Zero-hour Contracts, Compromise Agreements, and Payment by Outcomes

Citizen Wealth Financial Justice International Labor Organizing

Workers at the Hovis (Premier Foods) bakery protesting against zero-hours contractsLondon   One of the more frightening things about working around the world is stumbling over new ways that employers have found to screw workers.  In Great Britain with the erosion of labor protections and shrinking of unions, they seem to have mastered the art in new and imaginative ways, dressed in high style with fancy euphemisms.  Here are three of my favorites:  zero-hour contracts, compromise agreements, and something called “payment by outcomes.”

Workers get employment contracts in England.  Completing 12-months of work for an employer used to guarantee contracts giving them certain benefits and entitlements as a common-law ownership of the job almost.  Of course now the government says you only get those kind of guarantees after 2 years of steady work.  I was regularly hearing of 11 month or 50 week contracts where workers, even organizers working for unions, were given a succession of so-called contracts running short of a year and then renewing after a break in service, if they were still interested and the worker was still willing.  The contracts were only entitlements for certain agreements made, and then capped, during that time period.   Nonetheless a zero-hour contract tops the cake.

What in the world might that be?  Well,  a zero-hour contract is a special arrangement with what North Americans might refer to as an on-call, casual, or a temporary worker.  The so-called contract, if you insist on calling it that, obviously guarantees no hours of work, but essentially says that a worker can be called to work and get some varying number of hours from time to time.  Not surprisingly, employers in England defend the contracts and applaud the flexibility it gives them over the workforce.  US-based companies like McDonalds and Amazon are predictably big fans, but so are UK-based outfits.  An organizer told me that workers are not guaranteed any hours but have to be available for hours.  That may be true in practice, but that actually violates the terms even of the zero-hour contracts, which are also supposed to give the worker the right to take or pass on the job, similar to casual or temp workers in the US for example.  This can’t be good.  I read a newspaper report that in the Queen’s Speech she was going to argue for tightening up on zero-hour contracts, and the Queen is someone who probably understands zero-hour work and a worker’s right to either accept or turndown any particular job better than most.

Of course the one thing a “contract” gives you is protection from being fired at will without just cause, except there’s also a newish kind of thing called a “compromise agreement,” which seems especially tailored to the world of privatized, subcontracted services that has become the standard in Britain.  A worker might have a contract with her employer but her employer might be subcontracting the worker for other employers or branches of the government.  If the contracting employer wants to get rid of her for any or no reason, then despite her valid contract with her own employer, she has no work.  What’s to be done with her?  Well, here comes the “compromise agreement.”  A compromise agreement might or might not give her a bit of money to go away without shouting too loudly.  It would definitely end any future claims she might have legally.  She would often get a closed file and maybe a recommendation.  Nonetheless under any of these ifs, ands, and buts the one thing that she will not get is what she might have thought she had with her employment contract, which is a job.  Masterful, huh?

“Payment by outcomes” isn’t something that affects individual workers per se, but does affect a fair number of nonprofits or charities, as they are called on the other side of the water, and in this new world of arms-length bosses and newly precarious workers, “payment by outcomes” does slide downhill over their jobs.  Social Policy magazine ran an excellent piece in a recent issue entitled “Leadership Development is Not a Deliverable,” which got at the same point from another angle.  In England they have taken it to another new level, literally not paying the nonprofit contractor at all until the outcomes have actually been achieved.  As described to me by one organizer, some nonprofits are literally borrowing the money to fulfill the contract and being caught short when for one reason or another the outcome is met or not, determining whether or not they get paid and whether or not the worker also has a job.  Essentially governments are transferring all of the risk to the contractors in the worst-case scenario.  The literature seems to applaud a lot of this direction on the international aid scene where efficiency and corruption help provide the rationale, but domestically in countries like England or even as it migrates to North America, that’s not so much the issue as abandoning accountability, responsibility, and oversight.

Whenever bargaining power is unequal between parties, it’s reasonable to try to figure out who is getting screwed when and where.   In these novel, new employment and contracting schemes, unfortunately it is very easy to see workers on the short end of these sticks.