Zero Hours Contracts – When does flexibility become insecurity?

Anna Moyle

Of all the issues that affect employers and individuals, the use of zero hours employment contracts was one that was particularly picked up on by, and debated, in the media last year.

Are they one of the ways by which the UK has developed a flexible labour force able to avoid the levels of unemployment seen recently in some other European countries? Or are they (as Dave Prentis General Secretary of Unison has argued) “a return to the bad old days of people standing at the factory gates, waiting to be picked for a day’s work“.

There is no strict legal definition as to what amounts to a zero hours employment contract, but generally speaking it is a contract where the employer does not guarantee the individual any work, but where the individual is under no obligation to accept work when it is offered. Other terms will vary from contract to contract and from employer to employer.

Estimates as to the numbers working under these types of contracts have varied from 250,000 (by the Office for National Statistics) to 1 million (by the Chartered Institute of Personnel Development). What is clear from this is that employers as diverse as Sports Direct and Buckingham Place have been making use of them.

Following an information gathering exercise, the Government launched a formal consultation on 19 December 2013 on the use of zero hours contracts. The consultation will close on 13 March 2014.

The government describes its overarching aim in the consultation paper as being to “achieve a labour market that is flexible, effective and fair”. Some of the recent political debate focused on whether zero hours contracts should be banned. But this is not an option on which the government wants views, because it recognises that such contracts can be useful and valuable for both employers and individuals in specific circumstances. However, the use of exclusivity clauses and a lack of transparency are two specific areas of concern that have been identified.

Exclusivity clauses: these prevent an individual undertaking work for anyone else, even if little or no work is being offered by the zero hours employer. Whilst the government considers such a provision may be justified in certain situations – for example where confidentiality is an issue – there is concern that these clauses are being used in circumstances where they are not justified. The consultation paper asks for views on how such misuse could be addressed. Proposals include a ban on such clauses where minimum levels of work are not guaranteed, further government guidance on their use or an employer-led code of practice.

Lack of transparency: there is also concern that individuals are not always clear on the terms, conditions and consequences of a zero hours contract, and that employers do not always fulfil or understand their legal responsibilities to those engaged under them. Proposals to improve transparency include: ensuring access to better information, advice and guidance, an employer led code of practice and government produced model clauses for use in such contracts.

If you have any views on the issues in this note you have until 13 March 2014 to make the government aware of them here https://www.gov.uk/government/consultations/zero-hours-employment-contract

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