Press focus on "zero hours" terminology rather than substance unhelpful, says expert, as Government hints at tighter controls

Out-Law News | 22 Aug 2013 | 2:54 pm | 3 min. read

Broad references by the press to 'zero hours' employment contracts are unhelpful, as the term is used to refer to a wide variety of contracts that can be used for a number of legitimate business reasons, an expert has said.

Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com, said that some of the changes currently being called for by campaigners were "just unthinkable". Although the Government has indicated that it will take forward some legal changes to prevent  abuse of zero hours contracts by unscrupulous employers, it was "less likely" that these would be formalised in legislation given the nature of this type of contract, he said.

Mordue was commenting as the Recruitment and Employment Confederation (REC) suggested that as many as one in four firms could be using zero hours contracts, under which workers are not guaranteed work by an employer. REC's survey of 600 employers showed that 27% had used zero hours contracts to employ at least one member of staff.

Research by the Chartered Institute of Personnel and Development (CIPD), published at the start of the month, indicated that approximately one million people could currently be employed on a zero hours contract basis in the UK. Business Secretary Vince Cable is currently leading a review looking at the extent to which these contracts are used by businesses and whether they are a problem, while this week the Labour Party will host a summit with unions and employers to discuss the issue.

"All the Government has indicated so far in relation to any changes in the law is the possibility of banning exclusivity clauses, under which a worker employer on a zero hours basis can't work for anybody else at the same time," Mordue said.

"This is unlikely to be the limit of any Government response. I suspect there will be some form of code of practice encouraging employers to observe good practice rules such as giving guaranteed minimum hours wherever possible; giving greater advance notice of hours to be worked; not subjecting employees to detriment for turning down work; and not using zero hours contracts in a bullying way, such as restricting hours offered as a form of 'punishment'," he said.

Although some of this could find its way into legislation, this could be difficult given "the realities of how these contracts are used, the variety of situations they cover and the political desire to maintain business flexibility and avoid regulation", Mordue said.

"A law requiring guaranteed minimum levels of work to be granted or guaranteed minimum pay is just unthinkable, and a law on the amount of notice that has to be given of an offer of work is equally impractical," he said. "The difficulty in framing legislation is in dealing with those employers using these contracts as a standard operating model for their workforce, such as the allegations in relation to Sports Direct, without effectively banning casual labour."

Zero hours contracts are contracts under which an employer does not guarantee to provide the worker with any work and pays the worker only for work actually carried out. Under these contracts individuals are not obliged to accept work that is offered. Critics of zero hours contracts say that businesses use them to avoid giving workers the status of 'employee' and eligibility for the full range of employment rights.

However, business groups claim that using this type of contract gives firms the flexibility to cope with fluctuations in demand, particularly during challenging economic times. Kevin Green, REC's chief executive, said that the results of the recruitment body's latest JobsOutlook survey showed that this flexibility "has enabled our labour market to flourish". REC's figures, which showed that 97% of employers are planning to increase or maintain their permanent workforce over the next year, were "a direct result of businesses successfully adapting to the challenges faced in the recession", he said.

Mordue said that, given recent reports in the media, it was important for companies "from a PR perspective" to "have a handle on what their contracts actually say, the numbers involved and why they are used in preference to other types of contract".

"Contractors may come under pressure from customers, especially local authorities, regarding the use of zero hours contracts, so that might be another form of developing pressure on employers to change when and how they are used," he said. "Again, the loose terminology isn't helpful here as the local authority customer's idea of what a zero hours contract is might differ from the label applied by the employer or not really reflect the substance of the relationship and how it works."

"Voluntary options for employers at present are to look at guaranteeing hours where possible, which could lead to a smaller workforce on indefinite or fixed term fractional contracts; and guidelines for managers on how these contracts should be operated to avoid abuse or bad practice, especially in relation to the rostering of work in advance," he said.