There has been a lot of talk in the press recently about ‘zero hour’ contracts. The Labour Party has called them “exploitative” and was planning to give employees a legal right to a regular contract after 12 weeks of working regular hours. However, around 700,000 people were working on zero hours contracts last year, so what are they and why do so many employers use them?
There is no legal definition of a zero hours contract but it is a casual contract where the employer does not guarantee any work and only pays for the hours worked. Often employers will expect the employee to be available for any shifts offered and may even try to prevent employees working for another employer, although a ban on exclusivity clauses is likely to be implemented in summer 2015.
Many large employers in the retail and hospitality sectors use these contracts for the majority of their staff. They make the argument that these contracts give them flexibility to take on staff to meet peaks and troughs in demand. However, in my view, these large firms should be able to plan their requirements more accurately and have a moral duty to provide their staff with stability and guaranteed hours where possible.
The IOD argues that plans to limit zero hour contracts to 12 weeks would damage the flexibility that many companies need to survive. Certainly, we have written zero hours contracts for many of our small employers, especially start-ups who are taking on their first employee. In these cases, when the employer is uncertain whether or not there will be enough work on a weekly basis, it makes sense to start without a guarantee of a set number of hours. However, I’d always advise that the employer moves their new employee onto a normal contract with a set number of hours as soon as there is a fixed pattern of work. This is not only fairer for the employee, but gives the company more commitment from their staff.
Zero hours contracts are also very useful for short term staffing needs such as workers to cover one off events or peaks in customer demand. However, even in these situations it may be better to use agency staff or employ staff on fixed term contracts.
If you are considering a zero hours contract and want to know whether it is right for your company and employees, we are happy to discuss the pros and cons and draw up the appropriate contracts for you.