Zero Hours – A Zero Sum game?
"I do not believe in banning zero-hours contracts. But I do believe there is a very
strong case for expecting large employers to sign up to a tough code of conduct as to
how they are applied.
"For instance, if an employee proves reliable enough to be working for a big
company for a year or more then there should be an expectation that the company
will offer him or her a permanent position." (Nigel Farage – Daily Express and other
reports – April 2014)
To many on the left, the use of zero hours contracts represent the logical extension
of a form of capitalism that puts profit and flexibility over people and employment
rights: a legal metaphor for austerity Britain, with its cuts to public spending, pay day
loans and the so called “bedroom tax”. But to have Nigel Farage championing reform, suggests that there is a wide
consensus among all political parties not only is there significant misuse of them but
that something needs to be done, and soon.
The question is whether it will be new legislation, or creative challenges under
existing legislation in the Courts that will first herald such change? Also, what would
that change actually look like?
The case made for zero hours contracts
A zero hours contract is an employment contract between an employer and a worker,
where the employer is under no obligation to provide the worker any hours, and the
worker is not obliged to accept any hours: the antithesis of the concept of mutual
obligation. They differ from an agency worker who is assigned to work for a particular
period of time, the fixed term worker who agrees to work for a fixed length of time
and the permanent employee who is employed indefinitely.
The argument in favour of such contracts is that they provide much needed flexibility
to both employer and worker. Central to this argument is an assumption about
equality of bargaining power between the parties.
For the employer they can be used to provide a flexible workforce that meets a
temporary or changeable need for staff. For example cover for unexpected or lastminute event, temporary staff shortages, or on-call/bank work.
For the worker they can work when they like, allowing them to fit in another job,
studying or childcare as well as being able to move onto a permanent job with the
minimum amount of fuss. In these circumstances workers are happy with the
flexibility so they trade in security, or so the argument goes.
Defenders of zero hours contract can indeed point to the fact that they can act as a
gateway to more permanent work. Indeed, recent comments from a Conservative
minister suggest that they are going to be used as a way of helping the unemployed
get off benefit and into work. In particular, such claimants will be at risk of sanctions if
they do not apply for zero hours jobs.
Who gets the short straw?
The Office for National Statistics claims that close to 600,000 workers or 2 per cent
of the workforce is employed on a zero-hours contract. Health and social care,
hospitality and administration account for over 50 per cent of these workers. Other
bodies estimate the number of workers on such contracts to be up to 1 million.
Despite their widespread use there is no current legislation that deals specifically
with zero hours contracts and in particular their misuse.
The suspicion remains that many companies are using zero hours contacts as a way
of circumventing employment rights. This occurs particularly where companies
employ a large amount of their workforce on them. It is almost inevitable that with no
mutual obligation on an employer to offer work, companies will take both a short-term
view about the person working for them but also the employment conditions on which
they are employed.
Is any contract better than no work at all?
The reality is that many of these 1 million workers represent the most vulnerable in
the workplace, the young, the recently unemployed, those with disabilities, part-time
mothers and retirees. For these workers employment on any contract is better than
no employment. The more desperate you are for work, the more equality of
bargaining power is an illusion. This means that companies can cancel shifts at the
last minute, with no compensation, and insist that workers sign up to exclusivity
clauses, preventing them working for anyone else and being available all hours.
This is a view that seems to be shared by ACAS, the statutory conciliation service,
who claim that zero hours contracts can “breed mistrust and feelings of insecurity” that go beyond mere concerns about exclusivity clauses.
The coalition Government, through Vince Cable has commissioned a consultation on
banning the use of such exclusivity clauses.
The Labour Party, have recently promised to introduce legislation so that workers:
can demand a fixed-hours contract when they've worked regular hours
over six months for the same employer
receive a fixed-hours contract automatically when they've worked
regular hours for more than a year, unless they chose to opt out.
Protection from exclusivity clauses and compensation for cancelling
shifts at short notice.
The difficulty for those advocating legislative change is that none of this is going to
happen any time until after the election. Even other legislation will likely take priority,
meaning that change could be several years away.
Challenging the misuse of zero hours
However, for those seeking to challenge the misuse of zero hour contracts, existing
legislation seems to provide them with several promising routes.
If a worker or employee on a zero hours contract was not offered working hours
because of a protected characteristic (e.g., race, religion, sexual orientation,
disability, trade union membership), or because s/he had done a protected act (e.g.,
alleged discrimination, blown the whistle, been involved in health and safety or trade
union activities at work, taken family leave) then this would probably be enough to
bring a claim under existing equality and employment rights legislation. Usually, the
burden of proof is either on the employer from the start to prove an innocent reason
for treatment, or it shifts to the employer if the employee shows a prima facie case of
discriminatory treatment. So employers without a clear rationale for offering certain
hours to certain employees could find it difficult to prove that the process wasn’t tainted with discrimination.
Alternatively, where an employer, in offering hours to employees, adopts a ‘provision, criterion or practice’ which puts people sharing a particular protected characteristic at
a particular disadvantage compared to other people (e.g., requiring zero hours
employees to work some evenings if they are to receive any hours, which might
disadvantage women with childcare responsibilities, or requiring Saturday working,
which might disadvantage Jewish employees, or requiring employees to work a long
shift, or irregular shifts, which might disadvantage disabled employees), this will only
be lawful if it is a proportionate means of achieving a legitimate aim. Employers may
have difficulties justifying such practices.
The mutual obligation of trust and confidence, implied into all contracts of
employment, might also have a role to play in protecting zero hours employees,
depending on how zero hours contracts are to be analysed. If they provide an overarching contractual employment relationship, allocation of work to employees on an
arbitrary, capricious or perverse basis might be enough to amount to a breach of the
implied term. Such a breach would entitle employees to treat themselves as
constructively dismissed and/or bring a claim for damages.
More tenuously, for the purposes of unfair dismissal claims, since continuing of
employment is computed weekly, rather than daily, if a zero hours worker worked at
least once a week (and even if they worked less than that), s/he still might be able to
acquire sufficient continuous employment to bring an ordinary unfair dismissal claim.
And if a zero hours worker was dismissed for a reason that is automatically unfair,
s/he would be able to bring a claim, even with less than 2 years’ continuous employment.
Also, it may be possible for those with responsibility for procurement decisions to
specify that they will not subcontract work to companies who engage workers on
zero hours contracts. The Equality Act 2010 introduced provisions enabling public
authorities to take equality considerations into account in procurement decisions, and
there are strong arguments that the same principle could apply to zero hours
working.
Possible options for change
Existing legislation also provides practical models for how zero hours workers might
acquire greater employment protection under future legislation. One option is the
flexible working model, in which an employee could request the right to a permanent
employment contract. There could be limited bases on which the employer could
refuse to grant the request, with a right to review by an employment tribunal. The
alternative option, adapted from the current protection for fixed-term workers, might
automatically confer permanent employment status on zero hours workers once they
had worked on a zero hours contract for more than a fixed period of time (or worked
more than a certain number of hours). The obvious risk with this latter approach,
however, is that employers would dismiss employees immediately before they
acquired the right to permanent status.
No need to wait for Nigel
So for those looking to challenge the growing use of zero hours contracts, there is no
need to wait for Nigel Farage to become Prime Minister. Existing law already
provides a number of practical and creative routes to do this. Together with future
legislative change this should mean zero hours contracts return to being a truly
flexible and not an exploitive option for workers.
Ed Williams, Barrister
Tom Brown, Barrister
CLOISTERS
www.cloisters.com