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Zero Hours Contracts Under Spotlight

Zero hours contracts have hit the headlines recently following comments from the Business Secretary, Vince Cable, who has been leading a review on the issue for the government since June.  With unions calling for the contracts to be banned, and research by the Chartered Institute of Personnel Development (CIPD) finding that around one million people in the UK – 3 to 4% of the workforce – now work on zero hours contracts, it is an issue in need of detailed appraisal.  Clarity is, however, still being sought, particularly in light of the disparity between the figure provided by the Office of National Statistics of 250,000 zero hours ‘workers’ and that of the CIPD.

Zero hours contracts have no strict legal definition, and can be used for all categories of worker/employee, or even for those who are self-employed.  The exact features of these contracts depend on their drafting and on the reality of the employment situation of those that they concern, but generally provide that the individual can be called upon as required, with no set number of working hours per week agreed, being paid only for the work done.

The definition of employment status – whether someone is an employee, a worker or self-employed – is a highly complex issue of law, which requires a detailed analysis of both the written agreements in place and the reality of the daily working environment.  Even in the face of a zero hours contract, a Tribunal may still consider that an employment relationship exists if regular work is being offered and undertaken. 

It is clear that the advantages of these contracts are likely to weigh more in the favour of an employer in many sectors, allowing organisations to create banks of workers, only paying for work when required to cover peaks and troughs in demand.  Evidently this provides these workers with little financial security or continuity, with 14% of those surveyed stating that their ‘employer’ often failed to provide sufficient hours for a basic standard of living, and the government’s review is considering connected issues of exploitation of staff.

There are, however, benefits to zero hours contracts for certain categories of workers – for example students and the retired – who may prefer the flexibility that they offer.  The CIPD research found that zero hours workers were twice as likely to be age 18–24 or over-55 than other age groups.

For further information on the recent research into this growing trend, please see the CIPD press release at:

If you have concerns about your contractual status, or the contracts that you are seeking to impose on your staff, please contact Lucy Thomas at our Cockfosters Office for further advice.

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