Alan McCormack | Senior Associate

Rise in Number of Zero-Hours Contracts

The last three months of 2016 saw another rise in the number of people on zero-hours contracts (ZHCs), according to new analysis by think tank the Resolution Foundation.

In total, 910,000 people were employed on these types of contracts, which is apparently the highest figure ever recorded.

Growth Rate Slows Down

However, while total numbers have reached a new peak, the rate of growth of these sometimes controversial employment contracts appears to be slowing down. Over the second half of 2016, the number of ZHCs grew by only 7,000, or 0.8%. This is significantly lower than the 7.7% growth that occurred during the second half of 2015 and slightly slower than employment growth across the economy during that period.

According to the think tank, there are a number of possible reasons for this slower growth, including:

  • With the employment rate at a record high and concerns growing that the supply of labour from the EU could be limited after Brexit, employers may be finding it harder to fill roles without guaranteeing hours of work.
  • The reputational damage that some firms using ZHCs have received over the last year.
  • The initial rapid increases, which were driven by raised awareness of zero-hours contracts, may have reached its limit, with most ZHC workers now aware of the kind of contract they’re on.

Ongoing Popularity of ZHCs

Although the rate of growth is slowing down, the Resolution Foundation has stressed that it’s too soon to “call time” on their use because they continue to be popular with some employers and workers. Around 46% of the net increase in ZHCs in the last year has been among workers aged 55-64. The Foundation suggests that for some of these workers, ZHCs may offer a flexible transition from full-time work to retirement, allowing them to top up their income.

“This is about more than just the general slowdown in employment growth, with a bigger drop visible in the growth of zero-hours contracts,” explained Conor D’Arcy, Policy Analyst at the Resolution Foundation. “The negative publicity these contracts have attracted may well have played a role in their slowdown, as firms rethink their use. Not providing guaranteed hours of work for those who want it, especially those in low paying roles, can have a huge negative impact on the living standards of workers and their families, as budgeting becomes near impossible.”

“The challenge now is to ensure that these still-popular contracts are reserved for cases of genuine desired flexibility for worker and employer,” he added.

Taylor Review of Employment Practices

The growth in the use of ZHCs, together with a rise in agency workers and self-employment, are all contributing to a sense of insecurity in the workplace, which is one of the issues the Government is seeking to address through the Taylor Review of modern employment practices.

The Taylor Review was commissioned in October last year, and is tasked with looking at how employment practices need to change in order to keep pace with modern business models. It will consider the implications of new forms of work on worker rights and responsibilities – as well as on employer freedoms and obligations.

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Alan McCormack

Alan McCormack

Employment Law Team

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