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Zero-hours contracts need greater regulation, says report

The Resolution Foundation has called for greater regulation surrounding the use of 'zero hours' contracts. The recommendation comes after its research revealed that life for many zero hours workers was 'extremely challenging'.

The think-tank revealed that zero-hour workers earn lower hourly wages (£9) than other workers (an average of £15). Even graduates on zero hours get on average £10 per hour, whereas other graduates can expect £20 per hour. Lower wages and shorter hours were typical for zero-hours contracts, perhaps helping to explain the rise in their popularity for employers since the downturn.

In 2006, there were 134,000 people employed on zero-hours contracts, but Office for National Statistics put the figure at 208,000 in 2012, an increase of 55 per cent. The Resolution Foundation estimated the true figure may be far higher, as many people may not realise the true nature of their contracts. It said that there were around 150,000 domiciliary care workers alone on zero-hours contracts in the UK.

The report acknowledged that the contracts could be useful for employers, particularly in difficult times. They allowed flexibility, reduced the costs of recruitment and training, and sometimes enabled employers 'to avoid particular employment obligations'. The use of the contracts, the report said, may explain why the UK has been able to combine relatively high levels of employment with an 'unprecedented squeeze' on real wages.

But it also said that the ostensible freedoms presented by the contracts were to many workers 'more apparent than real' with many facing permanent uncertainty that they would be given enough hours to make ends meet. Turning down hours raised the threat that the employer might withdraw future work as a penalty. The authors recommended that the contracts should be modified 'to provide greater certainty and security to those working under them'.

It's important employers understand their responsibilities and set out any contractual terms clearly. Acas can help with this, providing guidance in its Advisory booklet - Flexible working and work-life balance and training in drawing up Contracts and terms and conditions.

Visit the Acas Training and Business Solutions page for more information.

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