AC Buzz

The Facts about Zero Hour Contracts

  • Zero hour contracts webNo legal definition of zero hour contracts exists
  • There were 1.8 million contracts that didn’t guarantee any hours in August 2014
  • About 697,000 people said they were employed on a zero hour contract in October-December 2014
  • The number of people on zero hour contracts is probably increasing, but it’s hard to say by how much
  • Your employment rights depend on your status, but you will be entitled to the minimum wage and paid holiday
  • The government is looking at banning exclusivity clauses which prevent you from working for other employers

(By Sam Ashworth-Hayes) From anecdotes about workers collapsing on the job to arguments about numbers, zero hour contracts are an emotive topic for the public, press and politicians alike.

What are zero hour contracts?

According to the government, “no legal definition” of zero hour contracts exists. It’s an informal term for a contract where no work is guaranteed. Instead of set shifts, the employer offers you work when they have it, and you may accept or refuse it. That said, some people can be on what might be described as a ‘zero hours contract’ but not be working to that description in practice.

I’m on a zero hour contract. What employment rights do I have?

sports directYour employment rights depend on whether you’re defined as an employee, a worker or as self-employed.

The distinction between employees and workers is nuanced. One difference is that employees have contracts that state that their employer must offer them work in exchange for pay, and they must do the work. This is not the case for workers, who can turn work down. This means that most people on zero hour contracts will be workers.

However, whether or not you’re an employee or a worker will depend not just on what’s in your contract, but what happens day to day. While a contract might say that you’re under no obligation to work, if you’re ‘punished‘ for not accepting all the hours you’re offered, or consistently work a set number of hours, then a tribunal might decide that you’re actually an employee.

Workers are entitled to the minimum wage, paid holiday, rest breaks and protection against discrimination, overwork and unlawful wage deductions.

Employees have all the rights that workers have. Additionally, they are entitled to things like protection against unfair dismissal, redundancy pay, a minimum notice period and time off for emergencies.

What about exclusivity clauses?

_81748036_174378006An exclusivity clause in a contract means that you can’t work for another company. Which is a problem if you don’t get enough work from your sole employer—who isn’t obliged to offer you any.

In response to these concerns, the government is currently looking at banning exclusivity clauses in zero hour contracts.

The Industrial Relations body ACAS say that ‘effective exclusivity’ is also an issue. This is where no official exclusivity clause exists, but workers may feel unable to seek employment elsewhere or turn down work from their current employer for fear of losing the hours they already have.

The numbers aren’t clear

There were roughly 697,000 people employed on zero hour contracts in October-December 2014. But the lack of a legal definition means that you can get a range of estimates.

The Office for National Statistics has two measures, one for the number of contracts that don’t guarantee a minimum number of hours (measured by the Business Survey), and one for the number of people employed on zero hour contracts (measured by the Labour Force Survey). These are not equivalent: people often have more than one contract, and the two use different definitions of zero hour contracts.

Counting Contracts

JS58705268The Business Survey counts the number of contracts with no guaranteed minimum hours. These won’t all be zero hour contracts as some other arrangements like casual contracts or ‘hours to be notified’ will be counted by this definition.

1.8 million contracts met this description and provided work in the two weeks from 11th August 2014. Because this figure is an estimate from a sample, the actual number of contracts is likely to lie between 1.4 million and 2.2 million.

There were an additional 1.4 million contracts that didn’t provide work in this time—and so weren’t counted. But some of these could well be ‘active’.

The survey could be missing those held by people with multiple zero hour contracts who work on them at different periods, or people who may have found a job elsewhere but not cancelled their contract. Or the worker might simply not have been offered work (or have been unable to accept it) in that two week window.

Counting people

The Labour Force Survey (LFS) asks people whether their main form of employment can be described as being on a zero hour contract.

The survey found that 697,000 people were employed on a zero hour contract in October-December 2014— just under one in 40 of all people in employment. Again, this figure comes from a sample so the actual number of people on zero hour contracts is likely to be between 630,000 and 765,000

Some people have more than one job, and will hold more than one zero hour contract. This is partly why the figure from the LFS is quite a lot lower than the Business Survey estimate, which counted the number of contracts.

The trends aren’t clear either

This is only the second Business Survey estimate published, and the figures aren’t seasonally adjusted. The ONS points out that we can’t directly compare the August 2014 estimate of 1.8 million contracts with the January 2014 estimate (1.4 million).

We can say a bit more about the number of people working on zero hour contracts as counted by the LFS. Again, the data isn’t seasonally adjusted, so it’s best to compare each period with the same time in the previous year.

There were 697,000 people on zero hour contracts in October-December 2014, compared with 586,000 in October-December 2013. The proportion of workers on a zero hour contract in October-December from 2000-2012 was under 1%. In 2013, it hit 2%. In 2014, it was 2.3%.

However, these numbers are not directly comparable.

Zero hour contracts have become news. Because the LFS relies on people knowing their contract type, raised public awareness can lead to an increase in people reporting that they are on zero hour contracts even when the number of people actually on zero hour contracts is unchanged.

What else do we know about zero hour contracts and those on them?

  • People on zero hour contracts tend to be either relatively young or old. Many are students: 17% of people employed on zero hour contracts in October-December 2014 were in full-time education.
  • Zero hour contracts provided about 25 hours work a week, compared with the 37 hours average for all people in employment in October-December 2014.
  • 34% of workers on zero hour contracts in October-December 2014 considered themselves to be full-time.
  • 34% of workers on zero hour contracts wanted more hours in October-December 2014, compared with 13% of other workers.
  • Working hours are flexible. 38% of people on zero hour contracts worked their usual hours in the week before the LFS interview, compared to 56% of other workers in October-December 2014.
  • Interestingly, while 14% of people on zero hour contracts didn’t work in the week before their LFS interview, neither did 10% of people who weren’t on zero hour contracts.
  • About 23% of people on zero hour contracts worked in ‘Accommodation and food’ in October-December 2014. Another 22% worked in ‘Health and Social Work’. Comparatively few worked in ‘Information, Finance and Professional’.
  • Larger firms were the most likely to have people on zero hour contracts. Half of companies with over 250 people had employees on zero hour contracts in August 2014, compared with 1 in 10 businesses employing under 20 people.

Source: Full Fact.

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