As the government is urged to ban zero hours contracts by the TUC (Trades Union Congress), Crown Workforce Management’s Flexible Working Consultant Neville Henderson says that a flexible approach can often benefit both the business and the employee.
Here he gives some tips for businesses to avoid the use of zero-hours contracts while still retaining workforce flexibility.
As with many types of insecure employment zero-hours contracts can be beneficial to some people such as students, but it is certainly not the norm. However, it is worth remembering that all forms of flexibility can be of benefit to both workers and employers, and striking the right balance is essential to ensure this is done ethically while meeting the needs of the business.
There may be a short-term benefit to the employee if we tip the balance to increase their freedom to work when and where they like – however if this is tipped too far, this may have detrimental effects to the viability of the business.
Equally, there are currently a large number of workers who receive low pay, have high work flexibility and essentially have little power or voice, and it is this group that needs to be addressed carefully to ensure fairness.
So what options do businesses have to avoid this?
Firstly, they should undertake a review of the business to understand their ‘demand profile’. This is an expectation of how many staff members, with what skills, are required at any given time, and highlight what factors could occur to affect this.
For instance, an airport security team will require higher levels of staff when large volumes of flights are departing, and there is likely to be a known seasonality across the year, and within days of the week and hours of the day, but this could change at times when adverse weather or air traffic control issues cause flight cancellations.
Once a business knows this, apart from relying on standard rigid employment methods with unplanned and often not guaranteed overtime, with its inevitable difficulty in reducing hours when not needed, I would suggest two main options when creating role profiles which, if designed carefully, are both fair on the employee and can cater for fluctuations in demand.
Banked hours
For simple cases of flexibility, one solution is using a banked hours scheme. Banked work schemes enable employers to create a ‘bank’ of hours from which they can plan for the number of staff and hours they require per month.
Shifts can flex accordingly week by week to meet the needs of the business, while the employee could receive a regular income rather than having the uncertainty of a zero-hours contract.
For example, if businesses have work which requires staff three or four days per week, a contract for 3.5 days could be given with regular weekly income. This would be possible to do without falling foul of minimum wage legislation.
Annualised hours
Extending the concept of banked hours, another approach is using annualised hours where an employee works a certain number of pre-planned hours over a year.
Attendance is planned according to the requirements of the business. For instance, there may be longer or shorter shifts or more or less staff planned depending on anticipated requirements, and the employee receives the same monthly wage to provide them with an element of certainty and stability.
Normally shifts are planned in regular patterns, and attendance and time off is planned in advance.
Some of the hours contracted for are usually left unplanned and may be used for short-notice work, such as covering sickness, and can help avoid overtime payments or the use of temporary or agency staff. Any unused hours left at the end of the year are usually written off, but act as a significant incentive to encourage productivity, low sickness and smarter working.
In both of these instances, an “operations manual” is usually developed to allow full understanding of flexibility expected from employees and the business with details, such as notice periods for changes to planned hours, best being developed and agreed together.
Upfront flexible planning is a transparent method to avoid the use of zero-hours contracts, providing security for the employee while ensuring the long-term strategic needs of the employer are met.
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Neville Henderson is a Senior Consultant at Crown Workforce Management.
