Sports Direct has announced it will offer directly employed casual staff a guaranteed 12 hours work a week, instead of zero hours contracts, in response to the intense scrutiny of its employment practices by the press and shareholders.

Sports Direct's employment practices had been severely criticised by MPs recently and with their AGM held on 7 September, pressure on the board may well have contributed to this decision.

In the run up to the last general election, there was significant criticism by politicians of zero hours contracts and their 'over' use by employers. Changes to legislation were subsequently made, offering greater protection and redress for individuals employed under such contracts. Our previous article considered the increased legal protections which now apply to zero hours workers.

What is a zero hours contract?

Zero hours contracts are simply contracts for casual work under which there is no obligation on the employer to provide a minimum (or any) amount of work and, usually, no obligation on an individual to accept any work offered.

Employing people on zero hours contracts can allow employers to build up a bank of directly employed staff who may be available as and when needed, but without the need to pay them when they are not needed; effectively putting workers permanently 'on-call'.

While this flexibility is hugely beneficial for employers, particularly in sectors where work flows fluctuate, for example, on a seasonal basis, it can leave workers in a precarious position with no guaranteed income. It was the apparently one-sided nature of zero hours contracts which attracted criticism from trade unions and MPs who argue it is too easy for vulnerable, low paid workers to be exploited. However, it should be noted that research by the CIPD found that many zero hours workers considered that they had a better work-life balance and higher job satisfaction than permanent staff.

A zero hour contract will usually give an individual 'worker' status and employers must remember that as such they are entitled to certain employment rights in the same way as any other worker employed under a permanent contract. Our previous article explored these rights in more detail.

How should they be used?

Properly used, zero hours contracts are a win-win for both parties. However such contracts may not always be the most appropriate working arrangement and employers should consider their appropriateness to each particular role.

A zero hour contract should only be used where flexibility is inherent in the type of role being carried out. If there is a constant need for particular hours to be worked then it is likely that a zero hours contract will not be appropriate.

Continually monitoring the business need and considering if there are alternative ways of providing the flexibility is advised. Sports Direct's announcement demonstrates the importance of reviewing how zero hours contracts operate in practice and updating where necessary.

Shareholder influence

The vote of the independent shareholder against re-election of Sports Direct's chairman at its recent AGM is a reminder that boards are ultimately answerable to their shareholders for their companies' labour practices. A further vote on the chairman's re-election will take place within the next few months, but the chairman has already confirmed that he would be prepared to step down if he fails to receive the support of independent shareholders at next year's AGM.