In the News: Zero Hour Contracts
Today it has been announced that employers who employ people on a zero hour contract are not longer allowed to stop these employees from searching for additional work elsewhere. Business Secretary Vince Cable has said that the zero hour contracts, which provide flexibility in working hours, are being abused by certain firms. However, he states that there is a place in the market for this type of contract as they are convenient for those who are looking for occasional pay and flexible hours, such as students and retirees for example.
It is estimated that this ban on exclusivity clauses will benefit around 125,000 people on zero hour contracts through allowing them to find additional work and increase their income. Although unions and campaign groups would like zero hour contracts to be eliminated completely it is thought that new rules to make the contracts more transparent will enable people to understand their rights and know what their contract entails.
What is a Zero Hour Contract?
A zero hour contract contains an arrangement between the employer and employee which means that the employer has no obligation to provide working hours and the employee has to ensure that they are available to work on an ‘on call’ basis. The employee must be available when required and will only be paid for the hours worked but will not be aware of how many hours are available for them to work each week.
The main disadvantage of a zero hour contract is that it is very hard to create, and stick to, a budget when you are unsure of how much money you will be earning each week. This means that zero hour contracts are not ideal for those who have dependent children or have mortgage payments to make.
The big advantage of being on a zero hour contract is that if you are just looking to earn a bit of money every now and then and do not have other commitments you can be on one of these contracts without being tied to specific hours. It is due to this reason that zero hour contracts are popular among students and retirees.
It is thought that one in five employers employs at least one person on a zero hour contract and these contracts are most often found in the retail and hospitality sectors.
Zero Hour Contracts: What is Changing?
The new rule will mean that if you are already working on a zero hour contract, or sign up to one in the future, the employer will no longer be able to stop you from taking additional work elsewhere. This means that the employer cannot tie you to their company exclusively and stop you working for another employer at the same time, which some firms have been doing despite the fact that they are not always offering their zero hour contract employees any working hours.
It is a concern that employers may try to evade the exclusivity ban through methods such as offering employees just one hour per week. However, Vince Cable has said that he will be consulting further on how to prevent this from happening.
By Sasha Davison
25th June 2014
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