A zero-hours contract is an employment contract where there is no requirement of the employer to provide the employee any specific number of working hours. Also, the employee is not guaranteed a set number of working hours. The employee is not obligated to take any hours that he or she is offered. Therefore, the employee is only paid for the hours that they are needed for. These hours may be changed on a daily or weekly basis. Because there is no commitment for a specific number of hours to be worked, the employer is not on the hook to pay for employee benefits. The employer can still offer employee rewards if they choose, but it is at their discretion.
Since a person on a zero-hours contract has no set schedule, they have no idea when they will work next. This fact makes employee engagement very low, since it is hard to have a positive emotional attachment to a job that you are not working at for days or even a week at a time.
Zero-hours contracts have some similarities to small-hours contracts, where an employee is promised a small amount of hours, with the hope of getting more if they are offered. However, they differ in the sense that the latter guarantee a minimum amount of hours that the employee will receive.
While there is no hard data that can connect the rise in zero-hours contracts with the rise in unemployment rates, the two may be linked. There are also those who would argue that zero-hours contracts have benefited employees during the downturn in the economy. This is because it has enabled many otherwise unemployed people to remain employed, thus avoiding being out of work for an extended period of time.
Employee relations and rights
Zero-hours contracts have also had their impact felt in workplaces throughout the country. One of the biggest concerns is in the area of employee relations and rights. In certain companies, a management tool that is commonly referred to as ‘zeroing-down’ is used as a way to intimidate employees. This is when employees become afraid to complain about various problems in the workplace, such as unsafe working conditions or unfair treatment, because that are worried that their hours will be reduced if they speak up. This problem is only heightened by the fact that a large number of the employees on zero-hours contracts are earning low wages. Thus, they feel powerless to begin with.
Quality of service
Zero-hours contracts has also had a direct impact on morale and staff turnover at many workplaces. These factors make it hard for a business to maintain a staff that is well-trained and high quality. This is an especially large concern in social care sectors where it is essential to have employees that meet a very high standard.
The interaction between the tax credit system and variable hours of work can be a major source of concern for many employees on zero-hours contracts. Since April 2012, a person needs to work a minimum of 16 hours per week to qualify for a Working Tax Credit. WTC eligibility is based on the person’s regular working hours. These are calculated based on how much the person ‘regularly, usually or typically’ works. However, this system presents problems, as it does not allow hours to be averaged out over a period of time. Therefore, coming up with an accurate estimate can prove difficult.