1 Aug 2013

Zero hour contracts – bad for employers too?

Zero hour contracts are on the rise and in the headlines. Are they helping companies ride out the downturn, or hurting the economy?

Unions hate them, Vince Cable worries they are used to abuse workers, and they might not be great for employers either, says the head of a research institute on employment.

A quarter of a million Britons are on zero hour contracts, new figures out from the ONS show today. That’s 25 percent more than the ONS originally calculated. And up 75 percent from 2008.

The total number may easily be double that, according to Ian Brinkley, director of The Work Foundation, a research group affiliated with Lancaster University. He claims that at least 400,000 are employed on zero hour contracts by the public sector alone.

Workers on zero-hour contracts can be given no work at all in any given month, but have to wait for it to turn up anyway. No work means no pay. Unison describes the deal as “fuelling insecurity and low pay and causing high staff turnover”.

But though the deals are in place to help employers, saving them from having to commit to full contracts, zero-hour contracts should be used sparingly by bosses, says Mr Brinkley of The Work Foundation.

Though the contracts can work well in some sectors: universities and the NHS, he said they can have negative effects elsewhere: “Employers should only use them sparingly, because if you look at the evidence, what makes companies successful is the degree to which employees engage with the company and align with its interests, and it’s very hard to do that if your employees are on zero-hour contracts. Because your employees by definition are going to be more remote and less engaged.

“If your workforce is insecure, doesn’t know how many hours it’s going to get, you’re very unlikely to get the best out of them.”

Business Secretary Vince Cable ordered a review of zero hours contracts back in June, and said he is worried by the lack of information about the numbers involved and the impact on employees and employers:

“There has been anecdotal evidence of abuse by certain employers – including in the public sector – of some vulnerable workers at the margins of the labour market.”