Prevalence and implications of zero hours contracts in Ireland
A new study on zero hours contracts commissioned by the government and carried out by University of Limerick (UL), has found that zero hours contracts are not in extensive use in Ireland.
The research found evidence of so called If and When contracts, where individuals get work though they are not contractually required to make themselves available for work. Individuals with a zero hours contract are contractually required to make themselves available for work and receive a minimum payment if there is no work available. Both types of contract involve non-guaranteed hours of work.
The study found that If and When hours are more prevalent in demand-led services where either the quantum of work or funding source may be difficult to predict. CSO data, through the 2014 Quarterly National Household Survey (QNHS), indicated that 5.3% of employees in Ireland have constantly variable working hours, but the data is not linked to types of employment contracts. Overall the results indicate considerable variability and flexibility in the Irish labour market.
If and When hours were found to take different forms in employment contracts: some contracts only provide If and When hours while other contracts have some minimum guaranteed hours with additional hours offered on an If and When basis.
The main advantage of If and When contracts to employers is flexibility, which allows them to increase or decrease staff numbers when needed. A second benefit is reduced cost, as organisations only pay people on If and When hours for time actually worked. There is an addition risk in that these individuals may not build up service to attain benefits such as sick pay. Employees on zero hour contracts are entitled to compensation of 25% of the additional hours for which they have to be available or for 15 hours, whichever is the lesser, even where they are not given work in a particular week.
In examining the legal position of people on If and When hours, the study found that their employment status is not clear. Legally, they are unlikely to be deemed employees and this raises questions about the extent to which they are covered by employment law.
Hours worked and the effects on women
With regard to the number of hours worked, there is no common definition of low hours work, according to the authors. The 2014 QNHS data showed that 1.8% of employees regularly worked 1-8 hours per week, 6% regularly worked 9-18 hours and 24% regularly worked 19-35 hours. The study examined working hours in certain sectors and identified that very low hours (1-8 hours) were prevalent in the wholesale/retail and accommodation/food sectors. A quarter of all employees working 9-18 hours per week were in wholesale/retail, with another 17% working in health. A significant proportion of those who work 19-35 hours per week were in education and health, impacted by the public sector resourcing model.
A higher proportions of personal service and sales workers were found to regularly work low hours, and given that these occupations are highly feminised, more women than men work low hours in Ireland. Consequently working hours, patterns of working time and employment protection are a vital strategic consideration for the employment and retention of women for a productive economy and a balanced healthy society.
According to the UL study, there are a number of key factors driving the use of If and When contracts, a combination of economic and personal drivers:
- Increasing levels of work in Ireland during non-standard hours
- A requirement for flexibility in demand-led services
- The absence of an accessible, affordable childcare system
- Current employment legislation
- The particular resourcing models of education and health services.
The 2014 QNHS indicated that people working constantly variable part-time hours and those regularly working 1-8 hours per week were the most likely to want more hours. Employer bodies argued that organisations require If and When hours to meet their flexibility requirements and that such hours suit the needs of people working them.
We cannot ignore the role of low and variable working hours for young people entering the labour market. Low hours suit many, alongside their studies, and enhance future employment through gaining valuable work experience.
Do zero hours and If and When contracts work for individuals?
With an absence of employee data from Ireland, the CIPD UK’s Employee Outlook survey of zero hours contract workers there (where there is no payment obligation) suggest that these types of working arrangements do in the majority of cases suit the individual. People on these types of arrangements are significantly more likely to be satisfied with having no set minimum contracted hours than to be dissatisfied.
Among those workers who are either very satisfied or satisfied with having no minimum set contracted hours, the main reason cited was that ‘they like to work flexibly as it suits my circumstances at the moment’, with 44% saying this is the case.
The survey also highlighted that such contracts suit many older workers. Just less than a fifth (16%) of respondents say they are satisfied with having no minimum set contracted hours because ‘I am retired and just need occasional hours to top up my pension’.
In addition to the flexibility they valued, these individuals were as likely to be satisfied with their job as the average employee. They are also more satisfied with their work–life balance, less likely to think they were treated unfairly by the organisation they worked for and less likely to say they were under excessive pressure at work.
Interestingly, the UL study compared how working hours are regulated across Europe. Zero hours contracts do not exist in a number of countries, and where zero hours-type practices are regulated, some countries have placed limitations, such as time limits, on their use. A number of countries have increased regulations on zero hours-type work in recent years.
Finally, the study recommends updating the Terms of Information Acts and the Organisation of Working Time Act. While revisions are necessary in the light of the study, it is important from the CIPD perspective, that we do not over-regulate this area, and lose flexibility valued by both employees and employers, and a key aspect of the Irish economy.
CIPD believes that employers should only use contracts with no guaranteed hours where the flexibility inherent in the arrangement suits both the organisation and the individual. All individuals should receive a written copy of their terms and conditions, which reflects the reality of the employment relationship. CIPD would support the creation of a code of practice setting out for employers and zero hours and If and When individuals some key principles on the responsible management of these types of working arrangement.
Though pay was not addressed in the UL study, CIPD believes that it is good practice to ensure that there are comparable rates of pay for people doing the same job regardless of differences in their employment status in order to support fairness and trust. Training and guidance should be provided for line managers to ensure they are managing zero and If and When individuals in line with their employment status and good practice.
The study provides a valuable resource on changing working patterns in Ireland.
O’Sullivan, M., Turner, T. and McMahon, J.. (2015) A study on the prevalence of zero hours contracts among Irish employers and their impact on employees. Limerick: University of Limerick.