FDF s Response to the Consultation Document from the Department for Business, Innovation and Skills on Zero Hours Employment Contracts

Transcription

1 FDF s Response to the Consultation Document from the Department for Business, Innovation and Skills on Zero Hours Employment Contracts 1. This response is made by the Food and Drink Federation (FDF), the trade association for food and drink manufacturing. Food and drink is the largest manufacturing sector in the UK (accounting for 18% of the total manufacturing sector) turning over 92bn per annum, creating GVA of 24bn and employing up to 400,000 people. 2. FDF s general comments on Zero Hours Contracts and its response to the relevant questions for employers bodies in the consultation document from the Department for Business, Innovation and Skills (BIS) on Zero Hours Employment Contracts is set out below and is based on consultation with FDF members and discussions at meetings of FDF s Employment and Skills Forum. General Comments 3. FDF agrees with the Government that the UK needs a flexible labour market that is effective and fair for both employers and employees. It considers that this is necessary to give employers the confidence to invest in their businesses so that they will hire employees and create new jobs. It also provides a framework that allows individuals not only to find work but also to find work that suits them and their personal circumstances. 4. FDF recognises that zero hours contracts are an important element of this flexible labour market that can provide benefits for both employers and individuals. They can help employers to respond quickly and efficiently to rapidly changing customer requirements and consumer expectations. They can also give individuals more choice in the way in which they work as well as help to provide pathways into the labour market for young people as well as Food and Drink Federation 6 Catherine Street London WC2B 5JJ Tel: +44 (0) Fax: +44 (0) Web: Registered office as above. Registered in London with limited liability. Certificate of Incorporation no VAT number: The Food and Drink Federation seeks to ensure that information and guidance it provides are correct but accepts no liability in respect thereof. Such information and guidance are not substitutes for specific legal or other professional advice.

2 for those who are returning to the labour market after a period out of it for various reasons. 5. CASE STUDY: One large manufacturer revealed that they use many different employment routes to recruit their workforce. Zero hours contracts are one of a variety of flexible entry routes into work. 6. From a recent survey that FDF has undertaken of its members and subsequent discussions with them, it is clear that, although there is not widespread use of zero hours contracts by FDF members, some of them use zero hours contracts in a range of circumstances. These can include the need to respond flexibly to rapidly changing customer requirements and support expansion plans or the introduction of a new range of products. 7. As far as the specific issues of exclusivity and transparency are concerned, FDF would be opposed to the introduction of legislation that would ban exclusivity clauses in zero hours contracts as it considers that there are some circumstances and situations, such as to protect an employer s intellectual property or to maintain commercial confidentiality, where such clauses are justified. However, it also believes that it is in the best interests of both employers using zero hours contracts and individuals who are on these contracts to understand their respective responsibilities and rights. 8. CASE STUDY: A medium-sized food and drink manufacturer uses development chefs, contracted on a zero hours basis, to help develop new products when requested by their clients. Zero hours contracts allow the company to work with reliable, highly skilled chefs. The zero hours contracts also allow the chefs to work on a variety of different and interesting projects. To protect the intellectual property of the company, a confidentiality clause is included in the contract. Food and Drink Federation Page 2

3 Responses to Questions in the Consultation Document Addressing exclusivity Question 1: Are there circumstances in which it is justifiable to include an exclusivity clause in a zero hours contract? If you answer yes, please describe the circumstances that justify such a clause. 9. Yes - FDF considers that there are some circumstances in which it is justified to include an exclusivity clause in a zero hours contract. These circumstances are probably fairly limited and we feel that they are more likely to occur for individuals who are working in senior or specialist technical areas. Some examples of situations in which we feel exclusivity clauses could be justified are where the employer is trying to protect its intellectual property or ensure commercially confidential information is not disclosed to its competitors. 10. In some ways, the use of these exclusivity clauses is similar to the use that is sometimes made by employers of confidentiality clauses in the contracts of employment of their permanent employees, often in senior or specialist/technical roles, which either restrict them from working for another employer or state that working for another employer requires the prior approval of their employer 11. FDF calls for more guidance on the use of zero hours contracts and the use of exclusivity clauses. As there is no legal definition of these, rather than waiting for tribunal case law, guidance could aid employers to act positively when considering the necessity to include an exclusivity clause in an individual s contract preventing cases needing to go to tribunal. Question 2: Do you think the Government should seek to ban the use of exclusivity clauses in employment contracts with no guarantee of work? 12. Whilst we find it difficult to think of circumstances in which it would be justified to have an exclusivity clause in employment contracts with no guarantee of work as our sector is committed to providing employment, we have concerns about the practicality of introducing legislation to ban exclusivity clauses in Food and Drink Federation Page 3

4 such employment contracts because, as the consultation document states, there is currently no legal definition of a zero hours contract. We are also concerned that the introduction of such legislation could have unintended consequences including reducing the more general use of zero hours contracts which we feel could be detrimental to the UK s flexible labour market. Question 3: Do you think an outright ban on exclusivity clauses in employment contracts with no guarantee of work would discourage employers from creating jobs? Are there any other unintended consequences of Government action that should be considered? 13. As we have stated in our response to the previous question, we have concerns about the practicality of introducing an outright ban on exclusivity clauses in this type of employment contract. As previously stated, zero hours contracts can act as a pathway into permanent employment for people such as students who are able to fit work around their studies whilst developing strong relationships and networks within a company. Zero hours contracts can also be positive for those looking to make a transition from work to retirement or to have reduced commitments to have a better work life balance. 14. CASE STUDY: One FDF member company uses zero hours contracts to help their employees transition from permanent positions into retirement. This benefits the employees as they are able to be paid gross, with tax concerns managed by the company, rather than as a sole trader having to navigate the tax system themselves. 15. We are concerned that the introduction of this type of legislative restriction on the use of zero hours contracts could have some unintended adverse consequences such as, for example, deterring employers for using zero hours contracts in other circumstances which could be to the disadvantage of both employers and individuals. Question 4: Do you think the Government should provide more focused guidance on the use of exclusivity clauses, for example setting out commonly Food and Drink Federation Page 4

5 accepted circumstances when they are justified and how to ensure both parties are clear on what the clause means? If you answer yes, what information should be included? 16. Yes - FDF can see that there would be some benefit for both employers and individuals in the Government providing more focused guidance on the use of exclusivity clauses although it will inevitably be quite difficult to cover all the circumstances in which they could be justified. It would probably be helpful if this guidance was sector specific or contained practical examples from different sectors of the economy of when exclusivity clauses could be justified together with some template exclusivity clauses that employers could use. However, it will be important to ensure that there is no legal requirement for employers to use the suggested wording of these clauses. Question 5: Would a Code of Practice setting out fair and reasonable use of exclusivity clauses in zero hours contracts (a) help guide employers in their use and (b) help individual understand and challenge unfair practices? 17. FDF considers that this type of Code of Practice would be helpful for both employers and individuals. FDF would support sector-specific Codes of Practice and would be keen to provide input into the content of any Code of Practice based on the practical experience of FDF members. FDF would also assist in the dissemination of this Code of Practice to FDF members and would suggest that the ACAS model is used to develop these sector-specific Codes of Practice. Question 6: Do you think existing guidance and common law provisions are sufficient to allow individuals to challenge exclusivity clauses and therefore no specific action from the Government is required? 18. We are not convinced that existing guidance and common law provisions are sufficient for this purpose and, as we have stated in our answer to the previous question, we would therefore support the introduction of practical sectorspecific Codes of Practice to achieve the Government s objective. Food and Drink Federation Page 5

6 Question 7: If you have sought employment information, advice or guidance on zero hours contracts before (a) where did you receive it from, (b) how helpful was it to you in terms of explaining your position in regard to zero hours contracts and (c) how could it have been improved? 19. This is not really a question that it is appropriate for FDF to answer but our impression is that employers currently find it quite difficult to obtain clear and practical information, advice and guidance on zero hours contracts which is why we would support the introduction of a practical Code of Practice on this issue. 20. Members have found the gov.uk website, which replaced the direct.gov and Business Link websites, lacking in useful information on this and other employment issues and would instead turn to ACAS or their companies own legal provisions when seeking advice and guidance. 21. FDF members also call for the Government to more positively promote the use of zero hours contracts and how these can benefit both employees and businesses. Question 8: Would the additional information, advice and guidance suggested in the first option (first bullet point, para 41) help individuals and businesses understand their rights and obligations? If not, what other information should the Government provide? 22. Yes it should help individuals and businesses to understand better their rights and obligations. Question 9: Further to your answer to Question 5, would a broader employerled Code of Practice covering all best practice on zero hours contracts encourage more transparency? Food and Drink Federation Page 6

7 23. Yes we feel that an employer-led Code of Practice should encourage greater transparency and FDF would be keen to be involved in the drafting of this document and its dissemination to FDF members Question 10: Do you think that model clauses for zero hours contracts would assist employers in drawing up zero hours contracts, and support employers and individuals to better understand their employment rights and obligations? If you answer yes, what would be the key considerations in producing model clauses? 24. Yes we feel that model clauses would assist employers, and particularly smaller employers, in drawing up zero hours contracts. However, they would need to be drafted in a way that reflects the different practical experiences of employers from different sectors of the economy and of different sizes. Question 11: Do you think that existing employment law, combined with greater transparency over the terms of zero hours contracts, is the best way of ensuring individuals on zero hours contracts are making informed choices about the right contract for them to be on? 25. Yes we would not support any additional legislation on this issue for the reasons set out in our responses to some of the previous questions. Question 12: Further to your answer to Question 11, do you think there is more employers can do to inform individuals on zero hours contracts what their rights and terms are? 26. No we would not support any further administrative burdens being placed on employers in relation to the use of zero hours contracts. Question 13: Are there unintended consequences of introducing any of these options? Please explain your response. Food and Drink Federation Page 7

8 27. As we have explained in our reasons to some of the above questions, there is the danger of creating unintended consequences if the Government were to introduce additional legislation on zero hours contracts or make the guidance on zero hours contracts that it provides employers and individual too detailed and complex. This could have the effect of discouraging some employers from using this type of employment contract to the disadvantage of some individuals who would like to work in this manner. 12/03/14 Food and Drink Federation Page 8