Zero-hours contracts are firmly on the political agenda, with "tougher new penalties" for those abusing them announced in today's Queen's Speech.

Much is being made of the fact that an estimated 1.4 million people in the UK are on zero-hours contracts. Contracts that provide no specific hours or times of work, or indeed any guarantee of work at all.  Contracts whereby an ‘on-call’ arrangement is set up and employers must only compensate workers for hours undertaken.  A simple concept designed to provide mutual flexibility.

Many workers on these contracts do not feel the perks of this flexibility. This is where the criticisms lie, with commentators arguing that the arrangements allow business needs to be prioritised to the detriment of workers’ rights. 40% of workers receive no notice of shifts and many are obliged to take work offered. The issue coming in for most criticism is the use of “exclusivity clauses” in such contracts by some employers, restraining staff from seeking employment elsewhere when work – and income – is not forthcoming. A further area of concern is the inability of workers on zero-hours contracts to secure mortgages and other forms of credit.

Although historically mainly used in hospitality and retail sectors, new figures show that the use of zero-hours contracts is now much more widespread. Workers in professional occupations, senior managers and directors make up 20% of people on zero-hours contracts in the UK. Employment rights are often diminished with no entitlement to statutory redundancy pay, sick pay or unfair dismissal protection. Employers need no justification for favouring one worker over another when offering shifts and are often accused of doing so to reward workers who are most readily available when called upon.

For all the emotive criticism that the arrangement has invited there are many workers who do benefit from the flexibility that zero hours contracts provide. This is especially the case in respect of students, the retired and those with family commitments.

There is a reason that zero-hours contracts are used across the public, private and voluntary sectors in the UK, from retail to the NHS and higher education. They are a crucial business tool. Sectors such as hospitality and tourism by their very nature necessitate a workforce that can react to fluctuations in demand. Often the demand in these sectors is predictable, the flexibility is mutual and the contracts suit both parties. Nearly half of workers on zero-hours deals are entirely satisfied with having no minimum hours according to research by the Chartered Institute of Personnel and Development.

So evidently the question is – how can the benefits of this model be harnessed into a workable solution for all who use them?

There are variations of zero-hours contracts that provide ‘core hours’ for employees and give them real contractual flexibility. These should be encouraged. Regulation has been called for to address the pitfalls of zero-hours contracts. One possibility is that, like those on fixed term contracts, workers on zero-hours contracts have the legal right to “convert” to fixed hours after a specified period of time. The Parliament’s Scottish Affairs Committee has published an interim report recommending that the contracts are only used when they can be objectively justified and that safeguards should be put in place to prevent workers’ rights from being exploited. Yet if the regulation of these contracts is too tight it will cause a decrease in job opportunities to the detriment of businesses and employees alike.

It is not clear at this stage what the future of zero-hours contracts will be.  One thing that is clear is that they will remain a hot topic on the political agenda for the foreseeable future.

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