December 11, 2015

Would you benefit from a zero-hours contract?

Zero-hours contracts have been a controversial issue for HR because of what they represent. They raise interesting questions about the employment contract and the relationship between employers and employees. HR professionals need to consider these questions very carefully if they have or are considering having employees on zero-hours contracts.

As the debate rages about whether this working model is good for employees or not, one very important question can easily get lost: What do those on the zero-hours contract think about their employment status? Do they like it? Do they think it’s fair? Does it work for them?

There is a fair bit of research that shows that far from being unhappy with zero-hours contracts, many employees actively like them. A new report by the CIPD, ‘Zero-hours and short-hours contracts in the UK: Employer and employee perspectives’, found that on average, people working on zero-hours contract are just as happy with their working life as those employees on permanent, full time contracts.

What is it that they like about the set up? They value the flexibility it offers. They are also more likely to feel that they have the right work-life balance than their permanent counterparts and less likely to feel under excessive pressure at work on a frequent basis.

The downsides cited are that they are less likely to feel involved at work and see fewer opportunities to develop and improve their skills. However, over four-fifths (825) of employers participating in the survey say zero-hours contract workers are eligible for training. Only 13% said they were not eligible.

The term zero-hours contract started being used after the global financial crisis of 2007-08 and the practice is now widespread, particularly in agriculture, hospitality, education and healthcare industries. It is likely to remain a permanent fixture of the UK labour market – the CIPD estimated that there were about one million zero-hours contracts in 2013, rising to about 1.3 million in the months preceding the report in December 2015. So employers and HR need to give due consideration to if and how they manage zero-hours contracts in the workplace.

Many business leaders support zero-hours contracts because of the flexibility it affords them. The CIPD report demonstrates why employers choose to offer zero-hours contracts. It found that the ability to manage fluctuations in demand is the most popular reason (cited by 66% of employers). Next is flexibility for the individual (51%), cover for absences (48%) and reducing costs (21%).

However, critics argue that it is not good employment practice and leaves those on zero-hours contracts without a stable, secure income. The hours are also unpredictable, which can be hard for those with caring responsibilities or who juggle other jobs as well. That’s just a few of the criticisms leveled at this labour model.

The CIPD report highlighted a few areas where employers could improve their stance on zero-hours contracts. Firstly, it recommends that there is greater transparency on employment status. It thinks there should be greater codification of procedures for the cancellation of work at short notice and termination of a zero-hours contract. The CIPD also thinks that all workers should have legal entitlement to a written copy of their terms and conditions after two months in employment, if not before.