Wednesday, 7 August 2013

Zero hour

The media debate over zero hours contracts has finally erupted.

The headlines seem to be that it represents exploitation by unscrupulous employers.  There are sorry tales of vulnerable youngsters kicking their heels at home, or wherever, waiting for a phone call to tell them when, if at all, they will be required to work.

From what I have seen and heard there is an inference at least that the employees are obliged to keep and make themselves available and not to decline any offers of work. This apparent inequality is presumably the perceived evil of the whole concept.

I don’t think that the world is getting a true picture here, or that is it anywhere near as beastly as the media (and those feeding them) would have it. 

I have been involved in these flexible working arrangements for over three years, both within my own business and on behalf of clients.  Last year we litigated to a full tribunal hearing a claim from a ‘consultant’ that he was in fact an employee at the time my client terminated a signed contract that plainly recorded that he wasn’t.

It wasn’t quite so simple as that though at the end of the day he failed.

Employment - and to an extent tax - lawyers have been wrestling for years with the distinction between a contract of service and a contract for services.

Every now and again the senior courts have produced a judgment that considers key factors such as personal service, control and mutuality of obligation.  Most employment lawyers will probably agree that noble efforts have generally resulted in the conclusion that every case turns on its own facts.

Not a great deal more clarification has emerged from a spate of recent  cases that culminated in the highly entertaining, er, position of lap dancer Nadine Quashie who, ultimately, was not employed by 72 year old dad, Peter Stringfellow.

It is perhaps a little simplistic but legal analysis identifies an employment contract at one end of the scale, an independent contractor arrangement at the other and somewhere in between this zero hours concept.

In many situations it is like the proverbial elephant – you will know it when you see it.  If you called a plumber, to fix your pipes, you wouldn’t expect him to claim subsequently that he is entitled to employment rights.

There are definitions of these arrangements that occupy the twilight zone in between but to my mind they are somewhat fickle because of the variety.  One of the difficulties one has in conducting any legal analysis is that the labels used may not be accurate.

What one person thinks is a ZHC may be a consultancy agreement or an employment contract in the eyes of another and vice versa.

But let’s get back to the point of this alleged scandal - the notion that people are being chained to a post or locked in a room until they are needed and then let out and paid (no doubt a pittance) for doing only as much as the gangmaster requires.

First, I doubt that in many if any cases that is actually what is agreed, whether it is verbal or in writing.  Far more likely that there is entirely even-handed mutual lack of obligation.

In other words, whilst there may be no guarantee of work, there is probably also no obligation on the worker to be available. 

Secondly, that may be a choice that the worker makes – because there is nothing better at the present time.  Of course, they would like a full time job that pays even when they are sick, on holiday or sat at work with nothing to do.

The reality is that employers in the current climate can’t afford to run businesses in that traditional manner.  Within many legal practices over the last two or three years there has been a shift to the use of independent consultants who work for two or more firms, neither or none of which is able to offer a full time position or even commit to relatively certain part time employment.

In my experience this works happily enough.  The workers are only too glad of a structure in which they can secure a full week’s work, whether it be at two, three or more locations.

The lack of mutual obligation is on the face of it a weakness, but in reality a strength.  What happens is that both sides build a bond of goodwill and cooperation which is potentially stronger than any written contract.

A worker who turns down assignments on a regular basis can only expect that the employer, who has no duty to offer work, will tire of rejection.  Similarly, a consultant who is not fed regularly will forage elsewhere.

The reality of the young kids waiting for the phone call from Burgerland or wherever is probably that they have no choice but to be at beck and call, because there is nothing else available.  If there is something better on offer then they should go get it.

In my experience there are many plus points to flexible working arrangements that, whatever the precise terms or labels attached, don’t amount to employment contracts.  Aside from the creation of opportunities where none would otherwise exist, there are spin-offs such as the sense of fulfilment and self-respect that individuals enjoy within their micro-businesses.

One suspects that the most enthusiastic contributor to the debate – whether or not the input is visible –will be the Treasury, having felt the impact in cash flow terms of many tax payers switching from Schedule E to Schedule D.

The climate is changing, we are told, and it may be commercial forces rather than political debate that see a swing back towards more familiar master and servant relationships. Ironically this will be at a time when our government has to a large extent destroyed the measure of security that was for employees its most coveted feature.

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