Inclusive growth: the case against zero-hour contracts

Zero-hour contracts are not a defined legislation, and are also referred to as casual or flexible contracts. The two main headlines of such contracts are: employers are not obliged to provide a minimum number of working hours; and the employee is not obliged to accept any work that is offered.

The employer can offer work on an ad-hoc basis that suits their business needs and the employee has the option to turn down work if they wish… sounds fair enough? However, the simplicity of this arrangement does have its pitfalls, and can quickly create negative experiences for both employer and employee.

Zero-hour contracts are heavily prevalent across the UK workforce. Over 900,000 people are currently on such agreements; however, for the first time in several years zero-hour contract growth slowed to below the current employment rate. This might be due to increasingly negative media coverage, employees becoming more aware of their status within a zero-hour contract, Brexit, and the knock-on effects of increased stress and mental health related absences at work.

The introduction of casual contracts has been more commonly used to meet fluctuating supply and demand within businesses on a short-term basis, and are often seen in the manufacturing, hospitality and retail sectors. Issues arise when businesses use such contracts on a long-term or permanent basis, which can cause employees anxiety, disruption and limit their ability to plan their finances effectively.

Some businesses will say that ‘casual contracts’ work for them - what are the alternatives?

Fixed-term contract or part-time permanent contract – for regular requirement of a few hours work on a weekly basis. If the days in which the hours are completed vary, the use of timesheets are a good way to track this for both parties.

Overtime – if the volume of work is unpredictable, paid overtime could be offered to permanent staff to combat busy periods. It is important to state within employee contracts that overtime will be offered. staff are not at liberty to fulfil this.

Agency staff – although in general more expensive than hiring directly, using an agency can provide short-term support with very quick turnaround times. This option also takes away any concerns over employment contracts as the employment relationship is with the agency. Be aware that agency staff have the same rights to benefits as permanent staff if they work more than 12 weeks consecutively for the same company.

Annualised hours – the employee is expected to work a total number of hours per year rather that per week. The employer, having forecasted busier and quiet business periods will then be able to manage the allocated staff hours.

It is understandable that employers need resources to be able to cover a multitude of potential staff shortages, and ‘cover all bases’. However, restricting staff growth often leads to a lack of business growth. Building positive relationships with your staff through job security will not only support staff retention, but also positions your business as a more attractive employer for prospective staff.

GC Business Growth Hub works in conjunction with the Greater Manchester Combined Authority (GMCA) to ensure inclusive growth is high on the agenda of businesses in the region. If you would like any further advice on this topic, please Enquire & Grow today.