Pressure grows on Government to outlaw ‘zero hours’ contracts as it is revealed Parliament uses them too

The Government is under pressure to outlaw “zero hours” contracts in which workers are put on standby without a guaranteed minimum amount of work or pay.

Conservative ministers have been accused of using the contracts to revive controversial proposals to reduce workers’ rights by Adrian Beecroft, a venture capitalist and Conservative Party donor. Many of his recommendations in a government review, including allowing bosses to fire workers without allowing them to claim unfair dismissal, won the backing of David Cameron and George Osborne but were blocked by Vince Cable, the Business Secretary.

Disquiet among trade unions about “zero hours Britain” has spread to politicians after figures showed that more employers are using the contracts. It emerged yesterday that the House of Lords employs 26 catering staff and 19 people working for Hansard, Parliament’s official record, on such a basis.

Glen Watson, director of the Office for National Statistics, said 200,000 people were on such a contract from October to December last year – up from 131,000 in the same period in 2007 and 150,000 in 2009. He admitted these figures may be an underestimate. “There is likely to be a degree of reporting error… as individuals may fail to identify their type of employment contract,” he said.

Mr Watson was replying to a written House of Lords question by Lord Oakeshott, the Lib Dems’ former Treasury spokesman, who said: “This is a return to the discredited old system of casual labour on the docks. It cocks a snook at the minimum wage if people have to hang about on call unpaid.” He added: “A zero hours Britain is a zero-rights Britain in the workplace –Beecroft by the back door. Being at the boss’s beck and call is no way to build a skilled, committed, loyal labour force.” Lord Oakeshott was shocked that the answer to another question revealed the Lords was using such employment terms for its own staff. “There should be zero tolerance for zero hours contracts for people who serve us in Parliament,” he said.

Experts believe the spread of the contracts is one reason why unemployment did not rise as much as expected during the double-dip recession. Some employers still provide holidays, sick pay and pensions to staff on them but others do not.

At first the contracts were most common in shops, restaurants and hotels but have spread to public services. The number in the NHS has risen by a quarter in two years to almost 100,000, mostly nurses and healthcare assistants.

But trade unions are pressing Labour to ban the contracts. Frances O’Grady, the TUC general secretary, said: “It’s likely that there are many more people trying to get by on zero hours contracts than these figures suggest. In tough times when there aren’t enough jobs to go round, employers are taking advantage of desperate people who will take almost any job…”

She added: “Zero hours workers never know how much work they’re going to get or how much money they’ll take home… which plays havoc with family finances. It’s no wonder that most people on these kind of insecure contracts long for the stability of guaranteed hours. Employers should stop trying to get workers on the cheap and start employing them on decent wages, with regular hours.”

Rights and wrongs: The beecroft report

People on zero-hours contracts are classed as “being in employment regardless of the number of hours they actually work” – even if they remain on standby all week without being paid.

In a 2011 Downing Street report, Adrian Beecroft, a venture capitalist, proposed scrapping regulations designed to protect workers’ rights, saying they deterred recruitment. His most controversial idea was “no fault dismissal” – under which staff deemed to be “coasting” could be paid off without being able to claim unfair dismissal. After Liberal Democrat objections, the Government opted for “settlement agreements” under which bosses and workers can discuss a pay-off.

Other proposals, including ending flexible working for parents, bringing back a default retirement age and making it easier to employ children, were also vetoed.