Zero hours contracts

Posted by Max Craft on
Zero hours contracts continue to attract the headlines and a report published today states that the number of people working on such contracts is at an all-time high. A closer look at the figures however reveals an interesting development, specifically, considerable less use of zero hours contracts in the last six months of 2016.

The Resolution Foundation has analysed the figures in the Office for National Statistics' Labour Force Survey. This shows that a record number of 910,000 people are working on zero hours contracts and 105,000 more people are on such contracts in 2016 compared to the same period in 2015. This is an increase of nearly 14% and 30% higher than 2014. However, there was a significant slowing down in the rate of increase in the last half of 2016. The increase was only 0.8% compared to a 7.7% increase for the same period in 2015. What are the reasons for this decline and are employers abandoning zero hours contracts because of the negative and controversial headlines they often attract?  

The current labour market provides one explanation. With more work available and many employers finding it difficult to recruit good qualified staff individuals may look for contracts with guaranteed hours of work rather than having to take a zero hours contract.  It is also likely that fewer organisations are using zero hours contracts because of concerns about reputation. Everyone can remember the barrage of bad publicity that Sport Direct received last year for its use of zero hours contracts and its working practices generally.

But it is important to remember that it's not all bad news as far as zero hours contracts are concerned. Many people, such as students or those with caring responsibilities genuinely like the flexibility these contracts offer. In addition, these contracts are not always associated with low pay, for example when employers have to rely on a flexible workforce at certain times of the year, such as Christmas or busy sale periods. In fact, according to the Resolution Foundation, one in six workers on zero hours contracts are in the three highest-paying occupation groups. In another interesting trend, it reported that, over the past year, half of the increase in zero hours contracts has been among workers aged 55-64. So it seems that there is still a future for zero hours contracts.    

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Max is a Consultant in our employment team.

Max Craft
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