Zero-hour contracts, sometimes also known as casual contracts are typically used where an employer needs flexibility to meet short term fluctuations in demand and also for some “on-call” work. Individuals on zero-hour contracts are still entitled to the National Minimum Wage and to statutory annual leave based on the hours they work, as well as statutory sick pay. So they have broadly similar rights to more “typical” workers. Equally, employers engaging atypical workers on such contracts, have responsibility for their health and safety which is no less stringent than for other colleagues. So while many take a negative view of such arrangements, in theory at least, these workers should not be treated any less favourably than their counterparts on more fixed hours.
So what is the position on these contracts and are they as good, or as bad, as their promoters and detractors make out?
Pros for employers
Zero-hours contracts can offer employers real flexibility in relation to their workforce in meeting changing customer demand. This is especially true of the hospitality and other service sectors. For example, having zero-hour contract workers helps employers manage sudden staff shortages or seasonal variations. Employers might also utilise zero-hour contracts to help cover extended periods of staff absence.
For employers seeking to expand their business but who can’t yet afford to take on full time or even fixed-term staff, zero-hours contracts can also offer an affordable solution. They can adapt their workforce to the needs of a growing business without the need to pay agency fees or a full time fixed salary especially where utilisation may be hard to predict and the associated costs hard to justify commercially.
Cons for employers
Yet the lack of guaranteed work associated with zero-hour contracts means there is often a higher turnover of workers. This can translate into a lack of security as people can be deterred from applying for a zero-hours position because it just doesn’t offer the security of income they need. The commitment (or lack of it) cuts both ways and for employers, this can impact on loyalty, quality and consistency which can have a knock-on effect for customers and the experience they have.
Pros for workers
One of the biggest claimed advantages of having a zero-hour contract is the flexibility it offers workers. If you are asked to take a shift that isn’t worth your while or clashes with other obligations, you can turn it down. The law also now makes clear that workers on a zero-hour contract are no longer bound by any clause in that contract banning them from looking for and accepting work from another employer.
A significant proportion of zero-hour hospitality workers are said to be students in higher education for whom this type of arrangement can work well. They can fit their job around their classes and achieve a good balance between work and study.
Additionally, a zero-hour contract can lead to a chance of permanent work, by providing a useful foot in the door of a particular employer or valuable sector experience that can be leveraged when applying for a salaried or fixed hours’ position further down the line. This may make a genuine difference in a job market that can be cutthroat and unforgiving.
Cons for workers
Having a job which doesn’t provide a fixed income can be a major challenge and despite the theoretical flexibility, for many there may be no other choice but to accept such work. In busy periods this may be fine, but for those trying to support themselves and a family with a job that may be their only source of income, this can cause considerable hardship especially given that these contacts are so prevalent amongst the lowest paid.
The lack of a reliable and consistent income can mean households struggle to afford bills and pay them on time. Given the current steep rise in gas and electricity prices and the cost of living more generally, workers on zero-hour contracts may be amongst the very hardest hit.
Zero-hour contracts can also impact on the psychological and mental well-being of workers due to instability and financial concerns. Anecdotally, workers can suffer from anxiety, stress and depression as a result of the financial and social insecurity attributed to zero-hour contracts.
Moreover, because those on zero-hour contracts are only paid for the hours they work, many will do so even when they are ill for fear of being seen as unreliable and losing their job as a consequence. That may also contribute to feelings of stress and poor mental health longer term.
What’s the verdict?
In many circumstances, zero hours’ contracts can provide a useful tool for the responsible employer grappling with fluctuating demand but who doesn’t lose sight of the fact that all of their workers must be valued and properly looked after. However, it’s also clear these contracts can be abused by less scrupulous and responsible employers too. It is evident zero-hour contracts have many advantages and disadvantages for workers and employers alike but the picture is far from consistent.
A case in point
with the recent commencement of the Edinburgh Fringe Festival, the topic of zero-hour contracts is much closer to home than some may realise. A recent article published by Edinburgh Live concerned an Edinburgh Fringe venue firm having an ‘exploitative’ job advert offering unpaid 13-hour shifts.
In 2019, C Venues was stripped of its tenancy of Adam House by the University of Edinburgh following a wage dispute where staff were being paid only £200 for six weeks’ employment. Nevertheless, a recent advert by the same company for 2022 crew members, informs prospective applicants to expect no remuneration for gruelling days of work helping to set up the venue. In return, workers are offered free accommodation, however they need to provide their own beddings, towels and clothes. It should be remembered that the rules around deductions for accommodation are very strict and low paid staff can find themselves dipping below the National Minimum Wage very quickly if the maximum allowances are not observed by employers. However, on any reasonable view it is impossible to see how a mere £200 for 30 full day’s work over a six-week period could possibly be lawful.
Additionally, the advert promotes working periods starting from mid-July until early September, with ‘one day off per full week’. Trade union Unite hospitality organiser, Bryan Simpson stated that, ‘This is one of the most exploitative job adverts we have ever seen, even for a Fringe which is not known for its exemplary working practices’.
In conclusion, it is clear certain sectors face challenges with the abuse of these contracts. Although there can be advantages to the use of zero-hour contracts, if used responsibly and in appropriate circumstances, it is difficult to overlook the disadvantages. All employers need to ensure these contracts are used responsibly and lawfully.
Insight from Chris Phillips, Employment Law Partner. For more information contact Chris or any member of the Employment team on 03330 430350.
