Zero Hour Contracts – Are They A Misunderstood Topic?

These days, most of you will have probably heard of zero hour contracts – and chances are, many of you who have read about zero hour contracts in the press will have read about how they are an exploitative form of employment that is detrimental to the welfare of the employee. Yes, when it comes to publicity, the zero hour contract doesn’t do too well in generating a surrounding of good publicity and, as a result, public perception of zero hour contracts is not positive.

But the fact is, there are currently almost 2 million people in Britain who are employed on zero hour contracts. And we need to ask, are all of those 2 million people being exploited by unscrupulous employers? Surely some of those people must be happy with their situation of flexible working hours, and surely not all employers who utilise the zero hour contract system are out to exploit their staff.

In this article, we will take a look at zero hour contracts, what the pros and cons are of working with zero hour contracts and then we will assess whether or not the negative publicity around them is warranted. Perhaps you have worked on a zero hour contract in the past and have had a negative or positive experience, or perhaps you are considering it for the future. Whatever the case, this article should help you make more informed decisions about working flexible hours with zero hour contracts.

There is no denying that zero hour contracts are a controversial term of employment, but those who are advocates of this way of working suggest that, in the modern world of employment, we shouldn’t be looking at a blanket solution that fits all. Fixed term contracts don’t always suit employers – especially in small and medium sized enterprises – and, of course, being limited to working a set number of hours at set times doesn’t always suit the employee, either. We are now in a situation where some people looking for employment are actually actively seeking zero hour contracts and, chances are, if you are reading this article right now, you are interested in part time work and the flexible hours that zero hour contracts can offer.

Zero hour contracts are a relatively new form of employment and, as they operate more in practise, both employers and employees hope that government regulations and new legislation will give both parties more piece of mind. Employees don’t want to be constantly in fear of losing their jobs – the point of zero hour contracts is for employers to be able to offer work when they have the hours available and for employees to have more control over their own time. They should be a win-win situation rather than a system where employers can hold their zero hour contract workers to ransom.

Indeed, the government have recently outlawed the exclusivity contract whereby some employers were tying their zero hour contract staff to working exclusively for them. Another job with a different employer was forbidden. This is no longer the case and gives employees more scope for finding work.

What is a zero hour contract?

A zero hour contract is where you only work the hours that the employer needs you for. You are not contracted to work a set number of hours per week or at set times. If the employer requires you to work, you are not under any obligation to accept those hours if you have prior commitments but, depending on the type of company you are working for and the number of staff working on zero hour contracts, you might not be offered so many hours in the future, if you make a habit of refusing the work offered.

Zero hour contracts are common in certain industries such as retail, catering and hospitality but they are also increasingly common in other industries, too. For example, if you are a supply teacher, this is, in effect a zero hour contract because you can be required to work at short notice and you can also turn down offers of work.

How is a zero hour contract different to a normal regular contract?

  • A zero hour contract means you only work the hours your employer needs you for.
  • On a zero hour contract, you are not obliged to work the hours that are offered to you.
  • You are entitled to be employed in other work whilst on a zero hour contract with your employer.
  • As with regular contracts, zero hour contracts mean you are entitled to rest breaks, statutory annual leave, sick pay and you are also entitled to receive the National Minimum Wage.
  • On a zero hour contract, you are only paid for the hours your work so your wage can vary, week on week.
  • Many zero hour contracts mean you are employed as a worker rather than an employee. If this is the case, this means you will not be entitled to maternity or paternity pay, you won’t be able to claim unfair dismissal, you are not entitled to statutory minimum notice periods or redundancy. This changes, however, if you are given employee status. You are legally entitled to employee status (if this is what you want) when you have worked a set pattern of hours over a period of months.

What Are The Pros & Cons Of Zero Hour Contracts?

So, now we know what zero hour contracts are, how they have been viewed by the media in the past, and how they differ from regular employment contracts, let’s take a look at the pros and cons of this type of employment both for jobseekers and for employers, too. This should give you more of an idea as to whether zero hour contracts will suit your needs or not.

Pros Of Zero Hour Contracts

  • Students tend to like zero hour contracts because of the flexible working hours. Even students working in part time jobs with fixed hours can sometimes find it difficult to fit study commitments in. Zero hour contracts mean they can take time out or work fewer shifts during study and exam periods, for example. They can then work extra shifts, if student work is available, through the holidays.
  • Working mums usually like zero hour contracts, again, because of the flexible hours on offer – they can work more hours during term time whilst their children are in school and fewer hours during the holidays. A zero hour contract can also be a great way to break back into the world of work after a long break for parenting reasons. We have written in the past about the benefits of, and issues with, part time work for mums.
  • Older people often like zero hour contracts because they can work just a few hours a week. As well as a bit of extra income, they can offer a way of getting out of the house and meeting new people during retirement without being committed to working lots of hours throughout the week.
  • If you are offered hours to work by your employer and you can’t do them for whatever reason, you don’t need to accept them as there is no obligation – your zero hour contract is exactly that; you are not contracted to work a set number of hours. It’s all about flexibility.
  • Zero hour contracts mean you have free time. This free time can be used for self development so you can train for a new career, for example, whilst still earning money working flexible hours of your own choosing. Of course, you can also use your extra free time for pursuing hobbies, too, and these hobbies, in turn, can eventually become a business.
  • Zero hour contracts mean there is more choice out there for job seekers because more employers can afford to advertise vacancies if they are allowed to employ people on these types of contracts. Many employers, particularly in smaller companies, can’t afford to employ people on fixed term contracts.
  • We all know work experience is good for our CV and working a few hours a week with zero hour contract means you don’t get that huge gap of unemployment when you come to apply for other full time work.
  • If it is what you are looking for, a zero hour contract can be a great way to get your foot in the door for the full time career you are looking to work in. Prove yourself to your employer – work all the shifts you are offered, where possible; work hard and impress your employer and if the opportunity comes up in the future for a permanent contract, you could find yourself being offered the role.
  • And following on from the previous point, a zero hour contract can also give you some practical work experience in the type of career you want…and then help you decide if it’s the right path for you, without throwing your lot in and committing to a full time contract. If you decide it’s not the career for you, you can either leave when you like or continue doing a few hours a week whilst you retrain for something else and earn money at the same time.
  • Working on zero hour contracts means you don’t have to jump in their first and fight over dates on the calendar for booking holidays. You can take time off whenever you like and, if you want to go on an extended break, this is also possible.
  • And if you are saving up to go away for four or five weeks, for example, rather than the standard fortnight, if the hours are available, you can also pack in the extra hours to help you save up for that break.
  • You are still entitled to holiday pay on a zero hour contract, as well as some of the other benefits contracted employees receive – although, not all. See above.
  • Giving employees the opportunity to offer zero hour contracts can benefit the company as well as staff looking to work flexible hours. In the fast moving world that we now live in, economic circumstances can change almost overnight for businesses. Having some staff on zero hour contracts allows employers to deal with these changes quickly by altering hours and work patterns to fit the new circumstances.
  • And, of course, if worker and employer are communicating properly around the terms of your zero hour contract, it means workers have more control over work life balance and they can better manage their commitments.

What Are The Cons Of Zero Hour Contracts?

With any list of pros, also comes a list of cons – and, whilst there are lots of advantages to zero hour contracts, they are certainly not suitable for everyone; both employers and workers. Let’s take a look at some of the possible pitfalls to zero hour contracts:

  • Zero hour contracts do give you flexibility, but your employer also might not be in a position to give you enough hours that subsequently gives you the income you really need. Since the abolition of the exclusivity contract, however, this means you could work multiple part time jobs and give yourself an idea of the type of career you might prefer in the future. If you are open with your employer about the fact you work in different roles, it could suit them better, especially if they really don’t want to lose you but they just don’t have enough hours to offer you.
  • Zero hour contracts mean the company you work for can send you home whenever they like – if you work in retail and it’s a really quiet day, for example – and that means you don’t earn the money you were hoping to in that week.
  • If you are offered some hours by your employer and you can’t do them for whatever reason, it could scupper your chances of being offered lots of hours in the future.
  • Zero hour contracts mean you are not guaranteed work and therefore, a fixed income.
  • Whilst you qualify for holiday pay with zero hour contracts, you are given worker rights rather than employee rights and this means you don’t have a right to a company pension or redundancy.
  • Depending on the company you work for and how your employer works their zero hour contract system, you could feel like you are ‘on call’ all the time, waiting for the phone ring to offer you some last minute work. This could mean you feel like you can’t relax. If this is the case, it might be better to speak with your employer to see if you can have some more concrete guidelines on when you are expected to be in work so that you can make plans.
  • Zero hour contracts mean you have no stable cash flow so you need to be good at managing your finances. Make sure you have money put to one side to pay bills, rent or to meet other financial commitments. If possible, try to discuss a minimum amount of hours with your employer so you at least know your baseline wage.
  • Because you might not be working regular hours or receiving a set wage each week, a zero hour contract can mean it is difficult to be accepted for a mortgage, credit card or other loans and credit.
  • Some people work zero hour contracts because they want to pick and choose their hours and dictate their own free time. However, with some companies, you might feel under obligation to work more hours than you really want to.
  • Again, it depends on the company you work for, but you might feel like you are not treated the same as other employees and you could miss out on training and development that would help you to progress in your career (if that is what you want) in the future.
  • A zero hour contract can lower your self-esteem. Again, it depends on your employer and the type of company you are working for but you might feel a bit used and that your efforts are going unrecognised.

Is The Negative Hype Around Zero Hour Contracts Warranted?

So, now you’ve had a chance to look at some of the pros and cons of zero hour contracts, is the negative hype around this type of employment warranted, do you think?

Zero hour contracts are a relatively new form of employment and, in mid 2015, the government voted to make it an offence for employers to insist on an exclusivity clause in zero hour contracts. This means those employed on zero hour contracts can now seek employment with other companies, too, giving workers a chance to work more hours, earn more money and get more work experience.

As with many stories in the media, it is the negative side of zero hour contracts that have dominated the press and cases of unscrupulous employers who have tried to exploit workers have been given much coverage. However, this is only one part of the story and many workers and employers work closely together to make zero hour contracts work for both parties. They are a way of working that can be mutually beneficial. The employer is able to have a member of staff who can work when needed and the worker gets to work flexible hours and have more control over free time and holidays.

Of course, zero hour contracts are not in place to suit everyone out there. It’s about creating a balance so that those who want to work on fixed term contracts can do and those who want to work flexible hours on zero hour contracts can do so, too. One blanket work pattern doesn’t suit all and it’s about recognising that. A zero hour contract can be ideal for some people but, for others, who need a more regular income, for instance, or who need a set working pattern, these type of contracts are just not practical.

So, rather than seeing zero hour contracts as a perfect opportunity for unscrupulous employers to exploit their workers, those employers and workers who want to make these contracts work can work closely together to make sure each party is happy with the situation. Employers can ask zero hour staff on a regular basis if they are happy with their situation and work to add or reduce hours where possible. Employers can also show that they value their staff on zero hour contracts by still offering training and development so that zero hour contract staff still feel valued and a part of the team. This benefits both the worker and, of course, the company benefits, too, if all staff receive relevant training and they feel valued.

As zero hour contracts mature as a system of working, employers are starting to make more effective use of them and are implementing well managed systems where there is no ambiguity. Staff working on zero hour contracts know exactly what is expected of them. McDonald’s are recognised as a company who make zero hour contracts work well for the company and their staff. All their staff, for instance, are given two weeks’ notice of their upcoming working hours. This allows zero hour contract staff to make plans and arrangements around their hours well in advance and McDonald’s have less chance of their staff not accepting shifts because they are too short notice.

Zero hour contracts, employers who are making use of them and workers who are employed on them are still finding their feet and eventually, poor practice will hopefully be ironed out so that this type of working can be effective for all parties. If employers have systems in place so that staff on zero hour contracts feel valued and feel they can approach their employer about any issues with their role, zero hour contracts can be successful for both parties and their reputation in the media should improve.