Zero or hero? Should zero hour contracts be banned?

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Posted in:HR and Employment|May 31, 2013 | Join the mailing list

There’s been a lot of coverage in the media recently about employers using zero hour contracts and the shadow health secretary, Andy Burnham, suggesting that any future Labour government should "introduce a ban" on such contracts. The Office of National
Statistics also released figures this month showing that the number of workers on zero hour contracts has nearly doubled since 2008 to 200,000.

Andy Burnham’s suggestion was made following Ed Milliband’s proposal to reward employers for paying low earning employees more than the minimum wage. Mr Milliband suggested employers could be offered a tax relief in return for paying what he described as a
"living wage".

Zero hour contracts are contracts for casual working, under which the employer doesn’t guarantee to provide the worker with any work and pays the worker only for work actually carried out. The worker, however, is expected to be available for work when or if
called on by the employer.

The retail and finance sectors make the most use of contracts like these, but the practice is also spreading to teaching staff, public services and the NHS.

So why the perceived need to ban zero hour contracts? A number of Labour MPs and trade unions consider that these contracts strip workers of their rights and exploit them because the workers have to be on call to work, but may end up not being given any work
and as a result may end up with no pay. It’s also suggested that employers use this type of contract to avoid the impact of the Agency Workers Regulations 2010, which entitle agency workers to the same basic terms and conditions as permanent employees after
12 weeks’ continuous service.

Another problem with zero hour contracts is that it’s unclear whether people who work under them are actually employees or not. It is, at best, a grey area and if the workers are not employees, then they do not have any protection against unfair dismissal if
the "employer" chooses to end the contract with the worker.     

However, from an employer’s point of view, zero hour contracts can provide much needed flexibility, especially in sectors where work levels fluctuate and having salaried staff would be a difficult burden to bear.

Nigel Crebbin of Berg commented: "Zero hour contracts can be vital to organisations in sectors where work levels can’t be guaranteed, usually due to seasonal peaks and troughs, and especially in relation to SMEs who can’t afford to pay salaried staff when work
is not available and profits are down. Perhaps a change in government will bring in a different view on these contracts, but if the current economic climate persists, that government will need to think carefully before taking a step which could damage many

For more information about any of the above or for practical advice on these or any other aspect of employment law, please contact Nigel Crebbin of the Berg Employment Team on 0161 833 9211 or email us at Follow us at Twitter
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice should
be obtained before taking, or refraining from taking, any action as a result of this article.

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