The issue of so-called zero hours contracts has been the subject of much debate over the course of the past year.
To really understand the key issues, one should get a grip on what the expression “zero-hours contract” actually means. A useful definition of term describes it as: “a contract for casual working, under which the employer does not guarantee to provide the worker with any work and pays the worker only for work actually carried out. The worker is expected to be available for work when or if called on by the employer.”
The Office for National Statistics believes that approximately 250,000 UK workers are currently engaged on zero-hours contracts. However, other reports, such as one produced by the Chartered Institute of Personnel and Development, estimate that the real number is in excess of one million. High profile proponents of zero hours-contracts include McDonalds, JD Wetherspoons and Cineworld.
The reason that zero hours contracts have proven particularly popular with the hospitality sector is that engaging workers on such a basis allows a business to take on staff in response to the ever fluctuating demand for their services. This means that hotels, restaurants and other venues can restrict their fixed overheads whilst retaining additional flexibility over their workforce.
Consumers also gain by ensuring that at times of elevated level of demand (for instance, the upcoming festive period), high levels of customer service are maintained. In addition, venues can keep prices as low as possible by not having customers pay for services that are not required.
Employers would argue that the benefits don’t stop there and often cite their belief that many workers appreciate the adaptability a zero-hours contract gives them. That said, whether or not the worker can turn down an offer of work when it is available will depend on the terms of their individual contracts.
Despite the perceived benefits to both parties, zero hours contracts have been the target of disapproval as some critics believe that they do not offer enough financial stability and security to workers. The concern arises from an allegation that some workers on zero-hours contracts are not being given enough hours which has an obvious impact on their earnings. Fears have also been expressed that some employers may abuse zero-hours contracts, using them as a behavioural management tool by offering more hours to employees that are “good” and fewer to those who are deemed to be less compliant.
The subject has become something of a political hot potato, with Labour leader Ed Miliband recently announcing plans to curb the “terrible misuse” of zero-hours contracts if his party wins the next general election. The debate will surely rumble on, but a complete lock-down on the use of zero-hours contracts appears unlikely at this time. The truth is, whilst some unscrupulous employers may use zero-hours contracts in an exploitative manner, the overwhelming majority of businesses draw-on them in good faith and with honest intentions.
Measures could be put in place to limit abuses, but policy-makers should be lobbied by those in the hospitality sector to ensure that any restrictions do not adversely impact upon the most valuable asset of this tool; flexibility. Everyone knows the seasonal effect on the leisure and tourism industries; a surprisingly sunny bank holiday weekend can be make or break time for many holiday destinations and zero-hours contracts help businesses respond quickly and efficiently to a spike in the level of demand, allowing them to maximise potential revenues.