Over the last couple of months that has been a flurry of debate over the use of zero-hours contracts, not limited to publicity on the latest Tribunal claim against SportsDirect. On the one hand, there are those who believe that the flexibility of zero-hours contracts is vital to UK businesses, and on the other hand those that believe this type of contract is a way to exploit flexible working and evade employers’ responsibilities. Zero-hours contracts are key to such sectors as retail and hospitality.
So what are zero-hours contracts and why have they caused so much fuss?
Zero-hours contracts – what are they?
Zero-hours contracts are designed for casual workers and employers who want a flexible working arrangement. There is no obligation on the employer to provide the casual worker with work and there is no obligation on the casual worker to accept any work offered. In practice, this means that employers can increase or decrease the use of casual workers every week to meet the demands of the business without having to conduct a costly redundancy exercise.
Worker not employee
An important aspect of a ‘genuine’ zero-hours contract is that the individual will be treated as a ‘worker’ rather than an ‘employee’ and will, therefore, not have certain employee rights including the right to unfair dismissal. Workers are still entitled to holiday pay and statutory sick pay (provided that in the latter case, the worker has already accepted an offer of work); although it has been suggested that some organisations do not provide these rights to their zero-hours workers.
The key point to note is that the zero-hours relationship must be genuine for the individual to be considered a ‘worker’. An individual will not be a ‘worker’ just because the contract is labelled ‘zero-hours’. If, in practice, the individual has fixed hours and has no control over choosing whether to work these hours then they are likely to be an employee.
Zero-hours contracts – why are they so controversial?
There is concern that more and more employers are exploiting the use of zero-hours contracts. The latest figures from the CIPD suggest that one million people in the UK are employed on zero-hours contracts.
Flexibility is the key benefit of this contract for both employers and, in theory, the workers. Employers are able to meet the needs of their businesses in industries where demand fluctuates. They can also provide additional employment opportunities in peak periods.
Seasonal demand in hospitality
This is most noticeable in the hospitality industry where the work demand is seasonal. The use of zero-hours contracts allows the hospitality industry to change the use of staff to meet these demands and to provide more work when needed.
Denying key employment rights
However, this flexibility may create uncertainty for the casual worker about their working hours and wages, and there are concerns that the use of zero-hours contracts is being abused. The main sticking point is that some organisations are allegedly using zero-hours contracts to ‘have their cake and eat it’. The contracts in question require individuals to work fixed hours like an employee but because they are calling the individuals ‘zero-hours workers’, they are denying them any employee rights. In practice, these individuals have no job flexibility in choosing when they work. Elizabeth George, a barrister at Leigh Day commented “without that choice you are not a casual worker, you are just a worker with no job security”.
SportsDirect has recently faced negative publicity in the news for exactly this issue. Their zero-hours contract is being challenged by an employee, who claims that SportsDirect is using the umbrella label of ‘zero-hours contract’ to deny, what are in fact employees, key employment rights.
Zero-hours contracts – what should you be doing?
The recent media attention could lead to individuals, engaged on zero-hours contracts, to actively challenge and bring claims regarding their factual employment status. In light of this, it may be sensible for employers to assess whether there are potential legal issues with the current use of their zero-hours contracts and, where there are, take the opportunity to implement practical steps to rectify these.
Zero-hours contracts – what is their future?
Business Secretary, Vince Cable, has suggested that legislation could be introduced to regulate zero-hours contracts. He is expected to decide this month whether to open a formal consultation on specific issues with zero-hours contracts.
Zero-hours contracts have clearly divided the UK. It remains to be seen what action, if any, will be taken by the Government in response to this debate.
If you want further advice on this issue or need your arrangements reviewing, contact Siobhan Thomson on 01733 887711 or email shthomson@greenwoods.co.uk.
The information contained in this article is intended to be a synopsis only. Before acting on it, you should take professional advice.
Written by Siobhan Thomson, Solicitor
Employment & Employee Benefits
Greenwoods Solicitors LLP
Monkstone House, City Road, Peterborough PE1 1JE
T: 01733 887700
Trinity House, Cambridge Business Park, Cambridge CB4 0WZ
T: 01223 393518
September 2013