The use of zero hours contracts are on the rise in the food industry, both in the food service sector and food and drink manufacturing. Unions have recently criticised this as a means by which businesses press workers into accepting longer hours and lower pay and in December 2013, the Government launched a consultation on the use of zero hours contracts. A zero hours contract is a type of contract whereby workers agree to be available for work but with no guaranteed hours. Such contracts are used where flexibility is needed to meet short-term staffing needs without taking on the obligations associated with contracts of employment.
Under these contracts, which are increasingly being used in the food sector (most notably in recent times by Burger King, which is believed to engage 20,000 workers on this basis), individual workers agree to be available for work "as and when required" but have no guaranteed hours or times of work and are paid only for work done. This gives companies a pool of people who are "on call" and can be used only as and when the need arises.
The Office for National Statistics estimates that 250,000 people work under zero hours contracts. It is very likely that these figures understate the true prevalence of zero hours contracts. Indeed, a survey of employers by the Chartered Institute for Professional Development estimated that around 3-4 per cent of workers in the UK are on these contracts in 2013, equating to approximately 1 million people.
There are a number of legal issues associated with zero hours contracts and casual staff. These affect not only their usefulness to the employer as a contract for flexible work, but also the individual engaged, in respect of that person’s employment rights. The principal issue is that of employment status - are those working under a zero hours contract “employees” or “workers”?
This is a key consideration for those engaging these individuals, as those with “employee” status are afforded a number of important legal rights (which “workers” are not), such as the right not to be unfairly dismissed, family friendly rights (including maternity rights) and the right to receive a statutory redundancy payment. It is important to remember that “workers” still have rights, including a right to the National Minimum Wage and to protection from discrimination.
While the flexibility of zero hours contracts and other casual working arrangements might appeal to (and be in the best interests of) food sector companies (and indeed in many businesses they are key to service delivery given tight margins), careful thought should be given to the nature of the role in question and the working practice reviewed on a regular basis. It remains to be seen what effect, if any, the Government’s consultation will have on the use of zero hours contracts.
Our view is that the Government is unlikely to make major changes – as to do so would run the risk of placing yet more pressure on businesses which are just starting to recover. That said, we can see the Government clamping down on those businesses who abuse the relationship, and for example, unreasonably restrict individuals from earning money elsewhere, even if they are not being provided with any work (and therefore receive no pay).