Zero-hour contract explained

A zero-hour contract is a type of employment contract in United Kingdom labour law, between an employer and an employee whereby the employer is not obliged to provide any minimum number of working hours to the employee.

In 2015, employers in the UK were prohibited from offering zero-hour contracts that prevented employees from also working for a different employer at the same time. In September 2017, the UK Office for National Statistics estimated that there are over 900,000 workers on zero-hours contracts, 2.9% of the employed workforce.

In the UK, zero-hour contracts are controversial. Trade unions, other worker bodies and newspapers have described them as an exploitation of labour. Employers using zero-hours contracts include Sports Direct, McDonald's and Boots.

Definition

A 'zero-hour contract' is a type of contract between an employer and a worker according to which the employer is not obliged to provide any minimum working hours and the worker is not obliged to accept any work offered.^[1] The term 'zero-hour contract' is primarily used in the United Kingdom.

The employee may sign an agreement to be available for work as and when required, so that no particular number of hours or times of work are specified.^[2]

Under UK law a distinction is drawn between a "worker" and an "employee", an employee having more legal rights than a worker.^[3] Whether a person working under a zero-hour contract is an employee or a worker can be uncertain; however, even in cases where the plain text of the zero-hour contract designates the person as a "worker" courts have inferred an employment relationship based on the mutuality of obligation between employer and employee.

Zero-hours contracts provide basic social security benefits, including maternity/paternity pay, holiday, and health insurance. A zero-hour contract may differ from casual work.

History

In the United Kingdom, under the National Minimum Wage Act 1998, workers operating under a zero-hour contract on stand-by time, on-call time, and downtime must be paid the national minimum wage for hours worked. Prior to the introduction of the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999 zero-hour contracts were sometimes used to "clock-off" staff during quiet periods while retaining them on site so they could be returned to paid work should the need arise. The National Minimum Wage Regulations require that employers pay the national minimum wage for the time workers are required to be at the workplace even if there is no "work" to do. In the past, some employees working on a zero-hour contract have been told that they are required to obtain permission of their employer before accepting other work, but this practice has now been banned under UK legislation enacted in May 2015.^[4]

In Autoclenz Ltd v Belcher, the UK Supreme Court delivered a judgment on workers employed under a zero-hour contract. Lord Clarke held, at paragraph 35, that in employment relations which are characterised by inequality of bargaining power, the written terms of a contract may not in truth represent what was the contract in law.

In March 2015, the Small Business, Enterprise and Employment Act 2015^[5] received royal assent. On a date to be appointed, s. 153 of the Act will amend the Employment Rights Act 1996, so that exclusivity terms in zero-hours contracts will no longer be enforceable, and regulations may specify other circumstances under which employers may not restrict what other work zero-hours workers can do.

Statistics

As of September 2017, the Office for National Statistics estimated that there are over 900,000 workers on zero-hours contracts (2.9% of the employed workforce),^[6] up from 747,000 the previous year, with over 1.8 million such contracts (as some people may have more than one contract),^[7] with a further 1.3 million where no hours were worked.^[8] Some commentators have observed that the number of such contracts may be under-reported, as many people may be confusing them with casual employment,^[9] and may not be reporting them as temporary.^[10] The Chartered Institute of Personnel and Development (CIPD), based on a poll of 1,000 workers, reported in August 2013 that as many as 1 million workers in the United Kingdom, 3–4% of the workforce, work under the terms of a zero-hour contract.^[11] Based on a survey of 5,000 of its members, Unite, Britain's largest labour union, estimates that as many as 5.5 million workers are subject to zero-hour contracts, 22% of those employed privately. The survey, conducted by Mass 1, showed that zero-hour contracts were more prevalent in northwest England, among young workers, and in agricultural work. Often workers said that holiday pay was illegally denied, and in most cases sick pay as well. The National Farmers Union, which represents farmers, supports zero-hour contracts as offering needed flexibility for tasks such as harvesting.^[12]

According to the CIPD research, about 38% of those employed under zero-hours contracts considered themselves to be employed full-time, working 30 hours or more a week. While 66% of those on zero-hours contracts were happy with the hours they worked, 16% felt they did not have an opportunity to work enough hours. About 17% of private employers used zero-hours contracts while they were used by 34% of non-profits organisations and 24% of public employers. Zero-hours contracts were frequently used in hotels, catering and leisure (48%), education (35%) and healthcare (27%).

For domiciliary care workers the incidence was reported to be as high as 55.7% of all workers during the period 200812.

In 2011, zero-hours contracts were in use in many parts of the UK economy:

• in the hotels and restaurants sector, 19% of all workplaces (up from 4% in 2004)
• in the health sector, 13% (up from 7%)
• in the education sector, 10% (up from 1%)

Employers

Zero-hour contracts are used in the private, non-profit, and public sectors in the United Kingdom:

• Sports Direct, a retailer, has 90% of its workers on zero-hour contracts^[13]
• In August 2013, The Guardian reported that J D Wetherspoon, one of the UK's largest pub chains, has 24,000 staff, or 80% of its workforce, on contracts with no guarantee of work each week.^[14]
• 90% of McDonald's workforce in the UK – 82,000 staff members – are employed on a zero-hour contract. According to a McDonald's spokesperson all work is scheduled in advance with no employees being "on call" and meets the needs of workers who desire or need a flexible schedule. In 2016, the store trialled offering the chance to move off zero-hour contracts but over 80% of staff chose to remain on them.^[15]
• A major franchise of Subway also uses the contracts, which state, "The company has no duty to provide you with work. Your hours of work are not predetermined and will be notified to you on a weekly basis as soon as is reasonably practicable in advance by your store manager. The company has the right to require you to work varied or extended hours from time to time." Subway workers are also required, as a condition of employment, to waive their rights to limit their workweek to 48 hours.
• Burger King franchisees and Domino's Pizza operations in the UK extensively use zero-hour contracts.^[16]
• The Spirit Pub Company has 16,000 staff on zero-hour contracts.^[17]
• Boots UK has 4,000 workers on zero-hour contracts.^[17]
• Buckingham Palace, which employs 350 seasonal summer workers, also uses them.^[18]
• The National Trust, a nonprofit organisation which manages extensive historic sites and nature preserves in England, Wales, and Northern Ireland, which must deal with variable weather, uses zero-hour contracts but at the same benefits and pay as permanent employees. The Tate Galleries also use zero-hour contracts.^[4]
• All non-management staff at Curzon and Everyman cinema chains are on zero-hour contracts.^[19]
• Cineworld, a leading cinema chain, uses zero-hour contracts for 3,600 people, about 80% of its workforce, and Stephen Wiener, the founder, stated in August 2013 that he will continue using them.^[20]
• CeX^[21]

The Workplace Employment Relations Survey conducted by the government of the UK in 2004 and 2011 shows that the proportion of workplaces that have some employees on zero-hours contracts has increased from 4% in 2004 to 8% in 2011. The survey found that larger companies are more likely to use zero-hours contracts. 23% of workplaces that have 100 or more employees used zero-hours contracts in 2011, compared to 11% of those with 50–99 employees and 6% of those with fewer than 50 employees.^[22]

Controversy

In the UK, zero-hour contracts are controversial. British business leaders have supported them, stating that they provide a flexible labour market.^[23] It is argued they may suit some people such as retirees and students who want occasional earnings and are able to be entirely flexible about when they work. It has been reported that 60% of people on zero-hour contracts are happy with the hours they work.^[24] Trade union groups and others have raised concerns about exploitation and the use of such contracts by management as a tool to reward or reprimand employees for any reason, meaningful or trivial. They also raise concerns about how workers can adequately assert their employment rights or maintain decent employment relations.^[25] A Channel 4 documentary broadcast on 1 August 2013 claimed that Amazon used "controversial" zero-hour contracts as a tool to reprimand staff.^[26]

Workers subject to zero-hour contracts are vulnerable to exploitation as they may be denied work at any time for any reason, including declining to respond to a demand to work. A refusal to work in any one instance for any reason can result in a prolonged period of lack of work.^[27] Due to the uncertainty of the workers' schedules, zero-hour contracts present problems for workers with children due to the difficulty of arranging child care. The rapidly growing use of zero-hour contracts was the subject of a series of articles in late July 2013 by The Guardian and as of 2013 was of concern to Parliament. Vince Cable, the business secretary of the government, considered closer regulation of the contracts but ruled out a ban.^[28] Labour MPs Alison McGovern and Andy Sawford campaigned to ban or better regulate the practice.

In 2016, several UK chains that had been using zero-hour contracts announced that they would phase them out during 2017. These included Sports Direct and two cinema chains, Curzon and Everyman.^[29] However, Cineworld, another leading cinema chain that also owns Picturehouse, has come under scrutiny for continuing to use the contract format, with the Ritzy living wage protests at London's Ritzy Cinema especially prominent.^[30]

In 2020, a campaign called Zero Hours Justice was set up. Led by Ian Hodson, president of the Bakers, Food and Allied Workers Union and backed by Julian Richer, it was launched with the aim of ending zero hours contracts.^{[31] [32] [33]}

Praise

The Institute of Directors, a chartered organisation of British business leaders, has defended the contracts as providing a flexible labour market, citing the lack of flexibility in Italy and Spain. Jacob Rees-Mogg MP has also argued that they benefit employees, including students, by providing flexibility, and could provide a route into more permanent employment.^[34]

Elsewhere in the world

Casual labour contracts in Canada can have "no guaranteed minimum hours,"^[35] place "no obligation on the employer to provide work", and pay can be "pro rated in line with hours worked."^[36]

In 2015 in New Zealand, the television show Campbell Live revealed that large corporate hospitality companies such as Burger King and McDonald's, KFC, Starbucks, Pizza Hut, Carl's Jr. (all under Restaurant Brands), Sky City and Hoyts, all use zero-hour contracts to reduce costs.^[37] On 9 April, Restaurant Brands agreed to do away with zero-hours contracts.^[38]

A bill outlawing zero-hour contracts in New Zealand was unanimously passed on 10 March 2016 and went into effect on 1 April.^[39]

See also

• Casual employment (Australia)
• Casual employment
• Fivesquid.com
• Flexicurity
• Labour market flexibility
• Marginal employment
• On call shift
• On-call room
• Precarious work
• Reserve army of labour
• Shift-based hiring
• UK labour law
• Underemployment
• Wage slavery
• Work-life balance

References

• Web site: Bessa . Ioulia . Forde . Chris . Moore . Sian . Stuart . Mark . The National Minimum Wage, earnings and hours in the domiciliary care sector . February 2013 . . 15 July 2013 .
• McGaughey . Ewan . Are Zero Hours Contracts Lawful? . 29 November 2014 . 2531913 .
• Web site: Pennycook . Matthew . Cory . Giselle . Alakeson . Vidhya . A Matter of Time: The rise of zero-hours contracts . June 2013 . . 10 October 2017 . https://web.archive.org/web/20171010201451/http://www.resolutionfoundation.org/app/uploads/2014/08/A_Matter_of_Time_-_The_rise_of_zero-hours_contracts_final_1.pdf . 10 October 2017 . live .
• Web site: Pyper . Doug . Brown . Jennifer . Zero-hours contracts . . 13 April 2017 . Briefing paper . 11 October 2017 .
• Web site: Pyper . Doug . Harari . Daniel . Zero-hours contracts . . 4 July 2013 . 10 October 2017 . https://web.archive.org/web/20171010210917/https://fullfact.org/sites/fullfact.org/files/SN06553.pdf . 10 October 2017 . live .

Notes and References

1. Web site: Zero Hours Contracts . Acas advice and guidance . . 11 October 2017.
2. Web site: Zero hours contracts hit 200,000 . 3 April 2013 . Recruiter . 15 July 2013.
3. Web site: Employee. Guide Employment status. UK.Gov. 8 August 2013.
4. News: Zero-hours contracts: what are they?: An employee can end up with no pay at the end of the week because the employer does not need to guarantee work . 5 August 2013 . . 30 July 2013 . Phillip . Inman.
5. act. 2015. 26. Small Business, Enterprise and Employment Act 2015.
6. Web site: More than 900,000 UK workers now on zero-hours contracts . Inman . Phillip . 8 September 2016 . The Guardian . 11 October 2017.
7. Web site: Zeroing in on zero hours contracts facts . April 2015 . Fullfact.org . 6 November 2015.
8. News: Jobseekers being forced into zero-hours roles . The Guardian . Rowena . Mason . 5 May 2014 . 5 May 2014.
9. Web site: Ian . Brinkley . "Zero hours" contracts and the flexible labour market . . 17 August 2012 . 1 May 2013 . dead . https://web.archive.org/web/20130404010751/http://theworkfoundation.com/blog/872/Zero-hours-contracts-and-the-flexible-labour-market . 4 April 2013 .
10. Web site: Ian . Brinkley . ' Zero hours contracts – nasty, brutish and unfair? . . 13 June 2013 . 25 June 2013 . dead . https://web.archive.org/web/20130712100024/http://www.theworkfoundation.com/blog/1224/Zero-hours-contracts-nasty-brutish-and-unfair . 12 July 2013 .
11. News: Zero-hours contracts cover more than 1m UK workers: Poll of more than 1,000 employers reveals controversial contract used far more widely in the UK than government data suggests. 5 August 2013. The Guardian. 5 August 2013. Simon. Goodley. Phillip Inman.
12. News: Zero-hours contracts: 5.5m Britons "are on deals offering little guaranteed work": Unite survey finds 22% of workers employed by private firms are on contracts promising less than three hours a week. 8 September 2013. The Observer, The Guardian. 8 September 2013. Sarah. Butler. The government's refusal to address the growing scandal of zero-hours contracts is creating a sub-class of insecure and low-paid employment..
13. News: Pressure mounts on Sports Direct over zero-hours contracts: Unite demands meeting with company founder Mike Ashley over contracts that do not provide workers with set hours. 5 August 2013. The Guardian. 29 July 2013. Simon. Neville.
14. News: Neville. Simon. Zero-hours contract figures were wrong, ONS admits. 26 June 2014. The Guardian. 1 August 2013.
15. News: McDonald's offer staff the chance to get off zero-hours contracts . Graham . Ruddick . The Guardian .
16. News: Burger King and Domino's Pizza also using zero-hours contracts: British Retail Consortium calls on employers to act responsibly amid revelations about fast food chain workers. 8 August 2013. The Guardian. 6 August 2013. Simon. Neville.
17. News: McDonald's ties nine out of 10 workers to zero-hours contracts. 6 August 2013. The Guardian. 5 August 2013. Simon. Neville.
18. News: Buckingham Palace uses zero-hours contracts for summer staff: The 350 part-time workers deployed during summer opening of the royal family's London residence have no guaranteed work. 5 August 2013. The Guardian. 30 July 2013. Simon. Neville. Matthew Taylor. Phillip Inman.
19. News: Curzon and Everyman cinema staff on zero-hours contracts. 9 August 2013. The Guardian. 9 August 2013. Simon. Neville.
20. News: Neville. Simon. Cineworld boss pledges to continue with zero-hours contracts. 26 June 2014. The Guardian. 15 August 2013.
21. News: Reed. Jim. Butterly. Amelia. People on zero-hours contracts paid less than others. 13 October 2020. BBC Newsbeat. 20 August 2013.
22. Web site: The 2011 Workplace Employment Relations Study (WERS). United Kingdom. 5 August 2013. 23 January 2013.
23. Web site: Who uses zero-hours contracts and why? . Walker . Andrew . 1 April 2015 . BBC News . The CBI says that labour market flexibility, including zero-hours contracts, supported job creation during the recent post-recession recovery. .
24. Web site: David. Smith . Economic Outlook: Turn sharp left for the 1970s and Corbynomics . https://web.archive.org/web/20150913010625/http://www.thesundaytimes.co.uk/sto/business/Economy/article1602765.ece . dead . 13 September 2015 . The Sunday Times . 6 September 2015 . 6 November 2015.
25. Web site: Matthew. Pennycook. The forward march of zero-hours contracts must be halted. New Statesman. 25 June 2013. 15 July 2013.
26. Web site: Anger at Amazon working conditions – Channel 4 News . Channel 4 . 1 August 2013 . 6 November 2015.
27. News: Zero-hours contract workers – the new reserve army of labour?: Karl Marx would see zero-hour contracts for what they are: rank exploitation – the type of working conditions that spawned trade unions in the first place. 5 August 2013. The Guardian. 4 August 2013. Larry. Elliott. Economics Blog.
28. News: Zero-hours contracts could be subject to new legislation, says Vince Cable: Business secretary says employer exclusivity is main issue for review, as figures show one million are on zero-hours deals. 6 August 2013. The Guardian. 5 August 2013. Patrick. Wintour.
29. Web site: Everyman cinema chain is next to drop zero-hours contracts . The Guardian. 14 September 2016. Sarah Butler. Hilary Osborne.
30. Web site: Ritzy cinema living wage strike disrupts BFI London film festival . The Guardian. 7 October 2016. Sarah Butler. Damien Gayle.
31. News: Unions back zero hours contracts campaign. 25 February 2021. Union News. 23 January 2020. Tim. Lezard.
32. News: Richer Sounds chief Julian Richer takes aim at zero-hour contracts. 25 February 2021. The Telegraph. 14 January 2021. Lizzy. Burden.
33. News: Richer Sounds founder bankrolls push to end zero-hours contracts. 25 February 2021. The Guardian. 19 January 2021. Zoe. Wood.
34. News: Zero-hours contracts: why do Lefties always think they know best?. Jacob Rees-Mogg. The Daily Telegraph. 6 August 2013. 16 August 2013. London.
35. News: The 15-hour workweek: Canada's part-time problem . The Globe and Mail . 4 October 2014 . 6 November 2015. Grant . Tavia .
36. http://www.netlawmancanada.com/d/casual-employment-contract
37. Web site: Kiwis tied to zero hour contracts speak out . 3 News . 6 November 2015 . dead . https://web.archive.org/web/20151213180150/http://www.3news.co.nz/tvshows/campbelllive/kiwis-tied-to-zero-hour-contracts-speak-out-2015030220 . 13 December 2015 .
38. Web site: Restaurant Brands says no to zero hour contracts . The New Zealand Herald . 6 November 2015.
39. Web site: Zero hour contracts officially history . The New Zealand Herald . 12 March 2016.