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Good news for the workplace?


Tuesday, July 18, 2017

The Government has announced that it intends to prioritise legislation in relation to “zero hours” and related contracts. This flows from the ongoing debate (if not controversy) over the use of these contracts in Ireland. The topic has attracted a great deal of attention over the last year or so, mainly flowing from the belief that ‘zero hours’ contracts are exploitative of workers.

They aren’t typical – the most common employment model in Ireland remains the 9 to 5 job, where the employee is contracted to work a set number of hours per week and the employer, in turn, pays the employee for the provision of those services. As long as the employee is available for work, they are entitled to be paid.

“Zero hours” contracts are quite different – under this model, employees are effectively “on call” with no guarantee of work. The employer chooses when the employee works depending on the needs of the business and, most importantly, employees are only paid if they are actually given work. These contracts have been the subject of a lot of criticism, particularly in the UK where their use seems to be much more widespread than here.

Among other things, it has been argued that it can be very difficult to keep track of income when you are on a ‘zero hours’ contract. A frequent criticism is that employees may have no idea at the beginning of a working week what their income will be at the end of that week and therefore find it difficult to plan financially.

The new legislation is going to make significant changes. The headline news is that ‘zero hours’ contracts will be banned – something that may alarm employers in certain sectors where the greatest flexibility possible is necessary.

As well as that, the Government intends to introduce what are known as “Banded Hours” contracts, which are likely to amount to a halfway house between the ‘zero hours’ model and standard employment arrangements. Banded Hours contracts guarantee a minimum number of hours per week by assigning hours to various bands – by way of example, “Band A” would be 10 to 15 hours. “Band B” would be 20 to 25 hours. “Band C” would be 25 to 30 hours and so on.

Critically, once an employee is placed in a particular band, they cannot be removed from that band without their consent. As well as that, there is scope for an employee to advance from one band to another – to move from Band A to B and B to C in the example used above. If an employee can demonstrate that over the past 18 months they worked on average greater hours than their existing band, they will have the right to move up to the next one.

Obviously the intention is to guarantee an employee at least a certain level of income each week but, once again, it is possible that this will be burdensome for employers (although it is apparently intended to mitigate the effect of the new rules by allowing employers to refuse a request where it would have adverse consequences for the business – although it remains to be seen how liberally, or not, this will be interpreted in practice).

The legislation makes other changes. Among other things:-

  • Employers will be obliged to provide certain key information (including pay rates) from the outset of employment. They’ll also be obliged to estimate what the new employee’s normal working day and working week will look like.
  • Where employers call employees into work unnecessarily, the employees will still have a right to be paid.
  • Penalising employees for trying to exercise their rights will be prohibited.

As always with legislation of this kind, it’s worth asking the question if the cure is better than the disease. The recent Government-commissioned University of Limerick study suggested that the prevalence of ‘zero hours’ contracts in Ireland was low. This poses the question whether this legislation is actually necessary to solve a genuine problem in the Irish workforce.

One thing is certain – the traditional 9 to 5 job is becoming increasingly antiquated in Ireland. Workers, particular younger workers, may well relish the flexibility that ‘zero hours’ (or equivalent contracts) offer them.

Not everyone wants a 9 to 5 job any more – millennials, to take one example, often want to fit work around life instead of life around work. ‘Zero hours’ contracts allow employers and employees alike much more flexibility.

Whether employers will be in a position to continue to offer flexible roles to employees is another question, given the potential for greater demands on their budgets as a result of the legislation. This remains to be seen.


Author

Patrick Walshe

PARTNER


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