This report delves into the trajectory of zero hours contracts and potential reforms under the Labour government. Key considerations include the historical context and perceived exploitations within these contracts.
- Zero hours contracts have lacked a formal legal definition but are understood to provide work without guaranteed hours, leading to significant worker insecurity.
- These contracts ascended in the late 1990s, with criticisms peaking in 2013 when employers like Sports Direct heavily relied on them.
- The Government intervened in 2015, banning exclusivity clauses, but uncertainties remain, highlighted by the 2017 Taylor Review.
- Labour has committed to banning ‘exploitative’ zero hours contracts, sparking debate over potential impacts on businesses and labour laws.
Zero hours contracts represent a contractual agreement where an individual is not guaranteed any working hours but agrees to be available as required. This lack of job security has resulted in over four million individuals being engaged in insecure jobs, with over one million specifically on zero hours contracts. The contracts became highly prevalent in the late 1990s and early 2000s, prompting significant discourse on their ethical implications when, by 2013, several companies faced criticism for their over-reliance on these flexible working frameworks. Sports Direct emerged as a notable example, with approximately 90% of its workforce operating under such contracts, highlighting the potential for employer exploitation.
In response to mounting criticisms, the government, in May 2015, banned ‘exclusivity clauses’ in these contracts to allow workers to accept other employment opportunities. Despite this, concerns about the insecurity of zero hours contracts persisted. A pivotal moment came in 2017 with the ‘Good Work: Taylor Review of modern working practices’, which revealed that many workers on zero hours contracts experienced a lack of control over their working patterns and recommended providing a right to request more predictable working conditions.
In September 2023, the Workers (Predictable Terms and Conditions) Act was given Royal Assent, aiming to extend rights to workers by enabling them to request changes for more predictable work patterns. This legislation, although yet to come into force, specifically targets zero hours contracts to mitigate their unpredictability. Labour’s stance further solidifies this direction with a campaign commitment towards banning ‘exploitative’ zero hours contracts, reflected in the King’s Speech.
Labour’s approach has been to eradicate what it labels as exploitative employment practices, ensuring that workers have contracts reflecting actual hours worked and receive appropriate notice and compensation for any sudden shift changes. However, business leaders have expressed concerns regarding the increased operational costs these reforms might entail, particularly in an already challenging economic climate. Consequently, Labour altered its original mandate, agreeing instead to target only the ‘exploitative’ elements of zero hours contracts.
The future of zero hours contracts under the Labour government is poised on a comprehensive re-evaluation of what constitutes ‘exploitative’. Policy briefings, such as those from the University of Warwick, suggest that zero hours contracts could be exploitative where regular work does not align with contract terms. These briefings advocate for workers to have rights to contracts that reflect regular hours worked and to receive fair notice for shift cancellations. Labour has indicated that before any legislation is enacted, a full consultation will be undertaken.
Labour’s reform agenda on zero hours contracts aims to eliminate exploitative practices while balancing business interests amid economic constraints.
