Zero-hours contracts

Nia Griffith Excerpts

Tuesday 9th July 2013 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Ms Dorries. I am grateful to have secured this debate on an issue on which I and many other hon. Members have been working for some time.

Zero-hours contracts are contracts whereby a worker is guaranteed no minimum hours and no minimum pay. In this country, we essentially have a large pool of workers, and employers have no legal obligation to pay them when they are not needed.

Zero-hours contracts have a widespread and deeply damaging effect on workers, and I call them “workers” advisedly. People employed on zero-hours contracts are treated differently to employees, and as such they are second-class staff. People employed on zero-hours contracts earn 40% less than those in fixed-hours employment. A study by the Resolution Foundation shows that, before tax, people on zero-hours contracts earn an average wage of just £9 an hour, juxtaposed with £15 an hour for people with set contract hours. Among graduates, the difference is £10 an hour versus £20 an hour. Firms that use zero-hours contracts have a higher ratio of low-paid staff than firms that do not use such contracts. Zero-hours contracts have traditionally been employed in the hospitality and leisure sectors, but they are increasingly being used in the health, social care and further education sectors.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that being undervalued not only has a cost to the individual? Not having pension contributions, for example, could lead to a much higher burden on the state in the long term than if those people were properly remunerated and were joining proper pension schemes.

[Julie Elliott]

I totally agree with my hon. Friend. In fact, there are other areas in which having such contracts costs the state money, and I will address that later.

According to the Government’s own estimates, nearly a quarter of major British employers use zero-hours contracts. The 2011 workplace employment relations study found that the number of firms with workers on zero-hours contracts increased from 11% in 2004 to 23% in 2011. The recession and the lack of recovery are hitting Britain’s lowest paid workers hardest.

Zero-hours contracts are not new, and they were not borne out of the financial crisis or the recession. The figure of 200,000 people employed on zero-hours contracts in 2012 is almost certainly an underestimate, as many people will not realise that they are on such contracts.

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[Lisa Nandy (Wigan) (Lab)]

I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. We can see how important it is, because there are literally no seats left on the Opposition Back Benches, although I am sorry to see that concern does not seem to be the same among Government Members.

I am grateful, nevertheless, to the Minister for taking the time to be in the Chamber, because I want to talk a little about the astonishing rise of zero-hours contracts in my constituency, reflecting the national picture mentioned by my hon. Friend the Member for Sunderland Central. The number of such contracts has more than doubled since 2005, and the level of human misery that they are causing has become more and more apparent to me over the past three years. I want to give the Minister the human flavour of what that means. I have real concern about what zero-hours contracts are doing to young people, who are desperate to get into the labour market at the moment, but are seeing their opportunities closed off at every turn.

A young man in my constituency works on a zero-hours contract as a security officer. This young man, as well as being incredibly ambitious for himself and his life, has a difficult background; he came out of the care system, and he needs a level of stability that his job and his employer simply do not provide, which is a concern. Zero-hours contracts are a problem for many of the people on them, but for this young man, working in a difficult job and not knowing when or how he will be called or what his income will be from one week to the next, the contract is a particular problem.

When I was preparing for the debate, I looked quickly on the internet at a few of the jobs advertised in Wigan. Similar jobs were advertised: a security officer at Robin retail park, at £6.50 per hour. The advert stated that the job was on a zero-hours contract and that the employee must work as and when required. At least the advert specified that the job was on a zero-hours contract. Many people in my constituency over the past few years simply did not know that they were signing up to a zero-hours or small-hours contract; they were astonished to learn that not only had they got themselves into such a situation, but they could not get out. As my hon. Friend the Member for Sunderland Central said, they were suddenly not eligible for any of the other forms of support available. People feel trapped, and they are desperately in need of a Government who will do something to help them.

[Nia Griffith]

Has my hon. Friend been approached by constituents who have been forcibly moved from one type of contract to another type? They find that, on the new contracts, all their rights seem to have evaporated. Basically, they have been forced to sign up, perhaps because of some small issue such as wanting flexible hours or some slight change, or because the whole work force is being shifted, and that move is really damaging.

[Lisa Nandy]

My hon. Friend is absolutely right. I was about to talk about the situation of some care home workers in my constituency, and that is certainly one of the things that happened to them. Furthermore—the point that I want to impress on the Minister—employers who abuse zero-hours contracts are likely to be poor employers; their employment practices on a whole host of issues affect the entire work force. I welcome my hon. Friend’s intervention.

Unison recently produced research which showed that around 40% of people working in care homes or providing social care are on zero-hours contracts. We should all be deeply concerned about the rise of the practice, even if uninterested in the employment rights of the people affected or their families, because the truth is that it must be having an impact on the level of care that we afford to the old, the sick and the vulnerable in our society.

A group of care home workers, all women, recently came to see me. They had been under contract with the council, and they moved from one firm to another as the council changed the contract. They came to see me about a whole range of problems, including zero-hours contracts for some and small-hours contracts for others. They were given extremely short notice of the hours that they were supposed to work, so—as my hon. Friend the Member for Sunderland Central said—they had no opportunity to plan, which was a real problem for those with child care responsibilities, or with other caring responsibilities for elderly relatives or friends.

One woman told me an absolutely astonishing story about a co-worker, who had been told that if she did not take a series of jobs put on to the rota at short notice, she would not be offered hours next time. She had two children, so she had to take them with her on a series of shifts lasting for more than eight hours. The young children had to sit locked in the car for most of that time. The firm did not even factor in a lunch break for the worker, which apparently is standard practice. On top of that, she had the children with her, although they were unable to go outside and play; they did not eat and were locked into the car for several hours, which she was absolutely distraught about, but she was left between a rock and a hard place—she has to feed her children somehow, and that was the job she had been offered.

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[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.

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[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.