What are zero-hours contracts?There is no single agreed definition of what zero-hours contracts are.While some contracts are explicitly called zero-hours contracts,there are other definitions available and used in published statistics.The common element to the definitions is the lack of a guaranteed minimum number of hours.When developing the survey of businesses, we consulted on the definition to be used and decided on the lack of any guaranteed hour.To provide clarity and prevent confusion with the other estimates of zero-hours contracts survey as no guaranteed hours contracts.When zero-hours contracts first hit the headlines during the 2015 election campaign they were broadly denounced as a terrible development in the labour market. But a new survey suggests workers on these strange deals are happier.What is the reality for workers?This style of contract allows employers to hire staff without guaranteeing them any work.
The employee is expected to work the shifts offered, but there is no minimum amount of work that they are assured of getting.Sick pay is rarely included in the contract,but holiday pay should be in order to comply with working time regulations Well-known brands including McDonalds,JD Wetherspoon, Cineworld and Sports Direct employ a large proportion of their staff in this way. The latter has hit the headlines in recent weeks for the terrible way it allegedly treats its staff.Teachers at nearby schools report young children being left home alone because on their Sports Direct zero-hours contracts parents can be instructed to work overtime without notice and, since mobile phone are banned within the warehouse, they can’t even call the schools. Complain or refuse and they’d be quickly sacked.
The facts about zero hour contracts.No legal definition of zero hour contracts exists.There were 1.8 million contracts that didn’t guarantee any hours in August 2014.About 697,000 people said they were employed on a zero hour contract in October-December 2014.The number of people on zero hour contracts is probably increasing, but it’s hard to say by how much.Your employment rights depend on your status, but you will be entitled to the minimum wage and paid holiday.The government is looking at banning exclusivity clauses which prevent you from working for other employers.From anecdotes about workers collapsing on the job to arguments about numbers, zero hour contracts are an emotive topic for the public, press and politicians alike.What are zero hour contracts?
According to the government,no legal definition of zero hour contracts exists. It’s an informal term for a contract where no work is guaranteed. Instead of set shifts, the employer offers you work when they have it, and you may accept or refuse it. That said, some people can be on what might be described as a ‘zero hours contract’ but not be working to that description in practice.I’m on a zero hour contract. What employment rights do I have? employees have contracts that state that their employer must offer them work in exchange for pay, and they must do the work. This is not the case for workers, who can turn work down. This means that most people on zero hour contracts will be workers.However, whether or not you’re an employee or a worker will depend not just on what’s in your contract, but what happens day to day. While a contract might say that you’re under no obligation to work, if you’re ‘punished’ for not accepting all the hours you’re offered, or consistently work a set number of hours, then a tribunal might decide that you’re actually an employee.Workers are entitled to the minimum wage, paid holiday, rest breaks and protection against discrimination, overwork and unlawful wage deductions.
Employees have all the rights that workers have.Additionally, they are entitled to things like protection against unfair dismissal,redundancy pay, a minimum notice period and time off for emergencies.An exclusivity clause in a contract means that you can’t work for another company.Which is a problem if you don’t get enough work from your sole employer who isn’t obliged to offer you any.In response to these concerns, the government is currently looking at banning exclusivity clauses in zero hour contracts.The Industrial Relations body ACAS say that ‘effective exclusivity’ is also an issue. This is where no official exclusivity clause exists, but workers may feel unable to seek employment elsewhere or turn down work from their current employer for fear of losing the hours they already have.Your employment rights depend on whether you’re defined as an employee, a worker or as self-employed.
We’ve met workers who have been told off for having to leave work to collect sick children from school, for taking days off at short notice to visit dying family members, who have been verbally abused by members of the public, felt upset about it and simply told to toughen up all of whom have had their hours inexplicably reduced as a result.So zero-hours employees aren’t happy?This is the thing: a recent survey has found that employees on zero-hours contracts are as happy as permanent full-time employees,says Sarah O’Connor in the Financial Times.We are not saying that the sample is perfect, but what we are saying it this is the most reliable sample of zero-hour contract workers in the UK excluding the ONS data,” said the Chartered Institute of Personnel and Development (CIPD), which conducted the survey, in the Financial Times.The CIPD’s research must not be used as a way of glossing over the problems zero-hours working can create,says Frances O’Grady, general secretary of the TUC trade union group.We’ve heard many stories of people being denied mortgages and tenancies as a result of being on these contracts and of the stress caused by not knowing how much work they will have from one day to the next.Zero-hour contracts: are they fair and why the controversy?
There were roughly 697,000 people employed on zero hour contracts in October-December 2014. But the lack of a legal definition means that you can get a range of estimates.The Office for National Statistics has two measures, one for the number of contracts that don’t guarantee a minimum number of hours (measured by the Business Survey), and one for the number of people employed on zero hour contracts (measured by the Labour Force Survey). These are not equivalent: people often have more than one contract, and the two use different definitions of zero hour contracts.The Business Survey counts the number of contracts with no guaranteed minimum hours. These won’t all be zero hour contracts as some other arrangements like casual contracts or ‘hours to be notified’ will be counted by this definition.1.8 million contracts met this description and provided work in the two weeks from 11th August 2014. Because this figure is an estimate from a sample, the actual number of contracts is likely to lie between 1.4 million and 2.2 million.There were an additional 1.4 million contracts that didn’t provide work in this time—and so weren’t counted. But some of these could well be ‘active.The survey could be missing those held by people with multiple zero hour contracts who work on them at different periods, or people who may have found a job elsewhere but not cancelled their contract. Or the worker might simply not have been offered work (or have been unable to accept it) in that two week window
Companies including Sports Direct, McDonald’s and Amazon faced criticism last year for using such contracts, which unions say offer little security for workers. However, others insist that the contracts have created a flexible workforce that has helped to keep unemployment down while allowing individuals a greater say over when, where and how much they work.What exactly are zero-hour contracts?According to the government,a zero-hour contract is an employme nt contract in which an employer does not guarantee the individual any work and the individual is not obliged to accept any work offered.What are the advantages of zero-hour contracts? For employers, zero-hour contracts are useful to provide a flexible workforce and a cheaper alternative to agency fees. For example, a catering company may need extra workers to cover unexpected or last-minute events, such as a last-minute wedding party. Other companies might need zero-contract workers to cover for temporary staff shortages.Workers, on the other hand, have the opportunity to gain experience and skills without the requirement to accept offers of work.A survey by the Office for National Statistics found that two in three people on zero-hour contracts did not want to work more hours.
The Labour Force Survey (LFS) asks people whether their main form of employment can be described as being on a zero hour contract.The survey found that 697,000 people were employed on a zero hour contract in October-December 2014 just under one in 40 of all people in employment. Again, this figure comes from a sample so the actual number of people on zero hour contracts is likely to be between 630,000 and 765,000.Some people have more than one job, and will hold more than one zero hour contract. This is partly why the figure from the LFS is quite a lot lower than the Business Survey estimate, which counted the number of contracts.The trends aren’t clear either.We can say a bit more about the number of people working on zero hour contracts as counted by the LFS. Again, the data isn’t seasonally adjusted, so it’s best to compare each period with the same time in the previous year.
There were 697,000 people on zero hour contracts in October-December 2014, compared with 586,000 in October-December 2013.The proportion of workers on a zero hour contract in October-December from 2000-2012 was under 1%. In 2013, it hit 2%. In 2014, it was 2.3%.What are the disadvantages of zero-hour contracts?The Trades Union Congress says that workers on zero-hour contracts are at risk of exploitation, with the majority earning less than the living wage. It has called on the government to clamp down on abuse of the contracts by “bad employers.The lack of regular hours and income makes it difficult for families to budget and organise childcare, says the TUC. “Employers like to argue that zero-hour contracts offer flexibility but for many workers they mean poverty pay and no way of knowing how often they’ll be working from one week to the next.
What are the politicians saying? Business Secretary Vince Cable has ruled out a complete ban on zero-hour contracts, saying they offer employers “welcome flexibility.The government has completed a 12-week public consultation on the issue and will respond in “due course”. But unions have complained that this only examines exclusivity clauses and lack of transparency in employment rights, while the problems facing workers on these contracts are far more wide ranging.The government has also come under fire for threatening to take away jobseekers benefits for three months or more if people refuse to take roles with zero-hours contracts.Labour has pledged to tackle the epidemic of zero-hour contracts if it wins the next general election, introducing more rights for workers, compen sation if shifts are cancelled at short notice and a fixed-hours contract after 12 months with an employer. Details of reforms announced by the coalition in this week’s Queen’s Speech have not yet been announced.However, these numbers are not directly comparable.Zero hour contracts have become news. Because the LFS relies on people knowing their contract type, raised public awareness can lead to an increase in people reporting that they are on zero hour contracts even when the number of people actually on zero hour contracts is unchanged.
What else do we know about zero hour contracts and those on them? People on zero hour contracts tend to be either relatively young or old. Many are students: 17% of people employed on zero hour contracts in October-December 2014 were in full-time education.Zero hour contracts provided about 25 hours work a week, compared with the 37 hours average for all people in employment in October-December 2014.34% of workers on zero hour contracts in October-December 2014 considered themselves to be full-time.34% of workers on zero hour contracts wanted more hours in October-December 2014, compared with 13% of other workers.Working hours are flexible. 38% of people on zero hour contracts worked their usual hours in the week before the LFS interview, compared to 56% of other workers in October-December 2014. Interestingly, while 14% of people on zero hour contracts didn’t work in the week before their LFS interview, neither did 10% of people who weren’t on zero hour contracts.About 23% of people on zero hour contracts worked in Accommo dation and food’ in October-December 2014. Another 22% worked in ‘Health and Social Work’. Comparatively few worked in ‘Information, Finance and Professional.Larger firms were the most likely to have people on zero hour contracts. Half of companies with over 250 people had employees on zero hour contracts in August 2014, compared with 1 in 10 businesses employing under 20 people.
How many people are on zero-hour contracts?According to the Office for National Statistics, there were around 1.4 million UK jobs making use of zero-hours contracts in a two-week period in January and February this year, a far higher number than expected. The contracts are most likely to be offered to women, people over 65 and young people, with nearly one-fifth likely to be in full-time education.Tourism, catering and food industries used the highest proportion of zero-hour contracts.Do I have any rights under a zero-hour contract? Zero-hour workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time,” says Acas. This might include sick pay for example. Zero-hour workers are entitled to annual leave, rest breaks and the national minimum wage, but not redundancy pay or a statutory minimum notice period.
The centre ground in a way that has reduced New Zealand Labour, according to its critics, to a party of empty gestures. But it is not yet clear what the real implications of the ban will be: as the British TUC argues, there is more than one way for employers to duck their proper obligations like sick pay, paid holidays and parental leave. Agency work, for example, often carries no protection.False self-employment is increasingly used to deprive workers of hard-won rights.Most trade unions would prefer a smarter approach that would protect a wider range of workers. The TUC wants employers to be obliged to give all new workers, on day one, a written statement setting out the terms on which they are employed and limiting the time a worker can be employed on zero-hours contract before they are guaranteed a minimum number of hours.
Any government serious about building a low-welfare, high-wage economy, as George Osborne claims to be, would also be serious about promoting and protecting workers’ rights. In his last budget, he pulled a major surprise to lend some credibility to his pose as a workers’ champion by increasing the minimum wage, even if he went on to sour the effect with his assault on tax credits.This week, should he choose to, he could make less ambiguous progress. The chancellor could take a lesson from his ideological cousins in New Zealand and start to do something determined about regulating unacceptably exploitative contracts.
Cheap, easy-come, easy-go labour deters investment in training and other productivity measures, undermines loyalty and corrupts the relationship between employer and employee. Next week is not just budget week, it is also the government’s moment of decision on the trade union bill as it completes its progress through the Lords, This is a mean-spirited, unfair bill which will, among other measures, severely hamper the capacity of unions to work on behalf of their members.No workers’ champion can be opposed to the employees standing together to get a better deal for themselves.Without drastic modification of the union bill, the Conservatives’ vaunting claim to be the party of the workers is hollow indeed.
But they are also spreading, geographically out of the south to the north, particularly the north-west, and from part-time work, often casual, to full-time employees and into new areas like further and higher education. Precarious employment, work with no guarantee of hours or income, is no longer just a short-term answer for uncertain employers that helps to keep people in work and off benefits. It is becoming integrated into the economy. The question of what to do about it is more complex.As research for the professional human resources body, the CIPD, has shown, some workers prefer zero-hours contracts to anything that demands greater commitment on either side.The biggest group of workers on zero-hours contracts may be students who like hyper-flexible contracts because they mean that work can be fitted round studying.Some other groups parents of small children or others with caring responsibilities – find them useful too.
At the end of last year the government introduced regulations that appear to ban the worst kind of zero-hours contract, where the employer can demand availability without guaranteeing any work at all. These so-called exclusivity clauses are now technically illegal: but only technically redress has to be sought through an employment tribunal (at a cost of up to £300) and with no guarantee of compensation because the claimant has to show they have suffered loss of future earnings, something that is impossible by definition for anyone on a zero-hours contract.
We produce biannual estimates of the number of contracts that do not guarantee a minimum number of hours (NGHC), based on a survey of businesses.These estimates were first produced on 30 April 2014.They complement the figures from the Labour Force Survey (LFS) which show the number of people who report that they are on a zero-hours contract in their main employment. This report includes the latest figures from the LFS for October to December 2015 as well as new estimates from the fourth and fifth survey of businesses for May and November 2015, respectively.The latest estimate of the number of people who are employed on “zero-hours contracts” in their main employment, from the LFS, a survey of individuals in households, is 801,000 for October to December 2015, representing 2.5% of people in employment.
It should be noted that responses to the LFS can be affected by respondents recognising the term zero-hours contract.This latest figure is higher than that for October to December 2014 (697,000 or 2.3 per cent of people in employment), but it is not possible to say how much of this increase is due to greater recognition of the term zero-hours contracts rather than additional contracts.People on zero-hours contracts are more likely to be young, part time, women, or in full-time education when compared with other people in employment. On average, someone on a “zero-hours contract” usually works 26 hours a week. Around 1 in 3 people (37%) on a “zero-hours contract” want more hours, with most wanting them in their current job, as opposed to a different job which offers more hours. In comparison 10% of other people in employment wanted more hours.
The results from our latest survey of businesses indicates that there were around 1.7 million contracts that did not guarantee a minimum number of hours, measured with regard to work carried out during the fortnight beginning 9 November 2015. For the May 2015 reference period (the fortnight beginning 11 May), the equivalent estimate was 2.1 million.The estimates may be affected by seasonal factors, relating to when the data were collected.Therefore estimates presented for different time periods should not be compared directly.Also, estimates may fluctuate over time due to sampling variation.The difference between estimates from the business survey and LFS are partly accounted for by people who have more than one zero-hours contract with different employers or who have a zero-hours contract to supplement their main employment.
Rayhan Ahmed Topader