Labour plan to ban zero-hour contracts. This is what Employers need to know

What’s the issue?

Labour’s pledge in this area was that:

Labour will end ‘one sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, based on a twelve-week reference period.

A zero hours contract is:

• Where there is no obligation on either side – the company has no obligation to offer any work, and the worker has no obligation to accept it
• Often for contracts where work is unpredictable – such as bank staff; casual waitressing, shift work etc
• Offering ultimate flexibility on both sides

The “issue” that Labour seeks to address is for workers who are left in a situation where they can never know from week to week what their income will be, leaving them in a precarious position, and potentially without income in any given week. This sort of contract cannot be used to obtain things like mortgages or often leases, due to the fact there is no guarantee of income. They can also be used to frustrate employment rights – keeping workers on these arrangements long-term without accruing some rights.

Labour’s pledge was to introduce some predictability and allow workers who are, in fact, generally working a regular pattern of work to be able to insist on that pattern, and thus rely on that income.

Our Thoughts – this is not easy to implement in practice

It is not unreasonable to suggest that someone who regularly works similar or the same hours each week should be able to rely on that income, rather than have it withdrawn without notice with very limited recourse.

Our concern is that it will be difficult to achieve, as the truly unscrupulous employer will likely be able to frustrate the end goal by ensuring that there is no pattern of regular work over the 12-week period – potentially making the situation worse, meaning a worker who might otherwise have had regular, if unprotected legally, hours, may find that those hours change each week deliberately to avoid building up a pattern over 12 weeks.

What about those who prefer these arrangements?

At the same time, many workers and employers who use this arrangement for mutual benefit may find that the results are unintended consequences of creating obligations that neither side wants. Many workers rely on this no-obligation arrangement. Those with caring responsibilities for example, and students in particular, will often take on casual work which they can do when they have time but can say no when their studies or other commitments require more attention. Older workers who have retired but like to “keep their hand in” or simply earn a top-up income may want the ability to choose their hours. Some like to work for a 3 or 4-month period and then take a similar amount of time off, perhaps to travel or simply take a break. There is no unscrupulous element to these contracts – both sides have deliberately chosen them.

The concern is that the very people who need protection will find their hours become less predictable, not more so, entirely to frustrate any attempts to legislate, whilst those who rely on flexibility will find that they have unwittingly created obligations neither wanted and which may mean that they cannot commit to the work at all. Much depends on how this law is brought in and how closely it sticks to the pledge.

What should employers do?

If you make use of zero-hours workers, it may be wise to consider the following: 

1. What the impact would be on your business if the flexibility for these contracts was removed?
   
   
2. Monitor the hours that these workers are currently doing – do you have the stats to use to react to the law and does a regular pattern appear?
   
   
3. Are you rotating your bank/casual staff sufficiently, or are the same people being given the same shifts?
   
   
4. Are you getting the protection that you think you are from doing it – are your contracts doing what you want them to or has the passage of time and the actual practice of how they operate changed them? It’s worth remembering that employment contracts are not fixed and that custom and practice can change the terms of a written contract over time.

We can help you consider whether your contracts are doing what you need them to, and whether there are steps which might help ensure that any changes to the law in this area are not a problem for you and/or your staff.  

Whilst it is early days and we do not currently know what format this law will take, nor when it will be imposed, a health check of how you are using your contracts and whether it is working for you and your staff in the best way, can help you get ahead and avoid unintended consequences.