April 7, 2013 8:05 pm

Employers increase zero hours contracts

Zero hours contracts are creeping into white collar work, as a broader range of employers adopt an idea originally devised to help retailers and restaurants manage busy periods.

The contracts – which allow employers to pay for work only when they have demand – are becoming more common in sectors such as health, education and the media.

Many employers have increased their use of the contracts during the economic downturn as they see it as a good way of cost-cutting and controlling headcount, said David Von Hagen, an employment lawyer at Winckworth Sherwood.

“It is cheaper as you only pay when you need them,” he said. “But it is the complete antithesis of the traditional employer-employee relationship.”

He said he had seen the contracts in the media, in IT and similar arrangements in the legal profession.

“In the future, there are probably only going to be a few uber professional white collar sectors that might remain untouched,” he said.

Peter Searle, chief executive of Adecco, the UK’s largest recruitment consultant, said the contracts were being used by professional and financial services organisations to try to remain “agile and competitive” in the face of global shifts in supply and demand.

As the British economy flatlines, unemployment has not risen as much as many economists would have expected. Zero hours contracts and other forms of casual or temporary working may be one of the many factors which help explain this so-called “productivity puzzle”.

Under the contracts, companies and other employers are able to retain skilled and experienced employees, without spending money when they don’t have work for them.

Professor Guy Standing, who has written on insecure workers, whom he calls the “precariat”, said labour statistics were now “atrocious” because they try to define people as employed and unemployed instead of the several shades of grey in between.

Dealing with the work flow

The health service has always used bank staff to cope with extra-busy wards but in the last two years there has been a 24 per cent leap in the number of zero hours contracts to almost 100,000. While many are nurses and healthcare assistants, he number of consultants on the flexible contracts has also increased.

The number of educational institutions using the zero hours contracts increased tenfold from 2004 to 2011, according to the government’s Workplace Employment Relations study. Lecturers can be only paid for their contact hours and if the number of students taking their course falls, they can teach fewer classes and their pay can be cut.

Experts say zero hours contracts are increasingly common in the media, which has busy and quiet news periods. The Houses of Parliament are advertising for reporters for Hansard, the parliamentary record, on zero hours contracts to supplement existing staff when parliament is sitting long hours or there are many committees to transcribe.

There are now almost 100,000 zero hours contracts used in NHS hospitals, up 24 per cent in the last two years, according to Freedom of Information requests submitted by the Financial Times.

The health service has always used ‘bank’ staff to fill in gaps and cope with extra-busy wards, and some of these staff have also had permanent contracts or multiple zero hours contracts.

But the proportion of zero hours contracts the NHS is using has risen far faster than the full time equivalent staff numbers, which are up just 6 per cent, and more highly skilled workers such as consultants are employed on the contracts.

A department of health spokesman said NHS Trusts are independent employers responsible for their own decisions.

“Zero hours contracts can help solve fluctuating staffing needs and may suit some people who want occasional earnings and are able to be entirely flexible about when they work, but the unpredictable nature of working times means that they won’t be for everyone,” he said.

The contracts vary, with some employers still offering benefits such as holiday pay and sick pay. In some cases, employees are allowed to turn down work but in others they are expected to be available.

Vidhya Alakeson, from think-tank the Resolution Foundation, said the first adopters of the contract tended to use it to avoid any mutual obligation with a worker, but since the recession started they had begun to be used by companies cautious about whether any uptick in demand might last.

“When people are on call you’re not paying redundancy, you’re not having to lay anyone off,” she said. “The upside is obviously that compared to previous recessions a lot of people are still connected to the labour market.”

Experts are divided about whether the increase in flexible contracts is a structural shift in the labour market. Mr Von Hagen and Professor Standing think employers will be reluctant to return to more onerous commitments to their workers.

But Ms Alakeson said if the economy begins to grow more rapidly, highly skilled workers will demand more secure contracts to better plan their lives.


Appeal of  zero-hours contracts  not universal


One academic didn’t think that with a PhD in history, an MA in French and Italian and a job as a lecturer, she would ever be reliant on her husband’s income.

But, stuck in a contract where her hours can vary massively each term, she now feels she has no choice.

“Zero hours contracts are OK for pin money but basically if that is your livelihood it is very, very difficult,” she said.

She initially claimed benefits as well but found the system could not cope with her fluctuating income and getting paid in lump sums, for example, after working at summer schools.

Her contact hours with students have been cut from 12, to 10 and then to just eight. “That’s 40 per cent of my income slashed like that – they just merge your classes,” she said, adding each hour requires many more of preparation time.

Her hours are spread over the week so it is difficult for her to take on a second job, although she does try to supplement her income with translation work.

The university she works for is not unusual – the proportion of educational institutions using zero hours contracts rose from one per cent to 10 per cent between 2004 and 2011, according to the Workplace Employment Relations study.

Jane Thompson from the lecturer’s union UCU says zero hours contracts are catching on in the sector.

“They’ve increased because of a perceived flexibility – universities have no committment to these people so they can cut the hours when student numbers drop,” she said. “Once some started getting away with it, a number of other people decided it was a good idea.”

But she said the contracts could result in a high turnover of staff which could frustrate students who are now paying more than ever towards their degrees.

For the lecturer, the contract has made her question her loyalty to the university. If it continues much longer, she says, she may end up returning to school teaching. “It is very, very demoralising,” she said.

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