COMMONS

Unscrupulous employers exploiting workers through zero-hours contracts

14 April 2014

Interim report recommends changes to zero-hours contracts but says “in the majority of cases” they should not be used at all.

In an interim report published on Monday 14 April 2014, Parliament’s Scottish Affairs Committee says there has been an "alarming" increase in the use of casual labour – who are in some cases not being paid the legal minimum wage - across the UK, and in Scotland in particular, and that Government should be using all the levers at its disposal, including legislation, to change this.

The Committee says the Government’s consultation on zero hours contracts is too narrow:  it is focused on exclusivity and transparency but the Committee says addressing those concerns will do little to help workers who are exploited by unscrupulous employers.

Evidence

Evidence to the Committee showed:

  • 20% of workers on zero hours contracts are paid less than their permanent equivalents doing the same job
  • 5% are paid less than the national minimum wage although this is illegal
  • thousands of social care workers are illegally denied payment for time spent travelling between appointments
  • 40% receive no notice of employment
  • 6% turn up for work  - having paid for childcare, travel etc - to find none available
  • thousands of others’ employers evade the provision of basic employment rights
  • zero hours workers are entitled to limited employment rights but a significant proportion of employers are either ignorant of those rights or are wilfully blocking access to them

The Committee also heard that the problem goes wider than employers:  some Jobcentre Plus staff are pressurising job seekers into accepting work with no guaranteed hours and threatening to sanction either the job seeker - if they turned the position down - or the worker - if having accepted it they found insufficient hours were made available and wished to exit the contract and re-sign on.

Many organisations are able to manage without using zero hours contracts: local authorities have moved away from using them directly and most major supermarkets  - among the most successful businesses in the UK - are able to respond to fluctuations in their sectors without them.

The Committee describes the Government’s suggestion that a low-paid worker can challenge their employer through the courts as "fanciful": litigation is expensive, the lack of a legal definition of a zero hours contract hinders any legal challenge, and any zero hours worker who embarks on such a challenge may be penalised by the employer.

The Committee says:

  • Zero hours contracts must only be used where the employer can objectively justify it
  • The Government must do more to protect workers who wish to challenge unfair, unsafe or unlawful conditions of employment
  • Workers should be told from the outset of their employment what type of contract they are on and a written contract setting out the terms and conditions must follow within two months
  • There should be a minimum notice period of work and workers should not be punished for turning down offers of work made within that period
  • Where workers arrive for work but find none available then the employer should compensate them for the inconvenience
  • Travel time between appointments should be paid and pay for zero hours workers should accurately reflect the number of hours that are worked to fulfil contracted duties
  • An employer-led  Code of Practice is unlikely to help workers who are exploited – in fact it may serve to embed a form of employment that in most circumstances is hard to justify
  • If a Code is produced it should only be as a stepping stone to, or following, legislative change aimed at reducing the use of zero hours contracts and ensuring workers receive the income, rights and protections to which they are entitled

Chair's comments

Chair of the Committee Ian Davidson MP said:

"The overwhelming majority of zero hours contracts are abusive and exploitative and should be abolished.  In most cases their use is evidence of sloppy, lazy or incompetent management, who intimidate their workforce by keeping them insecure.

Zero hours contracts put workers in such a vulnerable position that they are unable even to assert their lawful right to the meagre benefits these contracts offer.

We heard how workers, without any kind of job security, were fearful of questioning the terms of their employment, even when they knew they were being treated unfairly, and that they were reluctant to challenge unsafe working conditions. Many felt that they could not turn down work, no matter how short the notice or however inconvenient the shift offered, in case doing so jeopardised future offers of work.

Zero hours make blacklisting easy.

Our detailed recommendations would improve the operation of zero hours contracts but our overriding conclusion is that, in the majority of cases, zero hours contracts need not and should not be used at all. Organisations in the public and private sectors should look first to contracts of employment that offer guaranteed hours and full employment rights.

We believe the UK and Scottish Governments must use every lever at their disposal to affect a cultural change against exploitative contracts."

We accept that there are some exceptional circumstances where workers will be happy to be on zero hours contracts and, if both parties are satisfied, then we are happy to see these continue. However, we heard evidence of far too many situations where mutuality of obligation is patently not the case and zero hours are being used with little justification by unscrupulous employers who simply want to shirk their responsibilities and exploit their workforce.

This report is an interim one, as it is being timed to contribute to the UK Government’s consultation on zero hours. We now intend to pursue these matters with a number of employers, both individually and collectively.

Further information

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