With zero-hours contracts in the spotlight, Caroline Lindsay poses the question: is it time for this idea to get the sack?
According to the Business Secretary, Vince Cable, zero-hours contracts are being abused, after research suggested a million people could be working under them.
He said, this week, he was concerned there was “some exploitation” of staff on the contracts. Zero-hours contracts offer no guarantees of shifts or work patterns and mean that an employee is on call but places no obligation on the employer to offer work.
Many employees also miss out on holiday pay, despite EU rules saying it should be paid, and many employers also manage to avoid paying sick pay, pension contributions and other benefits.
Retailer Sports Direct was recently exposed for employing most of its 23,000 workers on zero-hours contracts, while its full-time staff were awarded bonuses of up to £100,000. Even Buckingham Palace is reported to employ its 350 part-time summer staff on zero-hours contracts.
In a survey of 1,000 firms, the Chartered Institute of Personnel and Development found up to 4% of the UK workforce were on such contracts.
Vince Cable has been leading a review on the issue for the Government since June and will decide in September whether to hold a formal consultation on specific proposals. Meanwhile, unions have called for them to be banned.
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.”
According to research by the Chartered Institute of Personnel and Development, firms in the voluntary and public sectors were more likely to use zero-hours contracts than those in the private sector.
The industries where employers were most likely to report having at least one person on them were hotels, catering and leisure, education and healthcare.
Graeme Dickson from the Dundee branch of Thorntons Law explained: “The purpose of zero-hours contracts was to give flexibility to the jobs market, for employers to have a pool of employees who were available at short notice to work the hours in the week ahead that were dictated to them.
“Industries where demand can change very quickly are particularly likely to use these contracts take ice cream selling, for example, the success of which is dependent on the weather, or a cinema which is showing a blockbuster and needs extra staff to man extra screenings. The contracts allow the employer to say on Sunday night: ‘This is how we see the week going’ and to pull in staff on call.
“It also allows extra flexibility for the employee who, without such rigid working hours, can negotiate childcare more easily. It can work well for older people, too, who may be officially retired but still like the idea of being employed.
“But there are downsides,” continued Graeme: “Sometimes you can turn up for a week’s work only to be told that you’re not needed, after all. That’s fine if employees can accept that level of flexibility and can cope with not having a reliable salary.
“Another problem is that if someone is asked to do hours that don’t suit them then the employer can just sack them. There are no regulations or protection so the contract can say whatever it wants to say.”
Peter Cheese, CEO of CIPD, said: I think even, sometimes, employers themselves are not fully clear on the absolute nature of their contracts and whether it is genuinely zero hours.
“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.
“Zero-hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings.
“Zero-hours contracts cannot be used simply to avoid an employer’s responsibilities to its employees.”
Alexander Ehmann, Head of Regulatory Policy at the Institute of Directors, feels that calls to ban zero-hours contracts would be deeply misguided: “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.
“Countries with a flexible labour market tend to have lower unemployment and higher employment, and one of the reasons that the UK economy has not gone the way of southern Europe is because employers have been able to adapt swiftly to changing demand.
“Taking on a full-time member of staff remains a risky and potentially expensive option for any company emerging from the downturn.
“Zero-hours contracts can be a vital tool in our economic recovery, giving flexibility to both employer and worker, while also guaranteeing basic employment rights.”
Professor Len Shackleton, an economics fellow at the Institute of Economic Affairs, added: “Zero-hours contracts are not ideal, and not for everyone. But they are an important element in offering job opportunities to some groups who would not be able to work regular hours.
“They also offer useful work experience to young people, and their growth has helped keep unemployment down in the UK at a time when most other European countries are seeing appalling levels of joblessness.
“The Government would be unwise to give in to those calling for an outright ban.”