Zero-hour contracts have always been quite a controversial topic within employment law with many calling for it to be banned completely in the UK.
Yet, they remain popular amongst many employers; in fact, it was recently revealed that over 900,000 UK workers are now on zero-hour contracts.
Are zero-hour contracts right for you and your business? What could the challenges or consequences of that choice be for you and your employees?
What are zero-hour contracts?
A zero-hour contract is a type of contract or agreement between an employer and worker that doesn’t entitle the worker to any set number of minimum working hours. The employer can choose to offer work as and when it is needed but they are usually obliged to offer work on a regular basis.
The worker is also under an obligation to accept any work offered to them, so it is important that fair notice is given when possible.
What’s the difference between zero-hour contracts and casual workers?
Many businesses get zero-hour contracts and casual workers mixed up, so it is important that you understand the clear distinction between the two.
Unlike zero-hour contracts, there is not mutuality of obligation with casual workers. Employers have no duty to offer work and workers have no obligation to accept any work offered to them.
Casual workers are also only entitled to a handful of employment rights; whereas, zero-hour contract workers receive full employment rights.
What are the benefits of zero-hour contracts?
Zero-hour contracts can be beneficial to both employers and employees under the right circumstances.
For example, there is the obvious argument that job flexibility often works best for younger workers who may still be in full-time or part time education, or even those who have other commitments outside of work such as young children, another job, or carer responsibilities.
This job flexibility is great for businesses too as they can tailor their staffing as and when it’s needed rather than being overstaffed on a quiet day and spending unnecessary money.
You should also consider that having some employees on a zero-hour contract means that in emergency cases such as sickness absence or bereavement leave, you can usually find someone to cover with ease.
Although casual workers can also be used on this basis too, as long as there is no regularity to the work offered.
It’s typical to find zero-hour contracts being used in customer service roles such as retail or restaurant staff because they’re unpredictable work environments where number of staff needed on any day can fluctuate especially during busier periods such as Christmas or quieter spells such as snow days.
You should assess your business needs and demands before you opt for zero-hour contracts.
You should also consider the following:
- Will there actually ever be any need for these employees?
Don’t just hire someone on a zero-hour contract basis for those very rare occasions that you need cover. If you don’t see a regular need for them in the workplace (at least a few hours week) then it won’t work and maybe a casual worker is more suitable.
- They are still entitled to all statutory employment rights such as Annual Leave, Sickness Pay and National Minimum Wage, so will it cost you more to hire multiple zero-hour contract workers over one full or part-time employee?
- Although zero-hour contract workers must accept any work offered to them, you need to be fair in how you treat them so don’t give them four hours’ notice before every shift.
Workers will usually need at least 24 hours’ notice before a shift so that they can arrange childcare or cancel/rearrange any appointments or prior engagements. Weekly rota’s are typically used to manage this, but if you cannot put that sort of system in place, then you may find that your workers don’t stick around for too long.
Why zero-hour contracts might not be right for you?
The disadvantages of zero-hour contracts for workers are obvious – irregular income, unpredictable hours, feeling isolated from the team etc.
Therefore, many people feel that zero-hour contracts are unfair and unethical and should be banned completely.
This controversy and negative public opinion surrounding zero-hour contracts means that opting to take that route could negatively impact public opinion towards your business.
Furthermore, zero-hour contracts are not popular for most people looking for work who need stability and guaranteed money coming in at the end of every month which you need to bear in mind for the type of role they will be filling.
Zero-hour contracts also tend to be a temporary choice for workers i.e. for students, they just need some extra income whilst they study. This could mean that you are having to recruit and train new people on quite a regular basis – a costly and time-consuming problem for your business in the long-term.
The argument on both sides is that if it works for your business, and your workers are happy and treated fairly, then zero-hour contracts can be great. But they are not for everyone and every business, so you should take careful consideration before making that sort of decision.
If you are dealing with zero-hour contracts issues, or have any questions or concerns about other HR issues then give us a call today on 0845 2626 260.