Zero-hour contracts: are they fair and why the controversy?

Jun 6, 2014

The Queen's Speech included plans to reform zero-hour contracts, which affect about 1.4 million people


Regulations surrounding zero-hours contracts will be tightened under plans announced in this week's Queen's Speech.

Companies including Sports Direct, McDonald's and Amazon faced criticism last year for using such contracts, which unions say offer little security for workers. However, others insist that the contracts have created a flexible workforce that has helped to keep unemployment down while allowing individuals a greater say over when, where and how much they work.

What exactly are zero-hour contracts?
According to the government, a zero-hour contract is "an employment contract in which an employer does not guarantee the individual any work and the individual is not obliged to accept any work offered".

What are the advantages of zero-hour contracts?
For employers, zero-hour contracts are useful to provide a flexible workforce and a cheaper alternative to agency fees. For example, a catering company may need extra workers to cover unexpected or last-minute events, such as a last-minute wedding party. Other companies might need zero-contract workers to cover for temporary staff shortages. Workers, on the other hand, have the opportunity to gain experience and skills without the requirement to accept offers of work. A survey by the Office for National Statistics found that two in three people on zero-hour contracts did not want to work more hours.

What are the disadvantages of zero-hour contracts?
The Trades Union Congress says that workers on zero-hour contracts are at risk of exploitation, with the majority earning less than the living wage. It has called on the government to clamp down on abuse of the contracts by "bad employers". The lack of regular hours and income makes it difficult for families to budget and organise childcare, says the TUC. "Employers like to argue that zero-hour contracts offer flexibility but for many workers they mean poverty pay and no way of knowing how often they’ll be working from one week to the next."

What are the politicians saying?
Business Secretary Vince Cable has ruled out a complete ban on zero-hour contracts, saying they offer employers "welcome flexibility". The government has completed a 12-week public consultation on the issue and will respond in "due course". But unions have complained that this only examines exclusivity clauses and lack of transparency in employment rights, while the problems facing workers on these contracts are far more wide ranging. The government has also come under fire for threatening to take away jobseekers’ benefits for three months or more if people refuse to take roles with zero-hours contracts. Labour has pledged to tackle the "epidemic" of zero-hour contracts if it wins the next general election, introducing more rights for workers, compensation if shifts are cancelled at short notice and a fixed-hours contract after 12 months with an employer. Details of reforms announced by the coalition in this week's Queen's Speech have not yet been announced.

How many people are on zero-hour contracts?
According to the Office for National Statistics, there were around 1.4 million UK jobs making use of zero-hours contracts in a two-week period in January and February this year, a far higher number than expected. The contracts are most likely to be offered to women, people over 65 and young people, with nearly one-fifth likely to be in full-time education. Tourism, catering and food industries used the highest proportion of zero-hour contracts.

Do I have any rights under a zero-hour contract?
"Zero-hour workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time," says Acas. This might include sick pay for example. Zero-hour workers are entitled to annual leave, rest breaks and the national minimum wage, but not redundancy pay or a statutory minimum notice period.

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