Negative publicity around ZHC’s affects employers’ approaches | Incomes Data Research

Our survey of variable hours contracts and low pay attracted widespread interest at its launch: we received initial responses from more than 200 organisations, suggesting the topic is of significance to many employers in industries such as hotels and leisure, retail, and social care as well as parts of the manufacturing and public sectors. However, only around a fifth of these respondents made it past the preliminary screening questions, which were designed to eliminate employers that do not operate these contracts and/or do not pay such staff less than £10ph. We nevertheless managed to produce a sample of 40 employers, with a combined workforce of just over 460,000 people.

Our survey explored the use of two types of variable hours contract: zero hours and minimum hours. The first of which provides employees with no guarantee of hours in their contract (zero hours), while the second guarantees only a small number of hours in the contract (minimum hours). Within the sample, we found that far more employers use zero hours contracts than minimum hours contracts (80% and 33% of respondents respectively). However, minimum hours contracts cover more staff: minimum hours workers represent 29% of the total sample workforce (and 37% of the low-paid workforce), while zero hours workers account for just 15% of the total sample (and 24% of the low-paid workforce). This is likely for various reasons, including the fact that minimum hours contracts are commonly used by large retailers and that zero hours contracts are often used for discrete activities.

Employers’ use of zero hours contracts appears to be for genuinely unpredictable and infrequent work. For example, they are often utilised for discrete activities and/or where it is recognised that there are likely to be peaks and troughs in demand (28% of respondents with zero hours contracts said they were largely used where demand is highly variable/difficult to predict, whereas no respondents said the same of minimum hours roles). The nature of such assignments ranged from erecting estate agent boards to summer activity instructors employed by a local authority.

Meanwhile minimum hours contracts appear to be used when fixed hours contracts might be equally suitable, which may indicate that employers are choosing to use minimum hours approaches because they are more advantageous for employers than employees because it means they can flex people’s hours at very little notice. For employers, providing workers with only a minimum guarantee of working hours (from as little as one hour a week at one hospitality firm in our sample) establishes a contractual relationship which the survey shows gives employees less freedom to turn down work or to request an alternative working pattern. The survey also indicates that while minimum hours contracts provide a minimum guaranteed number of hours for work, workers regularly work more hours than stated in their contract.

Managing fluctuations in demand is a key consideration for employers and 88% (35) said that this drove staff/shift scheduling decisions and was often the only consideration. Employee choice does feature as a consideration at 60% (23) but very few (8% or just 3 organisations) consider this alone. More than one employer told us that from their perspective a key reason for operating variable hours contracts was to facilitate flexible working for staff. For example, a retailer said that some staff worked additional hours to enable their colleagues to attend to family commitments, such as the first day of school, while seasonal or ad hoc jobs may be attractive to workers such as students who cannot necessarily commit to fixed working hours on a long-term basis.

One respondent suggested that the introduction of a higher rate for non-contracted hours, as suggested in the Taylor Review of Modern Working Practices, might therefore have a detrimental effect on work-life balance for some employees if it disincentivised employers from offering flexible hours in this way. However, the survey shows that managing demand is the main consideration when it comes to the use of variable hours contracts, regardless of employers’ views in respect of employee choice.

Media reports indicate significant growth in the use of variable hours contracts. However, on the whole our survey indicates little or no change in the use of variable hours contracts: while three respondents have implemented or increased their use of such working practices over the past two to three years, four respondents told us that they had reduced their use. The necessary caveat here, though, is the small size of the sample.

In analysing the survey findings and talking to respondents it became clear that some did not want to term their working arrangements ‘minimum or zero hours’, instead insisting that they employ staff on ‘flexible’ contracts. In addition, a number of employers, including two large retailers who we profile in short case studies, do not perceive themselves as offering variable hours contracts but in practice make extensive use of ‘overtime’ (paid at plain time up to full-time weekly hours) for workers on minimum hours contacts or what one respondent defines as ‘additional hours’, especially for part-time staff. These ‘additional hours’ are technically optional but, as one employer told us, an awareness of the precarious nature of the retail industry and peer pressure within teams can make some workers think twice before declining any overtime offered.

To read the full report or read more about the work carried out by the LPC click here: https://minimumwage.blog.gov.uk/2019/01/22/research-into-one-sided-flexibility/

Employment and unemployment both rise

The latest labour market figures from the Office for National Statistics (ONS) show that both employment and unemployment have risen. The comparatively unusual simultaneous increase in both employment and unemployment is connected to a fall in the number of individuals classed as economically inactive.
The number of people employed in the UK grew by 96,000 to 31.233 million in the three months to October 2018. The rise is due in particular to the numbers of full-time workers increasing. The employment rate rose to 75.7%.
At the same time however, unemployment has also increased marginally by 21,000 with the rate staying at 4.2%.
The reason unemployment has increased at the same time as employment is mainly because the numbers of those classed as economically inactive have fallen. A large proportions of these individuals – mostly previously long-term sick – are now available for and looking for work, and as a result have moved into the ‘unemployed’ category, leading to the rise seen in the latter.
Vacancies and redundancies show the same trend as in September with vacancy numbers rising by 18,000 to 849,000, and redundancies falling to 83,000, a decrease of 4,000. The change in both these sets of figures indicates that the availability of work continues to increase.

Summary statistics on UK labour market, September 2018
MeasureLevel (000's)Quarterly change in level (000's)Rate %Quarterly change in rate
Employment (16-64)31,2339675.70.2%
Unemployment (16-64)1,365214.20.0%
Economic inactivity (16-64)8,663-9521.0-0.2%
Vacancies849181.6*0.0%
Redundancies83-43.0-0.1%
* Number of unemployed people per vacancy
Next release: 22 January 2019

Average earnings growth rate rises to 3.3%

The rate of growth in total average weekly earnings across the whole economy rose to 3.3% in the year to October, up from 3.1% in the year to September and from 2.8% in the year to August. Average earnings growth was strong in all sectors of the economy other than in manufacturing, where it was just 2.0%.

Stronger bonus payments in the finance and business services sector, construction and the wider services sector, which includes communications and transport, lifted overall earnings in these sectors and this in turn lifted the whole economy figure. Lower bonus payments had previously held back overall pay growth, but this changed in October.

Continue reading Average earnings growth rate rises to 3.3%

Pay reviews – Median back up to 2.5% on foot of higher private sector awards

Our latest analysis shows the median pay award across the economy back at 2.5% for the three months to the end of October 2018, having dipped to 2.4% in September. The interquartile range has widened marginally from between 2% and 2.8% to between 2% and 2.9% and the average has also ticked up, under the influence of more higher-end awards in the private sector, with a quarter of pay awards worth 3% or more in the latest period.

Continue reading Pay reviews – Median back up to 2.5% on foot of higher private sector awards

Pay reviews – One third of pay awards at or above 3.0%

While the median pay increase across the economy remains steady at 2.5%, the proportion of awards at or above 3% has increased in the three months to the end of September 2018, according to the latest monitored figures from IDR. The private sector median also remains at 2.5%. The proportion of higher awards, ie those at or above 3.0%, account for a third of all the awards in the sample, up from a quarter in the previous period.

Continue reading Pay reviews – One third of pay awards at or above 3.0%

Increase to statutory minimum rates

The Government has raised the minimum wage based on the Low Pay Commission’s recommendations. The new statutory minimum for workers aged 25 and over, or the National Living Wage (NLW), will increase by 4.9% to £8.21 in April 2019.

The LPC have said that the NLW is on track to rise to £8.62 in April 2020 based on the target of 60% of median earnings.

Bryan Sanderson, Chair of the LPC, said:

I am pleased that the Government has again accepted in full the Low Pay Commission’s recommendations for future minimum wage rates. The increase in the National Living Wage (NLW) to £8.21 in April 2019 will ensure a pay rise for the lowest-paid workers that exceeds both inflation and average earnings.