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Sometimes something is created out of benevolence, but turns monstrous
In Prague in the 16th century, a rabbi created a monster out of clay and called it Golem. The golem's role was to protect the Jewish community from anti-Semitic attacks, and for a while it did its job well. But one day, the Rabbi forgot to give the golem its rest day. As a result it ran amok on a murderous rampage.
Zero-hours contracts, created for flexibility with the aim of benefiting a transient workforce, are perceived as becoming, like a golem, abused and abusive. Fairness in contracts has come under the media spotlight recently, and the issue of zero-hours contracts especially has become a contentious political issue.
Flexible working has many benefits, both to employees as well as employers. In the UK, the availability of temporary and part-time work has contributed to labour market flexibility and helped keep the unemployment rate down during the recession. In addition, such arrangements can help organisations respond to fluctuations in demand, keeping their fixed costs down during quieter periods whilst retaining a skilled employee base for busier periods. This is especially prominent in certain sectors such as retail or tourism.
The impetus behind these contracts can be a positive one – there are cohorts of the workforce for whom this kind of flexible working is beneficial – those with care or study commitments, for example, grateful for the freedom to choose working hours.
Zero hours contracts, whilst not defined in legislation, are understood to be employment contracts between an employer and a worker whereby the employer is not obliged to provide the worker with any minimum working hours and the employee is not obliged to accept any of the hours offered. The use of these contracts is now widespread, and the Office for National Statistics estimates that nearly half of all big companies in the UK use them. This equates to more than 1.4million such contracts.
These contracts are not of themselves unethical – used responsibly and fairly they can help people into work who may be prohibited from traditional contracts because of other responsibilities. It is the abuse, as opposed to the use, of these types of contracts which raise issues of fairness.
Some claim that instead of offering flexibility to employees, they can create financial instability and job insecurity especially when employees fear turning down work in case they are disadvantaged in the future. While it should be applauded that exclusivity clauses (which tie a worker to a single employer without providing a guarantee of any paid hours) are now prohibited, some evidence suggests that employees can still feel trapped into ‘effective exclusivity’, meaning that they are unable to receive the hours of work they need.
Those on zero-hours contracts may also feel that they do not have the right to complain of less favourable treatment (despite changes in the law); they fear if they do assert their rights they will not be offered further work on which they depend. Whatever kind of contract is in operation, employees are entitled to expect a degree of protection and expectation as to the number of hours they will work. Sickness and holiday pay should be available on a pro rata basis, either through the agency or the employer.
Ethics and compliance officers need to take a look, not just at the contracts which are being offered to staff, but at the culture which surrounds them. Good questions to ask would include: How do supervisors manage these contracts? How much notice are zero-hours employees given for rotas? Are employees required to be on unpaid stand-by, even though hours may not be given? Is the allocation of hours clear, fair and transparent? Do supervisors respect these employees in the same way as they do full-time workers? Employees on zero-hours contracts should still be treated according to the organisation’s ethical principles.
If this kind of flexibility is to continue to work for the benefit of both employers and employees it is crucial that the culture which operates behind it is one of ethics and integrity. Otherwise, an employee on a zero-hours contract may have zero interest in the company’s reputation.
Employers, therefore, need to be aware that this kind of contract may have serious implications for their business. For larger organisations, media reports of the abuse of the workforce through zero hours contracts may cause reputational damage. For smaller and medium sized organisations, whilst the stories may not make national newspapers, the reputational impact is likely to be similar from local word of mouth. If abused, zero hours contracts are in danger of becoming the golem which destroys corporate reputations.
If an organisation does not treat its employees with fairness and respect, whatever their contract, their staff will have little interest in doing business ethically. An ethical employer will want to treat all its employees fairly. Employees in return will want to ‘do the right thing’.
Read more in IBE's latest briefing Fairness in the workplace: staffing and employment contracts
Daniel Johnson works at the Institute of Business Ethics