From time to time, a subject will capture the public’s (or at least the media’s) attention. As a result, something which has gone on for many years either unnoticed or at least without comment or apparent controversy, suddenly becomes the focus of heated debate about inequity, political attention and the demand for fairness and change.
The latest such subject is the use of “zero hours contracts”. For those still unfamiliar with the term, a zero hours contract (aka a “casual worker contract”), is an agreement with an individual to provide work, but without guaranteed hours. Normally the worker will be part of a pool of staff who can be called on as and when the company requires them. As the demand for workers can change from week to week, so can the hours offered to the worker, who one week may work 40 hours, and none the next, being paid accordingly.
The stated purpose of a zero hours contract is to provide staff flexibility when workloads genuinely vary or are intermittent. An example may be a hotel which from time to time puts on events and therefore has a short term demand for increased staff which does not reflect its day-to-day business requirements. The business cannot justify maintaining higher levels of staffing between events, but instead relies on a pool of casual (zero hours) workers (NB not employees) whom it can pick up and put down as it sees fit.
According to the UK media, such contracts are being used by unscrupulous employers to deny workers access to sick pay, holiday pay, notice entitlements, etc., and to enable employers to dismiss at will without concern for claims of unfair dismissal. The more onerous of these contracts are reported to include a term requiring the worker to accept any work offered to him. This has resulted in particular criticism as workers are seen to be required to wait for work, possibly turning down work from other potential providers as a result, without any assurance that any hours will actually come their way.
Examples of such employment practice cited include retailer Sports Direct (apparently 20,000 of its 23,000 staff are on the contracts) and Buckingham Palace (One’s butler is not required when One is away, perhaps?).
So zero hours contracts get a pretty bad press. Is it merited? At least some of what is said in the media is misleading. Although someone engaged under a zero hours contract would not normally be an employee (assuming the contract is being used appropriately – see the example below), they will nonetheless normally be “workers” for statutory purposes and so are entitled to both sick pay and paid holiday (albeit that this will be calculated by reference to the actual hours they work, which can result in practical difficulties if hours vary considerably).
Whilst undoubtedly some zero hours contracts do include the requirement to be available to work, many don’t. Because of the higher degree of obligation imposed, those contracts which include such a requirement run a substantial risk of the workers gaining full employment status and the higher level of employment rights associated with it, irrespective of the intentions of the “employing” company. Such a case is reportedly currently being argued before the Employment Tribunal against Sports Direct. Clearly the stakes will be high – a finding that even one of your 20,000 zero hours workers is actually an employee would blow a huge hole in your staff management practices and could leave you with very significant accrued liabilities.
Inappropriate use of zero hours contracts also includes using staff on what are in practice very much regular hours, despite the purported intention of the contract to apply only where work is intermittent. Companies who use the contracts in this way may believe that their staff enjoy fewer rights, but in fact also run a significant risk of an Employment Tribunal ruling that the contracts are shams, disguising an actual employment relationship (again, if the numbers are close to correct, Sports Direct appears to be running this risk).
Pressure is on the Government to take action and Vince Cable, the Business Secretary, has suggested that legislative change could follow a review of the use of the contracts. Easy to say, of course, but it is much more difficult to see what changes could be made without limiting the use of the contracts where they are in fact appropriate and do reflect genuine changing business requirements. Despite the trade unions and others leaping to arms on the point (why now, exactly?), the reality is that if such contracts did not overall work reasonably adequately for both sides, they would not be used. They may actively suit the employees’ aspirations too – a little extra money from time to time, but no obligation to take it up if you don’t want to. Equally, there will undoubtedly be cases of abuse and exploitation but where this is the case, workers can rely on the Employment Tribunal if their rights have been denied.
However, one thing lacking in any of the commentary is a sensible alternative solution, reflecting both genuine business requirements where work is intermittent and fairness to workers where the contracts are used beyond such purposes. As a result, it seems likely that the status quo will continue for some while yet.