United Kingdom : the zero-hour contract, myth or reality ?

“What is a zero-hour contract ?”, “Is it legal ?”, “What will this kind of contract bring us ?” These are some of the questions that come to one’s mind when one hears about this novelty which has however, existed for ages. Zero-hour contracts first appeared in United Kingdom as a response to the temporary increase on the activity of a company. Strengthened by the laws of 1996 and 1998, this contract mentioned neither the period of work (whence its name : zero-hour contract), nor fixed salary. The employee would commit him or herself to work according to the needs of his employer under a condition that he can also refuse to come to the workplace when he is not available. On the other hand, the employer is not obliged to provide his employees with work on a daily basis. In the best case scenario, an employee will have his schedule one week before. However, most of the time, the employee knows whether there is work (or not) the same day. In the morning, around 9 a.m., the employee must make a phone call to the agency that manages the services offered by the company or to the company that hired him. In the first place, he has to inform them about his availability for the day. Then, if he is available that day, he crosses fingers and waits for the agency to call him back and offer him a job. It goes without saying that an employee will be paid only for the hours he spent working. At the end of the month, he might well receive a salary equal of zero pounds, or, if he worked, he might earn a salary that reaches up to a thousand pounds. But... only the future can tell.

According to British law, zero-hour contracts are absolutely legal. Flexibility and adaptability at work are its important features, which can only be challenged by the lack of professional and material stability. This kind of contract complies with the conditions of the 1996 Employment Rights Act and also guarantees employees to receive the National Minimum Wage (voted in 1998), 6.31 pounds per worked hour, or 7.79 euros. The 1996 Act provides a distinction between a "worker" and an "employee". Unlike a simple "worker", an employee has several rights such as the right to holiday entitlement, sick leave, social security, etc. However, a person employed under a zero-hour contract has a special and sometimes unclear status. Being considered more as a worker rather than an employee, a person under a zero-hour contract can change “category” according to the relationship with its employer. 

In United Kingdom, zero-hour contracts are primarily used by the large chains such as McDonald's, Burger King, Sports Direct and even by public institutions such as Buckingham Palace. Hosting and home care services are other areas that also benefit from this type of contract. McDonald's declared to have been using this kind of contract since 1974 as fast food has always needed a lot of personnel to be able to remain constantly flexible and available. The first scandal occurred in 2013, when it was said that 90% of employees of Sports Direct were under zero-hour contracts. Though the existence of this contract is far from being new and since employees benefit as much as employers from it, why make a tragedy out of it ? And most importantly why now and not before ?  

If one analyzes zero-hour contracts in the context of the current labor market, affected by the crisis and shaken by the mismatch between labor demand and supply, one will find many advantages justifying this practice, which are poorly known elsewhere. In France, the unemployment rate was 9.8% in May 2014, while in the United Kingdom it was 8%. Taking into account the fact that about 1.3 million of the British (between 3% and 4 % of the labor market), are employed now under a zero-hour contract; it proves that the existence of such an alternative allows the unemployed to find work. People are also attracted by the flexibility offered by a zero-hour contract. Young students who are looking to round their monthly income, but who cannot get a stable job ; or the elderly who want to be helpful without being obliged to work hard, will easily take advantage of the existence of this way of working. James, a third-year English student in London, tells of his own experience : "Last year, I worked under a zero-hour contract in London. It was in the field of restoration. I found the flexibility of my schedule particularly attractive since I had a chance to work when I was available. In addition, we were asked to ensure restoration at various events in London, what meant that we also had a possibility not to work always at the same place. I think this kind of contract is really helpful for students who need to focus primarily on their studies."

Indeed, the opportunity to renounce one day of work since you have unexpected circumstances or because you don’t feel very well without providing further explanation is a great argument in favor of zero-hour contract. This flexibility motivates even the unemployed having dependent children and who wish to have a long-term job without the constraints of schedules or working hours imposed upon them. "The most important aspect is that a zero-hour contract makes people work, even if it is on a temporary period and for reduced hours" James adds while talking about the benefits of employees hired under this kind of contract.

The third positive point of a zero-hour contract relates to the freedom of action given to employers. With the introduction of such a tool, companies facing economic problems won a right to limit their need for employees. By adopting condensed hours, these employers can save themselves from facing the economic recession. This will enable them to reduce operating costs of the company : electricity consumption, production expenses. In addition, companies dealing with such a deadlock can ask their employees to work only when they need them. If the production demand increases, the supply of products of the company will also increase. Therefore, employees will be required to work more. 

One might then be led to believe that the existence of such a contract makes life easier for everyone in the United Kingdom. Unfortunately, the reality erases the ideal image promoted by these contracts. Although technically companies can hire staff more easily by using zero-hour contracts, they can also dismiss them more quickly. Moreover, those contracts can result in the hired person being unable to work for another company, which means that if the person does not receive any worked hours a month, he or she would not be able to find another job while having one already.

Concerning the question of availability, as it has been already said, the employee has a right to refuse to work on a precise day. However, it does not guarantee that there will be a possibility to work the following day or when available again. People who have a family and who rely on their job in order to have a sufficiently large income at the end of the month cannot plan their spending. The lack of financial security makes this apparent solution to unemployment ambiguous. One has to keep in mind that in the United Kingdom there are more poor workers than poor people who do not work. Zero-hour contracts offer people an opportunity to be once again a part of the workforce, but this has a cost. Amy, a last year student, believes that “zero-hour contracts can be attractive to a student, but people who rely on this job for their survival have to face the situation of constant stress."

The main reason why zero-hour contracts are controversial is the potential exploitation of employees generated by the clauses included or non-included in its content. Aside from financial insecurity and impossibility to schedule in advance, there are also shocking aspects which are not addressed by this contract. Employees under such contracts do not receive holiday entitlements or sick leaves. Moreover, these contracts also make the dismissal of employees easier and can lead to abuses. If the employee does not meet the expectations of the employer, the latter has a possibility not assign work hours to him, without having to fire him. The result is : the employee will not earn anything at the end of the month, but will not be able to go to the Job Center and declare himself unemployed since he has signed a contract that still seems to be valid.

During its electoral campaign in 2010, the Conservative Party promised to support liberal economy having implied the encouragement of practices such as zero-hour contracts. On the left, Ed Miliband’s Labor Party is not supporting the removal of these contracts, but their regulation. If one remains objective, one will find out that zero-hour contracts are an English way of working which has its advantages and inconveniences.

« I am in favor of the existence of zero-hour contracts under a condition that the current legislation would also protect the rights of these workers » James declares. Amy, who is less impressed by the results of this trick in the English labor market, shares the same ideas « Students manage to take benefits from this system more than adults who accept this kind of work as their only source of monthly income. Government has to protect those people more against abuses by employers who are looking to increase their profits, without thinking about its impact on their employees. "One can hope that elections scheduled for 2015 will show what people really think about these economic approaches and what Government is ready to do in order to improve the economy, without forgetting to mention the well-being of society.