Zero-hours contracts

Iain McKenzie Excerpts

Tuesday 9th July 2013 Westminster Hall

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure, Ms Dorries, to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. It seems that austerity has sparked some employers to introduce zero-hours contracts, which they see as the ultimate flexible employment option.

Zero-hours contracts offer no guaranteed work. They form part of the general disregard for decent terms and conditions. Unfortunately, employers have increasingly turned to such contracts. Typically, as we have heard, an individual undertakes to be available for work, but the employer does not undertake to provide any guaranteed hours and pays only for the hours worked.

Zero-hours contracts have been widely used in various employment sectors, and a survey by the Industrial Relations Service suggests that 23% of employers now include zero-hours contracts as one of their employment options. The Office for National Statistics found a major surge in zero-hours contracts in 2012, with the number of people on such contracts peaking at 200,000. As we have heard, the private care sector has been particularly vulnerable to this practice, and a recent survey of home care workers found that more than 40% were on zero-hours contracts.

Zero-hours contracts undermine employment rights and hit young workers and women hardest. For staff, they entail huge drawbacks by comparison with permanent, regular work. There are no guaranteed, regular earnings to provide certainty over meeting bills or planning for the future. The variability of earnings also throws into doubt individuals’ eligibility for various benefits, creating even greater uncertainty over income.

Zero-hours contracts have shown themselves to be more open to abuse than regular permanent contracts. For example, some scheduling of work hours in the home care sector allowed no time for travel between home visits, leading to staff working considerably beyond their paid hours in some cases.

What will be crucial for workers is whether zero-hours contracts constitute an employment relationship. If there is an employment relationship, an employee on a zero-hours contract will acquire the same comparative rights as other employees. If there is a pattern of regular work that is regularly accepted, it should be deemed that the contract is one of employment.

Employers should take heed because zero-hours contracts can work against them. They damage the employer’s ability to attract and hold on to high-quality staff. They also damage their ability to provide continuity and quality of services. Zero-hours contracts are simply not compatible with developing a professional work force and delivering quality services.

Let me give a few examples. The G4S security fiasco just before the start of the London 2012 Olympics, when the firm was unable to meet its contracted staffing requirements, is an example of how zero-hours contracts can be a disaster. In my constituency, Amazon outsources hiring at peak times of the business year to private employment agencies that offer zero-hours contracts. The result is that many subcontracted employers end up in employment disputes that hit the headlines and ultimately reflect on Amazon and its business. I call on Amazon to distance itself from such contracts, even if it is associated with them only at arm’s length, and to give clear direction to its subcontractors. Amazon does not want zero-hours contracts offered to its temporary staff.

It would be far less damaging for employees and employers if permanent contracts were offered specifying a minimum number of hours per week. For thousands of workers across Scotland and the rest of the UK, life on a zero-hours contract means they are living their life permanently on call, uncertain whether they can secure enough working hours each week to pay the bills.

The forward march of zero-hours contracts is likely to have profound implications for the UK economy, as well as for the individuals on those contracts and for the services that those people provide.

[Nia Griffith]

Does my hon. Friend think there is scope for using procurement to force those who supply public sector—Government and local authority—projects to ensure that the workers they employ are not on zero-hours contracts?

[Mr McKenzie]

Absolutely. My hon. Friend makes an important point: procurement can be used to stipulate terms and conditions. We should stipulate that zero-hours contracts are not welcome in any procurement contract.

As I said, the erratic income stream that often comes with zero-hours contracts can make it difficult to manage household budgets, to juggle family and caring commitments and to access tax credits and other benefits. It is clear that the supposed flexibility that these contracts provide comes at far too high a price for the overwhelming majority of those who are employed on them.

[Robert Flello]

As well as the damage and exploitation experienced by the individuals concerned, is not the taxpayer, through working tax credit and the like, effectively subsidising the profits of these private companies?

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[Mr McKenzie]

Absolutely. My hon. Friend makes a good point: the taxpayer is subsidising these companies. Increasingly, there is a race to the bottom in terms and conditions in services.

I am led to believe that the Government have acknowledged the need for reform, and a review will report in the autumn. However, I fear that it is unlikely to lead to an outright ban on zero-hours contracts and that it will not be the precursor of a much-needed agenda for promoting fair and full employment. None the less, thousands of people across the UK hope that the Government will, at a minimum, recognise the indisputable case for introducing more stringent safeguards to provide greater certainty and security for the growing numbers who work on these contracts. It is almost as though we have gone back in time to a scene from “On the Waterfront”. I have witnessed people turning up at factory gates and being chosen for a shift, while others are turned away and told to come back the next day. Those are simply not the employment contracts or practices that we need for the 21st century.