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September 27, 2013

Legal Issues – Government Launches Consultation on Zero-Hours Contracts

On 16 September 2013 the Government announced that they are going to launch a consultation on zero-hours contracts. Details about the consultation will be issued by the end of the year. This announcement follows a review of zero-hours contracts by the Department of Business, Innovation & Skills (BIS). The trade unions have also recently raised the profile of zero-hours contracts by voicing their concerns over their use. It is estimated that approximately 3-4% of the UK workforce are on zero-hours contracts.

The Government states that the aim of their consultation is to explore how to tackle abuses in the system and ensure that people are paid and treated fairly. The BIS review highlighted four areas of concern with zero-hours contracts, those being exclusivity, transparency, uncertainty of earnings and the balance of power in the employment relationship. It is likely that these are the areas that the consultation will focus on.

The status of zero-hours contracts is somewhat unclear. However, they are being used more frequently by employers who find it difficult to predict the demands of their business but who wish to retain the number of staff available to them to meet and adapt to that demand. Zero-hours contracts can offer flexibility for both the employer and worker. They allow employers to adapt to changing demands and allow workers to fit work around their personal commitments. However, there are concerns over their use to exploit workers. Some zero-hours contracts require workers to be available for work at all times, to work exclusively for their employer, but with no guarantee of work. This can prevent those workers seeking additional employment.

The issue of zero-hours contracts has sparked a great debate. A number of politicians have called for these contracts to be banned entirely, whilst the trade unions have called for a minimum threshold on the number of hours being offered to workers. This is to ensure that workers are taking home a minimum weekly wage and to provide them with some form of stability.

So what does this mean for zero-hours contracts? It is unlikely that there will be an outright ban as zero-hours contracts can be advantageous to some and are helping employers in a struggling economy. Such contracts are also vital and specific to certain industries so an entire ban on their use could have bigger repercussions. It is likely that the Government will propose some restrictions on their use and remove any obligation on the worker to work exclusively for that employer. We will only know what the future holds for zero-hours contracts once the Government publish their response to the consultation next year.

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