05/08/2013 02:14 BST | Updated 05/08/2013 10:52 BST

Million Workers Could Be On 'Zero Hours' Contracts

  • Guess where 155 people are on zero hours contracts?

The number of workers on zero-hours contracts could be one million - four times as high as official estimates, according to new research.

The Chartered Institute of Personnel and Development (CIPD) said its survey of 1,000 employers showed that one in five employed at least one person on a zero-hours contract, under which staff are not guaranteed work from one week to the next.

Firms in the voluntary and public sectors as well as the hotel, leisure and catering industries were more likely to use zero-hours contracts.

Separate research among almost 150 zero-hours contract workers revealed that only 14% said their employer failed to give them enough hours to have a basic standard of living.

The workers polled averaged just under 20 hours a week and were most likely to be aged between 18 and 24 or over 55.

The Office for National Statistics (ONS) said last week that 250,000 people in the UK were on zero-hours contracts at the end of last year, 50,000 more than a previous estimate because of a change in the way the figures are calculated, although unions believe this is a huge under-estimate.

CIPD chief executive Peter Cheese said: "Zero-hours contracts are a hot topic and our research suggests they are being used more commonly than the ONS figures would imply. However, the assumption that all zero-hours contracts are bad and the suggestion from some quarters that they should be banned should be questioned.

"There does need to be a closer look at what is meant by a zero-hours contract, the different forms that they take, and clearer guidance on what good and bad practice in their use looks like. And this needs to consider both the advantages and disadvantages in practice for businesses and employees.

"Zero-hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. This can, for example, allow parents of young children, carers, students and others to fit work around their home lives.

"However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings, and we need to ensure that proper support for employees and their rights are not being compromised through such arrangements. Zero-hours contracts cannot be used simply to avoid an employer's responsibilities to its employees.

Business Secretary Vince Cable has ordered a review of zero-hours contracts.

The University and College Union (UCU) said zero-hours contracts denied staff the financial security or stability to operate on a month-to-month basis and denied students continuity with their teachers.

President Simon Renton said: "Without a guaranteed income, workers on zero-hours contracts are unable to make financial or employment plans on a year-to-year, or even month-to-month basis. This research shows that young people are particularly vulnerable to zero-hours contracts and a large number of workers do want more hours each week.

"Zero-hours contracts are the unacceptable underbelly of further and higher education as staff are denied full employee status and key employment rights. Students miss out on a lack of continuity and often receive reduced access to staff employed on minimal hours."

UCU is collating its own data on the prevalence of zero-hours contracts in colleges and universities and hopes to release the findings in early August.

Dave Prentis, general secretary of the Unison union, said: "The vast majority of workers are only on these contracts because they have no choice. They may give flexibility to a few, but the balance of power favours the employers and makes it hard for workers to complain.

"Not knowing from week to week what money you have coming in to buy food and pay your bills is extremely nerve-wracking. Having your working hours varied at short notice is also stressful and it makes planning, childcare arrangements and budgeting hard.

"The growing number of zero-hours contracts also calls into question Government unemployment figures. It is clear that many people working on these contracts are not included as unemployed, even if they have no work at all - at the very least we have hundreds of thousands who are under-employed. In turn, this plays havoc with the benefit and tax credit system.

"Unison would like to see the use of these contracts banned - at the very least the Government needs an official investigation to confirm the true scale of the problem."

Business Secretary Vince Cable said: "Since 2005 there has been a rise in the use of zero hours contracts.

"For some these can be the right sort of employment contract, giving workers a choice of working patterns. However for a contract that is now more widely used, we know relatively little about its effect on employers and employees. There has been anecdotal evidence of abuse by certain employers - including in the public sector - of some vulnerable workers at the margins of the labour market .

"Whilst it's important our workforce remains flexible, it is equally important that it is treated fairly. This is why I have asked my officials to undertake some work over the summer to better understand how this type of contract is working in practice today."

Shadow business secretary Chuka Umunna said: "Zero hours contracts should be the exception to the rule but unfortunately are becoming the norm in some sectors and companies. Whilst some employees welcome the flexibility of such contracts, for many zero hours contracts leave them insecure, unsure of when work will come, and undermining family life.

"The 'review' the Business Secretary has established into zero hours contracts is clearly inadequate given the seriousness of this issue and the mounting evidence of the abuse of zero hours contracts. Nothing less than a proper consultation with a formal call for evidence will do.

"We are determined to stamp out abuse of zero hours contracts and are looking at how to do so in Labour's Policy Review. Many of those who argue against taking action to curb abuse cite reasons similar to those used against the introduction of the National Minimum Wage. But if large swathes of the UK's workforce are in insecure employment, that will do nothing to boost consumer confidence, demand and jobs."

Vidhya Alakeson, deputy chief executive of the Resolution Foundation thinktank, said: "If it's true that there are in the region of one million people on zero hours contracts, then that would be a substantial portion of the workforce - this could no longer be dismissed as an issue affecting only a tiny minority.

"The new estimate underlines the urgent need for a deep and thorough review of zero hours by the Government, which takes into account not only the scale of the problem but the effect these contracts have on workers' employment rights, earning capacity and personal well-being.

"There may be a place for zero hours contracts, especially in getting through tough economic times, but our research suggests most people are negatively affected and the case for reforming them seems overwhelming."