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Rhondda HR Company Highlights The Risks Of Zero Hour Contracts

1 Apr 2014
Rhondda HR Company Highlights The Risks Of Zero Hour Contracts

“The Office for National Statistics figures suggest that the number of zero hours contracts has been on an upward trajectory since 2008.” says Mark Coombes, Director of HR Firm Connective Business Solutions based in Abercynon. A zero hours contract is ‘an agreement between two parties that one may be asked to perform work for another but there is no minimum set contracted hours’.

“There is a place for zero hours contracts where the flexibility inherent in these types of arrangement, suits both the employer and the individual.” Continues Coombes, “One of the biggest concerns is a lack of understanding by employers of zero hour contracts, in terms of employment status and rights, placing risks on the employer. It is important that both employers and individuals understand on what basis the zero hours arrangements are designed to operate and that there is clarity over employment status and associated rights.

There are different types of zero hours contract arrangements, some of which will engage zero hours workers as workers and some that will categorise these staff as employees, each of which have different rights.  For example, only ‘employees’ are entitled to maternity, paternity and adoption pay, have the right not to be unfairly dismissed after two years’ service and are eligible for statutory redundancy pay.

There are several factors that determine whether an individual on a zero hour contract is an employee or casual worker.  Exclusivity is one of those factors. In some arrangements, individuals will be obliged to accept work if offered and in others they will not; likewise, some arrangements will prevent individuals from working for others, while others will not.

Employers may find that zero hour contracts are an effective way of managing fluctuations and uncertainty in demand, as well as managing employment  costs, only pay for staff when the demand is there. However, as there is no guarantee of work there is the potential for staff to leave and work elsewhere.

Employees may find that zero hour contracts provide the flexibility to suit their needs.  This covers a range of aspects including managing caring responsibilities, studying, improving work–life balance, downshifting from full-time work as move toward retirement or in retirement and use to top-up pension. However, it lacks financial security and not having a guaranteed wage does not work for a lot of people. They lack of job security and can be given little or no notice of when they are required to work.

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