Zero hours versus increase in workers

Labour leader Ed Miliband's speech at the TUC Congress proposed three specific changes to zero hours contracts. Picture: PA
Labour leader Ed Miliband's speech at the TUC Congress proposed three specific changes to zero hours contracts. Picture: PA
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Some reform of unsecured contracts may be needed, but any changes could mean employers won’t take on staff at all, says Andrew Brown

Vince Cable will take action to prevent the abuse of zero hours contracts. Perhaps.

The Business Secretary has mooted a number of measures which might be implemented to prevent the abuse. The matter is to form the subject of consultation. Ultimately it may only result in a “code of conduct” for employers.

Earlier this month, the Scottish Government introduced a bill to reform aspects of public procurement, which could eventually require public sector organisations to consider whether potential suppliers use zero hours contracts.

Meanwhile, evidence was presented to the Scottish Affairs Select Committee’s “inquiry into the use of zero hours contracts” by the University and College Union; following requests under Freedom of Information legislation, it had established 15 of the 19 higher education institutions in Scotland use zero-hours contracts – a higher percentage than the UK as a whole.

Registering zero hours contract

As there is no requirement to register a zero hours contract, it is difficult to establish the extent to which they are used. Many employees don’t realise they are employed on a zero hours contract.

There is no legal definition and they range from the truly casual to contracts where hours may fluctuate with notice from time to time. They are commonly used in the hospitality industry and education sector.

Undoubtedly, some employers abuse the system. However, that is the case with almost every aspect of employment law.

The government actually introduced a new mechanism last month by which employers can exert their stronger bargaining position over individuals. Employers can refuse to employ people unless they waive any future rights to claim unfair dismissal or redundancy payments and other rights, in exchange for shares “worth” £2,000.

While the prospective employees are obliged to take legal advice before agreeing to this, it is perhaps of little value where the only alternative is to remain unemployed.

Why then, after months of discussion are the UK and Scottish governments now providing further detail of possible action over zero hours contracts? Perhaps because Labour did so last month?

In September Ed Miliband, in a speech to the TUC, proposed three specific measures:

• Banning zero hours contracts that also preclude workers from working for another employer.
• Banning employers from insisting workers be available when there is no guarantee of work.
• In cases where employees are working regular hours over a sustained period, converting the contracts to guarantee those hours.

Labour position

The Labour position is a little more robust. However, it is interesting that hundreds of employees in Labour-run councils are reported to be on zero hours contracts. No doubt they will claim they do not abuse the contracts.

Should action be taken? Employees are free to agree to the terms or to remain unemployed. It is attractive to give employees some guarantees around their pay and working hours.

However, in many cases it is very difficult for an employer to guarantee the demand for its services, yet it requires people to be available to deliver the services at relatively short notice. If forced to guarantee hours they may regard it as too risky to take on staff and simply fail to grow.

Last year the government increased the minimum period of service required to claim unfair dismissal from one year to two years in order to reduce concerns which might hamper employment and business growth. It would seem odd to now introduce measures which might dissuade employers from taking on staff.

Clearly the requirement to remain loyal to one employer, where that employer cannot guarantee a minimum level of work, is unpalatable. However, if the employee finds a more attractive alternative they are free to resign and take that job.

Surely it is legitimate that an employer who provides ongoing work (albeit ad hoc) to a particular individual protect their business by preventing the employee from, the following day, taking their acquired skills and inside knowledge to a competitor?

Perhaps the solution is to balance the relationship and ensure exclusivity applies in both directions: individuals who are subject to exclusivity clauses could also be the first to be offered any work that arises.

Trade unions

Meanwhile we hear of trade unions who, without much thought, it would appear, are resisting anything which might be termed a “zero hours contract”.

Even where, in the education sector for example, the individual might be given several weeks’ notice of the hours they are being offered and have those hours guaranteed for several months, trade unions are resisting such contracts.

Instead, they may ask for fixed term contracts, which might boost the union’s standing in terms of its resistance to zero hours contracts, but it achieves no greater certainty for the individual.

Some reform is appropriate. However, like much of the debate around employment law changes in recent years, there is a degree of competitive overreaction.

This may be for political ends, rather than to serve business, employees and trade union members.

• Andrew Brown is a senior associate in Anderson Strathern’s employment and pensions unit

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