andrew james

16 February 2015

By Andrew James, Solicitor

Much has been reported in recent months about the inequity of zero hours contracts (ZHCs). ZHCs are quite rightly seen as a form of employment relationship which leaves workers open to abuse and exploitation. Indeed, such contracts are often used as a conscious long term strategy by businesses to cut costs. Take for example, Sports Direct and Amazon, to name but two.¹

But ZHCs are simply one of a number of different forms of exploitative employment relationship which now exist in the type of increasingly casualised and de-regulated labour market that characterises many Western economies. Take for example bogus self-employment, agency work, part-time and ‘casual’ working. Occasionally, such relationships can work for both employers and workers. All too often however, they are a reflection of the inequality in bargaining power that exists between them.

The legislation in relation to ZHCs which Vince Cable is currently steering through Parliament will do virtually nothing to redress that imbalance of power. We can hardly expect more of a coalition government which remains firmly wedded to a market based economic strategy. We can and should expect more of the next Labour / progressive coalition government after 7 May.

It is ironic that sometimes judges show a better understanding of the inequality in bargaining power between capital and labour than politicians. Lord Steyn in his (partly dissenting) judgment in Johnson v Unisys, [2003] 1 AC 518 at 532 [19] referred for example, in relation to employment contracts, to:

“the need for implied terms in contracts of employment protecting employees from harsh and unacceptable employment practices. This is particularly important in the light of the greater pressures on employees due to the progressive deregulation of the labour market, the privatisation of public services, and the globalisation of product and financial markets…. The need for protection of employees through their contractual rights, express and implied by law, is markedly greater than in the past.” (my under-lining)

See also the judgment of Lord Clarke in Autoclenz Ltd v Belcher and ors [2011] UKSC 41. The Claimants in Autoclenz were required to sign contracts declaring that they were independent contractors, providing car valeting services, with a purported right to engage others to carry out the work on their behalf (and hence were not duty-bound to give personal service, a requirement for an employment contract to exist). The Supreme Court was however prepared to look at the reality of the relationship, not just the formal contract and found that the Claimants were employees.

It is high time that policy makers recognised this imbalance and legislated accordingly. There is a ready made solution for those who wish to do so which is contained in primary legislation which could be used to give more protection to workers – Section 23 of the Employment Relations Act 1999.

Section 23 gives the power to the relevant Secretary of State to make an order conferring any right under the Trade Union and Labour Relations Act 1999, Employment Rights Act 1996 (ERA), the Employment Act 2002, the 1999 Act and any instrument made under Section 2 of the European Communities Act 2002 “on individuals who are of a specified description”. Such rights could be given for example to any worker with worker status under e.g. S.230 ERA / the Working Time Regulations 1998; employment status under the Equality Act 2010; and/or to agency, fixed term or ZHC workers. ^{2 3}

Rights which could be conferred on such workers include rights in relation to unfair dismissal, written reasons for dismissal, Sunday working, statutory notice pay, redundancy pay, maternity paternity and parental leave, rights under the Fixed Term Employees Regulations, TUPE, time off for trade union duties and activities, collective consultation rights and insolvency rights.

Such a move would not be a panacea. It would be helpful if it went alongside a statutory presumption of employment for example. And individual rights are of course no substitute for the support and encouragement by a progressive, newly elected Labour government or progressive coalition of national / sectoral collective bargaining and Wages Boards. Nevertheless, it would still represent an important step forward towards a fairer economy. Just as important, it would give a clear signal from the new government that it not only recognised the imbalance of power between businesses and workers but was prepared to take swift and decisive action to begin to redress it, in the interests of both fairness and justice.

^{1. [For a comprehensive examination of ZHCs, see Reregulating Zero Hours Contracts by Zoe Adams and Simon Deakin, IER July 2014.
See paras 25 to 35 ]↩}

^{2. [The Employment Relations Act 1999 Section 23 can be found here.]↩}

^{3. [See the comments of Mr Justice Buckley in Montgomery v Johnson Underwood Ltd [2001] Civ 318, a case involving an agency worker sacked after working as a receptionist for the end user for over two years at paras 42 and 43.] ↩}