The government has launched an “informal” review of the use of zero hours contracts, as a result of a dramatic increase in their use over the last decade.
Business secretary Vince Cable said that the review, to be published in the autumn, had been prompted by “anectodal evidence” that some employers were abusing the concept of zero hours contracts under which workers have no guaranteed hours. He pointed to claims that employers are abusing vulnerable workers “at the margins” of the labour market, including in the public sector, by the use of such contracts.
Cable added that although zero hours contracts may suit some workers who want flexible working patterns, “for a contract that is now more widely used, we know relatively little about its effect on employers and employees.
“Whilst it's important our workforce remains flexible, it is equally important that it is treated fairly. This is why I have asked my officials to undertake some work to better understand how this type of contract is working in practice today," he said.
According to a recent report by the House of Commons Library, the number of zero hours contracts increased from about 50,000 in mid 2005 to approximately 200,000 by the end of 2012. It found that larger companies were more likely to use them, particularly in the hotels and restaurants sector, but they were also being used increasingly by the NHS and academic institutions.
The report pointed out that the use of zero hours contracts raises a number of legal issues including whether or not people working under them are defined as “employees” or “workers”, a crucial distinction affecting their employment rights. Their use also raises a question about whether employers have to pay them the National Minimum Wage while they are on call.
TUC General Secretary Frances O'Grady said: “Employers know they can get away with advertising zero hours jobs because there are so many jobseekers hunting too few vacancies.
“With the tough times set to continue, now is the perfect time for the government to be reviewing - and hopefully regulating - the increasing use of these exploitative contracts.
“The government must get tough with those employers who want to get workers on the cheap and encourage them to start employing people on proper contracts with decent wages.”