Official Report: Minutes of Evidence

The Chairperson (Dr Archibald): Good morning and welcome to Kevin Doherty, union services officer, NIC-ICTU; Patricia McKeown, a NIC-ICTU member for UNISON; and Paul Mac Flynn, co-director of the Nevin Economic Research Institute. I apologise for keeping you waiting; our previous briefing ran over. I invite you to make an opening statement, after which we will bring members in for questions.

Mr Kevin Doherty (Northern Ireland Committee, Irish Congress of Trade Unions): Good morning and thank you for inviting us to give evidence on what we regard as a very important Bill. We will follow up with a written submission shortly. I will let my colleagues introduce themselves as they speak. First, I will give you a brief introduction to our position on the Bill, and then Patricia will come in, followed by Paul.

As you mentioned, Caoimhe, I am an officer of the Irish Congress of Trade Unions (ICTU), which is the trade union federation on the island of Ireland, representing the collective interests of 800,000 people, 200,000 of whom live and work in Northern Ireland. ICTU is the largest civic society organisation in Northern Ireland and is the voice of the trade union movement under the direction of ICTU's Northern Ireland committee or, as we refer to it, NIC-ICTU.

Although the Bill is not a ban on zero-hours contracts, which the New Decade, New Approach agreement had promised, NIC-ICTU fully supports it. We do, however, have a concern with one aspect of the Bill as drafted, which we will draw your attention to later in the hope that it can be suitably amended. As I said, NIC-ICTU fully supports the Bill as we believe that it will have a positive impact on the lives of many vulnerable workers, including women, young and migrant workers, who tend to be disproportionately affected by zero-hours contracts. At the same time, it maintains flexibility for employers but not the flexibility to transfer risk to workers, exert unjustified control over them or have them at the employer's beck and call, as is the situation in many cases today. The Bill is a move in the direction of creating a more balanced, modern and flexible employment model, where workers and employers can agree the type of flexibility that suits both parties.

We regard the Bill as timely, as it aims to bring Northern Ireland into line with the widely held view that the swing of the pendulum, over at least the past 30 years, towards increasing casualisation of working people's terms and conditions of employment, or growth in flexibility, depending on your perspective, has gone too far, with growing adverse social and economic consequences, such as a rise in in-work poverty, even when wages are supported by state benefits. The provisions in the Bill fit within the new EU directive on transparent and predictable working conditions, which member states are currently transposing.

The Bill also chimes with the sentiments of 'Good Work: The Taylor Review of Modern Working Practices', which, as you are aware, was commissioned by a Conservative Government. The report was published in 2017, but, unfortunately, we are still waiting for the Government's promised legislative response.

We have the example of the Republic of Ireland, where very similar legislation to this Bill was introduced in 2018, with banded hours and compensations for workers who are called into work but not provided with any. It must be noted that the Republic saw no adverse economic consequences after those provisions became law. Businesses did not close, and employers did not dismiss workers. Flexibility in employment still exists. Those who wish to remain on non-guaranteed or zero-hours contracts can do so. Others who require a level of certainty about their income receive it by being granted guaranteed hours.

I am sure that, like us, you can recall all the dire warnings of economic doom that preceded the introduction of the national minimum wage in the UK, but, after it was introduced, the warnings proved entirely false. We believe that it will be the same with this Bill.

As we can see from the example of the Republic of Ireland, introducing the Bill will not damage good employers here. It will protect them from being undercut by unscrupulous employers who seek competitive advantage not through innovation or increases in productivity but through reduced labour costs by exploiting their workers regardless of the human cost to those workers and their families.

The Bill aims to create a level playing field as well as guaranteeing a predictable income to workers currently forced to accept zero-hours contracts. Predictable income is probably the most important aspect of work, as it is the basis for planning life. Not knowing what you will be earning from day to day can be a life lived in fear and anxiety, particularly if you have a family depending on your wage. In such a precarious lifestyle, you are unable to budget, get a mortgage or a bank loan, you struggle to pay bills and rent, you are unable to plan for life outside of work if you have childcare responsibilities or other caring responsibilities. Fluctuating hours mean that it is difficult to claim in-work benefits, and for many people, they do get benefits, they are delayed. In the workplace, you must take whatever work you are offered for fear that you will not be offered another shift. You suffer all sorts of mistreatment, as you are afraid that, if you complain, the shifts will stop. That is the situation that many zero-hours contract workers find themselves in today in Northern Ireland.

Between 2017 and 2020, NIC-ICTU, along with Ulster University, the Migrant Rights Centre Ireland and the Community Intercultural Programme, which is based in Portadown, ran a Peace IV project to assist vulnerable migrant workers mainly in the agri-food sector here. The project, which was also supported by the Executive Office, gathered evidence of the mistreatment and exploitation of large numbers of vulnerable newcomer migrant workers. They were vulnerable as they were new to the country. They were unaware of their rights. They had limited English and no wider family support networks to fall back on when times got tight.

By way of an example of the scale of the problem that workers on zero-hours contracts face at the moment, we wish to bring to your attention the experiences of migrant workers in one particular agri-food sector employer. You will remember the scenes from the Elia Kazan film 'On the Waterfront', starring Marlon Brando, when dock workers gathered every morning at the gates in the hope of getting picked over their colleagues for a day's work. That film was made in 1954. Would it surprise you if I told you that a similar situation exists here today? Well, it does, in a food processor that employs over 200 workers, most of whom are on zero-hours contracts.

In that company, to get work, employees check whether their name is on a list posted on the wall in the workplace the day before. That is the first hurdle. If it is, and you come to work, you have to wait with your colleagues to be selected by supervisors to get a start. If you are not picked, you have to make your own way home with no pay. If you are picked, you have a start time but you do not know what time you are going to finish at, as you stop work when the supervisor tells you that the work is done for the day.

Such scenarios block many women workers and many mothers who want to work. Who will pick up their children at the end of the day? They do not know whether they will be working when school or crèche finishes, so they just cannot take a job in the workplace, which leaves families reliant on one wage — the national minimum wage — along with unpredictable hours. That is how they survive.

If the workers object or take sick leave, they are penalised by not being selected for work for a period after that. That, along with the minimum statutory sick pay payment of £96 per week, led to workers with COVID symptoms continuing to work to support their families. They had no choice. It was either take a risk with COVID or not be able to pay the rent or heat their house. That employer's business model risked the lives of its workforce and their families during the pandemic and increased the discrimination of ethnic minorities in the workplace.

We came across that employer when 60 workers were told that there was no work for them just before Christmas 2018. They were left without pay, struggling to pay their rent, pay for heat and feed their families. We had to go to charities to see whether we could get money for heating oil for them and provide all sorts of food packages and support. They did not want to take cases to tribunals because the employer told them that work would start again soon and, if they took a case, they would not be picked for the employment coming up. The passing of the Bill will help to stop this scandal in workplaces.

The agri-food sector is not the only place where zero-hours contracts have been misused and turned into a normal business model. They are rife in hospitality and leisure and in healthcare, which Patricia will touch on next, and, even now, in the education sector.

As I mentioned at the start, we have a concern with the current wording of the Bill. Clause 14 states that if zero-hours contract workers are placed on a band, they are no longer defined as zero-hours workers. However, if that is the case, according to the Bill, they will no longer be protected from the ban on exclusivity clauses or compensated for being called into work and not being given any hours. If that remains the case, you could have a worker placed on a band, conceivably the lowest band, 3 to 6 hours, called into work on a particular day and then denied hours when they arrive, while those who chose to remain on zero-hours contracts are given work. This could be used by bad employers to penalise workers who seek to access the protections of the Bill. We ask the Committee to look at amending the Bill to close that potential loophole.

I will hand over to Patricia, who will be followed by Paul, and I am happy to take any questions afterwards.

Ms Patricia McKeown (UNISON): I am a member of NIC-ICTU and regional secretary of UNISON. We are the largest union in the social care sector, and this is a sector in which zero-hours working is predominant at the moment. We have made extensive policy submissions and bargaining interventions over the years on social care, and we are about to do so again for the current consultation on adult social care.

In social care, we have extensive experience of handling what are now called zero-hours contracts. In the 80s and the 90s, the majority of care workers were directly employed by the health service, and the majority of those were employed on casual contracts. Today, we call that "zero hours". That had a major adverse impact on retention, workforce planning, care standards and the quality and quantum of care delivered. Through collective bargaining, we introduced guaranteed working hours, which is not dissimilar to the banding proposals in the Bill. It took years longer than it should have done. A legislative base would have made the difference. However, with the outsourcing of social care, zero hours has become the predominant arrangement in social care provided by contractors. There are no proper collective bargaining arrangements to tackle it, although we have a commitment from the Minister for Health on our proposal to establish a social care forum. We have the terms of reference, but the forum has not met yet. The Bill is a necessary baseline for that work.

Zero-hours contracts create major problems for workers, clients, unions and employers. We have returned to the problems of retention, workforce planning, care standards and quality and quantum of care. The use of zero-hours contracts has always created a very high attrition rate across this sector, and the pandemic has exacerbated that. Many care workers in this sector in particular have simply moved on to something with fewer risks and better pay, at a time when we know that the commitments of the social care sector mean that we have to expand.

Remarkably, it has been 12 years since the publication of 'Fair Society, Healthy Lives', the groundbreaking Marmot review into health inequality in England. The review findings were endorsed by the health service here. Two of the six key recommendations to tackle growing health inequality across society are:

and:

Professor Marmot gave social care as a particular example in that review, summarising that quality care results are achieved by the decent treatment of the social care workforce, or, as my granny used to say: "You get what you pay for".

Today, we have a two-tier workforce delivering a critical component of healthcare in an area that has to expand. The Bill can start to take us in the right direction with those two core Marmot recommendations, not only in social care but across all sectors. Looking at the Marmot review, you realise that, if we are ever to turn around health inequalities, it is not solely about workers who are in work at the moment, it is about the future of the workforce and the future of individuals and groups of people in our society. Those two are intimately linked.

I am very happy to take any questions that the Committee may have. I will hand over to Paul Mac Flynn.

Mr Paul Mac Flynn (Nevin Economic Research Institute): Good morning, everyone. Thanks for having me here to talk today. As Kevin said, I am co-director of the Nevin Economic Research Institute, which is an independent research body funded by the trade union movement. A central plank of our work has been examining what we have come to name "precarious work". Zero-hours contracts are one element of that suite of precarious work, and it has grown in prevalence in recent years in particular pockets and areas of our labour market.

Although we do not have much in the way of reliable historical data on zero-hours contracts — Patricia mentioned the idea of casual contracts, which is what we used to call zero-hours contracts — we can say that there was a noticeable step change after the financial crisis, in which we saw a marked increase in these types of contracts in the UK, as measured by the Office for National Statistics (ONS). As the explanatory and financial memorandum to the Bill sets out, we know that somewhere in the range of 1·5% to 2% of employees in Northern Ireland are employed on zero-hours contracts. It is worth noting, however, that the data that we use has a chequered history and is still being updated: as recently as last week, a new method of attempting to calculate the number of zero-hours contracts was put in place. The problem is that a lot of people who were on zero-hours contracts did not know that they were on zero-hours contracts. They probably referred to them as casual contracts. As Kevin mentioned, there is a prevalence of zero-hours contracts among some groups of workers, particularly migrants, that are, too often, beyond the reach of the sample that the Office for National Statistics uses to make its calculation.

The one thing that we can say is that, of the UK regions, Northern Ireland has the lowest prevalence of zero-hours contracts. That can be seen as a good thing in and of itself, but, when we look at where zero-hours contracts tend to occur in the economy, we see that the biggest predictor of zero-hours contracts is the size of the firm involved in the employment. Northern Ireland has up to half the level of employment in large firms — 250 employees and over — so the structure of Northern Ireland's labour market means that it was always destined to have a lower incidence of zero-hours contracts. If you were to adjust Northern Ireland to make it look slightly more like other regions, you would likely see that incidence increase.

That speaks to the broader point here, which is that the fact that there is a lower level of zero-hours contracts at present does not mean that that situation will continue into the future. If anything, there are greater risks of an increase in the use of zero-hours contracts in the Northern Ireland economy. Patricia mentioned one of them already: the fact that zero-hours contracts are very common in areas such as social care, which we forecast to be one of the biggest growth areas in employment over the next number of years. Also, if we are hoping that Northern Ireland's productivity will improve, a key aspect of that will come from larger firms having a greater role in our economy. Therefore, the risk is definitely there.

The final point that I want to make is about transitions. It is possibly not as well known that the majority of people who are on zero-hours contracts are not hired on such contracts; they tend to transition to them with the same employer. In many cases, people are with an employer for up to two years before they transition onto a zero-hours contract. We are finding our way through one of the biggest labour market disruptions that has been faced in the past number of years due to the pandemic, and we are staring down at the next big change that will be necessary: adapting to climate change. That great churn in the labour market heightens the risk of transitions to zero-hours contracts becoming more prevalent. Yes, their prevalence is lower in Northern Ireland, but there is an opportunity here to shut the barn door before the horse bolts.

Thank you very much for hearing me out. I am happy to answer questions with the group afterwards.

The Chairperson (Dr Archibald): Thank you very much, all three of you, for the briefings. The issues that you have set out on the Bill and the broader labour market have been really useful to us, particularly as to why the Bill is required and why it was a commitment in New Decade, New Approach, along with the other employment and workers' rights commitments that we want to see taken forward as quickly as possible.

The example of the employer that you gave us, Kevin, is a scandal. The fact that that situation could persist in this modern economy and society is nothing short of scandalous and highlights why the legislation is necessary. Patricia, you laid out clearly why such contracts are a barrier to the recruitment and retention of staff that we want to see in a really important sector such as health and social care. That also highlights the importance of the legislation. Paul, you talked about improving our productivity, which is obviously really important to broader economic well-being and development. Workers' terms and conditions are clearly a key part of that.

Kevin, you mentioned the loophole, as you described it, in the protection of workers on zero-hours contracts and ensuring that that would carry over to them when they are on banded-hours contracts.

I know that you have raised that with Jemma and that she is open to looking at it. If the Committee can look at that issue, we would be happy to do so. We will look specifically at the wording that might be necessary to correct the issue.

I have a question that is probably for all three of you. What has been the experience of workers and employers in the South, where the legislation has been brought in? How has that impacted on them?

Mr Mac Flynn: We do not have anything in the way of hard data, because we had about year before we went into the pandemic and everything went a bit haywire. The key point is that the legislation in the South preserves, as the Bill does, the right of somebody who wants a zero-hours contract to have one. It provides for a limited set of conditions under which that should be made available. It overcomes what was possibly the central objection: some workers want the flexibility that zero-hours contracts offer. It constrains no one but sets a new minimum set of rights. As Kevin mentioned, like the minimum wage, it is just a new floor below which nobody has to fall.

There was no discernible immediate impact at the lower sectoral levels within the Irish labour market. It was well flagged beforehand, there was a great deal of consultation, and it came as a surprise to nobody. As happens in many of these cases, the labour market adjusts and continues.

The Chairperson (Dr Archibald): Thank you for that.

Mr Weir: I will make three points. You have touched on the first point to some extent. Feel free to give an oral response, but it may be more useful to answer with written information. In a previous session, we heard evidence in broad terms on the prevalence of zero-hours contracts in different sectors. Patricia touched on the public sector, and the agriculture sector has been mentioned, but we also heard evidence that zero-hours contracts are now very rarely used in the retail sector outside hospitality, and that they have become regarded as such poor practice that they are effectively disappearing from the sector bit by bit.

I appreciate the point that a caveat has to be put on the data because it is difficult to verify its accuracy. The range of 1·5% to 2% was mentioned, but, if you have statistics that, albeit with a health warning, drill down into the data and provide a breakdown by sector of the prevalence of use of zero-hours contracts, that would be helpful to our deliberations. Perhaps you could indicate whether you could send that to us. There may not be an enormous amount of point in saying much more on that today.

Mr Mac Flynn: We do not have sectoral breakdowns of the data for Northern Ireland purely because the sample size here that is used by the ONS would be too small for that to be statistically significant. There is a detailed UK-wide breakdown, however, and there is not a huge amount of evidence to suggest why it would be significantly different in Northern Ireland, once you make a few minor adjustments for broader industrial structure.

Mr Weir: Any evidence that you can provide, even with that slight caveat, would be useful.

My second point is on the issue that was raised about the potential for a loophole in the shift towards banded-hour contracts. I do not think that anybody would want unintended loopholes to be created. I can see the potential for danger on the cancellation protection, if I can put it that way. I would not want to see any loophole opened up. I think that everybody is on the same page and wants exclusivity to be banned. I have heard reference to exclusivity in zero-hours contracts. Sometimes, at high levels of employment, a permanent employee who is a specialist in a particular specialism has some level of exclusivity. I am not aware of exclusivity in banded contracts. Have you had any experience of that? We do not want to create, under any circumstances, an odd loophole in which exclusivity is different in the two sectors. Have you had experience of exclusivity issues with banded contracts? We have seen it with zero-hours contracts. Is there a danger of seeing a problem there that does not exactly exist?

Mr Doherty: I am not sure whether the exclusivity clause applies in the South's legislation. I am looking to Paul. That was identified in the Taylor review. Legislation to ban the use of exclusivity clauses was introduced in 2015. We do not have banded hours here yet, so I cannot comment on that.

I want to go back to your point on the retail sector. There were moves by the larger retail firms to move away from zero-hours contracts. There are guaranteed minimum hours — I think that eight hours is the lowest — and top-up hours provided through overtime. A type of banded system has been introduced in the retail sector, voluntarily. The purpose of the legislation is that it will stop those employers who seek to operate below that level. We need to use a bit of a stick to make sure that unscrupulous employers come into line with the good employers.

Mr Weir: I will move to my final point. We all want to create a situation in which good employers are protected but unscrupulous employers are prevented from abusing their position. The route proposed, via the Bill, is that, to transfer to a banded position, there will have to be evidence of what hours have been worked in a three-month qualification period. There may not be a great way of getting round that. Do you have any concern that that could almost reward unscrupulous employers who see the qualification period as being a point at which they move their zero-hours activities into a sphere of casualising their employees' arrangements and saying, "We'll take so-and-so on, but we'll only retain them for two or two and a half months"? That would mean that the employee does not reach the threshold, and there is greater churn. The employers who use those unscrupulous activities would not have to worry about the requirements of the Bill, but the better employers who are looking for longer-term relationships with their employees would be subject to the Bill's requirements. Is there any concern that there is a slight inadvertent danger of incentivising, to some extent, slightly unscrupulous employers?

Mr Doherty: You raise a fair point, and it is a point that was recognised in the Taylor review. Legislation has been passed across the water, and we are playing catch up. At the moment, it sits here that, if an employer breaks an employee's work for a week, the clock is reset. Across the water, with the Taylor review, they moved that to one month. We would like to see that catch-up here, which should, hopefully, close the loophole that you correctly identify. There is a lot of legislation that we need to catch up on here.

The Bill on its own will not solve problems. The commitments in New Decade, New Approach, particularly on collective bargaining, will be key to stopping exploitation in the workplace. We would be keen to see the commitments in New Decade, New Approach carried through into the next Programme for Government. It is a fair point that you raise. We need to catch up with the legislation across the water.

Mr Weir: I do not know whether there are examples elsewhere. I am thinking off the top of my head here. If you are talking about a three-month trigger period, is there any route whereby the clock does not have to start again within, say, a 12-month period? If someone is hired for two months, then told, "We're not going to need you. That's the end of your contract", and rehired a month down the line for another couple of months, it could be cumulative over a set period. That might be one of the areas in which to do it. That is more of a comment than a question.

The Chairperson (Dr Archibald): We need to take a look at that area, maybe not in this Bill specifically but in wider employment law.

Mr Nesbitt: Thank you all for your engagement. I am instinctively supportive of the Bill because — the point has been well made — it does not ban zero-hours contracts but tries to ban employers from imposing zero-hours contracts.

I was going to ask about the last point that Peter Weir made. Kevin referenced the factory gate in 'On the Waterfront'. There is nothing in my mind that stops an unscrupulous employer saying, "I'll employ Kevin for the first two months, then I'll switch to Patricia, then I'll go to Paul, then I'll go to somebody else." Just to expand on that, Kevin, you talked about 200 workers at that food processor. If we abolish zero-hours contracts and I, as the employer, need only 100 workers, what happens to those who get excluded? So, 100 are getting banded employment but 100 are getting nothing.

Mr Doherty: That is a difficult one to answer. There is a change in the situation here at the moment in that, with Brexit and the lack of migrant workers coming to the country, we are seeing labour force shortages. Those shortages are encouraging employers to do what they can to retain workers. That might have an impact on it.

The Bill will not solve all problems, but it is a step in the right direction. Along with other commitments in New Decade, New Approach, it will allow trade unions to intervene and allow access for workers who are facing that exploitation. However, things have changed slightly with a new dynamic in the economy after Brexit. We could be over-thinking problems that may not be there, but it is a fair point.

Ms McKeown: As Kevin says, the Bill will not solve everything. There are other key routes. The first is collective bargaining; the ability to do business with employers on the other side of the table to make sure that we establish the right rights. The second is quite a comprehensive route, particularly when you think about areas such as social care: monitoring in public procurement. In any instance in which major public money is expended — in social care, we are talking about many millions of pounds — we would expect the conditions to be written into, in the first instance, the procurement contracts between client and contractor, and we would expect them to honour their legal obligations. The policy of the public service would be an element of it, in addition to it being an area in which there is comprehensive collective bargaining. Workforce monitoring would come from that as well.

A number of things need to happen in order to have a holistic approach and to get to the place that Marmot talked about on decent work, fair remuneration, enough money to live on, and tackling health inequalities. The Bill does not solve all the issues; it is a stepping stone on the way.

Mr Nesbitt: That is very clear: it is not a panacea, but there is no reason not to support it because of that. Thank you.

The Chairperson (Dr Archibald): It has been a really useful briefing. It has offered us some important perspective in a range of areas. It will really help us in our scrutiny of the Bill. As I said, Kevin, we are happy to take a look at the issue that you raised. We look forward to the written submission as well. Thank you for your time.

Ms McKeown: Thank you very much.

Mr Mac Flynn: Thank you.

Mr Doherty: Thank you.