Written evidence submitted by Unite the Union

This submission is submitted by Unite the Union. Unite is the UK’s largest trade union with 1.4 million members across the private and public sectors. The union’s members work in a range of industries including all the manufacturing and transport sectors, financial services, print, media, construction, local government, education, health and not for profit sectors.

Executive Summary

• Zero hours are the latest mutation of a broader trend of precarious working and underemployment in the UK.
• Unite and independent research specialists Mass1 have carried out the largest investigation into zero hours contracts yet undertaken.
• Unite’s evidence shows that zero hours contracts are an accelerating trend across Scotland and can be found in all areas of the country and sectors of the economy.
• Zero hours contracts are used to trap workers in low paid and insecure work, creating social exclusion, poverty and misery for a growing class of people.
• Unite believes that such contracts are unacceptable; severely damaging peoples’ lives, while undermining future growth, productivity and leading to losses to the exchequer.
• The Scottish Affairs Select Committee should make comprehensive recommendations to support a ban on zero hours contracts.
• This should form part of a wider call for comprehensive and effective regulation of the UK labour market to protect all workers from exploitation and guaranteeing a decent standard of living for all.

1. Unite case in detail

Introduction

Unite welcomes the opportunity to submit written evidence to the Scottish Affairs Select Committee on zero hours contracts. The committee has taken a bold leadership role in investigating this issue that forms part of the growing problem of precarious work and underemployment blighting the UK economy.

Unite has been contacted by numerous workers who are employed under these precarious contracts and although these have been anonymised for the purpose of this report Unite can facilitate the committee speaking to some of them where appropriate.

Precarious working has become a sad factor of UK life, with the growth of various forms of contracts that exempt workers from fair and secure employment, e.g. agency, short hour and zero hours contracts as well as gangmaster labour, bogus self-employment and other tax avoidance mechanisms.

Unite has led the way in highlighting this trend. Working with independent research specialists Mass1 to produce the largest investigation of zero hours contracts yet undertaken. This research estimated that up to 5.5 million people in the UK could have no fixed income or fixed hours by which to plan their lives.

The survey shows that increasingly these workers are being locked out of life: no access to regularly work or income, struggling to pay rent and afford basics such as food, heating and clothing, disruption to family life and relationships, lacking the ability to provide stability for children and access child care, access to credit is denied with insecure workers barred from renting mobile phones, from rental contracts let along obtaining mortgages. Workers are even excluded from social security support during periods of work fluctuation.

It is often stated that temporary and insecure work is a way back into employment. Unite evidence shows that this is not the case. Long term unemployment and youth unemployment in Scotland remain unacceptably high and growing. Unite’s research shows that many workers are on zero hours contracts for at least 13 months and more often over 36 months, for the same employer therefore not moving in and out of the labour market.

Instead of returning people to the labour market, zero hours and agency contracts are being applied to those already in work, with some examples of whole workforces being put on these contracts.

Unite also believes that there could be an impact on the exchequer as many zero hour employees may not reach the tax threshold or be accruing contribution based benefits through national insurance payments.

Employing workers below the national insurance contribution threshold also provides employers with a competitive advantage over those companies employing on a proper basis, subject to 13.8% employer’s contribution.

Background

Zero hours contracts are but the latest mutation in precarious working and underemployment. Throughout the last decade unions have worked to persuade government to act to quell the growth in agency workers and other vulnerable forms of working. In 2006 one of Unite’s predecessor unions was instrumental in campaigning for the introduction of the Gangmasters Licensing Authority to tackle exploitation of workers in the agricultural, horticultural and shellfish industries. Similarly the Commission on Vulnerable Employment (CoVE) 2008[1] showed in detail the issues faced by workers in low paying, dangerous and insecure work in the UK economy. Unite has also highlighted the rise of bogus self-employment as a way to cut employment rights and costs, as well as other abuses in the construction industry such as blacklisting.

Underemployment in Scotland has been steadily rising. This has been particularly true since the 2008 financial crisis but was significantly higher than many other OECD countries prior to 2008 as well. Unite members were involved in submitting evidence to the Scottish Parliament Economy, Energy and Tourism Committee investigation into underemployment in Scotland[2] and a clear conclusion is that there is a lasting structural problem with the Scottish (and UK) economy that needs addressing. The Committee highlighted zero hours contracts as one of the issues behind the high rate of underemployment, particularly for those workers working less hours than they wanted.

Hours-constrained underemployment in selected OECD countries[3]

OECD. (2013) OECD StatExtracts

Structural changes to the economy

These trends have accompanied two decades of state induced decline in collective bargaining coverage, trade union density[4] and deregulation of the labour market that began in the 1980s. Unite believes that these factors are not unrelated and the long term erosions of these vital protections for working people have left a large underclass with little protection from a life of insecure and low paid work.

Similarly workplace organisation has rapidly changed with an increase in outsourcing, the use of agency workers and contracting across most sectors. A particularly common practice in some of the worst affected sectors (e.g. hotels and high street fast food outlets) has been the rise of franchising. The number of franchised units in the UK have risen from 7,900 in 1984 to over 40,000 in 2011[5] accounting for 594,000 workers in 2011[6]. Franchises too often stay under the enforcement radar due to their size and association with trusted brands. They can, however, have some of the worst employment practices, as is clear with hoteliers and fast food chains.

Public services have also been a major driver of insecure working. As the rate of outsourcing, commissioning contracts and cuts have increased, so too has the use of zero hours contracts[7] and the race to the bottom in staff pay and terms. Unite has received evidence that workers as diverse as nurses, care workers, estates workers and even 999 call handlers have been place on zero-hour contracts in various parts of the UK.

The contracting culture feeds precarious working. It has an in-built predilection to cost-cutting and wage assaults. Unite therefore believes that government action is needed to prevent insecure working through the entire contact supply chain. This culture does not provide ‘value for money’ for the people of the UK if it puts increasing numbers into insecurity. There must be a full assessment of its economic and social impact of zero hours and other forms of insecure working.

While Unite is now following with interest the proposed Scottish Procurement Reform Bill and some of the discussion about using the £9 billion Scottish public spending budget to address zero hours contracts, there is still too little detail to assess its impact. Unite believes that procurement can be a clear tool for the Scottish Government to use to make insecure working unattractive to employers, and for all workers to have the power to defend their working standards.

Unite is proposing the following UK wide changes that can help tackle these problems:

• Restoration of national collective bargaining in all sectors, especially vulnerable sectors such as social care, construction, hospitality, retail, food sector, logistics.

• All workers to be defined as ‘employees’ with the attendant rights, unless the employer can prove otherwise. This is to ensure delivery of NMW, holidays, sick pay etc.

• The introduction of a system of guaranteed minimum hours in all contracts as a standard, with payments for on call time and clear limits on the percentage of time someone can be expected to be on call.

• Zero hours contracts to be opt-in, only to be permitted if the worker agrees to them, and has had independent trade union and/or legal advice on their status. There must be no pressurising to accept zero hours contracts at the point of employment without any independent advice on their legal rights, as has been witnessed with the Working Time Regulations opt-out.

• Enforcement of existing law to be treated seriously. The state enforcement structures in the UK are woefully under-resourced and in many cases ineffective. Prosecutions are rare and sanctions pitiful. This is not the deterrent needed to dissuade employers from exploitative contracts and conditions.

• Unions could fill the enforcement gap. Union reps ought to be allowed to inspect any workplace premises. Many new employment environments are anti-union, so unions cannot access workers to advise them of their rights. Accredited union reps must be able to inspect workplaces where they have good cause to suspect mistreatment and/or to speak to workers about their rights, to receive copies of employment contracts and statements of terms and to bring enforcement proceedings if necessary.

• Action in needed on the contracting culture. Government – as the main contractor in the nation – cannot wash its hands of employment practices further down the supply chain. It must only reward contracts to those employers who police their entire supply chain and eliminate insecure employment. There must also be systems of liability that make the ultimate contractor responsible for the employment practices across their supply chains.

• Immediate revocation of the changes to Employment Tribunals. Workers have been priced out of justice; for insecure workers the idea that they can be asked to pay significantly over £1000[8] to access an ET to prove mistreatment – possibly only to retrieve a few hundred pounds owed or a declaration of contractual terms – is absurd.

• A mass communication campaign to remind workers of their rights and of the steps they can take to enact these safely. This campaign should also target bad employers, warning them of prosecution and reminding them of their responsibility to build a solid economy for all. A short guide to employment rights should be provided to all workers by their employers.

2. Consultation Questions

1. How widespread are zero hours contracts in Scotland?

1.1      Official statistics on zero hours contracts across the economy are a controversial subject that is currently generating significant debate.

1.2      The Office for National Statistics (ONS) estimates that 250,000 people are on zero hours contracts in the UK, having risen from 134,000 in 2006 (0.5% of the workforce). They are unfortunately unable to produce any break down for these figures and therefore no official Scotland only figure are available.

1.3      The ONS has now conceded[9] that they need to improve this information as various reports have shown that the figure is an underestimation, particularly because many people do not know they are on zero hour contracts, e.g. for example most agency workers will be on zero hours contracts. Similarly recent revelations have brought to light over 200,000 workers on zero hours contracts across the private sector alone, including staff at McDonald's[10], Burger King[11], Domino’s[12] JD Wetherspoon[13], Sports Direct[14], Cineworld[15] and Boots[16]. While the Government has admitted that 307,000 workers in the care system are on zero hours contracts and 67,000 NHS staff now on zero hour contracts[17].

1.4      The CIPD[18] confirms this underestimation with their own statistics which point to around 1 million people on zero hour contracts. CIPD found that a fifth (19%) of employers used at least one zero hours contract. CIPD points out that a quarter (25%) of organisations with 250 or more employees used zero hours contracts compared to 11% of smaller organisations with fewer than 250 employees. Underlining the uncertainty in the statistics these figures are directly contradicted by ONS findings (analysed by the Resolution Foundation[19]) that found that zero hours contracts were more likely to be working in smaller workplaces (those with less than 50 employees) than in large workplaces (those with over 250 employees).

1.5      To understand this issue better Unite commissioned an independent survey by Mass1[20] of Unite’s membership base. Unite’s members are spread across the whole UK economy and form probably the largest survey of employees undertaken.

1.6      The Mass1 survey is based on a sample size of 5000 respondents, which was followed up with a phone bank of 900 hundred individuals. The largest sample survey so far undertaken.

1.7      The results were shocking as the survey showed that 22% of those responding were either on a zero/short hours contract or knew someone who was. This meant that potentially up to 5.5 million people in the UK (22% of the workforce) could be in this situation. Union members are statistically more likely to be on average better paid and in more secure work[21], and this is reflected by the high number of people responding about friends and family rather than themselves. Of those that did not work on a zero hours contract 68% of people knew someone who did.

1.8      In order to improve data accuracy for Scotland, Mass1 also carried out further phone banking just for members from Scotland contacting a sample of 300 people in total and found similar figures, with 18% of the workforce. If projected to the whole Scottish labour force this would amount to over 456,000 people[22].

1.9      It is clear that these statistics are only the beginning of the level of research that is needed to fully understand this issue. Unite hopes that by starting the debate the Scottish Affairs Select Committee can help improve our knowledge on this important issue.

Zero hours contracts by Scottish region

Mass1 2013

2. In which sectors or areas are zero hours contracts especially common?

2.1      Unite has been contacted by hundreds of workers – many of whom are not Unite members – to tell us of their experience as zero hours/agency workers. Common features of this working life include:

• Running out of money during the month
• Debt is routine: borrowing money from friends and/or pay day lenders
• taking on a second job
• high levels of anxiety
• no savings or any contingency money
• no access to credit
• penalties on workers trying to rent accommodation; they must pay rent six months in advance
• sanctions if the worker speaks out, such as loss of shifts
• zero hours contracts of at least 13 months, more often of over 36 months – for the same employer

2.2      Below are some example quotes that Unite had received from workers – these and others are included in Appendix A at the end of this submission:

“There is no job security, and we are all unhappy about it. It is clearly done to avoid being in the position of employing people as permanent staff, even permanent seasonal staff.”

“I never knew where I would be placed, how far I would have to travel and how many hours I would get”

“I cannot plan for the future or build a stable life for myself as I have no security one day to the next”

“No stability, no fixed income. Had to take shifts at short notice which reduced my flexibility.”

“It’s very hard as there is no regular guarantee of work, and you can find yourselves with some weeks of no work and no money.”

“We are being forced this month to move over to zero hour contracts or face dismissal.”

2.3      Unite’s evidence from Mass1 shows that zero hours contracts are found across every part of the country and across many major industrial sectors. Unite members reported cases in low paying sectors, such as the docks, retail, catering, hospitality and social care, as well as in traditionally better paid professional roles, such as aviation, health specialists, education and local government.

Zero hours contracts by sector of the Scottish economy

Mass1 2013

2.4      Common names were highlighted as as zero hours employers, and although Unite has not formerly verified these they include Sports Direct, Radisson, Aviva, KNDL, Domino’s pizza, Hoyer, Eurocar, NHS Borders (and NHS more widely), McDonalds, Staffline, Peretemps (agencies), Tesco, Travis Perkins, Royal Mail, Gist, Stagecoach, Boots, Carillion, Lakeland, Peel Ports, Queen’s University (and education generally) and the National Trust. Other company names that were sent to Unite as part of the survey can be found in Appendix B. Unite would strongly recommend that the Committee investigates these further.

2.5      The diversity of sectors using zero hours contracts are reinforced by other UK surveys as well. For example the CIPD UK research showed that employers in the voluntary sector (34%) and the public sector (24%) were more likely to use zero hours contracts than private sector employers (17%), while employers in hotels, catering and leisure (48%), education (35%) and healthcare (27%) were most likely to report employing on zero hours contracts[23].

Distribution of employees by zero-hours contract status by industry

2.6      Similarly the Resolution Foundation found that according to WERS, zero-hours contracts are now used by 8% of workplaces across a wide range of sectors including retail, hospitality, higher education and health. Using the Labour Force Survey (ONS data) they estimated that 20% of those employed under zero hours contracts worked in the health and social work sector, 19% in hospitality, 12% in administration, 11% in retail and 8% in arts, entertainment and leisure. These results are shown below with the pink bars denoting the distribution of those on zero hours contracts.

2.7      The Resolution Foundation also found that zero hours contracts were particularly prevalent in the private sector where 85% of those employed on such contracts are located, compared to 76% of those not on these contracts. They found that even within the same sector and among workplaces of similar sizes, the use of zero hours contracts varies. The Resolution Foundation therefore rightly concluded:

“that the use of these contracts is not an inevitable by-product of a changing economic environment but the result of particular business models and/or imperatives. Some organisations choose not to use them, while others make extensive use of them, despite facing similar operating environments.”

2.8   The UK Mass1 survey used Mosaic demographic profiles[24] based on individual’s postcodes to better understand which people are on these contracts. Mosaic is a widely used geodemographic segmentation system and while Unite would not endorse the view that citizens can be reduced to these deconstructed characteristics, the graph below is illustrative in dispelling myths about who is on zero hours contracts. Mass1 found that zero hours contracts were weighted most commonly to the lowest income demographics, rather than in more professional and better off communities.

3. What are the advantages and disadvantages of these contracts for (a) employers and (b) workers?

“In order to meet my outgoings I have started working for a Scottish branch of Dominos as a pizza delivery driver.

During the time I have been working at Dominos the number of hours I receive from week to week varies hugely, from around 6 to 15 hours a week. Having such unstable working hours means I never really know how much money I’ll make from one week to the next.

The worst part is, if I come in to work for an evening and the shop is quiet my boss can send me home after just one hours work. This means that I only get paid for that one hour, so I actually end up losing money in the evening – as it costs me more than an hour’s pay to get to work.

I do need some flexibility in my work as I am studying at the same time, but really want more to plan my finances.”

Pizza Delivery driver

3.1   Unite’s Mass1 survey evidence is overwhelmingly showing that in general zero-hours contracts are unfair, creating insecurity and exploitation for many ordinary people struggling to get by, particularly young people. Employers use them to cut wages, avoid holiday pay, pensions, or other benefits enjoyed by employees and agency staff.

3.2   Unite’s Mass1 survey illustrates this with half of those under thirty reporting to be on these contracts. Respondents to the UK survey reported earning an average of £500 per month, just over a third (36%) say they do not get holiday pay and 77% receive no sick pay. 73% of those in Scotland said they did not get holiday pay, while average monthly earnings were £750.

3.3   Unite evidence also puts to rights the regular asserted myth that this “flexibility”, is equally beneficial to both employers and employees - in most cases this is simply untrue. Particularly in low wage sectors, workers on such contracts have no control over the hours they work, the amount of money they earn each week or even the breaks they take. Reports show that care workers on zero hours contracts are not paid for travel time, or gaps between appointments, but have to clock in upon reaching their destinations.

3.4   87% of respondents to the UK Mass1 survey said that if they had a choice they would not like to remain on a zero hour contract. 70% of people expected to travel for their job are not paid for travel time. 33% of people are expected to be on call when they aren’t at work. 82% of people are not paid for time when on call. 92% of females are not paid for time when on call this compares with 78% of males.

“It threatens my quality of life and my ability to pay bills and rent. The managers who are allowed to dictate how many hours they personally get a week don't seem to realise the stress the front of house are put under due to the unpredictable nature of the hours we are given.”

Cinema worker

3.5   Many workers reported being sent home at short notice with no pay for the hours they had expected to get. Others reported not being able to take on other work, as they are obliged to be available for work when the employer wants. This insecurity also increases their risk of being bullied, harassed and stressed as it gives extended control and power to employers. For example 46% of people responding to the survey who had spoken out about their contract have experienced bully or harassment as a result.

3.6   Unite members report that particularly in low paying sectors, such as the docks, retail, catering, hospitality and social care, where such precarious work is increasingly becoming the norm; these arrangements serve to trap workers in poverty and exploitation.

“Living with the constant threat that your hours may be cut is not acceptable and can leave me wondering if come Christmas I will be able to pay my bills. This company has no interest in its employees and employing us on zero hour contracts sums them up.”

Government Contractor

3.7   These findings were similarly confirmed by both the Resolution Foundation[25] and the Work Foundation[26]. These organisations report that those employed on zero hours contracts receive lower gross-weekly pay and that workplaces that utilise zero hours contracts tended to have a higher proportion of staff on low pay.

3.8   Those employed on zero hours contracts work fewer hours on average than those who are not, but are also more likely to want more hours.

3.9   They also show that zero hours contracts are particularly impacting more vulnerable people in the labour market. For example zero hours contract holders are more likely to be young than other age groups. They are also less likely to have a degree and more likely to have a GCSE as their highest level of education. They are much more common in workplaces that employer more non-UK nationals which are also often in notorious low paying and poorly regulated sectors such as food processing, cleaning, hospitality, agriculture, care and construction.

3.10           This reinforces Unite’s serious concern about the social exclusion caused by these contracts. There is a large and growing class of people living in the UK with no access to basic life chances being excluded from a decent standards of living, with little access to regular employment, labour rights, decent food and housing, education or even family life as irregular working and shifts undermine the ability to for example access child care or contribution benefits. The impact of this on these people’s lives, their families and society in general cannot be over emphasised. There is also a serious loss to our economy through loss of consumer demand, productivity and wasted potential.

4. What is the practical effect of zero hours contracts on the workers who are contracted, and on other employees?

4.1   In practice zero hours contracts are having a terrible impact on workers wellbeing. Respondents to Unite’s Mass1 survey show that 76% of people on these contracts feel anxious about being on a zero hours contract. In the Scottish survey 69% of those on zero hours contracts said that being on them made them “feel anxious”.

4.2   72% said that if they had a choice they would not be on a zero hours contract, 58% of people have spoken out about their contract, 50% of people have asked their employer for a regular formal contract with set hours and as a result 46% of people who have spoken out about their contract have experienced bully or harassment.

4.3   44% of people working zero hours contract would like to work more hours. 30% of people responding have had to pick up other part time work because they are on zero hours contract. 51% of people responding would want to pick up part time work.

4.4   60% of people have difficulty making their pay last to the end of the month. This figure was 73% for people in Scotland. At the same time 81% of respondents from Scotland and 72% of those from the whole UK do not manage to save anything for the future at the end of the month.

4.5   26% of people on zero hours contracts also reported not being able to find child care that suits their irregular hours. This figure was 31% of people in 40s compared with 22% for people in 30s.

“I can be kept waiting until as late as Thursday night before finding out whether I have work the next week. There is no way to predict whether I will get nothing, or 5 days' work, meaning all other things have to be put on hold until the last minute.

  University worker

“I am only informed if I have shifts one week in advance and the hours I am given for the week can range from 0 to 48. This situation makes it virtually impossible to plan my finances, as a result I regularly feel anxious about whether I will be able to pay the rent and put food on the table.

The lack of job security also means that my colleagues and I feel beholden to our employer for any shifts we are given. This creates a real sense of desperation and also means that staff are unlikely to raise any issue of malpractice or mistreatment at work.”

Edinburgh call centre

4.6   Such conditions are driving down terms and conditions for all employees and given that they are part of a growing trend the potential is for more people to suffer the same fate. The conditions are also having a negative impact on services and service users particularly in vital sectors such as social care.

“The workers on my contract are often put along with full time workers in places we are not familiar with, making us a hindrance to them, who are expected to find the time to give us on-the-job training. Full time workers also lose out on potential overtime pay since there are more zero hours staff who will snap up extra shifts.” 

University worker

“There is now a new Manager in place and I am actually fearful to ask her about my contract because there is NO job security where I work - the turnover of staff in the last 2.5 years I have been there is quite shocking (I am now classed as one of the longer serving workers!) I just fear if I ask her and she sees that I am on 'zero hours' I'm out the door or shifts removed from me.”

Care worker

“I feel that I don't get the opportunity to offer continuity of care to the people I am caring for, I have a lot of good ideas but can't get a proper run at it because continuity and consistence is an important part of care work. I very often get phoned at 7am to go in at 8am that day for a shift. This makes it very difficult to plan activities with service users because I am just popping in and out randomly as far as they are concerned. Many people with mental health problems need predictability and future planning with plenty of time to do very simple things that we all take for granted and I cannot commit to a day that I would like to do something such as going on an outing or preparing a meal from scratch going for a cycle. It is quite frustrating. The permanent staff seem to get the option of overtime before I get the offer of a shift. I do get holiday pay though, but I just want to work full time.”

Mental health worker

5. Are zero hours contracts affecting workers in Scotland disproportionately, for instance because of distances travelled or patterns of employment?

5.1   Official data for different parts of the UK is not readily available - an issue raised by the Scottish Parliament Economy, Energy and Tourism Committee in April in its investigation of Underemployment in Scotland[27]. Unite understands, however, that this is an issue that both the ONS[28] and the Scottish Government[29] have pledged to look into.

5.2   Unite’s evidence from the Mass1 survey shows that at 18%, Scotland is slightly below the average figure for the whole UK (22%), although this is within a normal error range.

6. Are zero hours contracts replacing agency work? What is the difference between them for the worker?

6.1   Statistically speaking this information is not clear. Agency worker data is notoriously difficult to measure with wide variability between different estimates when the Government last tried to do a full assessment in 2008[30]. Labour Force Data is now much clearer than in 2008 and after showing a dip during the recession, latest data (2010) shows temporary working as a whole has increased past its last peak in 2006[31]. These trends are echoed by the Recruitment and Employment Confederation (REC) that represent agency employers[32]. The UK still remains the highest user of agency labour in the EU.

6.2   The other side of the problem is that given that there is no formal legal definition of a zero hours contract, in reality many agency workers are on zero hours contracts, even if they do not know it.

6.3   This is illustrated by the Mass1 survey that showed that 25% of people responding were agency workers themselves.

6.4   Potentially there may be a trend away from formal agency working as a way to avoid equal treatment rights under the Agency Workers Regulations, however the Mass1 survey is not able to confirm or disprove that trend.

6.5   Either way Unite does not believe that this is the main question. As already discussed zero hours contracts are just one of many forms of insecure and vulnerable work currently impacting on the economy.

7. Are people who are on zero hours contracts, and employers who use them, aware of their obligations and their rights?

7.1   Unite’s Mass1 survey data suggests that workers on zero hours contracts are not aware of their rights. When workers in Scotland were asked whether they were “offered employment and redundancy rights” only 9% said they were, a further 43% said they were not and 47% said that they “didn’t know”.

7.2   This was in line with figures for the whole UK with only 10% saying they were “offered employment and redundancy rights, with 57% of people are not offered employment and redundancy rights, with 33% saying they didn’t know.

7.3   These figures confirm evidence that many workers do not even know that they are on a zero hours contract let alone know what rights they have.

7.4   In the case of employers it is clear that many of them are keenly aware of their rights and that is precisely why they are choosing to use them.

“Not only is it zero hours but also a 'self employed' contract which means despite being employees in practice, we have no legal rights as workers at all and no benefits. That in turn means we earn below the minimum wage (£5 per hour) and have a 20 hour trial period at £2.50 per hour. Further to this, as we're on zero hour contracts, we have to wait from week to week to see when we're called up for, this varies wildly. Last week I worked 35 hours, next week I'm working 18. It’s also at very erratic hours, some days I'll have to work in the morning and evening shift (but not the afternoon), others it'll be only morning or only evening. Those of us who (try to) work fulltime are completely unable to make any kind of plans as our wages are about £100 different from week to week (This where the maximum hours worked would earn you £175 per week). It’s a nightmare. I've joined a union (by myself) and hope to recruit others but it’s hard because every week whole swathes of the office are sacked.”

Energy company worker

8. What support is available to people negatively affected by zero hours contracts?

8.1   There is no specialist support available to people on zero hours contracts. Such people rely on the same support mechanisms as any other workers, e.g. trade unions, advice centres, the NHS, the tribunals system, the benefits system, charities, family and friends. The main difference is that they are far more likely to need this support.

8.2   Fundamental to zero hours contracts is a lack of basic legal employment rights. Zero hours workers do not have a legal right to many of the protections that those defined as employees come to expect. These include redundancy pay, sick pay, on-call payments, maternity and parent leave, pensions and even regular income. The lack of a regular income can mean that these workers find it hard to afford basics like rent, food, clothing, energy bills and family support let alone access mobile phone contracts, credit or mortgages.

8.3   This is a national scandal at a time when inflation on basics goods and services is increasing well above salaries[33], benefits are being radically cut back and council tax is rising in many places. The fact that the vast majority of new housing benefit claims are for people in work[34] strongly illustrates this point.

8.4   The Westminster Government’s decision to introduce fees for employment tribunals and cut back on many vital employment rights has made these issues even worse, reducing access to those weak protections that do exist.

8.5   Through industrial negotiations Unite seeks to reduce the numbers of workers on zero hours contract however given the numbers of workers now on these contracts Unite believes that the only solution is political. The Scottish Affairs Select Committee should make comprehensive recommendations to remove this contractual absurdity as it is undermining the employment rights of all UK workers.

9. Under a zero hours contract, a worker should be able to turn down work; is this possible for workers to do in practice?

9.1   In the best situations this does happen, but as with so much in the labour market, this depends both on the relationship the worker has with their employer and the bargaining power they have. Unite believes that best case scenarios should not be the basic assumption behind regulation. Legislation needs to be based on protecting the worst off in the market and it is clear from Unite’s members that in most cases this choice does not exist in practice.

9.2   Often workers do not have the luxury to turn down work, first and foremost because they do not get enough hours as it is - 54% of Scottish respondents to the Mass1 survey were working 20 hours a week or less. Those hours they do work, are too low paid - 67% were earning less than £8.55 an hour. The average monthly earnings for Scottish respondents to the survey was £750 a month. That figure would be below the minimum wage if spread across an ordinary working week (37.5 hours) and would mean that the worker would average only 25 hours a week if they were getting the Scottish Living Wage of £7.45 an hour.

9.3   While difficult to assess how many workers would be affected recent evidence has also shown that cost of living in rural Scotland can be between 10-40% higher than other parts of the UK[35].

9.4   In addition there is clear evidence that workers are afraid that if they turn down shifts then they may not get others in the future. As already stated 46% of the Mass1 survey respondents had experienced bullying and harassment as a result of raising their contract and 33% report having the be on-call at all hours in order to get jobs. This fear may also explain the small number of workers doing extremely high numbers of hours (from the Scottish survey 8% were working between 39-50 hours a week and 6% working more than 50 hours a week).

10. Are benefit claimants obliged to accept zero hours contracts?

10.1           This is difficult to evaluate statistically from the data available and Unite would welcome further investigation of this issue from the Committee. There have been examples cited by campaigners and the media of workers being obliged to work on zero hours contracts (e.g. at Amazon, Sports Direct[36]) under the work programme or face sanctions. A recent freedom of information request to DWP has shown advice contradicting this fact[37]. It is clear however that there is significant confusion about this issue and Unite would support the Committee investigating this issue in much greater detail.

“The contract was arranged by my Work Programme provider and local JC+, it seems so that the unemployment figures can be fiddled, and so that the WP provider can get a huge payment.”

Council worker

10.2           Unite’s evidence does show however that people on zero hour contracts often struggle to access benefits they might otherwise be entitled to. For example 25% of people have difficulty claiming benefits because they don’t work set hours a week. This figure was even higher for women at 33%.

10.3           Furthermore the social security arrangements remain unresponsive to regularly changing situations.

11. Are there any other types of contracts or employment arrangements that are a cause for concern?

11.1      As stated in the introduction zero hour contracts are just the tip of the iceberg. Under-employment is generally too high in all its forms[38] and this has been growing as recognised by both the ONS[39] and the Scottish Parliamentary Committee for Economy, Energy and Tourism[40].

11.2      Self-employment has also been rising, with bogus self-employment likely to be increasing as part of it[41], particularly in sectors like construction, agriculture and hospitality.

Employment and self-employment 2005-2012

Changes in 'self-employed' Jobcentre Plus notified vacancies Jan 2007- July 2012

Source: Job Centre Plus Vacancy Data, NOMIS

11.3      As has already been stated demand for agency workers has remained the highest in Europe despite the introduction of equal treatment rights in 2011.

11.4      There are similar trends with the notorious Swedish Derogation contracts that guarantee minimum hours of pay between agency assignments in order to exempt them from equal pay. Such contracts have been used to guarantee as little as 1-4 hours a week at minimum wage. Unite research in 2012 has shown that around 30% of agency workers are now on this contract which is particularly rife in logistics and manufacturing. This figure was confirmed by REC research later the same year.

11.5      Britain has one of the most deregulated labour markets in the EU. We operate a complex legal system that creates multiple tiers of workers with various different rights, particularly separation between definitions for “worker” and “employee” rights. The Government in Westminster is making this worse by deregulating employment rights, attacking trade unions and cutting back on state enforcement agencies.

11.6      Unite believes that this deregulated labour market is contribution to stagnating the economy, as workers’ wages suffer and productivity declines. While outside the direct remit of this Committee Unite urges members to call for broad based reform of the UK economic and labour market model to end unfair and unjust precarious employment practices for good.

APPENDIX A – Comments Unite has received

University of Glasgow             

“I can be kept waiting until as late as Thursday night before finding out whether I have work the next week. There is no way to predict whether I will get nothing, or 5 days' work, meaning all other things have to be put on hold until the last minute. 

The workers on my contract are often put along with full time workers in places we are not familiar with, making us a hindrance to them, who are expected to find the time to give us on-the-job training. Full time workers also lose out on potential overtime pay since there are more zero hours staff who will snap up extra shifts.” 

Former Domino’s Pizza worker

”All Domino’s pizza in-store staff and drivers are employed on zero hours contracts. The zero hours contracts are used as a management tool to manage staff, i.e. staff they want rid of simply get their hours whittled away so they walk out. People are afraid to become sick or have other issues as they know the management often 'payback' through cutting of hours, or giving out shifts that don’t suit. As its also low paid it also affects things like tax credits. I was fortunate in that I was able to average out my hours to gain enough for working tax credits but many couldn’t.” 

Dominos Pizza Delivery driver

“In order to meet my outgoings I have started working for a Scottish branch of Dominos as a pizza delivery driver.

During the time I have been working at Dominos the number of hours I receive from week to week varies hugely, from around 6 to 15 hours a week. Having such unstable working hours means I never really know how much money I’ll make from one week to the next.

The worst part is, if I come in to work for an evening and the shop is quiet my boss can send me home after just one hours work. This means that I only get paid for that one hour, so I actually end up losing money in the evening – as it costs me more than an hours pay to get to work.

I do need some flexibility in my work as I am studying at the same time, but really want more to plan my finances.”

Edinburgh call centre

“I have worked in a call centre for a multinational firm in Edinburgh for over 5 years. During that time I have gained a great deal of experience and regularly help manage projects, which involve large numbers of staff. However, despite my length of service, experience and the responsibility I am given, my employer still keeps my colleagues and I on zero hours contracts.

I am only informed if I have shifts one week in advance and the hours I am given for the week can range from 0 to 48. This situation makes it virtually impossible to plan my finances, as a result I regularly feel anxious about whether I will be able to pay the rent and put food on the table.

The lack of job security also means that my colleagues and I feel beholden to our employer for any shifts we are given. This creates a real sense of desperation and also means that staff are unlikely to raise any issue of malpractice or mistreatment at work.

Ideally I wish that my employer would give me more regular hours. As a result, I have applied for other work, but there are very few vacancies out there so I feel trapped in a difficult position.”

Hospitality             

“At my current job I don't have a contract at all, although my hours are fairly reliable. It has varied in the time I've worked here from 28-37.5 hours a week - quite a big fluctuation on £6.50 an hour, but manageable (although only due to the fact that I'm fortunate to have cheap rent). My previous job - also in hospitality, but for a big company rather than an independent business - I had a formalised zero hours contract. I never worked no hours in a week, but wouldn't find out until the Sunday before the working week began how many hours I would have in the coming week - never more than 30, sometimes as few as 13. My hours were often changed on very short notice and you'd be sent home if it was quiet, so potentially work fewer hours than you anticipated. On one occasion I turned up for work and was told it wasn't busy enough for me to be needed before I even took off my coat. It also meant you didn't want to raise grievances because if one of the managers took a dislike to you the you could find yourself with fewer hours.”

Sports Direct Ltd

“Shifts are changed, are cut without any notice, shifts vary week by week.”

Hotel worker             

“I was receiving jobseekers allowance when I put in for a job for Hotel Room Attendant. The job was from 9-5 and maybe overtime at weekends. When I got the job that is when I was told that it was a zero hours contract to which I was not at all happy about. When I asked why was it advertised at my local jobcentre as a full-time room attendant to be told no this is a zero hours contract. Like everyone else I cannot afford not to take any job as my husband’s wages pays all and after 6 months on jobseeker I would of got nothing as he is in fulltime employment so I have to take anything, but zero hours is no go as come winter we will be down to working 1 -2 days a week as the hotel gets quieter which is bad also, can’t even go get another job as you work 5 over 7 days so not same days you get off, we work bank holidays do not get over time rate not even time in a half so yes I agree get rid of ZERO HOURS.”

Private sector care provider

“I enjoy the job I do I am a support worker for people with mental health problems. I am very experienced and worked as a registered learning disabilities nurse in various settings before taking time out. I feel that I don't get the opportunity to offer continuity of care to the people I am caring for, I have a lot of good ideas but can't get a proper run at it because continuity and consistence is an important part of care work. I very often get phoned at 7am to go in at 8am that day for a shift. This makes it very difficult to plan activities with service users because I am just popping in and out randomly as far as they are concerned. Many people with mental health problems need predictability and future planning with plenty of time to do very simple things that we all take for granted and I cannot commit to a day that I would like to do something such as going on an outing or preparing a meal from scratch going for a cycle. It is quite frustrating. The permanent staff seem to get the option of overtime before I get the offer of a shift. I do get holiday pay though, but I just want to work full time.”

McDonalds Uk & Irl. Ltd.             

“During quieter times of year, it is not always guaranteed that there will be enough work. This usually comes in January when bills are high and there is a lot of post-Christmas financial stress. My branch can take in up to £100,000 a week in the busier months, but won't pay out for those who have families to support. Aside from this, the way shifts are rotated sometimes, it can mean that you end up with less hours. It puts a lot of unnecessary stress on people who often have taken the job because they don't know what else to do at that point in their lives. Between not having guaranteed hours and the shift patterns, it is often difficult for people to go on from working there, while trying to meet their everyday needs.”

SERCO             

“Living with the constant threat that your hours may be cut is not acceptable and can leave me wondering if come Christmas I will be able to pay my bills. This company has no interest in its employees and employing us on zero hour contracts sums them up.”

COMPASS GROUP - LLOYDS TSB CATERING

“hi, first sorry for my English, l going tell my experience of zero hours contract, was bad, harassment, they don’t let you do your hours always they cut you hours and zero contract hours was my experience. If you are other religion they don’t let you do your hours ,they give your work to other people, your employer can send you home any time, and also if your employer he don’t like you he do the same cut hours and you home and contract zero hours make discrimination, experience l had before l don’t want to have this experience sometime you feel like you are worse than animal, l hope trade union and all workers help trade union to stop this we are in 2013 we are not in the stone age.”    

Charity fundraiser              

“I have only become a permanent member of staff in the last week, the first 3 months I was employed by an agency. Two weeks ago many members of staff (approx. a dozen) in Glasgow were told not to report to work as there was no work for them and in London I heard that 80 members of staff were told the same thing.”

Third sector             

“I was not paid at the same level as full time permanent employees. I was also not given holiday pay, without having to raise a grievance. I also had to wait 2 months before getting paid.”

Door Steward/Security services

“I never knew where I would be placed, how far I would have to travel and how many hours I would get i.e. the client could shut up shop and send me away early and I would only get 3 hours for the night instead of 5 for instance. This is when I would have had to spend almost 2 hours worth of pay in petrol to get to the venue.... In fact I never had a contract at all, I signed something at my interview but after that I never got a copy and it was only one page. I can't remember what it said but it was not much. 

Effectively I had a zero hours contract because the company never promised me any work at all and could change my venue or cancel it at the last minute at my inconvenience.  For the first year I was never told that I could have holiday pay so it was only after working every weekend for 18 months that I found out that someone else had been paid for a weekend off they asked for....once I asked for it I got it but they never told me I was entitled to it. In 2 years I have only received one week paid holiday.” 

RAC             

“The uncertainty of any work as only paid per job. Also sick pay as you only statuary sick pay, and holiday pay you have to save towards it.”

Care worker

“We are being forced this month to move over to zero hour contracts or face dismissal.”

Council worker

“The contract was arranged by my Work Programme provider and local JC+, it seems so that the unemployment figures can be fiddled, and so that the WP provider can get a huge payment.”

Charity shop worker

“I choose to only work three days a week and so far I have always had work when I wanted. An advantage of this arrangement is that I never have to work weekends or Bank Holidays unlike my colleagues on permanent 'traditional' contracts.  However, unlike my colleagues on 'traditional' contracts, I do not receive any formal training, I am not invited to staff meetings or conferences and I do not receive any bonuses or other rewards. Recently all staff on 'traditional' contracts were given £50 John Lewis vouchers, even though some work less hours than I. I am aware of one colleague (on traditional contract) who recently questioned why staff on zero hours get paid less on days with shorter shop opening hours (Sundays & Bank Holidays) while staff on 'traditional' contracts are paid the same rate for all days worked. The organisation’s response was to threaten that they would look into ways of making staff on traditional contracts work additional hours.”

Energy company

“Not only is it zero hours but also a 'self employed' contract which means despite being employees in practice, we have no legal rights as workers at all and no benefits. That in turn means we earn below the minimum wage (£5 per hour) and have a 20 hour trial period at £2.50 per hour. Further to this, as we're on zero hour contracts, we have to wait from week to week to see when we're called up for, this varies wildly. Last week I worked 35 hours, next week I'm working 18. It’s also at very erratic hours, some days I'll have to work in the morning and evening shift (but not the afternoon), other it'll be only morning or only evening. Those of us who (try to) work fulltime are completely unable to make any kind of plans as our wages are about £100 different from week to week (This where the maximum hours worked would earn you £175 per week). It’s a nightmare. I've joined a union (by myself) and hope to recruit others but it’s hard because every week whole swathes of the office are sacked.”

Picturehouse worker

“It threatens my quality of life and my ability to pay bills and rent. The managers who are allowed to dictate how many hours they personally get a week don't seem to realise the stress the front of house are put under due to the unpredictable nature of the hours we are given. One week I can work 20+ hours then the next less than 8 hours. The complete disregard for the stress of this system from the management is frustrating and we are given our shifts with a week notice. Basically the cinema dictates what we are doing week to week. We give to the manager our availability for the week and are able to change this with a month’s notice (I don’t understand why such a long time to change this since the front of house team is only 25-30 person strong). Recently a new manager to the cinema told us that we were not being honest with our availability and that we could probably give more time to the cinema, this made me angry and forced me to tell the manager that I was unable to prioritise the cinema (I have another zero hour job with a more fairer shift delegation) and that would not be able to change my availability unless this would guarantee myself and my colleagues set shifts each week, and have recently not had as many shifts as I usually would. People still have bills to pay and need to feed themselves and their family so to make this kind of working contract a permanent and acceptable way of employment seems insane. Not to mention the lack of access to sick pay, pension plans and holiday pay.”

Care worker

“There is now a new Manager in place and I am actually fearful to ask her about my contract because there is NO job security where I work - the turnover of staff in the last 2.5yrs I have been there is quite shocking (I am now classed as one of the longer serving workers!) I just fear if I ask her and she sees that I am on 'zero hours' I'm out the door or shifts removed from me.”

National Trust worker

“There is no job security, and we are all unhappy about it. It is clearly done to avoid being in the position of employing people as permanent staff, even permanent seasonal staff. The pay is abysmal, £7.69 per hour for employees who, to a great extent, are more mature, educated, experienced individuals. This is for a job that is responsible (includes opening and closing, cashing up and making decisions on your own), quite strenuous (setting up things and standing all day) and vital to the organisation as we are the 'face of the Trust'. Whereas £7.69 would be a low salary for a full-time job, this is part-time, seasonal work, so it's not providing a living wage. Without a permanent job, I exist in a constant state of uncertainty and anxiety. I can't even move to a zero-balance credit card to pay off my credit card debt because that would require a credit check, which I would not pass since I don't have a permanent job and am earning so little money. If I have to move from my current rented accommodation (which happened to me once before when my landlady wanted to move into the house with her family), I would be required to pay six months' rent in advance because I don't have a permanent job. I simply couldn't afford it and don't know what I would do. I want to be able to pay my bills and have some financial security. Is that too much to ask? Instead, I feel trapped and quite depressed about the overwhelming uncertainty in my life.  For a charity, whose motives are supposed to be altruistic, to treat their people like this is inexcusable. In the process of looking for a permanent job, I can see that this is a rapidly growing pattern. It mustn't become acceptable - offering people flexibility is one thing, cheating a large segment of the working population is another. The ability to obtain basic credit, to rent accommodation and to have some peace of mind that you have a job should be basics in today's Britain.”  

APPENDIX B

List of identifiable employers reported to be using zero hours contracts from the Mass1 survey.

Scottish cases:

Other UK cases:

October 2013