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Proposed zero-hours reform tips scales back in employees’ favour

Zero-hours contracts have become something of a cause célèbre for the UK national press as more and more employers and employees have turned to “contingent work” in the attempt to combat a weak employment market in the post-recessionary economy, and as cases of alleged abuses by high-profile employers have come to light.

Generic time sheet

 

With as many as half of all employee-employer relationships in the UK expected to be on contingent terms by 2030, Vince Cable’s proposal today of a bill banning the imposition of exclusivity clauses on employees with zero-hours contracts represents an important first step towards addressing the imbalance in power that has emerged in these employment relationships.

While it may not have a major impact initially – many employers using zero-hours contracts do not operate exclusivity clauses – the legislation will provide greater control over the long term.

 

There is nothing inherently wrong with the concept of zero-hours contracts. Implemented well, they provide valuable flexibility for employees looking to accommodate childcare arrangements or part-time study, for example, or for semi-retired workers who don’t want to commit to fixed hours. Benefits for employers include the ability to easily scale their workforce according to their changing needs, perhaps due to seasonal variation in demand on their business.

UK employment law is currently poorly equipped to safeguard the rights of contingent workers, but today’s announcement alluded to the likelihood of further consultation, with a view to introducing additional controls and develop a code of practice on the fair use of zero-hours contracts by the end of the year.

The move to ban exclusivity clauses should help level the playing field for employees and employers, and provide greater security for both: employees can enter into additional contracts to safeguard themselves against fallow periods when one or another is providing them with fewer hours than they would like; employers, meanwhile, have access to a broader pool of available employees and are better able to plan their resourcing. The additional security provided by reducing uncertainty for employees might also encourage greater loyalty – and, in turn, greater productivity.

Many employers may think that the benefits of zero-hours contracts are outweighed by the complexities of implementation and the moral shades of grey and associated media scrutiny – in an ideal world, they would not operate in a space so fraught with reputational risk. In particular, the complexity of the law relating to holiday pay entitlement makes it difficult for employers to ensure that employees on zero-hours contracts are appropriately compensated – leaving them at serious risk of legal action and negative publicity.

Cable’s proposal is a positive step towards securing the rights of zero-hours workers, but there is still plenty that employers should do now to ensure they are not sleepwalking into trouble at the greyest edges of a difficult legal and moral issue. This includes reviewing the terms of their existing contracts and conducting a risk-benefit analysis of zero-hours agreements, and investigating alternative means of engaging staff (monthly or quarterly rolling contracts, flexible hours, job-sharing, etc.). Clearly, this is an ever-moving picture, and it is sensible to keep staff engagement practices under continual review.

This is adapted from an article that originally appeared in Retail Week, 25 June 2014

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further