Are zero hour contracts good?

Zero hour contracts have faced their fair share of controversy since they were introduced in the late 90s.

Frequently labelled as unfair and exploitative, there’s an assumption that a job with a zero hour contract is a bad job. But let’s look into this further and ask: can a zero hour contract job actually be a good job?

We’ll also cover:

What does zero hour contract mean?

Before we get stuck in, let’s define what a zero hours contract actually is. 

A zero hours contract is a job contract that doesn’t have a minimum amount of hours. Anybody on a zero hour contract can also work for other companies at the same time. It’s all about flexibility. In principle, this ultra-flexibility is supposed to benefit employers and workers.

Workers with zero hour contracts are still entitled to the National Minimum Wage, statutory paid annual leave (holidays) and Statutory Sick Pay (SSP). These are all calculated differently for every worker on a zero hour contract. They are based on how much workers are paid every week, along with the amount of hours they have worked.

There are also protections that apply to other types of contracts that zero hours contracts miss out on: we’ll get into what these are in a bit.

Are there any benefits to a zero hour contract?

Depending on your needs, yes. There are people for whom a zero hours contract is really helpful. 

For example: students, carers and anyone who needs to work at more than one job. For these people the flexibility of a zero hours contract is useful because they can fit work more easily around the rest of their life.

Furthermore, workers on a zero hours contract can leave a job without having to give any notice to their employer.

So what’s the problem with zero hour contracts?

While some workers do benefit from a zero hours contract, this isn’t the case for everyone. 

So why are they a problem? The biggest issue is that zero hour contracts don’t offer the same level of legal protections that other types of contracts have.

For instance, part and full time contracts offer the following rights that zero hour contracts don’t:

A set minimum of hours work per week

Why is this helpful? This makes budgeting for the future far easier, as there is a clear idea of how much money can be earned on a regular basis.

People on full and part time contracts can’t be terminated without notice

If their contract ends, the employee has to be given a termination date unless they've carried out a serious breach of the contract.

Why is this helpful? This gives a worker time to find another job, without having to worry about money at the same time.

Redundancy pay

If a full or part time worker (on a fixed term contract) is made redundant after working at a company for over two years, redundancy pay has to be offered. 

Why is this helpful? Similar to the above: this helps with budgeting, and takes some pressure off from finding a new job straight away.

Why is this helpful? This holds companies accountable for any unfair treatment of their workers.

Zero hour contracts are much more precarious. If a job with a zero hour contract doesn’t work out, that worker can be left in a really tough position without a safety net.

What are Breakroom users saying about zero hour contracts?

The Office of National Statistics (ONS) have reported that around 2.5–3% of all UK workers are on a zero hour contract. On Breakroom, the percentage of zero hour contract workers is a little higher: 7% of all Breakroom users have this type of contract.

While zero hour contracts aren’t an industry-wide standard for all hourly workers, it’s still important to have a proper look at them. Why? Because they’re still being used. And as they’re still being used, we want to see if they’re being used fairly. And who better to ask about what zero hour contracts are like than workers who actually have zero hour contracts.

Let’s start by looking at the amount of hours actually worked by Breakroom users who are on zero hour contracts:

Hours actually worked per week % of workers on zero hour contracts who worked these hours
Low hours (under 16 hours) 16%
Part time (16–34 hours) 43%
Full time (35+ hours or more) 41%

A significant chunk of Breakroom users on zero hour contracts work full time hours. So even though these people are working full time, they are missing out on all the benefits and safety measures a full time contract brings.

Adding insult to injury, 38% of them get less than one week’s notice of when they’ll be working. So although a zero hour contract worker may be working full time, there’s no guarantee that this will be on-going.

In fact, 52% of Breakroom users on zero hour contracts worry about what hours they’ll be given.

With this level of uncertainty, financial planning and budgeting becomes much more difficult. 

This is all very much in line with what this Sports Direct worker on a zero hour contract said. They shared that the worst thing about their job is

“Not knowing if you will get enough hours to pay your bills each month.”

Additionally, some workers on zero hour contracts feel like they have to work more hours than they’re comfortable with. Here’s what a McDonald’s worker said about their zero hour contract experience:

“Despite being on a 0 hour contract there are still expectations for me to work a certain amount of hours and it is difficult to reduce availability.”

Legally, anyone on a zero hours contract can turn down any shifts offered. However, this is easier said than done. As this McDonald’s worker has shared, there can be a lot of pressure to work more hours and it can be made very difficult to say no.

This all goes against the idea that zero hour contracts are equally flexible for companies and workers.

But even if this was the case, is the flexibility of zero hour contracts still better than the flexibility offered for workers on part or full time contracts? 

Are zero hour contracts really that flexible?

We looked at what Breakroom users had to say about how flexible their jobs are:

Type of contract % of Breakroom users who find it hard to change shifts
Zero hours 26%
Full time 27%

The main selling point of a zero hour contract to workers is flexibility. But, as we see above, if we compare their flexibility it looks like workers on zero hour contracts actually find them marginally less flexible. Talk about a red herring!

Full time workers also have another benefit: better pay rates.

We compared what workers on zero contracts, who work 40+ hours, earn on average, to workers on full time contracts who work the same amount of hours.

Average pay rate for Breakroom users on a zero hour contract (who work 40+ hours) Average pay rate for Breakroom users on a full time contract (who work 40+ hours) % difference
25% of people earn this or less £6.90 £9.00 +30%
50% of people earn this or less £8.21 £10.00 +22%
75% of people earn this or less £8.75 £12.00 +37%

So despite working the same number of hours, workers on full time contracts earn on average 30% more per hour than workers on zero hour contracts!

The story here is that, when it comes to zero hour contracts, it’s the workers who are drawing the short straw.

Zero hour contracts: only use when needed

Zero hour contracts are frequently misused. They aren’t reserved for workers who really need them, but used as a catch-all contract that offers workers the bare legal minimums and pay rates. 

At Breakroom, we believe that zero hour contracts should be used only in specific cases, led by the needs of the workers who require or request them. Their pay should also be in line with part time and full time pay rates for the same jobs.

We also believe that workers who are on zero hour contracts should be given the choice to change their contract to one that suits them. This should be in line with their needs and the hours they want to work. For all the hard work and time they put in, these workers deserve the stability, safety and higher pay rates that full and part time contracts offer.

Data used in this blog post is from 16 July 2020