Zero hours contracts more widespread than thought

The figures released today are early findings from CIPD research designed to investigate the usage of zero hour contracts in different sectors, with a view to informing best practice guidance so that they are used for the benefit of both employers and employees.

Latest figures from the Office for National Statistics suggest that approximately 250,000 people – less than 1% of those in employment – consider themselves to be on a zero hour contract. However, the new CIPD research suggests this may be an underestimate.

Data from the CIPD’s forthcoming summer 2013 Labour Market Outlook – based on a nationally representative survey of over 1,000 employers – show that:

  • A fifth of employers said they employed at least one person on a zero hours contract;
  • Employers in the voluntary sector and the public sector were more likely to use zero hours contracts than private sector employers;
  • The industries where employers said they were most likely to report they employed at least one person on a zero hours contracts were hotels, catering and leisure, education and healthcare;
  • A quarter of organisations with 250 or more employees used zero hours contracts compared to 11 per cent of smaller organisations with fewer than 250 employees;
  • Among the fifth of employers who made use of zero hours contracts, the majority employed less than 10 per cent of their workforce on these terms and the mean proportion of workers on zero hours contracts in these organisations was 16 per cent;

Based on this data, a best estimate would be that 3-4 per cent of all the workers covered in this survey were on zero hours contracts, which would equate to about one million workers across the UK labour force.

Data from the CIPD’s quarterly Employee Outlook survey series, based on a sample of 148 zero hours contract workers, provides additional insight into the circumstances of employees who regarded themselves as having no guaranteed hours of employment/as a zero hours worker:

  • The average hours worked by zero hours’ contract workers is 19.5 per week.
  • In all, 38 per cent of zero hours contract workers describe themselves as employed full time, working typically 30 hours or more a week.
  • Of the 62 per cent who are working part time, about a third would like to work more hours.
  • Across all zero hours contract workers (both part-time and full-time) 14 per cent report that their employer often or very often fails to provide them with sufficient hours to have a basic standard of living. However 18 per cent say this does not happen very often and 52 per cent say this does not happen at all often
  • By age group, those who are primarily employed on zero hour contracts are twice as likely to be young (18 to 24) or old (55 plus) than other age groups.

Commenting on these findings, CIPD CEO Peter Cheese said: “Zero hours contracts are a hot topic and our research suggests they are being used more commonly than the ONS figures would imply. However, the assumption that all zero hours contracts are “bad” and the suggestion from some quarters that they should be banned should be questioned.

“There does need to be a closer look at what is meant by a zero hours contract, the different forms that they take, and clearer guidance on what good and bad practice in their use looks like. And this needs to consider both the advantages and disadvantages in practice for businesses and employees.

“Zero hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. This can for example allow parents of young children, carers, students and others to fit work around their home lives. However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings, and we need to ensure that proper support for employees and their rights are not being compromised through such arrangements. Zero hours contracts cannot be used simply to avoid an employer’s responsibilities to its employees.

“We are continuing to research current practices and will use our research to produce guidance for employers as well as employees. We will share it with BIS to feed into the work Vince Cable has commissioned on zero hours contracts.”