The recent controversial announcement that there could be one million workers signed on to zero-hours contracts has prompted Business Secretary, Vince Cable, to request a review of the practice.
Zero-hours contracts are employment arrangements whereby the employee agrees to be available as and when required for work. There are no fixed hours of work although usually, a rota will be in place providing employees with an idea of their required availability. Employees may also be expected to be available to cover extra work at short notice.
Currently it is thought that 3-4% of workers in the United Kingdom are on zero-hours contracts. Approximately 14% of those have been reported as saying they did not receive enough work to ensure a decent basic standard of living. This would mean that the majority do which raises the question as to whether zero hours contracts are being utilised correctly.
An employee on a zero-hours contract is not entitled to a statutory minimum notice period, a redundancy payment or protection against unfair dismissal. In addition, pension and sickness benefits are limited. This is what makes zero-hours contracts controversial as there are few apparent safeguards from abuse by employers and little is positively known about their impact on the worker.
The CIPD has expressed concern that employers may be utilising zero-hours contracts as a way of giving more work to favoured employees. However, they also offer benefits for some employees for example, those looking for occasional earnings or those who would like flexibility with their work hours.
With a review of zero-hours contracts being called for, it is currently unknown whether the arrangements for such contracts will be altered in the future. Employers should complete a review of all zero-hours contracts they have in use to ensure that they are the most suitable contract for the employee concerned. It is also interesting to note that most people on zero-hours contracts are younger or more mature members of the workforce which raises interesting questions about potential discrimination.
*With thanks to Will Brennan for preparing this article.