Employment: Zero-hour Contracts

Viscount Younger of Leckie Excerpts

Wednesday 23rd October 2013 Lords Chamber

[Baroness Donaghy (Lab)]

On behalf of my noble friend Lady Royall, I beg leave to ask the Question standing in her name on the Order Paper.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

Zero-hours contracts are not new, but since 2005 there has been an increase in their use. More recently, government has been made aware of anecdotal evidence that has highlighted instances of abuse. As a result, the Business Secretary of State announced that his officials would undertake a fact-finding exercise to explore how these contracts work and what the issues are. This was undertaken over the summer. On 16 September, the Business Secretary said that he would publish a consultation seeking views on zero-hours contracts and on how to address the concerns raised in the summer fact-finding exercise. The consultation will be published in mid-November.

[Baroness Donaghy]

I thank the Minister for his reply. He has confirmed the very belated inquiry into this subject. Will he confirm that it will cover cases where employees work regular hours but have zero-hours contracts, their pay levels and a code of conduct? How wide will the scope of the inquiry be?

[Viscount Younger of Leckie]

Certainly, the noble Baroness has hit on a number of the issues that will be covered. They will include exclusivity; a lack of transparency within the contracts; a lack of information, advice and guidance; and a lack of certainty of earnings. However, any response that comes through as a result of the consultation needs to be proportionate and well considered.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, while I am sure that there have been some abuses of zero-hours contracts, perhaps I may ask my noble friend to keep the matter in perspective. The register of interests of your Lordships’ House reveals that I am the director of a brewery and a pub company. Our pub company staff find most welcome indeed the economic flexibility and freedom that zero-hours contracts give them.

[Viscount Younger of Leckie]

My noble friend makes a valuable point. Opportunities for zero-hours contracts allow, for example, students to enter the labour market. I have heard about instances of workers who used to work on the Tornado project using their legacy engineering skills in just such a way. They were particularly happy to do that. Also, zero-hours contracts particularly help the partially retired, who can work in a scaled-back manner.

[Lord Howarth of Newport (Lab)]

Does the Minister think that zero-hours contracts are reconcilable with the responsibility that employers have in all circumstances to respect the dignity of the people they employ?

[Viscount Younger of Leckie]

Certainly, the bottom line for zero-hour contracts—this is one thing that the consultation will look at—is how employers and employees enter into them. Although there is nothing wrong per se with the contracts, you get opaqueness where there are differences of opinion or a lack of transparency in the contracts between the employer and the employee.

[Lord Razzall (LD)]

My Lords, perhaps I may follow up on the supplementary question of the noble Lord, Lord Hodgson of Astley Abbotts. I am sure that the Government recognise that zero-hours contracts are absolutely essential in the pub and restaurant business, and often suit young people who want to work only certain hours. Does the Minister accept that this makes it even more important that the Government get the balance right between the use of these contracts and the abuse of the system?

[Viscount Younger of Leckie]

I certainly accept that. The consultation is designed to be wide-ranging. We do not have a closure date for it because it is important that we go into all the issues surrounding zero-hours contracts, including who is involved in them and the numbers of people. There is definitely opaqueness there; my noble friend makes a good point.

[Baroness Morgan of Ely (Lab)]

My Lords, Wales has a higher proportion of people working on low pay than the rest of the UK, including many who are in insecure jobs. About 50,000 of them are on zero-hour contracts. Will the Minister explain how, if these people do not know from one day to the next whether they have work, they are benefiting from the great recovery that we are supposedly seeing at the moment?

[Viscount Younger of Leckie]

First, I should alert the noble Baroness to the fact that there is a recovery going on. Indeed, the employment rate was 71.7% and the unemployment rate was 7.7%, so progress is definitely being made, but there is more work to do. In terms of the contracts in Wales to which the noble Baroness referred, again, this is one of the issues we will be looking at as part of the consultation. It is not a good thing if contracts are entered into with both parties being unhappy with the contract.

[Lord Christopher (Lab)]

My Lords, there is an issue that goes beyond that of zero hours. It was revealed today that the Revenue is investigating around 120 care homes and care-worker firms where the contract is not really one of zero hours—although that is technically what they are calling it—but zero minutes. They are not paying the full basic wage or for travelling time. The implication there goes beyond the issue of zero hours, which I think is disgraceful; there are also the possible consequences in care firms if they go out of business.

[Viscount Younger of Leckie]

The noble Lord raises an important point; we are aware that low pay is an issue for workers in the care sector. HMRC, which enforces the minimum wage on behalf of the Department for Business, Innovation and Skills, has been actively conducting enforcement activity in this area. Some investigations are very much ongoing and HMRC has identified relatively high levels of non-compliance, particularly with the national minimum wage. A full project evaluation is being carried out by HMRC and will be completed later this year.

[Lord Stoddart of Swindon (Ind Lab)]

Does the House of Lords employ any people on zero-hour contracts? If so, how many are they and in what grades?

[Viscount Younger of Leckie]

The noble Lord raises some very specific questions. I can confirm that zero-hours contracts are a legitimate form of employment and they were introduced in both Hansard and the catering departments to replace existing casual contracts, so there is an improvement there. The zero-hours contracts, when compared to the previous contracts, give staff the same employment rights as those enjoyed by full-time staff.

[Lord Roberts of Llandudno (LD)]

My Lords, when the Minister brings his report to the House, will he include those working in Parliament itself, especially catering department workers on zero-hour contracts?

[Viscount Younger of Leckie]

I believe that I have already given that reassurance and some examples to the House.

[Lord Hunt of Kings Heath (Lab)]

My Lords, perhaps we can come back to the issue raised about care workers. It is widely reported that thousands of care workers are employed under zero-based contracts—often, as my noble friend Lord Christopher said, delivering care visits of no more than 15 minutes while not being paid for transport or time costs between visits to different care settings. Much of that arises from the commissioning policies of local authorities. Is the Minister as surprised as I was that two days ago, the Government tabled an amendment to the Care Bill which stopped the Care Quality Commission from investigating the commissioning duties of local authorities in relation to care homes?

[Viscount Younger of Leckie]

There is opaqueness between the zero-hours contracts and the payment of travel time relating to care workers. The noble Lord brings up an important point. I have already said how much importance we attach to the care sector. As the noble Lord will know, the payment for time spent on travelling is complex. I do not wish to go into the Care Bill at this stage.