2 Employment rights: confusion and
abuse
15. Workers on zero hours contracts
are not defined as 'employees' and as a result can lose out on
employment rights such as:
· Statutory
redundancy pay;
· Statutory
notice periods;
· Unfair
dismissal rights;
· TUPE
rights;
· Collective
redundancy consultation;
· Family
friendly rights.[28]
Workers on zero hours contracts may
also have reduced entitlement to rights such as maternity, sick
and holiday pay.[29]
Citizens Advice Scotland told us:
often workers lose out on their
entitlement to holiday pay, or the holiday pay gets added on to
their hourly rate, which can leave workers underpaid. Conversely,
a client might not be paid for an enforced break in their usual
hours.[30]
Adding holiday pay on to the hourly
rate disincentivises workers from taking leave, which is against
the rationale behind the Working Time Regulations and is unlawful
unless it is clear that the payment is on top of the basic rate
and the calculation of the holiday pay is transparent.[31]
The Government website makes clear that "an employer cannot
include an amount for holiday pay in the hourly rate (known as
'rolled-up holiday pay')."
16. Statutory sick pay is available
to 'qualifying employees', with the definition of 'employees'
being wider than under normal employment law. The Employment Lawyers
Association state that, given the conditions for receipt of statutory
sick pay:
it is likely that some zero hours
workers will not qualify during periods of sickness: for example
(i) where the pattern involves only short periods of work of perhaps
1 or 2 days; (ii) if an employer is aware of employee's sickness,
they will not 'offer' a period of work, meaning that the individual
will not be 'absent'.[32]
Jake Molloy from the RMT gave the example
of a worker in the offshore industry who survived a helicopter
crash but, because he is not currently available for work, has
been left without access to sick pay or any other form of support
and now worries about paying his mortgage: "He was recovered
from the sea, taken to hospital and given the support and counselling
of the various companies on site at the time, but once he got
back home no contact; nothing at all, despite repeated efforts
to speak to the company that engaged [him]."[33]
| Box 1: Pregnant worker
Our client has worked on a zero hours contract, working 40 hours per week, for 14 months. She informed her employer that she was pregnant, and her hours have been reduced in stages until she now works only 11 hours per week. The employer has taken on two other staff but hours were not offered to our client. She believes this is so that the employer does not have to pay Statutory Maternity Pay as her pay will be below the lower earning limit.
Source: Anonymous (Citizens Advice warns on zero hours contracts, 9 July 2013)
|
Confusion
17. Not only do zero hours workers have
fewer rights than employees but there is also confusion about
what exactly those rights are. The CIPD's report, Zero hours
contracts: myth and reality,states "there is significant
confusion among both employers and zero-hours contract staff over
which employment rights people on zero-hours contracts are eligible
for".[34] Some organisations
do use zero hours contracts in a way in which they accept from
the outset that the individual is an 'employee', employed on a
continuous basis and therefore allowed to accrue employment rights.[35]
However, classifying individuals on zero hours contracts as employees
does not necessarily mean the individuals are automatically granted
the attendant rights. Almost two-thirds (64%) of employers who
responded to the CIPD survey said they classed their zero hours
workers as 'employees' but only:
· 31%
of employers reported their zero hours workers were eligible for
statutory redundancy pay (all employees are eligible after two
years' service);
· 40%
of employers said their zero hours workers were eligible for statutory
maternity, paternity and adoption leave and pay (these should
be available to all employees);
· Just
over 50% of employers reported their zero hours workers had the
right not to be unfairly dismissed after two years (this right
should be available to all employees);
· Just
under 50% of employers reported their zero hours workers received
statutory sick pay (this is payable to employees and workers except
under certain circumstances).[36]
18. It is not just employers who are
confused; evidence suggests that workers are also not clear about
what rights they are entitled to.
| Box 2: Care worker
At the beginning of my employment I was given a piece of paper to sign with not much information on it. I never knew about zero hours contracts. I thought this was a job that guaranteed me work.
Source:Anonymous (Informal meeting of the Committee with zero hours workers)
|
Of those on zero hours contracts who
responded to Unite's survey, 43% said they were not offered employment
and redundancy rights and 47% said they did not know, while 73%
did not know whether or not they were entitled to sick pay.[37]In
part, this may be due to individuals not knowing their employment
status.[38]Mark Epstein,
Chief Executive of research specialists Mass1, explained that
"people almost do not know that they are on zero hours contracts,
because the contract does not say at the top of it 'zero hours'.
It looks like a normal contract".[39]
In the university sector, Mary Senior from the University and
College Union (UCU) told us that "some people may have a
bit of paper with a contract; other people may not".[40]
In their written evidence Unite give the example of a door steward
who, for the first year of employment, was not aware he was eligible
for holiday pay.
| Box 3: Holiday pay
An East of Scotland Citizens Advice Bureau reports of a client who came in and reported that she had been employed for around two years and she had not had any paid holidays. She spoke to her manager about this and was told that as she was on a ''zero'' hours contract she was not entitled to any paid holidays. The bureau assisted the client in writing a grievance letter
Source: Anonymous (Citizens Advice Scotland written evidence)
|
Inability to challenge
19. Some organisations will construct
zero hours contracts to expressly state that an individual is
not an employee.[41]
But, while employers may draft contracts to imply a particular
state of employment, case law indicates that, if the day-to-day
reality of the work suggests a relationship of employment - for
example, a pattern of regular work which is regularly accepted
- then an employment tribunal may deem the contract to be one
of employment. The House of Commons Library notes:
One effect of this is that many
employers, who proceed on the basis that staff working under zero-hours
contracts have limited employment rights, may discover the existence
of additional rights only when these are asserted against them.[42]
However, zero hours workers are unlikely
to challenge their employer over employment rights because doing
so risks a reduction in work offered.
20. With no guarantee of work, zero
hours workers can effectively be dismissed - by not being offered
any more hours - without the employer having to follow any formal
redundancy procedure.
| Box 4: Meat-processing industry
Within the meat processing industry, we've got a huge casualisation of labour, with very vulnerable workers and migrant workers. They don't challenge employers, because if they put their head above the parapet they don't get the tap on the shoulder-they don't get the work.
Source: Scot Walker, Unite (Q205)
|
21. James Bevan, Campaigns and Communications
Officer, Unite, spoke of a fear factor amongst zero hours workers:
there is high youth unemployment
... [zero hours workers] realise that, even if they do put their
hands up, there can be quite a subtle punishment in effect. I
have spoken to people who have had it. You will either stop getting
calls for work the next week, or you will be punished by getting
shifts that are impossible to fill.[43]
The evidence from the trade union representatives
is supported by cases seen by Citizens Advice Scotland. Rob Gowans,
Policy Officer at Citizens Advice Scotland, described to us a
case where a client refused to do additional work for no pay and
then found their hours were cut from 27 to 6 per week.[44]
| Box 5: Security worker
A North of Scotland Citizens Advice Bureau reports of a client who is a security worker with a zero hours contract. He and several other workers are perturbed that their wages are not paid on the due date, and that they are paid into the bank by cheque which then takes several days to clear.Also, there are always deductions for unspecified reasons so that the actual wages are at least £30 less than the payment for the hours worked.They do not receive itemised payslips and if they do ask for them they are many weeks behind. The client queried why his money was not in the bank. He was then taken off the job he was on and put on standby. The client is finding these inconsistencies both stressful and distressing.[45]
Source: Anonymous (Citizens Advice Scotland written evidence)
|
22. 'Punishment' for challenging an
employer is not necessarily limited to a reduction in hours. Unite's
survey found that 46% of respondents who had spoken out about
their contract had experienced bullying or harassment as a result.[46]
Justine Seran, a PhD student from the University of Edinburgh,
told us that it wasn't just about the potential repercussions
but also the lack of transparency that accompanied it:
the whole issue is that, being on
a zerohours contract, we could be withdrawn work and never
be told why. If they say, "We just don't have hours for you,"
we will never know whether it is just because we have been here
or there can be deeper reasons, because they don't have to tell
us because it is a zerohours contract.[47]
23. In their response to the Government's
consultation, the CIPD highlight the problem of confusion over
employment status and recommend a change to the law. The CIPD
"believes all workers should be legally entitled to a written
copy of their terms and conditions not later than two months in
employment (currently under the Employment Rights Act 1996 only
employees are entitled to this)".[48]
They suggest this change would help provide greater clarity to
workers and employers on the issue of employment status and associated
employment rights.
24. 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.
25. 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.
Government proposals
26. The Government agrees that a lack
of transparency around zero hours contracts is a problem. In its
December 2013 consultation on zero hours, the Government stated:
"individuals are not always clear on the terms, conditions
and consequences of a zero hours contract, and employers do not
always fulfil or understand their responsibilities."[49]
The Government is considering several options aimed at improving
zero hours contracts:
· Improving
the content and accessibility of information, advice and guidance
on (a) employment contracts and rights, and (b) entitlement of
zero hours workers to benefits;
· Encouraging
an employer-led Code of Practice on the fair use of zero hours
contracts; and,
· Government
providing model clauses for zero hours contracts.
27. Witnesses to this inquiry were sceptical
about the Government's proposals to increase transparency. Dave
Watson, Scottish Organiser, UNISON Scotland, agreed that more
effort on education and understanding would be a good thing but
suggested that an employer-led code of practice would be"benext
to useless in terms of defending and protecting people in this
area."[50] Representatives
from the University and College Union questioned how increased
transparency would address the key problem of zero hours contracts-that
workers on them are exploited.[51]
Dr Rachel Shanks, from the University of Aberdeen, explained:
you have a twotier work force.
You have the work force with their permanent contracts and all
the benefits and protection, and then you have the people who
don't know how much work they are going to get and are working
many more hours than they are being paid for. I don't think having
the best zerohours contract you can possibly have helps
that.[52]
Karen Whitefield, Campaigns Officer,
Union of Shop, Distribution and Allied Workers (Usdaw), was slightly
more positive:
if, as a stepping stone towards
getting to a position [of nozero hours contracts], there was a
code of conduct around the use of zero hours contracts we would
not be against that, but it is not ultimately where we would want
to get to, so it would not be a preference.[53]
28. 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.
National Minimum Wage
Care workers
29. Before the Government launched its
December 2013 consultation into zero hours it conducted an informal
information-gathering exercise. In response to the exercise the
Government received representations from the care sector around
the non-payment of travel time between appointments. Carers argued
that non-payment of travel time was causing them to be paid less
than the National Minimum Wage.[54]
Under National Minimum Wage rules, "travelling in connection
with work, including travelling from one assignment to another"
counts as working time.[55]
In addition:
where travelling time is time for
which the minimum wage should be paid, any associated expenditure
incurred by a worker by that travelling is classified as being
in connection with the employment. These expenses reduce a worker's
pay for minimum wage purposes. A worker paid at minimum wage rates
would therefore need to be reimbursed such expenses in order to
be paid the minimum wage.[56]
30. HMRC enforces the National Minimum
Wage on behalf of the Department for Business, Innovation and
Skills. In November 2013, HMRC found that out of 183 employers
of care workers that were investigated, 88 (48%) had failed to
pay their workers the National Minimum Wage; over 2,400 care workers
were affected and £340,000 owed. The main reasons were non-payment
of travel time, and deductions for uniform costs.[57]
Dave Watson told us that in the past care workers would have had
a contract for a set number of hours and travel time would have
been part of those working hours: "with zero hours contracts
we are seeing the opposite".[58]
He explained that, while the rules were fairly clear,
a lot of these workers do not understand
their rights, are not as well organised as they might be and a
number of employers are taking advantage of zero hours contracts.
For example, if you challenged your wage rate and challenged the
issue [...] with your employer you probably would not get asked
back to work.[59]
31. The Parliamentary Under-Secretary
of State for Business, Innovation and Skills, Jenny Willott MP,
confirmed during a Westminster Hall debate on zero hours that
the Government was trying to improve compliance with the minimum
wage, particularly in the care sector. Penalties for non-compliance
had been significantly increased and the scheme for naming and
shaming employers that break minimum wage rules had been revised.
32. 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.
33. 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.
HIGHER EDUCATION TEACHING STAFF
34. During our inquiry we heard that
teaching staff in Scotland's higher education institutions (HEIs)
were also particularly vulnerable to earning below the minimum
wage. Research by the University and College Union found that
49% of all teaching staff of Scottish HEIs-approximately 4,500
people - were on zero hours contracts.[60]
While the terms and conditions varied across the HEIs, the overwhelming
conclusion of the UCU representatives who gave evidence to us
was that teaching staff on zero hours contracts worked far more
hours than they were paid for; as a consequence their level of
pay fell below the minimum wage. We were told that the hourly
rate, often between £10 and £15, might be comparable
to the wage of permanent colleagues but it was generally only
payable for the hours of teaching. Dr Rachel Shanks explained
that:
for teaching, you might only get
paid for the contact hour that you are in front of the students,
but to be in front of the students you have put in many, many
hours of preparation, especially if it is the first time you have
taught it, so it ends up that you are way below the national minimum
wage. You are talking maybe £1 or £2 an hour once you
have put in all that preparation time.[61]
Justine Seran told us that the University
of Edinburgh have a 'multiplier-by-two' so she was paid for one's
hour preparation for every hour she taught, "you are paid
£13 plus £13, but when you teach subjects such as literature,
when you are being asked to teach one book a week … [the
preparation] is much more than one hour per week".[62]
35. The interaction with students is
not limited to lectures and tutorials and preparation for them.
Teaching staff are also expected to reply to emails, check for
student posts in the virtual learning environment, mark papers
and provide feedback.[63]
We heard that marking was a particular problem; teaching staff
were expected to mark papers but were not always paid for it.[64]
Where staff were paid, the level of pay was based on the quantity
of work completed rather than the time required to do the work.[65]
Justine Seran suggested that while her department did pay for
marking, it was "being paid way below what we actually do,"
and that students were being let down by the arrangements:
When you have two classes of 16
students, that is 32 essays. It is a pile like that, which
you spend hours going through without being paid for.
Obviously, that impacts student
learning; that impacts on the ratings of the university. They
have really bad ratings every year at the National Student Survey
because we don't have time. We are not being paid to give proper
feedback. We would love to give proper feedback, but we need to
be paid for it, or else the extra time that we can't spend on
the feedback we will be spending on doing our other jobs—the
ones that are paid—because rent and bills still need to
be paid.[66]
36. Junior staff,such as PhD students,
are the most vulnerable to exploitation because they depend on
being given teaching experience to further their careers. Dr Shanks
explained that they are less likely to challenge their pay and
conditions as a result:
you may be thinking eventually that
you will be asking for references or even a job in that department,
and so you don't like to complain that you are not getting paid
for all the work that you are doing, because it looks good on
your CV, you are getting experience, and you are becoming a valued
member of the staff. So you don't want to rock the boat.[67]
We were told that teaching contracts
were not always advertised.[68]
One of the benefits of zero hours contracts to employers is that
they do not have to advertise positions and incur the costs of
a proper recruitment process. The lack of transparency can lead
to accusations of nepotism, a lack of equal opportunities and
people not being aware that opportunities exist.[69]
It also keeps people vulnerable and ensures that they are unlikely
to 'rock the boat'.
37. The disconnect between the hours
worked and the hours for which payment is made raises a further
concern-that teaching posts may only be accessible to those who
have family, other work or a bursary to subsidise them.[70]
In Dr Shanks 's view:
it is skewing the work force. It
is a bit like unpaid internships, where it is only the people
who can afford to keep on waiting for that permanent, more secure
employment who can do all those little bits of work. That is my
worry as well. Then, obviously, it can—very likely—compound
any inherent discrimination.[71]
38. 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.
39. We expect to scrutinise compliance
with National Minimum Wage legislation in Scotland in more detail
as part of our future work.
28 Union of Shop, Distributive and Allied Workers (Usdaw)
(ZHC0014); family friendly rights include parental leave, time
off for dependents and paternity and adoption leave. Back
29
Citizens Advice Scotland (ZHC003) Back
30
Citizens Advice Scotland (ZHC003) Back
31
HM Government, holiday entitlement, https://www.gov.uk/holiday-entitlement-rights/holiday-pay-the-basics Back
32
Employment Lawyers Association (ZHC006) Back
33
Q74; National Union Of Rail, Maritime & Transport Workers
(RMT) (ZHC004); Q273 Back
34
CIPD, Zero hours contracts: myth and reality, Research Report,
November 2013 Back
35
Employment Lawyers Association (ZHC006); For example, McDonalds
and JD Wetherspoon - two of the private sector's biggest zero
hours employers - report that they treat their zero hours staff
as employees. Back
36
CIPD, Zero hours contracts: myth and reality, Research Report,
November 2013; See also Employment Lawyers Association (ZHC006)
para 6.4.5 for an explanation
of entitlement to sick pay. Back
37
Q52 Back
38
RMT (ZHC004) Back
39
Q66; Mass1 worked with Unite in their investigation of zero hours
contracts. Back
40
Q382 Back
41
Employment Lawyers Association (ZHC006) Back
42
Zero hours contracts, Standard Note SN/BT/6553, House of Commons
Library, 20 December 2013 Back
43
Q31 Back
44
Q278; Citizens Advice Scotland (ZHC003) Back
45
Citizens Advice Scotland (ZHC003) Back
46
Unite, Submission to the Pickavance consultation on the abuse of zero-hours contracts,
January 2014 Back
47
Q466 Back
48
CIPD, Policy Response: Zero hours employment contracts, March
2014 Back
49
Department for Business, Innovation and Skills, Consultation: zero hours employment contracts,
December 2013 Back
50
Q266 and Q298 Back
51
Qq423-4 Back
52
Q425 Back
53
Q125 Back
54
Department for Business, Innovation and Skills, Consultation: zero hours employment contracts,
December 2013, p14 Back
55
HM Government, Minimum wages for different types of work, https://www.gov.uk/minimum-wage-different-types-work Back
56
Department for Business, Innovation and Skills, Consultation: zero hours employment contracts,
December 2013 Back
57
HM Government News Story, Care sector abuse of minimum wage rules,
25 November 2013 Back
58
Q242 Back
59
Q243 Back
60
University and College Union (ZHC002) Back
61
Q339 Back
62
Q343 Back
63
Q342 Back
64
Qq343-4 Back
65
Q343 Back
66
Q343 Back
67
Q341 Back
68
Q341 Back
69
Q339 and Q352 Back
70
Q341 Back
71
Q341 Back
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