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Managing my money for young adults
Managing my money for young adults

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2 Zero-hours contracts – good or bad?

Zero-hours contracts have featured heavily in UK media recently. Hundreds of thousands of people, particularly workers aged 16–21, are on these ‘casual’ working contracts. But is the so-called gig economy really useful to younger workers – particularly if they’re still in education – or is it seriously bad news?

In the video Bobby Seagull talks to Jonquil Lowe about zero-hours contracts.

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BOBBY SEAGULL:
So I'm here with Jonquil Lowe to talk about the controversial topic of zero–hours contracts. So Jonquil, what are these zero-hours contracts?
JONQUIL LOWE:
OK. So you are an employee, but you don't have the right to work a set number of hours. Rather you are on call. And your employer calls you in for any number of hours or even no hours in some weeks.
BOBBY SEAGULL:
So what are the benefits of these contracts for employers?
JONQUIL LOWE:
Well, for employers they're a very flexible way of running their workforce. So instead of having employees who perhaps aren't fully employed, on any particular day the employer can just pull in the number of workers that they need for that particular day or week or month. So it's great for seasonal working, for covering if somebody is off sick, situations like that.
BOBBY SEAGULL:
So are there benefits for employees too? I've heard that many young people are happy with these zero-hour contracts.
JONQUIL LOWE:
Well, yes in theory, they offer employees flexibility as well. And interesting, I think it was McDonald's ran an experiment where they offered their workers the choice of zero-hours contracts or contracts that offered at least a minimum each week. And a lot of their employees actually chose to stick with the zero-hours contracts.
Having said that, in practise sometimes they're not as flexible, because employees may feel that if they turn down hours that they're offered that they won't be offered any more. So they haven't necessarily got that flexibility that in theory exists.
BOBBY SEAGULL:
So what other reasons are there for steering clear of these type of contracts?
JONQUIL LOWE:
Well, provided you're happy with that flexibility, and for many young people, that might be perfect if you've got another source of income or you're studying and you just want to pick up odd hours here and there, then they may be perfect.
But if you've got regular outgoings and you haven't got another source of income, then it can make life very difficult, because without that regularly, you don't know not just when you're working or how long you're working. You also don't know how much pay you're going to have in any week. So it's very hard to pass credit checks for example, rental contracts or mobile phone contracts, affordability tests if you want to take out a mortgage.
And really, just organising your work-life balance can be very difficult, and it can be very hard to, although you've got the rights of an employee for example to holiday pay, it can be very difficult to work out how much holiday you've clocked up or what your pay would be during your holidays. And so many workers on zero-hours contracts end up not using their holiday pay entitlement at all.
BOBBY SEAGULL:
Jonquil, thank you very much.
JONQUIL LOWE:
Thank you.
End transcript
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Activity 2  Zero-hours contracts: the positives and negatives

Timing: Allow about 5 minutes

Do you have an opinion of the pros and cons of being on a zero-hours contract? The amount you can earn is clearly an important consideration. What other issues make these contracts very different from more regular employment?

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Feedback

The benefit of a zero-hours contract is the flexibility to change the number of hours you work. This could help you fit the work around your other commitments. For example, as you approach exam time in the early summer months you might want to scale back your working hours to focus on revision. After the exams are over you might want to take on more hours again.

The big disadvantage of a zero-hours contract is that the employer can decide whether you get any work at all. They might not have hours available when you want to work. Or they might become difficult with you when you turn down the hours they want you to work.

Another major disadvantage is that you’re unlikely to have any rights to sick pay or holiday pay.