Zero Hour Contracts in Action

The Use of Zero Hour Contracts

(Source: Ellis Whittam, 2016)

Description

Zero hour contracts are often used by companies by allowing them to hire workers without a concrete work guarantee (Brinkley, 2016). The contracts stipulate that staff only work when the employer needs their services, which is often on short notice. Employees also have the freedom to choose whether or not to work when requested. These contracts are primarily used for on-call work such as interpreters. The salary is directly proportional to the number of hours worked, and the sick pay is not given. However, employees are entitled to the minimum wage and annual leave.

Data in the UK

(Source: Mirror, 2017)

Big companies have encountered controversy over their use of this employee arrangement because staff members are not guaranteed of their hours. The number of British employees who are currently on zero hour contracts stands at 883,000, or 2.8% of the employment force, which is a record high figure. This figure was collected for April to June 2017, and it was 20,000 people lower than it was in the same period in 2016 when it hit highs of 903,000 or 2.9% of the workforce (Doody, 2017).

Demographics

A closer look at the demographics shows that these employees are primarily young and female. 36% of workers under zero hour contracts are below 25 years, but not all workers in this age bracket are on such contracts (Brinkley, 2016). The age group 16-24 accounts for a paltry 8% of the workforce, including full-time education students.

Zero hour contracts are primarily concentrated in the low paying and unskilled services like caring and leisure. The health and hospitality, as well as social work sectors, are also reliant on this arrangement with 24% and 21% of workers under zero hour contracts respectively (Brinkley, 2016).

Employees work for 26 hours per week, and roughly 26% of them would like more hours in their current company.

Zero Hour Contracts in Action

Church of England

The Church of England is known for its employment policy that follows this approach. Security guards and catering staff, at Lambeth Parish, operate on a casual basis with no guaranteed work minimums (Bingham, 2013). The seasonal catering staff hired for specific functions are the most affected. These details have become public knowledge, leading to condemnation by Labor and trade unions. (Source: Church of England, 2018)

The church ensures that these casual workers are treated differently from the norm by guaranteeing sick pay, sick leave, and annual leave. The church sometimes even books the staff members on its payroll in advance, when anticipating huge events. The employees are also not limited to working for Lambeth alone (Bingham, 2013).

This approach by Lambeth means that the church saves money since they do not guarantee constant work, and hence pay.

Cineworld

UK's largest cinema company said, in 2013, that it would continue with its application of the zero hour contract policy. Stephen Wiener, the company founder, pledged to carry on with the practice instead of a fixed hour approach.

(Source: Movie Theater Prices, 2017)

Close to 4000 Cineworld employees are on zero hour contracts, which represents over 80% of the company's workforce (Neville, 2013). Trade unions, politicians, and charities have contradicted this strategy since it leaves many employees in a state of uncertainty regarding their monthly income. The leadership has no plans to change this employment policy, suggesting that no employees have complained about the zero hour setup. Majority of staff in the UK multiplexes hold other jobs and only do the cinema business on evenings and weekends to supplement their income (Neville, 2013).

The advantage of this approach is that it gives Cineworld a high level of flexibility to respond to market changes. The company can quickly lay off workers in times when business is low and recall them when things improve. There are considerable savings on labour costs.

Benefits and Challenges

Advantages

Zero hour contracts increase the labour flexibility. Industries like hospitality and tourism are known for their fluctuating business regime (Catapult On-Demand Staffing Blog, 2016). The low periods make it difficult for companies with permanent employees since they must raise the salaries. Zero hour contract firms do not suffer this fate since they can lay off workers at their convenience.

Companies can address the issue of zero hour contracts and improve their brand image among the public. Organizations seen to embrace the long-term future of employees will generate public support (Monaghan, 2017).

These contracts help firms to keep hold of valued workers who may need to go to part-time from full-time. These valuable staff members can use the zero work policy to work at their convenience, benefitting themselves and the company.

Disadvantages

One of the primary criticisms of zero hour contracts is their treatment of the employee. Lack of work guarantee means workers are not assured of a consistent flow of income. It places them in a precarious situation since they are legally employed and hence ineligible for benefits when they don't get work (Catapult On-Demand Staffing Blog, 2016). Many people view it as an unethical business practice. SportsDirect direct recently scrapped their zero hour program amidst a flurry of public outcries (Sembhy and Smith, 2016).

Zero hour workers are not afforded the same rights and benefits as their counterparts on a permanent basis. They are labelled as workers and not employees, and hence the benefits will differ (Lewis, 2014).

The uncertainty that comes with this arrangement creates an environment of anxiety for the employees. They are not assured of jobs, and hence they cannot settle and make concrete plans. Their productivity is likely to be stifled since they are understandably low on morale (Catapult On-Demand Staffing Blog, 2016).

Conclusion

Zero hour contracts may be an excellent way of ensuring labour flexibility and reducing overheads. On the other hand, they may leave a negative impact on staff morale due to the uncertainty on the workers' future (Monaghan, 2017). Organizations should find a way of striking a balance to get the best working formula for their members.

Key Links to Explore the Topic Further

http://www.independent.co.uk/voices/comment/whats-so-terrible-about-zero-hours-contracts-8746638.html

This website further explains some of the things that are wrong about zero hour contracts.

http://www.acas.org.uk/index.aspx?articleid=3886 .

This website has information regarding the rise of zero hour contracts as an employment policy.

Bibliography

Bingham, J. (2013). Lambeth Palace in 'zero hours contracts' controversy. [online] Telegraph.co.uk. Available at: https://www.telegraph.co.uk/news/religion/10307249/Lambeth-Palace-in-zero-hours-contracts-controversy.html [Accessed 2 Mar. 2018].

Brinkley, I. (2016). New Statistics on Zero-Hours Contracts - Policy at work - CIPD Blogs - CIPD Community. [online] Www2.cipd.co.uk. Available at: http://www2.cipd.co.uk/community/blogs/b/policy_at_work/archive/2016/09/21/new-statistics-on-zero-hours-contracts# [Accessed 2 Mar. 2018].

Catapult On-Demand Staffing Blog. (2016). The costs and disadvantages of zero hour contracts for businesses. [online] Available at: http://blog.joincatapult.com/disadvantages-of-zero-hour-contracts-for-businesses/ [Accessed 2 Mar. 2018].

Doody, S. (2017). Contracts that do not guarantee a minimum number of hours. [online] Ons.gov.uk. Available at: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/contractsthatdonotguaranteeaminimumnumberofhours/latest [Accessed 2 Mar. 2018].

Lewis, D. (2014). The Pros and Cons of Zero-Hour Contracts Explained. [online] Howells Legal. Available at: https://www.howellslegal.co.uk/news/post/The-Pros-and-Cons-of-Zero-Hour-Contracts-Explained.aspx [Accessed 2 Mar. 2018].

Monaghan, A. (2017). Record 910,000 UK workers on zero-hours contracts. [online] The Guardian. Available at: https://www.theguardian.com/business/2017/mar/03/zero-hours-contracts-uk-record-high [Accessed 2 Mar. 2018].

Neville, S. (2013). Cineworld boss pledges to continue with zero-hours contracts. [online] the Guardian. Available at: https://www.theguardian.com/business/2013/aug/15/higher-cinema-ticket-prices-les-miserables-cineworld [Accessed 2 Mar. 2018].

Sembhy, R. and Smith, M. (2016). Sports Direct scraps zero-hours contracts and apologises for working practices. [online] mirror. Available at: https://www.mirror.co.uk/news/uk-news/sports-direct-scraps-zero-hours-8776267 [Accessed 2 Mar. 2018].