Zero hours and the public sector

The use of zero hours contacts in the public sector is greater than it appears. David Widdowson considers some of the issues they raise.

The subject of zero hours contracts (ZHCs) sprang into the headlines last year following the significant upward revision of the Office of National Statistics’ figures of the numbers of UK employees working under these arrangements. 

The commonly held view at the time was that this was mainly a problem for the private sector with little usage of contracts with no guaranteed hours in the public sector.

The detailed survey conducted by the CIPD “Zero Hours Contracts: Myth and Reality” published in November 2013 disclosed a rather different picture: far from being a minority user of ZHCs, 24% of public sector employers were reported as operating them. BIS estimates from the Labour Force Survey in late 2013 appear to confirm this, putting the figure even higher with 31% of ZHC workers being employed in the public sector.

Reliable statistics in this area are notoriously difficult to find with the total numbers across the country varying between 250,000 and 2m. What does seem clear is that public sector employers – particularly in health and social care and in education – see ZHCs as being a much a part of their operating systems as those in the private sector.

ZHCs attract strong views. Employers’ organisations stress the need for the flexibility that they offer to be preserved if British business is to remain competitive whilst trade unions, and in particular the TUC, point to the exploitative nature of these agreements among the lower paid. Calls for ZHCs to be banned, however, have reduced since the summer of 2013 and the Government has made clear in its response to the consultation paper it issued in December 2013 that a ban would not be considered and limited its proposed action to banning exclusivity clauses. 

There is very little data on the extent to which these clauses are used in ZHC worker contracts. The CIPD survey recorded only 7% of respondents engaged on ZHCs in the public sector saying that they were not permitted to work for another employer if work was unavailable. Across industry generally the proportion seems very low. As presently drafted in the Small Business Enterprise and Employment Bill, the Government’s intention appears to be to narrow this down even further by limiting the ban on exclusivity clauses only to those contracts where the employee is contractually obliged to accept work when it is offered even though there is no obligation on the employer to offer any. The effect of the proposed legislation, therefore, in practical terms may be negligible for many employers. 

That may, however, not be the end of it for public sector employers. Although not exclusively so, evidence suggests the vast majority of ZHC workers are towards the lower end of the pay scale, both in terms of hourly rates and take home pay. In Scotland, a previously widespread practice among public authorities of requiring a commitment from tenderers for public contracts in the course of procurement to paying a living wage to those who will be working on delivering public services was buttressed earlier this year by a legislative requirement in the Procurement Reform (Scotland) Act 2014. That reflects a growing practice in England and Wales.

To deliver on this in real terms will require, arguably, commitment from tenderers in respect of their ZHC staff not just in hourly rates paid but also the number of hours given. The principle of paying a living wage to workers engaged in provision of public services is hardly achieved, it might be said, by paying a living hourly rate but without any commitment to providing at least a minimum level of hours.

In this context, too, public authorities will have to have regard to the public sector equality duty. Anecdotally, at least, there tend to be more women than men working on ZHCs and also more ethnic minorities. Combining that with low levels of pay, it could be argued, is something public authorities will need to address in the context of procurement and outsourcing generally.

In its research report “Women and Casualisation: Women’s Experiences of Job Insecurity” published in December 2014 the TUC calls for legislative steps to be taken to remove what it terms increased precarious employment for women. These include written contracts for those on zero- or short-hours contracts guaranteeing work patterns.  

Clearly unions will be expecting public authorities to embrace these principles in their own employment practices and in those they require of private sector employers delivering public services without the need for legislation. The public sector equality duty may be seen as a source of leverage on those who are slow off the mark.

David Widdowson is a partner with Abbiss Cadres and chaired the Employment Lawyers Association (ELA) working group which responded to a Government consultation on ZHC exclusivity clauses.