2 weeks ago
Use of Zero Hours Contracts: A Threat to County Business
Zero hours contracts are like any other contract, in that one person agrees to do work for an employer in exchange for wages.
The difference is that a zero hours contract means that the employer does not have to offer any work to the employee.
The advantage to employers is clear, in that they can reduce their wage bill (a significant overhead) when work is less.
A leading employment lawyer in the county has this week slammed their use describing it as “Bad business and irresponsible behaviour”.
Not only is the use of these contracts a suggestion of absolutely no commitment to the local economy, but it is a serious risk to the business and employers seem totally blind to this risk.
Of course there are a few occasions when they are appropriate, but these are few in reality.
In effect, these contracts are simply a way for an employer to avoid obligation to its employees.
The wage bill is a significant overhead, and needs to be controlled by good management. These contracts transfer some of the business risk from employers to employees (who face periods with no work or wage) but in exchange for this risk, the employee does not get any enhanced profit, indeed it is usually at minimum wage.
It’s the stuff of a Dickens novel as we have seen at Sports Direct.
However, it’s not only irresponsible, it’s a business risk for three very real reasons:
- The employer risks reputational damage as word gets out that they view staff in this way;
- It damages the local economy, because if employees don’t have security in their earnings, they don’t spend. If they don’t spend, it damages other local businesses who depend on these local people spending;
- It’s a real risk in terms of tribunal claims since the law changed in January 2016.
The Tribunal risk comes from a change in the law which means it is unlawful for an employer to treat an employee to their detriment because the employee takes work with another employer.
So, if the employee is unavailable for work when called in, because they are doing work elsewhere, then the employer cannot penalise them for refusing to come in.
In reality, every employer using such contracts is likely to favour employees who turn up when asked to.
Therefore, by definition, those who sometimes say no will be offered less work, and this is a detriment.
We are simply waiting for the first case to catch an employer out.
Zero hours employees are also entitled to the same rights as permanent employees in respect of paid holiday and statutory sick pay.
Employers simply don’t seem to realise this and appear in some cases to be accumulating back pay claims without knowing they are coming.
Of course, rarely is there only one employee on such a contract in any business, and when the one person finds out they are owed back pay (let’s call him Bob Cratchit) then he will tell the others and quickly the financial claim can be crippling for any business.
Director of Sherbornes Solicitors