National Union of Rail, Maritime & Transport Workers Submission to the BIS Consultationon

National Union of Rail, Maritime & Transport Workers submission to the BIS Consultationon Zero-Hours Employment Contracts

Introduction

The National Union of Rail, Maritime and Transport Workers (RMT) welcome the opportunity to submit our views to theBIS Consultation on Zero-Hours Employment Contracts

The RMT organises 80,000 transport workers across all sectors of the industry and in the offshore oil and gas industry. We are the largest rail union and the only one that represents all rail grades.

We have attached a recent RMT publication “The Great Rail Payroll Rip Off” which highlights the plight of rail infrastructure workers on zero-hours contracts.

Key Points

RMT believes zero hours contracts are especially common in railway maintenance, maritime and the offshore industry. We support the prohibition of zero hour contracts.

The union also believes that the premise of the consultation, that only minor adjustments to zero hours are required, is completely wrong. By seeking to preserve zero hours working in the economy, under the guise of flexibility, the Government is looking to enshrine these exploitative contracts in law. This not only provides for inferior pay, terms, conditions and rights for the individuals being exploited by these contracts but will encourage the growth of a two tier workforce, divided between those that have full employment rights and those that do not. We believe that this is an unreasonable and unsustainable disparity in the workplace which the Government should address by outlawing zero hours contracts.

Rail

Of some 88,000 PTS (Personal Track Safety) cardholders, 67,000 are not directly employed by Network Rail. RMT believes that less than 10% are full-time employed and that the remainder may well be working under bogus self-employment on zero-hours contracts.

In some cases an individual worker may be sponsored by up to 8 contractors at any one time, and in an extreme case by up to 20 contractors. This means it is extremely difficult to regulate working hours and quality. The Office of Rail Regulation, which is the safety and economic regulator, believes that this is “not conducive to the development of a safe railway” (see attached letter).

RMT is opposed to exclusivity clauses as our members’ experience of the sponsorship system for rail track workers (see point above) demonstrates that permitting zero hours will lead to some employers abusing them. Therefore, we do not support exclusivity clauses as an acceptable alternative to the outlawing of zero hours contracts in the rail industry.

Network Rail is majority funded by the taxpayer through the Network Grant. It is clear that the taxpayer is now paying for a largely casualised workforce, with potentially deadly consequences in a safety critical industry. In addition, the activities of payroll companies cost the Treasury millions in avoided tax revenue every year.

Network Rail intend to increase the use of contractors:

“Overall, headcount is projected to reduce over CP5 (Control Period 5 2014-2019) by around 1,050, which is equivalent to a reduction of eight per cent in total workforce....Track direct employees have the greatest absolute reduction of around 800.

“We will achieve efficiencies of 18 per cent by the end of CP5 by making greater use of Tier 2 contractors...” Network Rail Strategic Business Plan January 2013

The Office of Rail Regulation, when questioned by RMT, acknowledged that zero hours contracts “appear to be a common form of securing staff for the engineering contract business” and stated that they are “mindful of the considerable risks that can arise from safety critical staff working for more than one employer”.

The widespread use of notionally ‘self-employed’ staff on zero hour contracts has some immediate and short term benefits with regard to staff flexibility and costs, it has a generally negative effect on the attitudes and behaviour of those involved, which is not conducive to the development of a safe railway.Ian Prosser, the Director of Railway Safety in the Office of Rail Regulation

In a written response of 2nd September 2013 to Alan Campbell MP who had raised RMT’s and the regulator’s concerns over Network Rail’s use of zero hours contractors, the former Rail Minister Simon Burns MP welcomed

...Network Rail’s aspiration to cease the use of zero hour contracts for any safety critical staff.

The Former Chief Executive of Network Rail, Sir David Higgins, confirmed this aspiration in oral evidence to the Transport Select Committee on 14th October 2014:

“I have certainly made it very clear that I am unhappy having any safety-critical roles both within Network Rail and our whole supply chain as zero-hour contracts. ... It is a very large industry in zero hours.... We think there is a valid role for an agency work force. We just believe there needs to be a minimum standard that all parts of the industry embrace. We want to bring our contracting work force along with that as well.”

Whilst Network Rail has taken a step in the right direction, as long as zero hours contracts remain legal there is always the possibility that they will be used, including in safety critical roles. We reiterate the RMT’s position that the Government should use this opportunity to ban zero hours contracts outright.

Offshore

In the offshore industry, employers have been using ‘flexible’ or bogus forms of self-employment to recruit divers, maintenance, engineers, caterers and other skilled workers for decades. Workers on these types of contract have no employment rights and can only expect a maximum of 5 days notice of a contract ending and the employer has no liability. There is a clear tension with safety here and the offshore unions consistently argue against this practice as it runs counter to the industry’s claim to be pursuing a safety culture of continuous improvement.

As a bare minimum, RMT would like to see the offshore industry adopt the retainer rate model for workers who are on-call to work at short notice which, if adopted as a standard industry minimum, would abolish the use of zero hours.

To illustrate the lack of protection for offshore workers on zero hours and agency contracts, one of the survivors of the helicopter crash off the Shetland Isles on 23rd August 2013 was left without access to sick pay or any other form of support following that traumatic episode on the grounds that he is not making himself available for work.

Maritime

RMT call for the safety regulator, the Maritime and Coastguard Agency to adopt a ‘zero tolerance of zero hours’ on vessels and to stop adjusting manning levels on vessels to accommodate employers’ use of zero hours contracts.

Written Answers to MPs revealthat the Government has not even discussed with the MCA the safety implications of the use of zero hours contracts on commercial vessels:

Katy Clark: To ask the Secretary of State for Transport what recent discussions he has had with officials in the Maritime and Coastguard Agency on the employment of workers on zero-hours contracts in safety critical roles in the shipping industry.

Stephen Hammond: I have had no discussions with officials from the Maritime and Coastguard Agency on the employment of workers on zero-hours contracts in safety critical roles in the shipping industry.[1]

The use of zero hours contracts is rife in the short sea sector, particularly passenger ferry operators in the North and Irish Seas. There are significant differences between the rights and entitlements of workers on zero hour contracts employed by an agency and zero hours workers directly employed.

RMT members working for DFDS on zero hours contracts are employed by an agency (Clyde Marine) and lack basic employment rights.

RMT members working for P&O Ferries Dover on zero hours contracts are directly employed by the company so enjoy better employment rights than their counterparts at DFDS but fewer statutory protections and entitlements than their P&O colleagues who are directly employed on a fixed term contract. This is an example of the two tier workforce that exists in companies that use zero hours contracts.

Public sector ferry operator Caledonian MacBrayne does not use zero hours contracts for seafarers working on their domestic passenger and freight ferry services from the west coast of Scotland. RMT would like to see that policy adopted by all ferry operators in the Scotland, Wales, Northern Ireland and England.

RMT will continue to campaign for all work on our railway network, commercial shipping routes and in the offshore sector to be undertaken in-house, without subcontractors, employment agencies, payroll companies, umbrella companies or any of the other mechanisms used to heighten the exploitation of the workforce.

Zero Hours contracts

The consultation document confirms that zero hours employment contracts are not new but their use by employers is on the rise again after a period of decline in the last decade.

In our experience, workers engaged on zero-hours contracts are not aware of their rights and in many cases unaware of their employment status making it even more difficult to establish what rights they do have. This is completely unacceptable and should be remedied through making zero hour contracts illegal.

Very little support is available to people negatively affected by zero-hours contracts. This is because, in many cases, the workers are legally considered to be self-reliant as self-employed workers or alternatively, the employers engaging workers on zero-hours contracts having both the will and the ability to circumvent any legal definition in order to avoid employment rights obligations.

In RMT’s experience a typical worker on a zero-hours contract risks not being offered further work should they reject offered work. This is also the case where workers refuse to undertake work which they consider to be unsafe. RMT has seen numerous instances of such practice and supportsa complete ban on the use of zero hour contracts.

Even a recent Chartered Institute of Personnel and Development survey highlighted bad practices with zero hours:

One in five zero-hours workers say they are sometimes (17%) or always (3%) penalised if they are not available for work.
Almost half of zero-hours workers say they receive no notice at all (40%) or find out at the beginning of an expected shift (6%) that work has been cancelled, and only about a third of employers tell us they make a contractual provision or have a formal policy outlining their approach to arranging (32%) and cancelling work (34%) for zero-hours workers.
One in five (21%) zero-hours workers believe their pay is lower than comparable permanent staff doing similar jobs, while one in ten employers (11%) report that this is the case. In fact, almost two-thirds (64%) of employers who use zero-hours workers report that hourly rates for these staff are about the same as an employee doing the same role on a permanent contract. Nearly a fifth (18%) report that hourly rates for zero-hours staff are higher than permanent employees (with the proportion slightly higher in the private sector).
Confusion among some employers and zero-hours staff over employment status and rights. For example, 42% of zero-hours staff don’t know if they have the right to take legal action if unfairly dismissed after two years service.

Question 1

Are there circumstances in which it is justifiable to include an exclusivity clause in a zero hours contract? If you answer yes, please describe the circumstances that justify such a clause.

These conditions would move workers on to a contract of work that is not zero hours. This is RMT’s main contention – that the Government should seek to adjust employment law to outlaw the use of zero hours contracts, rather than indulging in minor and misleading changes such as exclusivity clauses which actually preserve the zero hours culture and the associated safety risks that accompany their use in safety critical industries like transport and offshore energy.

Question 2

Do you think the Government should seek to ban the use of exclusivity clauses in employment contracts with no guarantee of work?

RMT believes that the Government should ban the use of zero hour contracts. All workers should be guaranteed regular paid working hours. The issue of exclusivity is misleading, as exploitation is still exploitation, whether it’s carried out by one or any number of employers against one employee. As such, banning exclusivity clauses should not be the subject of the consultation – banning zero hours contracts outright should be the aim and discussion of exclusivity is a distraction from the fundamental mechanism for worker exploitation that is zero hours.

Question 3

Do you think an outright ban on exclusivity clauses in employment contracts with no guarantee of work would discourage employers from creating jobs? Are there any other unintended consequences of Government action that should also be considered?

RMT believes that all types of employment should have minimum standards,and that the rhetoric of job creation is misplaced in this instance. Linking job creation to zero hours is a direct threat to employment rights and standards that should be countered through the abolition of zero hours contracts.

As stated in answer to the previous question, discussion of exclusivity clauses is a distraction from the need for an outright ban on zero hours contracts. Allowing zero hours contracts to persist will make it more difficult to ban them in the longer term as more employers will use these exploitative contracts to cut costs and arguments over the impact on jobs will always be made to resist banning them.

Question 4

Do you think Government should provide more focused guidance on the use of exclusivity clauses, for example setting out commonly accepted circumstances when they are justified and how to ensure both parties are clear on what the clause means? If you answer yes, what information should be included?

Again, RMT believes that zero hours contracts should be banned. Any amount of guidance to the employee/worker on their rights, or lack of will not change the fact that they are being exploited through a zero hour contract. We would also challenge whether a worker has a choice over whether to accept work on a zero hours contract, given the punitive sanctions that exist in the welfare system for people who reject offers of work. In reality, workers, particularly those in low incomes, are not able to ‘shop around’ for a job. The role of Governmentshould be to protect workers from exploitation and only the banning of zero hours contracts will achieve that basic level of protection.

RMT believes that the entire body of legislation used for categorising workers and their employment arrangements is a major cause of concern. It does not provide clarity as to the rights or responsibilities of the worker, and is open to systematic abuse – as is clearly demonstrated by bogus self-employment, zero-hours contracts, and pay-roll companies.

Question 5

Would a Code of Practice setting out fair and reasonable use of exclusivity clauses in zero hours contracts (a) help guide employers in their use, and (b) help individuals understand and challenge unfair practices? Please explain your response.

A code of practice would be ineffective, as it is likely to amount to a form of self-regulation and preserves the culture of zero hours contracts which RMT wish to see banned.

Question 6

Do you think existing guidance and common law provision are sufficient to allow individuals to challenge exclusivity clauses and therefore no specific action from Government is required?

No. RMT does not believe that the current legislative arrangements are sufficient, and do not combat bad employment practices.

Improving the transparency of zero hours contracts

Question 7 - Improving the transparency of zero hours contracts

If you have sought employment information, advice, or guidance on zero hours contracts before, (a) where did you receive it from, (b) how helpful was it to you in terms of explaining your position in regard to zero hours contracts, and (c) how could it have been improved?

N/A

Question 8

Would the additional information, advice and guidance suggested in the first option (first bullet point, para 41), help individuals and business understand their rights and obligations? If not, what other information should Government provide?