Zero-hours contracts

Ian Murray Excerpts

Tuesday 9th July 2013 Westminster Hall

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to serve under your chairmanship for the first time, Ms Dorries—no doubt there will be many more times to come. I pass on my congratulations to my hon. Friend the Member for Sunderland Central (Julie Elliott), whose speech was fantastic. Not only today, but every day that she has been in Parliament she has been championing the rights of people on zero-hours contracts, and it is important for her to have led today’s debate.

Although a small number of people use and like the contracts, we have heard, from all Opposition Members, about people who have gone to their constituency surgeries with examples of where the contracts are not appropriate. It is a shame that we cannot take a vote today, because we might win it, given who is here this afternoon. Of course, the aim of a zero-hours contract is to deflect from giving anyone pay; it is not just about hours. When an employer is looking at putting together a zero-hours contract, it cannot only be about the work available. It must be about reducing the wage bill and ensuring that there is no pay.

[Nia Griffith]

Does my hon. Friend agree that there is sometimes an irony in the use of agency workers, whereby the workers get paid very little and are second-class citizens, compared with the permanent employees, but, in fact, the firm gets ripped off because of the agency fees?

[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.

[Alison McGovern (Wirral South) (Lab)]

I apologise to fellow hon. Members for not being able to be here at the start of the debate. Does my hon. Friend agree that good regulation could protect employers who do not want to see this sort of practice? It could prevent a race to the bottom, which is what I think we are seeing in the care sector.

[Ian Murray]

That is a valuable intervention because that is what many employers are telling us and what many business organisations are saying: when we undermine workers’ rights, we are undermining as well the businesses that are looking after their staff. I ran my own business before coming into this place. Any business person—any person running a good business—gets up every morning of every day and wants to look after their staff; they know that their staff are their greatest asset. There is a danger here for the Government, and the hon. Member for North Norfolk (Norman Lamb), the Minister’s predecessor, said this quite clearly in a newspaper. Admittedly, it was six weeks before he got the job as the Minister responsible for employee relations, but he said that there was a real danger of undermining job security, which undermines consumer confidence, which sets us up in a spiral of economic decline.

Let me pick up some of the issues that my hon. Friend the Member for Sunderland Central raised. She referred to the disproportionate effect on women. Clearly, we have to look at that. The explosion in the number of zero-hours contracts has had a disproportionate effect on women, and that is probably because of some of the sectors in which we have seen this, such as the care sector and the hospitality sector. These are industries with high percentages of female employees. It is difficult to know whether it is a response to demand for flexible hours, better enabling female professionals to return to work after maternity leave, but it cannot be viewed as a positive trend at a time when equality in the work force is becoming more vital than ever. The Government have to consider whether what is happening is consistent with some of the other policies that I have mentioned in relation to flexible working.

There is also the issue of tax credits. The Government have been very clear about resolving some of the issues in relation to welfare. Their view was that the tax credits bill was too high, but the tax credits system was put in place to ensure that work paid, so again the reality flies in the face of some of the rhetoric and ideology. How exactly does the working tax credit issue interact with some of these zero-hours contracts? How often should HMRC update its system for someone who is on a zero-hours contract? Must they be on a zero-hours contract for a certain number of months? What happens when they get an injection of hours at the last minute? How is all that put together? There are also issues in relation to Jobcentre Plus. If someone is on a zero-hours contract and by law they are neither an employee nor a worker, are they actually in employment; can they claim jobseeker’s allowance? All those issues must be dealt with.

We have heard about the number of staff in this place who are on zero-hours contracts. A press release was issued this morning by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan). He said that 155 staff in this place were on zero-hours contracts. There are a number of case studies. This issue does not just involve the hospitality or care sectors. Edinburgh university, in my own constituency, has recently done an analysis that shows that 47% of lecturers in the college of humanities and social science are on zero-hours contracts, so there is a real problem there. I know that the University and College Union is taking it up with the university of Edinburgh.

Many hon. Members have spoken about the NHS, so I will not cause delay by making further comments on that, but may I turn to the Government’s recently announced review of zero-hours contracts? The announcement that the Secretary of State and the Minister were to look at this issue was very much welcomed. We must congratulate the Minister on at least going that far, but we need to know whether the Government will issue a call for evidence. Many trade unions have done so much work on this issue. My hon. Friend the Member for Corby (Andy Sawford) mentioned USDAW. It has done a tremendous amount of work on pushing this issue forward. The Government really have to issue a call for evidence. I believe that their review involves only three officials in the Department for Business, Innovation and Skills, so it would be good to issue a call for evidence.

Will the review consider the issues in relation to tax credits? Will it consider specifically the interaction of zero-hours contracts with young people and women in particular? The Minister may not be aware, but there was unanimous agreement from panellists at the Work Foundation’s recent conference on this topic that the review, in its current form, was too lightweight and would not provide the Government with the hard data that they needed to reform the system. I would be interested to hear the Minister’s response.

You have heard from Labour Members, Ms Dorries, the real concerns about zero-hours contracts and the impacts that they have on family life, on income and on people’s ability to plan their daily lives. This is simply an issue of fairness. It cannot be right to demand that someone travels to their place of work and then tell them that they do not have any work. I will be very interested to see whether the Minister will put together a body of work that looks at the mutuality of obligation and whether this is a case in which someone is not an employee, a worker or self-employed and therefore is deemed to be unemployed.