The McDonald’s case: Pros and cons of zero-hours contracts

Earlier this week the boss of McDonald’s UK defended his fast-food company’s use of zero-hour contracts. Paul Pomroy told the BBC that all of his employees were notified of shifts two weeks in advance and were allowed to work elsewhere.

“Jobs at McDonald’s are good jobs,” he said. “Our staff are trained well and are proud to work for the company.”

It was an interesting statement given that zero-hours contracts have become associated with workplace abuse – with TV documentaries and plenty of newspaper column space given to exposing their unfairness.

Those detractors supposedly don’t specify working hours, there is no guaranteed income and staff are in constant fear of losing their jobs.

According to the Office for National Statistics, up to 1.8 million workers are now employed under zero-hours arrangements. We are failing to support these people if we don’t fully investigate both the pros and cons of these contracts. It’s too easy to say one is good and one is bad. Nothing is black and white.

So what are the pro’s and cons of zero-hours contracts?

Cons

They don’t specify set working hours or guaranteed income with employees in fear of losing their jobs.

Thee are no fixed hours contracts, and it is used primarily as a cost-reduction tool.

It can create financial insecurity for employees, uncertainty around entitlements to benefits and workplace stress.

It’s not compatible with the goal to build a high skill, high wage economy. Can undermine employee engagement and good customer service.

Furthermore, if used incorrectly can damage your firm’s reputation.

Read more about zero-hours contracts:

Pros

It provides flexibility for workers – they can say yes or no to shifts. Suits students, second jobbers and working mums wanting to get back into employment.

You don’t need to offer permanent contracts, which could result in higher costs for the employer and less jobs. Working hours can also be set and agreed in advance, staff are entitled to holiday pay.

The CBI believes without them UK unemployment may well have surged beyond three million during the recession. It believes zero-hours “enable businesses to respond quickly to changes in demand and allow workers to better manage their work life with other commitments. There are also many examples of zero-hours contracts providing a pathway into permanent employment for those who want to work this way”.

According to a survey by HR professional body the CIPD back in late 2013 workers on zero-hours contracts were said to be “more likely to be happy with their work-life balance than other staff’. It said just over half of the 456 zero-hours workers it surveyed did not want more hours.

The CIPD said zero-hours contracts, which are widely used in fields including catering, leisure, retail and the public sector, provide flexibility for workers and employers.

Best advice for employers using or wanting to use zero hours?

Carefully study the legislation, give staff a written copy of the terms and conditions of the contract. Review their performance regularly and gauge their feelings about the contract. Do they want to change? Do they want more permanent hours? Prevent any disillusionment.

Legal view

Philip Pepper, employment law partner at Shakespeare Martineau, said: “It often isn’t viable for employers to employ all staff on permanent contracts with set hours, and that is why zero-hours contracts have become more attractive. Although such contracts suit many employment situations there is often an ambiguity around what these types of contracts actually mean for the employer and employees – and that is often what causes the problems. However, as long as the employer has well-managed systems in place to support this type of contract, there is no reason why they can’t work for everyone.

“Zero-hours contracts have previously been deemed controversial and open to abuse as a result of employers having multiple staff on such contracts, many of which are on ‘standby’ to cover busy trading periods if required. This combined with exclusivity clauses, which inhibited employees from working elsewhere, led to an unfair system for employees.

“This was recognised and exclusivity clauses have since been outlawed.
McDonald’s seems to have its working practices in order by offering all staff rotas two weeks in advance and many employees welcome the flexibility. However, it would be wrong to assume that zero-hours contracts are suitable for all employers and they should seriously consider whether the benefits of the contracts are workable for their business.”

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