Recruitment firms urge caution over ending of zero hours contracts

Martin Shipton

Britain’s largest umbrella body for recruitment firms has urged First Minister Rhun ap Iorwerth to back moves aimed at watering down a law that bars employers from imposing zero hours contracts on their workers.

Under the UK Labour government’s Employment Rights Act, employees will have a right to guaranteed working hours.

But the Recruitment and Employment Confederation (REC) is calling for an important detail to be changed in the way guaranteed hours are defined.

According to the UK Government’s current proposal, companies would be required to offer employment contracts that match typical working patterns, based on a 12-week period, for staff on zero hours or flexible arrangements.

REC, along with other business groups, is warning that the proposal could “increase labour costs and reduce hiring flexibility during a fragile recovery”, especially as the UK Government aims to boost youth employment. REC is urging Westminster ministers to allow employers to assess patterns over a longer period of six to 12 months, arguing this better reflects seasonal demand and project cycles.

While employment law is not devolved to Wales, the REC is seeking the Welsh Government’s support in its quest to get the proposal changed. The Act has already been passed, but its detailed workings, including the guaranteed working hours provision, are for UK ministers to determine.

In a letter to Mr ap Iorwerth, Neil Carberry, the CEO of REC states: “A new administration brings both fresh opportunities and significant challenges. As you begin delivering your agenda for government, I am writing to share the REC’s updated Welsh Manifesto for Growth.

“This document sets out the key challenges and opportunities facing the Welsh labour market and highlights how government and industry can work together to drive economic growth, increase employment and support businesses across Wales.

“The REC represents the UK’s recruitment industry – a sector larger than both law and accountancy, contributing more than £41bn to UK GDP each year. In Wales, RECymru has 81 members headquartered in the country and a further 138 operating branches, collectively contributing more than £8.8bn to the Welsh economy.

“Recruiters play a vital role in supporting growth by helping businesses access talent and enabling people to move into work. While the Welsh economy has shown resilience, there are clear challenges that must be addressed to support long-term prosperity. A dynamic and responsive labour market will be essential to tackling economic inactivity, addressing skills shortages and responding to the changing needs of employers and industry.

“Our Welsh Manifesto for Growth sets out recommendations across four key areas:

* Understanding today’s labour market challenges;

* Supporting labour market transition and preparing for the future;

* Boosting workforce productivity and reducing inactivity; and

* Regulating for a sustainable and dynamic labour market

“Alongside the challenges specific to Wales, there is also a significant UK-wide concern about the impact the Employment Rights Act could have on economic growth and the labour market. We are particularly concerned about the guaranteed hours proposals, on which the UK Government is expected to consult shortly. A robust and balanced response from your government, focussed on maintaining opportunities for Welsh workers, would be most welcome.

“Across sectors, concern is growing that a one-size-fits-all approach risks reducing labour market flexibility at precisely the wrong time. If implemented too rigidly, guaranteed hours measures could increase costs and complexity for employers, reduce hiring and limit flexible opportunities relied upon by many workers, particularly in sectors with fluctuating demand.

“It is vital that any reforms strike the right balance between security and flexibility, protecting good jobs while ensuring businesses can continue to create opportunities and support economic growth.”

Employment Rights Act

Explaining the guaranteed hours provision in the Employment Rights Act, a factsheet from the UK Government’s Department for Business and Trade states: “Recent data shows over one million people in the UK work on zero hours contracts. Flexible hours of work can benefit both workers and employers but without proper safeguards this flexibility can become one-sided, with workers bearing the financial risk.

“Zero hours contracts can make it difficult for a person to manage their financial obligations and their personal life. The current system allows workers to work regularly for an employer but with no certainty about their future hours and earnings. Employers can offer and cancel shifts at the last minute, so that much of the financial risk of changing demand is on their workers. That uncertainty can affect both financial security and well-being.

“The government is committed to ending one-sided flexibility and exploitative zero hours contracts, ensuring that all jobs provide a baseline of security and predictability so workers can better plan their lives and finances. Employers who already provide this security and predictability for their workers will benefit from a level playing field. These measures will help drive up standards and eliminate undercutting.

“Greater clarity and advance notice of working patterns will help workers by making it easier to organise transport and childcare, and to meet other family commitments and caring responsibilities. The measures are also expected to encourage employers to plan ahead more, meaning that workers do not bear so much of the financial risk.

“The measures set out in the Act will require employers to offer eligible workers guaranteed hours reflecting the hours they regularly work over reference period, which will be set in regulations and is expected to be 12 weeks. Individuals will be able to reject an offer of guaranteed hours and remain on a zero hours contract if they wish.”

The REC’s letter was sent to the First Minister on May 21.