ACE 2013 - Zero tolerance for zero hours?

By Richard Turner - Head of Employment, Brilliant Law

Brilliant lawI really didn’t want to wade into this debate. It’s just too political, too “hot potato”. There will be no winners, and I just don’t have a clear answer. Nevertheless if Brilliant Law claims to be out there in front of employment matters, are we duty bound to comment?

Well ok, if I’m backed into a corner and poked with a sharp stick (a position many people would like to see more lawyers in), but on one condition: I’m going to sit on the fence and get splinters, just this once. 

Déjà vu?

It’s difficult to remain objective when we keep seeing words like “exploitation”, “abuse” and “draconian”. It’s difficult, because nobody wants to be the one to stick their head above the parapet and say they’re a jolly big fan of zero hours contracts and actually wouldn’t it be wonderful if we saw more of them.

Good job I’m not about to say that, but I do struggle with some of the arbitrary line-drawing and the way it particularly alienates small business owners who may have their own struggles in the current economic climate.

Let’s get one thing straight; as it stands zero hour contracts are legal. Whether they are ‘fair’ depends on (i) your point of view and (ii) the terms of the contract itself.
Using zero hours contracts does not, necessarily, lead to the exploitation of workers. Abusing zero hours contracts may well do, but abusing your workers has long been frowned upon in this country. There are laws against that kind of thing you know.

We were here a couple of years ago; remember the furore about interns or, more recently, unpaid overtime ? Reports were promised, legislation was threatened, newspapers revealed “shocking” evidence of abuse and the Government wrung its hands and looked a bit sheepish.

And?

Well, nothing much changed. The world continued turning and whilst I’m sure some employers felt suitably chastened and tightened up their act, I’m pretty sure there are still plenty of overworked and underpaid interns out there if you care to look.

When is a Zero Hours Worker not a Zero Hours Worker?

Maybe some of this stems from the fact that many employers and employees frankly misunderstand the whole zero hours thing. It all relates to a rather fuzzy legal concept of “the worker”. Like “squeezed middle” or “Mondeo man”, there is a risk that these words lose all meaning in the heat of the debate. It’s therefore easy to agree that we should ban “exploitative” contracts but you try getting two people to agree on a definition of exploitative and see how quickly you give up drafting the legislation.

To recap, the law recognises three categories of working people:
1. Employees: They will usually work for one company, go to work when they’re told to, where they’re told to, and do what they’re told to do. Their employer must give them work and must pay them an agreed rate for agreed hours on set days. Employees also can’t refuse to work or send somebody else in their place if they want a day in bed. Employees are entitled to all the employment rights you’ve heard of – unfair dismissal, minimum wage, holidays and discrimination, for example;

2. Self-Employed: These folks work for themselves, when they want, for whom they want and using their own tools of the trade. They send invoices and importantly they can choose to stay in bed if they please or send a substitute in their place. Self employed people have no employment rights, take unpaid holidays and have no certainty of work unless they get out there and develop it; and

3. Workers: Ah, workers. These people live in a fuzzy grey world between the other two categories. Created by legislation to give limited rights to people who would otherwise not be entitled (because they aren’t “employees”), workers are – for example – entitled to be paid minimum wage and to receive statutory holiday. They don’t get unfair dismissal or redundancy rights.

Zero hours contracts are a type of contract given to casual staff which labels the individual a “worker”. If the actual relationship, in practice, becomes one that looks very similar to ‘employment’, then both an Employment Judge and/or the taxman is already entitled to ignore the label used by the employer and deem that person to be an employee. We don’t need new laws for that.

Be very careful, for example, of using what you believe to be self-employed sub-contractors in a way that triggers “worker” status (ie by determining their working patterns and refusing to allow substitution) as you might suddenly have claims for 6 years worth of unpaid holiday (as the construction industry found to its cost in 2009).

To Ban, or Not To Ban?

And so, from my vantage point on this fence, we come to the following conclusions:
They are exploitative: Not necessarily – some workers may enjoy the flexibility of being able to pick and choose when to accept assignments with at least some understanding of where that work might be coming from (which is more certainty than the genuinely self-employed have, even if less than employees can expect). Even Mr Miliband accepts that in certain cases (students, locums etc) there is a place for zero hours contracts.

Not giving employees absolute certainty is “wrong”: Hmm, maybe, but this is a broader social debate. Do we want to insist that anybody who is ready willing and able to work is entitled to absolute certainty over when, where and how much work they can get ? Should working X hours in any one week trigger an employment relationship ? What if somebody has a couple of zero hours contracts with different companies – do we start splitting up “bad zero hours” from “good zero hours” relationships ? Should the employer take all the risk in the employment relationship ? All are possible,  and perhaps admirable, but achieving them without tripping over the law of unintended consequences is another matter.

Banning them would force employers to give “proper” contracts: Probably not. When the minimum wage was proposed many predicted huge unemployment as employers were priced out of the labour market. It didn’t happen, so banning zero hours may compel employers to turn workers into employees on guaranteed hours. On the other hand, employers might instead:
i. switch their allegiance to agency workers (equally uncertain for the worker);
ii. utilise part-time employment contracts with a guaranteed minimum of, say, one hour a week with “optional” overtime;  or
iii. break each period of work into a separate assignment and offer casual contracts for each, possibly with overarching ‘umbrella’ contracts (this was the subject of its own debate in the early ‘90s, not to be repeated here).

In the meantime the debate looks set to rumble on, at least until the next “abuse” is discovered and we all forget about zero hours contracts…until the next time?

Meet the team at Brilliant Law on stand 393 at next week's CIPD 2013 Annual Exhibition in Manchester #CIPD13

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  • Well Done Richard, really enjoyed your well thought out take on this issue.  I appreciated your humour too on the whole fuzzy 'workers' status - such a headache and I wish it would all go away!  However I do recognise it adds much needed flexibility, especially in the charity sector where I have worked for the past 7 years.  

    Denise


  • It is indeed important not to throw the baby out of the bathwater.  As Richard has acknowledged, flexibility can benefit both employer and worker.  It is how you exercise that flexibility I think that is important.

    It seems to me that the real bugbear here for workers is being required to accept work if offered, being told to turn up for work and then finding that you are not needed on that occasion.  The worker is not able to accept work elsewhere because of the overriding requirement to take the work that is offered.

    To my mind, contracts should not impose such a one sided expectation.  There should be an arrangement in these contracts for employers not to be obliged to offer work, and where work is offered, there should be no obligation on the worker to accept it.

    That way, there is flexibility on both sides and I think this is a perfectly fair contractual arrangement.