It’s about time the government overhauled zero-hours contracts

Here, Jonathan Richards, CEO at breatheHR, highlights why the governments proposal to overhaul zero-hours contracts will help SMEs.

Clint Eastwood famously said, ‘What you put into life is what you get out of it.’ And this couldn’t be truer than when it comes to employees. The more business owners invest in their people – with training, opportunities and responsibility – the more they will get out. Simple.

This is why I’m pleased the current government has launched an inquiry examining zero-hours contracts and calling for those workers to be given the ‘right to request’ a move onto fixed hours if they want to.

Zero-what?

In a nutshell, zero-hours contracts allow businesses to employ people without any guarantee of actual payable work. They are only called into work as and when they are needed – often at short notice. Although they are given the same legal rights as permanent workers and entitled to holiday – sick pay is often not included.

Over 905,000 British workers are now employed on zero-hours contracts with most holding down more than one job, according to the Office for National Statistics. And this trend appears to be on the rise as this number has increased by 101,000 since last year.

This is a staggering amount of people in the UK who don’t have any guaranteed job security – 2.9 per cent of the workforce. It’s no surprise that it’s become such a hot and controversial topic for many.

See also: What sort of contract will I need if I want to employ staff on a flexible basis?

In fact, the Labour party pledges to enforce an outright ban on them if they are elected on the 8th June – something they have been trying to roll out for some time now. However, Labour might be too late as this new ‘right to request’ fixed hours’ initiative could be used by some of these workers, presenting enormous benefits.

Although high on the news agenda, there is still much confusion around what a zero-hours contract is and secondly what rights those workers have.

Is zero-hours the answer to flexibility demand?

Of course, for some people flexible contracts work well – students wanting to earn a few bob part-time being a prime example. Similarly, for those budding entrepreneurs just starting out and are unsure what the next month will hold for their business, let alone the next year, hiring someone on a flexible contract can reap clear cost-cutting advantages of getting an extra pair of hands, without the full commitment of a permanent employee. I don’t blame them, the odds are against SMEs given that four in ten small businesses don’t make it past five years.

And starting a business is a massive learning curve. You know what you’re doing and why you’ve set the business up, but everything that goes with that, all of the accounting, the property – not to mention the bureaucracy – isn’t something you anticipate will take up as much of your time as it does.

Support is critical to ensure these startups last. Especially at a time where foreign hubs like Berlin and Paris are actively poaching UK startups.

But as companies scale up, business leaders need to remember that Eastwood mantra. If they are hiring people on this flexible basis there will always be a cap on how much they get out of the relationship. After all, it takes two to tango.

By and large, people need stability, not only to be able to pay bills and mortgage repayments. For instance, CIPD’s research revealed 16 per cent of zero-hours workers said their employer often failed to provide them with sufficient hours each week. A lack of stability can also have detrimental impacts on individuals. For many, what people do for a living and their work is a big part of their identity.

So, what does this increasing shift to more and more zero-hour contracts have on wider society?
The business landscape is changing rapidly. People no longer just want greater flexibility, they’re demanding it. But zero-hours contracts aren’t the answer.

It’s far more productive to have someone on guaranteed hours. For the employer, managing zero-hours workers is trickier as they have less commitment, often less training and little team cohesion.
In essence, your employee won’t be putting in much effort or getting much out for return. And for the employee, zero-hours contracts can often be used as an excuse for low wages or poor management.
So, business owners, ask yourself this question, what are you willing to put into your employees?

Jonathan Richards CEO at breatheHR.

Further reading on zero-hours contracts

Related Topics

Zero-hours contracts

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