The subject of zero-hours contracts has been in the news fairly recently, brought about due to a legal challenge against Sports Direct over its use of these contracts.

The legal challenge is apparently raising the question that the use of zero-hours contracts discriminates against part time workers. This follows reports that 90% of SportsDirect’s employees are engaged under these contracts.

Business Secretary, Vince Cable, has suggested that zero-hours contracts may be subject to legislation but ruled out a complete ban. He will decide whether to hold a formal consultation on specific issues in September.

So what does a zero-hours contract mean?

A zero-hours contract does not oblige the employer to provide work for the employee nor does it oblige the employee to accept work offered. Although the employee agrees to be available for work as and when required. It can be uncertain whether a person working under a zero-hours contract is an employee or a worker. The distinction is that an employee generally has more legal rights than a worker. When deciding whether a zero-hours contract means the individual has the status of an employee it will not just be the wording of the contract that is relevant, but what happens in reality will be considered. If the reality is the individual is offered and accepts work on a regular basis then any tribunal is likely to deem the contract to be an employment contract.

In many cases zero-hours contracts can be beneficial to both employer and employee, particularly where the employer’s business is uncertain due for example to weather conditions or fluctuating business demands. It also benefits the individual who may wish to earn occasionally but does not wish to work set hours each week and has the ability to be flexible. Many students like to work in this way but an older workforce may also wish to earn on a more flexible basis.

Many well known businesses such as The National Trust, Boots, Burger King, McDonalds, J D Wetherspoon, Subway, Cineworld and even Buckingham Palace use these contracts.

It isn’t the nature of zero-hours contracts themselves that cause Vince Cable concern, it is more that some employers “exploit” the use of these contracts. However, it is clear that zero-hours contracts are on the increase and this shows that they will not be disappearing altogether any time soon but are likely to be subjected to more stringent regulations in the future.