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Will banded-hour contracts kill zero-hours?

Monday, August 24, 2015

As published in the Sunday Business Post 23 August 2015.

There has been much discussion about banded-hours contracts in the media in recent months.  This partly flows from the ongoing industrial relations disputes within one large retail chain, where the use of so zero-hour contracts has caused controversy.


One of the employees’ demands in that dispute is that they be given access to banded-hours contracts – a demand that their union supports.  But what exactly are banded-hours contracts and why would employees be interested in them in the first place?


As referred to in previous articles in this series, the typical employment contract model in Ireland is one 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 makes themselves available for work, they are entitled to be paid.


This contrasts sharply with zero-hour contracts where employees are effectively “on call” with no guarantee of work.  The employer is not obliged to provide work – the employees only work to suit the demands of the business.  Crucially, the employees are only paid if they are actually given work.


Zero-hour contracts have been much-criticised, particularly in the UK, where their use appears to be widespread.  The criticism, among other things, flows from the fact that it can be difficult to keep track of income when you are on a zero-hour contract.  Employees may have no idea at the beginning of a working week what their income will be at the end of that week and accordingly find it difficult to plan financially.


Banded-hours contracts are more secure than the zero-hour model, albeit falling short of the usual contract where you are paid a fixed fee for working fixed hours.  Banded-hours contracts are a hybrid of the two.  They 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.  Once an employee is placed in a particular band, they cannot be removed from that band without their consent.

The obvious aim is to guarantee an employee at least a certain level of income each week, which that employee can depend upon and plan accordingly.


Another feature of the banded-hours model is that employees would have the opportunity to move ahead to the next band if additional hours became available.  They would then be “locked” into that band (in other words, the employer would be prevented from reducing their working hours at its discretion – the integrity of the higher band would hold and the employee would continue working at the level of that band).


Several trade unions, notably Mandate, firmly support the implementation of banded-hours contracts.   Some see them as the ideal solution to the zero-hour dilemma – a banded-hours model of the kind envisaged by the union would certainly signal the death knell for zero-hour working practices.


There has been political pressure too.  Sinn Fein recently published a banded-hours contract bill which creates a mechanism whereby an employee is entitled to request to move to a higher band and, if the employer refuses, to bring a complaint to the Workplace Relations Commission which can itself direct that the employee be moved to a higher band.  That draft legislation is most unlikely to become law but it does signal the possible need for greater regulation in this area.


One of the things that will be interesting to see is whether Minister Ged Nash’s  working group on zero-hour contracts, which is due to report later this year, will make reference to banded-hours contracts and suggest legislative change.


Of course, the government’s capacity to amend employment law in the limited period between now and the next election may mean that there is no movement on this issue until the next Dáil.


However, the criticism of the current practice of zero-hour contracts in Ireland, and the corresponding desire for a move to a new model such as banded-hours contracts, means that this issue is unlikely to go away.  On this, it will be particularly interesting to have a better of idea of precisely how many Irish workers are employed on zero-hour contracts in the first place – as referred to in previous articles, one of the points that the Minister’s working group are likely to examine is the degree to which zero-hour contracts are used in Ireland.  At present, it simply isn’t clear.


Patrick Walshe