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Employment – Zero-hours contracts

08 June 2014
Employment – Zero-hours contracts

Zero-hours contracts have received a beating in the press recently, but have they been unfairly demonised? Elly Earls reports

Zero-hours contracts have, according to Labour leader Ed Miliband, "spread like an epidemic across our economy". He's promised to turn his words into action and has stated that a future Labour government would ban "the worst abuses of the system" and introduce measures to protect workers on these "exploitative" contracts.

Yet, at North Lanarkshire Council, where he announced his pledge to crack down on zero-hours contracts, almost 800 workers are employed under these arrangements, mostly serving food at council receptions and events.

Under a Labour government, Miliband would introduce three measures to address his concerns about zero-hours contracts. He would ensure workers can demand a fixedhours contract when they've worked regular hours for more than six months for the same employer; ensure they receive a fixed-hours contract automatically when they've worked regular hours for more than a year unless they opt out; and protect employees from employers who force them to be available at all hours, won't allow them to work for other employers or cancel shifts at short notice for no pay.

And while commentators in the sector have no qualms about the implementation of the last measure, they are adamant that the first two are unrealistic and would cause chaos. If they were put into practice, receptions and events might not run so smoothly at Labour controlled North Lanarkshire Council either.

A two-way street The latest official figures released by the Office for National Statistics (ONS) show that the number of zero-hours contracts in the UK has reached 1.4 million, with half of all employers in the tourism, catering and food sector using "non-guaranteed hours contracts".

But, says Kate Shoesmith, head of policy and public affairs at the Recruitment and Employment Confederation, this is hardly surprising. "It makes sense that half of all employers in the hospitality and catering sector use zero-hours contracts because these businesses are responding to very short-term fluctuations in demand," she says.

Kurt Janson, policy director at the Tourism Alliance, agrees. "In the tourism sector, there are peaks and troughs in demand and a lot of those are unforeseen. The weather, for example, can vastly change the number of visitors to a destination and, therefore, how busy a restaurant or hotel will be.

"While tourism businesses can offset some of that by having temporary employees over the summer period or part-time employees for weekends, there's still a need to have casual workers who are on call, who could be called up at a day or two's notice, or even on the day, when there's a surge in demand. That helps manage labour supply and demand for the business and keep costs down."

The flexibility of these contracts also benefits employees, Shoesmith says. "We know that the individuals who are working on these contracts want to work in a flexible way," she
says. "They might have caring responsibilities or they might be studying or have other work, so they are picking up this work to fit around their own lifestyle."

Peter Flaxman, director of Solutions 4 Caterers, says that in general, good employers and good employees work together well and people get the hours they want.

"They understand that in December there will be more hours and in January there will be fewer, and it's no big deal," he says.

Of course, there are downsides for hospitality operators. "If you have a function to organise at short notice, you have to ring around to get people. Sometimes you might have to ring an agency and pay extra for staff," says Martin Couchman, deputy chief executive of the British Hospitality Association.

But, he emphasises, that's part and parcel of working in the industry. "You're not producing a product day in, day out; you're doing something for which demand varies, sometimes at very short notice, and you need to be able to cope with that."

Unrealistic changes Miliband's suggestion of protecting employees from exclusivity contracts is one the hospitality sector supports. In fact, says Couchman, it would have little impact on businesses. "We
haven't seen evidence of exclusivity requirements on zero-hours workers," he says.

Take casual employees who work at banquets on short notice if the hours are suitable.

"If all those people had a right to a fixed-hours contract after a period, that would be impossible," he says. "The only way you'd get round it is by saying to them, after 11.5 months or so, 'we can't use you any more'. I think all the suggestions the politicians are coming up with are very clever, but they would cause chaos."

Shoesmith, Janson, Couchman and Flaxman all agree resolutely with one thing: the problem lies with poor employers, not zero-hours contracts themselves.

"Casual employment contracts in tourism and hospitality have been around for generations," Janson says. "When I was a student, I was employed on one. That's how it works and everyone was very happy. It's just that some companies have been taking advantage of these contracts and exploiting the workforce.

This has brought the type of contract into disrepute, when it's actually the employers who are the problem, not the type of contract itself."

For Shoesmith, the solution is improved guidance for employers. "They need to understand their responsibilities and they need to be sharing the terms and conditions of employment with their employees," she says.

Janson agrees: "Having good practice guidelines, would help to restore people's confidence in this type of employment arrangement."

Flexibility at Rudding Park

For Peter Banks, managing director of Rudding Park hotel in Harrogate, zero-hours contracts have their downsides for employers and employees, but these are outweighed by the
flexibility they offer. While Banks has to accept that a member of staff may not be available exactly when he wants them, employees on zero-hours contracts, like banqueting supervisor Brenda Moore, know that if times are quiet, they'll get fewer hours' work. "I have to accept that," she says. "It's about making hay while the sun shines."

On the other hand, she is able to pick and choose her hours to fit her lifestyle. "I can say that these are the hours I'd like to work and it fits in with my family life and holidays," she says, adding that she has been employed on this sort of contract for the past 25 years and wouldn't have had it any other way.

Banks mainly uses casual contracts in the conference and banqueting operation of the business and has a pool of 50-60 casual employees he can call upon when demand is up. The flexibility offered by zero-hours contracts is just as beneficial for him: "The reason these contracts work so well in food service is because it's a fluctuating business," he says. "I never know from one month to the next how busy we're going to be. In businesses like ours, which peak and trough very dramatically, it's the only way to work."

If new legislation around zero-hours contracts was brought in, Banks believes it would be self-defeating. "It would actually end up hurting the people it's trying to protect," he says.

"Brenda has raised a family while working here, and she wouldn't have been able to do that if she had to have a fixed-hours contract."

It's all about the experience at Dukes

At the five-star Dukes hotel in London, ge neral manager Debrah Dhugga employs staff on zero-hours contracts in both the property's food and beverage operations and the housekeeping department. She says both herself and the employees benefit from the flexibility of the arrangement.

"If the economy is struggling or if there's a trough period, it gives the employer the opportunity to look at their costs, but it also gives employees flexibility. They can say yes or no to work," she explains.

"Employees may have other commitments too. They may want to work in a five-star, deluxe hotel to build their CVs, but they might not be available for 20 or 40 hours a week. It works for them as it does for the employer."

Dhugga admits that some employees on these sorts of contracts would like extra hours, but at the end of the day, at Dukes, they're always made aware that they've signed up to a contract with zero guaranteed hours.

"As an employer, you're not committed to give x amount of hours if the employee has taken on a zero-hours contract," she says. "It's something they buy into when they sign the contract."

Zero-hours employees are certainly treated no differently from staff on traditional contracts. "If there's a staff party or social event, they will always be included. They get the same benefits and they're part of the team," she says.

Benefits of zero-hours contracts

At award-winning event caterer Seasoned Events, many employees have chosen to stay on zero-hours contracts - rather than switch to fixed-hours contracts - because it works better
for them. And managing director Colin Sayers certainly isn't complaining.

"This type of contract offers flexibility for me as well as the staff," he says. "It works for my business because of the peaks and troughs. And, when it comes to the employees, most of
my staff have worked for me for years and have evolved into full-time workers, but they have chosen to stay on variable contracts because it means they can do what they want, when they want. They don't have to work solely for me; they can get a variety of other work, too."

As the work at Seasoned Events is mainly during the week, many of Sayers' employees work for other companies over the weekend.

"Some will choose to work for seven months of the year solid and then go somewhere sunny over the winter," Sayers adds. "One guy who used to work for me was a chef in the UK during the summer, and during the summer in Australia, he ran cricket tours over there."

Sayers accepts that there will always be some companies that abuse zero-hours contracts, but he doesn't believe the rest of the industry should suffer too. "I wholeheartedly support zero-hours contracts as long as they are done in the appropriate manner," he says.

At Seasoned Events, those on variable contracts are treated exactly the same as those who work fixed hours. "If I had them all working on fixed-hours contracts, they would be unhappy and my business would suffer," he says.

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