Zero-hours contracts have divided commentators, with some championing the benefits of a flexible labour market for both employer and employee, and others criticising the insecurity of a contract with no guaranteed hours. What’s for certain is that their use is widespread. Four times more people than previously thought are employed on them, with the Chartered Institute of Personnel and Development (CIPD) reckoning about a million workers.
The contracts are particularly widespread amongst local authorities: a recent Freedom Of Information request by UNISON showed that 97 per cent of councils use them. Just over half (56 per cent) of domiciliary care workers are on zero-hours contracts, one of the biggest groups of council workers. Looking at their case can shine a light on why zero-hours contracts are so widespread, and the impact their use can have on the quality of the service delivered.
In the LGiU’s report published last year, Outcomes Matter: Effective Commissioning in Domiciliary Care, we looked at councils’ use of the time-task method of commissioning. The report notes that, as an unintended consequence of this method of commissioning, care workers end up being employed on zero-hours contracts. Another unintended consequence can be non-payment for travelling time, which often means that care workers end up on less than the minimum wage. Both are linked to the bid to drive down costs amongst local authorities and thus care providers, and can potentially have an impact on the quality of care delivered.
Local authorities moved from large block grants to framework agreements in order to give service users more choice, in line with the personalisation agenda. The idea was to avoid a “one-size-fits-all” approach to care. Framework contracts encouraged a greater level of competition between providers, to achieve greater efficiency and a diverse choice of provider for service users. However, the increased competition for contracts based on an hourly rate can encourage providers to submit ‘suicide’ bids, in which they make unrealistic cost appraisals in order to maximise their opportunities for work. This can result in pressure on the rate of pay for frontline staff.
In addition, framework contracts make economies of scale more difficult to achieve, as providers take on increased responsibility for risk, and face considerable uncertainty in relation to volumes of work. Again, the by-product is pressure on terms and conditions for frontline staff.
The result of zero-hours contracts, with non-payment for travelling times, can be pressure on both the care recipient and the care worker. In addition, poor pay and low reward increases churn. The majority of care workers move to another provider in the same sector for better pay, often in health. There is a question here about the quality of care that employees are able to provide whilst employed on zero-hours contracts.
On the other hand, commissioning for outcomes incentivises providers to invest in staff, as their cash-flow becomes dependent on the impact of the service rather than the time spent with an individual. This will likely mean better supported staff, with terms and conditions that guarantee a minimum number of hours, and which ensure that frontline care workers are paid for their travelling time. The result is likely to be a higher quality of care and less churn.
It’s therefore vital for local authorities to bear in mind the unintended consequences of their method of commissioning. If councils commission irresponsibly, in a way that encourages providers to drive down hourly rates of pay, they may inadvertently affect the quality of care their staff are able to deliver. And with an aging population, it’s in everybody’s interests for local government to commission conscientiously.