A zero-hour contract is a contract of employment used in the United Kingdom which while meeting the terms of the Employment Rights Act 1996 by providing a written statement of the terms and conditions of employment contains provisions which create an ‘on call’ arrangement between employer and employee. It does not oblige the employer to provide work for the employee, nor does it oblige the employee to accept the work offered. The employee agrees to be available for work as and when required, so that no particular number of hours or times of work are specified. The employee is expected to be on call and receives compensation only for hours worked. Zero-hour contracts may be ideal for some people such as retirees and students who want occasional earnings and are able to be entirely flexible about when they work, but people in the general working population, including those with mortgages and responsibility for supporting a family, run the risk of unpredictable hours and earnings. The possibility of the use of such contracts by management as a tool to reward or reprimand employees for any reason or no reason raises issues about how workers can adequately assert their employment rights or maintain decent employment relations.
Itinerant day labourers and part-time workers are employed under terms similar to a zero-hour contract in many countries. The term "zero-hour contract" is British English for an employee who is on call with no set minimum hours or definite schedule who works under an employment contract which nevertheless meets the requirements of the Employment Rights Act 1996, a statute of the United Kingdom.
In the United Kingdom, under the National Minimum Wage Act 1998, workers operating under a zero-hour contract on stand-by time, on-call time, and downtime must be paid the national minimum wage for hours worked. Prior to the introduction of the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999, the flexibility provided by zero-hour contracts was often used to "clock-off" staff during quiet periods while retaining them on site so they could be returned to paid work should the need arise. The National Minimum Wage Regulations now require that employers pay the national minimum wage for the time workers are required to be at the workplace even if there is no "work" to do. Despite being guaranteed no hours of work employees subject to a zero-hour contract may be required to obtain permission of their employer before accepting other work.
- in the hotels and restaurants sector, 19% of all workplaces (up from 4% in 2004)
- in the health sector, 13% (up from 7%)
- in the education sector, 10% (up from 1%)
For domiciliary care workers, the incidence was reported to be as high as 55.7% of all workers during the period 2008–12.
Some commentators have observed that the number of such contracts may be under-reported, as many people may be confusing them with casual employment, and may not be reporting them as temporary. The Chartered Institute of Personnel and Development (CIPD), based on a poll of 1,000 workers, reported in August 2013 that as many as 1 million workers in the United Kingdom, 3-4% of the workforce, work under the terms of a zero-hour contract. Based on a survey of 5,000 of its members Unite, Britain's largest labour union, estimates that as many as 5.5 million workers are subject to zero-hour contracts, 22% of those employed privately. The survey, conducted by Mass 1, showed that zero-hour contracts were more prevalent in northwest England, among young workers, and in agricultural work. Often holiday pay was denied and in most cases sick pay. The National Farmers Union, which represents agricultural workers, supports zero-hour contracts as offering needed flexibility for tasks such as harvesting.
According to the CIPD research about 38% of those employed under zero-hours contracts considered themselves to be employed full-time, working 30 hours or more a week. 16% of those on zero-hours contracts felt they did not have an opportunity to work enough hours. About 17% of private employers used zero-hours contracts while they were used by 34% of non-profits and 24% of public employers. Zero-hours contract were frequently used by hotels, catering and leisure (48%), education (35%) and healthcare (27%).
Under UK law a distinction is drawn between a mere "worker" and an "employee," an employee having more legal rights than a worker. Whether a person working under a zero-hour contract is an employee or a worker can be uncertain; however, even in cases where the plain text of the zero-hour contract designates the person as a "worker" courts have inferred an employment relationship based on the mutuality of obligation between employer and employee.
Thus, when deciding whether a zero-hours contract constitutes a contract of employment, conferring employee status, the wording of the contract will not be determinative of whether there is, in practice, a mutuality of obligation. The tribunal will look closely at the reality of the agreement. If the reality is that there is a pattern of regular work which is regularly accepted, the tribunal may deem the contract to be one of employment.
Employers in the United Kingdom
Zero-hour contracts are used extensively in the private, non-profit, and public sectors in the United Kingdom. Sports Direct, a retailer, has 90% of its workers on zero-hour contracts while J D Wetherspoon, a pub chain, has 80%. Cineworld, a large cinema chain, also uses the contracts.
90% of McDonald's workforce in the UK - 82,000 staff members - are employed on a zero-hour contract. According to a McDonald's spokesperson all work is scheduled in advance with no employees being "on call" and meets the needs of workers who desire or need a flexible schedule.
A major franchisee of Subway also uses the contracts:
The company has no duty to provide you with work. Your hours of work are not predetermined and will be notified to you on a weekly basis as soon as is reasonably practicable in advance by your store manager. The company has the right to require you to work varied or extended hours from time to time.
The Subway workers are required a condition of employment to waive their rights to limit their workweek to 48 hours.
Buckingham Palace, which employs 350 seasonal summer workers, also uses them. The National Trust, a nonprofit organization which manages extensive historic sites and nature preserves in England, Wales, and Northern Ireland, which must deal with variable weather, uses zero-hour contracts but at the same benefits and pay as permanent employees. The Tate Galleries also use zero-hour contracts.
The Workplace Employment Relations Survey conducted by the government of the UK in 2004 and 2011 shows that the proportion of workplaces that have some employees on zero-hours contracts has increased from 4% in 2004 to 8% in 2011. The survey found that larger companies are more likely to use zero-hours contracts. 23% of workplaces that have 100 or more employees used zero-hours contracts in 2011, compared to 11% of those with 50-99 employees and 6% of those with fewer than 50 employees.
On 2 August 2013, the Daily Mail ran an exposé outing Amazon.com UK for "tagging" employees with GPS and subjecting them to harsh working conditions; describing the employees as "human robots". The newspaper stated that Amazon used "controversial" zero-hour contracts as a tool to reprimand staff.
Several independent colleges in London have part-time tutors working under zero hour contracts, these include MPW (Mander Portman Woodward) and others.
Workers subject to zero-hour contracts are subject to exploitation as they may be denied work at any time for any reason, including declining to respond to a demand to work. A refusal to work in any one instance for any reason can result in a prolonged period of lack of work. Due to the uncertainty of the workers' schedules zero-hour contracts present problems for workers with children due to the difficulty of arranging child care. The rapidly growing use of zero-hour contracts was the subject of a series of articles in the late July 2013 by The Guardian and as of 2013 was of concern to Parliament. Vince Cable, business secretary of the government, is considering closer regulation of the contracts but has ruled out a ban. Labour MPs Alison McGovern and Andy Sawford have campaigned to ban or better regulate the practice.
The Institute of Directors, a chartered organization of British business leaders, has defended the contracts as providing a flexible labour market, citing the lack of flexibility in Italy and Spain. Jacob Rees-Mogg MP, a former investment banker, has also argued that they benefit employees including students by providing flexibility and could provide a route into more permanent employment.
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- "Working at Sports Direct is no fairytale for part-timers"
- "Zero hours Britain: 'I didn't know week to week what I was going to get'"