Dickensian: Zero-hours contracts

Zero hour contracts

Zero-hours contracts

I’ve just had two astonishing conversations with two young people. This wasn’t related to wild nights out or any inappropriate behaviour, but their employment conditions.

Both are working on zero-hours contracts.

For the uninitiated zero-hours contracts are apparently a particularly British phenomenon. A  bit like Christmas pudding and red double-decker buses, just infinitely less wholesome

They are understood to be an employment contract between an employer and a worker, during which the employer is not obliged to provide the worker with any minimum working hours, and the worker in turn is not obliged to accept any of the hours offered.

Increasingly, many companies  across all sectors  are taking on staff on ‘zero-hours’ contracts.  These contracts effectively provide employers with a pool of  employees who are ‘on-call’ and can be used when the need arises.

At one end of the spectrum  the Chartered Institute of Personnel and Development suggest that they provide  great possibilities for  individuals to strike a work life balance or supplement fixed incomes on an ad hoc basis. Students and pensioners particularly value this arrangement .

On the other hand,  they are viewed as yet another component in the exploitation formula with rife mal-practise reported.

Risk reduction

Zero-hours contracts are becoming increasingly popular as a way of tapping into a pool of labour to meet operational requirements and reducing recruitment and employee costs. They are also a way of minimising risk connected with workforce planning or it would seem planning of any kind really.

Research indicates that those on zero-hours contracts earn less than those on staff or on fixed-hours contracts,  with no rights to sick pay  and holiday pay  often refused.  They are also more widespread than is generally thought and increasing used for  hiring young people in the 18-24 demographic.  They are fast becoming a way of circumventing corporate statutory obligations. Although officially associated mainly with unskilled labour, anecdotal evidence would suggest that this is not consistently the case.

Victorian

There is something very Dickensian about this system with workers lining up, albeit at the end of their mobile phone and a few being selected,  with the rest remaining un-contacted.  Peter is on a zero- hours contract with a London  based call centre company.  Earlier this month he paid for travel to his place of work only to be told that there had been a miscommunication between the account manager and the client and there was no work until further notice. The contacted group was sent home after thirty minutes without pay.

Peter an arts graduate told me ” The choice to refuse work  in reality doesn’t exist.  If you refuse you are labelled as inflexible. Very often the management is poor with minimal training given. There is no accountability. The manager screws up and the workforce has their shifts cancelled.  Communication is erratic and anyone who speaks up is regarded as a ” trouble-maker. ”

He continued  “It’s made clear when you are hired any employment rights are restricted and there is  no job security until anyone has been employed for two years. But usually any long-termers are terminated just before they reach  the two years service point. Very often employees are given spurious official warnings for the slightest contravention to create an HR paper trail to “justify” a termination. One colleague was five minutes late after his train broke down and was given a written warning even though he sent an explanatory text to say  why he had been held up”

It is generally agreed that zero-hours contracts are effectively becoming licences for poor management and a pathway for potential employment abuse.

Kara with a degree in Psychology,  has been working on zero-hours contracts in the hospitality and retail sector. She explained “with no job security it is impossible to plan or save. My daily worry is how I am going to pay my most basic bills. Many of my friends are forced to live with their parents even though they are in their mid 20s. I work two jobs to make sure I have enough money to eat and cover my rent.  I’m 26 with a degree and it seems crazy that I can’t get a job to keep myself above the poverty line. When I do go for interviews for “proper jobs” I am told I don’t have the right experience. It’s like being on a treadmill ” 

Although the U.K. government plans to outlaw any restrictions  on employees on zero-hours contracts working elsewhere,  they are still allowing the concept to remain.

So although much is written about leadership and employees being valued the reality is that those leadership priorities are often disregarded to increase shareholder value and benefit business balance sheets regardless of the longer term implications.

Short term solutions

These are very short term solutions which will come back to haunt us. Together with it’s bed fellow unpaid internships  with zero-hours contracts we are seeing a reverse trend to Victorian era style employment practises which has a multi-generation impact.  Nicknamed KIPPERs (“kids in parents’ pockets eroding retirement savings”) in the U.K., we have a huge demographic who are spending what should be a formative period acquiring key professional skills,  in employment and economic limbo. This in turn is impacting their parents who continue to be forced to support them.

What will we see next? The return of the truck shop? 

15 responses to “Dickensian: Zero-hours contracts

  1. Zero hours workers do have some rights despite popular belief (http://irenicon.wordpress.com/2013/08/05/is-your-zero-hours-contract-really-a-zero-thought-contract/) but this arrangement has profound implications for the economic recovery.

    People on zero hours contracts can not rent flats in London (landlords view them as having unstable work patterns and not predictably able to pay the rent), cannot get mortgages (for the same reason) and often can not get credit (except for the payday loan companies).

    These workers, like the day labourers on the old dock schemes are held in ‘stasis’ when not working. Some don’t know until when they get up in the morning whether they have work or not. I know of grandparents working on zero hours who cannot make firm arrangements to babysit (so their children can work) …it goes on and on…

    The government in the UK has an open consultation on zero hours – though they have stated there is no intention to band them. http://irenicon.wordpress.com/2013/12/20/zero-hours-employment-contracts-consultations-gov-uk/ Please do respond and make your comments and opinions heard.

  2. Zero hours workers do have some rights despite popular belief (http://irenicon.wordpress.com/2013/08/05/is-your-zero-hours-contract-really-a-zero-thought-contract/) but this arrangement has profound implications for the economic recovery.

    People on zero hours contracts can not rent flats in London (landlords view them as having unstable work patterns and not predictably able to pay the rent), cannot get mortgages (for the same reason) and often can not get credit (except for the payday loan companies).

    These workers, like the day labourers on the old dock schemes are held in ‘stasis’ when not working. Some don’t know until when they get up in the morning whether they have work or not. I know of grandparents working on zero hours who cannot make firm arrangements to babysit (so their children can work) …it goes on and on…

    The government in the UK has an open consultation on zero hours – though they have stated there is no intention to ban them. http://irenicon.wordpress.com/2013/12/20/zero-hours-employment-contracts-consultations-gov-uk/ Please do respond and make your comments and opinions heard.

    • Hi Annabel – I agree there can be a place for this employment formula if used with integrity. But as you rightly point out the downsides of the system when abused are significant for businesses, individuals and whole economies. Without regular paid employment young people are forced into dependence on their parents. For those whose parents are not willing or unable to do this then the position of the individual is difficult. As Kara mentioned just being able to afford to eat becomes a major issue. We are not talking about a feckless under-class but graduates! It seems astonishing in the 21st century.

  3. Pingback: Dickensian: Zero-hours contracts | Employment law in a mad world

  4. This is not a problem confined the UK unfortunately. In Canada we have the same issue (and I believe the US, also). I am one of those KIPPER parents, with a son still living at home who has completed 2 unpaid internships and over 2 years of contract employment. The term ‘zero hours’ is not common here, but it exists. Upon repatriating, I worked for a year as a destination services consultant on exactly those terms. Trying to find additional paid work, when you’re expected to be available at a moment’s notice, is almost impossible, and I was told directly that the more I refused assignments, the fewer I would receive. I now have steady employment in the real estate industry, but still on contract, so no paid vacations, sick pay or the ability to contribute to our state unemployment insurance scheme. These employment conditions are not limited to Generation Y, they are common to all age groups. Fortunately they are generating a groundswell of opposition across the board and I hope the politicians will deal with them soon (if they want my vote).

  5. Whilst Zero Hour Contracts may not be ideal, I don’t believe that they are in of themselves bad. The problems occur when they are misused or abused.

    In many ways they serve as an organisation’s internal recruitment agency that can be used as staffing pool to fill in short term or seasonal gaps. If they are used properly both parties can benefit. The employer has people that they know and that know there systems/processes that they can call on. At the same time, the contractor gains crucial experience, is paid for work done and it may lead on to opportunities with the organisation that they working for or elsewhere.

    I am, however, against them being used without proper thought or forward planning or where there is outright abuse.

    • Hi Susan – thanks for your comment. Although under certain circumstances zero contracts can work there is a huge amount of anecdotal evidence to suggest that mal-practise is common.

      At one time contractors who did not have the security of full time employment were paid a premium. Now what we are seeing is the reverse when unscrupulous employers are tapping into the insecurities of the unemployed and offering rates lower than the norm.

      Efficient and skilled HR practicioners have always had pools of people they could call on in an emergency. But like unpaid interns zero hours contracts do not seem to lead to full time employment but from what I have been told the opposite. They are let go before companies are obliged to offer benefits associated with full time employment.

      There was a comment about Nestlé from Wendy and this company posted $11.5 BILLION profit in 2012.

      I don’t think that offering paid short term contracts to cover seasonal work is beyond their reach.

  6. At Nestlé in the uk, they employ hundreds of workers on these hours. What you get is the most uncaring, callous management possible. When we get to work we can be told there is no work despite being told to come in at the end of the previous shift. If cancelled they are supposed to text you, but they often do not. All they say is things such as, not my problem or its just the way it is. All the time they are taking onto their books more and more people, I hear that the government pays them to do this if they give them a few weeks work .This work is spread out over the year and it’s 38 days work.
    This means that no matter how good you are, no matter how punctual,no matter how hard you work, you will always be guaranteed to have your work given to another worker, they deliberately have too many people on their books in order to get more government money, it’s greed and an exploitive scam. The regular workers get great bonuses and other benefits, and they have even changed our job titles so that we are not protected by the agency workers rights that are supposed to give you equality with regular workers pay and benefits after 13 weeks.
    Is this the kind of society that we want to live in?

    • Thanks Wendy – thanks for your comment. Speaking to both Kara and Peter I was told this is indeed very common. Despite there being some advantages for a narrow demographic the system is being widely abused.

      Peter shared a story a story saying that following confusing communication about the schedule he made a mistake about the dates he was supposed to be working and missed a shift. He received a disciplinary letter.

  7. Dorothy great post. I work on a zero hours contract and there can be benefits. However as a single parent if the company I work for sends me home because they have not correctly estimated the workload I still have my travel and baby sitting costs. It makes it difficult to plan ahead and make childcare arrangements.

    When I asked for longer notice to organise my mother or babysitter I was told that it was take it or leave it. There were plenty more people to call. It’s not an atmosphere that is motivating and doesn’t help relationship building. The greatest motivator is fear of not being called again.

    For the young single people it’s hard for them to find accommodation because no landlord will issue a lease without guaranteed employment. They are basically trapped.

    • Thanks Emma – when I was talking to Peter and Kara they mentioned this problem and the difficulty to make any long term commitments or plans. For those working in 2 jobs with zero hours contracts sometimes there are conflicting demands with employers demanding exclusive rights. It seems as if this is being outlawed now.

  8. I could be Peter and/or Kara and so could many of my friends.
    We go from unpaid internships to zero hours contracts and try to go to interviews to get a foot on the career ladder only to be told we are not stable enough or lack focused experience. Companies don’t want a pool of skilled people they have trained and know and can call upon.

    They want a conveyer belt of cheap disposable labour to dump a will. It is soul destroying and beating down a whole generation. Only those with rich parents or the super able are immune. For the average person, who went into debt to go to university to get a degree that no one wants, the future is at best confusing and at worst bleak.

  9. Hi Dorothty, This zero-hours contract also exists in the Netherlands. And it does have some rights attached as well. The entire labour market is becoming very flexible in the Netherlands, with a record number of people working as zzp (independent workers without staff). Thanks for your interesting articles!
    Hanneke Dijkman, New Options

    • Thanks Hanneke – I think you are probably right there is a swing to what Business Week called “Perma-temps” – let’s hope that employee rights are not completely eroded.

  10. One has to ask why are these contracts so appealing to the companies that use them. A shot in the dark gets one to, because they offer a short term financial gain for them. Not paying for workers that have less to do in the down times. Seemingly a win win for the company.

    But wait there more!

    Are the companies actually shooting themselves in the foot here! Why would people stay in a position when there is little to no security. Most jobs offer some security that your pay will cover your bills. And in return you put in an honest days work to make sure that the protection of a job stays. You might even be proud of the company you work for.. But no, with this system it seems that the company is not offering any security, and surely opens the door to people that end up with little passion, even some that possibly feel there is no reason to put an honest days work in, or are always looking for a job with some security.

    It seems this is short-sightedness and while it may work for middle paying positions where people might have some room with their personal balance sheets. For entry level positions and/or, lower paying positions this just sounds backwards. It’s developing a mental model of loyalty to one. Look after yourself and screw the rest. The company doesn’t care, so why should the worker!

    Companies may get away with this for a while and bolster their P & L’s, but in the long term I think they are looking at disaster. People matter, because whatever it is you do, you have to have consumers, and consumers are people. Your employees are your company, without them you have no company. A swimming pool takes a long time to empty with a small leak, but empty it will. You can constantly put water back in, but you will pay a big price over a period of time, and for the most part leaks continue to grow.

    The other option is you could fix the leak, if only you knew where it was. Who knows where the leaks are, O’yes your employees that now don’t care any more about you as you do about them.

    You have to go back to the beginning and ask why companies are using a system where they have no idea of long term affects. They have leaks, and they have leadership that has lost their way. Change your leadership not your employees.

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