Small Business, Enterprise and Employment Bill

Written evidence submitted by UNISON (SB 12)

Introduction

UNISON is the UK's largest public service union with 1.3 million members. Our members are people working in the public services, for private contractors providing public services and in the essential utilities. They include frontline staff and managers, working full or part time in local authorities, the NHS, the police service, colleges and schools, the electricity, gas and water industries, transport and the voluntary sector.

UNISON’s submission is primarily focused on Clause 139, ‘Exclusivity in zero hours contracts’ with additional comments on Clause 135 ‘Whistleblowing’; Clause136 ‘Employment tribunals: failure to pay sums’; Clause 137, ‘Employment tribunals: postponements’; Clause 138, ‘National minimum wage’

Clause 139 Exclusivity in zero hours contracts

1. Clause 139 aims to tackle the use of exclusivity clauses in zero hours contracts, which ties the worker to working solely for one employer even though there is no contractual commitment to provide the worker with regular or consistent hours of work.

2. The definition of a zero hours contract within the Bill would always have been a challenge since the concept is not recognised in UK labour law. UNISON believes the wording used in the Bill has the merit of not specifying hours worked, which could easily be circumvented by a short hours contract. While welcoming this, UNISON believes the wording used will not protect the growing numbers of workers who are classified as ‘self employed’ but are in fact ‘bogus’ self employed. Furthermore, the reference to ‘no certainty that any such work or services will be made available to the worker’ could be circumvented by the ‘certainty’ of a one or two hour a week contract.

3. This has already been recognised by BIS, which has just launched a consultation on possible loopholes and evasions by employers using short hour contracts. UNISON will respond to the BIS consultation highlighting our concerns and urging the Secretary of State to use the full extent of the powers granted in this Bill to make further provisions to tackle any potential loopholes.

4. UNISON agrees with the TUC that a more effective and simpler approach would be to reform employment status laws and rules on continuity of employment so that all workers benefit from the same basic floor of rights at work. This would have the benefit of addressing the growth of casualisation and insecure work of all kinds that have become an increasing feature of the UK’s labour market.

5. UNISON regrets that the further powers granted to the Secretary of State only relate to the specific instance of exclusivity clauses. The worst abuses experienced by workers on zero hours contracts will continue untouched by this legislation. The experience of our members has repeatedly shown that the serious imbalances of power between employer and workers on zero-hour contracts and resulting exploitative treatment gives rise to the most serious and widespread problems.

6. One UNISON member working in the homecare sector told us that ‘zero-hours contracts means they have us over a barrel.’ Another said that working on these contracts means constant insecurity and that he was ‘always treading on eggshells. If you fall out with management, you could lose hours – some colleagues have just had this happen to them where their hours have fallen’’.

7. Many zero-hour contract workers lose out on basic workplace protections because they lack the necessary continuity of service or because their employer takes advantage of their uncertain employment status to evade employment rights obligations.

8. As the Resolution Foundation pointed out, even ‘where a clear mutuality of obligation exists and employee status appears incontrovertible’ the financial costs of pursuing a claim both through lost income and legal costs (which now include Tribunal fees) prove to be huge barriers for workers [1] .

9. Some have argued that the disadvantages offered by zero hours contracts are ameliorated by their temporary nature, that workers will be able to access full time work when the economy improves or their circumstances changes. The growing evidence that these contracts are becoming the norm in some sectors belies this.

10. UNISON believes that the growth in use of zero hours contracts are fundamentally linked to the low wages, job insecurity and underemployment being experienced by working people in the UK. We recognise that for some workers, zero-hours contracts may be suitable but usually there are flexible working alternatives such as annualised hours that are more appropriate and do not lead to loss of employment rights and insecurity. For all too many workers, the flexibility only flows one way.

11. A survey by the CIPD found that only 50% of employers themselves say that in practice zero-hours staff are free to accept work or turn it down. Some employers admit that staff do not have that flexibility – 23% of employers say that in practice their zero-hours contract workers are expected to accept work when it is available while 15% say they are contractually required to be available to work and a further 17% of employers report that in some circumstances zero-hours contract staff are expected to be available for work. [2]

12. These admissions from employers lay bare the pressures on those working zero hour contracts to remaining available to employers, limiting their ability to accept other offers of work under the fear of being penalised by not being offered future work. They allow employers to define ‘flexibility’ to their advantage at the cost of an employee’s ability to say no to bad pay and detrimental conditions of service.

13. None of these employers needed an exclusivity clause. Employers could simply sanction non-compliant workers by not offering them any more work – tellingly described as ‘zeroing down’. Therefore, while UNISON believes that exclusivity clauses are a particularly undesirable aspect of zero hours contracts and welcomes the provisions in Clause 139, we believe it fails to touch upon some of the worst abuses and exploitation.

14. In recent times UNISON has seen a particular growth in the use of zero hour contracts in the domiciliary and home care sector, where it is now the dominant form of employment contract. In response to a written question by Andy Sawford MP in early July 2013, Skills for Care estimated that there were 307,000 adult social care workers on zero hour contracts in England alone [3] .

15. This is despite the fact that it is widely acknowledged that the homecare sector is particularly unsuited to zero hours contracts. The Minister for Care, Norman Lamb emphasised this point in a Westminster Hall debate on homecare workers, last year saying: "The idea of a zero-hours contract is, in most circumstances, completely incompatible with a model of high quality care, in which the individual really gets to know their care worker." [4] While UNISON continues to campaign and negotiate to restrict the use of zero hours contracts in this, and other sectors, we believe that Government intervention and legislative reform is needed to prevent the abuse of zero hour contract workers. The provisions outlined in this bill are inadequate.

Clause136 & 137 ‘Employment tribunals: failure to pay sums’ and Employment tribunals: postponements’

16. Clause 136 seeks to address the widespread problem of non-payment of Employment Tribunal awards by applying a financial penalty. UNISON has always been very concerned about the large numbers of cases where the respondent fails to pay Employment Tribunal awards. Action taken to ensure compliance by employers would be welcome. Low paid employees already face huge obstacles in taking cases to employment tribunal and what faith there is in the system of workplace justice exists would be further eroded if high levels of non-compliance by employers continue. However, increasing the financial penalty is unlikely to solve the problem, as employers who do not pay compensation or back-pay are unlikely to pay the additional penalty either. UNISON would welcome more details on how the penalties would be enforced. Specifically it is our view that consideration must be given to emphasis on enforcement being taken away from individual (often low paid) claimants and rather be managed either through the Tribunal system or some other enforcement agency. This would include tackling the problem of companies who avoid payment by ensuring that they have no assets to seize. A short timeframe for the payment of Employment Tribunal awards of 14 days and interest accruing at a higher rate if payment is not made in 14 days may assist in increasing the number of awards that are actually paid.

17. The disastrous introduction of fees to access employment tribunals and the dramatic fall in cases being taken since July 2013 highlight how difficult in practice it is now for most workers to access workplace justice as individuals. This exacerbates the problem of up-front costs for individuals and non-payment by employers in the event of a successful case.

18. UNISON would also welcome action taken to reduce delays and short notice postponements at Employment Tribunal cases. Such delays cause considerable disadvantages to workers taking cases, especially if they are calling witnesses all of whom have to take time off work to appear.

Clause 135 ‘Whistleblowing’

19. Clause 135 aims to improve clarity and transparency around the reporting process for disclosures made by whistleblowers, as well increase confidence that these will receive follow up and investigation. UNISON agrees that prescribed bodies should be required to share some base level data about the number of concerns raised, pursued and upheld in any given time period. It is our view that prescribed bodies are required to be involved in issues of encouraging transparency - and there should be an assumption of some transparency from them also.

20. UNISON shares the concern of the TUC that whistleblowers will be further discouraged by the changes the government has made to S 43B of the Employment Rights Act, requiring whistleblowers to make a judgement call on the public interest test. Employment Tribunal fees and costs to access workplace justice will also deter employees from exposing wrongdoing in the workplace.

Clause 138 ‘National Minimum Wage’

21. This clause aims to improve compliance by increasing the penalties on employers who do not pay the National Minimum Wage (NMW). UNISON agrees that the maximum fine for non-compliance of the NMW should be raised as a deterrent. However, simply increasing the fines without improving and giving appropriate resources for enforcement would undercut this clause. The Low Pay Commission has noted that the current Government has successively reduced funding for NMW enforcement and awareness. UNISON believes that this must be reversed. Leaving enforcement to be triggered by affected workers, who are vulnerable to losing their job, allows too many workers to continue to receive unlawfully low levels of pay.

22. A report by HMRC on ‘National Minimum Wage compliance in the social care sector’ found that non-compliance with the NMW was widespread throughout the social care sector. However, in the year 2011-12 HMRC only received 11formal complaints concerning non-payment of the minimum wage by homecare providers and only 19 in 2012-13. Given that most homecare workers are employed on zero hour contracts, many are too scared to report their employer for fear of having their hours ‘zeroed down’. UNISON believes that this is one of the main reasons behind the incredibly low levels of homecare workers reporting their employers for non-payment of the National Minimum Wage.

23. The failure to pay staff for their travel time between appointments is probably the single most important reason for care workers not receiving the National Minimum Wage. More than half (58%) of UNISON homecare workers in England reported that they were not paid for their travel time between visits, and this figure was still over 50% in Scotland. [5] The Public Accounts Committee recently expressed alarm that hundreds of thousands of care workers are likely to be paid less than the NMW due to public procurement bad practice.

24. At UNISON’s recent care roundtable event, members described non-payment of travel time as having become standard in homecare. This causes members particular problems when combined with the use of zero hours contracts: one member described how non-payment of travel time meant that he was under pressure to take as many hours as he possibly could under his zero hours contract. This often led to working 70-80 hours a week, 7 days a week.

25. UNISON also believes that the government should give a new formal third party role for trade unions and the Citizens Advice Bureaux, which treats their reports of breaches of the NMW as a formal complaint. All such complaints would then lead automatically to a formal investigation by HMRC Officials.

October 2014

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[1] Pennycook, M., Cory, G., Alakeson, V. : ‘A Matter of Time: The rise of zero-hours contracts’ Resolution Foundation (2013) p14

[2] CIPD: ‘Zero-hours contracts: Myth and Reality’ Research Report (November 2013) p16

[3] Hansard (01/07/2013) http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm130701/text/130701w0004.htm#130701w0004.htm_wqn8

[4] Hansard (06/03/2013) http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm130306/halltext/130306h0001.htm

[5] UNISON (2012), Time to Care, October 2012, p4, www.unison.org.uk/upload/sharepoint/On%20line%20Catalogue/21049.pdf

[5] UNISON Scotland (2014), Scotland – it’s time to care, http://www.unison scotland.org.uk/socialwork/timetocare.pdf