Zero-hours contracts

Andy Sawford Excerpts

Tuesday 9th July 2013 Westminster Hall

[Andy Sawford (Corby) (Lab/Co-op)]

Thank you, Ms Dorries. It is a pleasure to serve under your chairmanship and to follow my hon. Friends. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this debate. She feels strongly about these issues and is a real champion for people in her constituency and throughout the country who are being exploited by zero-hours contracts. I will echo some of the points that my hon. Friend the Member for Wigan (Lisa Nandy) made and relate them to the experience of my constituents in Corby and east Northamptonshire.

In this Session, I have presented two private Members’ Bills to offer greater protection to the lowest paid and most vulnerable workers in Britain. The Gangmasters Licensing Authority (Extension of Powers) Bill will extend the powers of the Gangmasters Licensing Authority to enable it to regulate employment agencies in all sectors of the economy. That is combined with my Zero Hours Contracts Bill, which will prohibit the use of zero-hours employment contracts and end the scandal of employers requiring workers to be available for work when there is no guarantee of available work. I will go further than other contributors to this debate and say that zero-hours contracts should be banned. A contract of employment clearly implies that there is some employment. All too often the problem with zero-hours contracts is that people are not given any employment, yet they are required to attend for work.

I hope the Bill will become law, but whether that is now or later depends on Parliament. I want to generate a debate about how we can better protect the lowest paid and most vulnerable workers from being kept in a permanently fragile and uncertain state of zero-hours employment. That is why I am pleased to contribute to the debate today.

The Office for National Statistics estimates that at least 200,000 people are employed on zero-hours contracts in the UK, of which 75,000 are aged 16 to 24. We know that that figure is a huge underestimate, and I have begun to challenge it to reveal the true situation. Just last week, a written answer from the Minister of State, Department of Health, who is responsible for care and support, revealed that 307,000 people work in social care alone on zero-hours contracts. If the labour force survey claims that 20% of people on zero-hours contracts are working in the care sector, I am confident in saying that the true number of people in this country on zero-hours contracts could be approaching 1 million.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Gentleman agree that what should flow from the review by the Secretary of State for Business, Innovation and Skills is exactly what he is homing in on: a much more accurate estimate of how many people are affected? When we try to determine what needs to be done to help those people, we need to know how many are affected.

[Andy Sawford]

The hon. Gentleman is absolutely right and, if he will forgive me, I will come to that shortly.

It is well known that zero-hours contracts started in specific sectors of the economy, but are now widespread in all sectors, including in my constituency. Hundreds of constituents have contacted me about them. People tell me about waiting for a call or turning up at the workplace day after day, only to find that there is no work, yet their contracts make it difficult to find alternative employment or to claim jobseeker’s allowance. Like my hon. Friend the Member for Wigan, I have heard examples of people making child care arrangements or paying for transport to work and then waiting hours before being told they are not needed. Others have told me that because of zero-hours contracts they are unable to get a bank overdraft, a mortgage or car finance.

Of those on zero-hours contracts, 70% are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want that employment to be fair and secure.

A few weeks ago, the Resolution Foundation published an excellent report stating that those employed on zero-hours contracts receive lower gross weekly pay, and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency, zero-hours contracts and agency workers create a two-tier work force with permanent employees being paid better and having security of employment, but many others are paid incredibly low wages and are exploited from week to week.

The argument is that zero-hours contracts offer flexibility, but I would argue that if those contracts are justifiable, that flexibility should be beneficial to both employers and employees. In most cases, that is simply not so, particularly in low-wage sectors. Workers on those contracts have no control over the hours they work, the amount of money they earn each week or even the breaks they take. Reports show that care workers on zero-hours contracts are not paid for travel time or gaps between appointments. Unison published some excellent research on the impact on social care. I have a personal concern about that and I urge the Minister to look at it in detail. I would have said more about it if I had had more time.

Zero-hours contracts are just the tip of the iceberg. My hon. Friends have called for a review of the whole culture of work in this country, particularly as it has developed during the recession and in recent years as our economy has flatlined. Under-employment is generally too high in all its forms. Self-employment has been rising and bogus self-employment is a big issue. We have particular issues with Swedish derogation contracts that guarantee minimum hours of pay between agency assignments to exempt people from minimum pay.

I am pleased that the Minister met me and a delegation from Corby earlier this year to look at these issues. I am also pleased—I thank her for this—that she supported an initiative by the Employment Agency Standards inspectorate and Her Majesty’s Revenue and Customs to look at the issues in detail in Corby. The initiative was taken in my area, and I was not surprised to see the level of exploitation. When visiting agencies, they found more than 70 breaches of employment law, and HMRC put a figure of £100,000 on the money owed to local workers in my constituency. I urge the Minister to provide proper resources to HMRC’s minimum wage department and to support the vital role of the Employment Agency Standards inspectorate. It protects the most vulnerable people in my constituency and around the country. It should be better resourced, it should do more, and we should support it.

What do I want? I want more than an informal review. I want a proper formal review by the Government to look at the scale of zero-hours contracts, and a jobs market that identifies good practice. I want to explore the possibility of a ban. Zero-hours contracts have been banned in Luxembourg, Belgium and Lithuania. There are opportunities to develop new forms of flexible employment contracts and I urge the Minister to look at the work of the Union of Shop, Distributive and Allied Workers in this area.

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[Emma Reynolds (Wolverhampton North East) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries, for the first time but not, I am sure, the last. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing the debate, and on her excellent opening speech. I should like to say that we are having a debate this afternoon, but it seems only the Labour party really cares about the issue. There is not a single Conservative MP in Westminster Hall this afternoon. I am glad to see the Minister, and am also happy that the Government will undertake a review of the worrying rise in zero-hours contracts.

I wish to associate myself with many points that have already been made—it is always difficult going last in such debates—but I want, in particular, to agree with the comments made by my hon. Friend the Member for Sunderland Central about the flexibility of such contracts being a one-way street. The flexibility is all to the advantage of the employer and to the detriment of the employee. The worker is left waiting for a call and is on call, not knowing from one day to the next, or from one week to the next, whether they will get any hours at all. These contracts do not even provide a guarantee of any hours, and therefore, they have been named zero-hours contracts. In many cases, workers are desperate to increase the number of hours they work, and many of them are on very low incomes. These contracts seem extremely exploitative and make the lives of some of the poorest in society even harder.

I am particularly concerned about three groups of workers who the contracts seem increasingly to affect: the first is young people; the second is care workers, as some of my colleagues have discussed; and the third is public sector workers, which is worrying, because even though the majority of such workers are in the private sector, the use in the public sector seems to be increasing. It must be in the Government’s power to do something about that.

Research suggests that one in three people employed on zero-hours contracts is aged between 16 and 24. It is absolutely devastating to be unemployed at such a young age and to be only able to get a contract of work that does not guarantee any hours at all. The fact that this exploitative arrangement is the first experience that a young person could have of work seems totally unacceptable and unfair.

[Andy Sawford]

My hon. Friend makes a really important point about the particular impact on young people. I hear from young people who feel that they have had no training and no investment from their employer, because there is no incentive to do so when they are in such fragile, short-term employment.

[Emma Reynolds]

The Government need to look at the issue even more closely and consider whether the practice should be banned, for young people, in particular, but for all workers.

I turn to the issue of care workers. As has been mentioned, a report by Unison found that 40% of home care workers are employed on zero-hours contracts, and that number is thought to be on the rise. Home care workers play an incredibly important role in our society, especially given that we have an ever-increasing ageing population. They are saving the state money by ensuring that elderly people can stay in their homes and live there, rather than in a care home, and they are ensuring that elderly people are not in hospital. I am particularly concerned about reports suggesting that those workers are not being paid for travel time between visits. It seems that that must be, in some way, illegal—how can it be legal? In winding up, if the Minister has time, I would like her to comment on that point. If they have not been guaranteed a minimum wage for the real hours that they are working, have their minimum wage rights been breached? Is the employer, in such cases, in breach of the European working time directive?

Finally, let me say something about the public sector, because the contract is not unique to carers. We are seeing the increasing use of such contracts in all parts of the public sector, whether in the health service or elsewhere. In the health service alone, workplaces using zero-hours contracts rose from 7% in 2004 to 13% in 2011. Central Government have also been found to be using zero-hours contracts. As has been suggested, local government contracts seem to be driving the rise of these exploitative contracts. My hon. Friend the Member for Sunderland Central suggested that it is going on here in the House of Commons, too, and I would like the Minister to address that issue specifically.

Will the Minister reassure Labour Members, who are concerned about this injustice, that the review that the Government are conducting will look at exploitative practices by employers? Will the review consider how many of the workers who have had those contracts are low paid, and will it consider banning the contracts? Will she say whether central Government will take a leading role in getting rid of the contracts from their own payroll and do something to discourage, dissuade or even sanction local government if, when contracts are issued, conditions are not in place in the contracts to stop this kind of exploitative practice?

Our debate is timely, because the use of zero-hours contracts can be seen in a wider context of rising inequalities. Regrettably, inequalities in income are increasing, and the gap between rich and poor is widening. The Government are only exacerbating that. Living standards have been frozen, or in some cases, have declined for many lower and middle-income workers. The mean family income in 2015 will have the same worth as in 2002. For the first time in generations, parents are concerned and expect that their children will be worse off than them. The increasing use of zero-hours contracts in the private and public sectors is only exacerbating those inequalities, and I would like the Government to do something about it.

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[Ian Murray]

That is a good point. We should have another Westminster Hall debate on the agency issue, in terms of how that all fits together. It is not only about zero-hours contracts, as there is a tapestry of problems in the employment industry that are worth looking at.

Many hon. Members—including my hon. Friend the Member for Wansbeck (Ian Lavery), who always speaks very passionately about such issues—have said that people get no pay and no hours. People sometimes go to great expense to turn up at work. They arrange child care and sometimes they do not even get a call to say they have got hours—actually, sometimes they do not even get a call. I have a screen grab here from someone’s iPhone, where a message says, “You’re not needed today.” That is all it says. It was sent at 12.40 in the afternoon, so they sometimes do not even get a call from their employer to say they are not required.

Many Members have spoken about the increasing numbers of contracts, so I will not run over that again. However, I would like to concentrate on the law behind the issue. A body of law sets out what someone is classified as when they are at work. They are either an employee, a worker, or self-employed. We shall set aside the fourth, new category of someone who is an employee shareholder, as that is a different debate altogether. If we look at those three categories, it is clear what someone who is self-employed is. There is a whole body of case law about what the definitions of an employee and a worker are. Many would argue that someone on a zero-hours contract is, in fact, a worker, but that worker needs to have some kind of mutuality of obligation, and there cannot be a mutuality of obligation if the worker has to turn up for work at their expense, but the employer has no need to give them any hours. That does not seem to me to be any sort of mutuality.

[Andy Sawford]

I agree that the important point about an employment contract is that there must be a mutuality of obligation, but the contract also must impose an obligation on a person to provide work. Therefore, I cannot understand why it is not unlawful as it stands, in the current body of law.

[Ian Murray]

There is an argument about whether zero-hours contracts are currently unlawful, but mutuality of obligation is case-law terminology and is therefore not written in statute. That is how, over many years, the case law has built up about the definition of employment tribunals, in terms of whether someone is in work or, indeed, whether they are a worker, an employee or self-employed. So there is a definition. My hon. Friend the Member for Wansbeck has said that what we are talking about is not a job. It perhaps is not a job. It cannot be right for people to be in this situation and not end up with any hours.

Let us consider some of the damaging effects. For staff, zero-hours contracts have huge drawbacks compared with permanent regular work. There is no guaranteed level of regular earnings that provides any certainty with regard to meeting bills, meeting rent or planning for the future. The need to respond to calls to attend work, frequently at short notice, disrupts life outside work and places a particular strain on families in terms of arranging care for dependants. The Government have put a heavy emphasis on being family-friendly, but we have yet to see any evidence of that. Zero-hours contracts fly in the face of the flexible working legislation that the Minister, to be fair to her, has pushed through and championed in government. They slightly contradict that aspect of employment.

There is a detriment to business as well. That is why I cannot see why business wants to use zero-hours contracts, particularly in some of the areas that have been spoken about. There must be reputational damage to employers who use these contracts. There must be an inability to attract and to retain high-quality staff. There is undoubtedly a direct correlation between continuity and the quality of the services involved. Some hon. Members have spoken clearly about health and social care and how continuity and quality of services are significantly affected. A loss of training and skills development tends to accompany zero-hours contracts, particularly if people have to pay for their own training, which is a huge issue with these contracts.

There is an overarching ethos and ideology. The Government have a one-track mind on this issue. They look at regulation and employment law as a burden on business. We have seen that with the Beecroft report. I am delighted that my hon. Friend the Member for Wansbeck used the phrase “Beecroft by the back door”—we have copyrighted that now. This is Beecroft by the back door. There are all these ideological moves, in terms of the legislative programme that the Government are pushing through at the moment, that are simply an attack on workers’ rights and the ability of people to earn a living. Their central argument about removing workers’ rights in order to encourage businesses to grow surely cannot be right. It flies in the face of the evidence. Let us say that we accept that the Government have created 750,000 private sector jobs in the past two years as a fact, whether it is challengeable or not. Those jobs have been created under the current framework of employment rights, so that flies in the face of what they are saying.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to what has been a lively and good debate. I congratulate the hon. Member for Sunderland Central (Julie Elliott) not only on securing it, but on putting the arguments in a straightforward but well researched way. Over a period certainly of months and quite possibly longer, she has been a real campaigner for and champion of these issues. It is a credit to her that she has persevered in raising them. I very much welcome the time and effort that she has already put into this issue and her bringing it to the House today to give us all the opportunity to discuss it and highlight some of the problems.

The turnout reflects the concern that many people feel about this issue. I will discuss later how the Government are looking at it, but such a debate can be incredibly helpful to bring forward Members’ contributions, which of course can feed into that information that the Government are collecting from other sources.

In basic terms, of course we understand that zero-hours contracts can work well for some people, giving them flexibility in the hours that they work. Equally, we are well aware that they do not provide the certainty that many people feel that they need. Those people need to know what they are going to earn, so that they can manage their finances and, indeed, their lives. Hon. Members have given many examples this afternoon, and the Department has received a number of letters that reflect some of the concerns. Hon. Members will also be aware of the media commentary and stories, some of which have been quoted today as well.

It is important to be clear: zero-hours contracts will suit some individuals, but not everyone. A range of problems has been raised today, such as people accepting a job under such a contract when it did not suit them because they felt that they did not have a choice.

[Andy Sawford]

Will the Minister give way?

[Jo Swinson]

I will give way, but I am keen to make progress, so that I can respond to the points raised in the debate; I hope that hon. Members will let me.

[Andy Sawford]

I thank the hon. Lady for being generous in giving way. Zero-hours contracts are welcomed by some only because they afford flexibility; it is the flexibility they want, not the zero-hours contract. We ought to make that distinction.