Comment: Why zero hour contracts are indispensable in retail

Zero hour contracts have long been a mainstay of the retail sector and for many businesses having a bank of sales assistants on these types of contracts is a big plus. It enables busy times such as Christmas and the summer sales to be staffed by an experienced workforce, with the retailer able to easily cut back on workers in quieter times.

New research from the Chartered Institute of Personnel and Development (CIPD) has suggested there could be approximately one million zero hours workers in the UK - four times higher than official statistics had previously suggested. This news, coupled with the planned protests outside Sports Direct stores after it was revealed that 20,000 of their 23,000 workers are employed on zero hour contracts, means this employment practice, rife in the retail sector, is being further called into question.

Flexibility is key, both for retailers and for casual staff unwilling to make a long-term commitment to work – such as students, older people and parents, and in these situations zero hour contracts work well. The CIPD survey found that people in the 18-24 age group and over 55 were twice as likely to be on such contracts as any others. Getting rid of them entirely in the retail sector would not only be rash, it would be unviable.

However, there are a few legal issues retailers must be aware of when taking on staff on a zero hour basis.

For instance, many staff on this type of contract are classed as a ‘worker’, meaning they would not be entitled to the same levels of protection as an employee. However, the CIPD found that 38 per cent of the people they surveyed on zero hour contracts actually described themselves as working full-time – 30 hours plus in a week. Even if an employment relationship is not intended, it can be  unintentionally created because of how the relationship actually works and provide the staff member with more legal rights if there was a dispute.

While a staff member on a zero hour contract is generally not entitled to sick pay, they are eligible to 28 days pro-rata holiday – the employer must be aware of this and track carefully who is entitled to how many days off – a flexible workforce can make this difficult to monitor.

From a non-legal perspective, a large bank of zero hour workers can create an insecure and disaffected workforce. When customer service and brand loyalty is essential in the retail sector, savvy managers may well question the benefits of having a large majority of staff on such temporary contracts.

The recent headlines over Sports Direct and the lack of figures over how many UK workers are on zero hour contracts has prompted calls for the government to launch a full inquiry into the use of these contracts. Time will tell what the future holds for the retail sector in this respect, but undoubtedly – when used responsibly, zero hour contracts can be indispensable.

Fiona McAllister is a Partner in the employment team at Mundays LLP