Bizdaq Blog

Zero hour contracts rejected ahead of election

It’s been a hot topic on the hustings, with every party weighing in on the pros and cons of what’s become a divisive issue for employers and employees alike.

Bizdaq recently commissioned a survey of SMEs, to canvas their views ahead of the election. SMEs have become a significant section of the electorate, together employing 25 million people and turning over a total of £3,500 billion. We surveyed 1000 business owners, all with fewer than 15 employees and a turnover below £3m.

In addition to collating opinions on some of the top business concerns – including those relating to a change in taxation, late payment and rates reform – the study also asked small business owners to comment on one of the most contentious areas of this election – zero hour contracts.

Zero no-go?

Arguably, small business owners have the most to gain from zero hour contracts. Yet, despite ongoing reports that small businesses are using – and abusing – zero hour contracts in order to provide a flexible workforce, the majority of our respondents had no use for the contracts. A substantial two-thirds (66%) of small business owners told us that zero hour contracts were not important to their business model, with only 16% of owners feeling that it was an important issue for them.

More worryingly, when asked whether they planned to increase staffing levels during 2015, only a quarter of respondents (26%) said that they planned to take on more employees, leaving a large number of business owners (26%) with no intention of recruiting during 2015.

What are the parties pledging?

Every party has promised some action on zero-hours contracts – a practice which, though it may be less common that people might have expected within small businesses, nevertheless has grown fourfold since 2010.

Labour is proposing a package of protections to end what it calls ‘zero hours Britain’ including regular contracts for those working regular hours, protection for refusal of extra hours and a legal right to a regular contract if they’ve worked without guaranteed hours for a period of 12 weeks.

The coalition outlawed exclusivity clauses which prevented employees from working elsewhere when their zero-hours employer didn’t need them. Since then, the Liberal Democrats have focused on tackling exclusivity arrangements, although the Tories are less forthcoming – Iain Duncan Smith told the BBC in a recent interview that zero-hours contracts suffered from an image problem more than anything else and perhaps would benefit from being rebranded as ‘flexible hours’ contracts.

Meanwhile, the UK Independence Party (UKIP) has pledged to compel large employers to grant workers fixed-hours contracts after 12 months of working on zero hours terms. The employees wouldn’t be obligated to accept a regular contract but would have to be offered the choice, nevertheless. Green party leader, Natalie Bennett, would prefer an outright ban on the contracts, believing that workers are often put in an impossible situation, with the state forking out corporate welfare to cover the shortfall.