Zero hours contracts have hit the news this week as they have been put at the centre of Labour’s employment policies for the upcoming UK election and whilst I get the “exploitation” argument, it got me thinking about the concept in general and whether they are really that exploitative.

If you have never dealt with them, zero hours contracts are basically employment contracts which set out everything apart from the hours you are expected to work which are left as rather a loose arrangement where the employer can ask employees to work as much or as little as they want and the employee can then say yes or no as suits.

Personally I think the rights and wrongs of such contracts are all down to individual circumstances.

Yes, I agree it would be impossible to live on a zero hours contract BUT only if that was your ONLY SOURCE of income.

Yes, I agree that it is exploitative in the hands of well established and profitable businesses who have a responsibility towards job creation.

However let’s look at it a different way.

The UK is in the middle of a boom in self employment – take a look at this report from the Bank of England if you don’t believe me:
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2015/q105.pdf

So my line of thinking is this – if you want to take a risk on building your own business why would you want to pay out for full time and permanent staff until such time as you are established? For growing businesses, zero hour contracts are the perfect way to manage the wage bill so that you pay staff when you need them without the worry and cost of using temps.

Similarly, if you are taking such a risk, want a bit of a safety net and can afford to give up some time without being obligated to do so, why not enter into one of these arrangements which could just help tide you over until the cash starts flowing in? In this instance too, there are no obligations to fulfill but you do have the opportunity of paid employment from time to time which could help ease the stress out of wondering when you’ll generate enough cash to pay yourself.

For these reasons I happen to think that zero hours contracts aren’t such a bad thing at all but, as you’ve seen, I do have reservations about them.

The possible solution here is to classify businesses by size so that the micro, small and medium sized enterprises are able to use them freely whilst the more established, bigger employers are restricted in how long they can keep an employee on a zero hours contract, particularly if that employee gets regular and reasonable hours.

Finally if, as I do, you believe in having multiple income streams, and, depending on your own situation, a zero hours contract could well be a useful addition to your cash generation toolkit.

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