Retailers have split over the need to reform zero-hours contracts, as the Queen’s Speech yesterday (June 4) committed the Government to reforming the employment system.
Included among the 11 policies and legislation the Queen detailed, in the last policy update before the 2015 general election, was a focus on “improv[ing] the fairness of contracts for low-paid workers”.
Other legislative updates will impose higher penalties on employers that fail to pay the minimum wage.
Zero-hours contracts have courted controversy in recent months. Mike Ashley’s Sports Direct came under the most fire for its employment practices when it emerged last year that 20,000 out of its 23,000 staff were engaged on the contracts.
It is being taken to court by former employee Zahera Gabriel-Abraham, who started working at the retailer’s Croydon store in October 2012. She filed a lawsuit in August 2013 and a hearing is set for late November.
Bill Grimsey, retail veteran and author of the Grimsey Review into the future of the UK high street, said reform was essential: “At some companies that adopt zero-hours contracts, there is no real customer service as a consequence. Zero-hours contracts do not inspire loyalty.”
Schuh managing director Colin Temple said: “The average age of our shop floor staff is 21 and a lot are students. We lend ourselves to a bit of flexibility, but I don’t feel comfortable with zero-hours contracts.”
But others said the contracts were popular with workers.
One industry source said: “It needs to be regulated so it’s fair. The problem is that some employees want it; for example, to be able to choose not to work during the summer holidays.”
Harvey Jacobson, chairman of footwear supplier Jacobson Group, said he had “mixed feelings” about the contracts: “It gives a lot of flexibility to part-time workers. However, you have to make sure employers aren’t taking unreasonable advantage of it.”
Options for reform include enabling those employed on the contracts to work simultaneously for other companies and forcing employers to hire staff on full contracts after a year of service.
Prime Minister David Cameron and Deputy Prime Minister Nick Clegg issued a joint statement describing the Queen’s Speech as “unashamedly pro-work, pro-business and pro-aspiration”.
But the British Council of Shopping Centres (BCSC) said it had “fallen short”. Its chief executive Michael Green said: “A bolder speech would have put towns and cities firmly in the frame but it seems we, and town centres nationally, are still being left wanting.”
Phil Orford, chief executive of the Forum of Private Business, noted there was “nothing overly ambitious for businesses”.
He added the body would push to make sure the Small Business, Enterprise and Employment Bill contains proactive measures to support the battle against late payment to suppliers.
The 5p levy for plastic shopping bags, which will be made compulsory for supermarkets, also attracted criticism.
Sophie Bevan, head of retail at accountancy firm BDO, said the exemption for small and medium-sized retailers may confuse shoppers.
“More, however, should be made of the £70m that is expected to be generated from the levy that will be pumped into charities supporting environmental initiatives,” she added. “This is, in effect, a direct donation from the retail sector to what is a very worthy cause.”