Consultation on zero hours contracts: Results of our survey - DAC Beachcroft

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Consultation on zero hours contracts: Results of our survey

Published On: 18 March 2014

In December last year, the government issued a consultation on zero hours employment contracts. The consultation followed months of political debate concerning the extent of their use and possible abuse by employers.

We asked our clients for their views on the main proposals and their responses are set out in the attached paper. We have submitted this paper to the government in response to its consultation.

Banning zero hours contracts was not an option addressed by the consultation, despite calls for such a ban from some trade unions. Instead, the proposals ranged from potentially doing nothing to banning exclusivity clauses; with statutory codes of practice, guidance, model clauses and better provision of information also suggested.

The two main areas covered in the consultation were:

  • The use of exclusivity clauses (i.e. clauses that prohibit zero hours workers from working for anyone else);
  • Ensuring that zero hours contracts are transparent and that individuals understand what they are signing up to.

Our clients’ views were interesting:

  • Zero hours contracts clearly provide useful flexibility for employers with many using them to cover times of peak demand, holidays and sickness absences. Also, it was clear that such contracts are often used to recruit specialists where there is a genuine ad hoc requirement for specialist skills or knowledge. These specialists often work for multiple employers or in some cases are part retired. 50% of our respondents also let individuals choose when they work.
  • Only 7.7% of our respondents used exclusivity clauses within their zero hours contracts and 76.9% of respondents said they were aware of staff they employ on zero hours contracts who work for other employers.
  • Whereas 53.6% thought that the government should ban the use of exclusivity clauses, 21.4% thought they should not be banned and 25% were not sure. 35.7% thought they could not be justified in any circumstances, however, others thought they could be where there is a compelling business reason. Reasons given included using them for specific limited projects, for senior employees/directors - particularly where there is a need to protect commercial confidentiality and/or trade secrets.
  • 75% of respondents thought the government should provide more guidance on the use of exclusivity clauses and 71% thought that more guidance generally in relation to zero hours contracts would help individuals and businesses understand their rights and obligations. Although there wasn't a strong indication from our responses whether government guidance or a statutory code would be more suitable, if there was a statutory code this should have government endorsement. 64.3% of respondents also thought that model clauses for zero hours contracts would assist employers.

Given that all political parties appear committed to taking some action over zero hours contracts, it seems we should expect some change in the future. In the meantime employers should review the transparency of their zero hours arrangements and look at any exclusivity clauses in use to consider whether they are justified in the circumstances. Employers should also ensure zero hours workers' employment status and rights are fully understood by all (applicants and internally) and make sure there is clarity around the terms and consequences of the contracts.