Understanding Zero Hours Contracts

Davina Greene is a coach, trainer, and People & Organisational Development (OD) consultant based in Dublin, Ireland. This column was first published (adapted) in Irish Tatler magazine, on sale December 2014.

The topic of ‘zero hours contracts’ exists in a bit of a haze, with governments still trying to understand related usage, perceptions, and problems. A zero-hours contract essentially means that an employee is available for work but is not guaranteed work. The retail and hospitality industries are particularly fond of these contracts but, to focus your mind, it is interesting to state at this point that some UK doctors, pilots and professors are reported to have found themselves in zero-hours arrangements. So, this may be contagious.

Employees on zero-hours contracts have certain rights under the Organisation of Working Time Act 1997. We fare better than our UK counterparts, it seems, as UK employers are not obliged to provide any pay in the absence of work. In Ireland, the Act requires that a zero-hours employee who works less than 25% of their hours in any week should be compensated, the degree of compensation depending on whether any hours at all were provided. In the absence of any hours, the compensation should be either for 25% of the possible available hours or for 15 hours, whichever is less. If the employee did some work, they should be compensated to bring them up to 25% of the possible available hours. This is, at least, an initial hurdle for Irish employers to consider.

In designing these contracts, someone was likely trying to create a reasonable solution to a reoccurring problem but, as tends to happen, others came along and ruined it. Some big-name companies have stretched the usage of these contracts far beyond what many would consider reasonable. In the UK, the government thought that the zero-hours approach might be used in around 250,000 cases, but estimates are nearer 1 million. It is reported that up to 90% of McDonalds UK staff are on zero hours contracts (with mixed reports as to whether they take the same approach in Ireland). Dominos use them here, as in the UK.

Businesses are generally enthusiastic about zero-hours contracts. Managers remain full-time. For those suffering unpredictable demand, full-time employees (and the ‘full-time’ benefits they receive) only add to financial heartache. Also, employers like to remind us that employees increasingly enjoy flexibility, and that this is a flexible offering. Further still, governments love to claim “new jobs created”, and zero-hours contracts could add wonderfully to the numbers.

But how does it look from the other side? Stressful, for many – we’re used to “getting a job” meaning a sense of relief, stability and predictability. I come from an Operations background, where efficiency is highly valued. However, ‘increased efficiency’ in essence means ‘increased unemployment’, if you follow the logic through, and so your personal values will dictate at what point you become uncomfortable with efficiency-oriented activities. A common analogy for zero-hours contracts is that of farm-workers standing by the side of a road, waiting to see if they will be selected for work that morning – I am uncomfortable with that idea, for the average family- or self-supporting worker. The most worrying fact is that some companies out there are not explicitly explaining the zero-hours nature of the contract to those signing them. Others are claiming exclusivity over the worker, preventing the juggling of multiple zero-hours work opportunities and incomes. This only adds to the fear around this topic.

Whether a zero hours contract might work for you is for you to decide. Perhaps it might suit a graduate, still living at home, who wants a slow introduction to the working life. A person whose partner is singlehandedly paying the bills might be comfortable with such a contract, if “fun money” is all that is needed.

Choice is the issue. Flexible work should be an option in any economy, but some big, healthy companies have shown that they have few qualms about converting almost all non-managerial roles to zero-hours guessing games. If workers who need a full income to cover a mortgage, food, clothes, bills, education are being cornered into widespread zero-hours arrangements, that is not choice.

It is an emotive topic and I imagine some changes and clarifications are imminent, so watch this space if you think zero-hours contracts may be relevant to you and your industry.

KEY POINTS

  • ‘Zero Hours’ means availability for work without a guarantee of work.
  • In Ireland, there is some payment – even if no work is done.
  • Check any contract carefully – particularly if you are in Retail or Hospitality.
  • Understand the rhythm or seasonality of your industry, to decide what you think is fair.
  • Be very sure that this contract-type fits your financial obligations, before accepting.
  • Watch for developments. This is a very live issue.