Zero Hours - Mutually beneficial?

Mutually beneficial?
Mutually beneficial?

In March Sports Direct chairman Keith Hellawell faced a parliamentary committee on the group’s working practices and revealed that some 15,000 UK staff were on zero-hours. He said the approach “offers flexibility for a largely young workforce, some of whom are university students, and allowed us to meet demand”. He said any switch to permanent contracts would result in higher costs and less jobs.

Following Labour’s failure to win power in May, the Conservative government announced its legislative response to zero-hours with a ban on exclusivity clauses. (See Legal Boxout).

However it remains a sensitive area. Some of the companies said to be using zero-hour contracts responded quickly to BT’s questions on the issue.

A spokesperson for Domino’s Pizza says: “Our stores are majority owned and managed by franchisees who manage employment practices in line with government legislation. We employ many parents, second job workers and students who want flexibility and we ensure working hours are set and agreed in advance. All team members have access to training and staff development and are entitled to commensurate holiday entitlement.”

Centerparcs says: “The proportion of payroll hours given to employees on zero- hour contracts was around 2 per cent over the past 12 months. We offer this type of contract to employees who benefit and choose the flexibility and importantly, they have the choice of whether or not to work the hours offered.” Sports Direct however chose not to comment.

The companies stress the “flexibility” of the contracts, the choice and the type of workers often tempted by these deals – mums, students, older workers etc.

So what are the pros and cons of zero-hours and what should employers who utilise these contracts do given the media furore and legislative changes?

Norman Pickavance, former HR director at Morrisons supermarket, was asked by Miliband to undertake an independent report into zero-hours. It found that the majority of UK employers did not use these contracts “in most cases because they do not believe that they provide the right approach to flexibility or workforce management”.

Pickavance says: “When used appropriately, zero-hours contracts can aid short term flexibility for employers and provide increased choice for individual workers. However they are often used as a crude cost-reduction tool, and the lack of rules and safeguards governing their appropriate use leaves scope for abuse.”

He says zero-hours deals can create significant financial insecurity for employees, uncertainty around entitlements to benefits and “high workplace stress”. He adds: “They are disproportionately associated with low value business models and low investment in training. This hampers social mobility, as people on these arrangements often struggle to find opportunities to progress to better paid and more secure work. They are not compatible with the goal to build a high skill, high wage economy. Many leading employers recognise that zero-hours contracts can undermine employee engagement and good customer service.”

The CBI however has long held the position that zero hours have been “demonised” and that without them UK unemployment may well have surged beyond 3 million during the recession. It believes zero-hours “enable businesses to respond quickly to changes in demand and allow workers to better manage their work life with other commitments. There are also many examples of zero-hours contracts providing a pathway into permanent employment for those who want to work this way”.

On the recent legislative change Neil Carberry, CBI Director for Employment and Skills survey says: “Banning exclusivity clauses is a proportionate response to tackling examples of poor practice. But any further regulation must not damage our flexible labour market, which is an important success story of our economy, benefitting employers and employees alike.”

Stay tuned for tomorrow’s instalment of the Zero Hours contract series to hear how employees on zero hours contacts manage their work life balance…