Zero hours contracts: Consultation launched

What do we already know?

In our October 2013 Newsletter Zero-hours contracts: Consultation on its way… we discussed the controversy relating to zero-hours contracts and that the Government would be shortly consulting on the more concerning aspects of this type of contract.

What’s new?

Summary:  On 19 December 2013 the Government launched its consultation on zero-hours contracts.  The consultation paper is available here. As expected, the Government’s proposals stop short of calling for an out-right ban. It does however believe that abuse of zero-hours contracts by employers is possible, and proposes various measures to address this, including an “employer-led” code of practice.

The consultation will close on 13 March 2014.

Detail:  In its consultation, the Government makes clear it wants to “maximise the opportunities of zero-hours contracts while minimising abuse and setting out core standards that protect individuals”. To this end, the consultation looks at the issues, seeks evidence and invites views on possible options for the Government and employers.

The consultation identifies the main advantages of using zero-hours contracts for employers as being flexibility, supporting company expansion and retaining workers who have skills and knowledge of the business.

For individuals, the advantages of zero-hours contracts are said to be that they offer workers greater choice and opportunities to enter the job market, as well as offering flexible retirement plans.

According to the consultation, the two main concerns about the use of zero-hours contracts are exclusivity clauses and transparency. The consultation explores these two concerns.

• Exclusivity:  these clauses tie a worker to one employer even when there is no work available. The consultation proposes a range of options, including an outright ban on exclusivity, the issuing of Government guidance on the fair use of such clauses or doing nothing and relying on the existing legal framework.

• Transparency: the Government is concerned that some workers and employers may not be clear on the terms of a zero-hours contract and the corresponding rights. The consultation proposes improved Government guidance and model clauses (e.g. improving or creating new resources, such as online tools to calculate holiday, sick pay or redundancy entitlement, guidance on creating employment contracts or simplified guides to employment rights).  It also proposes an employer-led code of practice on the fair use of zero-hours contracts.

What do we think?

In light of the flexibility that zero-hours contracts bring to employers and workers alike, it is good news that the Government has no intention of banning such contracts.  However, as the Government (and all other political parties) seem determined to take some action in this area, we need to be ready for change.  The consultation has given us some clues as to what the change/s might be and watch this space for the outcome of the consultation and subsequent regulation and/or guidance.