In straitened times, finding ways to cut staff costs can be all too tempting. But while zero-hour contracts offer some benefit to charities, they don't come without their risks, warns Jonathan Bruck.
The last few years of increasing economic uncertainty have led to unique costs pressures on all employers in the UK, particularly in relation to staffing. As a result, many charities have been using more innovative, flexible and low-cost ways of engaging individuals to work for them. One example of this has been the use of so-called “zero-hours” contracts.
First question – what is a zero hours contract? To properly answer that question, it is usually best to remind oneself of one of the main principles that underpin a standard employment contract relationship. An employment contract requires mutuality of obligation. That is that the employer is required to provide a certain number of hours work in return for a specified wage, and the employee is required to work those hours in return for that wage. If either party fails to perform their respective obligations, there may be a breach of contract.
A zero-hour contract, however, enables an organisation to contract an individual to work, without any obligation to provide them with a minimum number of hours. Essentially, individuals engaged on a zero-hours basis (often given hourly pay) are only required to work as and when asked to do so. This provides the organisation with greater flexibility in respect of their workforce.
This can be particularly useful for cash-strapped charities in the current economic climate because it allows for individuals to be engaged on an ad hoc basis, according to the needs of the charity. For example, many charities require additional staff to assist during a large appeal for donations. In that situation, having a bank of zero-hours contractors from which to source additional staff is potentially useful. Alternative options include engaging agency workers to plug the staffing gaps, which can prove more costly.
Supporters also argue that zero-hours flexibility actually suits a large proportion of the workforce, particularly those juggling family commitments. Recent figures from the Office of National Statistics showed that 23 per cent of the UK’s major employers use zero-hours contracts (up from just 11 per cent in 2004), which suggests that they believe in the flexibility zero-hours contracts affords.
However, zero-hour contracts have been criticised by some politicians and unions, who believe that they are one-sided and are being used by employers to side-step important obligations to employees. Specifically, there is concern that their widespread use deprives individuals of a stable income and working pattern.
Finally, the use of zero-hours contracts is not without legal risks and can lead to confusion as to whether the individuals engaged on them are ‘employees’ or just workers, which is an important distinction in law. Legal advice should always be sought in relation to those issues.
Whatever their rights and wrongs, the use of zero-hours contracts has certainly divided opinion. Charities more than other organisations may wish to consider all aspects of the debate, and whether they are consistent with charitable aims and ethos, before using them.
Jonathan Bruck is a Senior Solicitor in the Employment team at IBB Solicitors
