Zero hour contracts

There has been much discussion recently of zero hours contracts: employment contracts that require workers to attend the place of work as and when required, and that pay them only for the hours worked. In one sense there is little to object to, as such contracts can result in earned income patterns similar to those experienced by self-employed workers. A self-employed plumber might earn nothing one week, and £1,000 the next, and might not regard this as a problem. But there are two problems with zero hour contracts. Some such contracts prevent the worker from accepting any other employment. This means that, even if no paid hours are offered, if other temporary employment becomes available the worker is not permitted to accept it. The other problem relates to disposable income after tax and benefits: A gyrating earned income can play havoc with a family’s disposable income, particularly if the family is claiming in-work means-tested benefits. Changes in earnings have to be reported, which can be time-consuming, and missed or inaccurate benefit payments will often be the result. (Once Universal Credit has been implemented, employers’, HMRC and DWP computer systems will need to communicate information on changing earnings regularly and faultlessly, which will be particularly problematic if a person has more than one zero hours contract.)

A Citizen’s Income would provide a substantial portion of a household’s subsistence income, and, because the Citizen’s Income would not change as earnings changed, it would provide a secure income floor on which workers could build with a combination of self-employment and one or more zero hours contracts. The combination of a Citizen’s Income with mutually agreed zero hours contracts could deliver both the flexibility that companies need and the combination of secure disposable incomes and labour market flexibility that many households would like to have.