Zero Hour Contracts: A Luxury We Cannot Afford?

False economics or a more flexible alternative to fixed hours? East of the M60 on the controversial practice of zero hour contracts

In the early 1990s, I used to trudge the streets of Dukinfield each morning with a dayglo orange bag. I would rise at 6am before school and deliver in all weathers The Guardian, The Sun, Daily Mail and the like, and sometimes the odd magazine. My round covered Pickford Lane, Russell Street and Chapel Street and one I had from November 1992 to May 1995.

As well as a core cohort of paper deliverers, each morning and evening, my local newsagent had reserve paper deliverers. They would be called by the newsagent to cover a fellow’s delivery if he or she was poorly. Sometimes, one of the permanent paper deliverers could cover the round instead of one of the reserve members and gain extra money.

Another part of being a newspaper delivery operative was calling at your customers’ houses at early evening near Christmas. He or she would politely knock on the door or ring their bell and say ‘Christmas tips’. Or if needed, a little card which said ‘Please Remember the Paperboy’ would be produced.

Once our tips were totted up, we would have to give a portion of our Christmas box to our reserve colleagues. On one side it seemed unfair but on the other hand, it was fairer as he or she would earn less over a year. The reserve Newspaper Delivery Operatives would only work when required by the newsagent.

Which constitutes a ‘Zero Hours Contract’.

Though the reserve Newspaper Delivery Operative would be on a Zero Hours Contract in today’s parlance, other staff would work regular hours. Wages may be low but work was guaranteed, so long as households continued to have their newspapers delivered (instead of all Newspaper Delivery Operatives being under a Zero Hours Contracts).

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A New Phenomenon?

Many commentators claimed the Year Zero mark for Zero Hour Contracts was shortly after the financial crisis in 2008. As stated above, they’ve been around for longer than five years. We only need to go back to the start of the Industrial Revolution. Maybe further back if we count slavery as a precursor to today’s zero hour contracts.

Till the 1960s, it was normal for British dockers to be doled out work subject to the bosses’ demands. Instead of mobile phones, men would assemble at the dockside – like a cattle market – and the boss or immediate line manager would choose which staff they want. Anyone who was left over would have to make their way back home and hope for work the following day. On the day they weren’t available, they weren’t paid.

By the 1980s, the privatisation of our docks and introduction of containerisation meant scope for casualised workforces. In 1989, the Conservative government abolished the National Dock Labour Scheme, which ensured regular work for dockers. Six years later came the Liverpool Dockers’ strike which came about after the union bashing practices of the Mersey Docks and Harbour Board. Their fight was also against the casualisation of working practices.

Eighteen years later, the very same things which the Liverpool Dockers fought against became legion. Today, there are a million people on Zero Hours Contracts.

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Present Day Usage of Zero Hours Contracts

Increasingly, staff have been employed on Zero Hours Contracts instead of on full time or part time contracts. Instead of augmenting a salaried workforce, core members of the workforce have been placed on them. Sometimes they may be accompanied by colleagues on Workfare-type programmes.

This has succeeded in keeping unemployment figures and corporate wage bills low. Coupled with people on Work Programme placements, unscrupulous employers may choose to employ people on an ad-hoc basis through zero hour contracts and have on some weeks a zero wage bill for its workforce. People on Zero Hours Contracts and on Workfare-type programmes are excluded from the DWP’s unemployment figures.

Instead of the ‘cattle market’ style dockers’ pens, today’s equivalent is the employee’s mobile phone and motor car. As opposed to reporting to the docks, factory gates or colliery at a given time, he or she would be contacted at a time which best suits the boss. That time could be anywhere within the 24 hour clock with no regard for public transport issues and the employee’s wellbeing. They, in effect become the boss’ property or ultimately the property of their company.

Workers’ Rights on Zero Hours Contracts

Given that such employees are required to work at the boss’ convenience, there is no entitlement to paid holidays. However, employees need to be paid the National Minimum Wage or the company’s going rate if higher. As hours are erratic, this jeopardises National Insurance contributions, though earnings may be low enough to fall under the basic Income Tax threshold.

Self Employment/Freelance Work compared with Zero Hours

A common misconception among some people is that Zero Hours is like Self Employment or Freelancing. Instead of being an employee, you’re employing people or happen to be a subcontractor to one party or more. You are also responsible for your National Insurance and Income Tax contributions. There is no guaranteed wage as such nor regular work hence common confusion between the two.

Seasonal Work compared with Zero Hours

Though zero hour contracts are subject to the boss’ demands, seasonal work could also be subject to zero hours within a certain period. For example, he or she may be on a zero hours contract in the run-up to Christmas for a superstore chain. Seasonal work could also be part time or full time work with guaranteed hours, with the full complement of employment rights, National Insurance contributions and Income Tax payments made.

Casual Work compared with Zero Hours

If a potential employee applies for a casual vacancy, he or she would be on call within certain hours of the day. A casual bartender may be required to work between 7pm and 12midnight and they could fit the hours around childcare commitments, other jobs or sources of income. Zero hour contracts make no allowances for one to answer a call of nature, let alone change a baby’s nappy.

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The Dark Side of Zero Hour Contracts

As I’ve said before, zero hour contracts make no allowances for almost anything. On a zero hour contract, it is impossible to arrange a doctors’ appointment, to look after a child properly or even visit the loo without awaiting a ‘phone call.

These factors are only a tip of the iceberg. The lack of a regular income also means:

  • No access to mortgages: no constant income stymies ability to meet payments;
  • No access to rented properties: as well as the above, prospective tenants have to find a deposit for their landlord which is often a few month’s rent in advance. This is true in social and private housing sectors;
  • No access to affordable credit facilities: purchasing electrical goods or a car means higher interest rates;
  • Greater use of payday loan companies/legal loan sharks: usury in excelsis as such companies make money on allowing customers’ modest loans to mushroom to unspeakable amounts through extortionate interest rates;
  • More expensive public transport fares: season tickets reward regular bus, train or tram users. More sporadic users may purchase day rover tickets which may be more expensive in the long term instead of a weekly or monthly season ticket;
  • Reliance on lifts or taxis: sometimes the employers’ chosen hours may be outside bus, train or tram operating hours, or the location may be away from local public transport spots.

Socially, zero hours deny employees on such contracts the right to the following things many of us take for granted like:

  • Work Life Balance: varying hours may affect one’s ability to rest and recuperate after each shift;
  • At least one holiday a year: the lack of paid holidays and precarious nature of the hours could mean him or her breaking their holiday. A possibility which can be achievable if he or she is a short distance way, though impossible if 36 hours away from Ringway or Heathrow;
  • A quick pint between working hours: even a trip to the pub could be out of the question if he or she has a ‘phone call midway through a drinking session;
  • Time out for non-work activities: any hobby which requires leaving the home could be affected from the boss’ call. Ditto the above with family engagements.

In short, you never really have a life. You become the Property of Some Mega Corp or Not-So Mega Corp. There are two words which best describe this:

‘Serfdom’ and ‘Feudalism’.

Given the uncertain nature of a zero hours contract, it is also impossible to work for another company to make any lost income during the gaps. Worse, such contracts are classed as ’employment’ by the Department for Work and Pensions. With casual work or part time work subject to certain hours, you can claim Income Support (or the income support element of Universal Credit) to make up any shortfall.

With a zero hours contract, you cannot claim Universal Credit, Jobseekers’ Allowance or Income Support between jobs as you are unable to prove your income. If and when Universal Credit’s, and the HMRC Real Time Tax payment system’s creases have been ironed out, there’s every chance UC could better accommodate people on zero hour contracts and ensure a regular income.

This depends on the ideological wherewithal of our present or prospective government. However, enabling zero hours employees to claim UC would put them under the additional stress of fulfilling their Claimant Commitment, as well as hoping their employer telephones them.

The Bigger Picture

A lot has been said about the unfairness of zero hour contracts to employees, though nothing about the bigger picture. That of our wider economy.

It is no coincidence that our flatlining economy also coincides with the rise of zero hours contracts as well as economic incompetence. Bigger purchases are deferred or postponed indefinitely, also exacerbated by a VAT increase from 17.5% to 20%. Therefore, shops and store chains close. Some which survive replace their full time or part time salaried staff with people on zero hour contracts or Workfare-type placements.

Furthermore, the lack of tax revenue enables the Chancellor of the Exchequer to make deeper cutbacks to public services. Spending on non-contributory Social Security payments increases and more money is taken out of the economy. Wages are driven down and demand for new homes is hindered.

On the other hand, some bosses are getting richer off their little tax cut, and enjoying how zero hour contracts have enabled them to sidestep basic employment rights. Not only the National Minimum Wage but also the hard fought freedoms fought by our ancestors. Like paid holidays, a welfare state which offers a real safety net, full employment and safe workplace. All of which being systematically destroyed and likely to disappear by 2015.

In short, zero hour contracts are creating a climate of uncertainty. Both to persons on such contracts and the state of our economy. Nobody, given the amount of financial and social commitments which they need to fulfil can survive on a zero hours contract, let alone live a comfortable life.

The way they are being misused is an equally great issue. They should, if required, only be used on reserve members of staff instead of core members of staff. Or, staff should be given greater control as to where or when they wish to work their zero hour contract. Like between 9am and 5pm. Casual contracts with a set number of hours and full employment rights are fairer, though nowhere near as fair as standard full time or part time working hours.

Better still, zero hour contracts should be scrapped. Completely and indefinitely.

Further Reading:

S.V., 06 August 2013.

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