The Chartered Institute of Personnel and Development (CIPD) says the number of workers working on zero hour contracts is four times the official estimates; Vince Cable is demanding a review of them and the public gave an outcry when a load of people employed on them were not offered work at Alnwick Castle when a high society wedding came to town and took over the tourist attraction. So what is the fuss all about?
Basically the contract is such that there is no minimum guarantee of work, in fact no guarantee at all, no promise of pay if the work isn’t there and so the person on that contract has no means of planning, or preparing for when there is no work and no pay; a very uncertain and unpleasant situation for some if that is their main source of income.
So why would a company use them? Let’s have a look at a how to use them appropriately.
Does the company have seasonal work fluctuations?
If that’s a yes, then these may be just the ticket. Often a business can’t promise a set number of hours as demand varies so much. It may be that the weather affects the role you do e.g. fruit picking – if it rains you can’t pick the fruit – or you may work in a tourist attraction where the work changes from season to season, month to month, and again with the weather. Imagine the financial burden to an amusement park if it were to rain solidly for the summer and all the staff were on fixed hours and payment terms so a decrease was not easily achieved? Such contracts would be ideal to be able to ‘flex’ the numbers of hours needed and meet the requirements according to forecasts.
Does the company benefit from a pool of people to call from?
People on such contracts can be used as a pool which is ‘on-call’ and can be used when the need arises, often at a moment’s notice. The retail world like to have a large source of people to draw upon to ensure busy trading periods, Bank Holidays for instance are covered appropriately. Anyone who has stood in an unstaffed cue to pay in a shop on Bank Holiday Monday will attest to the benefits of that!
Generally, as an employer, there is no obligation to offer work to these workers but often the individual is obliged to be available and to accept the work when it is offered, given certain parameters. This can be of great help to people who may want to supplement their main job with additional earnings and be flexible about when they work, or for students who need a choice about when and how much they work so they can fit it around their studies.
Don’t forget though if you, as a business, are considering using such contracts –
• you are still obligated to pay national minimum wage to workers on zero hours contracts
• workers on such contracts benefit from certain employment rights such as paid holiday and redundancy rights as they are not ‘casual’ in nature.
• It is important to review those on such contracts at regular intervals to ensure any shifts offered are rotated and managed appropriately to prevent discrimination claims
• And finally, ensure you have clarity in usage between ‘casual’ workers where there is commonly no obligation on the employer to offer work to the individual and, crucially, no obligation on the individual to accept work that is offered. The intention behind casual contracts this is often that mutuality of obligation does not arise, unlike a zero hours contract where that obligation does exist to a degree. These are often used interchangeably but that small but significant difference could mean the difference between employment status and an unfair dismissal claim or not!
So, used carefully and in the fitting circumstances then great, but please be mindful of the above before embarking on introducing them.
For more help and advice on assessing your current working arrangements to be able to decide on the most suitable contractual arrangements contact us at www.threedomsolutions.co.uk or follow us on twitter @3domSolutions