Zero-hours contracts are one of the more controversial topics in the UK today, with revelations arising about retailers such as Sports Direct and Amazon UK employing large numbers of their employees under this system. Highly-prominent establishments such as Buckingham Palace have hired several employees on zero-hours contracts as well. Some labor unions are calling for such types of contracts to be done away with, claiming that they undermine workers’ rights and reduce their job security in an era of widespread economic difficulties. On the other hand, companies and proponents of zero-hours contracts scoff at these suggestions, claiming that such contracts have helped the UK workforce maintain high employment levels without resorting to massive layoffs.

Zero-hour contracts explained

According to the Resolution Foundation, “A zero-hours contract is a type of employment contract under which an employer is not required to offer an employee any defined number of working hours and the employee is, in turn, neither guaranteed any set number of working hours nor obliged to take any offered. The individual therefore only receives pay for the working hours for which they are required; hours which may be subject to variation on a daily or weekly basis.”

From an employer’s viewpoint

In practice, zero-hours contracts give employers and companies the flexibility to adapt to seasonal variations in demand and varying staffing requirements in industries that experience fluctuations in activity, such as amusement parks, healthcare and sports facilities, educational institutions, and others. Employers may also desire to minimize their risk by having the option of reducing their employees’ working hours in case of slackening demand for their products and/or services, or due to negative economic circumstances. Zero-hours contracts also help companies minimize expenditures on training and on-boarding new workers, by having in reserve a large pool of trained workers ready to report to work, rather than having to identify, recruit, and train new workers.

Ramifications for employees

The flip side of zero-hours contracts is that workers can face economic hardship when they do not get to work enough hours to make ends meet. Long-term employment and career plans can often be jeopardized when workers are faced with job insecurity and uncertain incomes. A survey by the Chartered Institute of Personnel and Development (CIPD) estimated that approximately a million Britons work under zero-hours contracts. This is far higher than the Office of National Statistics (ONS) estimate of 250,000 people working under such contracts. Fortunately, only 14% of workers surveyed by the CIPD stated that their employer did not provide them with enough work hours to make ends meet. Certainly, zero-hours contracts can be beneficial for individuals in certain demographic groups—such as those under age 25 and those over 50, and for students or semi-retired persons—who may need (or only be able to work) minimal or reduced working hours.

Recommendations for employers

With the recent spate of controversies over large numbers of the UK workforce working under zero-hours contracts, companies that hire employees under these terms must exercise abundant caution when it comes to tracking the often-limited working hours put in by their employees. Manually entered and collated timesheets, punch card systems, spreadsheets, and other outmoded work time tracking systems simply do not provide the level of accuracy, user-friendliness, and accountability needed to ensure that employees on zero-hours contracts are paid correctly for their work.

Findings from the 2011 Workplace Employment Relations Study (WERS, Third Edition, 2013) indicate that “There was also a doubling in the percentage of workplaces that had some employees on zero hours contracts between 2004 and 2011 (from 4% to 8%)…In 2004, 11% of workplaces with 100 or more employees used zero hours contracts, increasing to 23% in 2011.”

As the number of employees on zero-hours contracts continues to increase in the UK, employers would be well advised to adopt modern employee time tracking systems. They not only ensure peace of mind for employers in these litigious times, but also give employees a fair deal and transparency into their work allocations, as well as clarity into wages receivable.

Cloud-based systems such as TimeAttend from Replicon give employers the ability to easily scale up with their staffing requirements, whether their employees are on zero-hours or other types of contracts. With its intuitive interface, users won’t need more than a few minutes of training to use, which improves accuracy of reporting and compliance with record-keeping regulations. Ultimately, both employers and their employees benefit from using time tracking solutions that promote fairness, compliance, and better labor relations.