IoD press release Zero-hours contracts have a valid role to play in a flexible labour market

New data from the Institute of Directors suggests that zero-hours contracts – in which employers are not obliged to provide any minimum working hours and workers are not obliged to accept any work offered – can facilitate a flexible and mutually beneficial employment relationship.

A clear majority (80%) of business leaders believe that zero-hours contracts can play a valid role in the labour market, with half (49%) of those surveyed also agreeing that they require reform in order to safeguard the interests of employees.

Commenting on the results, Alex Hall-Chen, Principal Policy Advisor for Employment at the IoD, said:

“Zero-hours contracts can enable businesses to adjust operations in response to fluctuating consumer demand, which is particularly important for sectors like hospitality and agriculture.

“Our research also suggests that zero-hours contracts can play a role in reducing economic inactivity rates, given their popularity among sectors of the population at higher risk of dropping out of the labour market, such as older workers and parents. Zero-hours contracts can offer these groups the flexibility to participate in the labour market without needing to commit to set hours.

“We would encourage policymakers to consider reforms which both recognise the valid role that zero-hours contracts can play in the labour market and ensure that the interests of employees are safeguarded.”

Full survey results

866 responses from across the UK, conducted between 15-27 February 2024. 14% ran large businesses (250+ people), 18% medium (50-249), 25% small (10-49 people), 31% micro (2-9 people) and 12% sole trader and self-employed business entities (0-1 people).

Unlike a traditional contract of employment, zero-hours contracts offer no guarantee of minimum working hours. What is your view regarding zero-hours contracts?

Zero-hours contracts can play a valid role in the labour market but need significant reform in order to safeguard the interests of employees.
Zero-hours contracts do not play a valid role in the labour market and should be prohibited.
Zero-hours contracts in their current form play a valid role in the labour market and do not need significant reform.
Don't know

Qualitative feedback from business leaders included:

“We have staff that prefer them (usually retirees who want to come back and work a little but only when it suits them). In a tight labour market we are happy to be flexible for an experienced worker.”

“It would be a nightmare for us and many small businesses and consultants/contractors if zero-hours contracts were changed. They provide an easy way (using pre-agreed terms etc.) to ramp up work fast to meet peaks in demand with known and trusted workers”

“We use zero-hours as our staff work across 4 companies. Without the flexibility of this I could not offer them employment or would have to offer weekly contracts which would be an administrative nightmare. This way they can work across any of the companies we have and I can give them continual work of about 47 hours a week. Everyone seems happy with the system and they have been with us for many years and it works well”

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