Zero Hours Contracts – “Do organisations need such extreme flexibility?”


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termination-110301_1280Zero hours contracts have continued to be a hot topic in recent months and Miliband’s speech in Glasgow last month sparked yet more debate in the press when he explained his plans to tackle what he calls the ‘epidemic of zero hours contracts’.

So what exactly do we mean by zero hours contracts? There are numerous definitions floating around but the common theme running through each is contracts that do not guarantee a minimum number of hours.

This can make life very difficult for employees working these contracts due to the following implications:

  • An employer is not obliged to offer sick leave or holiday pay
  • Staff can be sent home with no warning after commuting to work if the manager decides they are no longer required
  • There may be some weeks when staff do not work at all and therefore receive no wage
  • It’s difficult to arrange childcare if staff don’t know which days they will be working

However, it’s fair to say that there are many people in the workforce that relish working a zero hours contract because it suits their lifestyle and gives them flexibility. Zero hours contracts enable individuals to choose when, where and how often they work. For example, an individual may decide to take on a number of different roles or flex their working hours around other commitments such as caring for children. Furthermore, zero hours contracts enable students to gain flexible employment to fund their social life, library fines and ever increasing rent. Older workers may welcome a zero hours contract to top up their pensions on an ad hoc basis. For others, the contracts may simply fit with their lifestyle.

The future of zero hours contracts looks a little murky at the moment but the widespread press attention and interest from Government, unions and employment bodies means that tighter legislation is a likely possibility. Last month, Miliband made his manifesto pledge in Glasgow following a shadow cabinet meeting. He promised to introduce new rights for workers on zero hour contracts, if his party wins the next election.

As a brief summary, under Labour’s plans, employees on zero hour’s contracts would:

  • Not be obliged to be available outside contracted hours
  • Be free to work for other employers
  • Have a right to compensation for shifts cancelled at short notice
  • Clarity from their employers about their employment status covering a code on issues such as holiday pay notification periods pensions and auto-enrolment
  • The right to request fixed hours after six months with an employer and an automatic right to a fixed-hours contract after 12 months unless the individual opted out

Mr Miliband said “I’m in favour of flexibility but I’m not in favour of the kind of flexibility which means that people have to be flexible about whether they can see their kids or whether they can afford the weekly shop”. There are those that are content to be on zero hours contracts however the uncertainty of when and how much you’re working can make it hard to make ends meet in some cases.

WTS are in favour of flexible working to maintain the agile workforce required to support economic growth and in many cases zero hours contracts are beneficial to both the employer and employee. However, there have been numerous reports in the press of organisations exploiting employees through the use of zero hour’s contracts. For example, you will all no doubt remember the news story about Burger King in Glasgow where employees were made to clock on when the restaurant was busy and clock off again when it was quiet and wait in the staffroom. Clearly this is not always the case but such practice brings poor press for zero hours contracts.

According to research conducted by Cambridge University flexible working practices, including zero hours contracts, may be damaging employee health. The study reported that “unpredictable variability generates job insecurity by engendering uncertainty and worry about future changes to hours, incomes and schedules…which in many cases leads to an anxious, stressed and depressed mental state”.

Having considered both sides of the debate, it leads one to question what the way forward is when it comes to flexible working? It is important to ask why organisations need such extreme levels of flexibility when it comes to managing their workforce. It can be down to management failing to accurately predict how much staffing resource is required on a given day or week. Through using different methods and structures, conducting business demand analysis and applying workforce planning and management tools, organisations can carefully analyse the demand for labour and identify if, when and why it changes throughout the year and plan accordingly.

Demand-led rostering and concepts like lean employee resourcing (Lean-ER®) provide employers with labour resources that are flexible and responsive to the needs of the organisation and the marketplace, ensuring that demand is met and reducing the usage of zero hours contracts. For example, a cold drinks manufacturer may find their business peaks during the hot summer weather and dips during the winter. In this case the employee will be required to work more hours during the summer than during the winter. Unlike zero hours contracts, employees are given a contract which states the agreed number of guaranteed hours the employee is contracted to work through a twelve month period and employees are paid the same amount each month, regardless of the number of hours worked. Demand-led rostering creates a ‘win-win’ situation which benefits both the employer and the employee.


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