Zero-hours contracts have been much in the news lately. There could be around one million zero-hours workers in the UK – four times official estimates – according to a survey by the Chartered Institute of Personnel and Development (CIPD). Even Buckingham Palace is apparently at it. Some observers have clearly decided that these arrangements are a Very Bad Thing.
The difficulty with any discussion on this issue is that the term “zero-hours contract” covers a range of different types of employment arrangement, so people are often comparing chalk and cheese. In essence, a zero-hours contract is an agreement between two parties that one may be asked to perform work for the other but there is no set minimum level of work or pay. The contract will provide what pay the individual will get if he or she does work and will deal with the circumstances in which work may be offered (and, possibly, turned down).
At one end of the scale, this could be similar to a staff “bank” arrangement, where the hirer can contact anyone in the bank if there is work on offer and those contacted are under no obligation to accept. In these circumstances, minimum employment protections may not apply (for example, there may be no right to paid holiday or sick pay) because the individual does not necessarily have the status of employee or worker due to a lack of “mutuality of obligation”. This arrangement may well suit both sides by offering flexibility, but will clearly not guarantee that the job seeker will get enough work to make ends meet.
Another type of arrangement might be an “umbrella” contract, where the contract sets out the terms on which an assignment (if available) might be offered but does not guarantee any minimum assignments. This might be used for highly paid, professional service jobs to deal with fluctuations in demand. Once offered and accepted, an assignment might last for months or even years. The individual would qualify for the minimum protections afforded to “workers” or “employees”, depending on his or her particular status.
Yet another variation on the theme seems quite common in retail, hospitality and leisure, and increasingly in care work too. Here, individuals might be nominally on zero-hours contracts but are actually working regularly. They might be informed of their hours when the shift rota has been prepared, maybe a week in advance, or they might be “on call” or subject to last minute cancellation. Such contracts might be used to deal with demand issues (such as seasonal variations in the tourist industry) or, in some circumstances, might be used by unscrupulous employers to try to minimise their obligations to the people who work for them. Nonetheless, it is possible that an employment relationship or “worker” status might be implied if in practice - regardless of the wording of the contract - the employer has an obligation to provide a certain level of work and the individual has an obligation to accept it.
The real problem with these arrangements is that they have the potential to become exploitative, given the power inequalities inherent in the employment relationship which are more extreme in the case of lower-skilled, lower-paid workers. Examples of the types of abuses that can occur include:
- individuals not being allowed to work for others even when the “employer” has no work to offer
- individuals not being given sufficient notice that they are being asked to work
- individuals not being given sufficient notice that work is cancelled (possibly being asked to leave mid-shift because work has dried up)
- having no real choice about whether to accept work, or being penalised for turning it down
- employers bullying individuals by capriciously withholding work
- employers evading their obligations to pay sick pay and holiday pay
The CIPD has also pointed out that it can be difficult for people on zero-hours contracts to get mortgages or credit cards because they cannot show that they have a steady income.
Some issues, however, such as not having sufficient work, are not confined to those working under zero-hours contracts but are experienced by many part-time employees too. And, of course, problems will always be worse during a recession when there are fewer jobs around and people cannot simply walk away from unsatisfactory situations.
Given the range of circumstances in which these contracts are used and the variation in their terms, it is difficult to see what regulation could be used to address the problems identified above without impacting on non-abusive arrangements. Business Secretary Vince Cable has suggested that the Government might consider legislating to stop employers preventing zero-hours contract workers from working for others.
Other possible measures might include: regulating the amount of notice required to cancel shifts without pay; giving workers a statutory claim if their hours are reduced for a “capricious” reason (e.g. to bully or punish them); giving those on zero-hours contracts the same employment protection rights as “workers”; and best-practice guidance for certain industries and sectors. Raising the minimum wage would help part-time and poorly paid employees generally, but would not necessarily compensate for not getting sufficient hours’ work.
Rather than seeking to regulate zero-hours arrangements through legislation, it may be the case that naming and shaming employers for their poor practices and consumer boycotts are more effective and focused strategies for dealing with abuse. With that in mind, it may be in employers’ interests to consider what “best practice” might mean in this area and seek to to adopt it, before they become the centre of the next Twitter storm.