Comment: Vince Cable's zero-hours contracts decision should be welcomed

Vince Cable’s announcement to rule out a complete ban on zero-hours contracts comes as a welcome decision for employers and employees. 

Business Secretary Vince Cable has ruled out a complete ban on the use of zero-hours contracts, stating that they offer employers welcome flexibility. On the back of a launch of a consultation into these types of contracts, Cable has stated that they have a legitimate place in the labour market, despite evidence that some companies have exploited these contracts in the past.

What’s clear is that Cable’s announcement should be welcomed. The flexible working arrangements which zero-hours contracts provide can appeal to both worker and employer - but only if they are implemented correctly. One risk involves using employment terms interchangeably, without clarifying the exact nature of a contract. In doing this, employers leave themselves wide open to potential discrimination claims.

For example, ‘casual’ contracts are not the same as zero-hours contracts. Working under zero-hours contracts allows workers to benefit from certain employment rights, such as paid holiday and redundancy rights, which are unlikely to apply if the worker was hired as a ‘casual’ worker.

As a way of reducing the ambiguity surrounding such contracts, terms and conditions must be clearly communicated in order that workers can clearly understand their rights and what is expected of them. This process shouldn’t be used as a way to create divisions within the workforce, but instead, as a tool for ensuring transparency from the start of the relationship.

Zero-hours contracts can bring specific benefits to those who choose to work in this way. In particular, the flexible working arrangements provided by such contracts can appeal to students, who may value the choice they are given about when and how much they work because this means they can fit it around their studies.

Working parents may also choose to work under such arrangements, simply because the flexibility of these contracts means that they can manage their hours to fit around their home circumstances.  The other benefit of zero-hours contracts is that it means people in full-time employment elsewhere can potentially supplement their income with a second job. 

In today’s economic climate, it isn’t always viable for employers to appoint all staff on permanent contracts with set hours. Consequently, as long as the system used to manage workers on such contracts is well administered, they can provide an effective and flexible solution for all.

There is often ambiguity around the differences in these types of contracts, but encouraging clear communication between the worker and the employer and gaining clarity on the type of contract that workers adopt, is undoubtedly a step forward in reducing misunderstandings or abuse in the workplace that could and should be easily avoided.

Paula Whelan is head of employment law at Shakespeares