Properly drafted contractual arrangements can give employers similar flexibility and employees guaranteed benefits
Following the announcement that Vince Cable has ordered a review into zero-hours contracts, criticism by the TUC and others of the practice of offering such contracts has been reported widely in the press. But are such contracts intrinsically exploitative?
Flexibility
For those engaged in delivering social care services in the charity sector, the commercial realities of short-term funding (usually contracts are tendered on a three-yearly basis) and tight margins in an increasingly competitive contractual environment mean that flexibility is a key consideration. Organisations also need to be able to redeploy staff readily between projects and sites in response to changes to commissioned services. Many see zero-hours contracts as one of a suite of options available to ensure the standards set by the commissioners of the services they deliver are met in a cost effective manner.
Contracts
Zero-hours contracts do not have a uniform definition. Zero-hours staff are mainly casual workers rather than employees, and the defining feature generally is the absence of mutuality of obligation; in practice, this means workers are able to turn down jobs or shifts they are offered. But staff can also work under zero-hours employment contracts. As employees, they have the same rights and entitlements as permanent members of staff, except there are no guarantees on the minimum number of hours’ work they will be offered.
Such arrangements are not necessarily chosen by staff, but employees on zero-hours contracts will be entitled to all the usual employment benefits including holiday and sick pay on a pro-rated basis and, in practice, may be working a significant number of hours. Indeed we usually advise employers to keep individual zero-hours contract arrangements under review to ensure that part-time (in other words, fixed hours) contracts are not being created inadvertently.
Certainty
While zero-hours and casual contracts are legitimate means of providing flexibility, they are not the only options. Permanent contracts can provide certainty concerning employment status for employers as well as employees and flexibility can be achieved by including appropriate provisions. These would include ensuring that:
- job descriptions are non-contractual to allow for changes
- flexibility, mobility and variation clauses are included in the contract itself (though not carte blanche to vary terms willy-nilly)
- sensible levels of employee benefits are offered.
The charity sector has historically been generous beyond its means in relation to employee benefits, in line with its rights-based culture and sometimes as a legacy of links with local authorities. Charities have adopted a more commercial approach over the last 10-15 years, accelerated by the increasing drive to deliver public services through third sector organisations and the replacement of grants by commercial contracts.
Comment
Cuts to public sector funding mean contract specifications are ever tighter and economies have to be found so organisations can remain competitive while ensuring that service commissioners’ targets are met. There is clearly a discussion to be had within and between organisations concerning best employment practice against the back drop of these increasing commercial pressures. But to tarnish the reputations of charities delivering public services with allegations of unscrupulous employment practices is far wide of the mark.
Jane Klauber is a partner in the charity and social business team at Russell-Cooke
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