Zero-hours contract ban may hit jobs but benefit agencies
2 April 2015
Labour Party proposals to end zero-hour contracts, while reducing the flexibility of Britain’s workforce, may have hidden benefits for both recruitment agencies and umbrella companies, industry experts have said.
Thu, 02 Apr 2015
Labour Party proposals to end zero-hour contracts, while reducing the flexibility of Britain’s workforce, may have hidden benefits for both recruitment agencies and umbrella companies, industry experts have said.
On the campaign trail before the general election next month, Labour leader Ed Miliband promised a Labour government, if elected, would end zero-hour contracts. He said his government would pass a law that, among other changes, would give employees the right to a regular contract after 12 weeks of working regular hours.
The use of zero-hour contracts means an employer is not obliged to provide workers with a minimum number of hours’ work, and the worker is not obliged to accept any of the hours offered.
The banning of such contracts would introduce greater security to workers and this could lead to more permanent jobs on recruiters’ books, says Chris Seaton, an employment lawyer Burges Salmon.
He told Recruiter: “If there is a more restricted use of zero-hour contracts, it may mean they [employers] are going to have to look for more permanent workforce cover and, to that extent, the use of recruiters may increase.”
Agencies may not be the only ones to benefit.
Rob Crossland, founder and chief executive of professional umbrella employer Parasol, predicts the proposals could mean resourcing departments would look to make greater use of third-party employment providers that free them from the risks and costs associated with recruiting staff.
“Given the recent demonisation of our sector by Labour and the trade unions, it’s ironic that we could actually end up benefiting from this policy,” he said.
“We have always maintained that professional umbrella employers have an important role to play in the UK labour market, and this policy announcement by Labour goes to prove our point.”
However, employment lawyers have said the ban could prove detrimental to job creation in the UK; the latest unemployment data shows the number of people out of work has fallen to 1.86m.
Matthew Irvine, an associate at law firm Thomas Eggar, said the proposals could mean employers dismiss workers before they reached 12 weeks in employment or be reluctant to offer them work in the first place.
“Miliband’s proposal would potentially undermine job creation, jeopardise zero-hours workers’ current jobs and increase their insecurity,” he said.
Irvine added that the proposal, while attempting to give workers more stable contracts, did not adequately consider the likely implications for employers and the consequences for workers.
Colin Leckey, partner in the employment, reward and immigration team at law firm Lewis Silkin, agreed.
He said: “It is unclear whether a Labour government would or even could do anything to stop employers from re-jigging their employment arrangements so as to avoid any new protections, such as only offering contracts of less than 12 weeks' duration.
He continued: “It is likely that Labour has modelled its proposals on the Agency Workers Regulations, where agency workers acquire a raft of rights once they have completed 12 weeks of service for an end user.
“However, it was widely observed at the time that those regulations prompted a shift towards reduced-term engagements for agency workers. If the same happened here, it could have the unintended consequence of lower-paid, zero-hours contractors becoming more vulnerable, with employers increasingly disinclined to offer them longer-term contracts.”
On the campaign trail before the general election next month, Labour leader Ed Miliband promised a Labour government, if elected, would end zero-hour contracts. He said his government would pass a law that, among other changes, would give employees the right to a regular contract after 12 weeks of working regular hours.
The use of zero-hour contracts means an employer is not obliged to provide workers with a minimum number of hours’ work, and the worker is not obliged to accept any of the hours offered.
The banning of such contracts would introduce greater security to workers and this could lead to more permanent jobs on recruiters’ books, says Chris Seaton, an employment lawyer Burges Salmon.
He told Recruiter: “If there is a more restricted use of zero-hour contracts, it may mean they [employers] are going to have to look for more permanent workforce cover and, to that extent, the use of recruiters may increase.”
Agencies may not be the only ones to benefit.
Rob Crossland, founder and chief executive of professional umbrella employer Parasol, predicts the proposals could mean resourcing departments would look to make greater use of third-party employment providers that free them from the risks and costs associated with recruiting staff.
“Given the recent demonisation of our sector by Labour and the trade unions, it’s ironic that we could actually end up benefiting from this policy,” he said.
“We have always maintained that professional umbrella employers have an important role to play in the UK labour market, and this policy announcement by Labour goes to prove our point.”
However, employment lawyers have said the ban could prove detrimental to job creation in the UK; the latest unemployment data shows the number of people out of work has fallen to 1.86m.
Matthew Irvine, an associate at law firm Thomas Eggar, said the proposals could mean employers dismiss workers before they reached 12 weeks in employment or be reluctant to offer them work in the first place.
“Miliband’s proposal would potentially undermine job creation, jeopardise zero-hours workers’ current jobs and increase their insecurity,” he said.
Irvine added that the proposal, while attempting to give workers more stable contracts, did not adequately consider the likely implications for employers and the consequences for workers.
Colin Leckey, partner in the employment, reward and immigration team at law firm Lewis Silkin, agreed.
He said: “It is unclear whether a Labour government would or even could do anything to stop employers from re-jigging their employment arrangements so as to avoid any new protections, such as only offering contracts of less than 12 weeks' duration.
He continued: “It is likely that Labour has modelled its proposals on the Agency Workers Regulations, where agency workers acquire a raft of rights once they have completed 12 weeks of service for an end user.
“However, it was widely observed at the time that those regulations prompted a shift towards reduced-term engagements for agency workers. If the same happened here, it could have the unintended consequence of lower-paid, zero-hours contractors becoming more vulnerable, with employers increasingly disinclined to offer them longer-term contracts.”
