Abuse of Zero Hours Contracts – Zero Tolerance?

The use of zero hours contracts remains a hot political topic, particularly in light of David Cameron’s recent grilling by Jeremy Paxman in the lead up to the General Election. Paxman asked the Prime Minster how many jobs created during the coalition’s time in office were zero hours contracts, to which he replied “about one in 50 jobs are zero hours contracts”. He said these contracts are useful to people such as students who appreciate the flexibility they give them. 

Under zero hours contracts the employer does not guarantee to provide work and only pays for work actually done. Cameron also defended the use of zero hour contracts, explaining that his government has banned the use of exclusivity clauses in these contracts – but is this enough to relieve concerns over abuse of zero hour workers?

The problem of abuse - background

Over the past year zero hours contracts have been heavily criticised, mainly for the use of exclusivity clauses which prohibit workers from finding additional work to boost their hours. The government’s announcement that it planned to ban exclusivity clauses in zero hours contracts prompted widespread concern that employers would be able to avoid such a measure fairly easily, for example by offering no work or fewer opportunities to individuals who also undertake work elsewhere. In light of such concerns, the Government issued further consultation to “ensure that any potential loopholes that could be used to avoid that ban are closed”.

The latest proposals 

The government has recently published its response to the latest round of consultation and has issued draft regulations containing anti-avoidance measures. In summary the key proposals are to extend the exclusivity ban to low-income contracts (“prescribed contracts”) as well as zero-hour contracts and to give workers the protection of being able to bring tribunal claims if they are subjected to detrimental treatment as a result of also working for other businesses. In addition, there will be financial penalties for employers seeking to avoid the ban.

Problem solved?

Whilst such changes appear to send out a clear message of “zero tolerance” and will be welcomed by critics, it remains to be seen whether they will have the effect intended.

It is difficult to see how a zero hours worker could afford to enforce their rights by bringing a claim in light of the current employment tribunal fee regime, although they may qualify for fee remission. Furthermore issues still remain over abuse (sometimes inadvertent abuse) that arises from the lack of information about zero hour contracts. These contracts come in a variety of forms, and do not necessarily mean that the employer has absolutely no obligations to the worker – it depends on how the contract is drafted and how it is operated in practice. In some cases this may result in the zero hours worker having full employment rights. Confusion can arise on both sides therefore over calculating rights, and other day to day issues such as entitlements to benefits and holiday.

The latest government proposals do not address these concerns and appear to leave the development of industry led codes of practice to business representatives and unions.

No doubt the latest changes will have some deterrent value for businesses considering imposing exclusivity or taking other measures to prevent zero hours workers from working for other organisations, but in light of the above this alone is unlikely to stop forms of abuse. Perhaps a stronger deterrent is the recent trend of businesses being “named and shamed” in the press. Sports Direct for example was branded a “terrible place to work” last year by Ed Miliband and so reputational issues are likely to be in the forefront of many employers’ minds.

However pending further clarification around zero hours contracts, this area looks set to continue to be a source of confusion, abuse and potential claims.