​Zero hours contracts – it's not all doom and gloom

​Zero hours contracts – it's not all doom and gloom

Zero Hours contracts have recently appeared in the news again, but not necessarily in a negative light. The amount of Zero Hour Contracts have reached a record high with 2016 records showing a 14% increase in these contracts compared to 2015. The new figures show an increase but over the last 6 months, that increase is slowing down.

The analysis offered three potential reasons for this:

  • As Employment figures reach an all-time high, workers and employees can be fussier about the contracts they enter into. As the UK comes out of the financial crisis employers will be less likely to contract on zero hour contracts;
  • Furthermore with more people in Employment, there will be a decrease in the new jobs being created. This will affect both full-time and zero hour contracts alike.
  • As recently highlighted by the news, the final reason is business reputation.

Exploitative or beneficial?

Zero-hour contracts and the flexible working ideology have come under fire in recent news, which has highlighted the potential exploitative nature of zero-hour contracts. Whilst the contracts are often associated with those on low incomes, they work well for those seeking a flexible working environment. Many people contracted on this basis have full time employment as well but use the flexible working environment to make extra money on top of their salary as and when they want to. For most in this position, without flexible zero-hour contracts this kind of extra income would be unattainable.

There is of course a flip side, as some people have zero hour contract work as their only source of income. These workers are often underpaid and come from low income families. It is important to recognise that 46% of workers on zero hour contracts are aged between 55-64. These workers are likely to benefit from flexible working conditions to allow an easy transition from full-time work to retirement.

Others who may benefit from these types of contracts are students, parents and those caring for family members. The recent publication of these findings are to let the public know that not all zero hours contracts are negative and exploitative. The figures have also shown that 1 in 6 zero hours contracts workers are in the 3 highest paying occupational groups, meaning that they will not come provide a low income.

What's the difference between self-employed workers and Zero Hours contracts?

Zero Hours contracts are still employees, despite there being no guarantee of work. The employer will still pay NI and Income Tax for the employees on a pay as you earn basis.

There are however tax benefits for those who wish to be classified as self-employed. The self-employed are responsible for their own tax but pay a lower rate of NI and Income Tax than those in Employment. The Government sought to deal with this in the recent spring statement but instead of tackling the savings that big corporations make by having self-employed rather than workers or employees, the Government raised taxes on the self-employed. The change is set to bridge the gap between the rights and benefits of being employed or self-employed following the recent UBER and Deliveroo decisions.

This change in tax is a starting point to dealing with a loss of taxation which costs the Government billions each year, but what does it mean for the average self-employed person in the UK?

Well, given the tax rate is rising by 1% maybe it will be a change more of principle than of lasting effect, however we will have to wait and see once the change has taken effect.

If you have been affected by any of the above or are concerned regarding your employers behaviour towards you or if you are an employer and would like to speak to an expert about whether Zero hours 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.