Zero Hours Contracts

In December last year the UK Government launched a consultation into the use of zero hours contracts.

In the UK, estimates suggest that between 250,000 and 1 million people are employed on zero hours contracts. The leisure and retail sectors are probably the biggest users of this form of employment with reports that MacDonald’s employs 84,000 people on this basis, Burger King 20,000, Sports Direct 20,000, Boots Chemists 4,000 and Cineworld 3,600.

However, it is not limited to the consumer end of life.  Apparently, 24,000 University academic and other staff are on zero hours contracts. This level of usage has raised concerns about fairness and a political debate has begun. What are zero hours contracts and how are they treated around the world?

What are zero-hours contracts?

Zero-hours contracts are not defined by law. Under such contracts companies agree to offer work shifts to workers whenever the business need arises. The company does not have an obligation to provide work. Workers are usually not obliged to accept shifts. They are only paid for the hours they work.

The increased use of zero-hours contracts is partly due to the effects of the recession and the costs of employing full-time staff. These contracts provide flexibility for the employer to engage more staff when necessary, and as such, increase efficiency and reduce costs. They can also be popular with employees wanting more flexible work arrangements.

Why are they criticised?

Companies have been criticised for using these contracts to exploit staff. In some situations shifts are not given to workers as a form of punishment for allegedly poor performance or for refusing prior shift offers. Certain employers have removed hours from workers to avoid a formal redundancy process. Others oblige workers to accept proposed shifts, thereby eliminating the mutual flexibility element. Workers are denied the same protection provided to employees in the form of sick pay, holiday pay and job security whilst sometimes being given similar obligations. For example, some workers are not permitted to work elsewhere. On occasion, workers have been called to work, told to wait for an hour and then sent home without pay.

What is likely to happen to them in the UK?

Several trade unions and parties have called for a complete ban on zero-hours contracts. However, an absolute ban is unlikely due to the flexibility they provide to the labour market. Such a ban could raise unemployment as companies will be forced to reduce their work force. Instead, greater regulation of these contracts is expected. The UK Labour party has said it is intending to minimize the potential for exploitation by removing obligations on workers to accept shifts and prohibiting the use of exclusivity clauses.

Zero-hours contracts in the EU

Zero-hours contracts are NOT permitted in: Austria, Belgium, Czech Republic, Denmark, France, Germany, Hungary, Italy, Poland and Spain. There is an uncertainty as to their validity in Sweden. Generally they are not permitted under Swedish law but may be agreed by collective bargaining.

Zero-hours contracts are allowed in the following countries:

Ireland – employees are entitled to be paid minimum 25% of the contract hours they were required to be available for work, or 15 hours work, whichever is the lesser period.

Netherlands – provided important particulars are confirmed in writing, such contracts are permissible for the first 6 months of employment unless extended by collective bargaining. After 3 months, the agreed work hours are presumed to be at least the average work hours until this point.

Switzerland – the employee is to be remunerated full pay during standby at the business premises and partial pay for standby at home. Also, part-time workers are allowed the same individual statutory rights as full-time staff.

Zero-hours contracts in Asia

China – zero-hours contracts are not allowed. From July 2013 there is also a restriction on the employment of agency staff. Employers can only hire agency staff up to a certain percentage of their total staff. Agency staff can only be temporary, auxiliary or substitute workers.

Hong Kong – zero-hours contract workers are commonly referred to as casual employees. Under a casual work contract, the employer is not legally obligated to offer work. Conversely, the employee can refuse to take a shift as there is no mutuality of obligations. However, when employed for at least 40 hours per week for four weeks or beyond, a casual employee may qualify for labour law protection under the Employment Ordinance.

Malaysia – zero-hours contracts are not specifically regulated nor forbidden by any legislation. Contracts where the employee is engaged in long hours of inactive or stand-by employment are recognised by law. As such, zero-hours contracts would be subject to the same rules as ordinary contracts.

Singapore – zero-hours contracts are not outlawed by the Employment Act. 

Saudi Arabia – zero-hours contracts are not customary but there are no express prohibitions on their use. Provided both parties are in mutual agreement, there would be no grounds to declare them invalid. 

United Arab Emirates – zero-hours contracts are not prescribed by law.