A fast guide to zero hours contracts in the NHS

Throughout 2013, zero hours contracts were high on the news agenda and a political hot potato. Figures suggest that more than a million UK workers are on zero hours contracts, with no guarantees of shifts or work patterns − four times official estimates.

Summer saw Liberal Democrat MP Stephen Lloyd calling on ministers to investigate the proliferation of zero hours contracts and introduce safeguards for vulnerable workers. In October, business secretary Vince Cable announced a review of fixed term contracts and floated the idea of a code of conduct to regulate them. But what exactly is a zero hours contract?

‘In practice within the healthcare sector regular attendance, reliability and a consistent level of performance are key requirements’

Essentially, the idea of a zero hours contract is that the employer is not obliged to offer any work whatsoever and, if offered, the employee has no obligation to accept it.

The “classic” environment in which zero hours contracts have traditionally been used is the fast food industry. Workers would turn up for work and if the outlet was not busy they might be sent away on the basis that there was no work for them to do at that point. They would not be paid until actually required. 

Instinctively, this could be a problematic model for the NHS − but that has not stopped some providers seeking to rely on the argument that use of zero hours contracts means individuals working for them within the healthcare sector are not employees.

For example, in the case of Pulse Healthcare vs Care Watch Services and others in 2012, Pulse, which had taken over a care contract from Care Watch, argued that six individuals who it had dismissed were not employees. 

Mutuality of obligation

The claimants were providing 24 hour care for a lady who had severe physical difficulties. Pulse argued that because the individuals had signed up to “zero hours contracts” they were not employees, because there was no mutuality of obligation. In other words, the individuals were not obliged to accept work when it was offered to them.

‘Why do so many organisations currently feel the need to use significant numbers of temporary staff at all?’

This argument was crushed by the Employment Appeal Tribunal, which upheld the Employment Tribunal’s decision that each of the individuals was employed under a contract of employment. The argument that there was no mutuality of obligation was dismissed by the tribunal. 

It was apparent from the facts of this case that given the need to provide continuous care for the lady in question and the way in which the rotas had been worked by each of the claimants, that there was mutuality of obligation and they were employees. What the contract said was of secondary importance to the reality of the situation. 

This is often the critical point where the arguments in favour of zero hours contracts come up short. While in theory you might be able to argue that an individual has no obligation to accept work, in practice in the healthcare sector regular attendance, reliability and a consistent level of performance are key requirements.

This arguably also applies to bank workers, agency workers, “as and whens” and all manner of other temporary staff. The reality is that staff are valued for their reliability. If they perform well, they are likely to be offered regular shifts by organisations seeking to cover services but not recruit and therefore add to their existing “establishment” cost.  

Employment rights

One of the biggest risks of using a temporary worker is that the person turns out to be a good performer who is then offered shifts on a regular basis. In other words, the better the individual performs the more likely they are to be offered consistent work, which in turn increases the likelihood that they will be regarded by an Employment Tribunal as an employee with full employment rights.

‘The clamour concerning zero hours contracts is, to a large extent, obscuring the real issues’

Rather than focusing on whether zero hours contracts should be permitted at all, perhaps the time has come for a wider discussion about workforce planning, staffing levels, the reality of establishment cost, governance (particularly in the post-Francis report world), safety and a whole host of other related issues.

The clamour concerning zero hours contracts is, to a large extent, obscuring the real issues. Rather than asking whether zero hours contracts ought to be allowed, perhaps we should instead be looking to workforce redesign to optimise performance, make savings where appropriate and therefore dramatically reduce the requirement for a temporary, agency, or indeed zero hours contracts worker. 

While using zero hours contracts is instinctively always likely to seem wrong within the NHS, we risk missing the key question, which is why do so many organisations currently feel the need to use significant numbers of temporary staff at all?

Is it because of the pressure they feel to deliver headline cost improvement savings and cuts in establishment costs, while at the same time, quite understandably, improving their service delivery and strengthening their governance framework? 

The time has come for a grown up debate in relation to these wider issues.

Emlyn Williams is partner in the employment team and leads the commercial healthcare sector at Weightmans law firm