Zero-Hours Contracts Have Been Unfairly Demonised

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 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 professional body for HR and people development has also published new guidance, in collaboration with law firm Lewis Silkin, to help tackle poor practice highlighted in the research, such as the poor level of understanding about employment rights among many employers and zero-hours workers.

The CIPD 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. 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.
  • Zero-hours workers, when compared to the average UK employee, are just as satisfied with their job, happier with their work-life balance, and less likely to think they are treated unfairly by their organisation .
  • More than half 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 say they would like more hours.

However, the research does identify areas of poor practice

  • One in five zero-hours workers say they are sometimes or always penalised if they are not available for work.
  • 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 tell us they make a contractual provision or have a formal policy outlining their approach to arranging and cancelling work for zero-hours workers.
  • 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. In fact, 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.

Peter Cheese, Chief Executive of the CIPD, said: “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. If this is unavoidable then employers should at least provide some level of compensation. In addition, it seems that many employers and zero-hours staff are unaware of the employment rights people on these types of working arrangements may be entitled to.

“The emphasis should be on improving management practice and enforcing existing regulation first, rather than bringing in new legislation which would be extremely hard to do without unintended consequences. Employers that took part in the research told us that if restrictions were placed on employers’ use of zero-hours contracts, they would simply switch to another form of casual labour. Such an approach would also penalise the majority of zero-hours workers that choose these types of working arrangements because they suit their particular circumstances.

“The good practice guidance we’re publishing today helps to address some of the issues highlighted by our research as well as setting out what employers need to do to manage zero-hours workers within the law. If we restrict the ability of employers and workers to manage their employment needs flexibly, the consequence is less likely to be more permanent, full-time jobs, and more likely to be a reduction in the number of jobs available in the economy.

“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.”