Following widespread public and parliamentary concern over the use of zero hour contracts, the Government has published a consultation to consider whether these contracts are being abused and what action can be taken to tighten up their use.

Zero hour contracts, it seems, are far more widely used than most realised, with some surveys suggesting that around a million people are employed under them. They are a type of contract whereby the worker has no guaranteed hours and agrees to be potentially available for work, although not obliged to accept it. The individual is only paid for work actually carried out. As a result, they are useful for creating a flexible workforce. However, they are also ripe for abuse.

Many workers providing their services to the care & support sectors of affordable housing associations do so under zero hours contracts. These organisations often have banks of zero hour contract workers on standby who can be called upon when necessary. The ability to be flexible about when to work does suit some people, especially those who want occasional earnings, but its unpredictable nature means it does not suit everyone.

There are legal issues here, the main one being employment status. Is the individual an employee or a worker? An employee has significantly more legal rights (including the right not to be unfairly dismissed, redundancy rights and rights under the Transfer of Undertakings (Protection of Employment) Regulations 2006) than workers do.

The Government’s consultation resulted from a recent information-gathering exercise which flagged a number of issues of which two are:

  1. the use of exclusivity clauses in zero hour contracts which prevent workers working for more than one employer. In reality, a worker could be on a zero hour contract, rarely ever called upon to provide work, but restricted from securing additional employment. The consultation is seeking views on whether these should be banned in contracts where there is no guarantee of work or whether guidance and/or a code should be published on the fair use of such clauses; and
  2. there is evidence that some individuals are unclear on their employment rights under these contracts. The consultation is seeking views on how to improve the transparency of these contracts, including improving content and accessibility of information, advice and guidance on zero hour contracts, encouraging a code of practice and possibly providing model clauses for these contracts.

The consultation closes on 13 March 2014. Although unlikely to be banned outright, the Government seems set to tighten zero hour contracts significantly to reduce the risk of abuse. Provided they are carefully drafted and managed, zero hour contracts can be of great benefit to social housing providers, creating a flexible workforce in times of need but without overstaffing for the remainder of the time.