the economy is unstable. As employers try to find more cost-effective ways of dealing with fluctuating and uncertain business needs, workers are in the unenviable position of either accepting these unfavourable terms or left looking for another job in a tough market.

According to the Office of National Statistics, since 2005, the number of people (mostly women) on zero- hour contracts has more than doubled. 161,000 people are now employed in zero-hours jobs but, for the purposes of the UKs unemployment statistics, they are classed as ‘employed’ even if they work for no more than a couple of hours each week.

Why is there controversy?

Zero-hour contracts have always been the subject of criticism due to their predisposition towards the variable needs of the employer at the expense of the worker.

An individual working under a zero-hour contract is not guaranteed work, will only be paid for work done, and, as a ‘self-employed contractor’, will not be entitled to crucial employment rights which are afforded to ordinary ‘employees’. These include the right not to be unfairly dismissed, the right to a redundancy payment, and maternity leave.

Workers on this type of contract should also be aware of the potential affect it will have on their ability to claim benefits as a result of their level of earnings from week to week.

The unpredictable nature of the zero-hour contract is also a common criticism – an employer can, if they wish, arrange shifts on short notice, thereby making it extremely difficult for the worker to make alternative plans (childcare, study etc). And the problem does not stop once in the workplace – many employees will commute long distances (and bear the associated cost) only to be sent home after an hour or two having incurred a financial loss. To avoid this, many workers will insist that they are guaranteed a certain amount of hours before making the journey, but may be concerned that this could lead to them being labelled ‘difficult’.

Nevertheless, in many cases, no matter how short the notice or impractical the hours, a worker will agree to work for fear that their refusal will mean that they are offered less hours in future because the employer has a ‘pool’ of other workers to choose from. It is for this reason that zero-hour contracts are most commonly linked to low-skilled workers and why the NHS’s recent decision to employ highly-skilled clinical staff on zero-hour contracts has been met with condemnation – there are fears that these staff will fail to turn up for work and there will be no similarly skilled worker to fill in the gap.

So, what are the negatives for employer?

Just as a worker lacks certainty of work whilst under a zero-hour contract, the employer lacks the certainty that the worker will do the work.

This lack of mutual obligation inevitably leads to workers feeling a lack of loyalty to the company which could have detrimental effects on the business when the economy becomes stronger and the worker seeks more favourable contract terms. Even during the employment term, this uncertainty is very likely to have a negative effect on the worker’s productivity.
Employers will also need to be aware of the risk that, what they believe to be a zero-hour contract, has actually, by a course of dealing, unwillingly created an ‘employee’ relationship with all the associated employment rights.

Are there any benefits for the employee?

Yes, although zero-hour contracts are often criticised, they do offer some positives such as flexibility of working hours which is important to those with family commitments or students (provided reasonable notice is given).

Workers will still be entitled to ‘worker’ rights (as opposed to ‘employee’ rights) including the right not to be discriminated against, the right to be paid minimum wage, rest breaks, and holiday entitlement calculated on a pro-rata basis.

And, of course, they do offer the potential to earn in a market which is struggling to create jobs.

Jobsite have partnered with specialist employment law solicitor Philip Landau, to bring you expert advice on your rights in all key areas of your working life. As a Jobsite user you are also entitled to receive a free initial consultation on all employment law issues from Philip. Philip can help with a number of legal problems; perhaps you feel your employer isn’t following their legal responsibilities, you believe you have been dismissed unfairly or you are unsure about clauses in your contract. Once he knows your specific situation he can let you know what your rights are and what action you can take. To get in touch with Philip, click the link below and he will contact you to discuss your situation in more detail. Philip Landau is a solicitor and partner, specialising in employment law, in the London legal firm Landau Zeffertt Weir.

Click here to here to contact Philip

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