Zero hours contracts in Scotland: Interim Report - Scottish Affairs Committee Contents

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)


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)


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)


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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Prepared 14 April 2014