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Zero-hours contracts Q&A

03 December 2013

Category: Press releases, Commercial, Employment law

What are they?

A zero-hours contract is an agreement under which there are no guaranteed hours of work and the individual, also known as a casual worker, is only paid for work carried out.

Why are they used?

Their purpose is to give employers flexibility when workloads genuinely fluctuate. The arrangement allows the employer to avoid excessive staffing costs during quieter periods and to have a ready pool of workers when there is a short-term increase in work.

Are they legal?

Yes, they have been used legitimately by employers for many years, often in the hospitality and retail industries where workloads are seasonal.

Why all the controversy?

Recent studies suggest there has been a sharp increase in the use of zero-hours contracts. Some high profile employers, such as Amazon, Sports Direct and Buckingham Palace, have been found to use them extensively.

The concerns raised about zero-hours contracts are that:

  • some employers are using them as a means to deny workers basic employment rights.
  • some contracts include exclusivity provisions requiring the worker to accept any work offered to them, the implication being that the worker has to sit and wait for work, which may not materialise, and turn down other work in order to do so.
  • they make it difficult for individuals to manage their finances and personal lives, such as securing mortgages and arranging childcare.

The counter-arguments put forward are that:

  • their use has prevented higher levels of unemployment by enabling employers to align workloads with staffing costs.
  • individuals will normally be deemed to be ‘workers’ and therefore entitled to certain protections by law, such as holiday and sick pay. In addition, where the contract includes an exclusivity clause, they are also likely to be ‘employees’ and enjoy the additional protections that status brings.
  • they are good for individuals who do not want to commit to a certain level of work, such as students, carers and parents.

Next steps

Vince Cable has announced that the government is launching a public consultation on how to tackle abuse of zero-hour contracts.

To keep updated as matters progress, please email us to sign up to our monthly Employment Law Dispatches or view http://www.willans.co.uk/downloads/employment_law_dispatches/

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