Zero-Hour Contracts - Ministerial Response - 24 August 2016

Findings

Comments

F1

The  proportion  of  zero-hour contracts is much higher in Jersey than in the United Kingdom and, in the private sector, the number of zero-hour contracts has grown by a third from December 2013 – December 2015.

According to the terms of reference for the review, the Panel's intention was "to determine whether there is a disparity  between  UK  statistics  and  Jersey  statistics regarding the use of zero-hour contracts". The report refers  to  information  that  was  already  available  in Labour Market reports (produced by the Statistics Unit) but  does  not  consider  if  or  why  there  might  be  a disparity. There are evident differences in the data that might  explain  why  the  proportion  of  zero-hour contracts  reported  in  Jersey  is  higher  than  the proportion reported in the UK:

- Survey  respondents –  The  UK  Labour  Force Survey is based on respondents' views about their working  arrangements  and  counts  people  rather than contracts and so it is likely that any estimate from  that  source  will  be  less  than  any  estimate obtained directly from businesses. The Office for National Statistics (ONS) business survey figure is an  estimate  based  on  2,500 responses  from businesses.  Jersey's  figure  is  an  actual  figure obtained from all businesses in Jersey.

- Survey  reference  period –  the  Labour  Force Survey  counts  the  number  of  individuals  who report that they are on a zero-hour contract in their main employment where they have done at least one hour of paid work in the previous week. The ONS  business  survey  asks  a  sample  of 5,000 businesses,  and  counts  zero-hour  contracts only where a person has worked under that contract in a 2 week period. Jersey's Control of Housing and Work Law requires all undertakings in Jersey to report individual employee-level information to the States every 6 months which includes reporting on employees who have worked in the last month on  zero-hour  contracts.  This  longer  reference period in Jersey is bound to include more people working under a zero-hour contract than either of the UK surveys.

If there is a higher proportion of zero-hour contracts in Jersey,  this  does  not  necessarily  demonstrate  that employers  are  misusing  these  contracts.  Differences might also be attributed to factors such as:

- There may be a greater proportion of workers in Jersey than in the UK working in the industries that typically (and genuinely) use zero-hour contracts.

- Employers who (pre-Employment Law) regularly employed staff under short fixed-term contracts or

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under  seasonal  contracts  may  have  re-arranged their practices to use zero-hour contracts so as not to fall foul of Jersey's far greater protection against unfair dismissal than exists in the UK (or anywhere else in the world) for those working under seasonal and short fixed-term contracts.

- Proportionately more women work in Jersey than in the UK. Women are more likely to want the flexibility in hours and childcare costs are high in Jersey.

- Seasonal differences may be more pronounced in Jersey than the UK, with more of a high and low season.

- Local employers may be less able to deal with quiet periods, e.g. by seeking business and contracts in other nearby towns.

- The Agriculture sector may be more likely to use zero-hour contracts to ensure that they have enough staff  to  cover  the  workload,  depending  on  the weather. In the UK, farmers have more accessible casual labour, e.g. travelling farm workers.

- The Finance sector in Jersey may be more likely to use agency temps to cover peak periods, leave and absences.  UK  banks,  for  example,  can  more quickly and cheaply move existing staff between different branches.

Employers  in  the  UK  may  be  making  other arrangements,  such  as  gig'  work  (hiring  labour  on demand  facilitated  through  digital  platforms  such as Uber).  This  is  supported  by  recent  ONS  figures showing  that  the  UK  self-employed  workforce  has grown  by  730,000  to  4.7 million  between  2008  and 2015. This is a marked upturn since the 2008 recession, and self-employed people now represent around 15% of the workforce. Part-time self-employment grew by 88% between 2001 and 2015.

F2

Most  people  employed  on  zero- hour contracts are working in the following  sectors:  education, health  and  other  services; hospitality;  construction  and employment agencies.

It is to be expected that large proportions of the jobs that are recorded as zero-hour contracts (5,790) are in education, health and other services (1,080), given that it is standard practice to maintain a register of public sector  supply  teachers  and  bank  nurses  to  maintain service provision. It is also to be expected that a large proportion of zero-hour contracts are in employment agencies (760) and in the hospitality sector (990).

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F3

The  Social  Security  Department uses staff engaged on a zero-hour contracts  through  an  agency, some of which have been working in the Department for a year or more and predominantly work to the  Department's  hours  of 8:30 a.m. –  5:00 p.m.  This suggests to the Panel a need for those  agency  workers  to  be employed  on  a  permanent  basis by the Department because hours that  are  regular  and  remain  that way  for  an  extended  period  of time do not reflect a typical zero- hour  contract.  They  are  denied access to the benefits of working as a permanent member of staff for the States of Jersey to which they would otherwise be eligible, for example the States earnings- related pension scheme (PECRS).

There is confusion in areas of the report between zero- hour  contracts  and  agency  work  (e.g. page 20).  To clarify, the Department does not engage staff on zero- hour  contracts.  At  the  Social  Security  Department, temporary staff are rarely, if ever, engaged through an agency  with  the  intention  that  they  will  remain  on assignment for extended periods of time of a year or more. However, in some cases, the initial temporary assignment may unexpectedly need to be extended. For example, if the post-holder is on sick leave longer than expected,  if  the  duration  of  a  project  has  to  be extended, or if the person is offered a further temporary assignment to deal with a different project within the Department. A rigorous vacancy management process takes place before seeking to engage temporary staff. The  Department's  practice  accords  with  the  JACS guide (as set out on page 12 of the Panel's report).

• Is the work infrequent? – no

• Is  the  work regular but for a  project or a  short period? – yes

• JACS advises, either consider using a fixed term contract if you know how long it is for. If you don't know how long it is for JACS advises: "think about using an agency or variable hours contract".

The JACS guide recommends that employers should carry out regular reviews of zero-hour contracts to see if they have effectively become contracts with fixed or guaranteed  hours  because  a  regular  pattern  of employment could lead the Tribunal to conclude that there  had  been  a  variation  in the  original  zero-hour contract.  Working  regular  office  hours  does  not necessarily mean that a zero-hour contract or agency engagement is being misused, for example, to complete a short project during normal working hours each day, but for an unknown period of time.

F4

The  Social  Security  Department uses agency staff as a mechanism to avoid the cap on staff numbers set  by  the  States'  Employment Board.

This is the view of the Panel rather than a finding of the review. In its stakeholder meeting with the Minister for Social Security, the Panel asked: "Does the practice that you use of employing ... not employing, of using agency workers have anything to do with the headcount you are supposed to stick to?" The Chief Officer of Social  Security  replied  that:  "We  also  have  funds available  for  the  engagement  of  project  work.  They could be consultants, could be temporary staff, to make things happen."

It is important that the Department is able to deliver services to its customers. The Department pilots new ideas and constantly seeks to make improvements. Use

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of  arrangements  such  as  engaging  staff  through  an agency provides the capacity to offer new services and make  improvements  while  maintaining  business  as usual',  such  as  covering  for  staff  sickness  and managing seasonal workload  peaks.  As  of 31st July 2016,  the  Department  engaged  28 staff  through  an agency.

F5

Around  1,200  public  sector workers  are  employed  solely  on zero-hour contracts.

Page 4  of  the  Panel's  report  says  that  there  are 510 zero-hour  contracts  in  the  public  sector  (Labour Market figure for December 2015). This reported figure is the number of jobs where the person has worked under that contract in a 4 week period and is the more appropriate figure to show active' zero-hour contracts. The 1,200 figure includes all zero-hour contracts even if no work has been done under the contract for years, e.g. all bank nurses and all supply teachers.

98%  of  the  total  public  sector  zero-hour  contracts (2,679 of the 2,729 contracts) are within the education and health departments and so they will primarily be for bank nurses and supply teachers. Those who are employed by the States solely on zero-hour contracts (i.e. the zero-hour job is not in addition to a full-time job with the States) are therefore likely to be supply teachers and bank nurses who choose to be available for  casual  work,  who  have  retired  from  full-time employment, taken a break from employment e.g. to care for children, or may be employed in the private sector.

F6

Zero-hour contracts offer a degree of flexibility for both employers and  employees.  Employees  can choose  when  they  work  and employers are able to adjust their staffing  levels  to  suit  their business needs. However, the case for  flexibility  on  both  sides  can only  be  made  if  employees  are free to turn down work when it is offered.

Agreed.

F7

Some employers opt to use zero- hour contracts in response to the uncertain  economy.  However, despite signs of an upturn in the economy the number of zero-hour contracts in Jersey is still rising.

It  seems  logical  that  employers  may  have  increased their use of zero-hour contracts to try to adapt to the economic  downturn.  However,  the  Panel's  finding appears  to  be  based  solely  on  a  quote  from  the Managing Director of Rowlands Recruitment (page 24) who said that the number of zero-hour contracts went up during the recession. The Panel provides a table of the most common reasons given by employers for the use of zero-hour contracts  (page 23), but "Uncertain

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business  conditions",  which  was  one  of  the  options provided in the employer survey, is not in that table and no response data from the survey has been provided.

F8

Zero-hour  contracts  can  be beneficial for both employers and employees  if  used  appropriately and correctly.

Agreed. The Panel recognises that many people choose and  are  satisfied  with  zero-hour  contracts.  This  was supported by the  2014 JASS survey –  around three- quarters  (76%)  of  workers  on  zero-hour  contracts reported being either very' or fairly' satisfied with this type of contract, identifying the flexibility as one of the  main  benefits.  Similar  questions  were  asked  of employees in the Panel's own survey but those results have not been reported. Employees were asked by the Panel how they would rate certain aspects of their zero- hour  employment  including  flexibility  of  working hours, notice provided of work required and access to employee benefits and training.

F9

The Panel's survey found that a large  proportion  (77%)  of employee  respondents  had  not seen  the  guide  published  by JACS. Therefore, it appears that important  information  on  zero- hour  contracts  is  not reaching  a large number of employees.

Seven of the Panel's recommendations (2 to 8) flow from this finding. The report does not specify whether this is a percentage of the employee respondents who were  working  under  zero-hour  contracts,  or  a percentage of all of the employee respondents, to some of whom the guide would not be relevant. While JACS services  are  provided  for  employers  and  employees (and data from their annual reports demonstrates that use  of JACS  services  is  fairly  evenly  split  between employers  and  employees)  this  guide  is  clearly intended to provide technical advice to employers. It cautions employers against assuming that an employee on  a  zero-hour  contract  will  not  enjoy  the  same employment  rights  as  other  employees  and  sets  out some alternatives to zero-hour contracts that employers might consider. The guide does not seek to explain all of the rights that an employee might have and so its use to employees is more limited.

F10

61% of employees who reported being employed under a zero-hour contract  for  at  least  one  year answered no' when asked if their contract  had  been  reviewed. Therefore,  the  results  from  the Panel's employee survey suggest that the JACS guidelines, in some instances, are being ignored.

The Panel itself has highlighted the limitations of its survey data. The Panel does not state how many of the employees who responded had been employed under a zero-hour contract for at least one year. This finding could be based on response from only a few employees. The  also  Panel  reports  that  78%  of  employers  had reviewed  the  terms  of  their  employees  zero-hour contracts.  Employees  would  not  necessarily  know  if their employer has reviewed contracts, particularly if the employer decided not to change the contracts. See the Minister's response to Recommendation 9, which is based on this finding.

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F11

Where  an  employee  has  been engaged on a zero-hour contract for 6 months or more then it is possible  that  "mutuality  of obligation"  has  been  established and therefore a zero-hour contract would no longer be appropriate. A large  number  of  survey respondents revealed that they had been in their zero-hour job for a year or more.

The Panel's survey asked employees How long have you been employed under a zero-hours contract?' The survey  did  not  ask  how  long  employees  had  been employed under  the same zero-hour contract, as the recommendation states. In any case, the Panel has not provided the outcomes of that question and so presents no  evidence  to  support  this  finding  that  A  large number of survey respondents revealed that they had been in their zero-hour job for a year or more' (p.29). In addition, some employees will have been employed under a zero-hour contract for a year or more, but will have worked only occasionally and irregularly under that contract.

More  fundamentally,  this  finding  is  based  on  a misunderstanding  of  the  concept  of  mutuality  of obligation'  which  is  not  established  by  the  mere passage  of  time.  Mutuality  is  a  complicated  legal concept and is not an all or nothing' threshold. UK courts tend look for sufficient' mutuality to establish the employment status that is being claimed. The UK makes important distinctions between an employee and a worker, with employees having many employment rights  that  workers  do  not  qualify  for.  One  way  to distinguish between an employee and a worker is to look at the mutuality of obligations and decide whether they are sufficient to support the existence of a contract of employment. This generally means that the employer is obliged to offer work and the employee is obliged to accept it. Even in a workers' contract there is a need for sufficient'  mutuality  to  support  the  existence  of  a contract. If there is simply no obligation on either side of the agreement then there is no contract at all and the individual will not even qualify as a worker.

The distinction between employee and worker is not made in Jersey and so the Tribunal is likely to simply look for sufficient mutuality to infer the existence of a contract.  It  may  be  that,  while  it  is  clear  that  the employer  is  obliged  to  offer  some  work  and  the employee is obliged to accept at least some of the work that  is  offered,  the  relationship  is  still  properly described as a zero-hour contract because in any given week there is no obligation for a minimum number of hours to be offered.

The opposite of a zero-hour contract is not a permanent contract.  Employees  with  a  minimum  number  of working hours may still be in temporary or precarious employment.  The  fact  that  a  zero-hour  contract  has been  in  place  for  months,  or  even  years,  does  not provide any sound basis for concluding that it is being used inappropriately.

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F12

The Panel's survey revealed that 60% of employee respondents are never penalised by their employer when  turning  down  hours. However a significant number of employees (27%) said they were sometimes  penalised  and  12% said they were always penalised. According  to  the  JACS guidelines,  there  should  be  no obligation  on  the  employee  to accept work when working on a zero-hour contract.

The JACS guidance is descriptive on this issue and is not prescriptive. It states that the normal position is that zero-hour  contracts  involve  no  obligation  to  accept work but it does not set out a legal standard that must be applied on this issue.

The extent to which the employer is obliged to offer – and the employee is obliged to accept – work is not always straightforward. At one end of the scale, the person is someone that the employer may contact from time to time when work is available and the person is free to refuse or accept that work. At the other end of the scale, the pattern of work may be unpredictable, but there is a clear expectation that the employee will be available on a regular basis and that the employer will be in a position to offer a reasonable amount of work. Determining  where  on  the  scale  of  obligation  the parties sit can be a very difficult question and JACS advises employers to review the situation regularly to ensure that the written contract accurately reflects the obligations of the parties. However that does not mean that an external standard can be set in which employers are  prevented  from  requiring  any  particular level  of availability from an employee.

The Panel's report does not explain the nature of the penalties to which employees may be subjected when they refuse work offered by the employer. It is not clear from the  survey question what employees  meant by penalised'. The survey question offered one example of not being offered hours in the future'.

While  it  is  obviously  undesirable  for  employers  to impose  unreasonable  demands  on  employees  it  is understandable that, if some employees are generally happy  to  accept  work  and  others  frequently  turn  it down, the employer is likely to offer work to those who have been most willing to accept work in the past. As a result, those who are more likely to turn work down might be less likely to be offered work in the future. It is not clear from the report if that is the sort of penalty that the respondents to the survey were experiencing, or if there is a more serious form of victimisation.

F13

The Panel cannot see a benefit in the  existence  of  exclusivity clauses.  Abolishing  such  clauses would provide employees with the freedom to choose  whether they would like to take on additional hours, thus potentially improving their financial situation, which at the moment for some is restricted.

The  Panel  states  that  it  cannot  see  a  benefit  in  the existence  of  exclusivity  clauses.  However,  it  is  not clear from the Panel's report whether it has seen an example of an exclusivity clause as part of this review. None  of  the  employer  responses  to  the  survey prohibited  their  employees  from  working  for  other employers.  The  Panel's  report  (p.33)  states  that  it sought to establish to what extent these clauses were being implemented by businesses in Jersey' and yet the

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Panel  has  based  its  recommendation  instead  on  the perceptions  of  some  employees.  The  Panel  has  not provided specific numbers in response to the question Are you allowed to work for another employer under the terms of your zero-hours employment' but from the table  on page 34 it appears  that around 55% of the employee respondents said that they were  always or sometimes allowed to work for another employer and around 30% said that they did not know whether they were allowed to work for another employer.

Some employees (around 17% based on the chart on page 34) said that they were not allowed to work for another employer, but the survey does not make it clear whether  this  is  as  a  result  of  an  exclusivity  clause written into the contract or whether it may be for other reasons, such as the demands made on the employee's time by the employer. An employee who works full- time hours for an employer, albeit under a zero-hour contract, may think that he or she is not allowed to work  for  another  employer  because  doing  so  would mean that he or she is not available to work for the primary employer. However, this does not mean that there is an exclusivity clause in the contract.

F14

Results  from  the  Panel's  survey reveal  that  39%  of  respondents report that they are paid less than those  doing  the  exact  same  job who  are  not  on  a  zero-hour contract.

This finding is based on the perception of employees rather than the responses provided by employers. The Panel's report states that "7 in 10 of the employers who completed  the  survey  do  not  pay  their  zero-hour employees differently to permanent employees. 3 in 10 report that rates of pay are actually higher than those they  employ  on  permanent  employment."  (p.35).  It appears that almost all of the employers who responded to the Panel's survey said that pay rates were either the same or higher for zero-hour contract employees. The Panel also notes that this is reflected in the evidence presented  to  the  Panel  in  person  by  Rowlands Recruitment.  In  addition,  44%  of  the  employee respondents said that their rate of pay is the same as permanent colleagues.

Despite the evidence collected by the Panel and the stated limitations of its survey data from employees, the recommendation focusses on the perception of 39% of the  employees  who  said  they  were  paid  less  than permanent colleagues. The Panel has not considered the reasons why employees might perceive their pay to be less  than  that  of  colleagues –  see  the  Minister's response  to  Recommendation 12.  In  addition,  the survey question did not specify what is meant by pay – hourly pay, or pay and benefits – and so the question may  have  been  interpreted  differently  by  different respondents.

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F15

Employers should add 4% to the hourly  rate  of  pay  given  to employees on zero-hour contracts to cover the statutory minimum of two weeks paid leave. Two thirds of  the  employee  respondents  to the Panel's survey believed they were not eligible to receive annual paid  leave  and  only  half  of employer  respondents  said  they provided  annual  paid  leave. Therefore, better publicity of the Law is required either via JACS or Social Security.

The Panel has recognised that it is standard practice to provide rolled-up holiday pay' to zero-hour employees (which is 4% added to pay to cover 2 weeks' statutory paid leave). However, the survey asked if "paid annual leave"  is  provided.  Rolled-up  holiday  pay  is  an acceptable  equivalent,  but  many  employers  and employees  would  not  describe  this  as  "paid  annual leave", i.e. time taken off work where the employee is paid at the time when the leave is taken. It was not clear from  the  survey  questions  whether  employers  and employees were expected to treat annual paid leave' as including rolled-up holiday pay, or not. In addition, no evidence has been presented to show that the two-thirds of the employee respondents who believed they were not  eligible  to  receive  annual  paid  leave  were  not actually  receiving  rolled-up  holiday  pay.  Given  that 74% of the employer respondents had seen the JACS guide,  it  seems  likely  that  in  many  cases  rolled-up holiday  pay  was  being  provided  to  zero-hour employees.  See  the  Minister's  response  to Recommendation 15.

F16

Employees  who  have  been engaged  on  zero-hour  contracts for a long period of time should not  be  excluded  from  seeking  a mortgage or loan. This is a further reason  why  zero-hour  contracts should  be  reviewed  and  why employees should have the option of  a  permanent  contract  after 6 months if their work has been carried out on a regular basis.

This appears to be a statement of the Panel's views rather than a finding. The survey asked employees if obtaining a mortgage or loan was a problem for them as a direct result of being, or having been, on a zero-hour contract. 42% reported that obtaining a mortgage  or loan was a problem but it is not clear what proportion of these had actually tried to obtain a mortgage or loan (i.e. based on experience rather than perception).

F17

It is unreasonable to expect carers to use their own time to travel to and  from  clients,  when  it  is  an essential part of the job of which they  are  expected  to  carry  out. The  Panel  believes  this  is  a fundamental misuse of zero-hour contracts.

The Panel has presented this key finding as well as recommendations 20 and 21 on the basis of timesheets provided  by  one  care  worker  (page 46).  Given  the extensive research and publicity of this review, it is expected that more evidence would have been available to inform the Panel's findings if this was a significant problem. JACS is not aware of any particular issues in this  sector.  The  Panel  admits  that  it  has  found  no evidence  of  UK  local  authority  practices  in  Jersey (p.46) and that it has made assumptions based on UK practices and timesheets from one employee. The time that is takes to travel between clients is likely to be far less onerous in Jersey than in the UK.

Recommendations

To

Accept/ Reject

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Target date of action/ completion

R4

In order to ensure employer/ employee  awareness  of  the current Zero-Hour Contracts Guide  (pending  the introduction  of  a  code)  the Social  Security  Department should  send  a  copy  of  the Code  or  Guide  to  any employer  engaging employees  on  zero-hour contracts  (as  declared  in manpower  returns)  drawing it  to  their  attention  and requesting  that  copies  be provided to employees.

SS

Partially accept

According  to  the  Panel's  survey, 74% of employers had already seen the  JACS  guide  (p.26).  However, the  Minister  agrees  that  it  is important  to  continue  to  raise awareness  of the JACS guide  and intends  to  ensure  that  the  JACS website  is  regularly  promoted. Employers  and  employees  are encouraged  to  use  documents directly  from  the  JACS  website rather  than  printed  versions  of leaflets to ensure that only the latest version  of  a  guide  is  being  used. This is also more cost effective than sending  printed  copies  to businesses.

Ongoing

R6

In order to raise awareness of the  Zero-Hour  Contracts Guide  (pending  the introduction  of  a  code)  the Social  Security  Department should  periodically  run  a short  advertisement  with  a local radio station.

SS

Partially accept

As  stated  in  response  to Recommendation 4,  although  74% of employers had already seen the JACS guide, the Minister recognises that  it  is  important  to  continue  to raise awareness of the JACS guide.

However, the Minister is concerned that a radio advert may not provide good value for money. It would be inappropriate to spend considerable sums on such an advert (or to favour the  radio  over  other  media)  when more  targeted  advertising  can  be achieved  at  lower  cost  and  in various  languages  through community  organisations  and  IT based  communications.  For example,  we  could  circulate information  to  employees  and employers  through  contacts  made

Ongoing

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To

Accept/ Reject

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by  the  Back  to  Work  team  and Citizen's  Advice  Jersey.  As  the Panel  recognised  (p.27),  many employees already rely on JACS for information  and  support.  The Panel's  survey  found  that  around half  of  the  employees  trusted  that issues would be addressed if taken to JACS. In the first half of 2016, of the 5,176 client enquiries to JACS, 2,486 (48%) were from employees.

R8

The  Social  Security Department  and  its inspectors  engaging  with zero-hour contract employers should  promote  and encourage good employment practice  in  accordance  with any code or current guide.

SS

Accept

The inspectors already promote and encourage  good  employment practice.  This  includes  routinely advising employers that the use of zero-hour  contracts  is  unlikely  to enable  them  to  avoid  their obligations  under  the  Employment Law. Where inspectors find issues with  employment  contracts, e.g. missing  information  or suspected  misuse  of  any  type  of employment  contract,  officers  will advise  the  employer  that  they  are leaving  themselves  open  to  a possible  claim  and  to  seek  JACS advice on what should be included in  contracts.  The  inspector  then sends  a  follow-up  letter recommending  that  the  employer seeks advice from JACS regarding any  issues  discussed  during  the survey.  Inspectors  might  also  ask the  employer  to  send  revised contracts  to  the  Department  for review  within  a  certain  period  of time after the inspection.

The  JACS  outreach  service continues to target small employers across  a  range  of  industries  and regularly advises those employers of the  risk  of  claims  should  they continue to use a zero-hour contract and advises employers to offer staff other  types  of  contracts,  where appropriate.

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R15

Inspectors  employed  by  the Social  Security  Department must  exercise  increased vigilance  to  ensure  that employees working on zero- hour contracts are paid their additional  contractual holiday pay

SS

Accept

The Minister agrees that employees must  receive  the  paid  holiday  to which  they  are  entitled  under  the Employment  Law.  The  Panel  has identified that it is common practice to provide rolled-up holiday pay to zero-hour  employees.  See  the Minister's response to Finding 15.

The  survey  form  used  by  Social Security  inspectors  makes  specific reference  to  contracts  and  holiday pay and  the  inspectors  are  always vigilant with regard to the relevant holiday  pay  and  contract  type. Nevertheless,  this  is  an  issue  that JACS  may  wish  to  highlight,  and Social  Security  inspectors  will  be asked to continue to pay particular attention to when inspecting written terms of employment and payslips. The  JACS  guide  to  Rolled-up holiday pay'[2] states that employers are  strongly  advised  to  make explicit  provision  for  rolled-up holiday pay in the written terms of employment  and  advises  that  the employee's pay slip should clearly identify  the  value  of  rolled  up holiday pay. Inspectors can be asked to provide copies of the JACS guide to employers that use this practice.

Ongoing

R16

The Minister should actively monitor  the  increasing prevalence  of  zero-hour contracts in the economic life of our Island by making full use of the data available from Social  Security  and manpower returns, including actively  engaging  with employers  using  such contracts,  to  attempt  to establish  the  reasons  why such contracts are being used and  whether  they  are

SS

Partially accept

This  is  likely  to  be  a  broader responsibility  for  the  Council  of Ministers as a whole. The number of zero-hour contracts will be kept under  careful  review,  using appropriate statistics.

The UK faces a period of economic and  political  uncertainty  while  it adjusts its relationship with the EU following  the  referendum.  This  is likely to affect employer confidence and  decisions  around  staffing  and recruitment.  It  is  not  clear  at  this stage  how  Brexit  might  affect

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appropriate  in  the circumstances.  The  Minister should  include  the  findings from such monitoring in the Department's annual reports

Jersey.  Further  economic uncertainty may drive an increase in the use of zero-hour contracts. Or it may  lead  to  an  increase  in  other working arrangements (e.g. the UK self-employed workforce has grown by  730,000  to  4.7 million  since 2008).

R18

In  recognition  of  a responsibility  to  promote best practice in employment, the  Department  (specifically the  Income  Support Section and Back to Work Scheme) should not require jobseekers to  take  zero-hour  contract jobs  unless  the  employer confirms that it will observe the  guidance  set  out  in  the Zero-Hour  Contracts  Guide. The Department should also monitor such observance and encourage  a  review  of  the employment  contract  after 6 months at most.

SS

Partially accept

The Minister accepts  the  principle of  this  recommendation  and  the Department  will  continue  to promote  best  practice  in employment where we engage with employers  through  our  Back  to Work  schemes.  Where  the Department is directly involved in helping  a  jobseeker  to  find employment, then the employer can be asked to follow the JACS guide. The  Minister  does  not  accept  the specific  actions;  to  require observance of the guide or request a review  of  the  contract  after 6 months.

We must be cautious of relying on the  JACS  guide  as  if  it  were legislation, applying standards that are  not  found  in  the  Employment Law itself. The guide is intended to provide  advice  to  employers  who may  not  appreciate  the  extent  to which those employed under zero- hour contracts are protected by the Employment Law.

Income Support provides a service to  low  income  households  and  its remit  is  to  assess  benefit entitlement.  It  is  not  realistic  to widen the scope of Income Support to review or monitor employers and their employment practices. Back to Work Advisors support their clients during their first 6 months in work and will speak to the employer if a client  has  any  concerns  or  issues with their contract. Employees can also contact JACS directly.

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The Minister believes that all work opportunities  are  valuable.  This  is supported  by  the  Panel's  finding that  "a  large  number  of  Jersey's workforce  would  rather  be employed  under  unreliable circumstances than not work at all" (p.42)  although  no  figures  have been  provided  from  the  Panel's survey  to  support  this.   The Department  encourages  Income Support claimants and jobseekers to obtain  full-time  permanent  work and  recognises  that  a  zero-hour contract may sometimes be the best stepping stone to achieve this.

In many cases, employees will have chosen a zero-hour contract because it  is  appropriate  for  their circumstances,  for  example,  to allow flexibility to fit around family life.  The  Panel's  survey  asked employees to identify the reason for choosing  a  zero-hour  contract  but the results of this question are not included  in  the  Panel's  report. Where a zero-hour contract suits the person's  circumstances,  they  may not want their employer to review the contract every 6 months.

The  Panel  has  expressed  concern that wide variation in income when someone is on a zero-hour contract, which is not uncommon, can cause problems'  in  relation  to  Income Support  claims.  In  the  Panel's survey, when questioned about the typical working hours of employees, the Panel was also concerned that 51% of employer respondents said that working hours are broadly the same  each  week  (p.18).  It  is  not clear whether the Panel is concerned about people working regular hours or irregular hours  under zero-hour contracts.  The  Social  Security Department confirmed to the Panel that,  through  continuous

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improvements  in  process,  Income Support  now  complete  change  of circumstances with the minimum of delay and a new online form enables customers  to  inform  Income Support  straight-away  about changes  in  their  hours  of employment.

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R2

The Minister should consult with a view  to  approving  a  Code  of Practice  on  zero-hour  contracts pursuant  to  Article 2A  of  the Employment (Jersey) Law 2003, in order to build on the foundations of the current Zero-Hour Contracts Guide,  thereby  giving  greater emphasis and value/efficacy to its provisions.  The  Minister  should report  back  to  the  States  within 6 months.

SS

Reject

A code of practice is not appropriate in  these  circumstances.  A  code  of practice is appropriate where there is a clear legal framework in place and employers need direction as to how to best  comply  with  the  Law.  A  code may also be of use where there is a clear consensus about how employers should  behave  in  a  particular situation.

Neither of these applies in the case of zero-hour contracts. It is unlikely that a code could be sufficiently broad to encompass  the  many  different situations  and  businesses  in  which zero-hour  contracts  may  be  used, while  still  being  specific  enough  to provide useful direction.

There is a danger of creating perverse incentives  by  seeking  to  regulate zero-hour contracts too closely. If an

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employer was required to take some specific  action  in  the  event  that  an employee's working pattern achieved a given level of regularity – e.g. the established  pattern  becomes  a contractual  obligation –  there  is  a danger that employers will ensure that the  level  is  never  reached  (see Recommendation 9).  An  employer might  withhold  work  from  an employee  who  is  nearing  the threshold of regular' work. It would be  difficult  to legislate  against  this, which  would  potentially  cause  real practical difficulties for employees.

The  Employment  Law  requires  a period of formal consultation before a code of practice is introduced and so, even if the recommendation had been accepted, it would not be possible to report  back  to  the  States  on  the outcomes within 6 months.

R3

The Minister should consult with a view to bringing forward proposals to amend the Employment (Jersey) Law  2003  to  provide  that  a statement of terms of employment should  be  signed  and  agreed  by both parties (or be deemed to be signed  by  both  parties  if  one  or both parties have failed to sign the statement after a specified period has  elapsed  following  it  being provided to the employee).

SS

Reject

It  is  not  necessary  to  consult  or  to amend  the  Employment  Law. Article 3  of  the  Employment  Law already requires employers to provide employees with a written statement of their  terms  and  conditions  and requires  that  the  statement  must  be signed by the employer. This applies irrespective  of the  number  of hours worked. The JACS guide and model terms of employment make provision for the employee to sign as well.

The  value  of  amending  the  Law  to require a signature from the employee is  questionable  given  that  such  a signature will be deemed to have been applied after a period of time in any event. Where the employee does not sign  the  contract,  but  continues  to work under the contract, this is taken as implicit acceptance.

No  evidence  has  been  presented  to suggest  that  the  current  rule  on providing a statement is inadequate. The Panel's survey asked employees if they had seen and signed a contract

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for  their  zero-hour  employment. However,  no  outcomes  have  been presented  from  this  question.  There may  be  cases  where  the  employer fails to issue such a statement, but this problem –  which  is  not  confined  to zero-hour  contracts –  will  not  be solved  by  imposing  an  additional requirement  that  the  statement  be signed.

An  employee  may  complain  to  the Tribunal  where  a  written  statement has not been provided at all, or been provided but it does not fully comply with the Law. The Tribunal has the power to amend the written terms so that  they  comply.  In  addition,  from April 2017, the Tribunal will have the power to award compensation to an employee where their employer does not comply with the Law in relation to written terms of employment.

R5

The Minister should consult with a view to bringing forward proposals to amend the Employment (Jersey) Law 2003 to provide that where an employee  is  engaged  on  a  zero- hour/variable hour/minimum hour contract, the employee should be provided with a copy of the Code of Practice or current guidelines or given information in writing as to where  those  documents  may  be accessed electronically.

SS

Reject

This is excessive in legislation. The guide  primarily  provides  technical advice to employers. It does not seek to  explain  all  of  the  rights  that  an employee might have and so its use to employees  is  limited.  Employers being aware of their obligations has a positive impact on employees without the employees necessarily needing to be  issued with a copy of the  guide itself.

No other area of employment rights is subject  to  the  need  to  provide  an employee with written guidance.

R9

The Minister should consult with a view to bringing forward proposals to amend the Employment (Jersey) Law 2003 to provide that where an employee has been working on a zero-hour/variable  hour/minimum hour  contract  for  a  continuous period of 6 months and during that period he/she has worked for the employer on a regular basis (to be determined  in  legislation),  the employer  shall  be  obliged  to

SS

Reject

The Panel has not presented sufficient evidence  to  justify  the  work  that would be required to make provision in  law  and  so  the  Minister  cannot accept  the  recommendation.  The recommendation  is  based  on  the Panel's  finding  that:  "61%  of employees  who  reported  being employed under a zero-hour contract for at least one year answered no' when asked if their contract had been reviewed." The Panel also found that

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conduct  a  review of the contract with  the  employee  to  determine whether  it  is  an  appropriate reflection of the hours worked in accordance  with  the  Code  of Practice or current guidelines.

78% of employers had reviewed the terms  of their employee's zero-hour contracts.  This  demonstrates  that employees may not necessarily know if their employer has reviewed their contract, particularly if the employer decided  not  to  change  the  contract. The  Panel's  survey  also  asked employers if they transfer zero-hour contract  employees  to  full-time  or other  types  of  contracts  but  the outcomes  to  that  question  are  not presented.

There  are  a  number  of  difficulties raised by this recommendation:

1. When would the rule apply? The Panel uses the term on a regular basis' and states that this will be determined in legislation'. This is not  straightforward.  If  the  law were to set out the sort of work patterns  that  would  trigger additional  obligations  on  the employer,  there  is  a  danger  of simply providing a target for the employer  to  avoid  (e.g. if  the trigger point is 26 weeks in which the employee has worked for at least  one  hour  each  week,  the employer  could  deliberately create  a  workless  week).  This would  disadvantage  employees but it would be difficult to frame the legislation to prevent this.

2. What does review' the contract mean? If it simply means that the employer has addressed its mind to  the  issue  of  whether  an arrangement should continue then it is not surprising if employees are not aware of a review being carried out. If, however, the idea of  a  review  means  something more  specific,  then  this  would need  to  be  set  out  in  the legislation.  Should  there  be  a meeting  with  the  employee,  for example?  However,  it  is ultimately  for  the  employer  to

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decide  what  contractual arrangements best suit the future needs of the business. It is likely that procedural hoops such as this would  not  ultimately  make  a difference  to  the  arrangements under  which  an  employee  is employed.

R10

The Minister should consult with a view to bringing forward proposals to  amend  the  Employment (Jersey) Law 2003  to  introduce  a mechanism  whereby  a  Social Security Officer might refer zero- hour contracts to the Employment Tribunal to determine whether the use  of  a  zero-hour  contract  is appropriate.

SS

Reject

Article 3  of  the  Employment  Law provides that a  written statement of employment must include terms and conditions relating to hours of work, including any terms relating to normal working hours, etc. Article 7 provides that where a statement has been given and  a  question  arises  as  to  what should  have  been  included,  the employee  may  ask  the  Employment and  Discrimination  Tribunal  to determine the question.

Where  the  Tribunal  determines  that certain particulars  should have  been included or amended it can effectively deem the change to have been made to  the  employee's  terms  of employment.  It  will  also  have  the power to award compensation of up to  4 weeks'  pay  when  an  employer has  failed  to  meet  its  obligations regarding terms of employment. This additional  compensation  is  an improvement made to the Law during the period of the Panel's review, as adopted  by  the  States  in  May 2016 and in force 1st April 2017.

The  Tribunal  does  not  have jurisdiction  to  rule  on  the appropriateness'  of  a  particular contract. If a zero-hour contract has been validly entered into and has not been  varied  by  the  parties  then  it remains valid. The Tribunal can deal with a dispute arising from an alleged breach of that contract and can make a declaration to correct any terms that have not been accurately recorded in the  written  statement.  However,  it cannot say to an employer that it must amend a valid contract on the grounds

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that the contract that has been agreed is in some way inappropriate'.

This  recommendation  would  also require  a  significant  change  to  the role  of  Social  Security  inspectors, requiring a more time-consuming and intensive system of labour inspection. The appropriateness (or otherwise) of a  zero-hour  contract  is  a  subjective decision  based  on  the  individual circumstances and daily practices of the  employer  and  employee.  These officers  currently  inspect  matters  of fact,  such  as  non-payment  of minimum wage and failing to provide a payslip.

R11

The Minister should consult with a view to bringing forward proposals to amend the Employment (Jersey) Law  2003  to  abolish  exclusivity clauses.

SS

Reject

The Panel has not presented sufficient evidence that exclusivity clauses are being  used  in  Jersey  or  that  they present  a  significant  problem  that would  justify  the  time  required  to consult and prepare legislation. It is not clear from the report what practice the  Panel  actually  seeks  to  abolish (see Finding 13). Banning exclusivity clauses  is  unlikely  to  make  any practical difference to the experience of  employees.  It  may  be  more appropriate  to  provide  additional support  to  employees  to  help  them understand  their  terms  of employment.

The development of legislation in this area in the UK was far more complex than had been anticipated. Particularly challenging  was  the  further consultation  and  legislation  required to introduce anti-avoidance measures to  prevent  employers  from circumventing  the  ban  (e.g.  what  if the  employer  offers  a  contract guaranteeing 1 hour per month?).

Although  some  employees  (around 17%)  told  the  Panel  that  they  were never  allowed  to  work  for  another employer,  the  employer  respondents said  that  they  did  not  restrict  their zero-hour staff in this way. Even in

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the  UK,  the  number  of  zero-hour contracts with exclusivity provisions is believed to be small and so the law change is not expected to have much impact.

R14

The Minister should consult with a view to bringing forward proposals to  amend  the  Employment (Jersey) Law 2003  to  provide  for compensation  to  be  paid  to employees  working  on  zero-hour contracts where pre-arranged work is  cancelled  at  short  notice, (drawing on the experience of the Republic  of  Ireland  and  New Zealand where such provision has been enacted).

SS

Reject

The Panel's survey did indicate that some  employees  experience  work being cancelled at short notice. The Panel did not, however, ask whether compensation was paid to employees in  such  circumstances.  Importantly, the  Panel  also  did  not  ask  how frequently  work  was  cancelled  at short  notice  and,  therefore,  it  is difficult  to  gauge  how  much  of  a problem this actually was. This is not a  good  basis  for  introducing  a potentially  complicated  amendment into the Law.

New Zealand has recently introduced a law on the cancellation of shifts at short notice. However, this applies to all hourly paid workers, not just those on zero-hour contracts.

In  Ireland,  the  Organisation  of Working  Time  Act  1997  provides some  minimum  protection  where zero-hour  workers  have  shifts cancelled at short notice. However, a zero-hour  contract'  in  Ireland  is  a contract that requires the employee to be  available  for  work,  either  for  a certain  number  of  hours,  or  when required, or a combination of both. If the employee has the right to refuse work,  there  is  no  obligation  on  the employer  to  compensate  the employee for a late cancellation. This provision therefore  would not apply to a zero-hour contract as the term is understood in Jersey. For that reason, we cannot draw on this experience.

Both Ireland and New Zealand have much more heavily regulated labour markets  than  Jersey.  It  is  not  clear why, of all the areas of employment law covered by those countries, these provisions should be given particular

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priority for transposition to Jersey. It is not clear that an amendment to the Employment Law would lead to any substantial  benefits  for  employees, and  insufficient  evidence  has  been presented  to  justify  the  amount  of work that would be required.

R17

If, after a period of monitoring the increasing prevalence of zero-hour contracts,  the  Department considers that it was not receiving adequate  co-operation  from employers or considers that there might  be  misuse  of  zero-hour contracts  among  employers,  then consideration  should  be  given  to further  measures,  including legislative changes.

SS

Reject

The Minister does not consider that the evidence provided by the Panel's report  provides  a  sufficient  case  to extend the Employment Law in this area.

If  local  employment  conditions change in the future, the Minister (at that  time)  will  consider  whether changes  to  employment  legislation would help to address the issue. Any such decision would need to be taken at  the  appropriate  time,  and  the Minister cannot commit today to such future action.