The Rise of Zero Hour Contracts

The recession, and seemingly never-ending list of cuts that the government plans to carry out, has unsurprisingly created anxiety among many areas of society in the UK.  Constant discussions about the need to  “tighten our belts” in the media, and worries about continued access to state services will do that.  One serious issue that seems to be a direct a result of the recession, is an increase in fears over job security.  Many employers have been placed in difficult situations over reducing staff and hours, with several businesses experiencing a drop in profits.  However, fears over job security, rising unemployment, and the limited number of available jobs, are valid concerns that are being exploited by some employers.

Zero hour contracts are a form of contract that are increasingly being used by a number of different employers, from tourist attractions to NHS trusts, from high street shops to hotels.  This form of contract places no obligation on the worker or employer; similar to using temporary agency staff, without the agency fees.  UNISON estimates that 23% of employers now use zero hour workers.  These workers are usually “on-call” or called into work with one or two days notice.  There are obvious benefits to this mode of work; for workers who are able to be very flexible and do not necessarily need a regular salary, this is probably ideal.  However, the problem arises when employers use zero hour workers on a regular basis over an extended period of time, choosing to maintain their zero hour status instead of formalising the employment relationship.  Workers only get paid for the hours that they work.  Employers are also not obliged to provide paid leave for zero-hour workers; so they will not earn any money while taking any sick leave or holiday.  Furthermore, any rights, such as maternity leave, and the right to redundancy payment are only applicable for employees. Many employers decide it is more profitable to maintain the zero hour contracts in place, despite the workers in questions perhaps working for months, or years, as it is more profitable.

In September 2012, the NHS was criticised for increasing their number of zero hour contracts, instead of providing more formal employment, for highly skilled medical professional staff.  As a form of employment, it has been used without much criticism in the areas of retail and hospitality for many years.  However, when using these contracts for medical staff, such as care workers and nurses, quality of care and endangerment to the lives of patients needs to be addressed.

Zero hour contracts are favoured by employers due to the lack of employment relationship and obligation towards workers.  However, the use of zero hour workers for extended periods of time, without formalising the employment relationship does not mean that the employer successfully escapes any obligations.  In 2012, the Employment Appeal Tribunal found in favour of five care workers, who had zero hour contracts, and were dismissed suddenly at the end of an assignment.  The EAT ruled that an employment relationship did exist, as the care workers were under obligation to provide services at fixed times, and Carewatch, the company providing care workers to the NHS, had undertaken to offer work.  The EAT found that there was “mutuality of obligation”, and that the individuals in question were entitled to continued employment with Carewatch.

Mutual obligation demonstrates an employment relationship, that means that zero hour are entitled to employment rights similar to those of the employees they work alongside.  Many industries, particularly retail, hospitality and customer service sectors, use zero hour workers regularly over a long time, even years, maintaining that they owe these workers no rights.  However, the 2012 EAT ruling demonstrates that, where there exists a “mutuality of obligation”, employers cannot simply dismiss their zero hour workers or suddenly cut the number of hours they are provided.

With the economic situation showing no signs of significant improvement, it is likely we will see a continued rise in the use of zero hour work.  Some employers, understandably, have been affected by the recession and reluctantly use this mode of employment in the need to survive.  However, it is also being used by large companies who have successfully taken advantage of the economic situation, and manage to convince zero hour workers that they should feel lucky for having a job at all, in the context of the current high levels of unemployment in the UK.  In times of economic insecurity, people are much less likely to speak up over unfair treatment, meaning that employers are free to continue using this form of employment, to their advantage.

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