UK to clamp down on ‘zero-hour’ worker contracts


The U.K. government is to give staff working under "zero-hours" contracts, which guarantee no minimum hours or income, the freedom to look for additional work elsewhere.

U.K. Business Secretary Vince Cable announced on Wednesday that clauses forbidding employees on so-called zero-hours contracts from taking on extra work would be outlawed.

Oli Scarff | Getty Images

The ban, set to benefit the estimated 125,000 zero-hours contract workers tied to an exclusivity clause in the U.K., is part of a bid to clamp down on abuses by "less scrupulous" employers.

"It has become clear that some unscrupulous employers abuse the flexibility that these contracts offer to the detriment of their workers," said Cable in a statement.

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Zero-hours contracts appear to be increasingly common in the U.K., fueling concerns that the country's economic uptick is failing to benefit all its citizens.

In the latest official survey, 583,000 Britons said they were employed with a zero hour-contract in the last three months of 2013, more than twice the number (250,000) reported in the same period in 2012. Of these, around 125,000 were covered by exclusivity clauses banning them from working elsewhere.

However, the U.K.'s Office for National Statistics has suggested that the uptick in reported zero-hours contracts was likely influenced by heavy coverage in the media.

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Tim Thomas, head of employment policy at EEF, a body representing U.K. manufacturers, said the government had struck the right balance between encouraging employment and preventing abusive practices.

"The way forward… treads a fine line between supporting the majority of workers who want to continue to work on their zero-hours contracts, and limiting their use where they are neither necessary nor appropriate," he said in the government's statement.

Economic data point to a steady improvement in the U.K. economy, with employment up 345,000 in February-April on the previous quarter. However, the debate about whether "regular" Britons are profiting is seen gaining heat in the run-up to next year's national election.

—By CNBC's Katy Barnato