Sports Direct: The end of zero hours contracts?

Written by
Tom Ritchie

09 Sep 2016

09 Sep 2016 • by Tom Ritchie

Depending on how you view them, zero hours contracts are either a valuable tool for businesses to give workers flexibility or an emblem of a job market that picks up casual workers on a whim, providing no guarantees for lower wage employees.

Speaking from experience, zero hours did not work for me. Fresh out of university and low on cash, I accepted a zero hours position at a big retail chain. Not knowing one week if I was going to work four hours or 24 was stressful, and all I had to worry about was scrimping enough cash to go out for a few beers at the weekend. 

The high profile case of Sports Direct has brought increased political attention to the matter. In 2015, as part of his concerted effort to ban zero hours contracts, Ed Miliband branded the sports retailer “a terrible place to work”. MPs on the business, innovation and skills select committee claimed founder Mike Ashley ran the company like a Victorian workhouse and “treated his workers as commodities rather than human beings.”

Ashley has now announced that all retail staff will be guaranteed a minimum of 12 hours a week if they want to come off the zero hours contract. Workers at their central warehouse in Derbyshire, provided by employment agencies, will remain on the same deal.

While many are celebrating the successful campaigns of the Unite Union and the effect of mounting public pressure, it was announced on Thursday that there are more UK workers on zero hours than ever before. 

Over 900,000 workers have no guaranteed hours, forming 2.9% of the country’s workforce. In the East Midlands – coincidentally where Sports Direct’s central warehouse is situated –  zero hours contracts make up 3.6% of the total workforce.

Could a high profile case such as Sports Direct’s result in a move away from such contracts? Kim Hoque, professor of human resources management at Warwick Business School is not so sure: “It has certainly not done the reputation of zero hours contracts any good, but Sports Direct has been criticised as much for their flouting of the National Minimum Wage and for their ‘six strikes and you’re out absence policy’.

“One might argue (cynically) that they are only moving away from zero hours given that these types of contracts have received so much press attention recently, hence abandoning them was always going to attract a lot of attention and provide them with a quick and easy PR hit.”

The case for the contract is valid. Where they are mutually beneficial for the company and the employee, they can be a valuable asset, especially in a scenario where the need for irregular hours is beyond the control of the employer. However, it is important they do not become a company-wide norm.

If they are enforced, it can negatively affect the morale of the workforce. Hoque commented: “The common argument is that it will damage morale as it makes it impossible to budget, get a loan, a mortgage or organise childcare. This is particularly the case where people’s hours (and hence earnings) fluctuate a lot as a result of being on such contracts, and especially where they have no control over their hours.”

Hoque also believes that the problems at Sports Direct are rooted in bigger issues than simply the implementation of zero hours: “The Sports Direct case shows that, at least in instances where your hours don’t fluctuate wildly, there are many things that affect workplace morale just as much if not more than the type of contract you are on.”

Much of the moral protestation regarding zero hours contracts has been exaggerated. In some cases, they do provide genuine flexibility and can be a sign of mutual trust between employer and employee. But then again, when a 21 year old with no overheads is pulling their hair out when they look at their measly eight hours on a rota, imagine the untold stress scarce hours cause UK workers with genuine responsibilities.