Zero-hours contracts

Robert Flello Excerpts

Tuesday 9th July 2013 Westminster Hall

[Julie Elliott]

That is absolutely correct. In fact, a number of Departments have responded to parliamentary questions by saying, “We don’t know.”

Many people will not realise that they are on zero-hours contracts. If, as it seems, zero-hours contracts are part of the new labour market, and not simply a reaction to the recession, we need to show our willingness to combat their worst excesses. Zero-hours contracts affect only approximately 1% of the work force, but that is 1% of a very large number and cannot be ignored.

Although they are on the increase in the public sector, zero-hours contracts are still more prevalent in the private sector, which is responsible for 85% of all such contracts in the UK. It is clear why zero-hours contracts appeal to employers, as they reduce risk by conferring greater flexibility to enable them to weather fluctuating demand. We want to do what we can to make it easier and more attractive for employers to hire new people, but all too often zero-hours contracts are the answer. Staff who have worked for their employer for less than a year make up more than a third of all zero-hours contracts. Young workers, newer workers and women are shouldering the burden while employers enjoy the benefits.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I congratulate my hon. Friend on securing this debate. Is not one of the fundamental issues that zero-hours contracts are about transferring the burden and the difficulty of dealing with a contract from the employer to the most vulnerable and the lowest paid? How can it be in any way fair to transfer that burden from the employer to someone right at the bottom of the pile?

[Julie Elliott]

It simply is not fair, and it simply is not acceptable in most cases.

Having a high number of employees on zero-hours contracts is also potentially damaging to employers as it can lead to inadequate staffing levels, the loss of training and skills development and an inability to attract and hold on to the highest quality staff. Too many people are living a life on call, and I hope this debate will move the conversation forward from discussing the existence of such contracts to evaluating solutions to the problem.

Zero-hours contracts can have a devastating impact on people’s lives. Workers employed on such contracts have little certainty of their expected weekly earnings and therefore cannot plan their family finances. People with employee status have several legal rights that workers do not, such as the right not to be unfairly dismissed, maternity rights and redundancy rights. The inherent variability of earnings throws into doubt an individual’s eligibility to claim various forms of benefits. The disruption to family life that results from frequent short-notice requirements to work makes so many things, from child care to the weekly shop, nearly impossible to plan.

--- Later in debate ---

[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.

[Robert Flello]

I am enjoying my hon. Friend’s speech, because it is a good speech, but the things that she is saying are absolutely horrifying. Local authorities up and down the country are in a dire financial situation, but does she agree that they simply should not be touching such companies even with the longest of bargepoles?

[Lisa Nandy]

I completely agree, and I was about to say that I have been astonished by the slow response of my own local authority. I have tried and tried to get it to take the issue seriously, but the response has simply not been good enough. We should not be spending public money on enabling such employment practices to continue, whether nationally or locally. We all have a responsibility to stop them.

The women also told me about the serious problems that they are having budgeting. They work for the minimum wage, so they do not earn a lot to start with; we all know that the minimum wage is not enough to meet essential needs, so they are already earning poverty pay. On top of that, they do not know what they will be bringing in from one week to the next. As my hon. Friend the Member for Sunderland Central said, that is pushing people into the hands of legal loan sharks. Payday lenders have sprung up throughout Wigan—walking down the high street now, more payday lenders can be seen than practically any other sort of shop. We are collectively colluding in pushing people into the hands of those appalling lenders who cause such misery in people’s lives.

As well as zero-hours contracts, I have come across women with small-hours contracts. They are supposed to be guaranteed a certain amount of work but are not given that work, even though that is specified in their contracts. I have seen several examples of contracts not being upheld at all.

The point I want to impress on the Minister is that when employers treat people on zero-hours contracts in that way and where their use is widespread, it is likely that they are poor employers across the board. One firm in my constituency, Cherish, provides care to elderly people in their own homes. It breaches the minimum wage requirements because its employees are not paid for travel time, which is often hugely variable in my large constituency. Most of those women do not have transport because they cannot afford it as they are not paid enough, so they must travel long distances on several bus routes, which takes a long time, but they are not paid a penny for that. Lunch is not factored in and their payslips are confusing and incomplete. A whole host of problems have been brought to me about Cherish, and when I wrote to the firm I received what can only be described as a sarcastic letter thanking me for my interest in the company. I was astonished at the lack of response from the CQC and the local authority.

I echo what my hon. Friend the Member for Sunderland Central said. It cannot be beyond our wit to devise a statutory framework to crack down on those unscrupulous employers, but that must go with a culture of valuing our workers. I have been dismayed by the coalition Government’s attack on the trade union movement in the last few days, which can only hinder the situation of those women and not help it.

--- Later in debate ---

[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?

--- Later in debate ---

[Robert Flello]

I want to pick my hon. Friend up on a fact. He mentioned the difference in the number of hours, but I suggest there is not a difference. It is just that the people who are not on zero hours are getting those hours paid.

[Alex Cunningham]

Indeed. That is very much the case. It just worries me that although the average working week for people on those contracts may be 21 hours, for many people they mean zero.

Power imbalances operate in many workplaces, and workers who need a minimum number of hours a week to remain financially secure often find the uncertainty of working fluctuating numbers of hours tremendously tough. Similarly, some find their contractual situation becomes a device through which loyalty is used to determine future work load. In essence, the allocation of a favourable number of hours becomes reliant on such factors as previous flexibility and a willingness to accept all hours offered, as well as fickle aspects such as cordial relationships with line managers. Regardless of how good a worker someone is, if their face does not fit, their zero-based contract may mean just that—zero. The repercussions that are used to sanction employees who are deemed to have stepped out of line should be better regulated to ensure fairness in the workplace. It is time that safeguards against exploitation were re-examined and bolstered to achieve a balance of power.

Before the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999, zero-hours contracts were often exploited to clock off workers during quiet periods, while retaining them on site to allow for a rapid return to work. That down time was largely unpaid, and was grossly unfair to employees. Under the previous Labour Government, action was taken to protect the interests of workers and stop that abuse. We cannot and must not go backwards on these issues. We need a Government who will take more action now. If we must have such things as zero-hours contracts, we need to ensure that they are properly regulated to maintain an individual’s freedom to contract on favourable terms, with some form of guarantee that they have a job worthy of the name.