The Issue with Zero-Hour Contracts

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The UK unemployment rate has fallen to its lowest level since 1975 and is currently estimated at 4.3% in the latest figures. This news should be good for all but these figures hide a darker secret as several firms, including the high street giants of Sports Direct and McDonald's are coming under fire for their increasing use of zero-hour contracts. As UK unemployment reaches record lows, the number of employees on these contracts has risen to record highs, it is estimated that 910,000 workers in the UK are employed in this way representing around 3% of the workforce.

So, what is a zero-hour contract?

In the majority of cases, these contracts allow firms to employ workers with no obligation to provide a minimum number of hours whilst at the same time, workers are not obliged to accept any work offered either. They are often used for employment within the agricultural, hotel, retail and healthcare sectors. The main argument for their use is the flexibility that it should theoretically provide employees. A work rota per week is typically published and staff are free to swap shifts and change arrangements as per their needs. Supposedly, this is beneficial for university students who work part time around their studies and those moving out of the labour force to supplement their income by working part time. However, this assumes a Utopian world, and the harsh reality for many workers is not reflective of these ideals.

One issue is that the demand for labour is in many cases seasonal; for example it is a commonplace for retailers to use zero-hour contracts to offer more hours of work from May to December as their turnover increases in these months, due to the holiday season in the run up to Christmas and equally in the agricultural industry, more hours of labour are needed during harvest than other times of the year. This means that employees are not guaranteed hours of work per week in times when the demand for labour is reduced.

Polls have suggested that over a third of those employed on zero-hour contracts would like more hours a week and more stability in their income. Zero-hour contracts allow employers to offer hours as and when it suits the company, which can be detrimental to those on low incomes who need a guaranteed income. Without fixed hours, these people cannot guarantee their incomes so budgeting becomes near impossible which is unfair and exacerbates inequality as those on zero-hour contracts are often those with low income unskilled jobs.

A question to be asked is why don’t workers seek alternatives. In some cases, jobs are simply not available and this is the only option available due to the widespread use of zero-hour contracts. In the worst contracts, they contain exclusivity clauses stating that the worker is not able to work for another firm even if hours are not given.

Employee welfare and rights are a serious issue and it is not to be taken lightly. Recently, things have been getting better. Last year Sports Direct, a firm who came under severe scrutiny for their use of zero-hour contracts, offered its 18,250 shop staff on zero-hour contracts the option of a guaranteed 12-hour week. This move is welcomed but it begs the question is it enough?

On the other side of the world, New Zealand have gone one step further and banned this type of employment outright in the names of worker’s guaranteed rights and to avoid their exploitation. The UK is seeing more light being cast on the issue, as awareness is raised about exploiting firms such as Sports Direct are reforming and are moving to fairer and more equal contracts for its employees. Whether the UK can follow suit with New Zealand is yet to be seen but the issue still looms over the thousands of workers without guaranteed hours.