Zero-hours contracts - bad for workers, services and the economy

The growing use of zero-hours contracts (ZHC) is primarily a conduit for the exploitation of working people.  The growth in casual employment is contributing to the growth in in-work poverty, damaging public services and the economy.

Today, I was giving evidence at the Westminster Scottish Affairs Committee inquiry into zero-hours contracts. My evidence was largely based on our experience of the growing use of these contracts in the care sector. 

There is no recognised definition of zero-hours contracts and considerable confusion amongst workers and employers as to their legal status, as the recent CIPD survey shows. Equally, the data on how widely they are used is incomplete and the ONS is currently looking at how they can make the data more reliable. Estimates vary, but it likely to apply to at least one million workers in the UK, possibly just under 100,000 in Scotland.

In the social care sector our survey indicated around 10% of our members are on ZHC, but this is likely to be an underestimate as we have more members in council employment where ZHC are less prevalent. The SSSC workforce data says 21% are not on permanent contract, so the figure could be as high as 20,000 care workers in Scotland. Scottish Universities are another big user of ZHC with 18,500 atypical workers, more than the 16,700 permanent teaching staff.

The main issue for workers is the lack of employment rights that give legal force to basic fairness, and grant employees redress where those rights are breached. They also deny stable employment that is vital to day-to-day life such as getting a mortgage, paying the bills, and reducing the reliance on the benefits system. Employers claim the flexibility ZHC bring is good for them and workers. While this may be the case for some workers on ZHC, it is not the norm. For most it is simple exploitation. A particular problem is the requirement, stated or implied, of exclusivity even when the employer is not paying them. Even in feudal times there was a duty of mutual obligation!

But it's not only workers who lose out in the growing use of ZHC. The creation of uncertain employment means that workers are less willing to question dangerous safety practices involving themselves and others. Even more worrying in the care sector, they are less likely to report care abuse. With the growing use of personalisation, care workers tell us that they wouldn't be thanked by their employer for raising these issues. ZHC workers are also likely to be less well trained. The combination of poor employment practice means higher turnover and a loss of continuity of care.

The economy also loses because the lack of stable employment impacts on economic demand. An ILO study shows that economies with high levels of self employment are also low per capita GDP states. The growth of self employment in the UK is a feature of underemployment, not entrepreneurial zeal. 

So what's the solution?  While an outright ban might be appropriate in some areas, in practice employers would just find another way of exploiting staff. Another solution is to tightly regulate the practice to remove abuses and then agree appropriate contract provisions for each sector.

The regulations should start with a legal definition of a ZHC as a contract that fails to specify guaranteed hours; or that specifies guaranteed hours but the worker is expected to be available for work longer, sometimes called short hours or nominal working hours. There should be a right to a written notice of hours upon commencement of work and a right to equal treatment compared to fixed term and regular working hours staff, together with normal remedies for detriment when exercising statutory rights. To address exploitation there should be a right to request fixed and regular hours every six months and a right to be offered a contract after 12 weeks of continuous employment. Exclusivity clauses should be prohibited.

These are all matters that could be regulated by Westminster, although the current UK Government consultation is unlikely to go much further than an employer led code of practice. As much use as a chocolate tea cosy in addressing abuse. The Scottish Government could take action directly as an employer and also through procurement. Public bodies could do the same.

Zero-hours contracts are bad for workers, bad for the services they deliver and bad for the economy. Time for concerted action at all levels of government.