The Business Secretary Vince Cable has announced a package of measures that he claims will inject more fairness into the workforce and in wages for British workers.
Following an initial review over the summer, Dr Cable announced has said that he will launch a consultation on zero-hours contracts (ZHC) in order to tackle any abuses Government finds, particularly those involving exclusivity.
Dr Cable has also asked the Low Pay Commission (LPC), the body that advises Government on the National Minimum Wage (NMW), to consider how the NMW may be able to rise faster than current conditions allow over the medium term. This will allow low paid workers to benefit from the emerging economic recovery.
The review into ZHC conducted over the summer highlighted four key areas of concern:
- Exclusivity: This is where someone agrees to a contract that does not guarantee them a minimum number of hours and is stopped from working for another company. This is described as an ‘exclusivity clause’. In certain cases this can mean that people were stopped from looking for work elsewhere particularly when they needed more hours to bump up their earnings. Feedback from employers themselves suggests awareness that there can be abuses that limit flexibility.
- Transparency: There is no clear or legal definition of a ZHC and it can cover a number of working arrangements. This can lead to confusion and a lack of understanding on contract details and what it means for the individual. In some cases people were not aware of the fact that there was a possibility that they might not be offered work on a regular basis.
- Uncertainty of earnings: The amount of money a person on a ZHC can expect to earn is dependent on the number of hours worked. This means that people on a ZHC find it hard to calculate earnings and it can lead to concerns about how benefits might be affected.
- Balance of power in the employment relationship: The review found that people perceived they would be penalised if they did not take hours offered even if the hours were offered at very short notice and did not suit. This meant it could lead to a climate of fear that a person is less likely to be offered regular work in future if they failed to accept the hours on offer.
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