Conclusions and recommendations
Conclusions are in plain text, recommendations
are in italics.
Employment rights: confusion and abuse
1. Denying
workers rights that are legally due to them, whether it is through
confusion, abuse or even a failure to determine an individual's
employment status, is unacceptable. Employers must make clear
from the outset an individual's employment status. In addition,
all workers should be legally entitled to a written contract setting
out the terms and conditions of their employment. In many circumstances
it would be unrealistic for such a contract to be produced from
the beginning of employment, particularly if the work was for
a very brief period, but such a contract must be agreed within
a specific timeframe. The CIPD suggest not later than two months;
this proposal has our support.
(Paragraph 24)
2. While
abuses of employment rights might be resolved via an employment
tribunal, it is unrealistic to assume zero hours workers, who
are vulnerable to sudden changes in their working hours and are
often poorly paid, would mount such a challenge against their
employer. The Government must come forward with a robust means
of protecting workers in insecure employment that enables them
to claim the rights to which they are entitled without suffering
detriment. Such a system must be enforceable and employers who
abuse it appropriately penalised.
(Paragraph 25)
3. We
welcome the Government's concern about a lack of transparency
around zero hours contracts, but we fail to see how an unenforceable
Code of Practice, aiming to curb abuse by unscrupulous employers,
can be 'employer-led' and still be effective. Improving the information
available to employers may help address problems of confusion
over rights and entitlements but model clauses and a Code of Practice
may also serve to embed in the workplace a status of employment
that is often unfair and unjust. Such proposals should only be
implemented as a stepping stone to, or following, legislative
change aimed at reducing the use of zero hours contracts and protecting
those who are on them. (Paragraph
28)
4. Exploiting
low-paid workers through non-payment of the minimum wage is a
disgrace. We welcome HMRC's investigation into the care sector.
Care workers are expected to look after the vulnerable in society
and treat them with dignity yet HMRC have found that almost half
of those employers investigated have shown no such duty of care
to their workforce. The Government's efforts in enforcing this
area of legislation have been severely lacking. (Paragraph 32)
5. As
part of its investigations into payment of the minimum wage, the
Government should make sure that workers are being paid for time
spent travelling between appointments and that the associated
expenses are reimbursed. We are concerned that zero hours workers
who report bad employers might be 'punished' through a reduction
in the number of hours of work made available. In calling for
individuals to come forward the Government must ensure that they
are not disadvantaged in doing so.
(Paragraph 33)
6. We
are alarmed by the extent to which zero hours contracts are used
by Scotland's higher education sector. In some cases universities
are being kept going by a staff who earn less than the minimum
wage. The system of employment appears to us one of unashamed
exploitation. This is unfair to dedicated teaching staff and may
also compromise the quality of teaching that students receive.
Scottish higher education institutions must review the terms of
employment of their teaching staff and make sure that levels of
pay accurately reflect the number of hours that must be worked
to fulfil contracted duties. In addition, we recommend that HMRC
investigate the use of zero hours contracts in the higher education
sector in Scotland in order to determine whether employers have
broken minimum wage legislation.
(Paragraph 38)
7. We
expect to scrutinise compliance with National Minimum Wage legislation
in Scotland in more detail as part of our future work.
(Paragraph 39)
Uncertainty
8. In
most circumstances employers are able to give reasonable notice
of work yet over half of the zero hours workers surveyed by the
CIPD received less than a day's notice. We find this lack of notice
to be unacceptable and a symptom of lazy workforce planning.
(Paragraph 46)
9. We
recommend that zero hours contracts contain a minimum period of
notice, both for work and the cancellation of it, which would
apply unless there were mitigating circumstances which fell within
specific criteria set out in the contract, such as the requirement
to provide cover for unexpected absence. It should also be made
clear that a worker is free to turn down work offered within the
notice period without suffering any detriment. If work is cancelled
at such short notice that travel expenses have been incurred then
those expenses should be reimbursed by the employer plus an element
of compensation for the worker's time.
(Paragraph 46)
10. We
accept that zero hours contracts may be justified in a limited
number of circumstances which genuinely require flexibility (on
either side). We do not believe that the level of flexibility
demanded by employers such as Network Rail and some Scottish universities
is matched by their business need. If large organisations such
as most major supermarkets and local authorities can cope without
zero hours contracts then so can many others. Reducing HR costs
or improving administrative efficiency are not acceptable reasons
to deny workers the stability that comes with being an employee
with guaranteed, contracted hours. Organisations must reduce their
use of zero hours contracts and Governments should use every lever
they have to encourage this change in behaviour. (Paragraph 58)
Exclusivity
11. We
have already made clear that zero hours workers, in need of work
but with no guarantee of income, are unlikely to challenge their
employer and seek redress, even if the terms and conditions of
their employment might be considered illegal. Half of all zero
hours workers earn less than £15,000 per year and one in
three are under 25. It is fanciful to assume that individuals
in these circumstances would opt to challenge an exclusivity clause
through an expensive and complex legal process. (Paragraph 63)
12. A
Code of Practice that provided greater clarity of the rights and
entitlements of workers on zero hours contracts may be of some
benefit, particularly if it follows legislative change, but on
its own is not enough to achieve the Government's stated aim of
protecting vulnerable workers. (Paragraph 64)
13. If
employers want to prevent workers from taking up employment with
somebody else then they should pay for that privilege. Employers
who do not provide a zero hours worker with sufficient work should
not be able to prevent that individual from seeking employment
or additional employment elsewhere. We recommend that the Government
legislate to ban the inclusion of exclusivity clauses in all employment
contracts that do not guarantee work.
(Paragraph 67)
A threat to health and safety
14. We
welcome Network Rail's acknowledgement of the risks of using zero
hours contracts in safety-critical roles. Zero hours contracts
have been shown to be incompatible with running a safe railway
and Network Rail must demonstrably reduce their dependence on
them, both in its role as a direct employer and indirectly through
its use of contractors. (Paragraph
73)
15. We
believe that the stability of work and funding offered by a five-year
control period means that Network Rail does not have a business
need for the flexibility that zero hours contracts provide. Its
only justification in using them must therefore be to reduce costs.
This is not sufficient reason to put the safety of workers in
jeopardy and to deny them the opportunity to be an employee and
receive the employment rights that go with that status. Network
Rail should take more work in-house and make greater use of fixed-term
and part-time contracts.
(Paragraph 74)
16. Zero
hours workers have a right to work in a safe environment and must
be able to raise concerns without fear of losing their job. Despite
a number of reports detailing the risks of zero hours contracts
in safety-critical industries, the Government's consultation on
zero hours proposes nothing to protect workers who speak out.
In response to this Report, the Government must set out the steps
it will take to ensure that individuals who question the conditions
in which they are expected to work and the quality of service
they are able to provide, are protected from the actions of unscrupulous
employers. (Paragraph 79)
Engaging with the State
17. The
Government must do more to ensure that Jobcentre Plus staff are
aware of, and follow, the rules regarding zero hours contracts.
The employment terms of a vacancy must be made clear to a Job
Seeker and, if the vacancy is an offer of insecure employment,
the individual must be allowed to reject it without facing sanction.
Individuals must also be allowed to leave zero hours contracts
which do not provide sufficient work without facing sanction for
doing so. Jobcentre Plus staff should be putting people into permanent
employment not pushing them into exploitative working conditions.
(Paragraph 85)
18. We
are concerned that Universal Credit might not be as beneficial
to zero hours workers as the Government suggests. In response
to this Report, the Government must set out the advantages and
disadvantages of Universal Credit to workers with a fluctuating
income. (Paragraph 89)
19. The
Government must make sure that staff who are responsible for administering
benefits are aware of the specific problems faced by zero hours
workers. Staff in Jobcentre Plus, HMRC and local authorities must
be able to respond quickly to reported changes in earnings so
that individuals can receive their benefit payments at the time
when they need them most.
(Paragraph 90)
Other types of casual labour
20. The
Swedish Derogation, if operated properly, can offer sufficient
benefit to workers to justify its continued use, but the UK Government
must tighten up the implementing Regulations to ensure that the
Derogation can only be used in the spirit in which it was intended
and not deliberately to reduce the pay and conditions of workers
and increase the margins of employers.
(Paragraph 97)
21. We
recommend that, where the provision of certain employee benefits
can vary, the calculation of those benefits should reflect the
number of hours regularly worked rather than a minimum number
stipulated in a contract. The Government should explore means
to make this clear. (Paragraph
101)
22. We
welcome the Government's announcement of plans to clamp down on
the use of employment intermediaries to avoid employment taxes.
It is disappointing that the clampdown does not extend to the
use of these intermediaries to deny employment rights to workers
as was suggested in the 2013 Autumn Statement. In response to
this Report the Government should set out what other steps it
is taking to prevent workers from being pushed into bogus self-employment.
(Paragraph 108)
Public and private sector contracts
23. The
Government should monitor whether the introduction of the National
Employment Savings Trust (NEST) prompts employers to take steps
to avoid it and in doing so cause detriment to workers.
(Paragraph 114)
24. We
welcome the commitment of many major retailers not to employ workers
on zero hours contracts. We call upon them to extend that commitment
to their supply and distribution chain. We do not believe that
major retailers who are against zero hours contracts within their
organisations would be happy to be seen to profit from their use
elsewhere. (Paragraph 117)
25. Not
all workers on zero hours contracts are exploited or dissatisfied,
but we believe that where an individual has a regular pattern
of work they should be entitled, after a specified period of time,
to request a contract of employment that reflects the hours they
work. This would provide individuals with the reassurance of guaranteed
work which a zero hours contract cannot offer. There should be
a presumption that such requests are treated favourably unless
there is a clear reason to do otherwise. The Government should
explore how such a system might be set up and monitored for abuse.
(Paragraph 118)
26. We
recommend that the UK and Scottish Governments should have procurement
policies that guarantee minimum standards for workers and which
reduce the use of insecure employment practices such as zero hours
contracts. We call on both Governments to set out what steps they
will take to achieve this.
(Paragraph 120)
27. We
recognise the financial pressures that local authorities are under
but it is disappointing that the reduction in funding has prompted
some to oversee a diminution in the terms and conditions of workers
in the social care sector. Commissioners of care services should
make good conditions of service for care workers part of their
selection criteria. An improved procurement policy from the Scottish
Government would send a clear message to local authorities to
reduce their reliance on zero hours workers to meet their need
for social care provision. (Paragraph 122)
Conclusion
28. The
UK Government has recognised that poor practice exists and needs
to be addressed. It announced its intention to address concerns
surrounding zero hours contracts in August 2013 but the consultation
that followed was too narrow. It focused on measures to combat
the problems of exclusivity and a lack of transparency which are
concerns but addressing them on their own will do little to tackle
the problems of exploitation we have highlighted in this Report.
(Paragraph 125)
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