The Pros and Cons of Zero Hour Contracts
You will learn
- How zero hour contracts can benefit employers
- The flexibility that they provide for both parties
- Why zero hour can be unpopular
Zero hour contracts are chosen by an employer when they want to create a flexible working environment which is beneficial for their business and its staff. Although they are not favoured by everyone, they can be a great solution for some companies, especially those in the hospitality sector, or where situations are constantly changing.
Despite being controversial and frequently criticised, there are some great benefits of these agreements. Evidently staff and employers are embracing them, so if you want to find out some more information about how they work, read below and discover the advantages and disadvantages of using these casual contracts.
What is a zero hour contract?
The Government explains a zero hour contract as:
- Staff are on call to work when you (the employer) needs them.
- Employers do not have to give staff work.
- Staff do not have to work when asked.
There has been much negativity surrounding the fairness of zero hour contracts for workers. Due to the fact they offer no assurance of hours, people argue that staff can be left suffering from financial problems and anxiety e.g., difficulty of getting a mortgage or finance. However, zero hour contracts can be a great option for individuals of all ages. People are not tied to work, and therefore they have the flexibility to choose a shift or refuse it. If people have other commitments like school or University, they can work around lessons. Similarly, if they have nothing else on their agenda, they are free to accept more hours.
Zero hour contracts are also great for employers, especially those who own a business which has unpredictable daily outcomes. Those who are, for example, from the restaurant sector, might not be able to predict that on a Thursday night they will have a full dining room, with numerous large parties. If this is the case, they will need some extra staff to work at the drop of a hat. In this scenario, zero hour contracts are a great option. I have a client who runs a cleaning company, and she has core staff on permanent contracts and a bank of staff on zero hours that she can call on when needed.
Yet another advantage of using zero hour contracts is that employers can keep hold of staff who may need to go from full-time work to part-time. If a business owner is very fond of a particular worker, then they might not need to replace them if they can no longer commit to long hours. This is also great for employees who may be able to keep hold of a job they love despite having other obligations.
This also works the opposite way, if an employer hires staff on a zero hour contract, but feels like they are performing particularly well, they can then hire them as a permanent member of the team. People who want to further their career, but only have a zero hour contract should not rule out promotion; if they work hard enough to become a valued member of the workforce, then their employment circumstances might become more permanent.
Another benefit of using zero hour contracts in the hospitality sector is that owners can hire extra staff as and when they need them. If a hotel is particularly busy during the summer months, then they may need some additional employees who can work flexible hours. However, during the months when a business is not swamped with guests, they can get by with just a few permanent members of staff.
As mentioned above, one of the main criticisms of zero hour contracts is that they do not provide any financial stability to those who are employed under them. Individuals have no guarantee of work, and therefore it can be a risky situation to be in. This is especially dangerous for those who have young children or teenagers: without the assurance of work, they cannot completely plan for the future or budget accurately. However, on the flip side, parents may actually prefer this option. If there is someone else in the household with a steady income, then the partner on a zero hour contract is able to choose the shifts that are most convenient, rather than struggling to juggle work and home life.
The main negatives surrounding zero hour contracts seem to be based on employees rather than business owners. However, individuals are opting in to these contacts, whether it is because they are also a University student who cannot commit too much time to a job, an individual who wants some extra experience, or someone with young children that wants to be in control of when they work, it is safe to assume that they do have some benefits for employees despite contributing to financial uncertainty.
Remember that employees on zero hours contracts still accrue holiday pay when they work, and potentially employment rights. In addition, it is no longer legal to have exclusivity clauses in the contract.