Proposed changes to zero hours contracts fail to protect workers

The government’s recent consultation on proposed changes to zero hours contracts has failed to address the key issues related to insufficient support from the system rather than the actual contracts themselves, the Low Incomes Tax Reform Group (LITRG) says

In its response to the government’s consultation on how to improve protection for workers on zero hours contracts, the LITRG said proposed changes to the rules, such as outlawing ‘exclusivity’ and increasing transparency, were wide of the mark and claimed the consultation had too narrow a focus.

Anthony Thomas, LITRG chairman, said: ‘Against the backdrop of the government’s labour market strategy, we can see this is a much more complex issue than just banning zero hours contracts outright. In any case, the nature of the enquiries we have received from the public suggests that the problems faced by low paid workers are often more to do with insufficient support and information than the actual contracts themselves.’

LITRG says the root cause of many of the problems in practice is the ways in which such contracts interact with the employees’ tax, NIC position, related tax credits and welfare entitlements.

It cited a recent inquiry from a care worker paid the national minimum wage (NMW) and on a zero hours contract whose work-related motoring costs were not reimbursed by her employer. The worker was told by her employer that these costs could be ‘claimed’ under HMRC’s ‘mileage system’ even though her earnings were insufficient for her to pay tax. As a result the expenses she incurred in doing her job were reimbursed neither by her employer nor through the tax system. In addition the NMW rules meant that any unavoidable travel expenses she personally incurred could not be taken into account in the NMW calculation whereas they would have been if the employer had reimbursed them.

Thomas said: ‘This query clearly illustrates the need for basic information about what low-income workers on such contracts should expect, as well as the mismatch of the rules that may be affecting them. We also recommend a comprehensive review taking into account the tax and benefit interactions, with a view to better protecting low paid workers in the long term.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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