An anatomy of zero‐hour contracts in the UK

• DOI: http://doi.org/10.1111/irj.12233
• Published date: 01 January 2019
• Author: Maria Koumenta,Mark Williams
• Date: 01 January 2019

An anatomy of zero-hour contracts in

the UK

Maria Koumenta and Mark Williams

ABSTRACT

We present the first attempt to locate zero-hour contract (ZHC) jobs—jobs that lack a

guaranteed minimum number of hours—within theoretical frameworks of the

employment relationship and occupational class and empirically explore their charac-

teristics using successive UK Labour Force Survey. In line with these theories, we find

this contentious form of employment to be strongly differentiated by the nature of

occupational tasks and to overlap with nonstandard employment features

(e.g. part-time and temporary). They are also highly concentrated in a small number

of occupations and sectors, with over half of ZHC jobs found in just 10 occupations.

We further show that ZHCs are associated with indicators of inferior job quality such

as low pay and underemployment. Although we find no evidence that ZHCs are a

particularly pervasive feature of the UK labour market, further growth cannot be

ruled out in certain occupations.

1 INTRODUCTION

Although there remains no legal definition of zero-hour contracts (henceforth ZHCs),

they are generally accepted to occur when a contract of employment between an em-

ployee and an employer lacks a guaranteed minimum number of hours (BIS, 2013;

ONS, 2017). A distinctive and controversial feature of ZHCs is that employees can

be called on at short notice if and when required by their employer. Employees in turn

have no obligation to accept the work. Proponents praise the flexibility this type of

employment relationship affords to organisations and workers alike (CIPD, 2013;

Pyper and Brown, 2016). Critics, on the other hand, refer to ZHCs as an extremely

low quality employment relationship characterised by labour market vulnerability

in terms of both pay and hours insecurity. In a context where policy makers have been

advocating not only more but also better jobs (e.g. DBEIS, 2017; ILO, 2012), the ap-

parent emergence of zero-hour work is seen as a threat to job quality (Wood, 2016),

while Rubery and Grimshaw (2016: 240) describe them as having taken ‘an almost

iconic status to symbolise extreme flexibility and commodification in the labour

market’. Public critique has been so intense that the Labour Party promised to outlaw

them in the previous two General Elections, while the Office for National Statistics

(ONS) has been compelled to publish regular updates on their prevalence.

❒Maria Koumenta, Department of Business and Management, Queen Mary University of London,

London, UK and Mark Williams, Department of People and Organisations, University of Surrey,

Guildford, UK. Correspondence to: Maria Koumenta, Department of Business and Management,

Queen Mary University of London, Mile End Road, London E1 4NS. E-mail: m.koumenta@qmul.ac.uk

Industrial Relations Journal 50:1, 20–40

ISSN 0019-8692

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd

Nonetheless, beyond the descriptive accounts offered in government reports and

public speculation about their growing salience in the labour market, there has been

a distinct lack of academic treatment of ZHCs, both theoretically and empirically.

In this article, we address this gap by examining the following two themes. First,

we consider the wider institutional and economic context that ultimately paved the

way for the emergence of ZHCs and form expectations regarding which specific

segments of the labour market are likely to be most vulnerable in this regard. In doing

so, we draw on occupational class theory that provides a model as to how and why

employers differentiate employment contract types across different kinds of occupa-

tions according to their task content (Goldthorpe, 2007). An advantage of adopting

an occupation-based approach is that it enables a particularly fine-grained view of

the dispersion and concentration of ZHCs in the labour market and also can reveal

where further growth is more likely. Second, we examine the quality of ZHC jobs with

respect to aspects that have been the main focus of contention, namely, pay, hours

inadequacy and insecurity. This enables us to assess whether ZHCs are associated

with indicators of labour market disadvantage such as inferior pay and underemploy-

ment. A complicating factor that we seek to clarify is that because the zero-hour di-

mension is but one feature of ZHC jobs, it is important to separate out specifically

this contentious zero-hour component from other confounding dimensions we expect

to cluster with it (e.g. part-time and temporary contracts). More broadly, we contrib-

ute to the literature on developments in the employment relationship and provide an

evidence-based account to inform contemporary debates on the future of work, of

which ZHCs have been a key feature.

We explore the two themes of incidence and quality of ZHC jobs using seven

quarters of the UK Labour Force Survey (2013–16). The article is structured as fol-

lows. We begin with an in-depth discussion of the definitions, issues of measurement

and prevalence of ZHCs, then move onto discuss the relevant theoretical perspectives

underlying our analysis. The section that follows describes the data. In our results

section, we explore the incidence of ZHCs focusing on their overlap with other

elements of nonstandard and flexible work and the types of occupations where they

are concentrated and proceed with examining the pay and hours of ZHC jobs.

Conclusions and implications are discussed in the final section.

1.1 Definition and prevalence of zero-hour contracts

In the UK context, a conclusive definition of ZHCs that was understood by em-

ployers and employees was lacking until recently. Following a consultation exercise

with employer, employee and legal groups, the (then named) Department of Business,

Innovation and Skills defined ZHCs as ‘an employment contract in which an

employer does not guarantee the individual any work and the individual is not

obliged to accept any work offered’(BIS, 2013: 2). The clarification in the definition

of ZHCs was followed by the ONS conducting a review in 2013 on their measurement

and estimation in their Labour Force Survey (LFS). The LFS is a quarterly survey of

around 40,000 households providing a representative portrait of the UK labour mar-

ket and is the government’s data source in calculating official labour market statistics.

Although the LFS has been collecting information on ZHCs since 1996, the ONS

cautions against long-term historical estimates for two main reasons (ONS, 2013).

First, the LFS shifted from seasonal to calendar quarters in 2006 making historical

comparisons with prior years of any quarterly specific variable such as ZHCs

21Zero-hour contracts

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd