Miliband battles with employers to bin zero-hour contracts

13 April 2015 -

The abolition of the practice is a key Labour manifesto pledge

Jermaine Haughton

Labour leader Ed Miliband has today pledged to abolish zero-hours contracts.

Speaking at David Brown Gears in Huddersfield, the leader of the opposition said: "We have an epidemic of zero-hours contracts in our country – there's been a 20% increase in the last year alone – undermining hard work, undermining living standards, undermining family life. Because if you don't know from one day to the next how many hours you're going to be doing, how can you have any security for you and your family?

“To anyone trying to raise a family on a zero-hours contract, you shouldn't be left at the beck and call of an employer who can ask the world of you but can give you no security in return. It's not fair, it's not good for business – and we'll put a stop to it.”

Typically, zero-hour contracts demand that employees be available to work at certain times –but their employer does not have to guarantee them any hours of work. Under the system, an employer could send a staff member home at short notice without even an hour of work.

According the Office for National Statistics, the number of contracts that do not guarantee a minimum number of hours was 1.8 million as of August 2014, up 400,000 since January 2014. Under a Labour government, Miliband said, UK businesses would be forced to provide staff with a regular contract after 12 weeks of working regular hours, following recommendations from former Morrisons HR director Norman Pickavance. Yet, while Labour has been bold in jumping ahead in this issue, it has been left red-faced following recent reports of the Party’s main backer – trade union Unite – being found by a tribunal to have hired an employee on a zero-hour contract.

Colin Leckey, a partner in the employment team at law firm Lewis Silkin, argues that Labour’s plans are likely to be ineffectual because of a number of potential loopholes in what can be defined as a “regular” contract.

“It is unclear what exactly Labour means by a ‘regular contract’, but presumably one with certain pay in return for certain hours,” says Leckey. “This ambiguity raises a number of unanswered questions and difficulties. First, how much pay – and how many hours – will an employer be required to promise? The Coalition struggled with this issue in its own consultation on zero-hours contracts. It is generally recognised that promising a single hour of work and a single hour of pay as a way of getting round zero-hours legislation would be abusive, but where is the line drawn, and by whom?”

What are the other parties planning?

The Conservatives have sought to dampen the animosity towards the employment contracts claiming that just 2% of workers were on such contracts and nearly 40% of them already worked full time.

The Liberal Democrats are pushing for a ban exclusivity clauses which prevent people looking for additional work to boost their income. This has been partially achieved with the Department for Business, Innovation and Skills has already included a clause in the upcoming Small Business Employment and Enterprise Bill to prevent employers from requiring staff to sign exclusivity clauses if they earn below a certain weekly wage.

The Greens have joined Labour in the former, with leader Natalie Bennett appealing for an outright ban on zero-hours contracts. “The ice-cream shop that calls staff in or not on the basis of the next day’s weather forecast might be maximising its profits, but it’s putting its workers in an impossible situation,” she says. “And is ensuring that the state has to pay corporate welfare to cover the shortfall. Zero-hours contracts should be banned, and I’d urge every shopper to consider the list of companies that use them, and consider whether they want to give their shopping cash to them.”

Employers

While maintaining the rights of low-income workers is important, the value of zero-hour contracts to businesses, particularly in tourism, hospitality and retail sectors, cannot be underestimated. The flexibility offered by the contracts allows employers to effectively handle peaks and troughs in service throughout the year, while also avoiding paying fixed overheads. Therefore, the majority of these businesses have voiced their concerns over the potential ban, if Labour was to lead the next Government.

CBI director-general John Cridland said: "Of course action should be taken to tackle abuses, but demonising flexible contracts is playing with the jobs that many firms and many workers value and need."

Christian May, from the Institute of Directors, said zero hours contracts had helped the economic recovery. "I'm just very surprised that the Labour Party feels the need to go this far in curtailing what has been an undoubted tool of great success, during our economic recovery.”

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