The Benefits of Zero-Hours Contracts

• 02.26.2015, 17:40
•  Europe,  World

The Office for National Statistics (ONS) in UK provides the data about zero-hours contracts in workforce of the country. According to the data, as BBC reports, nearly half of the big companies in the UK use a total of 1.4 million zero-hours contracts. It is interesting for economists what this new innovation in the employment is and if it is mutually beneficial for the employer and employee.

Zero-hours contract is an informal contract between employer and employee, which allows employers to hire staff with no work guarantee. It means that employees work only when they are needed by employers and they get paid based on the hours they have worked. This new type of contract makes workers to take those shifts they are offered by their employer. The other specificity of the contract is that sick pay sometimes is not included, although holiday pay should be.

According to the ONS survey on workers, 583,000 people comprising 2% of the UK workforce, were on zero-hours contracts. Some separate sources also confirmed that there are 1.4 million contracts of zero-hours. The survey findings show that the advantage of zero-hours contracts is that one worker can hold more than one contract. Some other surveys on this topic have approved that one in five employers are holding at least one employee on zero-hour. Surveys have shown that in the UK 17% of private sector firms, a quarter of public sector employers and a third of voluntary sector organizations used zero-hours contracts. The UK workforce has the following picture: 22.2 million full time workers, 8.2 million part-time workers, 1.4 million zero-hours contracts.

What are the advantages and disadvantages of the zero-hours contracts?

One of the disadvantages can be considered not enough financial stability and security. Most of the time workers do not get sufficient working hours on the week bases. Also they do not have the same rights as traditional contract possessors. Critics on this issue argue that it gives advantage from the point of view of employer, as they avoid their responsibilities to employees. Employers may use it as a management tool, which means offering more hours to favored employees rather than less favored ones.

The trick of the zero-hours contracts gives positive figures to the government’s unemployment data, because people on this contract are counted as employed, while they are receiving insignificant hours of work and pay.

The main advantage of the currant contract is the flexibility for employers, because the same person can work in different workplace at the same time. The case works especially for tourism and hospitality sectors. Some workers consider themselves as full time workers as they work 30 hours a week, despite they hold zero-hours contract. From the point of view of employer the zero-hours contracts help them to avoid some fixed taxes to pay.

Summarizing the results of surveys and the views of both employee and employer zero-hours contracts are quite beneficial. In any case there are many people that can work only for several hours during a week, such as mothers or people with some health problems. It is fact that the contract is very flexible. People, who are not satisfied with their jobs, can easily change and find a new one. This is also a good opportunity for people who would like to invest his or her time in self development and knowledge enlargement, but at the same time have enough budget for the living cost and other expenses.