LONDON (Reuters) — Britain is to ban employers from using contracts that stop employees from taking jobs elsewhere but do not provide a guarantee of work or income, Business Secretary Vince Cable said on Wednesday.
The ban is aimed at preventing abuse of so-called "zero-hours" contracts, which do not specify set working hours or guaranteed income levels but instead allow employers and employees to arrange shifts on an ad-hoc basis.
Earlier this year, such contracts were found to be much more widely used than previously thought. Their growing use has been attributed to a tougher labour market in the aftermath of the 2007-08 financial crisis, with firms more wary of hiring workers on permanent contracts, leaving some workers with little choice.
That has fed into a political debate central to the 2015 election campaign — namely, whether Britons are benefiting from the country's economic recovery, as Prime Minister David Cameron's Conservatives say, or whether, as opposition Labour argues, many Britons are still struggling to make ends meet.
Of the estimated 1.4-million jobs in Britain employed on zero-hours contracts, the government said around 125,000 workers who have an exclusivity clause that bars them from seeking work with another employer are likely to be affected by the ban.
"Zero hours contracts have a place in today’s labour market... but it has become clear that some unscrupulous employers abuse the flexibility that these contracts offer to the detriment of their workers," Cable said in a statement.
Labour's business spokesman Chuka Umunna said his party wanted further protection for workers, including the right to compensation pay if shifts are cancelled at short notice and to be given full contracts if they are working regular hours.
The ban will be included in new legislation which will be unveiled later on Wednesday and is expected to become law before the 2015 election. The government is also working on a code of practice for zero hour contracts.