Zero Hour Contracts: A Countdown to What?

What are zero hour contracts?

A zero hour contract is a contract which gives neither an obligation to the employer to offer work, nor an obligation on the party of the employee to accept it. The exact mechanisms for achieving this differ between contracts, but the lack of obligation is the heart of the zero hour contract.

They are designed to provide an alternative to agency workers. An agency worker would be rented out when there is demand, through an intermediary (the agency). A worker on zero hours doesn’t have to work through the middle man. This is an advantage.

A difficult battleground?

There is a debate as to their effect. On the one hand, it is possible to argue that they damage the ability of the lowest-skilled workers to demand living wages by permitting employers to take advantage of employees. Often, a zero hour contract is the only available offer of work. Yet this does not provide a guaranteed income. Naturally therefore, those working under such a contract seek to find other work. Employers however, could insert clauses to prevent the individual from searching for other jobs, knowing that the individual who accepts a zero hour contract is often desperate.

On the other hand, the argument can be made that during a period of economic recovery (when this become a hot topic) jobs were few – and even the ephemeral promise of a zero hour contract was preferable to nothing. This is particularly helpful for students, especially since some universities limit the amount of hours an individual taking a course is permitted to work.

Certainly, the changes formalised on the 26th of May 2015, forbidding zero hour contracts containing exclusivity clauses was a positive move because it addresses their potentially repressive nature.

In fact, this change significant becalms the storm surrounding the topic. Because the fact that zero hour contracts have been shown to stack rights in favour of the employer is not one that can be solved through legislating. A contract is the result of a negotiation between two parties. One of these two parties will almost always have a stronger position – and therefore be able to demand better terms. It is true that any government left of absolute capitalism should be interested in mitigating the harshness of the most heinous of demands (i.e. exclusivity clauses). But beyond this, there is little clarity on what exactly a government could to, beyond work on wages that employers must pay.

Future?

Zero hour contracts, having had the exclusivity element removed, are no longer a tools for repression. They are far from perfect, but they are a useful tool to ensuring more flexibility in an era where traditional jobs seem to be disappearing fast. Careful legislation must continue to prune them when they threaten to strangle their hosts.

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Budgeting for a Better or Broken Britain?

It is fair to say that the first Conservative budget since November 1996 has caused quite the reaction. This blog looks at changes introduced by the budget for individuals and companies. For the sake of context however, it is worth noting that the Chancellor, George Osborne, has promised savings totalling £34 billion – half from government budgets, £12 billion from welfare cuts, and £5 billion coming down on tax evasion.

1. Overview

  • Benefits

Those aged 18 – 21 will lose their (automatic) entitlement to housing benefits.

  • Business

The Northern Power house idea – at the national level, there has been an acceptance of a need to devolve power to the north – Manchester, Sheffield, Liverpool, and Leeds.

The Chancellor has signposted his readiness to ensure that the UK maintains the lowest corporation tax in of the G20 – the proposed aim being of 18%.

At the same banks were rewarded on one hand levies on a bank’s worldwide assets will be restricted to levies only on UK assets by 2020. But there will be an introduction of an 8% tax on annual profits.

  • Government and Welfare

Student maintenance grants will be cut from 2016. Instead, a loan of up to £8,200 will be available which will have to be repaid when the individual earns over £21,000.

Child benefit – tax credit and universal credit – is to be limited to the first two children, from April 2017.

More generally, tax credit changes will hit three million families who will lose an average of £1,000.

Public sector rises will be capped at 1% until 2019.

The NHS is being offered £8 billion.

Cap on benefits will be lowered from £26,000 to £23,000.

Working benefits will be stripped from those who are not disabled and have no children.

Rent payments for social housing will be cut by 1%, per year, for the next four years.

  • Income Tax

Two headline figures, relevant to everyone: on the one hand the 40p rate of tax was raised to £43,000, whilst on the other the threshold for basic tax was raised to £11,000, an increase of £400, on the way to the target of £12,500. This latter is projected to raise with the minimum wage. The former is part of an increase – the 40p rate is aimed to be applied to £50,000. According to the Chancellor this is will mean 29 million people will pay less tax.

  • Inheritance Tax

In the same vein as the 1996 budget, the inheritance tax was increased; then it was to £215,000. Now it has been increased to £1 million.

  • National Living Wage

Over 25s will have a minimum pay of £9 per hour by 2020 – which is 60% of median earnings. This will start in April 2016, with the figure being £7.20. This compares favourably to £6.50 for under 21s. This is estimated to concern 6 million people.

2. Commentary

This is a well-rounded budget. In 1996, the budget was the last budget for a government that was coming to its close – this is the budget of a newly mandated government Yet political pressures simply manifest them in a different, not lesser, way. During the campaign for the 2015 general elections, Mr. Osborne was seemingly aiming to have his photograph taken by every single employer in the UK.. But having obtained the support, it has been argued their resources are now needed to fund his other promises.

Whilst this analysis is persuasive, there is a further consideration: the language of working man has been used repeatedly by the Tories. Could it be that they actually mean? The budget is aimed at creating jobs and pushing people into those jobs – however well it does so, being an entirely different matter. When viewed in this narrative, the cuts on the corporation seems to be less a ‘pound of flesh’, than a seed from which to develop a stronger work force.

The big question is, of course, whether things will deteriorate for the worse off. Osborne has hung his budget on the fact that an individual working full time under the new National Minimum Wage would be better off even considering the cuts to benefits. The National Minimum Wage is applicable only to over 25s. Under 25s,  who are most in need because of their low employment rate, will be a cheaper labour source. Thus, they will be preferred to over 25s. As for the students, changing a grant into a loan does not impact the position of students at the moment. It also does not seem it will impact the ability experience – total funding for a student eligible for the maximum loan will be somewhere around £12,000 a year. Poverty of the parents should not mean that a student who perhaps emerges and gets a well-paying job should not be asked to pay back the money they were given for university. And  if they do not have a well-paying job they do not have to pay it back – this fairly well accepted fact seems to discredit any arguments that suggest that  Certainly, students who will have to pay the money back, might be more spend thrift of that money.

The impact of the budget on the wider political landscape has exposed to salient facts: firstly, Labour are evidently still reeling from their defeat given their lack of response. Secondly, there may now be substantial weight to the suggestion that Osborne and Boris will go toe to toe for the leadership of the Conservative Party post-Cameron.  This is clear by Osborne’s adoption of what Boris first championed; the living wage.