Zero-hours contracts: from zero to … well not quite hero, but it’s getting better
The SenseHR lowdown on zero-hours contracts and it’s not as ugly as you’d expect. There are some gleaming silver linings to the cloudy world of gig work and if it’s done right, it can give both an employer and their workers the flexibility they need, without exploiting anyone.
Let’s be honest. Even Meghan and Harry get better press than zero hours contracts.
Here are just a few of the more recent headlines:
And this corker:
In fact, it’s gotten so bad that the zero-hours-contract PR team had to organise a celebrity style reinvention. It’s now called ‘casual work’—we’re joking of course—zero hours contracts don’t pay enough to hire a PR team. Teehee!
OK. Now we’ve got that out of our system, let’s get serious.
It’s true that zero hours contracts have a massive stigma attached and that’s not something we can just ignore, but it’s not the concept or even the contracts themselves that are inherently bad. It’s just that they’re open to
interpretation misuse, and in the wrong hands that can lead to ruthless exploitation.
So, here’s the SenseHR lowdown on zero-hours contracts and it’s not as ugly as you’d expect.
What’s a zero-hours contract (ZHC)?
It’s pretty much all right there on the tin.
Zero-hours or casual contracts are usually for ‘piece work’ or ‘on call’ work. Which means that casual workers:
- are on call to work when you need them
- do not have to be given any minimum working hours
- do not have to accept any work when asked
Everyone employed under a ZHC has the employment status of either an employee or a worker. As such they’re entitled to statutory employment rights including minimum wage, paid annual leave, rest breaks, and protection from discrimination.
So far, not too bad. The flexibility could benefit both the employer and the individual. But flexibility can start to look a lot like insecurity when it’s heavily one-sided in favour of the employer. So, it’s important that HR professionals and line managers know how to manage such fluid working arrangements responsibly and avoid exploitative practices.
Why do they exist?
ZHC exist to support vital flexibility in some industries. A good example is staff banks that help to reduce agency costs for member organisations, like the NHS, while simultaneously helping to make sure shifts are fully staffed. But they also offer security, protection, and flexibility to the casual workers too.
Other examples of industry sectors with fluctuating workforce requirements are delivery driving, hospitality work, seasonal industries, and warehouse work. And new businesses and services that are testing their requirements might benefit from a more flexible workforce too.
There are also individuals who enjoy the flexibility too. Students need to balance unpredictable academic workloads. While working parents must factor in childcare. And those who are working more than one job need the flexibility to balance the requirements of each.
But great flexibility can be manipulated beyond its intended limits.
A murky past and present
While there are legitimate uses for casual contracts, they are often used inappropriately. It is rarely suitable to run a core business around ZHCs or use them for roles that require regular hours over a continuous period, for example. And their flexibility means they’re susceptible to favouritism, as well as worsening the imbalance of the employer/employee relationship. For example, despite the law, only 57% of employers of casual workers give them the right to turn down work in practice, meaning a large minority are expected to take all the hours offered to them.
In fact, some organisational practices have abused the flexible nature of zero-hours contracts to such a degree that recent legislation has been introduced to offer some protection to otherwise vulnerable casual workers.
Among the most exploitative practices was the demand for casual workers to sign contracts banning them from getting work elsewhere, despite not guaranteeing any hours. In May 2015, as part of the Small Business, Enterprise and Employment Act 2015, the government had to step in to prohibit exclusivity clauses.
The government’s Good Work Plan, which came into force in April 2020, recognised that a “minority of employers abuse the current system” and operate ZHCs that create one-sided flexibility. But the new legislation means that:
- workers will have the right to switch to a more predictable and stable contract that reflects the normal hours worked after 26 weeks’ continuous service.
- continuous service can only be broken by a 4-week employment gap, rather than 1 week.
And on top of the national living wage, workers who must be ‘on call’ are entitled to be paid for that. And if they need to remain at a place of work, they’re entitled to their full rate of pay, even if there’s no work for them to do.
Case law has also resulted in further protection. In 2021 the Supreme Court found that Uber drivers should be afforded some of the statutory rights enjoyed by employees. That means that casual workers can now claim annual leave and are protected against discrimination.
Meanwhile, the findings of Harpur Trust v Brazel ensured that holiday pay for causal workers would be fairly calculated—zero-hours contracts now entitle workers to 5.6 weeks, even if they don’t work every week, and are calculated according to the average weekly pay over the last 52 weeks, excluding any weeks the worker did not work.
And Jan Wheatley, an outraged former casual worker of the art gallery Turner Contemporary ensured that regular casual workers now have the right to redundancy pay too.
But then, Turner Contemporary were using zero-hours contracts in place of proper business planning—and that is something that every good employer should avoid.
Because zero-hour contracts have become so controversial there are rising calls to follow in New Zealand’s footsteps and ban them altogether. But bad employers will carry on bad practices regardless of what a contract says. And the flexibility of zero-hours contracts is genuinely needed by some people and some organisations.
Conversely, by developing a more constructive, positive, and supportive framework for atypical work, while confronting abuse and bad practice will allow more people to work the way they want to. And avoid penalising the industries that rely on flexibility.
A brighter future
Thankfully, most organisations that employ zero-hours workers aren’t exploitative. In fact, many are signed up to the Good Business Charter and have FAIRER HOURS Employer Accreditation. It’s these firms that are shaping the future of zero-hours contracts—and that future looks a lot brighter.
In addition to complying with new legislation, these organisations establish practices such as scheduling shifts for zero hours workers with at least two weeks’ notice, which means that workers can coordinate other responsibilities and jobs. Or paying workers for shifts that are cancelled with short notice, since 70% of zero hours workers suffer cancellations at less than a day’s notice.
The Living Wage Foundation found that 96% of casual workers are hit with added costs as a result of insecure work. So, there have even been suggestions of higher hourly rates, perhaps even a higher national living wage and national minimum wage, for those with insecure contracts.
CIPD research shows that casual contract workers are less likely to have a voice at work to express any issues or concerns they might have. But rather than seeing zero-hours workers as a transient and expendable division of the workforce, many forward-thinking people managers are taking measures to make them feel like an integral part of the organisation.
Tellingly, recent research is far more positive than past findings too. Zero-hours workers report better work-life balance, are under less stress at work than other workers, and are less likely to report workloads are excessive. While data from the Office of National Statistic’s shows that only 16% of workers on zero hours contracts wanted to work more hours.
So, it seems that much like all media targets, many of the horror stories surrounding zero-hours contracts are either outdated, sensationalised, or outlying cases. And in any event legislation is catching up with the worst offenders.
But considering all the fear, confusion, and uncertainty that surround casual contracts, it’s vital that contracts, policies, and practices surrounding casual work are fair, transparent, and well publicised.
It’s also likely that labour market watchdogs and legislation will continue to enforce and strengthen the rights of casual workers and penalise bad employment practices, so it’s important that HR professionals stay ahead of the regulations.
But with proper management, the awesome power of graph databases, and employee self-service features, next-gen HCM software like ours can take zero-hours contracts all the way from zero to hero.