From hero to zero: zero hours contracts in the spotlight (Part 1)

By David Banks, CIPD Public Affairs Officer, @DC_banks

Zero hours contracts - their use by employers has evoked consternation, anger, misapprehension and political tussling. For some, they represent the embodiment of worker exploitation and job insecurity in an ‘age of austerity’, while for others they represent nothing more than an alternative flexible hours arrangement, akin to the use of casual or agency employment contracts. However, how much do we actually know about them? And what are the issues that lay at the heart of the debate?

One of the initial difficulties encountered when examining zero hours contracts is that there are no accurate official figures stating how many people are employed on them. In August the ONS revised its estimate of 200,000 workers on zero hours contracts up to 250,000; CIPD research has found that there may be 1million people employed on them, and the Unite trade union estimated in September that there could be as many as 5.5million individuals working on zero hours contracts. Lack of sufficient data has, to some extent, overshadowed sensible debates about the positive and negative aspects of the use of this type of employment contract.

So why do employers use zero hours contracts? Zero hours contracts are a form of flexible hours arrangement, originally used by employers to respond to fluctuations in demand without significantly increasing employment costs, and to cope with service demands by customers and users outside of the traditional 9am-5pm working week. Other flexible hours arrangements may include annualised hours, on-call working, a compressed working week or flexi-time.

In an ‘age of austerity’ where margins are being squeezed, employers can, and are, using zero hours contracts to manage their workforce more flexibly and respond to market changes quickly. Furthermore, many employees increasingly value and to some extent expect greater flexibility over how and where they work in order to manage caring responsibilities, study, improve their work-life balance or to down-shift from full-time employment.

There have been calls in Parliament, in the media and on social media sites to ban zero hours contracts, often made without necessary regard to what employers may replace them with, for example short-hours contracts or on-call working, or the extent to which they benefit many people who are currently employed on them. Undoubtedly, there will be some bad employers who use zero hours contracts inappropriately or in an exploitative manner, but banning this type of contract ignores the majority (from my experience and work in this area) of employers who use them responsibly and the employees who favour this type of employment relationship. It is unclear how employers would respond to a ban on the use of zero hours contracts, and whether such a ban would really be beneficial for employees and employers.

However, while employers may enjoy the benefits of increased workforce flexibility, they must also ensure, through the design and management of zero hours contracts, that the balance of flexibility is shared with employees. There have been legitimate concerns that people employed on zero hours contracts are unaware of their employment status, have difficulty accessing finance and, if they turn down work as is within their rights, are excluded from future offers of work. There are also concerns over exclusivity clauses, pay and benefits and an inability for many staff to gain access to the number of hours they would ideally like to work per week. However, the employee/worker experience of zero hours contracts has yet to be substantially explored and the extent to which these concerns are the norm is currently unclear.

Initial findings from CIPD research (the full report is due to be published on 26 Nov) suggests that this is not the case, with only 14% of those on zero hours contracts reporting that their employer often or very often fails to provide them with sufficient hours to have a basic standard of living. Work Foundation analysis of the Workplace Employment Relations Survey, along with other Labour Force Survey data, found that more than 80% of people on zero hours contracts are not looking for another role, suggesting an amount of satisfaction with their current employment contract. This suggests that initial calls to ban zero hours contracts when a full picture of how and why they are used is yet to emerge is a somewhat reactionary and premature response.

Nonetheless, it does remain important for all employers who do use this type of contract to use them responsibly. In response to this challenge, Labour MPs George Howarth, Luciana Berger and Alison McGovern outlined a zero hours employer code of practice  at a recent CIPD roundtable, which included recommendations on several key areas, including working hours, notice, training and development, transport and family requirements and employment status.

Would a compulsory code of practice be sufficient to ensure that staff employed on zero hours contracts have the flexibility they require? If so, are there other areas that should be taken into account? For example, should there be a requirement to provide workers with their contractual terms and conditions within a certain time-frame? Where work is cancelled without notice, should travel expenses or a minimum amount of pay be provided as compensation? What about exclusivity clauses in employee/worker contracts – should zero hours workers be free to work for another employer except in limited circumstances? Or, do you think zero hours contracts should be banned altogether?

It would be great to hear your views in the comment box below.

Thank you for your comments. There may be a short delay in this going live on the blog page as we moderate the comments added to our blogs.

  • Anonymous

    Regardless of initial good intentions from responsible employers, the whole  thing has gone wrong. Widely used, yes, but for the potential for exploitation. In the few cases where it fits the purpose of the employees, it happens as a by product, marginally, not meant to be.

    It is a consequence of the shift in power in the work market by the engineered "recession". As long as it remains like that, it will only be replaced by a similar scheme, or something else that makes no difference.

  • Anonymous

    Zero hour contracts give a great deal of power to the employer. At the moment, it is widely acknowledged that there is a cost of living crisis for people in many walks of life. These kind of contracts further erode the possibility of many people's wages keeping up with the cost of living. Being worried about how much pay you might receive each month is not conducive to being productive. There is a big productivity issue in the UK and zero hour contracts will not help with that. There is also massive and dangerous alienation from the political system. If politicians acted and banned zero hours contracts people might actually have a reason to believe in politics again.

  • I have a zero hours contract in addition to my full-time permanent contract.   The zero hours contract is because the work is seasonal and usually only involves about a maximum of 6 hours work on a Saturday (but not every Saturday in the month).   If there are weekends I am not available then this is accepted by my employer.  This works for me as I do not rely on the salary I receive from this position.

  • Use of zero hours contracts is vital to keeping public services such as the NHS operating, and reducing the use of agency with the associated increased costs involved.  Many substantive staff also have a 'bank' (zero hours) contract as well, which serves to offer them additional shifts when / if they want them, and enables cover for sickness, annual leave or periods of extreme activity levels.  I accept that there will always be exploitation by some bad employers, but that could be said of many other areas of employment practice as well as zero hours contracts.  I absolutely hope that the current coalition gives serious consideration to the financial and operational implications of putting in a ban in order to appease ill-informed opinions currently doing the rounds in the press.