Zero-hours v casual contracts

Randall Tsolakis-Franka sets out the differences between zero-hours contracts and variable agreements and asks whether either are ‘deceitful’

Zero-hours contracts and casual agreements are often labelled as misleading and/or unethical. Some political figures have even called for them to be abolished. But before they are written off as being largely negative, let’s take a closer look at the detail of these agreements and the pros and cons of each.

Zero-hours contract

A non-guaranteed hours contract (zero-hours contract) is an agreement between an employer and an employee that indirectly ties the employee to the employer. The employer has no obligation to offer the employee any employment assignments, but the employee has an obligation to accept the employment assignments offered – they could face disciplinary action if they repeatedly reject work or turn it down without valid reasons.

Casual contract

A variable agreement (casual agreement) is similar to a zero-hours contract in that the employer isn’t obliged to offer any work. However, with this type of contract, the employee is not obliged to accept work when offered. This agreement can be ended by either party at any given time after the agreement has been made.

Why have these contracts been deemed unethical?

The zero-hours structure has often been labelled as unethical because employers may not have enough work to satisfy the demands of the workforce, which can result in a reduction of hours offered, or even none at all, seriously reducing employees’ earning potential.

It’s not surprising that many in this position seek work elsewhere, but here lies the problem. If an employee begins working for another employer and is subsequently offered hours by the primary employer and can’t accept them, it could lead to disciplinary action. It may even lead to dismissal if the ‘offence’ is continual. So the huge disadvantage of a zero-hours contract is that it limits an employee to being contracted to one employer only.

The casual agreement can be just as inconsistent in the offering of working hours. The difference is that the employee can be registered to work for several employers under this agreement. Rejecting work assignments is completely acceptable under the terms of this agreement.

Employee relationships are also managed differently. When it comes to offering working hours, discretionary priority is usually given to zero-hours contracted staff over casual workers. In regards to the termination of employment, a zero-hours employee is to be lawfully treated as though they were full time.

With casually agreed staff, this is slightly different. Unless a staff member has been working with an employer for 12 consecutive weeks – which automatically gives them identical rights to those of a permanent employee – the working agreement can be terminated at any point. This has prompted calls for casual agreements to be made defunct as this is deemed to be unfair in terms of the commitment and professionalism of the employer.

Are they unfair?

I believe both agreements can be beneficial – depending on the individual’s circumstances. From experience, casual agreements have usually worked very well for those looking for flexible work and ad-hoc employment. Zero-hours contracts may not necessarily be beneficial to those looking for continuous employment and/or a steady income, but may be suitable for someone interested in working as a hobby or to boost their existing wages.

Substituting permanent contracts for zero-hours contracts, in particular, could indirectly limit potential employees to the hours made available by the employer, which can have a detrimental effect on their income and quality of life. Similarly, while substituting full-time positions for casually agreed roles would provide employees with the autonomy to select employment assignments with any employer, it shows a distinct lack of commitment to one's employees because these agreements can be terminated at any time.

While both types of agreement could prove to be more convenient to organisations with fluctuating business requirements, they offer limited benefits to employees. Where the availability of work hours is inconsistent, my advice is to think long and hard about the impact these contracts can have on employees’ wellbeing – and on your company’s reputation.

Randall Tsolakis-Franka is a recruitment expert