Zero-Hours Contracts - Where Are We Now?

The report found that the number of people on zero-hours contracts is small, accounting for just 3% of total employment, which has changed little since 2015. The report made a number of other findings:

• 77% of employers surveyed do not use zero-hours contracts.

• 64% of employers who make use of zero hour contracts reported using them to manage fluctuations in demand.

• Zero-hours contracts are most common in the hospitality and entertainment industries.

• 70% of zero-hours contract employees worked part time hours.

• The adult population supports a ban on zero hours contracts, but support is weakest among 18-24 year olds, who are among the most likely to be on a zero-hours contract.

• 48% of organisations do not compensate employees if they cancel a shift at short notice.

The Report's Recommendations  

The CIPD's view is that, used in the right way, zero-hours contracts can provide benefits to both employers and workers. They can provide flexibility and opportunities to those who otherwise may struggle to find work. The report recognises that a total ban on these contracts would disadvantage those who benefit from them. However, the report found that zero-hours contract workers are overall less likely to be satisfied with their contractual arrangement than other workers.

The CIPD recommends:

• the right for variable hours workers to request a more stable contract after they have been in employment for 6 months. The creation of a right to request more stable contract after 26 weeks was a measure that was due to be introduced in the Employment Bill. The Bill was omitted from this year's Queen's Speech and will be introduced 'when parliamentary time allows'.

• the introductions of a statutory code of practice for management of zero-hours workers, including the requirement to compensate employees for the full value of any shift cancelled with less than 24 hours' notice.

• improving the labour market enforcement system by the creation of a Single Enforcement Body, which would boost the number of inspectors and increase advice and support to enable improved compliance.

• the abolition of worker status. However, the Government recently confirmed that it intends to maintain the current framework for the time being. 

Employers should note that these recommendations are not binding. Employers may wish to consider how they use zero-hours contracts moving forward in general but also in light of the recent decision in the Brazel case.

The Supreme Court judgment in Brazel affects the calculation of holiday pay for part-year and irregular hours workers. Employers may wish to consider whether there are better ways of managing their workforce. For example, if work is seasonally busy, whether it would be sensible to  use fixed term contracts for that period, rather than a year-round permanent contract. However, what approach works will be different for each organisation and its workers and specific advice may be required.

For more information please contact Ellie Boyd in our Employment Law team on 020 7665 0940, or complete the form below.