What are British zero hours contracts?

SportsDirect protest against zero hours contracts
SportsDirect employees protest against zero hours contracts

During the last general election campaign, Ed Miliband (Labour Party) made his opposition to zero hours contract one of his key campaign issues. Because this is the most common contract among immigrants, we’ll explain how it works.

Zero Hours Contract:

The term “zero hours” is not defined in UK law, but is generally understood as an employment contract between an employer and a worker that does not oblige the employer to give the worker a minimum number of working hours a week. The worker is not usually obliged to accept any of the hours offered, but some zero hours contracts can force workers to accept them.

Rights for the employee:

  • Most zero hours contracts will give staff ‘worker’ employment status.
  • Workers have the same labour rights as regular workers, although they may have “breaks” in their contracts, which affect the rights that accrue over time (eg pension payments, subsidies, etc.).
  • Workers are entitled to annual leave (vacation/holidays), the national minimum wage and pay for business trips in the same way regular workers are. They are also entitled to health insurance and maternity leave.
  • Usually, zero hour contracts DON’T include sick pay during sick leave.
  • It is a legal requirement that all employees receive a written statement of the terms and conditions of their employment. This should include terms and conditions on working hours, including normal weekly hours, overtime requirements, the rate of pay and how often you get paid. This statement is not your contract but it shows that you have a contract and part of what it includes. Even if your contract doesn’t detail the number of hours you must work each week, but only says that “working hours vary weekly”, it is still a legal contract.
  • NOTE: If your contract states that you have no fixed working hours and says that you must simply be available for work, but what really happens is that you work the same number of hours each day / week, then it can become implied that you have a contract with a certain fixed number of hours to work each day/week. If you are willing to work that many hours, but one day/week those hours get cancelled, you may be entitled to get paid your normal wages for those cancelled hours.

Why are zero hour contracts used?

They are aimed at creating a framework of flexibility for employers to fill positions temporarily due to last minute vacancies, peak production times or high workload seasons.

Pauses in recruitment

Depending on the specific agreements in the contract, a ‘zero hours’ contract could mean that the contract exists only when the work is provided. Whether it’s for hours, days or weeks.

When a zero hour contract means the contract only exists when the work is provided, a minimum rest within a fully scheduled week (Sunday to Saturday) is required. That is, the employer must give you a day off every seven days. For instance, you can’t work 8, 10 or 12 consecutive days.

When employment is continuous and regular, certain labour rights accumulate over time. For example, after the first year, workers do not have to wait to accumulate annual leave before using it.

Likewise, when the contract is broken, the employer also has certain responsibilities. This includes the need to pay the employee for any accrued holidays that s/he was unable to take.

How many people are hired with zero hours?

The Office for National Statistics (ONS) said that 697,000 people had zero hours contracts as their principal form of employment between October and December 2014, based on figures from the Labour Force Survey. This represents 2.3% of the workforce in the UK and shows an increase over the same period in 2013, when there were “only” 586,000 (1.9%).

The main companies that use these contracts are McDonalds, JD Wetherspoon and SportsDirect, with almost 90% of their workers with zero hour contracts. Other chains that have many employees with zero hours contracts are Tesco, Boots, Subway, Cineworld or even the Buckingham Palace.

Why are they controversial?

There is concern that zero hours contracts do not provide enough financial stability and security. The ONS found that employees with this contract worked an average of 25 hours a week and that these workers were more likely to be women or in full-time education and aged under 25 or over 65.

Employees with zero hours contracts also don’t have the same labour rights as workers with traditional contracts, and critics are concerned that the contracts are being used to avoid employers’ responsibilities to employees.

My opinion about the advantages and disadvantages

If we look at the cold, hard data, such contracts seem to have helped the UK out of the financial crisis, created job opportunities and allowed businesses more flexibility. For small business owners, these contracts are an advantage because they can reduce costs and make hiring easier.

The contracts also create an advantage for workers (mostly immigrants), as there are more possibilities of finding a job (despite low qualifications or poor language skills) for a few hours a week and combining it with other jobs. They also provides opportunities for students or people looking for something part time.

What’s better? Two people having a regular job of 15h a week or one person working 30 hours a week and another one unemployed? The former may seem better at first glance, but there are also problems associated with the British zero hours contract “solution”.

Zero hours contracts lead to disadvantage and job insecurity among the working class. You don’t know how many hours you will work throughout the month and therefore can’t count on a specific income. It becomes harder to make future plans, book holidays (if you can afford them), know in advance about weekend shifts or apply for a mortgage. Usually, the flexibility of zero hours contracts leads to job insecurity.

When I think of my “entrepreneurial” experience, I am in favour of flexible contracts, which allow you to hire when necessary until your company grows and you can create more permanent jobs. The problem comes when large companies like McDonalds or SportDirect take advantage of this and make an exception become the norm for the rest of the labour market.

What do you think? What is your experience with these contracts?

Summary in a video by ACAS


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