Zero hour contracts have been in the news a lot recently with Clapham & Collinge reporting on them back in March. Whilst they can offer the employee flexibility and a balance between home and work life, they can also exploit the worker. Contractual loopholes mean the employer may avoid offering numerous benefits to their employees.
Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) chief Matthew Taylor is currently heading a review into modern employment practices, including the 'gig economy'.
The current government had been looking into possible changes to make precarious employment more secure. As a result worker's rights have become the battleground of the general election, with each political party campaigning for something different. So what are the major parties offering?
- Wage rises
- Protection for workplace pensions
- Employee representatives on boards
- End zero-contract hours
- Union representation in companies
- Workers in the 'gig economy' are assumed to be employees unless the employer can prove otherwise
- £100 per week allowance for entrepreneurs
- Review of business rates
- Abolishing the public sector pay cap
What does this mean for workers and businesses?
Whilst the changes proposed by each party come at the benefit of the worker, they have been deemed counter-productive to businesses – especially small businesses where no mention of support to back up these proposals have been mentioned.
Nova Fairbank, public affairs manager at Norfolk Chamber of Commerce explained that 'low pay and low social mobility won't be solved just by driving up wage rates'.
For example, if the national minimum wage is continually increased in an economic climate that may not be able endure it, there may come a point where no employer could support the cost. Initially many companies will have the means to increase pay for their employees, however small business or start up business may struggle to do so. This could hinder expansion in any industry, and wage increases could ultimately be funded by the sacrifice of other employee benefits.
Salena Dawson who is the East Anglia regional chairman of the Federation of Small Businesses stated, 'Simply adding a new set of statutory employment regulations is not enough. With EU funding set to end and no regional development spend budgeted at the national level beyond 2021, small firms are staring into a business support black hole'.
Pre-empting any possible changes made by whichever party or parties should form a government, fast food chain McDonalds announced last month that it is to offer all UK staff the option of whether to have a zero hour contract, or a fixed hour's contract. Currently in the UK McDonald's employs around 115,000 workers, most of whom are on a zero hour contract.
Paul Pomroy, the UK CEO has explained that a trial regarding contracts arose from staff feedback stating 'the vast majority of our employees are happy with their flexible contracts, but some have told us that more fixed hours would help them get better access to some financial products.'
Whilst the fast food chain has said employees on zero hour contracts should be offered up to 35+ hours of work a week (where possible), those that are on fixed contracts will have added benefits such as:
- Annual leave
- Sick pay
- Pension scheme
Whilst only 20% of staff that were part of the trial chose to move to a fixed hour contract, Mr Pomroy has stated that both existing employees and new starters will be included in the roll-out. The franchise will begin rolling out fixed hour contracts over the next 12 months.
If the roll out of the contracts is a success for McDonald's and their employees then it may be that we see more companies trialing and adopting this approach as a way to satisfy the needs for all employees and avoid any consequences from the result of the snap-election.
If you are an employee and wish to obtain advice on your employment contract, or if you are an employer and would like to find out whether zero hour contracts are right for your business, contact us today on 01603 693500 or email us using the 'Make an enquiry' form. Appointments available at our Norwich, North Walsham, Brooke and Sheringham offices.
For more information on Employment Law for Individuals please see our Employment Law page.
For information on Employment Law for Business please see our Employment Law page for Businesses.