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In light of the extensive media coverage regarding zero hour contracts and the recent MP debate in the House of Commons over the issue, many organisations question their approach to using zero hour contracts and many employees are reconsidering accepting employment on such terms. Zero hours contracts are legal but it should come as no surprise that the Government has recently consulted on the use of zero hour contracts. The initial message is clear – the Government will support their continued use. The consultation, which only recently closed in March 2014, sought to address a number of issues, including:
- whether guidance should be issued for employers on the justification of using zero hour contracts;
- whether safeguards should be introduced requiring permanent employment to be offered to those workers who are on zero hour contracts for a long time;
- whether a code of conduct should be introduced requiring transparency and better information to be provided to employees about the use of zero hour contracts?
The Government is currently analysing the feedback received from the consultation and its responses will be published in due course. At present, there is no certainty on the timescales.
The Government will also consider whether the use of zero hour contracts negatively impacts directly on those who receive the services that are often provided under them. For many being served by those on zero hour contracts, particularly where low wages are paid and there is insecurity about hours, concerns arise about the quality of service they will receive.
So what are the advantages and disadvantages of zero hour contracts? From the employer’s perspective, they are a helpful tool in addressing the budget cuts and commissioning strategies that they are being forced to consider, allowing them to engage a more flexible workforce and not offer set hours of work. In addition, they allow the opportunity to offer training and experiences that there would otherwise be no budget for. It also enables effective management of peaks and troughs of work whereby the employer can establish a “bank of staff” to call upon during busy periods without having to unnecessarily pay staff where work is not available.
From the employee’s perspective, they can pick and choose when they make themselves available for work and sometimes allows them the opportunity to sign up with multiple organisations.
However, when used incorrectly, there are some disadvantages to using zero hour contracts for both employers and employees. Arguably, such contracts discourage loyalty from staff and make it difficult for employees to budget. In addition, depending on how they are structured zero hour contracts can prevent employees from accruing statutory employment rights.
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