5 Aug 2013

Cable: Workers on zero hour contracts ‘need to be protected’

As new research shows that one million people are on zero hours contracts, Channel 4 News asks Business Secretary Vince Cable if employers use them to exploit workers.

The Chartered Institute of Personnel and Development (CIPD) said its survey of 1,000 employers showed that one in five employed at least one person on a zero-hours contract, under which staff are not guaranteed work from one week to the next.

Firms in the voluntary and public sectors as well as the hotel, leisure and catering industries were more likely to use zero-hours contracts.

Separate research among almost 150 zero-hours contract workers revealed that only 14 per cent said their employer failed to give them enough hours to have a basic standard of living.

The workers polled averaged just under 20 hours a week and were most likely to be aged between 18 and 24 or over 55.

‘Very clear’

Last week, Channel 4 News revealed claims by former staff of online bookseller Amazon that the firm uses zero hours contracts extensively, which means those staff have no job security and are forced to make themselves available for work with no guarantee of shifts.

Mr Cable, who has ordered a review of zero-hours contracts, said: “There are cases where zero hours contracts are of benefit to the work force, in other cases it can lead to forms of exploitation.

“We need to be very clear what the distinction is and how we deal with that distinction, whether we deal with it by making more information available or it may involve legislative action.”

The Office for National Statistics (ONS) said last week that 250,000 people in the UK were on zero-hours contracts at the end of last year, 50,000 more than a previous estimate because of a change in the way the figures are calculated, although unions believe this is a huge under-estimate.

Hot topic

On Saturday, protests were held outside branches of retailer Sports Direct over zero-hour contracts and its use of them for an estimated 20,000 staff.

CIPD chief executive Peter Cheese said: “Zero-hours contracts are a hot topic and our research suggests they are being used more commonly than the ONS figures would imply.

“However, the assumption that all zero-hours contracts are bad and the suggestion from some quarters that they should be banned should be questioned.

“There does need to be a closer look at what is meant by a zero hours contract, the different forms that they take, and clearer guidance on what good and bad practice in their use looks like. And this needs to consider both the advantages and disadvantages in practice for businesses and employees.

“Zero hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. This can, for example, allow parents of young children, carers, students and others to fit work around their home lives.

“However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings, and we need to ensure that proper support for employees and their rights are not being compromised through such arrangements.

“Zero hours contracts cannot be used simply to avoid an employer’s responsibilities to its employees.”

Contracts ‘deny staff financial security’

The University and College Union (UCU) said zero-hours contracts denied staff the financial security or stability to operate on a month-to-month basis and denied students continuity with their teachers.

President Simon Renton said: “Without a guaranteed income, workers on zero-hours contracts are unable to make financial or employment plans on a year-to-year, or even month-to-month basis.

“This research shows that young people are particularly vulnerable to zero-hours contracts and a large number of workers do want more hours each week.

“Zero-hours contracts are the unacceptable underbelly of further and higher education as staff are denied full employee status and key employment rights. Students miss out on a lack of continuity and often receive reduced access to staff employed on minimal hours.”

UCU is collating its own data on the prevalence of zero-hours contracts in colleges and universities and hopes to release the findings in early August.

Dave Prentis, general secretary of the Unison union, said: “The vast majority of workers are only on these contracts because they have no choice. They may give flexibility to a few, but the balance of power favours the employers and makes it hard for workers to complain.

“Not knowing from week to week what money you have coming in to buy food and pay your bills is extremely nerve-wracking. Having your working hours varied at short notice is also stressful and it makes planning, childcare arrangements and budgeting hard.

Bad management

However Kevin Green CEO of the Recruitment and Employment Confederation said abuse of zero hours contracts is down to “bad management.”

He added: “There is nothing inherently wrong with zero hours contracts. When managed properly with good communication between hirer and employee they can be beneficial for both the business and the worker.

“Employees on zero hours contracts have the same statutory rights to holiday pay, sick pay and the national minimum wage as any other employee.

“To operate efficiently and fairly there needs to be honest and open communication and clarity on what hours and pay the individual should expect.

“Of course, employees shouldn’t feel like they have to sit by the phone waiting to be told when their next shift will be, this is simply bad management.”

Flexible labour market

Alexander Ehmann, Head of Regulatory Policy at the Institute of Directors said zero hours contracts “give flexibility to both employer and worker.”

He said: “Calls to ban zero hours contracts are deeply misguided and any such action would have extremely damaging results.

“It would hurt thousands of employees who rely on the flexibility such contracts allow and employers, especially small and medium sized firms, would struggle to hire the staff they need to meet varying demand.

“Zero hours contracts can be a vital tool in our economic recovery, giving flexibility to both employer and worker whilst also guaranteeing basic employment rights.”

Ann Bevitt, Partner and Head of Employment in the London office of Morrison & Foerster, told Channel 4 News: “There are positives of zero hours contracts for both employers and employees.

“For employers, if used correctly, a zero hours contract allows them to respond to the ebb and flow of business – something which is particularly important in a recession – and may therefore allow them to offer job contracts when they might not otherwise”.

“For many employees, zero hours contracts offer them a flexibility which means they can juggle several jobs at once, or study, or accommodate the demands of family life.

“The key to successful zero hours contracts from both parties’ perspectives is for employers is to be sensitive as possible to employees’ needs and other demands on their time.”