According to a recent report published by the Trade Union Congress (TUC), workers on zero hours contracts earn on average £300 per week less than permanent staff.
The average weekly pay for those working under zero hours contracts are £188 in comparison with an average weekly wage of £479 for permanent staff.
The report also found that workers on zero-hours contracts are five times more likely to miss out on statutory sick pay, because of their lower take-home pay. This demonstrates a significant and alarming disparity in wages between "casual workers" and permanent staff.
Zero Hours Contracts Explained
Zero hours contracts are employment contracts between an employer and a worker which do not guarantee any work to the worker. Essentially, the employer is not obliged to provide the worker with any minimum working hours, and the worker is not obliged to accept any of the hours offered.
A zero hours contract is different to other employment contract arrangements. Therefore, it is important that both the employer and worker are aware of their duties and obligations under the contract.
One of the key issues with zero hours contract is that because there is no requirement for an employer to offer work and no obligation for a worker to do any work, a worker is unable to claim various statutory rights e.g. the right to receive statutory maternity / paternity pay and the right to request flexible working. This often leaves workers in a difficult and vulnerable situation as their rights are so limited.
It seems that increasing numbers of workers are becoming "trapped" in jobs with zero hour contracts which often offer little or no job security. In the current changeable economic climate, it is understandable that some workers would prefer to obtain some work under a zero hours contract rather than remain unemployed and have no work at all. However, some employers have been using this situation to their advantage by offering these contracts to exploit workers.
What's Being Done to Improve the Situation?
It is reported that Sports Direct, recently settled a claim over its use of zero-hours contracts. Under a settlement agreed before a Tribunal, Sports Direct will have to make clear in job adverts, contracts and staff rooms that it does not guarantee work, sick pay or holiday pay in the terms under which the majority of its staff are employed.
This case and others have received widespread interest from Members of Parliament, in particular Labour Leader Ed Miliband. Consequently, he has promised that under a new Labour government, he will bring in new laws to tackle the problem. Labour has set out a number of interesting proposals that could benefit zero hours workers (which could be implemented after May 2015) so watch this space!
In December 2013, the Department for Business Innovation and Skills (BIS) launched a consultation on the pros and cons of zero hours contracts. Over 36,000 organisations took part in the consultation which ended on 31 March 2014 and BIS subsequently published its response to the consultation.
It was decided that exclusivity clauses in employment contracts would be banned. In other words, this means that employers will no longer be able to insist that their workers work only for them. Workers will be free to work for more than one employer which would enable them to work enough hours to earn a decent wage.
This is welcome news for the 125,000 workers who currently work under a zero hours contract containing an exclusivity clause. BIS has also agreed to provide additional guidance relating to zero hours contracts including a code of practice by the end of this year. There is also a second consultation in the pipeline to consider the steps that need to be taken to prevent businesses from evading the ban on exclusivity clauses.
In June 2014, the Small Business, Enterprise and Employment Bill 2014-15 was introduced to the House of Commons (the Bill). The Bill will implement the proposals which seek to prevent the abuse of vulnerable workers who work under zero hours contracts. The Bill will provide a definition of zero hours contracts and make exclusivity clauses in zero hours contracts unenforceable. It will also give the government wide-ranging powers to make further provisions in relation to zero hours contracts in the future. The Bill is still making its passage through Parliament and at this stage it is not known when the government intends the Bill to come into force.
What happens next remains to be seen but it's clear that employers should actively monitor their need for zero hours contracts and only offer them as and when appropriate. In addition, where these contracts are offered, there needs to be transparency and clarity as to the terms and implications of the contract.
If you would like to find out your rights in relation to a zero hours contract, you should seek expert legal advice from an Employment Solicitor.
Zero hours contracts is just one of the issues the TUC intends to highlight as part of its Decent Jobs Week campaign. The campaign is taking place around the UK from 15 to 21 December 2014. For more details see http://decentjobsweek.org/about