Zero hours: lazy management or mutually beneficial?

Are there really benefits to zero hours contracts for both employers and employees, asks Heather Greig-Smith, or is it a case of poor planning?

2204004654_064547affc_oZero hours contracts can play a positive role in creating flexibility, says CIPD chief executive Peter Cheese. As someone who has experienced the frustration of being in one, albeit briefly, I’m not sure the positivity is worth the downside.

My own experience was not in the UK but in Australia. Despite being scheduled for shifts, I was required to call in and check if they needed me only hours before showing up. More often than not, they didn’t. No shift; no money. The promise of work kept me from looking elsewhere, convinced things would pick up when I’d proved myself. They didn’t.

Power play

And there is the key problem with zero hours contracts – they’re all about power and shifting the risk from employer to employee. While they can be manageable when there is generally plenty of fluctuating work and the employees are in demand, they are open to abuse – particularly in lower skilled retail and hospitality sectors.

The CIPD’s own statistics show that 48% of hotel, leisure and catering companies use zero hours contracts. How many of those employees chose a zero hours option? The chances are there was nothing else on offer, which makes it far from the mutual decision some are making it out to be.

Ben Wilmott is head of public policy for the CIPD. He says the organisation has concerns and wants to examine the zero hours phenomenon to see if it really can benefit both employer and employee. The CIPD plans in-depth interviews with all parties over the summer to ascertain this and to draw up good practice guidelines for an autumn report.

“If you are not relying on [the work] for your basic standard of living: if you are a student, or have caring responsibilities, or are an older person looking to downsize and supplement your pension, it may be a win-win,” he says.

Annualised hours

But even if zero hours contracts are good for some, the damage they do to others may outweigh the positivity. Couldn’t many of the advantages employers enjoy through use of zero hours contracts be achieved in other ways? Would a minimum number of hours a month or a year be so difficult to implement?

Wilmot agrees. “The point about annualised hours is a good one. One per cent of the UK workforce is on annualised hours and that number isn’t really shifting. It always surprises me that they aren’t used more widely,” he says, adding that they are employed commonly and effectively in Germany.

Maybe zero hours contracts just come down to bad planning. If Tesco can work out how many ice creams we’re going to eat weeks and months in advance, why can’t businesses plan their work pipelines more effectively?

The Recruitment and Employment Confederation (REC) takes a strong line on the issue – arguing that there is nothing inherently wrong with zero hours contracts and that bad experiences are a result of bad management, not the contracts themselves.

Kevin Green, REC chief executive, said it would be ‘ridiculous’ to ban the contracts. He said: “To operate efficiently and fairly there needs to be honest and open communication and clarity on what hours and pay the individual should expect. Employees shouldn’t feel like they have to sit by the phone waiting to be told when their next shift will be, that is simply bad management. If businesses treat their workers badly they will lose good employees which wouldn’t be in their own best interests.”

He added: “They allow employers to respond to peaks and troughs in demand that exist in many sectors such as driving, hospitality, tutoring and retail… Flexible work contracts allow businesses to handle fluctuations in demand and the opportunity to vary the hours they work can be good for people who don’t want to commit to a daily nine-to-five routine. For instance, data from the Resolution Foundation showed a quarter of people working on zero hours contracts are full-time students. Other people might have caring responsibilities, additional work with another employer or simply be looking for a particular work-life balance that makes sense for them.”

It is certainly possible to envisage a world where zero hours contracts work well for a number of people, but it’s hard to imagine one where no employer abuses it. Zero hours contracts exist for the reason that there may not be any work and the employer is unable or unwilling to take that risk.

The fact that low paid and vulnerable people are more likely to end up in these kind of contracts should be making employers uncomfortable.

Image credit: http://www.flickr.com/photos/cidsoe/

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