Zero hours contracts could be a false economy for businesses

News reports show that zero hours contracts are at a record high. Coodes’ Employment Team argues that permanent employment can be cheaper for employers in the long run.

“Although they are often seen as being cheaper and easier for companies, zero hours contracts are associated with a lack of job security and regular wage. Anyone who has tried to get a mortgage while working different hours each week will tell you how problematic zero hours contracts can be. Although they have become controversial, zero hours contracts are perfectly legal in the UK though were recently outlawed in New Zealand.

“Zero hours contracts can be very useful where there are fluctuating requirements for staff, often in hospitality and construction. They provide a solution where it might be difficult to provide guaranteed hours, where margins are tight and costs need to be kept under control. Unfortunately, that solution can be abused by employers.

“Suffolk brewer Greene King, pub chain JD Wetherspoon, cinema chain Everyman, along with Sports Direct, are among the companies that have recently announced they will give staff on zero hours contracts the chance to be made permanent. While Greene King are allegedly guaranteeing staff 70 per cent of the typical hours they would work each week, and Everyman are guaranteeing workers 40 hours a month, the terms of JD Wetherspoon’s contracts are yet to be announced. Nonetheless, the decision of these large employers could have a big impact and we may well see more businesses follow suit.

“This move by some of the UK’s large employers may reflect the fact that employers are trying to be more responsible. It may also be a result of the difficulties in recruiting and retaining staff where the hours and wages are not guaranteed. With increasing levels of employment, employees can be more selective. As employment levels rise, employers may need to re-think their HR strategies to reflect this.

“For other businesses looking at moving away from zero hours contracts, alternatives could be to guarantee a minimum number of hours or fixing the number of hours for a period of time and then adjusting when those hours are worked over the month. Another option would be to fix a salary on the average number of hours worked and then adjusting up or down at the end of the month.

“There are a number of ways in which businesses can approach this, but contracts should always be adjusted to reflect any changes. The key is to find a balance between treating employees responsibly and achieving an approach that works for the business.

“Businesses need to recognise the value of motivated and committed staff. High turnover of staff is not in the business’ interests. Making the working arrangements more secure is a price that is worth paying for many businesses.”

For more information or advice, please contact the Employment team on 0800 328 3282 or info@coodes.co.uk. Alternatively, you can use the contact form.