The Pros and Cons of Zero Hours Contracts for Your Business

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Zero-hours contracts are for people who work on a casual or temporary basis, and are willing to make themselves available when required. Staff are called in to meet workload peaks, or to cover for permanent staff who are away on holiday or sick. In this article, we look at how zero contracts work, and how your business can benefit from them.

What are zero-hour contracts?

Zero-hours contracts have been under the spotlight recently. This flexible work agreement, allows employers to offer casual staff as little or as much work as they wish. The large retailer Sports Direct famously employs around one million people across the UK on zero-hours contacts – that is with no minimum contracted hours of work.

The number of zero-hours contracts has grown significantly, and there are now thought to be around 1.4 million UK workers on them. The average hours worked per contract is just under 25 hours per week.

The scheduling of workers can be time-consuming, so many employers use software programs like Planday which gathers data such as worker availability, holidays, etc. This saves having to use numerous spreadsheets, streamlining operations.

The pros and cons of zero hours contracts are hotly debated, with opinions on both sides of the fence citing many advantages and disadvantages. In brief, zero hours contracts are good for business because they offer

Flexibility – A zero-hour contract allows companies to adapt quickly to changes in demand and increase or decrease their range of services.

Simplicity and affordability – If a worker is not working, it doesn’t cost the employer anything. In the case of workers who are not classified as employees, the financial relationship, and administration is much simpler for a company.

Growth – Companies can increase their workforce without committing to permanent new staff. Companies who are experimenting in new market arenas can benefit from these contracts – there are no wages to pay if things don’t work out. But if they do, there’s a pool of temporary staff to draw on, some of whom can be upgraded later to permanent staff.

In a recent poll, nearly 30% of UK firms were in favour of zero-hours contracts. 60% felt that they allowed them to respond swiftly to fluctuating demand for their products, or services, and over 30% believed it gave people a much greater choice and flexibility in the workplace.

As far as workers are concerned, zero hour contracts offer the following advantages:

Choice – Zero-hours contracts give workers a much greater say over when and how often they work.

Casual employment – It’s a perfect arrangement for students looking for work experience or casual income.

A great option for retirees – The contract allows retired people to work from time to time and earn money while still having time to pursue their hobbies or other interests.

In a recent survey, almost 50% of respondents were very satisfied with their zero-hour contracts because they had more options and flexibility and no set work hours. Over 70% believed they had a good choice of the number of hours they worked.

However, it is also clear that zero-hours contracts have a number of disadvantages for employees:

Unpredictability – Zero-hours contracts make it difficult for people to plan financially because of the uncertainty about how many hours they’ll work each week or each month. Wages fluctuate and for those with dependents this can be tricky.

Penalties – Some employers were penalising workers when they refused to work at certain times after being given little or no prior notice.

Exploitative clauses – A recent government review found that some companies used exclusivity clauses in the zero hours contracts to prevent people from working for other companies – this, even though they had no guarantee of work.

Employee rights – Because most zero hours contracts define people as ‘workers’ rather than ‘employees’, they’re not entitled to protection from unfair dismissal, pay in respect of redundancy, time off for ante-natal care, time off for the care of dependents, and so on. However, ‘workers’ are entitled to rest breaks, protection from discrimination, whistleblowing protection, health and safety protection, and must be paid the national minimum wage.

 

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