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UK – Zero-hours contracts underestimated, oversimplified, and unfairly demonised

26 November 2013

The use of zero-hours contracts in the UK economy has been ‘underestimated, oversimplified and unfairly demonised’, according to new research from the Chartered Institute of Personnel and Development (CIPD).  

A survey of more than 2,500 workers has found that zero-hours workers are just as satisfied with their job as the average UK employee, and more likely to be happy with their work-life balance than other workers.

The CIPD found that as long as zero-hours contracts are being used for the right reasons and people on these types of arrangements are managed in the right way, they provideflexibility that works for both organisations and individuals. Efforts to address poor practice should be focused on improving employer understanding of how to use these contracts responsibly and within the law, rather than on attempts to restrict their use through regulation.

Key findings from the CIPD research, ‘Zero-hours contracts: myth and reality’ include:

  • A survey of more than 1,000 employers has confirmed the CIPD’s initial estimate that there are approximately one million people employed on zero-hours contracts, the equivalent of 3.1% of the UK workforce.
  • Zero-hours workers, when compared to the average UK employee, are just as satisfied with their job (60% versus 59%), happier with their work-life balance (65% versus 58%), and less likely to think they are treated unfairly by their organisation (27% versus 29%).
  • Zero-hours workers are, on average, nearly twice as likely to be satisfied with having no minimum set contracted hours, as they are to be dissatisfied. Almost half (47%) say they are satisfied compared with around a quarter (27%) who report being dissatisfied.  The most common explanation for this is that flexible working suits their current circumstances (44% of those saying they are satisfied or very satisfied with having no minimum set contracted hours).
  • More than half (52%) of zero-hours workers say they would not like to work more hours than they do in a typical week, although just over a third (38%) say they would like more hours.
  • Eight out of ten (80%) zero-hours staff say they are never penalised for not being available for work.
  • Employers cite both sides of the flexibility equation in explaining their use of these contracts: two thirds (66%) highlight their need for the flexibility to respond to peaks and troughs in demand, but around a half (47%) of employers who use zero-hours contracts also cite the need to provide flexibility for individuals as one of the reasons informing their approach.

The research also identifies some areas of poor practice:

  • One in five zero-hours workers say they are sometimes (17%) or always (3%) penalised if they are not available for work.
  • Almost half of zero-hours workers say they receive no notice at all (40%) or find out at the beginning of an expected shift (6%) that work has been cancelled, and only about a third of employers tell us they make a contractual provision or have a formal policy outlining their approach to arranging (32%) and cancelling work (34%) for zero-hours workers.
  • One in five (21%) zero-hours workers believe their pay is lower than comparable permanent staff doing similar jobs, while one in ten employers (11%) report that this is the case. In fact, almost two-thirds (64%) of employers who use zero-hours workers report that hourly rates for these staff are about the same as an employee doing the same role on a permanent contract. Nearly a fifth (18%) report that hourly rates for zero-hours staff are higher than permanent employees (with the proportion slightly higher in the private sector).
  • Confusion among some employers and zero-hours staff over employment status and rights. For example, 42% of zero-hours staff don’t know if they have the right to take legal action if unfairly dismissed after two years’ service.

Peter Cheese, CEO of the CIPD, commented: “The use of zero-hours contracts in the UK economy has been underestimated, oversimplified and in some cases, unfairly demonised. Our research shows that the majority of people employed on these contracts are satisfied with their jobs.”

“However, we also recognise that there is a need to improve poor practice in the use of zero-hours contracts, for example the lack of notice many zero-hours staff receive when work is cancelled. The emphasis should be on improving management practice and enforcing existing regulations first, rather than bringing in new legislation, which would be extremely hard to do without unintended consequences,” he concluded.

Tom Hadley, Director of Policy for the Recruitment and Employment Confederation (REC), commented: “The CIPD report will hopefully bring some balance to the debate on zero-hours contracts. Flexible staffing arrangements can provide a crucial outlet for both employers and workers, what we need is a practical debate on the best ways for businesses to bring crucial flexibility into the workplace.”

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