Monthly Archives: July 2013

The growing problem of zero hours contracts in the UK

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Chris Forde
Chris Forde is Professor of Employment Studies at CERIC.

@CERIC_LUBS

In May, Vince Cable announced a review of zero hours contracts, amidst concerns that such contracts may be ‘abusing workers at the margins of the labour market’. Under zero hours contracts, workers agree to be available as and when required, but they have no guaranteed hours or times of work.  In healthcare, hospitality, and education, such ‘on-call’ workers are increasingly commonplace, cleaning hotel rooms, waiting in restaurants, or providing care to people at home. A number of reports have highlighted the precarious nature of many zero hours contracts, characterised by low pay, few employment rights, and little opportunity for progression.

Getting a handle on the numbers engaged in zero hours contracts has proved difficult. A Resolution Foundation report, using Labour Force Survey data, puts the number of workers on zero hours contracts at 200,000, although the authors recognise that this is likely to be an underestimate.  This would certainly seem to be backed up by figures cited last week by Norman Lamb, the Care and Support Minister who stated in Parliament that in social care alone, 300,000 workers – one fifth of the workforce – were employed on zero hours contracts. Why have they have become so commonplace in some sectors, and what are the experiences of those workers at the sharp end of these contracts?

In our recent research at the Centre for Employment Relations Innovation and Change (CERIC) at the University of Leeds, Ioulia Bessa, Sian Moore, Mark Stuart and I have been able to look at the realities of zero hours contracting in the domiciliary care sector. Our study for the Low Pay Commission examined contracts, hours of work and pay for workers who provide care for clients in their own homes. We have looked at pay levels in this sector in a previous blog, but what about the prevalence of zero hours?  One of the most striking findings from our analysis of a national dataset on work and employment in social care was that zero hours contracts have become the norm for domiciliary care workers over the last few years. Between 2009 and 2012, 56% of domiciliary care workers were employed on zero hours contracts. As figure 1 below shows, in the private sector, it is rare to see a care worker on a standard employment contract: in 2012, a staggering 4 in 5 domiciliary care workers was on a zero-hours contract. Our analysis suggests that there were approximately 100,000 domiciliary care workers in total on zero hours contracts in 2012.¹

Figure 1: Proportions of Domiciliary Care Workers on zero-hours contracts, 2009-2012, National Minimum Data Set for Social Care.

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Source: Bessa, Forde, Moore and Stuart (2013) Report for Low Pay Commission

Our case studies showed that it was changes in the commissioning process and well-documented falls in ‘block contracts’ (where providers are given guaranteed numbers of hours of care under local authority contracts) that had driven the rise in zero hours contracting. As a manager from one large national home care provider put it:

‘It would be difficult to not sustain a zero hours contract because  you don’t have any guaranteed or block hour contracts from the local authority, because they’re all commissioned and framework (agreements), there’s no guarantee of business, it’s difficult to guarantee a workforce business or work’ .

Advocates of zero hours contracts point to the flexibility of such arrangements, and the benefits to both employer and worker of adaptable work schedules. To be sure, we found some evidence of workers who valued flexibility over how many hours they worked (in particular those with second jobs, students or those with other commitments). However, the problem is that zero hours contracts remove any element of continuity for workers in the hours they worked from one week to the next. One respondent who had worked as a care worker described how his ‘heart sank every Sunday night’ when he received a work schedule for the coming week from his employer, typically setting out less hours for the worker than they were expecting. Whilst these hours were often topped up by the employer with additional hours during the week, it made planning very difficult. Our case studies also highlighted how working variable hours each week also had implications for the receipt of Statutory Sick Pay, and benefits such as Working Family tax Credits.

Some have called for these contracts to be outlawed, whilst others suggest tighter regulation, and better enforcement of those rights that zero hours contract workers do have. As one commentator has noted, those on zero hour contracts do have a modest advantage over those on casual contracts, in that an employer does have an obligation to provide work to employees on fixed-term contracts over casual workers, if work is available.  The problem is that under zero hours contracts, the risks associated with work not being available are predominantly borne by the worker, .

If we are arguing that commissioning practices in social care are one of the causes of the rise in zero hours in the sector, are there better solutions? Our case studies highlighted how the practice of contracting for hours of care from suppliers (with no specified pay rates or employment conditions that suppliers must adhere to) was a barrier to improving contract arrangements of the care workforce. ‘Fair fee models’, where authorities could give a specified rate for hourly pay and for overheads (with the capacity for increases), or ‘open book’ approaches, where the local authority would pay what a service costs and then allow a certain percentage profit might lead to a reduction in the reliance by employers on zero hours arrangements to maintain margins. However, the dominance of the current commissioning model in social care would seem to suggest that such radical changes are unlikely to happen any time soon.

¹ Our analysis of zero hours in the NMDS-SC dataset in 2012 was primarily concerned with wages and hours worked, and we focused on the 42,908 zero hours contract workers who provided information on their contracted hours and additional hours. We excluded from the analysis of those workers who indicated that their contracted hours were zero, but who provided no information on actual hours worked in a given week. These involved the exclusion of 60% of cases from the dataset. Including these workers in the count of zero hours contracts would give the higher count of 100,000 reported above.

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