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Legal Corner: Zero hours contracts

27th Sep 2013

By Sofia Tharoo


Zero hours contracts have been in the news rather a lot over the last few weeks. Here is a brief overview of the issue:


What are they?

Zero hours contracts are a relationship between an employee and an employer where the employee does not have a guaranteed number of hours of work. The employer will offer shifts as and when they have a need, often at short notice. An employee is only paid for the shifts that they work, and therefore often does not have a steady stream of income. Some contracts oblige an employee to accept the shifts that are offered to them, but others do not.

Zero hours contracts do provide for holiday pay but the vast majority do not provide sick pay.


Why are they used?

Zero hours contracts have many advantages for employers; they have a bank of employees available to meet fluctuating demand at short notice, for example in the tourism or hospitality sectors, whilst only paying for the work they actually require.

For employees, such contracts can give them flexibility to work as and when they can.


Why are they controversial?

Zero hours contracts do not offer financial stability or security. Employees do not have a guaranteed income, making it difficult to plan financially, and often struggle to obtain services such as mortgages or even mobile phone contracts. Many employees complain that they are not given as much work as they would like.

There is also the concern that because such contracts do not offer the same employee protections as full time workers, a two-tier workforce is being created.

There is also the risk that employees can abuse their powers by, for example, withholding work from employees who raise legitimate complaints.


Why are they in the news at present?

A number of recent studies have shone a light on how widespread the use of zero hours contracts actually is in practice. A recent survey by the Chartered Institute of Personnel and Development estimated that over one million people were employed under such contracts, more than four times the official number, and that those between 18-24 were most likely to be employed in this way. A study by the Resolution Foundation found that people on such contracts were paid on average £6 per hour less – £9 per hour compared to £15 for other workers. The unions, Unite and Unison in particular, have forcefully called for the use of such contracts to be outlawed.

The Labour Party Leader, Ed Miliband, used his speech at the TUC conference to call for such contracts to be banned in certain circumstances – where workers are required to be on call all day, where they are required to work exclusively for one business and where they work regular hours but are denied a ‘regular’ contract. The Green Party have called for the banning of all zero hours contracts. The Government have rejected such calls but have agreed to review their use, so it may well be that changes are on the way.


Safia Tharoo, Barrister, 42 Bedford Row, London



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