Pledged Crackdown on Zero Hours

Hard on the heels of Ed Miliband’s vow, at the TUC’s annual conference, to crack down on the abuse of zero-hour contracts, the Business Secretary, Vince Cable, has used the Lib-Dem Conference to highlight the Government’s own, somewhat similar, plans.

Whilst Ed Miliband has announced the appointment of the former Head of HR at Morrisons, Norman Pickavance, to lead an independent review and New Year report, Vince Cable has provided further details of a planned BIS consultation, to report at the same time.

Clearly this is an interesting example of the main political parties continuing to jostle for the middle-ground, and to make political capital, particularly with the unions. However, and perhaps because each party's proposals around zero-hour contracts are remarkably similar, Mr Cable has also announced that he has asked the Low Pay Commission to carry out a study of what economic conditions will be needed for the National Minimum Wage (NMW) to rise more quickly than it has in recent years. However he also, wisely, flags the fact that any changes, both to the NMW, and zero-hour contracts, need to be carefully handled, with an eye to the need to balance workers' rights against the obvious flexibility, and lower unemployment, which zero-hours contracts, and low wages, afford.

As a result, neither party's proposals around curbing the worst abuses of zero-hours contracts, appear to be particularly far-reaching. Whilst both parties have homed in on outlawing “exclusivity” (i.e. a ban on outside work, without any guarantee of any minimum hours), it will be interesting to see how many of the estimated ¼ million workers on zero-hours contracts, have such an absolute restriction. In most cases there may be some control, but this is generally more in the form of a vetting clause – i.e. that an employee would need to seek prior consent to outside work (such consent not to be unreasonably withheld) This is primarily designed to prevent the employee working for a competitor, rather than a more general ban on outside work per se.

In Labour’s case, Ed Miliband also spoke of a proposed ban on zero-hours contracts where workers are required to be ‘on call all day’. Again, it will be interesting to see how many workers have such a requirement, as opposed to simply being on call at certain times of the day. Doubtless this is something that Norman Pickavance will therefore be investigating, as part of his planned research, initially amongst larger retailers, including apparently Asda, and his own former business, Morrisons.

Ed Miliband’s third specific proposal was that zero-hours contracts should be banned where staff are working ‘regular hours’. However, that term would plainly need careful definition, since otherwise there would obviously be scope for getting around that restriction, by instigating a variable pattern of work or working hours, so there are no “regular” hours of work. In fact many zero-hours contracts are, almost by definition, likely to be very variable, so that this last proposal may also have limited application.

The slew of recent cases where zero hours contracts have been seemingly abused, has lent an extra necessity to these moves. Employers may also prove to be vulnerable to challenges relating to perceived unlawful discrimination. In some recent examples, where only part time workers are engaged on zero-hours contracts, the employer is vulnerable to challenges that the arrangements are both unlawful discrimination of part time workers, and indirect sex discrimination. This argument would be on the basis that only full-time comparators are eligible for certain benefits (for example, apparently a shares allocation in the case of Sports Direct staff). Depending on the gender breakdown of the part-time worker pool, it is likely that the full-time hours criteria for certain benefits will indirectly discriminate against female workers. Hence the scope for a potential test case which will then highlight the other worker disadvantages with zero-hours contracts. The onus will then be on the employer to give good business reasons (which there may be) to justify the less favourable treatment.

If the media coverage of the Sports Direct challenge is correct, then the Claimant apparently left after suffering panic attacks, allegedly because of a lack of financial security. This therefore opens the prospect of a debate about potential compensation for personal injury, albeit there are likely to be some technical arguments around causation.

Whilst Mr Pickavance’s research may well be used in due course to challenge the Government’s proposals, it will be interesting, over the next few months, to be involved in that consultation exercise, and doubtless this is a topic that both Parties will be looking to keep high up on the employment agenda, in the run up to the next election.

If you would like more information in relation to any of the issues discussed in this article, please contact Nikki Duncan, Partner in the Employment Team - nikki.duncan@michelmores.com.