The use of zero-hours contracts in the UK economy has been underestimated, oversimplified and unfairly demonised, with the positive experience of the majority of people employed on them being overlooked, according to new research from the Chartered Institute for Personnel and Development.
Its 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, which has just published a best practice guide finds that where zero-hours contracts are being used for the right reasons and people on these types of arrangements are managed in the right way, they are providing flexibility that works for both organisations and individuals. It says 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 (3.1% of the UK workforce) employed on zero-hours contracts.
– 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% vs 58%), and less likely to think they are treated unfairly by their organisation (27% vs 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 say they are satisfied compared with around a quarter 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 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 highlight their need for the flexibility to respond to peaks and troughs in demand, but just under a half of employers who use zero-hours contracts also cite the need to provide flexibility for individuals as one of the reasons informing their approach.
However, the research does identify areas of poor practice. For instance, it says one in five zero-hours workers say they are sometimes (17%) or always (3%) penalised if they are not available for work. Also, almost half of zero-hours workers say they receive no notice at all or find out at the beginning of an expected shift that work has been cancelled, and only about a third of employers say they make a contractual provision or have a formal policy outlining their approach to arranging and cancelling work for zero-hours workers.
The report also found one in five zero-hours workers believe their pay is lower than comparable permanent staff doing similar jobs, while one in ten employers report that this is the case. However, almost two-thirds 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 report that hourly rates for zero-hours staff are higher than permanent employees (with the proportion slightly higher in the private sector). The report also highlights 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, Chief Executive of the CIPD, said: “The reality of today’s globally competitive economy and increasingly complex and age diverse workforce is that flexibility is here to stay. We need to focus attention on ensuring that people are well managed, are building the right skills, are engaged and productive. Many employers have a lot more to do in all of these areas to increase our international competitiveness. Flexible working arrangements can have a positive influence on productive and engaging work environments and those who call for excessive restriction of zero-hours contracts or who rail against measures to encourage more flexible working are equally out of touch with the modern world. Zero-hours contracts combined with good management can be an effective means of matching the needs and requirements of modern business and modern working lives across a wide range of employment sectors and job roles, in organisations of all shapes and sizes.”
The CIPD report includes a number of recommendations to improve practice in the use of zero-hours contracts, including:
– Appropriateness: careful consideration and regular review by employers of whether zero-hours contracts are appropriate for the nature of the work involved, and are offering the right balance of mutual flexibility for employer and employee.
– Exclusivity: Unless there is a clear business reason, for example for clearly defined competitor or intellectual property reasons, employers should not restrict zero-hours staff from working for another employer when they have no work available.
– Compensation for last-minute cancellation: where work is cancelled at short notice, travel expenses and at least one hour’s pay should be paid in compensation.
– Pay equity: zero-hours workers should be paid at comparable rates to anyone else doing the same or similar work.
– Manager training: line managers should be trained to ensure that the reality of the employment relationship is consistent with the contract and associated employment rights of zero-hours workers.