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

1  Introduction

1. Over the last 18 months a perceived rise in the use and misuse of zero hours contracts and other forms of insecure employment have seen them become a focus of much attention and concern in Scotland and across the UK. Zero hours contracts are not defined in law but have come to refer to contracts of employment which do not guarantee the provision of work to the individual and generally place no obligation on the individual to accept any work offered by the employer.[1] Zero hours contracts can offer flexibility to both parties but with that flexibility can come drawbacks for the worker in the form of a lack of guaranteed income and working pattern, as well as reduced access to basic employment entitlements such as maternity, holiday and sick pay and redundancy rights.

Our inquiry

2. Our inquiry into zero hours contracts arose from concerns raised in our previous investigations into blacklisting and health and safety. We began our hearings with compelling evidence from Unite, and their research partner Mass1, on the extent of the use of zero hours contracts and their impact on workers. Since that first session we have taken evidence from the Scotland representatives of a number of other trade unions and the consumer body, Citizens Advice Scotland. We held sessions in Westminster, Dundee and Falkirk and we are grateful to all those who assisted us with this inquiry.[2]

3. The legal aspects of zero hours contracts are entirely reserved. Thus most of our recommendations are addressed to the UK Government. However, the decision about what does, or does not, go into employment contracts is often a matter of choice for the employers, be they in the public or private sectors. In addition, the ultimate funder in the public sector in Scotland will regularly be the Scottish Government and thus it has a responsibility for what it permits.

4. This report is an interim one, as it has been timed to feed into the UK Government's consultation on zero hours.[3] We feel that we have now collected sufficient information to highlight the main problems caused by the use of zero hours and other types of contracts which can be used in an exploitative way and we will next want to raise these matters with a number of employers, both individually and collectively. We also intend to raise with the various arms of the State the difficulties caused to those on zero hours and similar contracts when interacting with various government agencies.Accordingly, our conclusions and recommendations are interim ones and we welcome observations and comments upon all of them. We also welcome further relevant evidence which highlights good and bad practice or which identifies issues of which we have not previously been aware.

Prevalence of zero hours contracts

5. Data released by the Office for National Statistics (ONS) in July 2013 stated there were 250,000 people on zero-hours contracts in the UK (0.8% of the total workforce and an increase of 116,000 from 2006).[4] This figure was quickly challenged, first by a CIPD survey which suggested close to a million people (3.1% of the workforce) were on zero hours contracts[5] and then by Unite the Union who, using its own survey of 5,000 Unite members, found that 22% of those responding were either on a zero/short hours contract or knew someone who was.[6] Unite's survey showed the proportion of the working population on zero hours contracts was broadly similar in Scotland and the UK as a whole. Of the 1,829 Scottish respondents, 331 (18%) were on a zero hours contract.[7] In total, an estimated 90,000 workers in Scotland are on zero hours contracts.[8]

6. According to a 2011 UK Government survey of businesses, the proportion of workplaces that have some employees on zero hours contracts increased from 4% in 2004 to 8% in 2011.[9] The CIPD's survey suggests this is a significant underestimate: of the businesses that replied to the CIPD survey, 23% reported that they used zero hours contracts with, on average, 19% of their workforce engaged in such arrangements.[10] In October 2013, the Business Secretary, Rt Hon Vince Cable MP, raised concern over "the lack of reliable statistics that are available on zero-hours contracts" and wrote to the ONS requesting they improve their collection of data on zero hours workers.[11]

7. The ONS had acknowledged the need for better statistics and pledged to review the way it collected data on zero hours contracts.[12] In October 2013 the ONS published a consultation document on proposals for a pilot phone survey in the autumn of 2013 which would be followed by a full-scale survey in February 2014. The results of the latter survey were published at the beginning of March and showed 583,000 workers were on zero hours contracts-still short of the CIPD's estimate but far in excess of the official estimate published six months earlier. Data released by the ONS also shows that the average hours worked by zero hours workers is falling. This is illustrated in the figure below. The Government consultation states that, "though the number of individuals on zero hours has increased, the total employment hours worked under such contracts may not have."[13]Figure 1: Average actual weekly hours worked by people on zero-hours contracts and total number of people employed on zero hours contracts

Source: Joseph Rowntree Foundation, Monitoring poverty and social exclusion 2013[14]-graph based on data released by the ONS but does not include the revised estimate of total numbers of zero hours workers announced in March 2014.[15]


8. Zero hours contracts are used by employers across the economy. As the chart below shows, they are most prevalent in the 'public services' and 'distribution, accommodation and food services' sectors.Figure 2: Estimates from Labour Force Survey of the proportion of those on zero hours contracts by broad sector

Source: Department of Business, Innovation and Skills consultation, Zero hours employment contracts, chart 2, December 2013

9. During our first evidence session for this inquiry, we heard that, across the UK, approximately 83,800 McDonalds staff, 20,000 Burger King staff, 20,000 Sports Direct staff, 24,000 JD Wetherspoon staff, 4,000 Boots the chemist staff, 16,000 Spirit staff, 20,000 Domino's Pizza staff, 200 Tate staff, 600 Subway sandwich staff and 3,600 Cineworld staff were all on zero hours contracts.[16]The University and College Union reports that of those who responded to its requests for information, 53% of universities and 61% of further education colleges across the UK used zero hours contracts-in Scotland the figure rises to 79% of universities.[17] The University of Edinburgh employed more people on zero hours contracts, around 2,400, than any other university in the UK.[18] These figures alone are enough to cast doubt on the revised official estimate of 583,000.

10. Data from the 2011 Workplace, Employment Relations Study shows large increases in the use of zero hours contracts between 2004 and 2011 in the 'hotel and restaurant', 'education' and 'health' sectors. The increase in the health sector is supported by figures from Skills for Care (the partner in the sector skills council for social care) which estimated 307,000 adult social workers in England were employed on zero hours contracts in May 2013,[19] and a report in the Financial Times which noted that there were almost 100,000 zero hours workers across NHS hospitals-a 24% increase over two years since 2011.[20]

11. Zero hours contracts are used throughout the income distribution. The Government's December 2013 consultation on zero hours states: "the available evidence suggests: around 31% [...] worked in elementary occupations (for example construction or cleaning) and around 20% worked in professional or associate professional or technical occupations".[21] The Resolution Foundation and the Work Foundation both report that those employed on zero hours contracts receive lower gross weekly pay and that workplaces that utilise the contracts tended to have a higher proportion of staff on low pay.[22] Research by the CIPD found that half of all zero hours contracts workers earn less than £15,000 per year compared with 6% of all employees.[23]In the areas that have seen the most widespread use of zero hours contracts, women have been disproportionately affected, and one in three employees affected are under 25.[24]


12. Surveys suggest varying levels of satisfaction for workers on zero hours contracts. 72% of zero hours workers in Unite's survey said if they had a choice, they would prefer not to remain on a zero hours contract, while the CIPD found that that zero hours workers "were just as satisfied with their job as the average UK employee (60% and 59% respectively), and more likely to be happy with their work-life balance than other workers (65% versus 58%)".[25] Both surveys found that around four out of ten zero hours workers wanted to work more hours though the UK Commission for Education and Skills (UKCES) puts this figure at over half.[26] According to UKCES's survey, 33% of zero hours workers could not find a job with fixed regular hours, the figure rising to 54% for 16-24 year olds.

13. Zero hours contracts have benefits for employers: they offer the flexibility to manage fluctuations in demand, avoid recruitment costs and can allow companies to expand services whilst limiting the risk of over-recruiting permanent staff.[27] They are also used as an entry point into the jobs market for young people and can allow businesses to retain the skills of staff who have partially retired but wish to continue working on an ad-hoc basis.

14. Alongside the benefits, the use of zero hours contracts also raises significant areas of concern. These include a lack of employment rights for zero hours workers, financial and job insecurity and a culture where workers are afraid to question the terms and conditions of their employment.In this Interim Report we focus primarily on those areas where zero hours contracts are used to the detriment of the worker and we highlight particular areas of abuse that we think need to be addressed.

1   The Employment Lawyers Association states that not all zero hours contracts will be drafted so that the worker is entitled to turn down work. Some will oblige the worker to accept work when offered, or will only provide limited scope for refusal (such as a set number of consecutive occasions, or a set number of occasions per year) with provision for termination of the relationship if the limit is exceeded. Back

2   A list of those who gave oral and written evidence is at the back of this report. Back

3   Department for Business, Innovation and Skills, Consultation: zero hours employment contracts, December 2013 Back

4   Office for National Statistics, Zero hours contract levels and percent 2000-2012, ad hoc analysis, 31 July 2013 Back

5   Chartered Institute of Personnel Development (CIPD) Press release, One million workers on zero hours contracts, finds CIPD study, 5 August 2013 Back

6   Unite the Union (ZHC005) Back

7   Q4 [Mark Epstein] Back

8   Q239 [Dave Watson]; the 90,000 figure derived by breaking down the CIPD's one million estimate by population share. Back

9   Department for Business, Innovation and Skills, Workplace Employment Relations Study (WERS), 23 January 2013 Back

10   CIPD, Zero hours contracts: myth and reality, Research Report, November 2013 Back

11   Zero hours contracts to be reviewed by the Office for National Statistics, The Guardian, 23 October 2013; One reason for the unreliability of official data on the number of zero hours workers is that workers may themselves not know that they are on a zero hours contract. Back

12   Office for National Statistics, ONS announces additional estimate of zero hours contracts, 22 August 2013 Back

13   Department for Business, Innovation and Skills, Consultation: zero hours employment contracts, December 2013 Back

14   Joseph Rowntree Foundation, Monitoring poverty and social exclusion 2013 Back

15   Graph based on statistical data released by the ONS Back

16   Unite the Union briefing paper, September 2013 Back

17   University and College Union (ZHC002) Back

18   Employment Lawyers Association (ZHC006) Back

19   Skills for Care, The State of the Adult Social Care Sector and Workforce in England, 2012, October 2012 Back

20   Employers increase zero hours contracts, Financial Times, 7 April 2013 Back

21   Department for Business, Innovation and Skills, Consultation: zero hours employment contracts, December 2013, p10 Back

22   Unite the Union (ZHC005) Back

23   CIPD, Zero hours contracts: myth and reality, Research Report, November 2013 Back

24   Unison, Fact sheet: Zero hours, March 2014 Back

25   Unite the Union (ZHC005), CIPD, Zero hours workers 'happier than other employees', 26 November 2013  Back

26   UK Commission for Employment and Skills, Flexible contracts: behind the headlines, February 2014  Back

27   CIPD, Zero hours contracts: myth and reality, Research Report, November 2013; Department for Business, Innovation and Skills (ZHC0012) Back

previous page contents next page

© Parliamentary copyright 2014
Prepared 14 April 2014