Louise spent the final weeks before giving birth battling with her employer over her right to claim maternity pay.
He had worked long, semi-regular shifts for a security company for more than a decade, but his zero-hours contract meant he did not automatically qualify for statutory pay. In the final week of the period to determine whether he qualified, the company abruptly cut his hours to zero. He was eventually paid, but not before HM Revenue and Customs intervened to overcome unpleasant threats and obstructions from the HR department.
“They were using zero-hour contracts to avoid their obligations,” said Louise, who asked not to give her full name. “It was very, very blatant.”
If the new UK Labour government delivers on its promise of a “New agreement“To advance workers’ rights, their experience should be relegated to the past.
The scrapping of zero-hours contracts – giving workers in jobs similar to Louise’s the right to a deal that reflects the hours they actually work – is just one of a number of major changes planned in a package of reforms billed as the biggest shake-up of employment law in a generation.
Zero-hours contracts affect only a small proportion of the UK workforce, but they symbolise a labour market in which flexibility for employers has come at the cost of personal security. Because they do not guarantee any shifts, workers cannot predict their earnings from week to week, let alone their entitlements to maternity, holiday or sick pay.
Over the past 50 years, “in most aspects of industrial relations, power has shifted away from workers and towards employers,” says Steve Machin, professor of economics at the London School of Economics. “The shift has gone too far and has been bad for the economy and for those who work in it.”
Labour wants to redress the balance with sweeping reforms affecting all corners of the labour market. Proposed policies include a default right to flexible working, wider coverage of compulsory sick leave and stronger rights for unions to enter workplaces and negotiate with employers.
Some of the more complex reforms – including redefining employment status to create a clear boundary between workers and the self-employed – are now longer-term aspirations that will require extensive consultation.
But the proposal that most alarms employers could be implemented almost immediately, through a simple change in secondary legislation. It would give employees protection against unfair dismissal from their first day of employment, by removing the two-year qualification period.
Labour says employers will still be able to sack new employees during the probationary period, but the change will be “a shock to the system” because probationary processes will need to be rigorous enough to withstand court scrutiny, according to employment law consultant Darren Newman. “It will really make people concerned about hiring, especially small businesses.”
Lawyers say one unintended effect could be that employers become more wary of taking a chance on someone with an atypical background. Another could be that they become more brutal in terminating contracts at the end of the probationary period if there is any doubt about performance, rather than giving dubious candidates more time to improve.
The biggest concern is that this could deter them from hiring.
In countries with higher hiring and firing costs, such as France, Spain and Italy, regulation has not significantly affected employment, according to A recent report by the Resolution Foundation think tank. But it is associated with a slower rate of hiring and a “two-tier” workforce in which many people are stuck on less secure temporary contracts.
“Sometimes employers find ways to comply with the letter of the law but avoid the spirit,” says Alan Manning, a professor at the LSE. Manning believes that British workers have been asked to take too many risks in recent years, to the detriment of their mental health, but that “we need to get the detail right.”
Business groups, while concerned about the potential for increased costs, have signalled a willingness to cooperate, provided Labour honours its promise of a wide consultation.
“If we have the right mechanisms in place, such as probationary periods, we can find a way out,” Shevaun Haviland, director general of the British Chambers of Commerce, told a conference last week. Many companies already have employee-friendly policies in place, such as flexible working or increased sick pay, she added.
Recruitment agencies see the proposals as a broader threat and question the assumption that workers are better off in permanent employment. But Neil Carberry, chief executive of the Recruitment and Employment Confederation, says his main concern is that the rules are enforced by a properly resourced agency, so that recruiters who comply with them are not undermined by less scrupulous rivals.
According to the Institute for Fiscal Studies, any additional costs, whether from an extension of sick pay or the obligation to compensate workers for cancelled shifts, could be passed on in lower wages. But Labour, backed by unions and many economists, argues that the costs of the new rules will be modest and will be offset by the benefits to workers and the economy.
Nicola Smith, head of economics at the Trades Union Congress, says it is time to abandon the “orthodox assumption” that a flexible labour market is an aspirational goal. “There is an opportunity to rethink what is good,” she said at a recent event. “If there is better job protection, it is easier for people to take the opportunity to change jobs. If there are stronger and more secure incomes, it boosts demand… It is easier to get back to work… if there are working patterns that reflect your own needs.”
Charlotte Wootton, a 38-year-old mother from Staffordshire, agrees. She juggles two zero-hours jobs in the kitchen and bar at a golf club, working more hours than she wants in summer to make up for the winter months when bad weather means shifts are cancelled. Childcare is too expensive to justify the move to a better job in Birmingham.
“A lot of mums get cornered because it’s the only way to get flexibility,” she says. A contract with a few guaranteed hours would allow her to budget and plan her time, and offer clarity about maternity pay. “That worries me, because part of me would want to have a second child – I have no idea how that would work.”
Some argue that giving workers more security would also help overcome one of the biggest problems facing the UK economy: the sharp rise in the proportion of the population who are economically inactive because ill health prevents them from working.
Alice Martin, from Lancaster University’s Foundation for Work, says the right to flexible working and guaranteed hours could help people who are out of work because they can’t find stable work that accommodates childcare or health problems. “People who are at the toughest end of the labour market are those who can’t get good flexible work,” she says. “They have to go into very insecure ways of working… where you don’t know what life will be like week to week.”
But others argue that the new government’s reforms will not transform workers’ lives unless they address bigger issues, boosting productivity to underpin higher wages and investment to drive economic growth. [day one rights] “That would make a huge difference,” Manning adds, comparing Labour’s plans to “much bigger” past changes such as the minimum wage and equal pay rules. “Growth should be the most important thing.”
Jonathan Wadsworth, a member of the Low Pay Commission, a body that advises ministers, says there is a strong case for improving working conditions for people in low-paid jobs. But change would be “much easier to achieve when the economy is doing well,” he says. “The best bargaining power low-paid workers have is a tight labour market.”