What to do about zero-hours contracts?

The Guardian is running a campaign on the potential abuses of zero-hours contracts and they seem to have the ear of at least one side of the Coalition. Both Nick Clegg and Vince Cable have made sympathetic noises about doing something to tackle the problem.

So will anything be done? Take this quote from a Government consultation document:

Some 200,000 people in the UK work under zero hours contracts. These contracts do not specify particular hours: the person may be required at any or at specified times. These contracts maximise flexibility for employers and suit some people who want occasional earnings. Many employers ensure the contracts are used sensibly, but they have the potential to be abused…

…The Government would welcome views on whether further action should be taken to address the potential abuse of zero hours contracts and, if so, how to take this forward without undermining labour market flexibility.

Unfortunately it’s too late to send in your response because I’ve taken this from the White Paper ‘Fairness at Work’ published by the new Labour Government in 1998.

In the end nothing came of the suggestion and no limitations were placed on the use of zero-hours contracts. On the other hand, many employees stuck on those contracts would have benefited from the National Minimum Wage, the Working Time Regulations, the Part-Time Workers Regulations and changes to unfair dismissal law that the Government went on to introduce so we shouldn’t be too sniffy.

But the fact that this problem – if it is a problem – has been around for so long does suggest that it isn’t easy to solve. The very vague mumblings that have come from politicians perhaps show that they appreciate difficulty of legislating in this area. After all, you can’t ban a zero-hours contract can you? To do so you would have to provide a minimum number of hours – and how could that work? What is the minimum number of hours a worker must perform in a week? One? Five? Eight? It just makes no sense to be so prescriptive.

Another difficulty is that a ‘zero-hours contract’ is not a well defined legal creature. At one level we could just be talking about casual work where the employer draws on a pool of available workers as and when they are needed. Typically those workers are under no more of an obligation to accept work than the employer is under an obligation to provide it. A more extreme case of a zero-hours contract would be where the employer is not obliged to offer any work in a particular week but the worker is obliged to be available and to accept whatever work is offered. Clearly the second kind of contract is more likely to create hardship, but the debate seldom draws a distinction between the two.

In any event, what is written in the contract is not always the full story. When we look at how the contract is performed we might find that there is an implied term that a minimum level of work will be offered. This is the sort of argument that often crops up in an Employment Tribunal because if there is genuinely no obligation on the part of the employer to offer work – and no obligation on the worker to accept it – then the contract is not a contract of employment (because there is no ‘mutuality of obligation’) and the worker has no right to claim unfair dismissal or redundancy. When a sacked casual worker brings a claim there often needs to be a preliminary hearing to determine whether he or she was an employee or not – and the issue of whether the contract was genuinely one with no obligation to offer or accept work may well be key.

This is one area, at least, which would be quite easy to reform. The Government could amend the Employment Rights Act so that protection against unfair dismissal is no longer dependent on the existence of a contract which includes an obligation to provide and accept work. I think that this could be done by an Order under S.209 but it may be better to just redefine the concept of employee to specifically exclude any need for mutuality of obligation. The same could be done across the board in employment rights so that there was no question of zero-hours contracts being use to avoid the need for rest-breaks, Statutory Sick Pay or paid annual leave.  

And here’s another idea. The Part-Time Workers Directive was based on an agreement between the European social partners (unions, and employer organisations) and Clause 5(3) of the agreement says:

As far as possible, employers should give consideration to…(b) requests by workers to transfer from part-time to full-time work or to increase their working time should the opportunity arise.

This surely suggests some sort of ‘right to request’ for workers on zero-hours contracts who want a more secure supply of work. Of course many employers would just say ‘no’ – but a new right may provide a ‘nudge’ in the right direction.

It won’t happen of course. For all the sympathetic noises coming from one side of the Coalition there is no way that this Government is going to place an additional burden on employers in the shape of new rights for workers on zero-hours contracts. Even if they did, their own ‘one in, two out’ policy would require them to remove twice as much of a ‘burden’ on employers as they are imposing.

In any event, as Rick argues in the always excellent Flip Chart Fairy Tales, the real issue is not so much the nature of a zero-hours contract itself, but the state of the job market and the resulting power balance between employer and employee.  Some workers will benefit from the flexibility of a zero-hours contract and some workers will be exploited. There is a limit to what employment law can do to remedy this. 

Perhaps someone could invent some sort of organisation that workers could join to protect their interests and help redress the balance of power?

Nah, that would never catch on.

About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Zero Hours COntracts and tagged , , , , . Bookmark the permalink.

13 Responses to What to do about zero-hours contracts?

  1. Victoria Phillips says:

    Government could always use the (so far unexercised) power in section 23 of ERelA 1999 to confer rights on individuals… but as you say can’t see the Conservatives accepting this. see Grant Shapps great grip on employment rights (not!)

  2. Rob McCreath says:

    Interesting post, Darren – thank you. It won’t happen but …. legislation could provide that after (say) 12 months, zero hours contracts will be deemed to provide for a minimum of (say) 75% of the average hours in the previous 12 month period.

  3. John Anzani says:

    Darren
    I’d like to add my thanks for another accurate, balanced and thought-provoking post. What did I do before I came across this blog?

    Clearly the Conservativess won’t make a move here [and I am more than cynical about their partners. rather I think that this is Clegg & Cable trying to differentiate themselves from Conservatives for the election.
    One area where there may be some chance of public opprobrium making a change is the situation like Sports Direct where the positive PR generated by the [genuinely] generous bonus to full time staff is now being swiftly eroded by the large scale long term usage of zero hours for over 90% of their shop staff. To suggest that SD cannot predict with reasonable certainty the pattern of trade in their stores after all these years is a nonsense. That is clearly abuse of zero hours. New start small businesses may well need them but in my experience many of them are keen to translate them as soon as possible into part-time contracts. They do so because they recognise the benefits to be gained from greater staff engagement.
    As for organisations not catching on I think that your phrase [though I presume meant humorously] vastly underestimates the visceral opposition of much of the political establishment [Milliband & Falkirk anyone] and media to Trades Unions. Blacklisting in the Construction Industry?

  4. Andrew says:

    I think your last point gets to the nub of this, the unions don’t seem interested or vocal about the most ‘precarious workers’.

    Also a problem with zero hour contracts is that often those on such working agreements frequently work regular shift patterns and hours, and they exist in workplaces such as shops which must surely be able to forecast staffing levels from one week to the next. Perhaps, a development along the lines of the reforms with agency workers, whereby after a set period they acquire employment protection/privileges could be looked at as well.

  5. Pingback: Zero-hours contracts – normalisation and back | Alex's Archives

  6. Oliver D says:

    I have just read that Leigh Day are supporting a challenge to zero hours in the ET against Sports Direct. The press release, along with most articles on this, claims that workers on zero hours contracts do not receive holiday pay. Does anyone know where this information has come from? Workers on zero hours contracts are still fairly obviously workers under the WTR. I would be very surprised if Sports Direct, McDonalds or any other of these large employers have not been paying their staff accrued annual leave.

    • I was surprised by the reports about holiday pay too. Assuming the report is correct (big assumption) I would have thought that the contracts are felt to be so lacking in mutuality of obligation that those on them do not even count as workers for the purposes of the WTR because they are not in a contract to provide work.

      If Leigh Day are challenging that then I say all power to them. I’d be surprised if the courts would allow employers to circumvent employment law in that way. Let’s see what happens.

      • Oliver D says:

        I have a suspicion they mean that workers on a zero hours contract don’t accrue holiday in the Heimann v Kaiser GmbH sense, which is not all that shocking. Generally people don’t expect to accrue holiday if they haven’t worked.

        But you are right, it’s too early to speculate. Let’s see what happens!

  7. Pingback: Zero-hours contracts – is a ban the answer? | IDS eye - blog from Incomes Data Services

  8. Vertex Law says:

    A very informative look at zero hour contracts. As you have said it really can be difficult to differentiate between what is fair for the worker and what is not. We have employment law in place in order to create a fair workplace and zero hour contracts need to be looked at to see how they fit with this.

  9. Pingback: Zero-hours contracts: a snowball in hell? - The Justice Gap | The Justice Gap

  10. Attila says:

    What if from now, I only pay council tax when the council performs the work that I actually want them to do on my request and I do not pay them when I do not need their work???

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