Zero-hour contracts: can our legislation really protect workers?

Employers in Britain have found themselves in the firing line lately over their use of zero-hour contracts. Under these, employees must be available for work, but do not have specified or guaranteed hours.

With Labour leader Ed Miliband promising to crack down on these contracts if elected, the issue will be front and centre during the UK general election campaign.

Closer to home, the use of zero-hour contracts is also coming under increased scrutiny, particularly after a recent claim in the Dáil by Fianna Fáil jobs spokesman Dara Calleary that some companies using these types of contracts in Ireland are abusing workers and treating them "like the navvies in England".

The Government recently appointed a team from Kemmy School of Business at the University of Limerick (UL) to examine the prevalence and impact of zero- hour and low-hour contracts in Ireland. It has promised to act if the review finds employees are being exploited.

Opponents of zero-hour contracts argue that having to be on call is highly restrictive for employees as they have no guarantee of earning enough to live on. They may also miss out on benefits such as sick pay and holidays, and find themselves unable to get loans and mortgages because they aren’t in regular employment. And there are childcare issues to contend with.

Some big-name companies such as McDonald’s, Tesco, JD Wetherspoon, Domino’s Pizza and Sports Direct have come in for heavy criticism for using these casual contracts in Britain. More recently, closer to home, Dunnes Stores has been under the media spotlight after staff voted for industrial action on this and other issues.

Recent figures from the Office for National Statistics showed that 697,000 people, or 2.3 per cent of the British workforce, are on zero-hour contracts, which are popular in retail, hospitality, health and education. No comparable figures are available for Ireland as yet, but the UL study should be able to provide some data.

New companies

According to some experts, zero-hour contracts are not heavily in use here and it is unlikely that they’ll become commonplace in the near future either, despite Mr Calleary’s complaints

"To be honest, I wouldn't be surprised if the UL study finds that there are not many of them here because if they were coming up a lot, lawyers would be among the first to see them," said Patrick Walshe, partner and head of the employment law department at Philip Lee Solicitors.

“We do an awful lot of work with new companies setting up here and, because we’re drafting up contracts of employment, we’d know if employers were particularly keen to use them because we’d be asked to draft a clause that allows them to call on workers when and if needed. We’re just not seeing that though,” he added.

Employers’ lobby Ibec is also keen to downplay the popularity of zero-hour contracts, with its head of industrial relations and human resources, Maeve McElwee, pointing out that it’s not as easy to introduce here as in the UK.

“We don’t actually see any significant trend here towards zero-hour contracts and we are not expecting employers to move in that direction at all because there are significant differences between British and Irish law,” she said.

“Unlike in the UK, where employers have no obligation to pay for hours they contract, the Organisation of Working Time Act 1997 provides protection for Irish workers on zero-hour contracts. The Act requires that any employee who works less than 25 per cent of their allocated hours (or 15 hours, depending which is less) in any week must be compensated. Given this, there’s a big obligation on employers here to manage things tightly to ensure they are actually utilising the hours contracted,” she added.

While most organisations approached by The Irish Times would not comment on their use of zero-hour contracts, a spokeswoman for McDonald's Ireland stressed that the company was not a zero-hours employer and did not operate an "on-call" practice with their team.

Separately, JD Wetherspoon, which operates two bars in Dublin, and intends to open a further 27 pubs in Ireland over the next five years, said it offered “flexible working contracts”, as it operates in a seasonal sector, in which demand fluctuates.

A spokesman said the pub chain probably offered more hours per week than any other similar company because of its long opening hours and the fact that its pubs are busy throughout the day. It added that staff get holiday pay, bonuses, staff discounts and other benefits, including free share options after 18 months.

While the Working Time Act gives employees some protection, there is anecdotal evidence that some companies are using zero-hour contracts unfairly.

"We don't have any statistics on this so we have to rely on other data available, but if you look at the number of people who report being under-employed, then there are more of those here than in the UK," said Esther Lynch, legal and social affairs officer at Ictu.

“In Britain, they have come to the realisation that there’s a growing, unacceptably high number of zero-hour contracts so, on that basis, I think it’s safe to presume that there is a problem with the practices here although they may vary a little from those in Britain.”

But what about the argument that some workers prefer zero hours because they want more flexibility? According to a survey of more than 2,500 workers in the UK, carried out by the Chartered Institute of Personnel and Development (CIPD) in November 2013, the use of zero-hour contracts has been demonised, with the positive experience of most people on them being overlooked.

That study found 65 per cent of people on zero-hour contracts report being satisfied with their work-life balance, compared to 58 per cent of all employees.

Maeve McElwee is concerned that the negativity surrounding zero-hour contracts hides the fact that there are workers – such as students and older people – who don’t want to be tied down to restrictive full-time employment. She believes it is in employers’ interest to keep staff sweet.

Hard rap

“I think employers are getting something of a hard rap because many of the industries where zero-hour and low-hour contracts are popular are also the ones that are customer-facing. It doesn’t make sense to put an unhappy employee in front of your customers. The reality is that most employers do their best to ensure good relations with staff by trying to be flexible around rosters,” she said.

Ictu’s Esther Lynch is somewhat sceptical, claiming that many employers simply don’t want to offer full-time employment to staff.

“If companies truly believe that people want casual contracts, then they have nothing to fear from offering full-time contracts to staff. But our proposal that staff should be able to request full-time employment has been bitterly opposed,” she said.

If the UL study finds that zero-hour and/or low-hour contracts are being used to exploit staff, Patrick Walshe says there are a number of steps the Government could take.

“A simple technical amendment could be made to increase the threshold in the Working Time Act from 25 per cent upwards. Another alternative would be to possibly restrict the sizes of businesses that can make use of zero-hour contracts so that, for example, only new companies that can’t afford to take on full-time staff and may only need them at certain times could use them,” he said.

“It’s worth keeping in mind, though, that zero-hour contracts are simply not going to be appropriate for most types of businesses and I suspect that it’s unlikely that we’re going to see an expansion in the use of these types of contracts here,” he said.