Guide for Employers | What are the pros & cons of zero hours contracts?
Understanding the advantages and disadvantages of zero-hour contracts is pivotal in shaping workforce flexibility. In this blog, we’ll dissect the pros and cons, looking at the benefits of zero hour contracts for both employers and employees, to help you make informed staffing decisions.
It’s rare for HR and employment law to hit the headlines. However, the spotlight has remained firmly on employers’ use of zero hours contracts in the last few years.
Companies that have used them extensively in their business have been on the brunt of considerable criticism, workers have been very concerned about their job security and the press have been very vocal with their views!
Nevertheless, they remain a part of the British workforce. In this article, we will explore the benefits and disadvantages zero hours contracts offer employers and workers.
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Pros and cons for employers
The biggest advantage of using zero-hours contracts is flexibility.
For any organisation, it is invaluable to be able to respond quickly and effectively to business fluctuations. Engaging people on zero hours contracts allows employers:
- to deal with an unforeseen event (e.g. to manage a sudden increase in demand)
- to cover a particular event (e.g. promotional events to launch a new product)
- to cope with absences (e.g. maternity leave or long-term sick leave)
- to deal in the build up to a busy period (e.g. in the run up to Christmas)
- to have flexibility when starting a new business or when faced with limited or variable funding.
It can be frustrating to see your staff twiddling their thumbs and getting paid for the privilege. This is why zero hours contracts are very attractive for employers. Under a zero hours contract, you are under no obligation to offer them work and the individual is only paid for the hours they actually work.
When looking at different recruitment options, employers will undoubtedly be looking at costs. Hiring people on zero hours contracts can be cheaper than paying the agency fees and commission for an agency worker, so it can help keep costs down for your organisation.
However, the flexibility of these types of contracts can backfire on employers. As individuals are under no obligation to accept work, it can be difficult to get someone to undertake the work needed. This can especially be the case if people are required on very short notice.
The other concern for employers is that it may end up that different people are doing the same job. This may lead to differences in service delivery and quality of work. It is important to make sure that everyone is meeting company standards and that there is consistency with everyone’s work to avoid problems.
Additionally, employers often find zero hours contracts tricky – it can be hard to work out holiday pay, annual leave accrual, whether the employment relationship continues between engagements and employment status. Getting this wrong can lead to all sorts of claims.
Pros and cons for workers
You may be surprised but there are actually advantages for workers too.
Flexibility is also one of the biggest attractions for workers. If an individual is at university or college, has a part-time job, is semi-retired or has care responsibilities, zero hours contracts give them the opportunity to work without having to give up their other commitments. If they do get called to work, they can turn it down if they can’t do it due to other prior commitments.
Others see it as a way to get your foot in the door. They feel it may give rise to permanent opportunities with an organisation.
The cons for workers have been well documented by the press. Zero hours contracts can mean that there is no real job security and fixed income. They don’t know when the next shift or pay check is heading their way.
If they are given little notice of work, they may not be able to take the job or if their job is cancelled at the last minute by the employer, they may be left with no work at all. This makes it difficult to plan ahead, leading them to be in a vulnerable position.
This is why employers should try and give as much notice as possible of any available work. This will give the individual time to arrange their schedules and ensure that they can deal with all their commitments. Employers should also avoid cancelling assignments at the very last minute as this allows workers to pick up another assignment.
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