Labour Party Announces Zero-Hour Contract Clampdown Plans

Latest Pledge Supported By Trade Unions And Rejected By Business Groups

01.04.2015

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The Labour party has announced that it would outlaw the majority of zero-hour contracts if it formed the next Government following the General Election on 7 May.

Revealing the policy on a day of election campaigning in which the needs of businesses took centre stage, Ed Miliband said he would give workers on zero hour contracts the right to a regular contract within 12 weeks.

According to Labour, more than 90% of the 1.8 million zero-hour contracts would be banned as a result of the new rules.

Christian May of the Institute of Directors described the proposals as "unnecessary and potentially damaging" whilst John Cridland, director-general of the CBI, said that “a proposal to limit the flexibility on contracts to 12 weeks misses the mark.”

TUC general secretary Frances O'Grady said: "We need a fairer system that guarantees zero-hours workers decent rights at work and stops them from being treated like second-class employees."

Labour’s announcement was made on the same day as 100 senior business executives signed an open letter in support of the current Government’s long-term economic plan.

In a separate move, the Liberal Democrats have set out plans that would entitle new fathers to six weeks of paternity leave.

Kirsty Ayre, an employment partner at Irwin Mitchell, said:

Expert Opinion
“Employment law remains high on the public and political agenda this week with a new announcement from the Labour party on zero hours contracts. This type of contract, under which a worker has to be available for work but isn’t guaranteed any hours, and is only paid for hours actually worked, has been the subject of much debate in recent months.

“Shortly before Parliament was dissolved in preparation for the general election, a bill which purports to ban exclusivity clauses in some zero-hours contracts received royal assent. The bill provides that any clause in a zero-hours contract which prevents a worker from working from other employers would be unenforceable, unless the worker is being paid more £20 or more an hour. It is now far from clear when or indeed whether the bill will ever come into force.

“Last week David Cameron commented that most workers on zero-hours contracts want to work in such a flexible way - a suggestion that has been hotly refuted by the TUC. In response, Ed Miliband has now put forward Labour’s proposals. In essence, the new proposal is that workers on zero-hours contracts should be entitled to ‘convert’ their contracts into ‘regular’ ones after 12 weeks, so that employers would only be able to use zero-hours contracts for a maximum of 12 weeks.

“This falls short of the outright ban on the use of zero-hours contracts which some have called for, and critics suggest that it will have the effect of increasing job insecurity, by encouraging employers to sack those on zero-hours contracts within the first 12 weeks.

“The idea of a 12 week qualifying period is not new – it also applies to agency workers, who gain the right to the same terms and conditions as permanent staff after 12 weeks work. We haven’t seen any evidence of employers letting agency workers go before they hit the 12 week mark.”
Kirsty Ayre, Partner