Zero Hours Contracts

Colin Angel - 201108 - smiling 01

Colin Angel, Policy and Campaigns Director

On Tuesday, 20th August, UKHCA attended a round-table event on the use of zero-hours contracts of employment across all employment sectors, at the invitation of Shadow Business Secretary, Chuka Umunna MP. The event was attended by representatives of employers, employees, academics and MPs.

The UK homecare sector contains a workforce of at least 490,000 employees, working through 9,000 registered homecare agencies and similar organisations (including local authority in-house teams). The vast majority (estimate up to 70%) of homecare is purchased by local councils (and Health and Social Care Trusts in Northern Ireland), but delivered by independent and voluntary sector organisations under a variety of contract arrangements.

Our comments relate to statutory sector purchase of homecare delivered by a workforce employed in the independent and voluntary sector.

UKHCA member organisations had responded generously with comments, views and experiences on the subject of zero-hours contracts in response to our preparation for this meeting.

The use of zero-hours contracts in the independent and voluntary homecare sector is extensive and longstanding. There is no consistent dataset across the UK, nor is there a single definition of what constitutes a zero-hours contract. Estimating the precise extent of zero-hours contracts is therefore problematic. Our estimate is that at least 50% of the homecare workforce are employed on these contracts, and probably significantly higher.

However, the working patterns of homecare workers are vastly different from other sectors and the way that zero-hours employment has been explained to the public in recent media reporting has been unclear.

Demand for homecare services vary throughout the day, typically peeking around early morning, lunchtimes and evenings. Generally, careworkers will provide support for several people each week on an ongoing basis. Over time, their working patterns will vary as their service users regain independence, require more care, are admitted into hospital or enter residential care.

Zero-hours contracts enable flexible working patterns which respond to demand and the needs of individual service users. While this can create a degree of unpredictability of working patterns (and therefore wages), it is rare that careworkers face the commonly reported stop-start working described in other employment sectors by the Media.

However, we must be clear that the use of zero-hours contracts is largely determined by local authorities, who buy the majority of care delivered by the independent and voluntary sector.

Councils themselves almost universally purchase care according to the time that workers are in a service user’s home (we refer to this as “contact time”). From the fees generated the provider must pay their workers (including applicable travel time for National Minimum Wage purposes) and the costs of their operation (including training, supervision, and management costs).

In UKHCA’s 2012 Commissioning Survey, “Care is not a Commodity”, we found very little evidence of councils calculating fees paid to providers by any other method than contact time (See: http://www.ukhca.co.uk/downloads.aspx?ID=356). In addition, historically providers have faced contracts from councils, typically of three year periods, where there was a high risk of non-renewal at the end of the contract period, or where there was no guarantee of purchase during the life of contract.

While recent Media reporting has suggested a significant increase in the use of zero-hours contracts across the UK, we do not believe that there has been a recent expansion in the homecare sector, above levels already being used.

However, we are absolutely clear that the current commissioning of homecare services by local authorities, facing massive public spending constraints, makes the use of zero-hours absolutely essential for the functioning of the homecare sector at the level we have already achieved.

The policy direction in all four UK administrations places homecare services at the forefront of services for people using social care. It is essential that our sector is able to expand. This will inevitably be with the continued use of zero-hours contracts.

The sector has faced two additional issues which support the inevitable use of zero-hours contracts:

1) Aggressive price cuts by councils: We estimate that 90% of providers experienced a real-terms decrease in fees paid by the councils with which they trade in the financial year 2011-12 alone, with no realistic prospect of better terms in the next few years; and

2) An increasing appetite by central and local government for plurality of providers in the market as part of the personalisation agenda, reducing the number of contracts with any guaranteed purchase by councils, the introduction of “framework agreements” open to multiple providers, and an increasing use of personal budgets and direct payments.

The objectives of personal choice for people who use services and a diverse market of providers are both widely supported. However, it must be understood that both of these factors increase the likelihood of a workforce which does not reach optimum “economic efficiency”, as there is considerable unpredictability of work, especially where councils choose to put packages of care out to multiple providers and initiate competitive bidding (usually based on price).

In the many responses UKHCA has received from homecare providers there is a clear message that the homecare sector, and individual businesses would not be able to operate without extensive use of zero-hours contracts. A number of responses from providers indicated that if zero-hours contracts were effectively “banned”, their businesses would face closure.

The ability to pay workers for periods of inactivity during the day, including where ongoing work with an individual service user ceases for the variety of reasons described above is, in our view, economically unviable for all but a limited number of homecare providers. Media portrayals of the increasing use of zero-hours contracts have included references to a shift of risk from employer to worker. It is our view that in the homecare sector there is actually a passing of the risks faced by local government which is shared between both provider (in terms of predictable revenue) and worker (in terms of predictable wages).

It is also clear from our member organisations that the use of zero-hours contracts in our sector does not match the Media portrayal of other employment sectors where these contracts are used.

Many providers continue to report the widespread attraction of flexible working for our workforce, and the number of workers who combine homecare services with personal commitments, including childcare and variable income requirements over time. Employers were also clear that it was in their interests to ensure that their workforce understood the terms and conditions of their working arrangements, and how they could make changes in their availability and desired number of hours known.

Providers have repeatedly stated that as their income is generated almost entirely on the hours of care they deliver, they have every incentive to ensure that their workers receive as many opportunities to obtain as much work as they are willing to accept. Even those few employers who operate both guaranteed hours contracts and zero-hours contracts reported a significant proportion of their workforce who opted for zero-hours arrangements.

In conclusion, UKHCA maintains that the ethical use of zero-hours contracts in the homecare sector is both inevitable (because of the operating environment) and meets a demand from a workforce who themselves benefit from the flexibility it offers.

Calls for a reduction in zero-hours contracts within our sector would require a massive increase in the spend on social care by local authorities which we believe is entirely unachievable in the current economic climate, and with the regrettably low status that society places on social care work and care services which the state purchases on behalf of older and disabled people.

Note about this round-table meeting:

This event was held under the “Chatham House Rule” (See: http://www.chathamhouse.org/about-us/chathamhouserule) to enable constructive discussion, without comments being attributed to individuals or organisations.

The Rule does not, however, prevent individual organisations from explaining the points that they made outside the meeting. This article therefore summarises and expands on the essence of the information which UKHCA provided to delegates.

Our impression of the meeting was that there was widespread acknowledgement among delegates that use of zero-hours contracts in the homecare sector is the result of the way that homecare services are commissioned by local authorities.

UKHCA is grateful to Chuka Umunna MP and the Labour Party Business Team for the opportunity to participate in the round-table.

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