Zero hours contracts: What do retailers need to know?

Why are we talking about this now?

It has emerged that Sports Direct employs 90% of its workforce on zero hours contracts. They are seen as controversial as those workers contracted to them do not have set hours and therefore no set monthly wage.

How do the contracts work?

Anyone who is contracted to work zero hours is expected to be available once they are called on to work, and usually faces a varying and fluid number of hours from week to week.

How common are they in the sector?

Sports Direct is not the only retailer doing it as, according to trade union GMB, Next has started using these contracts too.

Some 200,000 people in the UK are employed on zero hours contracts, according to the Office for National Statistics. But a British Retail Consortium spokesman says zero hours contracts are not widely used in the retail sector.

He says: “A key benefit for the employees of the very small number of retailers who use this kind of contract is the flexibility it offers. For example students away at university can return during the holidays, parents can juggle the hours they work to fit around family commitments and colleagues coming towards retirement can begin to reduce their hours gradually and work ad hoc to provide holiday cover.”

GMB national secretary Gary Smith says: “It’s not entirely new but it is a growing cancer. There are more retailers other than Sports Direct and Next doing it.”

Are there drawbacks to the contracts?

It is understood that the zero hours contracts mean workers have no rights to sick or holiday pay or benefits such as pensions and redundancies.

Smith believes it is an extremely unfair way of employing people. “They are exploiting low-paid workers and it’s eroding people’s rights at work. They don’t know if they are working from one week to the next,” he says. “The key is they don’t know what they’re going to be earning.”

He also disagrees that the contracts are put in place to offer workers flexibility.

“People want contractual hours. You can be contracted and still be flexible,” he says. “Lots of people have minimum contractual hours for what suits them.

“It is also undermining confidence in the economy because low-paid workers don’t want to spend their money.”

Is the Government doing anything to regulate the contracts?

Last month business secretary Vince Cable announced a review of the contracts in the UK. Some trade unions want the contracts banned but Cable is unlikely to do this because he believes some employees like the flexibility the contracts offer. Instead, he could bring in tougher regulations.