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Zero-hours contracts pose benefits risk to jobseekers

22nd May 2014

If they turn down certain zero-hours contracts without good reason jobseekers risk losing benefits, the government has said.

The change comes with the incorporation of income-based jobseeker’s allowance into the new universal credit system.

Previously, people claiming jobseeker’s allowance were able to refuse to accept such jobs without facing penalties.  But under universal credit, which is being rolled out gradually, people will have to accept the casual contracts or risk losing their benefits.

Zero-hours contracts allow employers to hire staff with no guarantee of work.  They are popular with many companies due to the flexibility they offer.

Critics say that zero-hours contracts can leave workers with little financial stability or security, few employment rights and not enough work.  The government says such contracts offer an average of 25 hours’ work a week and can be a good way to gain experience.

A spokesman said that, when workers did not get the hours they needed, their universal credit payments would adjust automatically to ensure they remained financially supported.

Labour has said the government should focus on stopping abuse of workers through zero-hours contracts rather than forcing claimants to accept such working conditions.

Shadow work and pensions secretary Rachel Reeves said: “The growth of zero-hours contracts and the exploitative use of them has got to be cracked down on.”

She said jobseekers should be able to choose whether to accept zero-hours contracts and “shouldn’t be forced into taking a job” that was unsuitable.  She also said that the government had questions to answer about “who exactly is at risk of losing benefits for refusing to take a zero-hours contract job.”

Under the new scheme, claimants who turn down such a contract when it is deemed to be suitable could lose benefit payments for more than three months.

A spokesman from the Department for Work and Pensions said claimants needed to do everything they could to get work.  He said jobseekers would be expected to take “reasonable” zero-hours contracts and carry on looking for permanent full-time work in the meantime.

Unions last week called for action against zero-hours working.

This followed a study that showed around 1.4 million jobs involved contracts that did not guarantee a minimum number of hours.  The Office for National Statistics (ONS) said most of the contracts were zero hours.