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The scandal of zero-hour contracts

Adrianne LeMan, from Barnsbury Ward, examines the pernicious practice of zero-hour contracts, on which workers have no certainty of work and earn less than half that of permanent employees.

We’ve all heard of zero-hour contracts, but it’s likely that few of us – including people employed on them – fully understand what they entail, nor how widely they are used.

The government’s website (www.gov.uk) sets out the parameters (interestingly, only from the employers’ point of view):

  • "[workers] are on call to work when you need them
  • you don’t have to give them work
  • they don’t have to do work when asked"

There had been a tendency for employers to expect people to work exclusively for them, but in May last year the Zero Hour Regulations 2015 were introduced: the law now states that workers can ignore a clause in their contract if it bans them from looking for work or accepting work from another employer. Acas’s website (www.acas.org) adds that “Zero hours workers are entitled to...the National Minimum Wage and National Living Wage and pay for work-related travel [my italics] in the same way as regular workers”, but in the case of care workers at least, employers seem easily to find a way round paying for travel time between visits. Healthvision UK – a member of the UK Home Care Association and registered with the Care Quality Commission – defines place of work thus: “You will normally be required to work from your home and visit individual service users’ premises within your designated geographical area...”. “Visit” and “travel” it seems, are not synonymous.

Philip Inman, The Guardian’s Economics Correspondent, reported in September 2015 that the number of workers on zero-hours contracts had increased by 19% in the previous year. According to the Office for National Statistics, 744,000 people (2.4% of the UK’s 31m workforce) were on contracts without a minimum number of hours (Unite estimates the number as being closer to 5.5m, or 5.6%).

A December 2014 TUC study showed that people on zero-hour contracts earned less than half that of permanent workers, and that 40% earned too little to qualify for statutory sick pay. In addition, those who earned less than £5,772 a year did not receive any credits for the state pension.

It is particularly hard for workers in London, one of the world’s most-expensive cities. Shane Croucher, writing in The International Business Times, calculated that even if workers were earning the (voluntary) London Living Wage of £9.40 an hour and worked for 37.5 hours a week, their annual pay would be £18,330, compared with the UK median of £26,936. If they manage to find somewhere to live in London, they are likely to have to pay at least 40% of their income for a single room – nearly 90% for a one-bedroom flat. If they can afford only to live in, say, Zone 4, travel will cost 14% of their income.

Which companies are serial zero-hour contract offenders? Sports Direct, owned by billionaire Mike Ashley, has been in the news for employing the vast majority of its 27,000-strong workforce on zero-hours, but there are many other companies who employ, sometimes a majority of, staff in this way. They include: J D Wetherspoon, Spirit Pub Company, McDonald’s, Burger King, Domino’s Pizza, Subway, Yo! Sushi, and Boots UK. In contrast, some of the UK’s most successful brands – House of Fraser, John Lewis, Marks & Spencer, Next, Pret a Manger and Sainsbury’s – operate on full-time, part-time or fixed-term contracts.

It’s wrong to conflate zero-hours with temporary or fixed-term contracts, under which people know how many hours a week they will work, or for how many weeks they will be employed. The pernicious thing about zero-hour contracts is that workers have no certainty. Healthvision’s contract states: “In some weeks you may not be required to work any hours. Payment will only be made for actual hours worked...”.

The introduction of the National Living Wage is having unforeseen implications for this company’s workers. They are now paid £9.15 an hour, but are paid by the minute: they call in – from the client’s telephone – when they arrive and when they leave. They are not paid for travel time between calls and are often not given adequate time to get from one client to the next with the result that they are frequently a few minutes late. Under the new system, if they are five minutes late, their pay will be cut by 77p; ten minutes late? £1.54.

Why don’t they add the time on to the end of the visit? The cumulative effect of that would result in them being unacceptably late for the last client on their shift – and their clients are people who need help to get up and go to bed, to wash, dress, eat, and so on.

Healthvision states that being paid by the minute is “now very normal in the industry”. This may be true, but it simply seems to be a way of avoiding paying the Living Wage.

As John Philpott, Director of The Jobs Economist comments: “...even a small proportion of zero-hour contracts can drag down overall pay levels...the ability of employers to hire people in this way undermines the bargaining power of other workers, thereby dampening pressure for improved pay and conditions, particularly at the bottom end of the labour market.”

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