Zero-hour contract

Reader question:

Please explain “zero-hour contract” in this sentence: “In New Zealand, zero-hour contracts have been banned after parliament unanimously passed a bill prohibiting the controversial practice.”

My comments:

Zero-hour contracts are a relatively new phenomenon, something unheard of when I was looking for a job prior to graduation from college.

Quite a while ago that was, to be sure but, anyways, the key word here is zero.

Zero means naught, nil, nothing.

That’s the crucial point about zero-hour contracts. They guarantee you nothing.

By definition, a zero-hour contract is a deal between an employer and an employee which doesn’t guarantee a minimum amount of work.

Actually, the minimum is zero, so there.

Since you may end up working for zero hours this week or month, you may get zero dollars or pounds or what have you in pay. That’s nothing. Zilch.

Well, as you can see, that’s the controversial part of the deal. It guarantees little – or nothing if the amount of work really gets to boil down to zero.

So therefore, you can view zero-hour contract as a bad example of part-time work, with even fewer guarantees. In other words, no pension plans, okay?

Hey, if zero amounts of work and pay are permissible, what other benefits do you expect to look for?

In short, don’t aim too high when you are negotiating a zero-hour contract.

This said, I have to point out that zero-hour contracts do give the employee unlimited amount of flexibility in the best scenarios.

In the best scenarios, I say, because in the best cases, the employer allows the employee to refuse work on offer. That means for the employee, it’s really a situation of I work as I please.

However, some employees don’t allow that. In fact, in the worse cases, employers kind of ask their contractors to be on permanent stand-by, i.e. be ready when work arrives and do not look for work elsewhere – even if there’s no work from here.

In this case, everything’s in favor of the employer. It’s like, work for me, only for me and have no complaint. Now go away and work.

I mean, wait (for work).

All right, let’s learn more about zero-hour contracts via media reports:

1. Workers on zero-hour contracts can be given no work at all in any given month, but have to wait for it to turn up anyway. No work means no pay. Unison describes the deal as “fuelling insecurity and low pay and causing high staff turnover”.

But though the deals are in place to help employers, saving them from having to commit to full contracts, zero-hour contracts should be used sparingly by bosses, says Mr Brinkley of The Work Foundation.

Though the contracts can work well in some sectors: universities and the NHS, he said they can have negative effects elsewhere: “Employers should only use them sparingly, because if you look at the evidence, what makes companies successful is the degree to which employees engage with the company and align with its interests, and it’s very hard to do that if your employees are on zero-hour contracts. Because your employees by definition are going to be more remote and less engaged.

“If your workforce is insecure, doesn’t know how many hours it’s going to get, you’re very unlikely to get the best out of them.”

- Zero hour contracts - bad for employers too? Channel4.com, August 1, 2013.

2. It’s not every day you get to unveil a completely new series, especially not in as politically charged an area as zero-hours contracts.

These figures are, like the GDP figures we had earlier in the week, a preliminary estimate.

The Office for National Statistics (ONS) estimates that employers in the UK held 1.4 million contracts that did not guarantee a minimum number of hours, but on which some work was done in the two weeks beginning on 20 January.

It’s a little hard to reconcile that with the previous figures that the ONS released.

It asked people if they were predominantly employed on a zero-hours basis as part of the Labour Force Survey and came up with a figure of 583,000 for October to December 2013.

But there were extensive caveats behind that figure, because there was considerable doubt about whether respondents knew what a zero-hours contract was.

- Zero hours contracts - a work in progress, BBC.com, April 30, 2017.

3. The phrase “zero-hours contract” was virtually unheard of in Britain a decade ago. That’s not surprising, since in the years leading up to the start of the financial crisis in 2007 few people were employed on one.

Today, after an eightfold increase in the past 10 years, everybody knows what a zero-hours contract is and what it represents. It is a symbol of an increasingly insecure labour market in which the balance of power is tilted decisively in favour of employers.

The fact that zero-hours contracts have their own acronym (ZHC) shows how widespread they have become. In 2005, there were 100,000 workers on contracts that did not guarantee a minimum number of hours. The latest estimates from the Office for National Statistics show that by the end of 2017 there were 801,000.

Somewhat surprisingly, the big increase in ZHCs was not during the Great Recession itself, when the number of people on them doubled to 200,000. Instead, it has been the period when the economy has been recovering from its longest and deepest slump since the second world war that their use has rocketed.

Initially, the argument was that ZHCs were a response to the sluggish and uneven nature of Britain’s recovery, and they would become less prevalent as unemployment decreases. This argument looks less tenable now that the jobless rate is back to its pre-recession level. In the past year alone, the number of zero-hours contract workers has increased by 15%.

Let’s be clear. Some workers like ZHCs because they provide flexibility. Tens of thousands have been with their current employers for 10 years or more. Similarly, many people at university find that a ZHC dovetails well with their studies. Even after the sharp rise since 2017, people on zero-hours contracts account for just 2.5% of those in employment.

That said, this is not just a question of an undergraduate taking a couple of hours’ break from their essay on Hamlet to pull pints down the local pub. While 10% of workers overall say they would like to work longer hours, the figure rises to 37% for those on ZHCs.

TUC research has shown that average weekly earnings for zero-hours workers are £188 compared to £479 for permanent staff, and that two-fifths earn less than the £111 a week needed to qualify for statutory sick pay. This is not “flexibility”: it is exploitation. And it is on the increase.

- A zero-hours contract is not ‘flexibility’ but exploitation – and it’s rising, March 9, 2016.

About the author:

Zhang Xin is Trainer at chinadaily.com.cn. He has been with China Daily since 1988, when he graduated from Beijing Foreign Studies University. Write him at: zhangxin@chinadaily.com.cn, or raise a question for potential use in a future column.