Analyse one advantage and one disadvantage to IPA of changing employment contracts from full-time to zero hours for most production employees.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2025). The mark or mark type is shown in brackets.

1. [1] A contract of employment sets out the terms and conditions between the employee and employer.
2. [1] A full-time contract of employment guarantees full-time hours of work for the employees.
3. [1] A zero hours contract of employment offers no guaranteed hours for the employee.
4. [1] Advantage: Reduced labour costs.
5. [1] Advantage: Greater flexibility in production.
6. [1] Disadvantage: Negative impact on motivation of employee.
7. [1] Disadvantage: Increase in labour turnover.
8. [1] Disadvantage: Increase in recruitment and training costs.
9. [1] Application: Recruitment of skilled production workers has been difficult.
10. [1] Application: Training is given to employees.
11. [1] Application: Seasonal demand for smartphones.
12. [1] Application: Low margins on sales.
13. [1] Application: Some employees will remain on full-time contracts (possible conflict between employees and productivity).
14. [1] Application: Impact on quality of refurbished phones.
15. [1] Analysis: Reduced labour costs in off-peak times will enable IPA to reduce prices for its smartphones and therefore result in an increase in sales and profit.
16. [1] Analysis: A reduction in labour costs reduces the direct costs of IPA and therefore increases gross profit.
17. [1] Analysis: Zero hours contracts may reduce employee motivation therefore reducing labour productivity and increasing costs of production resulting in a reduction in profit.
18. [1] Analysis: Employees may resist the change to zero hours contracts resulting in an increase in labour turnover and therefore an increase in recruitment and training cost.
19. [1] Analysis: Inconsistent quality of refurbished phones due to the everchanging workforce.