Zero tolerance

Last year, I was proud to stand on a manifesto which committed to a ban on exploitative zero-hour contracts as part of Labour’s Plan to Make Work Pay. It is nothing short of a national scandal that there are now more than a million people employed on zero-hours contracts across the UK economy, including over 100,000 in the retail sector. This represents the very worst of what’s become known as one-sided flexibility. Too much of the flexibility at work belongs to the employer, not the employee. In retail and hospitality, zero-hour contracts are just the tip of the iceberg of the wider problem of low hours. Even where workers do have a contracted number of hours, they are often on a short-hours contract, with many working between 10-20 hours more than their contract every week.

As with zero-hours contracts, these ‘extra’ hours can be taken away without notice, leaving workers unable to plan their finances or childcare. What’s more, these overtime hours count for nothing when applying fora mortgage or taking out a loan. When my union Usdaw surveyed their members, thousands responded to say how much pressure this places on them and their families. One response really stood out to me: “Work can take hours off me when they feel like it. I live in fear that my hours will go ‘back to contracted’ … [I] would find it hard to live as I am living at my means now. I have asked for a full-time contract on many occasions to just be told that it is not possible.”

The employment rights bill is the first step in giving all workers the right to a contract that reflects the hours they regularly work, as promised in Labour’s Plan To Make Work Pay. This right will bake in the predictability and financial security those hours represent.

However, several hurdles remain before workers can start benefiting from this new right, including the House of Lords and secondary legislation.

It is vital that the right to guaranteed hours is a right to have rather than a right to request. We know from experience – particularly in the case of the statutory right to request flexible working hours – that a request-based system simply does not work. Research has shown that up to one in three flexible working requests are refused, with employers making liberal use of the permitted “business reasons” for refusal. Crucially, the figures for refusal do not include workers who felt unable even to make a request, or those who were unaware of their rights in the first place. This worker-employer power imbalance was noted by the independent Low Pay Commission (LPC) following an intensive review into one-sided flexibility: “The issue is not about a worker requesting a change to the amount of work they do, but rather the proper recognition of their normal hours. Workers, already worried about raising issues in the workplace, because of fears of employer retaliation, are less likely to raise a ‘request’ – so the right needs to be stronger than this.”

The truth is that a right to request, in whatever form that takes, is not a right at all. Labour’s employment rights bill recognises this, and incorporates a real right to have, subject to what is likely to be complex secondary legislation.

It may come as no surprise to hear that both the Liberal Democrats and Conservatives in the House of Lords have aligned themselves with unscrupulous bosses by repeatedly trying to undermine the provisions. Their amendments would transform Labour’s plan into a right to request or allow workers to “opt out” from being offered a normal-hours contract. We cannot allow unelected opposition peers to water down the clear manifesto promise that was endorsed by the electorate at the general election.

Once the bill receives royal assent, attention will move on to the secondary legislation, which it relies heavily on. This legislation will be complex and technical, making it imperative the government gets it right. Failure to do so would make this new right at best ineffective, and at worst, leave some of the most vulnerable workers worse off than they are now.

There are two key questions the new regulations need to answer. First, which workers will have the right to a guaranteed hours contract? Second, how will ‘hours regularly worked’ be calculated?

The wording of the bill allows the government to make the right available only to workers already contracted to fewer than a certain number of hours. Further, it allows the government to exclude groups of workers via statutory instrument.

Business has, as expected, lobbied the government to make the right available to as few workers as possible. This includes setting the hours limit as low as possible. The limit has been euphemistically referred to as “low hours”, even in the government’s own document, Next Steps to Make Work Pay.

Moreover, during the committee stage, a Conservative probing amendment proposed introducing the right for only those workers currently contracted to work two hours a week or fewer – hours so low that even they admitted it would be “ridiculous”. Similarly, some lobby groups have proposed excluding entire sectors, including hospitality. To do either of these things would not deliver on promises made to the electorate in the Plan to Make Work Pay. The government has said that there will be a consultation on what constitutes a “low hours” contract. Nevertheless, as these details are considered, we must keep two questions at the forefront of our mind: how the measures will be implemented in the real world, and whether they might have unintended consequences or behaviours that undermine what we are trying to achieve.

For example, if the figure is any lower than full-time, or indeed lower than 48 hours per week, it is likely to significantly distort the labour market. A ‘low hours ‘provision of, for instance, eight hours per week would simply result in a replacement of zero hours contracts with eight-hour contracts. Not only that, but it could also result in employers who typically offer 10-hour contracts choosing to offer eight-hour contracts, which would now be seen as a legally endorsed floor.

It is important to remember that workers will only be entitled to a contract which reflects their current working patterns. This means that employers need not worry about hiring someone to work part-time, only for them to demand more hours than they have been working. Labour’s legislation provides a right to predictability and security, not to more hours.

If only a certain subset of workers are entitled to the right, employers could circumvent the new provisions by offering overtime only to those who are not entitled to guaranteed-hours contracts. This will leave some of the lowest paid workers worse off, primarily women, workers of colour, and disabled workers. These are the very people whose circumstances we are trying to improve. Unions have been clear throughout the development of this policy that the hours a worker is entitled to should be based on an average of the preceding 12 weeks. Whilst the government has already accepted that the first reference period will be based on a 12-week average, they are to consult on the length and frequency of subsequent reference periods.

Maintaining the 12-week reference period is deceptively important. If the reference period is too long, it undermines the right. If it is too short, it could make the right impractical and subject to factors such as seasonal variations in workload. There is also a long-established precedent in employment law of defining an average work week over a 12-week reference period.

Without consecutive reference periods, employers are likely to ‘game the system’ by giving workers a low number of hours over the first 12 weeks of employment before subsequently increasing the number of hours of work. Also, the growth of algorithmic scheduling will make it much easier for employers to manipulate hours, so it is vital that the legislation guards against this. We should remember the government’s crucial promise in Make Work Pay: “We have an ongoing commitment to protect the integrity of these policies and will put in place anti-avoidance measures where necessary.”

The employment rights bill and the New Deal for Working People are some of the Labour government’s most popular policies. More than that, they are Labour values in action. Employment law is complex and regulation-heavy, and so much of the bill is still left to be clarified by statutory instrument. In the case of an entirely new right like guaranteed hours, which is specifically designed to tackle the workplace power imbalance and end one-sided flexibility, any loophole left open or regulation incorrectly calibrated risks undermining the right as a whole.

Analysis of the official labour market survey shows that there are up to 2.4 million workers on variable forms of contract who could benefit from the provisions on guaranteed hours if they are done right. If they are not, then the millions who voted for a transformation in employment rights will be left at the mercy of unscrupulous employers – a situation we must work to avoid to the utmost of our ability.

Image credit: Chris Ebstein via flickr