The future of zero-hours contracts in Northern Ireland

The Department conducted a public consultation last year on zero-hour contracts. The main outcome of this seems to be that there will be no outright ban, with DEL citing that this "would have a disproportionate impact upon flexibility within the economy, and potentially remove some employment opportunities."

The Department has proposed a number of changes to provide better regulation and address some outstanding issues surrounding contracts that do not guarantee a minimum of hours. None of these proposals have yet been committed to, but they do outline the general direction that the Department will head in.

One of the most contentious aspects of zero-hours contracts has been the use of exclusivity clauses, which forbid  employees  from working for another employer. Obviously this is less of a problem when a full-time contract is involved, but with no guarantee of any hours of paid work in place, a worker would be at a great disadvantage if they are unable to subsidise weeks in which fewer hours are available by working in another job. This is estimated to apply to around 9% of zero-hours contracts.

The Minister has decided that exclusivity clauses included in zero-hours contracts should be banned (or made unenforceable). This is the same position that The Small Business, Enterprise and Employment Bill, currently making its way through the House of Lords, takes on such clauses. In addition, the GB Bill enables anti-avoidance measures to be put in place (such as stopping employers from using one-hour contracts to get round the issue).

An option still open to the Department is to introduce an automatic right to a fixed-hours contract that will allow zero-hours workers to move to a guaranteed hours arrangement after a certain period of time. However, it is more likely that a right to request, rather than an automatic entitlement, will be put in place instead. There are concerns, as highlighted in the NICVA response, that some workers may be unable to secure a fixed-hours arrangement via a right to request. However, DEL seem to be taking a proactive “twin-track” approach which will require employers to objectively justify the need to retain a zero-hours contract. So, while the right to move to a fixed-hours arrangement might not be automatic, if effective regulations are ensured both workers and employers will be better served.

The Minister also argues that there is a strong case for a statutory code of practice to set out employer and employee roles and responsibilities (an employer-led code was an alternative option). This should prevent zero hour contracts from being used to erode employment rights.

Improving clarity around social security entitlement is a necessity, especially when universal credit starts to come in to Northern Ireland. Universal credit provides a real-time assessment of claimants’ circumstances, but with problems surrounding its implementation as it is rolled-out in England making assurances around accessing benefits would help vulnerable workers on variable hours with income and budgeting.

Statistics

Suitably, the Office for National Statistics has just released its latest data on “contracts that do not guarantee a minimum of hours”. Unfortunately, the sample size is too small for  a reliable estimate of the number of contracts in Northern Ireland to be made, but statistics are available for the UK. This shows that there are currently around 697,000 workers who have a zero-hours contract in their main job, and increase of over 10,000 on the previous year. There are other types of contracts that do not guarantee hours, however, which are not specifically zero-hours contracts (where workers are paid only for the hours that they work). There are in total 1.8 million non-guaranteed hours contracts in the UK currently.

Numbers in employment on a zero-hours contract (UK)

The data also allows us to see worker characteristics: according to the ONS, women are around two-thirds more likely than men to be a zero-hours worker. Around 6% of under-25s are zero-hours workers (compared to around 1.7% of those aged between 25 and 64). Zero-hour workers are also more likely to work in industries such as hospitality (where 10% are employed on these contracts), transport, health and administration.

Proportion of workers employed on a zero-hours contract by industry

Though rates of pay are not included as part of the analysis, occupations at the lower end of the pay-spectrum are more likely to involve a zero-hours contract, especially ‘elementary occupations’ and ‘caring, leisure and other service occupations’ where around 6% of employees are employed on zero-hours.

Around a third of zero-hours workers want to work more hours than they currently do, compared to 13% of other workers (including part-time workers). While 66% of zero-hours workers seem content with the hours they currently receive (25 hours a week on average, but varying from worker to worker), 34% want more hours, either in the same, a different, or an additional job.

Proportion of workers on/not on a zero-hours contract