Should zero hours contracts be banned?

Should zero hours contracts be banned? Labour’s manifesto supports a ban, while the Lib Dems call for a right to request fixed hours after 12 months as a zero hours worker.

Meanwhile, a small-scale poll on workingmums.co.uk site has found a big majority favouring a ban. 80% say the contracts should be banned, while just 13% say they shouldn’t.  The rest of those polled are not sure.

One respondent said: “Jobs need more security, peace of mind and decent working terms and conditions as opposed to jobs without long-term benefits.” Another mum stated: “Most people need the stability of a regular income or we cannot make plans for the future.

Under zero hours contracts employers are not obliged to provide any minimum working hours and workers are not obliged to accept any work offered. Rights vary according to employment status. Most zero hours workers are considered workers, but they may acquire employee status which will change the type of rights they are entitled to.

While workers are entitled to rights such as annual leave and SMP, there have been a number of cases where hours have been reduced after workers have complained about treatment.

Conflicting studies

Research has been equivocal on the contracts. A 2013 study of 2,500 workers by the Chartered Institute for Personnel and Development found that zero-hours workers are just as satisfied with their job as the average UK employee and more likely to be happy with their work-life balance than other workers.

The CIPD said that where zero-hours contracts are being used for the right reasons and people on these types of arrangements are managed in the right way, they are providing flexibility that works for both organisations and individuals. It says efforts to address poor practice should be focused on improving employer understanding of how to use the contracts responsibly and within the law, rather than on attempts to restrict their use through regulation.

However, a 2015 report from Working Families stated that zero hours contracts were damaging family life, making it difficult for parents to arrange (and retain) childcare and disrupting in-work benefits. Moreover, for many workers a refusal to work shorter, longer or simply different hours could easily lead to there being no work at all.

Workingmums.co.uk has heard from parents who have faced problems due to zero hours contracts. One mum wrote: “My employer has changed all the rotas at work. I used to work two weekdays one week and Monday and Sunday the other. This was fine as childcare was sorted. Now he wants me to do a weekend one week and two different weekdays the next. My issue is that I have no childcare for one of those days as my husband is working. I am worried work will drop my shifts because I can’t do that day. What are my rights?”

Greater choice

It is estimated that around 900,000 workers in the UK – or around 2.7% of the workforce – are on zero hours contracts as their main job. Others use them to top up their pay from other jobs. They are common in industries such as retail and hospitality.

There has been a focus recently on how to offer workers greater choice over their hours, with McDonald’s, for instance, offering all of its employees the choice of a flexible or fixed contract offering minimum guaranteed hours or a zero hours contract. The fast food giant said that initial uptake of the guaranteed hours contract was around 10% across the country, but depended very much on area.  In restaurants with a high number of students, for example, the uptake was as low as 5%. McDonald’s says some employees like the flexibility of zero hours, for instance, zero hours mean parents can take time off in the school holidays and students can take time out for exams.

However, this contrasts with a 2017 TUC survey which shows two thirds of zero-hours workers wanted jobs with guaranteed hours, compared to just 25 per cent who prefer being on zero hours.

In his review of modern working practices, Matthew Taylor recommended a right to request guaranteed hours and higher minimum wage rates for workers on zero-hour contracts in recognition of the insecurity of their contract. Trade unionists argue that a right to request is weak legislation and means employers can still refuse workers fixed hours. In addition to a right to request, the Lib Dems are also offering to increase by 20% the minimum wage for zero hours workers working during ‘times of normal demand’ to compensate for insecurity.

However, the current reality suggests workers on zero-hours contracts may in fact be being paid less than those on fixed hours contracts. A recent Resolution Foundation study found zero hours workers face a ‘precarious pay penalty’ of almost seven per cent  – or £1,000 a year for a typical worker – compared to similar workers doing similar jobs.

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