8 Public and private sector contracts
115. Zero hours contracts and other
forms of casual employment are appropriate in certain circumstances
and can work to the advantage of individuals. However, as the
evidence we have received makes clear, there is also a large number
of people who are forced to undertake casual work when their preference
is for full-time permanent employment.
116. Zero hours contracts are often
cited as a legitimate response to a need for a flexible labour
force that enables employers to respond to peaks and troughs of
demand. Too often, however, employers choose to use zero hours
contracts when the workflow is regular and there is no need for
flexibility. Instead they use the contracts to avoid the costs
and responsibilities that come with having a permanent workforce.
For the worker this means a lack of certainty over hours and income,
reduced employment rights and an unbalanced employment relationship
where the employer has all of the power and the worker is vulnerable
to arbitrary dismissal. There are downsides for the employer as
well. Relying on a casual labour force leaves an employer without
a guaranteed pool of specialist labour, it can affect an employer's
ability to recruit, train and retain high quality staff and can
result in a reduction in the continuity and quality of services
provided.[187]
Private sector
117. Many retailers, including Tesco,
Asda, Sainsbury's, Morrisons, John Lewis, Marks and Spencer, Argos,
Homebase, B&Q, Pret a Manger, Waitrose, Next and Greggs, have
confirmed that they do not use zero hours contracts. Many of these
companies face peaks and troughs in demand yet are able to manage
them without zero hours contracts. Greggs chief executive, Roger
Whiteside, told TheGuardian:
To have a flexible workforce to
call on for a business is obviously very attractive but we have
certain values with our business, especially with looking after
our staff and helping in the community. The idea of having zero-hours
contracts doesn't fit in with that at all.I can understand why
it would be attractive but it's not something we do.[188]
Though they may not use zero hours workers
directly, or at least on their retail premises, some of the companies
listed above may well have suppliers or distributors who use zero
hours contracts.[189]
Scot Walker explained that, in the meat processing industry, "the
retailers, the supermarkets that we provide products to, many
of whom claim and purport to be ethical retailers, [
] allow
this huge casualisation to take place within their supply chain."[190]Sainsbury's,
Tesco, Waitrose and Marks & Spencer, amongst others, are members
of the Ethical Trading Initiative-"a tripartite organisation
of employers, trade unions and non-governmental organisations,
whose aim is to try and improve the lives of workers across global
supply chains".[191]
Some members of the Initiative seek to implement the ETI-code
in their own direct workplace while others will also try to influence
the behaviour of those across their supply chain. Scot Walker
suggested that sometimes UK workers were overlooked:
If you are asking me do supermarkets
that promote fair trade ensure at home that throughout their supply
chains workers get a fair crack of the whip, my experience of
that is no.
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.
118. The use of zero hours contracts
is complex. While we support the commitments made by those companies
who do not use them, we must be hesitant about castigating all
of those who do not make such a commitment. It has been reported
that some companies, such as JD Wetherspoon, McDonalds and Hertz
who employ individuals on zero hours contracts offer those workers
full employment rights as well as other benefits such as entry
into the company pension or bonus scheme.[192]
McDonald's Vice-President for HR, Jez Langhorn, when asked to
defend his company's use of zero hours contracts, pointed out
that, "from a response rate of 90%, around 94% of our employees
said they were happy with their hours and the flexibility of their
contract".[193]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.
Public sector
119. The public sector is one of the
biggest users of zero hours contracts. In addition to ensuring
that workers who work directly for public sector bodies are not
on zero hours contracts, the Government, the Scottish Government
and local authorities can use public procurement policy to make
insecure working unattractive to other employers. Through procurement
legislation and guidance, public sector administrations can insist
that any staff that are going to be employed as part of a particular
procurement deal must be afforded certain terms and conditions,
such as to be paid a living wage or to be on a fixed-term contract
with set hours.
120. In our recent Report on Blacklisting
we recommended"that direct employment and transparent recruitment
practices should be standard for all public sector contracts in
the construction industry".[194]
We can see no reason why those principles should not apply to
all public sector contracts. The Scottish Government's Procurement
Reform Bill, currently before the Scottish Parliament, is a good
example of an opportunity to do this. Dave Watson told us that
through the Bill the Scottish Government could "lay down
what we could call decent employment standards as part of that
arrangement".[195]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.
121. Local authorities are generally
responsible for the purchase of care services from the private
and voluntary sectors.[196]
We have already discussed the large numbers of care workers who
are on zero hours contracts and the impact such arrangements can
have, both on the carer and on the quality of care he or she is
able to deliver. Local authorities have to meet increasing demand
for home care while at the same time their budgets have been significantly
cut. The increase in the use of zero hours contracts by private
and voluntary sector organisations in the care sector may be a
response to this challenge, as local authorities insist they do
more with less money. Dave Watson explained that some voluntary
sector providers are considering revising their approach to employing
carers:
I think that one or two of the bigger
onesI cannot give you a name yetwe have been talking
to might be in the situation to be able to hold themselves up
as something close to an exemplar and show you how they, in a
very difficult time for them in terms of budget cuts and so on,
have moved, if not to entirely eliminate zero hours contracts
to reduce them quite considerably.[197]
122. 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.
187 University and College Union (ZHC002) Back
188
Burger King and Domino's Pizza also using zero hours contracts,
The Guardian, 6 August 2013 Back
189
Qq89-90 Back
190
Q180 Back
191
Q181 Back
192
Workplace Savings and Benefits, How JD Wetherspoon utilises zero hours contracts,
19 December 2013; CIPD, Zero hours contracts: myth and reality,
Research Report, November 2013; and HR magazine,McDonald's VP HR defends use of zero-hours contracts,
3 September 2013 Back
193
HR magazine,McDonald's VP HR defends use of zero-hours contracts,
3 September 2013 Back
194
Scottish Affairs Committee, Sixth Report of Session 2013-14, Blacklisting in Employment: addressing the crimes of the past; moving towards best practice,
HC 543, para 45 Back
195
Q253 Back
196
Q250 Back
197
Q323 Back
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