Zero hours contracts became very much a part of the General Election campaign yesterday with the announcement of Labour’s manifesto. But what is the real impact of this message for smaller employers?
Zero-hours contracts – the facts
The facts are, according to the ONS; 697,000 people in the UK said they were working under a zero-hours contract for their main employment between October and December 2014. However, the number of people on contracts that did not guarantee a minimum number of hours was in fact 1.8 million in August 2014 (which may also represent seasonal factors). That’s a lot of people without any guaranteed hours.
A third of these people want more hours in their current job, most of them being in full-time education, working part-time, and likely under 25 or over 65. The most common use is in the voluntary sector (according to the CIPD). They’re also likely to be working under these in the services sector; half of Accommodation and Food Services made use of no guaranteed hours in August 2014 – again though, this could also be seasonal.
So what does this information tell us? Firstly, the change in volume between the summer and winter, as well as the demographics working under these contracts, might well suggest that a great many school or university students are gaining casual work through these contracts.
It could also show that zero hours contracts are in fact making the labour market more accessible to people that want to work – the CBI stated that during the post-recession recovery “labour market flexibility allowed firms to create jobs at the first sign of demand rather than waiting for sufficient demand”.
However, there is certainly an argument against. As we can see from the ONS statistics, the number of people wanting a higher number of hours reached a third. However, under other terms of employment, this only ever reached 13%. Surely this demonstrates the lack of flexibility when it comes to workers wanting to work more?
Labour’s new zero-hours policy
So, back to yesterday’s news. Labour stated their clear intention to “ban exploitative zero-hours contracts”. What does this actually mean?
Well, the Independent gives a fairly sensible view on it (and their other policies). Essentially; change the way that zero-hours contracts work, and removing the exploitative elements of them, rather than banning them outright. Labour’s main intention being to make employers offer proper contracts after three months of working regular hours – although the definition of ‘regular hours’ is still to be decided.
The regulation of zero-hours contracts in this way might be a new idea, but regulation in general isn’t.
Only recently, Chancellor George Osborne acknowledged that something needs to be done on exploitative contracts, claiming that it would be “very difficult” to live on them.
The current government is also taking steps to regulate the terms of zero-hours contracts too, banning companies from including exclusivity clauses – tying workers to a no-guaranteed hours contract for only one company.
What Labour’s policy would mean for employers
So what does the news of Labour’s manifesto mean for smaller employers? If they’re using zero-hours contracts, probably quite a bit, as it may affect the way in which they can employ casual workers on a seasonal basis – depending on the definition of ‘regular hours’.
Some employment lawyers have even claimed that Labour’s policy could make it more difficult for employees; employers just terminating contracts at the 12 week mark.
As we can see from the data, there are pros and cons for the current use of zero-hours contracts which should be taken into account by both employer and employee. Students and other employees can gain work when they need it, and turn it down when they don’t, and likewise employers can more freely offer work to people who need it.
It’s an issue that has no concrete answer, zero-hours contracts working for some and being exploitative for others. In the meantime, employers just need to think about whether anything they have put in place currently could change (exclusivity clauses), or how they might work with any potential changes should Labour win the election.
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