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Short Term Loan News

Money tips and MYJAR news

Zero Hours Contracts & the Risk to Those on Benefits

The Office for National Statistics has released figures that show big companies in the UK use a total of 1.4 million zero-hours contracts between them.

What are Zero-hours Contracts?

Zero-hours contracts, or casual contracts, allow employers to hire staff with no guarantee of work. An employee on a zero-hours contract only works when they’re needed by their employers; this can often be at very short notice. See our quick rundown of zero-hours contracts below:

  • One in five employers has at least one employee on a zero-hours contract
  • Zero-hours contracts are common in the retail and hospitality sectors
  • Employees are not guaranteed work
  • Employees are entitled to holiday pay

Pay often depends on how much they work. Certain zero-hours contracts force workers to take the hours they are offered. Other benefits are often omitted including sick pay.

The Risk to Jobseekers

Jobseekers who turn down certain zero-hours contracts without good reason, risk losing their benefits. Those claiming jobseeker’s allowance are currently allowed to turn down these roles without facing penalties; however new rules, laid out as part of the government’s universal credit system, mean people will have to accept these contracts.

Under the new scheme, if a claimant turns down a contract thought to be suitable for them they could be at risk of losing benefit payments for more than three months.

Zero-hours contracts are popular with many companies as they offer flexibility and the ability to hire with no guarantee of work. However, the critics of casual contracts argue they leave employees with weak employment rights, no financial stability, no job security, and not enough work.

Many claim the policy will force individuals into unreliable employment and constrain their ability to search for better work.

“Reasonable” Zero-hours Contracts

In an interview with the Guardian, Labour minister Shelia Gilmore stated she was concerned about the changes as JobCentre decision makers already do not appear to be exercising enough discretion when applying benefit sanctions.

"While I don't object to the principle of either universal credit or zero-hours contracts, I am concerned about this policy change," she said. "I also fear that if people are required to take jobs with zero-hours contracts, they could be prevented from taking training courses or applying for other jobs that might lead to more stable and sustainable employment in the long term."

The Guardian also reported that “coaches” would be employed at the JobCentre with powers to “mandate” zero-hour contracts if they believe it’s right for the claimant.

The Department of Work and Pensions confirmed that jobseekers could not turn down “reasonable” zero-hours contracts, but would not be required to contracts that tie workers to a single employer.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk