Are zero-hours contracts more trouble than they're worth?

McDonald's, Wetherspoon's and even Sports Direct are starting to give staff more options.

by Jack Torrance
Last Updated: 12 Sep 2016

It’s easy to see the appeal of using zero-hours contracts, at least from an employer’s point of view. Flexibility, lower fixed costs and the ability to ‘turn on the tap’ and make sure you have enough hands on deck at peak times – and cut back hours drastically when things are quiet. It’s little wonder that more than 900,000 workers are on them, up 20% on last year.

But is it possible we’ve hit peak zero-hours? Some large employers that have drawn fire for their use of the controversial contracts have announced they plan to reduce them. Back in April, McDonalds offered its staff the option to move to a fixed-hours contract of four, 12 or 30 hours per week.

Last week in a bid to rehabilitate its toxic image Sports Direct said it will offer its store staff a similar option, and look to reduce its use of agency staff in its warehouse (by how much remains to be seen). And yesterday Tim Martin, founder and chief exec of pub chain JD Wetherspoon, told Buzzfeed that his business will be offering its staff fixed hours too, after a successful trial. If super cheap fast food chains, super cheap pubs and super cheap clothes retailers can afford to give their staff a proper contract, perhaps other companies will realise they can afford to do the same.

Of course some workers like the flexibility of the contracts. A Chartered Institute of Personnel and Development survey last year found that zero hours workers were actually slightly happier than their fixed-hours counterparts. It’s easy to see how a student or the semi-retired would be happy to have the freedom to turn down work when they don’t want it. McDonalds says that just 20% of its workers chose to switch.

But for those who depend on their income to pay the bills each month, life on a zero hours contract can be unhappy indeed. As McDonalds noted, lack of a guaranteed income makes it harder to secure credit for things like mobile phones, car loans and mortgages. Martin said ‘up to 70% or 80%’ of his workers had decided to switch. For many workers without the prospect of a new career in the future, the idea of staying on a permanent zero hours contract must be galling.

And that creates a problem for employers. A worker that doesn’t their value their job isn’t going to be motivated and work in the best interests of a company. It’s a lot harder to give a toss about a customer’s whims and fancies when you don’t feel like your boss gives a toss about yours.

There are other downsides too – your freedom to only use staff when you need them is matched by theirs to only work when they want to. You might be in more of a position to refuse than they are, but there’s always a risk staff will leave you in the lurch, and you won’t be able to do a thing about it. And zero hours workers are more likely to leave, creating a bigger recruitment bill and damaging staff morale.

There's also a reputational risk as zero hours contracts have become such a political hot potato. Just today the TUC's general secretary Frances O'Grady singled out Sports Direct's use of the contracts in a speech in which she warned, 'any greedy business that treats its workers like animals – we will shine a light on you.' The effectiveness of such activisim is debatable but nobody wants to be the subject of negative attention. 

It seems unlikely that the contracts will die out altogether. Some industries and companies really do need that level of flexibility and rely on them to function. Sports Direct hasn’t made any commitments about when its warehouse workers are likely to get fixed hours. And many low-wage workers have found themselves in the gig economy, enjoying even fewer protections than afforded by a zero hours contract. But for responsible companies in the public eye it seems likely they will soon be as unfashionable as Sports Direct’s Argyle golf sweaters.

Image credit: CTSabre14


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