Benefits of zero-hours contracts outweigh downsides for most people

New research from the CIPD suggests there needs to be a more balanced and nuanced debate about their place in the labour market, that recognises both the positives and downsides to zero-hours work. The CIPD’s new research ‘Zero-hours contracts – Evolution and current status’– claims that this kind of arrangement – where there’s no guaranteed minimum number of hours that must be worked – is an established part of the UK labour market. It finds that the number of people on ZHCs has changed little since 2015, making up just 3 percent of employment. Fewer than a fifth of employers (18 percent) use ZHCs, and they’re most often used in the hospitality and entertainment industries, in the voluntary sector, and typically in roles such as bar staff, waiters/waitresses, and care workers.

On the positives, the CIPD’s research highlights that zero-hours workers have comparable job satisfaction with other staff. They report better work-life balance and are less likely to say their work has a negative impact on their physical or mental health. They also provide employment opportunities for those who might otherwise not be able to work because they can’t commit to more regular pre-determined working hours due to ill-health, care or studying needs, for example.

However, the report shows challenges persist with ‘one-sided flexibility’ that typically benefits employers rather than workers. It finds that just 57 percent of employers with ZHC workers give them the right to turn down work in practice, meaning a significant minority are under pressure to take all the hours offered to them. The report also shows that many employers don’t compensate zero-hours workers if they cancel shifts with little or no notice.

Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development, said: “People’s experience of zero-hours work varies widely depending on their individual circumstances and how they are managed. Many people benefit from this very flexible way of working, and in return, are prepared to make some trade-offs in other areas of job quality.

“In contrast, some find the flexibility of these working arrangements mainly favours the employer. For example, where they are put under some pressure to accept hours or have shifts cancelled with little or no notice, and without compensation. These sorts of practices are unacceptable and need to be tackled.

“However, simply banning zero-hours contracts would disadvantage the majority of those workers for whom they provide genuine two-way flexibility, and in some cases could limit access to employment altogether. The nuanced and mixed picture of both the benefits and downsides of zero-hours contracts set out in our report suggests it is time for a more balanced debate about their place in the labour market.”

“There is also a need to ensure that insecure and low paid workers more broadly benefit from additional financial support by Government over the coming months, to help them deal with the cost of living crisis.”

The CIPD has the following recommendations for Government to enhance the rights of ZHC workers and clamp down on poor employer practice:

• Introduce a right for variable hours workers to request a more stable contract or working arrangement after they have been employed for six months.
• Create a statutory code of practice on the responsible management of zero-hours workers that would include the requirement for organisations to compensate workers if their shifts are cancelled with little or no notice.
• Improve labour market enforcement, including through the creation of a Single Enforcement Body and a much stronger focus on supporting employer compliance.
• Abolish ‘worker’ status to help clarify and enhance employment rights for many zero-hours contract workers and casual workers more widely.

CIPD research highlights

The positives: 

• Zero-hours workers are largely as satisfied with their jobs as other workers: 62 percent were satisfied (or better) with their jobs, compared to 66 percent of other employees
• On average, zero-hours workers report better work-life balance, are under less stress at work than other workers, and are less likely to report workloads are excessive
• Zero-hours workers are more likely than other workers to think their work has a positive effect on their physical and mental wellbeing.  For example, nearly half (45 percent) of zero-hours contract workers thought their work had a positive effect on their mental health compared to just over a third (34 percent) of other workers
• Most people on zero-hours contracts are treated by their employers as ‘employees’ rather than ‘workers’ and consequently have full employment rights subject to their length of service.

The challenges: 

• Zero-hours contract workers are likely to be less satisfied overall with their employment contracts and pay and conditions compared with other employees
• Hourly pay for zero-hours workers is slightly lower (6 percent) than pay for people working on other forms of contract once allowance is made for other factors like age, experience, etc
• Zero-hours contract workers are less likely to have a voice at work to express any issues or concerns they might have
• Nearly half (48 percent) of employers of zero-hours workers said that they do not compensate workers for shifts that are cancelled with less than 24 hours’ notice.
• Just 57 percent of employers of zero-hours workers give them the right to turn down work in practice, meaning a significant minority are under pressure to take all the hours offered to them