Zero hours contracts provide flexibility for employees as well businesses but safeguards needed to prevent abuse, says expert

Out-Law News | 06 Aug 2013 | 1:13 pm | 3 min. read

It would be wrong for businesses to be barred from contracting with workers on 'zero hours' terms, an employment law expert has said.

According to research by the Chartered Institute of Personnel and Development (CIPD), approximately one million people may currently be employed on a zero hours contract basis in the UK.

Critics of zero hours contracts say businesses using zero hours contracts do so in order to avoid having to give workers employment rights. However, Maria Passemard of Pinsent Masons, the law firm behind Out-Law.com, said that zero hours contracts can provide businesses and workers with flexibility that can be useful for both parties. She said, though, that appropriate checks and balances should be introduced to stop businesses from exploiting workers who are utilised on a zero hours contract basis.

"The CIPD research has highlighted that the average number of hours that individuals employed on zero hours contracts in the UK actually work each week is 19 and a half hours," Passemard said. "This runs contrary to the idea that most zero hours contract workers are sitting at home waiting to be allocated work. Indeed, more than 50% of the zero hours contract workers surveyed by the CIPD said they had few complaints about the number of hours their employer was offering them."

"Zero hours contracts are a useful tool for businesses to use to afford themselves some flexibility in ensuring services can be provided in an efficient manner. For example, it allows businesses to tap into a pool of workers to provide services at peak times of demand, such as where workload is seasonal in nature, but avoid burdensome labour costs during times when a more skeletal workforce is sufficient," she said.

"The terms of employment can also suit employees. Zero hours contracts enable students to find part-time jobs, parents to balance work and home life, and those in existing employment to supplement their main income," Passemard added.

"It is true to say that some zero hours contract workers, particularly in the unskilled labour market, may feel pressured into accepting work from employers for fear of not being offered shifts in future, even though there is often no obligation to accept the offer of work. Perhaps new guidelines could be introduced to help prevent cases where workers on zero hours contracts are blacklisted by employers because they have refused a particular shift or job. This could supplement existing employment laws that provide protections against gender and age discrimination, for example," Passemard said.

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, employers are often not obliged to provide the individual with work and the individual is not obliged to accept work which is offered. In fact, this is often the very reason that such contracts are used and can be an advantage to both employer and individual. However, the fact that this 'mutuality of obligation' does not exist between employer and worker, often prevents the individual from acquiring employee status with which comes eligibility for the full range of employment rights.

Critics of zero hours contracts say businesses using zero hours contracts do so in order to avoid having to give workers employment rights and leave workers feeling insecure.

Business Secretary Vince Cable is currently leading a review of zero hours contracts looking at the extent to which the contracts are used and the extent to which they are a problem.

A leading business group said that any ban on 'zero hours contracts' would be "deeply misguided" and "have extremely damaging results".

"[A ban] would hurt thousands of employees who rely on the flexibility such contracts allow and employers, especially small and medium sized firms, would struggle to hire the staff they need to meet varying demand," Alexander Ehmann, head of regulatory policy at the Institute of Directors, said.

"Countries with a flexible labour market tend to have lower unemployment and higher employment, and one of the reasons that the UK economy has not gone the way of southern Europe is because employers have been able to adapt swiftly to changing demand. Taking on a full-time member of staff remains a risky and potentially expensive option for any company emerging from the downturn. Zero Hours Contracts can be a vital tool in our economic recovery, giving flexibility to both employer and worker whilst also guaranteeing basic employment rights," he said.