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Do zero-hours contracts need full-time regulation?

Fiona Rushforth is an associate at London-based law firm Wedlake Bell.

Fiona Rushforth

Fiona Rushforth

Ed Miliband has set out Labour’s plans for the regulation of zero-hours contracts, as Drapers recently reported.

Zero-hours contracts, in which the worker has no set hours, are used across retail to meet demand for casual staff with variable
hours. The prevalence of such arrangements in the fashion sector came into focus last September, when Sports Direct came under attack for using these contracts for 20,000 of its 23,000 staff.

Miliband’s proposals did not suggest outlawing the zero-hours model, but instead focused on stamping out abuses. One change would be that workers could no longer be required to be available at all hours to accept shifts or be forced to work only for one employer.

This would be of great benefit to retail staff, where the extended working week means zero-hours workers can be effectively on-call for one employer 70 hours a week, with no income guarantee. Many retailers will be able to deal with the change by agreeing specific hours of availability with each worker, but they may need a wider pool of workers to ensure they can find cover. Employees will also be entitled to payment for shifts cancelled at short notice. This is clearly of benefit to workers and could be managed relatively easily by employers.

The most significant proposal effectively outlaws zero-hours arrangements beyond a year, unless the worker is happy to agree to continue without fixed hours - which could mean zero-hours workers are simply dismissed when they reach 12 months of service. In retail, however, where product knowledge and skills are valued, employers may prefer to agree to a fixed-hours arrangement at this point.

A potentially more significant challenge to the use of zero-hours contracts will take place in October, when a group action
by Sports Direct employees will assert that the contracts indirectly discriminate against women with childcare responsibilities. If the action succeeds, a more dramatic rethink of the zero-hours model will be necessary.

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