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Political hysteria over zero-hours contracts is unhelpful and misplaced as safeguards already exist
The disclosure over the summer that as many as a million people could be on zero-hours contracts by the Chartered Institute of Personnel and Development as well as confirmation that a well-known retailer, Sports Direct, is being challenged in court over its use of them has got Vince Cable excited enough to call for an “investigation”.
In fact, so serious is the matter that Labour leader Ed Milliband has declared war on the “abuse” of zero-hours contracts by promising to outlaw them if he is elected in 2017.
This promise seems somewhat hysterical when you consider that the practice works well for many and is an essential business tool for many more. Of course, the key to actually tackling this ‘abuse’ is to first understand who benefits and why, and then determine who abuses the contract and why. It is only from this that you can make legislative changes that will end abuse, or you end up with a legislative ban that can be easily avoided.
There are many sectors with genuine zero-hours contract needs, such as where staffing levels are difficult to predict and the contract is used for a percentage of the workforce to provide flexibility.
Some sectors depend on zero-hours contracts to make their business or organisations function properly – especially the care sector, where a bank of zero-hours workers is essential for cover in case of unexpected shortages. Underfunding in this sector means money is just not available to overstaff contracts with permanent workers.
Other sectors dependant on zero-hours contracts include supported housing services, some NHS services, cleaning companies and catering companies. The employees benefit from flexibility. It is reported that this flexibility is limited but there does not seem to be any reliable data to support that view.
Therefore, it seems Milliband cannot target the abusers with an outright ban as there are wider implications. To do so would only undermine legitimate use and surely result in financial stress on organisations that use the practice legitimately (unless, of course, in 2017 he has a pot of money to pass to care providers and the NHS).
The most obvious route open to an employer seeking to continue ‘abusing’ staff contracts after a ban would be to engage staff on a part-time contract for a nominal amount of hours. Then the employer could, presumably use an overtime arrangement for any additional hours, still offering no guaranteed overtime. This is impossible to police or legislate against.
The legal position on zero-hours contracts already offers some protection against abuse. If a tribunal is presented with an employee who has been working a certain number of hours for a sustained period it is open to the judge to decide those are the contracted hours (similar to custom and practice). If a person sounds like, acts like and is treated like a full-time employee, any tribunal is likely to find that they are one and apply the appropriate employment rights.
It seems that this is the starting point for legislating against abuse, although the new tribunal fees might be a better place to begin.