Zero-hour contracts are becoming more and more common in the modern workplace. But despite their popularity that have been much criticised as a way that employers can have more control over their staff.
Interestingly there is some research to suggest that being on a zero-hour contract puts people at a greater risk of suffering psychological distress, and less likely to report feeling healthy compared to employed people.
But zero-hours contracts also provide employees with opportunities to work at their own pace, and employers with tight budgets to stay in business. So here we take a look at whether zero-hour contracts are genuinely wrong or if they are simply misunderstood.
What is a zero-hour contract?
We need to start by understanding exactly what is meant by a ‘zero-hour’ contract. A legal definition for zero-hour contracts was not actually created until 2015. The definition makes specific reference to the fact that this kind of contract does not provide any certainty that work will be made available to the worker.
Crucially, the zero-hour contract goes both ways; an employer is not obliged to provide a minimum number of hours, and an employee is not obliged to accept any number of hours. There has been some suggestion that the specific wording of the definition puts the balance of power much further towards the employer than it does to the employee.
Flexibility for staff and business
There is no doubt that zero-hours contracts have their advantages – for both employers and employees. An aspect that is undoubtedly appreciated by both the staff and the business is the additional flexibility. A zero hours contract means that employers only need to bring in staff when they need them.
This means that they don’t need to spend money on staff when they are actually needed for the business. This is especially useful for companies that provide customer service or any kind of role that has varied peak time.
For employees, the flexibility is a benefit from the perspective that they can take any amount of work that suits them, potentially allowing them to pick up extra shifts when they are free and could do with extra money, but also allowing them complete freedom if they decide they need a significant amount of time off.
Pensions and sick pay
One of the disadvantages of zero-hour contracts from the perspective of an employee is the issue of workplace benefits. Zero hours employers are not obliged to provide employees with redundancy pay, holiday pay, sick pay, or a pension scheme. However, the fact that they are not obliged to doesn’t mean that none do.
In fact, it could even be beneficial for businesses to start providing more benefits to zero hours workers. According to financial specialists Reeves Financial “if employees are made aware of and recognise the value of their benefit packages, their confidence in their future and, therefore, the future of the company is raised”.
Not all zero hours contracts are created equal, so it is important for both employers and employees to understand their contract and what it means for them.
When is it appropriate to use zero-hour contracts?
There are certain times that it can be completely appropriate for businesses to utilise zero-hour contracts. For example, when a business has just started and does not yet understand demand, peak times, or the level of its customer base. Another reason that employers could legitimately use zero-hour contracts is if they have seasonal work, where staff are required in order to deal with huge demand at certain times of year.
Ultimately, it should never be used to attempt to circumvent employment and not give standard workers what they should be owed in terms of job security, regular earnings, and employee benefits.
It remains the case that with regard to zero-hour contracts, the balance of power stays firmly in the hands of the employer. The puts an onus on business owners to use zero-hour contracts responsibility – specifically, by doing so only when necessary and when it is the preference of the employee.
The concept of these contracts does not need to be intrinsically ‘wrong’ – but we need to ensure that they are not being abused in order as a way for employers to have a greater level of control over their staff.