Despite controversy over zero-hours contracts, their use is on the increase. Legal expert Syma Spanjers explains whether regulation is imminent and what an employer's duty is to its casual staff
The Government has confirmed that zero-hours contracts are currently under scrutiny by the Department for Business, Innovation & Skills. Critics have denounced them for exploiting workers by taking advantage of people desperate to accept any role in order to avoid unemployment. Sarah Veale of the TUC has claimed that they reduce people to "industrial fodder", while Shadow Health Secretary Andy Burnham has recently called for a complete ban on their use.
Despite the controversy, zero-hours contracts are on an upward trend. The Office for National Statistics revealed that 200,000 workers were engaged on these casual contracts in 2012, representing a 174% increase since 2005.
With almost a quarter of Britain's firms now using them, it is clear that employers are embracing the flexibility and potential cost savings that zero-hours contracts can provide. Yet in the face of such political opposition, are they here to stay?
The law Under zero-hours contracts there are no guaranteed hours and individuals are paid only for the hours worked. There is no obligation for the employer to provide work or for the individual to accept such work.
Advantages Having access to a bank of ready and willing workers provides employers with the flexibility to respond to variable business needs. They can avoid the pressure and costs of recruiting extra staff during busy periods only to have to consider making redundancies when the workload diminishes.
Employers can, therefore, protect their core workforce while also potentially avoiding the rights and liabilities associated with traditional employment contracts.
Some individuals prefer flexible working arrangements, particularly if they are unable to commit to a fixed number of hours each week, perhaps due to family commitments or because they are studying or retired but keen to have occasional work. Workers can also keep their skills up to date by undertaking ad hoc work while looking for a permanent job.
Disadvantages For workers, uncertain hours and variable income may make it difficult to manage childcare and to budget for household bills. Similarly, an employer's continuity of service might suffer if someone with the right skills cannot be found at short notice to meet a sudden increase in demand.
Indiscriminate use of zero-hours contracts could also have an impact on quality of service, as casual workers are less likely to feel engaged in the business or valued by the employer and are therefore unwilling to go the extra mile.
Increased regulation? While the popularity of zero-hours contracts would make it difficult for the Government to eradicate them completely, their use might become more regulated; and greater regulation might result in casual arrangements losing their appeal for employers, which could mean fewer opportunities for the unemployed and increased pressure on existing workforces to pick up the slack in busy periods.
â- Monitor workers to ensure there are no regular working patterns which could lead to claims that an employment relationship has been created.
â- Explore ways of engaging casual workers in the business (ie, by sharing good news stories or inviting them to social events).
â- Monitor their use carefully to safeguard productivity and maintain quality standards.
Beware! Zero-hours contracts do not equate to zero liability.
â- Employment status If in reality there is a regular pattern of work being carried out and no one really expects the individual to refuse to work, the employer risks inadvertently creating an employment relationship. For an arrangement to be truly zero-hours it is essential that there is no obligation for the employer to offer work or for the individual to accept it.
â- Holiday Casual workers are entitled to 28 days' holiday, calculated pro rata. It can be difficult to calculate holiday entitlement when the number of working hours is not known in advance.
â- Pay If workers are required to be on standby or on call at or near their place of work, they must be paid at least the national minimum wage for that time.
Contact Syma Spanjers is an associate at Charles Russell