2  

Acknowledgements

Ciarán Garrett, LY National Chairperson 2013-14

Jeni Gartland, LY Campaigns Officer 2013-14

Elaine Deegan, Claire Power, and Yvonne Campbell, Labour Research Office

Rory O’Farrell, Nevin Economic Research Institute

Ged Nash TD

John Lyons TD

Contact Details Jack Eustace, Labour Youth National Chairperson: lychair@labour.ie

Luke Field, Labour Youth Policy & Education Officer: lyeducation@labour.ie

Grace Williams, Labour Youth Campaigns Officer: lycampaigns@labour.ie

Labour Youth Online

http://www.labouryouth.ie

http://www.facebook.com/labouryouth

http://twitter.com/LabourYouth

Get Involved with Labour Youth – email youth@labour.ie.

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Contents

Introduction 4

A Note on Low Pay 5

Summary of Recommendations 6

Criticism of Zero Hour Contracts 7

‘Back to the Bad Old Days’ 7

Tackling the ‘Flexibility’ Argument 7

Employees as Consumers: The Economic Case 8

Always Best for Business? 9

The Human Face of Zero Hours 10

Subsidising Low Pay: The Implications for the Welfare System 12

Tackling Zero Hours 13

Leading the Way: The HSE and Home Help 13

Labour Youth Proposals 16

Proposal 1: Extending the Organisation of Working Time Act 1997 16

Proposal 2: Implementation of Collective Bargaining 17

Further Reading 18

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Introduction

A ‘Zero Hour Contract’ is one in which an employee has no guaranteed hours

or roster but must nonetheless be available for work at such times as

specified by their employer.

The contract constitutes a formal arrangement whereby the employee must be

ready and available to work either:

• for a certain number of hours per week, or

• whenever the employer requires, or

• both for a certain number of hours and whenever required.

A person on a Zero Hour Contract has no guaranteed hours of work and few

basic entitlements. There is no sick pay under a Zero Hour Contract.

In Irish law, Zero Hour Contracts are currently dealt with under Section 18 of

the Organisation of Working Time Act 1997. Employees who receive no hours

for a whole week are entitled to the lesser amount of:

• 15 hours’ pay, or

• pay for 25% of the hours they were available to work.

The provision does not cover workers who are engaged on a casual basis.

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For several reasons it is very difficult to accurately ascertain the numbers of

Irish people employed through Zero Hour contracts; Labour Youth welcomes

the appointment of a team from UL’s Kemmy School of Business to

investigate their prevalence here1. In the broadly comparable case of the

United Kingdom, recent estimates place the number of workers on these

contracts at approximately 1.8 million2.

A Note on Low Pay

It is somewhat self-evident that issues of low pay are interlinked with Zero

Hour Contracts. While this policy paper deals specifically with Zero Hour

Contracts, Labour Youth wishes to acknowledge the work of the Labour Party

and Minister of State Ged Nash TD in establishing the Low Pay Commission

to examine these issues. We look forward to the forthcoming recommedations

of the Commission adjusting the minimum wage3.

                                                                                                               1 Slattery, Laura, 2015a. University of Limerick appointed to investigate zero-hour contracts. Irish Times, 9 February. 2 Slattery, Laura, 2015b. Low-hours and zero-hours contracts give employers one-way flexibility. Irish Times, 8 April. 3 Connolly, Shaun, 2015. Low Pay Commission to report to Government by July. Irish Examiner, 27 February.

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Summary of Recommendations

Labour Youth believes that, in the interests of both fairness and the

development of the economy, we as a society should urgently tackle the issue

of Zero Hour contracts.

We as young citizens believe that there is no need here to choose between

what is best for workers and what is best for business. Rather, we see

confronting the spread of Zero Hour contracts as an excellent means of

improving:

• employment rights

• workplace productivity

• job stability for employees

• consumer spending

• social cohesion

• savings to the state welfare system.

With these objectives in mind, Labour Youth proposes the following:

• amendment of the Working Time Act 1997

• enactment of Collective Bargaining legislation.

Labour Youth views these measures as essential components in creating a

fair, modern economy fit for a 21st-century Ireland.

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Criticism of Zero Hour Contracts

‘Back to the Bad Old Days’4

A Zero Hour contract is, in its essence, a profoundly unmodern form of

employment. Rather than representing part of a sustainable future for our

economy, these contracts seem more of a throwback to a Victorian system of

casual labour, weak employee protection and dangerous levels of inequality.

‘It takes us back to the days when fruit pickers, dock workers,

farm labourers and general workers stood at a designated

corner and waited for an employer to come by in the hope of

being selected to work that day’5

Zero Hour contracts represent a warped distortion of the understandable need

for flexibility in certain working arrangements. Rather than valuing and

incentivising work, they instead treat employees as just another commodity to

be used or discarded at the employer’s convenience.

Tackling the ‘Flexibil ity’ Argument

Often, the debate on Zero Hour contracts focuses on their supposedly

providing much-needed flexibility for employers and employees alike.

                                                                                                               4 Prentis, David, 2013. UNISON General Secretary, July 2013. 5 Mills, Paul, 2013. Zero-hours contracts are on road to nowhere. Irish Examiner, 22 August.

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However, all too often these contracts lead to ‘a one-sided flexibility for the

employer and insecurity for the worker’6, who is left with no security against

illness or redundancy, workplace intimidation or unpredicted fluctuations in

hours.

There is a profound difference between flexible work arrangements being

negotiated on an individual basis, and huge multinational chains such as

McDonald’s allegedly employing as much as 90% of their regular workforce7

on these contracts. In such cases, it is inconceivable that the overwhelming

majority of employees would rather not have regular, predictable hours and

rates of pay. Unfortunately, for some employers, Zero Hour contracts have

simply been allowed to replace more secure forms of employment.

Employees as Consumers: The Economic Case

The notion that Zero Hour contracts serve anything but the extreme short-term

interests of businesses is demonstrably false. The Irish economy is presently

in the throes of a consumer spending crisis, in which many businesses are

struggling. Employees on Zero Hours are among the worst placed to help lift

us out of it.

                                                                                                               6 Milne, Seumas, 2013. Zero-hours contracts: in Cameron's Britain, the dockers' line-up is back. The Guardian, 6 August. 7 Mills, ibid.

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Put simply, people with low, unpredictable earnings have low, unpredictable

spending patterns. The entire economy stands to benefit from each of us

having a predictable amount of disposable income at the end of the week.

Under a Zero Hour contract, this is often simply not possible.

‘It’s … easy to see that when employers go looking for

customers, the more people there are on zero-hours contracts,

then the less likely it is that people are buying … The workforce

is also the consumption force, and efforts to keep the wages and

security of the former down also keep the wages and security of

the latter down’.8

The best, most sustainable path to proper economic recovery is through

decent pay, regular hours and reliable job security for our citizens. Zero Hour

contracts are by their nature incompatible with all three.

Always Best for Business?

As suggested above, businesses are not separate from society but rather

form an integral part of it. Accordingly Labour Youth does not believe that

private enterprise must be driven by the demands of cold, short-term self-

interest.

                                                                                                               8 Orr, Deborah, 2013. Zero-hours contracts will not create a sustainable economy. The Guardian, 9 August.

  10  

To their credit, several businesses and employers have already renounced

the use of Zero Hour contracts. This not only has clear reputational

advantages, but makes real economic sense as well: ‘big companies that

succeed value their staff’. 9 It hardly needs explaining that investing in

employees pays more of a dividend than sacrificing their goodwill in order to

shave a few Euro off the wage bill. Providing decent conditions of work is the

sure path to greater loyalty and, consequently, productivity in the workplace.

The Human Face of Zero Hours

‘It’s the uncertainty that gets to me. These contracts only work one way––they

don’t offer any flexibility even if you wanted it because if you turn down hours

you suffer’10

‘I want to move on with my life but can’t as I don’t know when and if I will be

next out of work so this stops me from committing into anything financial like

moving out or furthering my education’11

                                                                                                               9 McGovern, Alison, 2013. The zero hours reductio-ad-absurdum. Progress, 8 August. 10 ‘Shirley’, quoted in Pennycook, Matthew, 2013. The forward march of zero-hours contracts must be halted. New Statesman, 25 June 2013. 11 Survey Respondent, quoted in Berger, Luciana, Howarth, George, & McGovern, Alison, 2013. Young People and Employment.

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Being on a Zero Hour contract can be a demoralizing and devaluing

experience. It has been described as effectively reducing the employee to a

commodity “like a tin of beans on a shelf” waiting to be picked up.12

For employees, unpredictability of hours and earnings can cause major

problems. A Zero Hour contract can make it next to impossible to:

• Budget effectively

• Have confidence to meet regular bill payments

• Apply for a loan or mortgage

• Organise childcare or a second job

• Avoid workplace intimidation or manipulation

• Sustain a consistent, reasonable standard of living

Workers can find themselves unwilling to exercise what rights they do have,

as any attempt to “rock the boat” can be easily and quietly punished by

reducing or rearranging work hours with very little notice.

Damningly, precarious forms of work like this are no guarantee against falling

into poverty. According to Mandate, as many as 17% of those living below

the poverty line are working in precarious work situations.13 This is a wholly

unsustainable situation.

                                                                                                               12 Mills, 2013. 13 Lynch, Esther, 2013. Regulating for Decent Work Combatting Unfair Terms in (Zero-Hour) Employment Contracts. Address to ICTU, 6 May.

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Subsidising Low Pay: Implications for the Welfare System

Zero Hour Contracts are one of the key features of the rising problem of

precarious work and underemployment. Against the backdrop of the economic

crash, the need for job creation has understandably taken on enormous

importance in public discourse. However, we must be extremely wary of falling

into the trap of assuming that all jobs, no matter how low-paid or insecure, are

equally valuable to our society.

Too often our social welfare system is forced to step in and effectively

subsidise low-pay, low-security employers who do not provide their

employees with enough hours’ work to maintain a reasonable standard of

living. The taxpayer ends up bailing out these employers in order to lift

working people above a basic threshold of decency. It is difficult to see who

wins in this scenario except for low-wage employers who are relieved of their

most basic obligations by the State.

‘Over recent decades, the idea has been that anyone who

creates employment is “good”, when in fact only those who

create jobs that allow employees also to be secure and active

consumers are really doing anything useful. Governments

understand that getting welfare costs down means “making work

pay”. But you make work pay by paying people for their work’14

                                                                                                               14 Orr, ibid.

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An Tánaiste and Minister for Social Protection, Joan Burton, has

acknowledged and criticized the fact that low wages and Zero Hour contracts

are being subsidised in this manner, saying it “presents a profound challenge

to both the welfare system and the wider economy”.15 She has also pointed

out that the State spent, for example, some €280 million in 2014 on Family

Income Supplement – the payment to low-paid workers with children.

Labour Youth firmly agrees with the Minister’s assertion that this is “money

well spent”16. We as a society should always intervene to ensure people can

make ends meet. However, our goal must surely be to return this

responsibility to employers, who owe their workers at least enough to be able

to care for their children without a State top-up.

Taking on unscrupulous practices like the use of Zero Hour contracts could

therefore not only improve working conditions and consumer spending, but

actually produce direct savings for the State as the need for income

supplements decreases in a secure, well-paid modern workforce.

                                                                                                               15 Burton, Joan, 2013. Why it’s time to talk about a Living Wage for Ireland. TheJournal.ie, 28 November. 16 ibid.

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Tackling Zero Hours

In prior times, workplace rights and respect have been won by collective

mobilization of workers and far-sighted legislative reform. Labour Youth

believes that both are again required in order to take on the issue of Zero

Hour contracts. Through extension of the Working Times Act 1997 and

guaranteeing the right to collective bargaining through the trade unions, we

can reverse the tide of precarious work and ensure tangible improvements in

the lives of some of the least secure workers in our society.

Leading the Way: Home Helps and the HSE

Fortunately, we are not starting out in a vacuum. The recent Labour Court

ruling which ended the use of Zero Hour contracts for home helps employed

by the Health Service Executive is highly encouraging. Some 10,000 HSE

employees have now moved from a situation where some had “not worked for

months”17 to a guaranteed minimum of seven to ten hours’ work per week.

This represents a major step forward and show how, by working together,

employees can win new rights and create fairer, more dependable, and more

sustainable working conditions. The role of SIPTU, the union of the home

helps, has been vital in this long-running and ongoing struggle for decency.

                                                                                                               17 Paul Bell, SIPTU Health Division Organiser, quoted in O’Regan, Eilish, 2013. Home helps win an end to zero-hour HSE contracts. Irish Independent, 19 September.

  15  

However, without a statutory right to have their union recognized by their

employer, workers in other sectors may find it impossible to emulate this

success story. In addition, without improved legislative protection for workers

the efforts of employees and their unions may encounter major roadblocks,

particularly in sectors with low union density which often overlap with areas

where Zero Hour contracts are prevalent.

  16  

Labour Youth Proposals

Proposal 1: Extending the Organisation of Working Time Act

1997

Labour Youth acknowledges that there is sometimes a need for flexibility in

modern workplaces, and that such arrangements must be catered for under

employment law.

However, Labour Youth also firmly believes that contracts without guaranteed

hours of work must:

• Allow employees scope to plan their lives around the hours in which

they are to be available for work;

• Provide a minimum level of income higher than that available under

social welfare whilst minimizing the need for a State income

supplement;

• Be suitable for employer-employee relationships which require such

flexibility without being an overly attractive means of employers

replacing their full- and part-time workforce.

With these objectives in mind, Labour Youth proposes the following changes

to the Organisation of Working Time Act 1997:

• Amend the definition under S. 18 – subsection (1) of the Act to remove

paragraphs (b) and (c) and amend the rest of the Act in accordance

with this deletion, with the goal of ensuring anyone on a contract

  17  

without guaranteed work hours has a set number of hours to be

available for work per week, rather than being required to work “as and

when” required by their employer.

• Amend subsection (2) to ensure that the minimum amount of hours’

pay to which the employee will be entitled per contracted week shall

not fall below either the number of hours at minimum wage necessary

to stay above the weekly rate of Jobseeker’s Allowance (currently

22/week) or that of 50% of their contracted hours, whichever is higher.

• Amend subsection (3) to ensure that subsection (2) always applies for

so long as the contract is in operation.

Proposal 2: Implementation of Collective Bargaining

Labour Youth applauds the Cabinet for approving Collective Bargaining

legislation and welcome the suggested framework18. Labour Youth calls for

the draft legislation to be published and passed as soon as possible so that

workers may benefit from its protections.

                                                                                                               18  Ged Nash TD, Labour Press Release, 16 December 2014.

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Further Reading

The Organisation of Working Time Act 1997

http://www.irishstatutebook.ie/1997/en/act/pub/0020/print.html

Mandate, 2013. Decent Work?

http://issuu.com/mandate/docs/mandate_decent_work_report_2012

The Work Foundation. Zero Hour Contracts: Response to the BIS

Consultation. http://www.theworkfoundation.com/Reports/356/Zero-Hour-

Contracts-response-to-the-BIS-consultation

Berger, Luciana, Howarth, George, & McGovern, Alison, 2013. Young People

and Employment.

http://www.georgehowarth.org.uk/working_for_you/supporting_docs/young_pe

ople_and_employment_june_13.pdf

NERI. What Should Full Employment Look Like in the 21st Century?