Zero hours contracts
PUBLISHED: 13:32 16 September 2013 | UPDATED: 13:32 16 September 2013
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This year's white elephant, or welcome flexible working? asks Darren Sherborne
As we cautiously look toward better economic times I hear a lot of conversations around employers’ caution to take on new staff, despite the fact that there is nervous optimism that new staff will be required.
It is perhaps no surprise then that I am also seeing a rise in interest from employers in zero hours contracts (that is a contract where the employer is not obliged to provide any work at all and therefore not obliged to pay). When I was at school I was told by a very studious English teacher to ignore everything in a sentence that preceded the word “but” and I am mindful of this when I say that zero hours contracts can be a useful tool in some circumstances but they are not the key to a good and flexible workforce.
It is inevitable in an upturn of the economy, we will experience a race to recruit decent employees. After all, nobody wants to employ duffers. Consider then the quality of staff that an employer will get if offering no commitment when other employers are offering more certainty. This could become an experience akin to falling into a barrel of breasts only to come out sucking one’s thumb. There is some truth to the idea that if you give peanuts, you get monkeys!
There is of course the need for flexibility and the ability to remove staff who don’t perform but with the new requirement for an employee to have two years’ service before they can claim unfair dismissal, employers now have up to two years before they are saddled with a duffer. In other words, employees can be removed in the first two years without the need to prove the dismissal is fair.
Flexibility can be achieved using annualised hours contracts for employers who wish to avoid paying overtime in peak periods and having people idle during slow periods. With this sort of contract, one can average the requirement of hours so that a consistent wage is paid all year but in winter, for example, only 30 hours are worked and in summer extra hours worked with no overtime being necessary to be paid. These contracts provide certainty for employees and flexibility for employers. It is important to remember when we look at the economy as a whole that we need people to spend their money and employees will only do this if they have certainty. Clearly these contracts are slightly more complicated to draft but all the more worthwhile.
There will always be times when zero hours contracts are a good idea. It really isn’t as often as people think and may well prevent an employer from getting the decent staff it needs. Business owners need to prepare for an upturn in work that will leave them efficient and able to earn a profit and I’m afraid zero hours contracts may leave employers looking back at any upturn feeling like they’ve just run barefoot down a gravel road.
Finally, with recruitment appearing to be back on the agenda, it may be worth sparing a thought for what would happen if a key sales or technical employee left and began working in competition. While there are certain urban myths about what can be done to prevent this happening, it is entirely possible to have a contract of employment that prevents this from happening. They need to be tightly written and I suspect the stories of them being unenforceable come from situations where they were not properly written in the first place.