Big employers 'slowing their uptake' of controversial zero-hours contracts

The number of workers on zero-hours contracts has hit a record high, rising 13% over the course of last year to hit 910,000 in the last three months of the year, according to new research.

But analysis by the Resolution Foundation think tank suggests the tide may be beginning to turn on the controversial contracts, with signs that big employers are moving away from the arrangement in the wake of furious controversy over its use by sportswear retailer Sports Direct.

Sports Direct announced in September it was ditching zero-hours contracts (ZHCs) for casual retail staff following a review of working practices. And the Resolution Foundation said that other major employers such as Homebase, Wetherspoons and McDonalds have announced that they will end use of the contracts or offer workers a chance to move to fixed-hours deals.

Trade unions have regularly raised concerns about the possibility of exploitation of workers on ZHCs, who have no guaranteed minimum working hours, sick pay or holiday pay, and can be called in to work whenever the employer needs additional manpower. Workers on ZHCs typically earn £1,000 a year less than colleagues in staff roles and are more likely to be under-employed.

But employers say the contracts suit many workers, who like the flexibility they offer and the opportunity to "top up" their income.

Analysis of official date released by the Resolution Foundation showed that numbers of people on ZHCs grew by more than 100,000 between the first and last quarters of last year.

But the increase in the second half of the year was just 7,000 - or 0.8% - compared with the 7.7% growth in the second half of 2015. It was the first time that ZHCs have not increased significantly faster than overall employment since they came to the forefront of public debate in 2013.

The think tank's policy analyst Conor D'Arcy said the slowdown in growth could indicate that employers are finding it harder to fill jobs at a time of record high employment and with the prospect of the supply of EU labour being limited after Brexit.

But he said it was also likely to reflect a fear of reputational damage - as "no employer wants to be the next Sports Direct" - as well as growing awareness among employees about ZHCs.

Mr D'Arcy said: "While the growth in these contracts has continued, beneath the surface there are signs of change, with a marked slowing of their uptake in the last six months of 2016.

"This is about more than just the general slowdown in employment growth, with a bigger drop visible in the growth of zero-hours contracts. The negative publicity these contracts have attracted may well have played a role in their slowdown, as firms rethink their use.

"Not providing guaranteed hours of work for those who want it, especially those in low-paying roles, can have a huge negative impact on the living standards of workers and their families, as budgeting becomes near impossible.

"The challenge now is to ensure that these still-popular contracts are reserved for cases of genuine desired flexibility for worker and employer."