The regulations aim to:
- tackle the abuse of zero-hours contracts
- raise the national minimum wage
An estimated one million workers in the UK are on zero-hours contracts, with 22% of people working in the private sector on contracts of less than three hours a week. Due to this, a governmental review of zero-hour contacts has been launched. It has been instigated because of a number of abuses highlighted by recent investigations. Four key areas of concern relating to zero-hour contracts have revealed a number of areas are in need of improvement:
- exclusivity clauses that are too restrictive in nature. These relate to contractual provisions that stop workers from working for another employer. Even though they are not guaranteed a minimum number of hours by the employer they are contracted to
- lack of transparency: there is no clear or legal definition of a zero-hour contract and it can cover a number of working arrangements
- uncertainty of earnings: the amount of money a worker on a zero-hour contract can expect to earn is dependent on the number of hours the person has worked. This results in difficulties when looking to calculate earnings and may affect how much benefits the worker receives
- an imbalance of power in the employment relationship. The review found that people perceived they would be penalised if they did not take hours offered, even if the hours offered were given at very short notice and did not suit. This lead to the perception that a worker is less likely to be offered regular work in future if they failed to accept the hours on offer
It is clear that some companies have tried to exploit workers under the rules. These forms of contract have been a convenient way to keep costs down, avoid redundancy payments and fulfill statutory obligations towards employees on zero-hour contracts.
The Government aims to ensure that workers are paid and treated fairly, in a way that also helps keep people employed in delicate economic times. Options in such cases would be to require companies either to provide base pay or assure workers that they will receive a minimum number of hours. One proposal is to ensure that people who have worked regular hours on a zero-hour contract for 12 weeks should become contractually entitled to those hours.
In terms of the national minimum wage, the review has asked the Low Pay Commission (LPC) to make recommendations concerning the national minimum wage. The LPC has also been asked to consider how the national minimum wage may be able to rise faster than current conditions allow, so that low paid workers can benefit from the emerging economic recovery. The idea is that this will help without causing an adverse impact on jobs and ensure benefits of economic growth can be shared fairly.
The LPC is due to report on its findings in spring 2014.comments powered by Disqus
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