Zero-hours Contracts

Debate between Baroness Hollis of Heigham and Baroness Neville-Rolfe

Thursday 11th June 2015 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

My Lords, most people on zero-hours contracts are also in minimum-wage jobs. They are very low paid. In the past 48 hours, we have learned that the Government are expecting something like £5 billion out of the £12 billion welfare cuts to be saved from working tax credits. Those people on zero-hours contracts survive because of those tax credits. How will they survive in future?

[Baroness Neville-Rolfe]

My Lords, zero-hours contracts allow people to come into the workforce who could not otherwise come in for the reasons I have explained, participate and get a job. The social security welfare framework continues to apply. This seems to me to be a good thing, not a bad thing, as the noble Baroness suggests.

Small Business, Enterprise and Employment Bill

Debate between Baroness Hollis of Heigham and Baroness Neville-Rolfe

Wednesday 11th March 2015 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, I am grateful to all my noble friends who took part in the debate—my noble friends Lady Drake, Lord Young and Lord Cunningham. Indeed, I am grateful for all the contributions from around the House. However, what has puzzled me a little about the contributions from around the House is the fact that most of the argument seems to have been about the need for, and virtues of, zero-hours contracts as such, and the need for a flexible labour market. I had hoped that we had been at pains to establish that of course customers, consumers, passengers and patients now live in a 24/7 economy. The issue is not about ZHCs; it is not even about codes of practice, because good employers such as Marks & Spencer do not abuse ZHCs, whereas Boots does. Pret a Manger does not abuse them, although McDonald’s does. Good employers can already decide how best to employ their staff. Whether a company does or does not have ZHCs is not the issue.

The issue is that there are some people with ZHCs, as the noble and learned Baroness, Lady Butler-Sloss, and the noble and learned Lord, Lord Lloyd of Berwick, rightly said, who are exploited and suffer because although they are summoned to work by text, often overnight, they turn up and are then sent home again without a penny. What is more, they may have spent £5 or £8 in travel costs to get there and back. They may have spent £15 or £20 in childcare to get there and back and they get not a penny of recompense for the expenditure they made to uphold their side of the ZHC contract.

All that I am asking for is fairness, as the noble and learned Lord, Lord Lloyd, said—fairness between the employer who can dispense with the services of somebody and the employee. He may need to do that—I can see the point—but it should not be the worker who exclusively and solely bears the cost of the cancellation. That is what is unfair; not ZHCs, not flexible labour contracts, but the fact that only one party, the most vulnerable, the poorest, the weakest, should bear the cost of a zero-hours contract when they turn up to work and the work is taken away from them, even though they are doing exactly what the employer requests.

The noble Lord, Lord Deben, was worried. I thought that the speech by the noble Lord, Lord Butler, was admirable in putting the simple point that the amendment would require the Secretary of State to make regulations, but keeps the content entirely open. However, we expect them to reflect the spirit of the discussion in this House tonight that zero-hours contract workers—the people we are concerned about—should be able to be protected in this way.

In Committee, the Minister said that the Secretary of State already had powers to do that. This was followed up by a letter saying that that was not the case. The order-making power does not extend to other issues around ZHCs such as compensation for late-notice cancellations. I repeat that the Secretary of State has no power presently to regulate this anomaly at best—this exploitation, bluntly, at worst—that we all agree is unfair. He has no such power. The amendment would give him that power. After consultation with the sector—it may take months, I fully accept that—he can then introduce appropriate requirements for codes of practice or whatever may be proper to defend the people of whom the noble and learned Baroness, Lady Butler-Sloss, so eloquently reminded us: the lone parent who may be £20 or £30 out of pocket because at five minutes’ notice her shift is cancelled. At the moment, the Secretary of State does not have the power to do that.

This is not about ZHCs or the flexible labour market, I am asking your Lordships to do what this House is always at its best in doing: say to the Secretary of State, “We are willing to give you the power, we expect you to handle it sensibly, in consultation with industry, but it is not fair, as the noble and learned Lord, Lord Lloyd, said, that the most vulnerable should pay the cost of the employer’s requirements”.

[Baroness Neville-Rolfe]

The noble Baroness’s amendment goes beyond zero-hours contracts. She is emphasising the zero-hours aspects, but this is compensation to all workers, as I sought to explain—and I sought to explain the perversities.

[Baroness Hollis of Heigham]

If the noble Baroness is worried that the technical quality of the amendment is insufficient, it can be overturned in the other place and replaced with an amendment that embodies what she and the Secretary of State would wish to see. There is no problem about that. When I was a Minister, I accepted amendments all the time that were technically defective but which reflected the spirit and will of this House, because it was the right thing to do. If they needed tidying up, that could be done perfectly easily in the other House. That is not a reason not to accept the amendment today.

We are talking about ZHCs; all of us have been talking about ZHCs. As the noble and learned Lord, Lord Lloyd, said, this is fair and the right thing to do. Workers who keep their side of the contract should not then find themselves out of pocket, because the employer does not. The CBI agrees. I hope that your Lordships will also agree tonight. I beg leave to test the opinion of the House.

Small Business, Enterprise and Employment Bill

Debate between Baroness Hollis of Heigham and Baroness Neville-Rolfe

Monday 26th January 2015 Grand Committee

[Baroness Neville-Rolfe]

My Lords, I am grateful to noble Lords for their amendments and the opportunity further to debate aspects of zero-hours contracts. I am also grateful for the clarification by the noble Lord, Lord Young, that he does not want to get rid of all flexibility. I was also very glad that the noble Baroness, Lady Hollis, joined our discussion. Her three case studies demonstrate the need for Clause 148.

As I set out in our previous debate, the Government recently consulted on the matter of avoidance and routes of redress, including powers to go to employment tribunals and seek compensation. I am pleased to reassure the Committee that that is already possible under Section 27B in Clause 148.

Amendment 68ZX would require employers to offer fixed-hours contracts once an individual has worked regular hours as determined by regulations. The noble Baroness, Lady Hollis, mentioned six months. Before I respond, let us reflect on how those with zero-hours contracts feel about their employment. The CIPD survey published in November 2013 found that many individuals chose to work on a zero-hours contract and were found to be more content than those in permanent employment. I accept that there will be hard cases but these are overall comments. Zero-hours workers, when compared to the average UK employee, are just as satisfied with their job, happier with their work-life balance and less likely to think that they are treated unfairly.

To respond to the point made by the noble Baroness, Lady Hollis, fluctuating demand is not predictable. My noble friend Lady Harding told us about that at Second Reading from her experience. Even the noble Baroness acknowledged that there are sectors of the workforce and individuals—students, those in IT, the recently retired, and many others—who are happy with zero-hours contracts, and, of course, happier to have a job than not to have a job. Imposing restrictive criteria over how a zero-hours worker can be employed may have the perverse effect of discouraging employers from creating jobs at all.

I appreciate that that is not the noble Lords’ intention, but I know that the Committee will understand the risk of unintended consequences, because it is something that we consider a lot when we are trying to legislate in this House. There is a clear risk that employers will simply let people go, or offer no work at the end of a qualifying period to avoid converting the contract to fixed hours. It would also be very difficult to define what is meant by “regular hours” in all those different industries.

The Government have already made some changes in this area. The flexible working regulations were amended in June 2014 to ensure that any employee can request flexible working. That is just as relevant to someone on a zero-hours contract as it is to a permanent member of staff. If a zero-hours worker is an employee and can show 26 weeks’ continuous service, they can make a request for formalised hours or a particular shift pattern.

Amendment 68ZX also requires a right for zero-hours workers to be provided with financial compensation. As I understand it, that power is already provided for in the clause.

[Baroness Hollis of Heigham]

The Minister says that people are satisfied with that. I was just checking my statistics from the CIPD, in which only one in five older people prefer the contract that is being offered them; the other four-fifths would like regular hours. The problem is that you cannot run a second job alongside a first—which is the point of Clause 148, which we all welcome—unless you know what your hours in the first job will be. It is very simple. Unless you have the ability to turn it into a reliable, regular, predictable contract, with the exceptions that we all agree may well be necessary—in IT, arts events, so on and so forth—the freedom you are giving in Clause 148 will be partly illusory. You cannot do it.

[Baroness Neville-Rolfe]

I thank the noble Baroness for her clarification. This is not an easy area. I also note that she made a number of good points about bad employer practices. I will mention something we are doing that may help on all these points. We have already encouraged business groups and unions to develop codes of practice. Those need to be sector-specific and industry-led, as we think that creates the most impact. A one-size-fits-all solution from the centre will not work, for exactly the reasons that we are debating this afternoon. The guidance would include, for example, in what circumstances a zero-hours contract is appropriate and where it is not, and the kind of considerations mentioned by the noble Baroness will be relevant.

Amendment 68ZX also seeks powers for employment tribunals to enforce their own judgments. Well established court-based enforcement options are already available to enforce employment tribunal awards, such as the fast-track system or county court in England and Wales and the sheriff courts in Scotland. The primary function of the employment tribunal is of course to provide a forum in which parties can resolve their disputes and obtain a judgment. The employment tribunal does not have responsibility for the enforcement of the awards it makes to individuals. Tribunal-led enforcement of its own awards would represent a fundamental departure from the normal principles of civil justice and enforcement. If the enforcement of employment tribunal awards for zero-hours claims became a tribunal-led affair, many other employment tribunal and civil court users would begin to question why the tribunal or court did not pursue or enforce its judgments or awards.

Amendment 68ZAC suggests that zero-hours workers should be provided with information about their basic terms and conditions within two months of their start date. I agree that employers should provide their staff with clear terms and conditions, and I reassure noble Lords that employees are already entitled to a written—or, I think and hope, online—statement of the particulars of their employment arrangement. That entitlement applies to individuals on a zero-hours contract if their employment status is that of an “employee”. However, the Government acknowledge that there is a wider issue about whether all workers, regardless of their employment status, should be entitled to a written statement. That is being considered as part of the review of employment status, including the risks, impact and opportunities involved in any new arrangements, which I mentioned when we were discussing interns. Officials will report to Ministers on the outcomes in March.

The noble Baroness, Lady Hollis, also talked about the interlink between zero-hours contracts and jobseeker’s allowance or universal credit. Universal credit was of course designed to be responsive to fluctuations in earnings—it is different in that way, and to my mind better—so, for people who are working, financial support will be reduced at a consistent and predictable rate. In weeks where a claimant has lower or no income from their zero-hours contract, universal credit payments would increase.

[Baroness Hollis of Heigham]

The point is that if you are going to be paid only at the end of the month, what do you live on in the mean time? Just to make it clear, your universal credit payment will be paid in arrears at the end of the month. However, you learn only at the end of the second week that you do not have the income. Although I absolutely agree that UC will reflect the total earnings over the total month, what do you live on in weeks two and three?

[Baroness Neville-Rolfe]

The noble Baroness makes a point that bears on the universal credit payment system in the round. I think that the clause is actually helpful, compared to the status quo, if we make these changes on zero hours. I am advised that universal credit is paid in real time, so if the claimant informs the system in real time, they will get the money. I must apologise that I am not a welfare expert, I am a Business Minister.

[Baroness Hollis of Heigham]

Whether it is the handwriting or whatever, it is certainly the case that UC will be based on real-time information, but the payment will be made at the end of a month in arrears. Therefore you have the problem of income-smoothing when you have unpredictable hours, and we know that the hours of 75% of people on ZHCs vary every week. That is why, going back to Clause 148, I ask how you can run a second job with unpredictable hours if your first job has unpredictable hours. Your two employers may want you at the same time, but neither employer may want you at another hour.

[Baroness Neville-Rolfe]

The noble Baroness makes a good point. In a sense, that is a problem for employers, who could previously have a zero-hours arrangement that was exclusive. As I explained in opening, we have decided that that should not be the case in future. I am sure that the new arrangements will take some thinking about and settling in but, as far as I am concerned, if you are on a zero-hours contract, you can offer your services to—I do not know—two fashion magazines rather than just one. That is an excellent move forward. In any event, many people on zero-hours contracts who benefit so much from them, especially those in the categories that we were talking about, are not looking for universal credit, as the noble Baroness acknowledged.

I have probably taken this as far as I can this evening. I have tried to set out why we are proposing this, and I hope that the noble Lord will feel able to withdraw his amendment.