Zero Hour Contracts and Minimum Wage

12 May 2017

Zero hour contracts

Many people working in the retail, hospitality, education and health sectors are doing so under zero hour contracts, low-hour, ‘if and when’ and banded hours employment deals.  In some situations of course these conditions are necessary and even suit some workers, but since the recession the trend has grown and the sheer numbers now affected smacks of worker exploitation. 

Due to a shortage of full time jobs and the general drive to get people working again any jobs were welcome, and people were glad to find any sort of work.  But now that the employment situation has improved so much, at least on paper, it is high time the quality of jobs on offer was looked at and measures taken to prevent exploitation.  Unemployment dropped to 6.2% in March but do the figures paint the true picture and are all the new jobs coming on stream fairly contracted and giving the workers a reasonable standard of living?

The recent trend in many areas of employment has been away from the traditional model of permanent work with set times and set benefits, to more ad hoc arrangements like zero hour, ‘if and when’ and short term contracts.  For example two thirds of teachers entering the profession since 2010 are still in temporary or part time employment  and the situation is particularly bad at third level where people are hired to give a course of maybe only a couple of hours a week with no guarantee that another ‘gig’ will follow.  ‘If and when’ and  various types of low security contracts are also prevalent in the area of health, especially in community care and general practice nursing, as well as retail and hospitality.

A certain amount of this kind of work of course is needed as it suits some workers and some employers.  Students for instance or people with other commitments may find casual work suitable for their particular circumstances so a certain amount of flexibility could be welcome.   Also some employers may be tentative in making commitments to workers when they are just building up from the recession or growing a business from a small base, but others may simply be trying to keep the wage bill down at the expense of workers. 

Effects of zero hour contracts

The insecurity and uncertainty of the practice though, leaves an awful lot of people very vulnerable when it comes to building a life for themselves and their families.  Many have to rely on family income support to make ends meet and most people in this situation find it difficult to get mortgages or even bank loans.  They don’t know from one week to the next how much or how little work they will get and can’t plan anything.

The trend has more long term dangers in that there will be repercussions for pensions at a time when the problems of providing pensions in the future is very much in the news.

 Also there will be consequences in terms of developing skills and experience.  The training that would be part of traditional employment has been shown to increase productivity.  Investment in skill development benefits the employer in terms of productivity, the economy in terms of increased tax revenue and the workforce in terms of increased skills and earnings.

The prevalence of ad hoc working arrangements therefore could be short-sighted and damaging to the economy in the long run.

Minimum wage

Over 10% of Irish workers are being paid the minimum wage of €9.25 or even less.  Some who are earning less than minimum wage say it is because they are on training rates or age related rates.  Minimum wage, like zero hour contracts is most common in the services industry where four in five only earn minimum wage or less, and exacerbates the difficulties of those on low security contracts.

Nearly 40% of them are aged between 18 and 24 and three in five are employed part-time.  The repair of motor vehicles sector and the accommodation and food services sector account for around 25% each of those paid minimum wage.

Levels of education are somewhat reflected in the numbers on minimum wage and below in that almost 20% had no secondary education, 19% only had lower cycle secondary and 17% had completed secondary education.  Less than 4% of those with a third level degree are on minimum wage.

Many of these people who may also be working on a very casual basis may not get training opportunities that might be available to more permanent or full time staff.

Government response

The government is putting forward legislation to tackle the issues surrounding low pay and zero hour contracts following a report by the University of Limerick which examined the situation prevailing in retail, hospitality, education and health.

  • Planned new laws aim to do away with zero hour contracts, force employers to give employees more certainty over their hours and make sure pay packets accurately reflect the actual hours worked.
  • They will also cover terms and information which employers will have to give to employees within a certain timeframe.
  • Employees will be placed in bands of hours that reflect the hours they actually work over a certain period which should help with applying for loans.
  • UL proposed that workers should be paid for a minimum of 3 hours if brought in to work, but the Dept of Jobs is considering a minimum payment of 3 times the minimum wage so as not to be over generous to higher paid workers and put too much cost on the employer.

The ICTU welcomed the proposals as it has been pushing for change in precarious work practices but IBEC described them as ‘crude and disproportionate’.


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