Zero Hours Contracts - a political football, but what is the reality for employers and employees?

13 May 2014

The phrase “zero hours contract” (ZHC) has been occupying an increasing number of media column inches in recent weeks. ZHCs have been vilified, defended, consulted upon and even featured in the Scottish independence referendum debate. This blog looks into the specifics around ZHC’s and considers potential solutions to the issues surrounding them… it could be argued that ZHCs are incorrectly named and a “Variable Hours Contract (VHC)” would be more reflective of reality.

Political party lines are drawn.  Ed Miliband’s recent announcement in Scotland that a Labour government would crack down on “exploitative” ZHCs has been seen by many as a plea to Scottish voters that a Labour Westminster government would offer enhanced social justice compared to a SNP government at an independent Scottish parliament. This follows Miliband’s speech in September last year, in which he said that, amongst other things, Labour would ban ZHCs which require workers to work exclusively for one business.  Meanwhile, the Government’s focus on ZHCs has turned to benefits.  The Government has announced that jobseekers will risk forfeiting their benefits if they refuse to accept certain ZHCs.  Under the new scheme, benefit claimants who turn down a ZHC, when it is thought to be suitable, could lose payments for more than 3 months.

This development may seem somewhat surprising since it comes at a time when we await the outcome of the Government’s formal consultation on ZHCs, and it is arguably a contradictory message to that set out in the consultation foreword.  The Secretary of State said that the Government “seeks to maximise the opportunities of zero hours contracts while minimising abuse and setting core standards that protect individuals” and will “crack down on any abuse or exploitation of individuals in the workplace”. 

One thing is clear; there is a real interest in ZHCs. The lobby group 38 Degrees has obtained in excess of 100,000 signatures on a petition calling on the Government to fully investigate the usage of ZHCs, and has just started a campaign to stop ZHCs being “forced on job seekers”.  The Government’s consultation on ZHCs earlier this year closed having received more than 30,000 responses.

ZHCs have been used for years without furore. It is easy to get swept up in this emotive and political debate, but what is the reality where ZHCs are concerned?

Why are ZHCs often vilified?

In the right circumstances, ZHCs can be a useful tool for both the employer and individual. There are certainly categories of the workforce that welcome the flexibility to juggle work around their other responsibilities, and many employers who use ZHCs do so responsibly.

However, there is also clearly potential for abuse, and this has sparked criticism. Critics have highlighted that the use of such contracts can disproportionately impact women and young people. In particular, UNISON notes that there has been a marked tendency for women to be on ZHCs and 1 in every 3 zero hours employees is under the age of 25.

The balance of power in a difficult economic climate often lies with the employer, and some individuals have found themselves with little option but to accept the uncertainty of being engaged on a ZHC.  Stories abound in the press about individuals, who clearly want guaranteed minimum hours and pay, being placed on ZHCs and experiencing huge dips in their levels of pay and a lack of security about whether there will be work available for them. For employees seeking security and certainty of hours and pay, ZHCs are clearly inappropriate.

What next for ZHCs?

With the political debate and Government consultation still on-going, there is an element of “watch this space”. 

What is needed is clarity between employers and employees, so that both parties understand the terms of the contract and ZHCs are offered and accepted in situations where this is appropriate.

It seems that there is confusion and a lack of clarity about what ZHCs are and how they are used. It would be beneficial for both employers and employees to hear reasoned debate about how best to utilise these types of contracts so that individuals are afforded the protections they are entitled to under employment law, while enabling individuals to have flexibility and adopt working patterns which suit their lifestyles and make their employers more profitable, if they wish to do so.
The terminology of ZHCs does not help matters. Many people understandably are not clear what a ZHC is, because they normally work more than zero hours.  Perhaps it could be argued that ZHCs are incorrectly named; would a “Variable Hours Contract”, or “VHC” be clearer?

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