Cable makes small turn to workers

The trade unions and Labour Party have been complaining about the increased use of zero hours contracts for some years now. These are standard contracts of employment in all but one respect: the employer does not stipulate how many hours the employee will work; and the employee does not guarantee to work a set number of hours either.

When used in the right way, this kind of contract can be very useful. For example, a retired nurse can have a zero hours contract with, say, a local care home. When the care home needs extra staff – to cover holiday or sickness absence, perhaps – instead of going to expensive employment agencies, the employer can offer a fixed period of work to the nurse who can accept or decline. Going back to the same person in this way is cheaper than going to an agency – not only in terms of the employer not having to pay the agency fee but also because the zero hours worker has already been trained in company procedure, is already on the books so doesn’t take up HR’s time, etc. Similarly, some professions have had zero hours contracts with students who are only looking for work during the holidays (which corresponds with when employers need to cover annual leave, of course).

However, what has been happening is that employers have been using zero hours contracts and then employing staff for just the number of hours that they need each week.  For example, hairdressers usually have contracts that require them to be at work for 35 or 40 hours each week and they are paid for that number of hours. But if a company employs its staff on a zero hours contract, it could just tell an employee to go home or not to come in the next day if there were no bookings, for example.

The zero hours contracts are good for business in the sense that if they have someone who can monitor the level of work and get workers in, or not get them in, in close parallel with the amount of work that has to be done, the business can minimise its costs. However, if taken to extremes (which is what ever more numbers of employers are doing), it leaves the worker in a very difficult position. If your pay varies from week to week (and this can be by substantial sums of money), it is hard to get a mortgage. It is hard to keep up with reporting the changes in your income to housing benefit. It is hard to budget or find alternative or extra part-time work.

Even the parties in the Coalition have now noticed the downside to zero hours contracts. They have been looking into the practice and have been hinting that they will do something about them. Now they have finished a consultation about the contracts and announced what they are going to do – and it is all a little underwhelming.

Some employers have been using zero hours contracts which require employees not to have second jobs with other employers. The Government is going to make this contractual requirement – called an exclusivity clause – unlawful. This has not been chosen because the Government has suddenly decided to back workers’ rights – far from it. The clause conflicts with the Government’s belief in the right wing concept of flexible labour. They intend to outlaw exclusivity clauses as a means of helping more employers to have access to workers they can employ on a very part-time basis. As the Department of Work and Pensions (DWP) says: “The use of exclusivity clauses in zero hours contracts undermines choice and flexibility for the individuals concerned.”

The DWP goes on to claim that the move will benefit an estimated 125,000 workers. This may be true, but that is not many workers in the grand scheme of things, and it won’t benefit them very much in most cases (because many zero hours contracted workers can’t find another employer at all). The extra freedom workers will be given is, as the DWP puts it, to be allowed “to look for additional work to boost their income”.

It’s not that the Government should be criticised for taking this move – it’s just that it has to be criticised for not doing very much more. The change will also open another door. Just as people on welfare benefits today are told to find work so that they can stop claiming JSA, it may not be long before those in part-time work are told to stop relying on in-work state benefits and are told to go and find extra part-time work in our wonderfully flexible labour market. The next step would be to be told you will have your in-work benefits cut if you cannot prove that you are actively seeking extra part-time employment. Gradually, the concept of the welfare state – that you pay in when you have proper pay for proper work, and that you draw out when you need to – would be eroded in favour of a Victorian style promise to keep you from starving if you are properly grateful.

The Government has also promised to work with unions and business to develop a best practice code of conduct aimed at employers who wish to use zero hours contracts as part of their workforce. This idea comes straight from the “have fig leaf, will use it” school of government, and it’s code for “don’t hold your breath to see what the outcome is”.

The sting in the tail (yes, there is one of those too) is that the Government will carry out a new round of consultation on how to avoid employers exploiting the exclusivity ban, for example through offering 1 hour fixed contracts. The only good thing about this is that the Government has started to heed the Law of Unintended Consequences. Usually one would expect the ban on exclusivity clauses to come into force, for employers then to evade it by offering one-hour contracts, and for the Government then to smack it’s collective forehead, go “doh!” and be sympathetic while promising unspecified further legislation in the unspecified future.

It’s one feeble cheer for Cable’s new turn, but let’s mark his report card “must do considerably better”.