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Could zero hours contracts get you in hot water?

Could zero hours contracts get you in hot water?
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Could zero hours contracts get you in hot water?
by Andrew Linton
Managing partner - Buss Murton Law

Zero-hours contracts have been in the headlines for the wrong reasons.  Many other European countries have banned them, or restricted their use.  So where is that likely to leave British companies who rely on them for their flexibility?  Andrew Linton of Buss Murton Law has been gauging the political climate to see what the implications are for UK business owners and managers.

The statistics

The number of zero-hours contracts quadrupled in the first 16 years of this century to a high of 1.7 million, but has since fallen to 1.4m in May 2017, according to the Office of National Statistics (ONS).  This amounts to 2.8% of the total workforce.

The workers

The Labour Force Survey (LFS) outlines the typical profile of people on zero-hours contracts as ‘young, part-time, women or in full-time education’

The arguments for

Employees on zero-hours contracts are entitled to the national minimum wage, paid annual leave, rest breaks and protection from discrimination.  Some businesses argue that these ‘casual’ contracts create maximum flexibility for both them and their staff.

The arguments against

Sometimes called ‘hire and fire’ contracts, critics argue that zero-hours contracts exploit workers, giving them few employment rights and no job security while allowing employers to hire staff as and when they need them, often at short notice.  Some studies suggest that the financial insecurity and resultant stress can affect both physical and mental health, especially among younger workers.

According to Rebecca Long-Bailey MP, Labour’s Shadow Secretary of State for Business, Energy and Industrial Strategy: “It is a national scandal that there are 1.4 million contracts that don’t guarantee minimum hours, with people stuck in limbo in insecure work, not knowing how much they’ll earn from week to week, unable to budget for basic necessities and unsure if they can even pay the rent.”

Major names in food, hospitality and retail have come under fire for zero-hours contracts; some have now offered staff the chance to move to fixed-hours contracts.

The test applied in recent rulings such as Deliveroo, CitySprint and Uber has been to ask whether the person doing the job can be ‘substituted’ for another as well as the level of ‘control’ the employer has over its employees. Whilst the CitySprint and Uber rulings went in the workers’ favour, employees of Deliveroo were classified as self-employed and therefore not entitled to basic employment rights. 

With CitySprint subsequently amending its contracts and thereby further alienating its workforce, it is clear that a balance must be struck between the needs of businesses and people’s employment rights. 

The future for UK businesses

Zero-hours contracts have been banned or severely restricted in many European countries, but it is unlikely that we will see an immediate ban on them in the UK.  The government’s current position is that zero-hours contracts ‘should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable.’ 

However, two parliamentary committees recently published draft papers on proposed changes in this area. The government is now under pressure to act swiftly to protect hard-working individuals from employers who are purposely trying to underpay them and circumvent their obligations.

For the time being, the responsibility will continue to lie with individual companies to weigh appropriately the need for flexibility against the basic employment requirements of their staff.

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Andrew joined Buss Murton Law in 1995 and in 2015 became the firm’s Managing Partner. He is the head of the Employment Department, acting for both employers and employees. Andrew specialises in providing advice to employers on all aspects of employment law ranging from employment contracts for their senior executives to group redundancy arrangements. He also advises senior executives on their terms of engagement, revisions to their terms and conditions and, where necessary, negotiating their severance packages.

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