By Gerwyn Davies, CIPD Labour Market Adviser, @Davies_Gerwyn
Striking the right balance between the needs of workers and employers is always an incredibly difficult balancing act. To find a balance in as complex an area as zero-hour contracts potentially makes the exercise a bit of a minefield.
Yet, this was the task facing Norman Pickavance, former director of HR at Morrisons, who has today published his review on zero-hour contracts for the Labour party. The CIPD contributed to the review and has met with Mr Pickavance over the recent past to voice our views. In summary, there is much to commend in his review, but much to be concerned about from an HR perspective.
On the upside, it is encouraging to see how much the Labour party’s position has shifted. For instance, the Labour party has adopted many of the CIPD recommendations included in our evidence-based report, Zero-hour contracts: myth and reality, that Norman Pickavance helped launch last autumn.
These include the right to compensation when shifts are cancelled at short notice, and the call to amend the Employment Rights Act 1996 to ensure that both employers and individuals employed under zero-hour contracts have clarity about their employment status and terms and conditions. As the CIPD has found, there is an alarming lack of awareness about the rights zero-hour contract individuals are entitled to among both parties. In addition, we support the principle of workers on zero-hour contracts being free to work for other employers.
However, it remains to be seen how effective his proposals will work in practice in relation to giving workers on zero-hour contracts certain rights after a certain period. One idea is to give workers on zero-hour contracts who are working regular hours a right to a contract with fixed minimum hours. Another is to offer a fixed hours contract automatically after a period of 12 months’ continuous employment.
These proposals could prove problematic for various reasons. The idea of fixed hours runs counter to the idea of fluctuating demand and the broader aim of flexible working arrangements that suit both the individual and employer. The offer a minimum number of hours would be a far better alternative in our view.
Additionally, the proposals raise questions as to how some employers might respond if they are insecure about their future or the broader economic outlook. This morning, shadow business secretary Chuka Umunna told BBC Radio 4's Today that "One man's flexibility is another's insecurity". This is a fair point. However, it does not reflect the insecurity that is sometimes felt by employers too, which should also be factored into the policy-making process.
Take for instance a voluntary sector organisation that is in the middle of a two-year contract. If they take a worker on a zero-hour contract nine months into the contract, how is that organisation likely to respond a year down the line if the contract has not been renewed?. The strong likelihood is that it will simply switch to other forms of casual arrangements such as agency work, which cuts the earnings potential of both parties incidentally; and/or simply cut short the contract to a period of less than 12 months.
As CIPD evidence shows, the majority of zero-hour contract workers are happy with their arrangements. It would be far better therefore to promote good practice along the lines of the lighter-touch right to request flexible working model, which has successfully protected and promoted the interests of employers and employees through dialogue, and not checking the legal handbook.
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