Open-access content Wednesday 4th September 2013
The trend towards 'zero-hour' contracts has sparked controversy within the wider UK economy. Here, Nick Martindale assesses the impact of such contracts on the FM industry.
4 September 2013
The recent scrutiny of the government, and Vince Cable in particular, over 'zero-hours' contracts and just how widespread these are, has put a number of positions traditionally associated with the facilities management industry into the spotlight.
The advantages of such contracts are clear from an employer perspective: enabling organisations to call on a pool of reliable and experienced staff at short notice to cover peaks in demand or seasonal work, but without any obligation to use them.
"You'd use zero-hours contracts if you genuinely can't make a forward commitment, for instance, in a company such as a special event business, or if you need cover for sickness or absence," says Lucy Jeynes, managing director of Larch Consulting. "It's more affordable because you only pay for what you need." Such contracts can also work well for individuals, she adds, particularly those who want to fit in shifts around other responsibilities or who have more than one job.
It is a model that is deployed by many FM services organisations to cover roles such as catering, cleaning, security and helpdesk services. This includes SGP, which uses a bank of workers on such contracts to cope with short-term assignments or periods of high demand, and sees them as preferable to using agency labour.
"We use it for direct delivery of services, specifically in cleaning but we have also used it in catering," says Adrian Berwick, HR director. "We may have a hospital with 10 cleaners and if we have two or three people on zero-hours contracts we can call them in very quickly to cover people who don't turn up for a shift."
Another area is in the company's helpdesk operations, he adds, particularly around peak times, such as cold snaps. "It's far more beneficial for you as a business to do that through zero-hours contracts and individuals known to you than it is through agencies, where they're not known to you and have to be trained up," he says. "In a helpdesk environment it might take someone a month to be trained to take calls; if you have a spike of work for two weeks that's no good for you. Providing it works for the individual as well and you're not forcing them into a zero-hours contract, which we would never do, it can work very well for both sides."
Robert Cunliffe is a consultant within the FM industry and author of the FM Future blog. He's also seen zero-hours contracts work well, after inheriting a number of security staff on such arrangements in a previous position. The key to making it work, he says, is to ensure there is enough of a balance with both workload and other staff on contracted-hours contracts, to make sure that in practice those on such contracts get regular work.
"We had 60 members of staff on 42 or 48-hour contracts and then five people on zero-hour contracts and they all got work and a monthly amount of money," he says. "When people left, those five people would just slot into the contracted-hours jobs. They can help the employer because they don't have to worry about costs over and above what they might be getting in terms of revenue, and it also allows them to take on the extra peaks that may or may not come."
Not everyone in the industry is convinced, however. Jeremy Waud, managing director of Incentive FM Group, says his business uses them very rarely, usually only when it suits the needs of an individual worker. "Generally we tend to give people standard contracts and even if they were doing holiday cover, provided there was enough of it scheduled in, we'd roster them in accordingly and employ them on a normal contract," he says.
He admits, though, that his business tends not to be affected by huge disparities in the amount of work it takes on, or by seasonal trends. "Ours tends to be fairly straight-lined and where it varies at the weekend it's just a case of how you roster people," he says. "It's about planning and managing your business properly in line with your clients' expectations, as opposed to having zero-hours contracts where you don't know what's going on and where you just tell them whether you need them or not. That feels a bit lazy."
Where such contracts work less well is when staff feel they have no choice but to take the shifts they are offered if they want to be considered for future assignments. "If you're expected to be available and maybe shifts materialise and maybe they don't, that's where it's a completely one-way obligation," says Jeynes. "There are a lot of people who don't have any choice but to take that kind of offer and this is where the concern comes from. In a situation where there are more people than there are jobs it can be used in a way that is very disadvantageous to the worker."
Martyn Sherrington, procurement and supply chain director at SGP, also admits there is potential for unscrupulous employers to abuse the system. "Say you have 10 individuals on zero-hours contracts. You operate a rotational system so they all get given a fair crack of the whip; those that can't come in go to the bottom of the queue and then get time to work their way up again. Then everyone is on the same page in terms of expectations," he says. "But if you say that if they can't come in you'll never ring them again, clearly that is not appropriate. People may be sick or on holiday or already engaged on another zero-hours contract."
There are potential downsides for employers, too, including this risk of individuals being unable to take on shifts in the same way as employees would. "You can't rely on the fact that people are going to be in but the idea is you have a whole bank of people to call on so you don't have to rely on them," says Ali Moran, HR specialist at HR Works UK and a member of the BIFM's people management special interest group committee. "But if that person is really good and you'd really like to get them in then that's an issue. Also there's a risk that they don't have that loyalty or motivation that you would hopefully expect of an employee."
Taking this one step further, Waud argues that giving staff greater security can lead to higher levels of retention and loyalty. "If you look after staff, they tend to look after you. But if you don't, they don't tend to be terribly loyal to you," he says. "In the business we're in, it's all about people. In some employment markets there's 100 per cent availability of all the staff I want. But generally, you have to work a bit harder to get the best people. You need to pay the going rate and give them a contract of employment because otherwise they will drift, which makes the job pretty hard to do."
Working the system
Operating a large number of zero-hours contracts can also create headaches around administering the scheme, suggests Cunliffe. "You need people to manage your roster, to ring up those on zero-hours contracts, and then there's a payroll admin process to go through at the end of the week or month," he says. "If you have contracted-hours people you don't really need to worry about that."
Employers need also tread carefully around the contracts themselves (see box), says Susan Ball, a director specialising in employment law at Verisona Law. "One issue that often arises with casual workers on zero-hours contracts is whether they are in fact an employee, as that affects their rights and protections," she says. "Such workers are entitled to far fewer employment rights than employees, so a prudent employer will strive to ensure the contract is drafted, so far as possible, so that the individual does not obtain employment status and will not build up continuity of employment."
Despite the current furore over the use of zero-hours contracts, the nature of the work in and around facilities management means they are likely to remain a well embedded tool for employers to help manage demand. "We would clearly struggle to run our business if everyone was employed on a zero-hours contract, and we have lots of people on salaried contracts," says Sherrington. "But with the changing nature of properties and clients changing requirements, we have to be flexible. We have to deliver a good service to our clients and therefore we need to have different coping mechanisms in place to deal with that."
Perspectives: workers and employees
The legal definition of a worker - someone used on an ad hoc basis, including on zero-hours contracts - and an employee is very similar, warns Ali Moran, HR specialist at HR Works UK, and a member of the BIFM's people management special interest group committee.
But case law has established that the absolute minimum component of an employment contract is 'mutuality of obligation', she says.
"That is, the employer is legally obliged to offer work and the employee is legally obliged to accept, which creates a fixed number of hours for an employee and the obligation that they will, in fact, turn up to fulfil those hours," she says. "In the case of a worker there is no such obligation and, in theory at least, they are able to refuse any work that is offered to them."
But if a worker is required to accept all the work that is offered, this would bring their status
as a worker into question and this could be challenged at tribunal, she warns. In this case, the panel will examine not only the written contract but also how the relationship works in practice on a day-to-day basis.