Zero Hour Contracts - The Debate

It was impossible to miss the recent headline news on zero hour contracts. It has caused a huge amount of debate, so we thought we would bring all of the discussion together and summarise it, together with our insightful findings based on our own research.

WHAT ARE ZERO HOUR CONTRACTS?

Zero hour contracts, or casual contracts, allow employers to hire staff with no guarantee of work. Employees will then only work as and when they are needed by employers, often at short notice, and are only paid for the hours they work.

Some zero hour contracts oblige workers to take the shifts they are offered, others do not.

THE EMPLOYERS VIEW

Employers use zero hour contracts to allow for fluctuating demand for their services. For example, think of services at a football match at Wembley – they only happen on a casual basis. Employers believe that they allow flexibility to employees, where employees are not looking for permanent employment.

THE CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT (CIPD) VIEW

The CIPD have recently conducted research that found that there were approximately 1 million people in the UK on zero-hour contracts. That is 3 to 4 per cent of the country’s workforce, far more than the 1 per cent the Office of National Statistics calculation. The findings were based on a survey of 1,000 employers. Peter Cheese the CIPD Chief Executive said of them:

There does need to be a closer look at what is meant by a zero hours contract, the different forms that they take, and clearer guidance on what good and bad practice in their use looks like.

Zero hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities…

…this can, for example, allow parents of young children, carers, students and others to fit work around their home lives.

Peter Cheese, Chief Executive, CIPD

OUR FINDINGS

Research based on a third of a million employees in the retail sector and found that only 1.2% of employees were employed on a zero-hour contract – which is in line with the Office of National Statistics calculation.

As a company with a long and successful history of working with some of the largest retailers in the UK, we can confirm that based on over a third of a million employees working in the retail sector only 1.2 per cent are employed on zero-hours contracts. Based on these real payroll data points, it would seem that the retail sector is not a major contributor to the overall number as reported by the recent CIPD research.

Our conclusion is that this varies enormously by industry, but retailers do not use them. We are seeing a trend in portfolio careers where an employee has more than one employer, as employees are looking for more flexibility. Therefore in this case, zero-hour contracts are helping to meet employee needs.

THE GOVERNMENT VIEW ON THEM

The Business Secretary Vince Cable is concerned that zero hour contracts are being abused by some companies. Mr Cable said he was concerned there was “some exploitation” of staff on the contracts which give no guarantees of shifts or work patterns.

He has been leading a review on the issue for the Government since June and will decide in September whether to hold a formal consultation on specific proposals.