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]
BREAKDOWN OF USE
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]
Satisfaction
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
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