Zero-hours contracts

Zero-hours contracts

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How common are zero-hours contracts among your clients? 

CIPD chief executive Peter Cheese, said: “Zero-hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities.”

But with unions calling to ban them, is there a more serious problem here?

Replies (23)

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By ShirleyM
05th Aug 2013 13:10

See this thread ....

https://www.accountingweb.co.uk/anyanswers/question/notice-period

The person in question was working 60-70 hrs per week, but had a zero hours contract.

I do think the zero hours contracts are being abused in many cases, and is a side effect of high unemployment, as they know people will take the job, any job, no matter how bad the wages and/or the terms of employment are.

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By Robert Lovell
05th Aug 2013 14:20

Comment from the UK200Group

David Ingall, past president of the UK200Group, said: “One can understand the issues that arise around such contracts. Banning them may prevent some employers from having a flexible labour force but equally one does suspect that some employers are seeking to take advantage of a loophole.

“What is the answer? Perhaps limiting the period that an employer can keep staff on such a contract without offering something rather more permanent, but one could foresee abuse of that. Some staff have several of these contracts, slipping from one employer to another.

“Let's face it, though, good staff are worth proper contracts and if an employer treats people as unions allege then they don't deserve anyone.”

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By ireallyshouldknowthisbut
05th Aug 2013 14:56

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My assistant is on one. It works really well for the both of us.

She works when there is work, and on the odd occasion there isnt any she goes home. Also means she can do the same to me, she has time off whenever she wants. 

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Replying to andy.partridge:
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By B Roberts
05th Aug 2013 15:18

How does it work in reality ?

ireallyshouldknowthisbut wrote:

My assistant is on one. It works really well for the both of us.

She works when there is work, and on the odd occasion there isnt any she goes home. Also means she can do the same to me, she has time off whenever she wants. 

I guess that it can work fine in the above circumstances.

However, what about those employees who cannot afford not to work (presumabley many people on such contracts are lower paid).

Also, if the employee is free to  "take time off whenever they want to" then it could work out, however I have heard of situations whereby an employee declines a shift and they find that they are not asked again.

I do not understand how people are expected to arrange their finances and childcare etc. if they do not know if they are going to work tomorrow.

Also, how does this work with benefits / tax credits etc. ?

When you consider that Tesco offers "apprenticeships" in shelf stacking (presumably being funded by the taxpayer) and many graduates are fighting over unpaid "internships" it makes me really sad that as a country we appear to be going down the low skill, low pay route.

 

 

 

 

 

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Replying to andy.partridge:
By mrme89
05th Aug 2013 15:38

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ireallyshouldknowthisbut wrote:

My assistant is on one. It works really well for the both of us.

She works when there is work, and on the odd occasion there isnt any she goes home. Also means she can do the same to me, she has time off whenever she wants. 

 

I think in the above circumstances these types of contracts work well, but the circumstances described are in the minority.

 

The problems arise when the employer believes this contract is one sided, i.e. they can give no notice or work to the employee, but should the employee refuse a few hours they won't give you any further work. They want the flexibility of the contract to be one sided. There needs to be safeguards in place to ensure flexibility is available to both parties without risk of terminating the employment.  

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Mark Lee headshot 2023
By Mark Lee
05th Aug 2013 15:11

One reason for zero hours contracts that the press has missed

It is an alternative for 'employers' who need a flexible workforce of independent contractors. The more common route is to insist that the contractors provide their services through the medium of personal service companies. If these contractors are paid as self-employed workers the employer ("BigCo")will be attacked by HMRC for failing to apply PAYE.  

The zero hours contract is a more honest solution than the personal service one as the contract recognises that the individual is an employee when working for BigCo.  The personal service company 'solution' simply moves the risk to the individual and their company. IR35 then determines that their company must account for PAYE re work done as an 'employee' of BigCo.

Mark

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By ireallyshouldknowthisbut
05th Aug 2013 15:17

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@B Roberts, it works for us, but I quite agree its how you handle it.  You could use this in a very negative way too. For my is a big plus of working for my firm - flexiblity. But it has to run both ways to make everyone happy.  its not like she gets sent home after 2 hours in the office, that would be a good way to lose an assistant!

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By User deleted
05th Aug 2013 16:14

So what is to stop a catch-22 ....

Those on the dole etc. being offered a zero hours contract

Surely we then have a catch-22 situation, whereby if they turn the contract down they are deemed to have refused work

Whereas if the take the contract and come of the dole - and subsequently have zero hours work, then they are penalised by no income

Whatever choice is made they could be caught out

Or is something being missed here ?

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Glenn Martin
By Glenn Martin
05th Aug 2013 20:49

A lot of spin is put about this
But in reality the odds are heavily stacked in favour of the employer. The example giving above does work I suppose but in general all the benefits are with the employer. You can still offer flexible working to staff and give them a proper contract.

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By User deleted
05th Aug 2013 22:46

May be ...

... zero hours contracts should only be available to businesses that meet the small company criteria (regardless of whether sole-trade/partnership/llp or Ltd).

Do not allow other businesses to have them, or at least only allow a small percentage of the payroll to be on them.

As Glenzzy says, better to have a hours per year contract, say 1000 hours per year but at employers convenience, but minimum say 10 hours per week, maximum 60. If they have extra capacity, use a temp agency. With the zero hours they are getting the flexibility of an agency but denying it to the employee.

 

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Replying to accountantccole:
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By DMGbus
06th Aug 2013 09:07

Carmichael vs National Power case - no mutual obligations = s/e

Rob P wrote:

Work only when and if the employer wants you to.

Only get paid if you work.

No paid holidays, no paid sickness.

 

Didn't we have a system like this once before?  It was called slavery.

It is also still lawful - now called Self-employment.

I recall that the Carmichael vs National Power case established that with no mutual obligations such workers (Power Station tour guides in the quoted case) amounted to self-employment)...I wonder how long it will be before the big plcs who are ever so fond of zero hours contracts will try and establish that their workers on such contracts are self-employed (as decided in the National Power case).  I suppose the subtle difference with say supermarket workers is that the way that they do their job is regimented by rule books (for internal financial control purposes), whereas tour guides (in the National Power case) must have had a high degree of freedom as to how they conducted themselves.

 

 

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Locutus of Borg
By Locutus
06th Aug 2013 08:19

How many workers are unhappy with them?

According to the BBC News report only 14% of workers on zero hours contracts were actually unhappy with the arrangement.

I think they have a place in society, so long as the abuses are ironed out.

Apparently, some zero hour contracts restrict the ability of the work to get a second job, which I think is wrong, given the uncertain nature of the earnings.  Possibly there should also be a period of time after which the zero hour contract ends and a normal contract replaces.

A small business owner on TV that uses them (a direct mail business that has uncertain income) said that if they got banned, then she would have to get her workers from an employment agency instead.  The agency would obviously take their cut, so the workers would then only get minimum wage.  Who wins there?  Just the parasitic agency.

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By Steve Holloway
06th Aug 2013 07:54

Well like it or not ...

it is, along with agency workers and contractors, an absolutely intrinsic part of a modern economy. To be competetive with the rest of the world where labour costs are much lower the 'developed' economies must be able to organise their workforce to meet fluctuating demands. I am not sure why a community of accountants would throw their hands up in horror as I am sure we are predominantly employed by celints who have forsaken security and benefits for self-employment which is the ultimate zero hours contract!

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By Mature Student
08th Aug 2013 12:26

I have friends whose children are on zero hours contracts and it is awful.

Can work 30 hours one week, 6 the next. Benefits are overpaid and get clawed straight back from next payment, without you knowing you'd been overpaid until the clawback. Work more than 16 hours for two weeks on the trot and Benefits Agency insist you sign off. Yes, there is a so-called fast-track to sign back on in these circumstances, but it takes 4 weeks for the first payment, Not fast enbough in my book, and it's no wonder we now have food charities in this country.

One employer insists employees are available for shifts any time as the factory operates 24 hours. Refuse a shift and you either get sacked or made to wait a couple of weeks for your next shift. So you can't take a second job as you could if you were part-time at the first with more fixed hours. And at this factory, as it's concerned with food production, you can't come in when ill. So you phone in after the empployer mandated three days clear of symptoms to be told there's no work until maybe the end of the following week.

Yes, it's good when it's operated two-way, but in a lot of cases which often seem to be the case for younger people, it's very one sided for the employer who wants employees on tap with no come back or morals.

 

 

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By Rob Lelliott
08th Aug 2013 14:42

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I believe these contracts do play an important role in the recovery of the economy as they give small businesses the confidence to employ staff and try to grow, without having to worry about whether they will be able to survive if business takes a turn for the worse etc. However it is without a doubt abused by larger organisations.

As mentioned above it would make sense to restrict such contracts to smaller businesses thus avoiding this abuse to a certain extent. There could also be a rule which states that if an employee works on average at least 'x' hours a week for, say, 13 weeks (or even for 12 weeks out of 16 or similar) then it demonstrates continuing availability of work and therefore the employer is obliged to offer the employee a 'proper' contract. This would then avoid people being stuck on zero hour contracts long term for the same employer.

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Replying to lionofludesch:
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By B Roberts
08th Aug 2013 16:21

Proper Contract ?

Rob Lelliott wrote:
. There could also be a rule which states that if an employee works on average at least 'x' hours a week for, say, 13 weeks (or even for 12 weeks out of 16 or similar) then it demonstrates continuing availability of work and therefore the employer is obliged to offer the employee a 'proper' contract.

In reality, a "proper contract" isn't worth the paper it is written on for at least 2 years - within this period an employer can legally just end an employment.

That is as long as the reason isn't due to a protected characteristic (although due to recent changes in law with regards to employment tribunals even this will be difficult to get to court due to increased costs, and then you have go to prove your case).

 

 

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By User deleted
08th Aug 2013 16:38

not strictly true ...

... yes it can be ended, but there will still be minimum hours, notice periods, sick and holiday pay provision etc. etc.

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Replying to lionofludesch:
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By Rob Lelliott
08th Aug 2013 16:43

Thanks...

Old Greying Accountant wrote:

... yes it can be ended, but there will still be minimum hours, notice periods, sick and holiday pay provision etc. etc.

Thanks OGA this is what I was thinking of when I made the comment.

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Replying to lionofludesch:
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By B Roberts
09th Aug 2013 08:54

Sick pay, Holiday pay - how calculated ?

Old Greying Accountant wrote:

... yes it can be ended, but there will still be minimum hours, notice periods, sick and holiday pay provision etc. etc.

 

Genuine question (I don't have any experience of these contracts).

If a zero hours contract does not pay an employee when they do not work, how are sick pay and holiday calculated ? (also, not sure about the minimum hours).

 

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Replying to Justin Bryant:
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By User deleted
09th Aug 2013 12:46

You miss the point ...

B Roberts wrote:

Old Greying Accountant wrote:

... yes it can be ended, but there will still be minimum hours, notice periods, sick and holiday pay provision etc. etc.

Genuine question (I don't have any experience of these contracts).

If a zero hours contract does not pay an employee when they do not work, how are sick pay and holiday calculated ? (also, not sure about the minimum hours).

What was said was, if you are on a zero hours contract for say 3 months, and in that time you worked an average of 20 hours a week, you should be entitled to go on a "proper" contract specifying you were contractually entitled to be paid for 20 hours per week - i.e. zero hours are a temporary contract whilst actual requirements of employer are not known. Once a regular pattern of requirement is established, it is only equitable the contract should reflect that.

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By GuestXXX
17th Mar 2015 16:21

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By leon0001
09th Aug 2013 12:37

Mutuality of obligation?

It would appear that there is no obligation for the "employer" to provide work.

No mutuality of obligation implies  failure of a fundamental employment status test.

Does this mean that any earnings under such a contract should not be subject to PAYE?

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By John Wheeley
10th Aug 2013 09:22

How to set up zero hours contract ?

A client wants to take on an additional employee on a 'zero hours contract'. (to help with holiday cover etc).  How is it done ?  Is there a website with (free?) specimen contract of employment ? 

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