CIPD report on zero-hours and short-hours contracts reveals the polarity of the debate

It is no surprise to see the CIPD's new report on zero-hours and short-hours contracts come under attack this morning from the TUC and other commentators.‎ Some commentators appear to start from the position that there simply is little or nothing positive to say about zero-hours contracts, and that any evidence to the contrary is therefore either biased or flawed.  The CIPD’s position on zero-hours contracts, and our guidance to employers, has been based, as much as it can, on robust evidence from all sources, including our own surveys of employers and employees as well as case studies of employers using zero-hours contracts.

A central finding of our latest study is that zero-hours contract employees report, on average, similar levels of job satisfaction, personal well-being and work-life balance to employees as a whole.  No doubt it sounds counter-intuitive to many, but that doesn’t mean the data must somehow be at fault.

The employee survey used in the study collected data from just over 2,500 employees, drawn from the YouGov panel.  Because we know that zero-hours contract and short-hours contract employees form relatively small proportions of the workforce, we asked YouGov to “oversample” these groups – in other words, collect more responses from these groups than if it was a simple random draw.  This is a commonly used practice when trying to survey small minorities within a population.  As a result, our survey sample contained 368 zero-hours contract employees.  When it comes to statistical reliability – in the sense of standard errors and confidence intervals surrounding a particular estimate – it’s the number of responses which is the key parameter, and it is a case of more is better.  But many studies will report percentages based on far fewer than 368 observations.  Even with a survey as vast as the ONS Labour Force Survey, if you start segmenting zero-hours contract employees by combinations of age, gender, region etc., then the number of actual responses does quickly get very small indeed.  The actual percentages quoted in the report are weighted to be representative of employees as a whole – this corrects for the over-sampling of zero-hours contract employees and also aligns the sampled data with the national population on key characteristics like sector and industry of employment, full-time/part-time working, gender etc.  Full details are provided in the report.

A different critique of the data might be that the sample from which the employees were being drawn – in this case, the YouGov panel – was somehow unrepresentative of the population in ways that cannot be corrected for by weighting.  This critique can potentially apply to any survey, no matter how big or small, and it is hard to prove it might not be a problem.  We would note here that the YouGov panel is widely used for surveys on all types of issue, including by critics of zero-hours contracts, such as these recent statistics on bullying at work published by the TUC.  In addition, where we are able to compare our employee data with the ONS Labour Force Survey findings for April-June 2015, we find similar results.  For example, the mean hours usually worked by zero-hours contract employees were 25.1 hours a week in the LFS and 23.9 hours in our employee survey.

Of course, we do not have data from the LFS on job satisfaction or perceived work-life balance, which is precisely why these questions were included in our survey.  However, the LFS does provide data which suggests that many zero-hours employees may be reasonably satisfied with their working arrangements, in the sense of not wanting to change them – 36% want additional hours and 22% want a new job, but 59% want neither a new job nor additional hours.

In our view, the finding that, on average, zero-hours contract employees report similar levels of job satisfaction, personal well-being and work-life balance to the population of employees as a whole suggests there are positive as well as negative aspects to zero-hours contract work.  A potential positive is that zero-hours contract employees are less likely than employees as whole to say their workload is excessive and, as a result, less likely to say they are put under excessive pressure on a regular basis (which is bad for job satisfaction and for physical and mental health).  Potential negatives are reduced perceptions of being involved in the workplace and having opportunities to learn and grow.

When looking at these data, we also have to remember that the majority of zero-hours contract jobs tend to be concentrated in low skill, low paid parts of the economy.  The difference in hourly earnings between zero-hours contract employees and employees as a whole present in the LFS data probably reflects this concentration because, when we asked employers using zero-hours contracts, 79% said they paid zero-hours contract workers the same (or a higher) hourly wage rate as other workers doing the same job – just 9% said they paid a lower rate.  This – and the concentration of zero-hours contracts in part-time employment – may also help to explain the difference in perception of opportunities to learn and grow.

The data also show that part-time employees who want to work additional hours report, on average, significantly lower job satisfaction, personal well-being and work-life balance than part-time employees who are satisfied with their hours.  Clearly, underemployment has negative effects on well-being.  However, the data suggests this is a general problem affecting all forms of part-time work regardless of contract type and not one restricted to, or particularly acute for, zero-hours contract employees.

This last finding is a reminder that issues such as insecurity, low pay and lack of progression transcend contractual type.  Employees with open-ended contracts are often just as likely to be affected as employees with “non-standard” working arrangements.  Excessive concentration of fire on zero-hours contracts could divert attention away from a broader need to deliver fair and flexible employment practices that benefit all types of workers.

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  • The key here for me is the sentence "Some commentators appear to start from the position that there simply is little or nothing positive to say about zero-hours contracts".

    Whilst I have no doubt that some employers of Zero Hours workers are unscrupulous, so are some employers of permanent employees too.  I do find it frustrating that people fail to recognise that when managed well, casual working contracts can work for, and benefit, both parties.  We have a number of casuals working for us - who choose to do so.  They have passed up the opportunity for permanent roles (some even used to have permanent roles with us!).  We were not so surprised with this when the Agency workers regulations were imposed by Europe.  I seem to recall many commentators stating how in the UK many Agency workers choose the flexibility that working arrangement offers.  Why is it so hard to accept that same principal for zero hour contracts.

    I am not suggesting that there should not be some controls and ethics applied - but I am pleased the CIPD continue to promote more open mindedness to this debate.

  • Anonymous

    I worked on a zero hours contract on the Clerical Bank (NHS) for over 2 years while trying to get back into HR part-time after a 10 year career break.  Despite a new CIPD Intermediate qualification I am still in poorly paid employment.  The Trust I worked for, headed by someone of note and a speaker at CIPD branch meetings, I felt were quite unscrupulous.    Holiday pay was "rolled up" so we did not realise the poor £7.05 basic wage we were really on.  I did not find out until I had been there over a year we were not eligible for pay increases and we were on a grade lower than the permanent staff, which they said was a training grade.   Basically they only trained you to do 95% of the job, so that in their eyes you were not entitled to the next grade.  To add insult to injury the Bank grades were also lower than the permanent grades, although they called the Bank grades "enhanced rates".  I started to challenge these practices, but never got a response until I was told 5 minutes before my shift ended all Bank Staff not covering substantive posts were being made redundant, due to the Trust being overspent.   No notice required for zero hours staff.  I am still somewhat  shocked by the treatment I received.   I feel I was treated extremely poorly treated and wished I have investigated taking the Trust to tribunal, however it was difficult to find out where I stood as zero hours contracts are a grey area in terms of employment law.   My experience of zero hours was definitely not a happy one.

  • Once more the Dinosaur in the room tramples progress.... :-)

    You (deliberately?) confuse the existence of satisfaction with the potential for dis-satisfaction Keith.

    What you say is absolutely true, many employers have been ripping off employees on ZHCs regarding holiday pay etc. However that does not alter those employees' (to date ignorant) satisfaction with their employment, nor does it prevent the principle behind the ZHC, of having employment without fixed (or any) hours in a given period being valid.

    You also allege this is a "...survey by the HR Industry..." but it was not. It was a survey by a highly reputable and strongly independently minded business, YouGov, who use a variety of complex and robust methods to ensure that their surveys represent balanced reality, so far as is statistically possible, and are not swayed by any pre-set client agenda. How do I know: Very simply: I used to work for them and I know the strict ethics practiced by the business and those who work in it.

    Of course an employee who finds they have been cheated out of years of holiday pay (or some other benefit) will be unhappy, but they will be unhappy with the employer's deceit, not with their ability to work the hours they have wanted (or been able) to work when a permanent fixed terms (PFT) contract would have been a commitment they could not (or did not want to) make.  An employer can swindle PFT employees who are "...legally illiterate..." every bit as easily as they can those on ZHCs, or those who may in fact be highly qualified but chose (or are forced by personal circumstances) to work more flexibly and without commitment.

    ZHCs can open doors for those who otherwise could not work; they can also enable employers to operate (and offer jobs) where viable (or efficient) operation would otherwise not be possible or competitive, especially in 24/7 organisations responding to international real-time requirements.

    It is not the ZHC that cheats employees, it is the bad employer. Aim at the right target instead of blocking what is in reality no more than a natural extension of the flexible working principles we have been seeking for the last thirty years on some out-dated principle of what a "proper job" once looked like!


  • Anonymous

    I do not see zero hours as progress.  It is the bad employer that cheats workers and bad employers are attracted to zero hours because they feel they have greater ability to do as they please.  My pay was not fair or transparent compared to those on the agenda for change.  I am all for flexible employees and keeping costs down in the NHS, but I felt an annual hours contract would have been fairer.

    I am not aware of any landmark cases on ZHC.    There needs to be clearer guidelines in employment law terms of what is/is not acceptable/permitted.   I wanted to be clear of my facts before challenging my employer, yet the information I searched for was hard to find.  

    I felt if I didn't  keep quiet and go along with it, I felt I was very vulnerable in terms of having my hours cut or losing my job, which is what happened in the end.

    I am not on ZHC by choice, I had my children at 40, so wanted to return to work in my early fifties.   Four years later there is still a massive shortage of part-time work, paying above the living wage, regardless of previous experience and higher qualifications.  At my last interview 15 people were shortlisted.   Frankly single parents deserve better than ZHC, as they are only suitable for people wanting pocket money.  

  • I’m Mark Beatson, the author of the report.  I was away last week and so unable to reply to comments as they came in, but here is a response to some of the points made.

    First, CIPD doesn’t employ anyone on a zero-hours contract, although if a new recruit or someone already employed was to ask for a zero-hours contract, the request would be given serious consideration (in the way that flexible working requests are).

    Second, the blog does go into some detail on the methodology.  That’s because the employee survey has been questioned, so it was important to provide a broader and more detailed account of the survey and the reasons why we think the key results on well-being are robust.

    Third, most people’s perceptions of their employment rights are both incomplete and inaccurate.  You only need to think about employment status.  What’s written in the contract may not correspond to a determination by a Tribunal based on the facts of the case – and the employee/worker distinction in turn affects entitlement to a range of entitlements and benefits.  For this reason, our surveys don’t ask people if they are on a ‘zero-hours contract’.  Instead, they are asked if they have a guaranteed minimum number of hours, and only those saying there was no minimum are defined as zero-hours employees.  Surveys can still provide much valuable information on people’s experience of work, even when their legal status and rights are uncertain – but it does mean their findings have to be interpreted with care.  In addition, as highlighted in one response, we should never assume that all employers know the law either.

    Fourth, we think it’s unlikely that zero-hours contract employees report similar levels of job satisfaction and well-being because their expectations of work are lower or because they have become accustomed to poor working conditions.  Where comparisons can be made with other surveys, ours have similar results.  And although zero-hours contracts have become widespread in some jobs (such as domiciliary care), they are still relatively rare.  Most people with a zero-hours contract will have had a previous job with guaranteed hours, or know family, friends or colleagues with different working arrangements.  They know what the alternatives look like.

  • One other observation.  The comments made so far seem, to me, to support one of the arguments made in the report.  There are ‘good’ employers and there are, sadly, some ‘bad’ employers who will try and short-change the people working for them if they think they can get away with it.  Zero-hours contracts alone don’t turn a ‘good’ employer into a ‘bad’ employer.  Yes, they do give unscrupulous employers some additional ways to treat employees badly, such as not offering work to people who step out of line.  But, even in the unlikely event that zero-hours contracts could be abolished, there’s no guarantee this would lead to an improvement in working conditions or job security: ‘bad’ employers could simply offer casual work with even less access to employment rights.  We need to focus on raising employment practices across the board, rather than simply for one or other type of contract.  People in full-time positions with open-ended contracts can be treated shabbily.

    It would help if employment rights were understood more widely.  That’s why CIPD thinks the government should extend the current requirement for a written statement of terms and conditions to all workers, not just employees.  But people also need access to reliable and impartial sources of advice, like ACAS and Citizen’s Advice Bureaux.  In addition, there needs to be effective redress when employment rights are breached, which is why we think the Government needs to reconsider the current arrangements for Employment Tribunal fees.

  • fair and accurate picture of zero hour contracts as they affect lower paid workers

  • Anonymous

    Wow ZHC gets people going.  My concern about the government or union stance  is that they have an a political agenda.  

    I am sure the CIPD is not agendaless, however these contracts can work if used appropriately and correctly.  

    They can give workers and companies a flexible workforce they need during key stages in their development.  I am loathe to make sweeping generalisations in favour or against.  

    I have concerns that the government seems to have an agenda to clamp down on these without doing proper research or naming and shaming unscrupulous employers.  

    It's hard for legislation to effectively police the whole spectrum of workplace situations.  This results in winners and losers.  

    I fully appreciate life is more complicated than soundbites like 'move to find work', 'get out and seek work - it's out there', 'believe you are truly capable and competent to seek out any work in order to start making a contribution and building your career' and so on.  

    Of course, we need to look at the real issues behind long term unemployment.  

    We also need to recognise that there are lots of roles that need to be done.  They might not all be highly paid, a living wage is a good start to address the pay issue, or offer a career path however they are important roles nonetheless.  

    We all have to start somewhere.  My first job was tiring, boring, poorly paid and not very exciting.  It was a stepping stone.  I'm lucky I realised that in order to get on, I needed to get on in the first place.  I appreciate some people don't have the luxury of that kind of start in life and might need more help, support and encouragement to start their career or job journey.  I'm not sure banning ZHContracts outright is a means of addressing this. - Sharon Green