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What Does a Zero Hours Contract Mean?

You may be all too aware of the controversial “zero hours contract”. Mass debate has surrounded the topic ever since it was introduced in the UK. Under the National Minimum Wage Act 1998, workers who operate under zero hour contracts, on stand-by time, on-call time, and downtime must be paid the current minimum wage (which can change year to year) for the number of hours they worked. This means if you do not work any hours, you will receive no pay at all.

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Zero Hour Contracts are also known as causal contracts. Typically, zero hour contracts are usually for ‘on call’ work or for ‘piece work’. For employers, this means:

  • A worker is contracted to be on call to work when you need them
  • You do not have to offer them work – this particularly useful when going though quieter periods in business and employer’s may be overstaffed.
  • They are still responsible for the health a safety of any staff on a zero hours contract

However, a person under a zero hours contract does not have to do the work when they are asked to.

What are people under Zero Hour Contracts entitled to?

If you are signed into a zero hours contract, you are clearly not entitled not a set amount of hours work per week. This has caused a lot of uproar as people can no longer guarantee work and thus feel as though they can no longer budget correctly, or even pay their rent or bills.

Zero hour contractors are entitled to, however, statutory annual leave as well as the National Minimum Wage in the same regard as “regular workers”. They are also entitled to things like Maternity or Paternity Pay and Health Insurance.

If a person on a zero hours contract earns less than £5,772 per year, they will not be able to receive any credits for the state pension.

It is not legal to stop a person under a zero hours contract to look for or take up work elsewhere. The law states that they are allowed to ignore a clause in the contract if it bans them from:

  • Looking for other means of work/income
  • Accepting work from a separate employer.

Employers in the United Kingdom

The zero hours contracts have been on the rise and are used in a variety of different trades across the United Kingdom. They have been used as a means to increase employment rates following the global financial crisis in the private, non-profit and public sectors within the United Kingdom.

Some of the employers that you might recognise which use zero hours contracts include:

  • Sports Direct: A Retailer. 90% of workers are on a zero hours contract.
  • J D Wetherspoons: One of the UK’s largest pub chains. 24,000 of staff or 80% of which are on zero-hours contracts.
  • McDonalds: Fast Food Restaurant. 82,000 workers across the UK, or 90% are on a zero hours contract. Similarly, Burger King, Subway and Dominoes also use zero hours contracts for their workers.
  • Boots: Pharmacy and Retailer. Has 4,000 of their staff on zero hour contracts.
  • Buckingham Palace: employs 350 seasonal summer workers on zero hour contracts.
  • Cineworld: Cinema Chain. Around 3,600 or 80% of their work force are on zero hours contracts.
  • Yo! Sushi: Sushi chain restaurant. Employs all of their non-management staff on a zero hour basis, despite advertising roles as full-time, falsely.

The Workplace Employment Relations Survey which was conducted by the UK government in 2004 and again in 2011 elucidated that the proportion of places of work which have some employees on zero hour contracts has increased from just 4% in 2004 to 8% in 2011. The survey also found that the companies of a bigger scale were more likely to favour the zero hours contract route. It was found that 23% of companies which had 100 or more employees used zero hour contracts in 2011. In contrast, 11% of those did so who had 50-99 employees and 6% for those with fewer than 50 employees.

Controversy and Criticism

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As mentioned, the UK saw controversial conversations cropping up around the use of zero hour contracts. Plenty of MPs have called for the end of zero hours contracts in the UK.

Zero hour contracts were quite heavily supported by some British business leader, claiming it providing a more flexible labour market overall. It has also been recognised that zero hour contracts suit certain lifestyles such as those who are retirees and students that may be happy with occasional earnings and are flexible about when it is they can work. In fact, it has been reported that around 60% of those who are on zero hour contracts are happy with the hours that they work.

However, concerns had been raised by Trade Union Groups to do with the possible exploitation of workers rights. If zero hours contracts became the norm, people may not be able to afford the same things week to week, making it impossible to know if they can even continue to pay their rent or phone bill each month. A worker under such a contract can be denied work at any point and for any reason, leaving them extremely vulnerable.

Zero hours contracts have also highlighted problems with child-care. Workers with children may struggle to pay for and arrange child-care if they are called into work.

Zero Hour contracts around the world 

It is not just the UK that has zero hour contracts, this type of casual employment is also heavily used in places like Australia, Canada, Ireland and New Zealand.

It is the same concept wherever you go, there are no guaranteed hours per week nor any obligation for the employer to provide the worker with any work at any given time. The employee will only get paid for what they work, so if they receive no work one week, they go without a wage.

 

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