Useful flexible working tool or evil instrument of exploitation? The debate itself could start to influence business performance...
The simmering debate about the effect of zero-hours contracts was reignited in recent weeks during party conference season, with all parties appearing to commit to tackling the abuse of workers under such terms by unscrupulous organisations. Yet an enormous amount of confusion still exists as to the scale of the force and effect of zero hours terms, with ongoing uncertainty surrounding even how many people have them.
Figures released by the Office of National Statistics (ONS) in April this year, following a survey of UK employers, suggest that there are 1.4 million contracts with no guaranteed hours of work. However, an ONS survey of workers, some of whom could hold more than one contract, found that there are 583,000 people affected, representing 2% of the workforce.
The Chartered Institute of Personnel and Development (CIPD), who surveyed 1,000 UK firms, found that figure to be closer to 4%, with equates to over one million contracts, with Chief Executive Peter Cheese blaming the discrepancies in figures on confusion over the definition of a ‘zero-hours’ contract and the lack of measurement accuracy.
Yet, in spite of the lingering uncertainty, both politicians and trade unions are already making, and have been for some time, strong and urgent calls for legislation to address the abuse of workers under such terms. Speaking at the conservative party conference that ended last week, Prime Minister David Cameron said, “When companies employ staff on zero hours contracts and then stop them from getting work elsewhere, that’s not a free market – it is a fixed market. In a Britain that everyone is proud to call home, people are employed, they are not used. Those exclusive zero hours contracts that left people unable to build decent lives for themselves – we will scrap them.”
It is as yet unclear whether this is the promise of a ban on contracts with no guaranteed hours of work in general, or a commitment to remove the exclusivity clauses within them that make workers unable to accept work anywhere other than the organisation they are contracted to. 16% of zero-hours workers reported that they were not offered sufficient hours each week and Business Secretary Vince Cable, who led the government review that began in June 2013, feared that they were being used by employers to avoid their responsibilities to their workers.
Are Big Employer Brands Being Damaged?
Much has been written about the nature of this abuse. Companies with household name status such as Sports Direct, owned by business giant Mike Ashley, pub chain JD Weatherspoon and fast food giants MacDonald’s, Burger King and Dominos Pizza have all been cited as companies with a heavy reliance on zero-hours contracts, and demonised in many quarters as a result.
Yet is this really another example of the money hungry private sector wilfully benefitting from the disadvantaged? Perhaps the most interesting and least publicised facts about zero-hours contracts are those related to the type of organisations using them. The CIPD found that, whilst 17% of private firms used them, this rose to 25% in the public sector and to over a third of voluntary sector. Far from suggesting that these organisations are exploiting their staff, this is perhaps instead evidence to suggest that zero-hours contracts are an incredibly useful and efficient way of maintaining flexibility for both employer and worker in an age where flexible working patterns are the norm and Monday to Friday, “9-to-5”, 40-hour per week jobs are more a thing of the past.
Speaking a few weeks ago, Vince Cable said, “The evidence shows that the vast majority of zero-hours contracts have been used responsibly by many businesses for many years, but unfortunately we know that some abuse takes place.” The veteran liberal democrat minister has thus far advocated removing the exclusivity clause in these contracts, allowing workers to accept work elsewhere when hours are not available.
There has also been discussion of granting workers some of the benefits and protections enjoyed by employees, including the right to bring unfair dismissal claims against their employer, receive maternity and paternity leave and pay, sickness pay and the right to minimum statutory notice. One incentive for organisations to engage workers on a zero-hours basis is the lack of these provisions, meaning both less cost and less risk.
Whilst there is a strong case for changes of this nature rather than a full scale legislative block on all zero-hours contract, the debate both within and outside of Westminster is likely to continue to rage until the general election next year, with the noise level from political parties, unions and the media only likely to increase even further. Senior decision makers in organisations across the country from all sectors will be wondering about how the potential legislative changes, and the growing public outcry, will affect their business and its bottom line. The conference season has stoked the fire to the point whereby consumer behaviour and brand perception may be severely influenced, whether the issue only affects 2% of the workforce or not, and so companies must take action now to avoid the damage that may ensue.