What does the Queen’s Speech mean for zero-hours contracts in retail?

On 4 June 2014, the Queen’s Speech delivered a number of assurances in the employment arena, including a review of the use of zero hour contracts by businesses.

The Government has recently entered into a period of consultation on the use of zero hour contracts and while the Queen’s Speech lacked real detail on the subject, it indicated that there would be a crackdown on the abuse of such contracts.

Zero hour contracts are contracts which set out the terms of the relationship between an ’employer’ and a casual worker. They are intended for use when a business wants to engage a worker on an ad hoc basis, with no guarantee of work, but with an expectation that the worker will be available for work if/when offered. Only compensation for work performed (at the national minimum wage or above) is given. Zero hour contracts are often used in industries which fluctuate in demand e.g retail and hospitality, but there is evidence to suggest more widespread use.

Criticism of the zero hour regime has primarily focussed on the fact that for the estimated 1.4m people in the UK working under such arrangements, the needs of business are often prioritised over the rights of the worker. Putting aside the fact that the worker does not accrue the right to redundancy payments or unfair dismissal rights, it is the use of exclusivity clauses that has caused the greatest outrage – the ability to restrain a worker from seeking employment and income elsewhere at times when their employer has not offered work or has no work to offer. And it is this principle that is likely to be changed going forward.

The use of zero hour contracts is unlikely to be banned (although there has been some opinion that it should be) and while it is not definitive, it is likely that exclusivity clauses will be prohibited. Further, the right for zero hour workers to request a minimum number of hours work each week, after 12 months’ employment, may also be introduced. In addition to these two probable changes, the CIPD is proposing the introduction of a code of practice on the use of zero hour contracts and an amendment to legislation to ensure that workers are entitled to written terms and conditions of employment no later than two months’ into employment.

If you use zero hour contracts, it is prudent to assume that exclusivity clauses will be prohibited at some point in the near future. For those entering into arrangements with workers going forward, it would be sensible not to have such a prohibition in the worker’s contract – allowing the worker to seek and perform alternative employment at times when your business is not in a position to offer work. Further, a well written contract will always allow the employer to terminate the arrangement if the worker is unable to accept a certain number of assignments over a defined period of time. Further, make sure you have written terms of the zero hour arrangement rather than oral (this is advisable in any event).

The key to the future of the zero hour contract regime will be flexibility for industry with protection for workers. And the more businesses which are able to demonstrate support for their workers, the better served they will be when even the minimal of anticipated changes are likely introduced.

 

This article first appeared on Retail Week’s website on 9 June. Click here to view. (subscription only)