Government must strike right balance in navigating the zero-hours minefield
T HE contentious issue of zero-hour contracts has entered the media spotlight this week following the Government’s approval of draft legislative proposals from Jobs, Enterprise and Innovation Minister Mary Mitchell O’Connor, and Employment and Small Business Minister Pat Breen.
Such approval by the Cabinet paves the way for the introduction of legislation that will attempt to enhance employment protection for low-paid workers and those operating under contracts which provide little guaranteed working hours or certainty of income.
Labour’s Ged Nash, former business and employment minister, published a report entitled ‘A Study on the Prevalence of Zero Hours Contracts among Irish Employers and their Impact on Employees’ in November 2015.
The report was compiled by the University of Limerick and has been factored into the most recent legislative proposals as approved this week. It found that zero-hour contracts were not extensively used in Ireland, but of concern was the emergence of ‘if and when’ contracts, where workers were not contractually required to make themselves available for work.
That report also found that when such contracts were used inappropriately, it greatly undermined existing legislative protections.
When trying to define zero-hour contracts per se, it’s quite difficult to provide a definitive answer as there is no harmonised definition of zero-hour contracts from a European perspective.
A zero-hour contract, in its simplest form, is an agreement between an employer and employee, where there is zero obligation on either party, so in effect there is no obligation on the employer to provide work nor the employee to accept work. Such contracts or arrangements are also often referred to as “casual contracts”. It is, however, more common in practice, and particularly in Ireland, for employers to guarantee at least a certain number of minimum hours per week to staff as opposed to guaranteeing none.
Technically, employees working under zero-hour type agreements are generally deemed to have the same employment law rights as permanent employees. In reality, though, the unfavourable terms and conditions of such contracts can be arguably construed as unfair, due to their ad hoc nature, whereby employees face real uncertainty as regards hours of work and income security. This can have a stifling effect on workers and their families from economic, societal and psychological perspectives.
Another common problem is that even when certain protections are in place, many employers can use existing loopholes enshrined in current legislation to bypass such employee-rights safeguards.
For instance, in the Irish context, zero-hour contracts stem largely from the Organisation of Working Time Act, in which Section 18 states that employees operating under such contracts must make themselves available for work – in other words to be on standby for the hours they are contracted for, despite no guarantees of getting actual work for those contracted hours.
Section 18 of the act does afford protection in the form of entitlements to some remuneration, even if the employee does not acquire the hours they are contracted for. This remuneration is based on either 25pc of their contracted hours or 15 hours, whichever is less.
Section 18 will not apply such protections where an employee has no hours guaranteed, as no obligation to accept work exists. For instance, a likely scenario could be where an employee is offered 15 hours’ work one week, but only seven hours the following week.
Despite such loopholes, Ireland is still better off than most of its European counterparts as regards the protections afforded to workers operating under such contracts. The UK has seen a rapid rise in these types of employment arrangements in recent years, which in turn has stirred much political debate .In August 2016, research showed that the number of UK workers on zero-hours contracts had leapt 20pc in a year to more than 900,000 – or 2.9pc of the working population.
It has been indicated by the Government that the new draft proposals will include an amendment to the Organisation of Working Time Act which will outlaw zero-hour contracts “in most circumstances” unless such work is genuinely casual work, emergency cover or short-term relief work for the employer.
It also worth noting that New Zealand gained much media attention last year when its Government passed legislation that banned zero-hour contracts, a move heralded as a first of its kind in the developed world.
New Zealand’s Employment Standards Legislation Bill came into force in April 2016. The rationale for that pioneering change was based on the overriding assumption that such agreements were exploitative in nature towards workers and their rights.
As expected, the various reactions to the new legislative proposals in Ireland have been divisive. The business community, through advocates such as Ibec, has far different views from trade unions when arguing in favour of such contracts or hybrids thereof.
Many businesses argue that such contracts, although not ideal, do serve an economic necessity – particularly in sectors where seasonal workers are prominent, or for new start-ups where flexible working hours for staff can be an invaluable asset in getting a business off the ground.
Union representatives, however, have largely welcomed the new proposals. Many trade unions deem such legal instruments as inherently unfair and exploitative in nature and have previously called for current loopholes to be closed and for more protective measures to be introduced. For example, measures that limit the length of time a position can be filled using such contracts or rules requiring employers to provide for longer notice periods to those on standby.
The debate on zero-hour contracts is not likely to go away any time soon. We will need to wait and see how urgently this draft legislation is progressed. The predominant factor for this
Such contracts can have a stifling effect on workers and their families from economic, societal and psychological perspectives
Government or successive governments will be to try to strike a fair balance between the age-old dilemma of competing economic interests of employers and the safeguarding of workers’ employment rights.
It is apparent from recent studies that Ireland is far from the bottom of the class in this regard, when compared with other developed countries, which is a positive position. However, it will be key for the Government to quickly stem the growth of the emerging ‘if and when’ contract which resembles a pure zero-hour contract in its most exploitative form, while demonstrating the necessary political appetite and skilled manoeuvrings in which to negotiate through the legal and policy wranglings of vested interested groups, in order to achieve this zero tolerance approach to zero-hour contracts.
Jobs,Enterprise and Innovation Minister Mary Mitchell O’Connor at Leinster House. Photo: Tom Burke