Insights

Zero Hour Contracts- Should Ireland follow New Zealand’s lead?

  • March 30th, 2016
  • Jason O'Sullivan

New Zealand gained much media attention this month (March 2016) when its Government passed new legislation that banned Zero Hour contracts, a move heralded as a first of its kind in the developed world.

Their Employment Standards Legislation Bill, comes into force on the 1st April 2016.

The primary rationale for this pioneering change, was based on the overriding assumption that such agreements were exploitative in nature towards workers and their rights.

It’s worth considering therefore whether such legislative trailblazing by New Zealand, will have any impact on the policy ambitions of Irish legislators, and in turn increase the possibility of similar change?

When the journal.ie carried out an online poll on the 11th of March this year following the news, they asked “Should Ireland ban Zero Hour contracts?” close to 17,000 participated.

At the time of writing, an overwhelming 89% agreed they should be banned, while an underwhelming 7% agreed they shouldn’t, 2% couldn’t decide. Although such polls are open to scrutiny on their accuracy and representative qualities, the findings do highlight the clear dislike and contempt towards such legal contracts by those polled. This raises the question of whether such discontent emanates from direct worker experience or stems from the negative perceptions of such agreements as portrayed in current domestic and global media.

What are Zero Hour Contracts?

This is quite a difficult question to provide a definitive answer, as there is no harmonised definition of Zero Hour contracts from a European perspective. Most Member States have their own wording that aligns with their domestic understanding and use of such legal agreements in their own perspective countries. This in itself is a major problem, as such lack of clarity on the intricacies of these complex agreements can imbue immediate consternation against their use, simply by mentioning the term ‘Zero Hour contract’.

In a general sense, a true type of Zero Hour contract, in its simplest form, is an agreement between an employer and employee, where there is zero obligation on either party, so in effect there is no obligation on the employer to provide work nor the employee to accept work. Such contracts or arrangements are also often referred to as “casual contracts”.  It is however, more common in practice and particularly in Ireland, for employers to guarantee at least a certain number of minimum hours per week to workers as opposed to guaranteeing none.

Employee Rights?

Technically, employees working under zero-hour type agreements are generally deemed to have the same employment law rights as permanent employees.  In reality though, the unfavourable terms and conditions of such contracts can be arguably construed as unfair, due to their ad hoc nature, whereby employees face real uncertainty as regards hours of work and income security. This can have a stifling effect on workers and their families from an economic, societal and psychological perspective.

Another common problem, is that even when certain protections are in place, many employers can utilise existing loopholes enshrined in current legislation to by-pass such employee right safeguards.

For instance, in the Irish context, Zero Hour contracts stem largely from The Organisation of Working Time Act, 1997-2012, in which Section 18 states that employees operating under such contracts must make themselves available for work – in other words to be on standby for the hours they are contracted for, despite no guarantees of getting actual work for those contracted hours.

Section 18 of the Act does afford some protection in the form of entitlements to some remuneration, even if the employee does not acquire the hours they are contracted for. This remuneration is based on either 25% of their contracted hours or 15 hours, whichever is less.

Section 18 will not however, apply such protections where an employee has no hours guaranteed, as no obligation to accept work exists. For instance, a likely scenario could be an employee is offered 15 hours of work one week but only a mere 7 hours the following week.

Despite such loopholes, Ireland still fairs far better than most of its European counterparts as regards the protections afforded to workers operating under such contracts. In particular, the UK, which has seen a rapid increase in recent years for these type of employment arrangements. Such prevalence has stirred much recent UK political debate on this topic, primarily centred on their genuine merit and alternatives options.

Are Zero Hour Contracts Justified?

Zero Hour contracts are equally as divisive when the issue of merit or justification is raised here in Ireland.

The business community have understandably far differing views from trade unions when arguing in favour of such contracts or hybrids thereof.  For instance, many businesses argue from an overriding economic perspective that such contracts, albeit “not ideal”, do serve an economic necessity. Particularly in sectors where seasonal workers are prominent or for new start-ups, where flexible working hours for staff can be an invaluable asset in getting a business off the ground and saving on wasted capital.

Union representatives however, argue more so from the societal standpoint, based on the alleged infringement of worker rights. Many trade unions deem such legal instruments as inherently unfair and exploitative in nature.  Also, as is evident from recent collective bargaining talks, more trade unions, notably MANDATE have called for current loopholes to be closed and for more protective measures to be introduced. For example, measures that limit the length of time a position can be filled using such contracts or rules requiring employers to provide for longer notice periods to those on standby.

The Future

The former Minister for Business and Employment, Labours Ged Nash, published a report entitled “A Study on the Prevalence of Zero Hours Contracts among Irish Employers and their Impact on Employees” in November 2015, which was compiled by the University of Limerick.  The report found that Zero Hour contracts were not extensively used in Ireland, but of concern was the emergence of “if and when” contracts, where workers are not contractually required to make themselves available for work. The report found that when such contracts were used inappropriately, it greatly undermines existing legislative protections and in particular remuneration entitlements as contained in Section 18.

A consultation was considered following this report with various stakeholders, such as employer and union representatives to gauge and obtain their feedback on the report’s findings and recommendations. However, given the fact former Minister Nash did not retain his Dáil seat at the recent general election coupled with the current turmoil and uncertainty regarding the makeup of the next Government- it is unclear when this consultation will now take place and what it will achieve in the long run, if anything,  from a change in policy perspective.

Conclusion

The debate on Zero Hour contracts will likely be continual and an issue for the next Government to consider during its tenure, however long. The predominant factor will be to try and strike a fair balance between the age old dilemma of competing economic interests of employers and the safeguarding of worker’s employment rights.

It is apparent from recent studies that Ireland is far from the bottom of the class in this regard, when compared with other developed countries, which is a positive position. However, it will be key for the incoming Government to quickly stem the growth of the emerging “if and when” type contract which resembles pure Zero Hour contracts in their most exploitative form.

It remains unlikely however, that Ireland will follow New Zealand’s lead and be the first EU Member State to ban Zero Hour contracts, regardless of the general public opinion. As to do so would require the necessary political appetite and skilled manoeuvrings in which to negotiate through the legal and policy wrangling’s of vested interested groups, in order to achieve this zero tolerance approach to Zero Hour contracts.

J.O.S Solicitors provides tailored Employment Law and HR Compliance to Business and Individuals. If you would like J.O.S Solicitors to assist your business with its HR needs or to simply discuss your options about any employment law or HR compliance issue. Then please contact us

Jason O’ Sullivan, is a Solicitor and Public Affairs Consultant at J.O.S Solicitors

 Disclaimer

 This publication is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by J.O.S Solicitors for any action taken or not taken in reliance on the information set out in this publication. Any and all information is subject to change and professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication.

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