Advising on Zero-Hour Contracts: RBS Mentor and the Independent

I’ve written before about zero-hours contracts and how difficult it might be to solve some of the problems associated with them. Whatever view you take of that debate, however, the fact remains that as the law stands they are perfectly legal. Furthermore, many people on zero-hours contracts are quite happy in their work and are treated well while many people with guaranteed hours are exploited by their employers and treated badly. What should matter is how well you are treated at work and whether your working pattern fits in with what you want from your job. I get very frustrated when people refer to zero-hours contracts as though they are the epitome of all that is wicked in the world of employment.

So imagine my delight when I saw the Independent carrying  this headline: 

RBS in zero hours storm: State-owned bank helping businesses draw up controversial contracts to make jobs less secure

The general thrust of the article is that

The Royal Bank of Scotland is helping hundreds of businesses across Britain draw up “zero hours” contracts for their employees, potentially making thousands of people’s jobs less secure, The Independent has learned.

I have an interest to declare here. I used to work for the RBS Mentor Service mentioned in the article. I was there in the early days when the London office had just two people (including me) and I left more than a decade ago. But I made lots of friends I still keep in touch with and regularly bump into the “Mentor Crowd” who, I can assure you, are a bunch of really nice people.

The whole premise of the Independent’s story is nonsense. But to understand that you have to understand how a service like Mentor (others are available) works. When you sign up with one of these consultancies you pay a monthly fee and get a range of services in return including a 24 hour helpline, insurance cover, Tribunal representation and a tailored suite of contractual documentation –  including a detailed staff handbook and a series of contracts of employment to issue to staff.

So a consultant is sent out to interview the new client about how it operates and prepare the appropriate documentation. The purpose of that is not to come up with new and innovative ways of exploiting the current employees or reducing their terms and conditions. The point is to get the employer onto a solid legal footing when it comes to its HR systems.

Read this paragraph from the Independent report:

According to one contract drawn up by RBS and seen by The Independent, an hourly rate of pay is stated but no annual salary. It also gives the company the right to instigate a “period of temporary layoff without pay… where there is a shortage of work”.

Where to start? Lots of contracts have no annual salary but are based on an hourly rate of pay. That does not make them zero-hours contracts. The implication of the paragraph is that a contract of this sort is a fiendish device dreamt up by a wicked banker in order to exploit people. It isn’t; its a normal “hourly-rate” contract. Such contracts often have regular normal working hours set out in them – I’ve written hundreds in my time. The contract referred to might be a zero hours contract or it might not. We don’t know, because we’re reading the wrong bit.

Nor is there anything sinister in a clause allowing a temporary lay-off without pay. In a range of industries this is, and always has been, a standard clause. Clauses like this don’t exist in a vacuum, however. if an employee is laid off there is a right to a guarantee payment and if a lay off persists the employee can claim a redundancy payment. The very existence of these provisions show that a lay-off clause is an accepted and normal part of the landscape.

Now the reality of the clients that services like Mentor have (and I’m talking generally now, not about Mentor in particular) is that many of them are small firms run by owner-managers or operating in traditionally low paid sectors like the ‘”Three Cs” of care, cleaning and catering.  Many of the employees they employ are on terms and conditions very close to the legal minimum in terms of pay and holiday entitlement, and some are on the legal maximum in terms of hours of work. Most of these businesses  have no dedicated HR function and few of them aspire to be nominated for a Personnel Today award. As an employment-law consultant your job is to help your clients comply with employment law, not turn them into Mr Fezziwig. Nevertheless, the truth of the matter is that – in the majority of cases – employees whose employer signs up for an employment law service will be treated better as a result.

And of course Mentor will issue zero-hours contracts to clients if that is what they want. So will any other law firm or consultancy.  There is nothing wrong with that, because zero hours contracts are not illegal.

It appears that in the case quoted in the Independent, a contract issued to employees was inaccurate and had to be corrected. Well that happens – but it is hardly evidence that Mentor is ‘pushing’ clients onto zero hours contracts. In fact the suggestion is absurd.  Why would they? If an employer currently has employees with guaranteed hours, any move to zero-hours contracts would involve changing terms and conditions and be likely to be met with hostility (as illustrated in the example quoted). Unless that is a change that the employer feels it needs to make, it seems pretty unlikely that a consultant would try to persuade the employer to go down that route. It would simply create more work – and the client’s fees are fixed. There is no evidence in the article that Mentor is actually doing this of course, just a vague innuendo. I think Mentor are entitled to be cross.

Another undercurrent of the article is that since RBS is publicly owned, there is something shameful about it providing a service that is aimed at the needs of small businesses. That makes no sense to me at all. Just because there is an element in public ownership in RBS does not mean that Mentor has to act like Acas. It is not there to promote the interests of both employer and employee, it is there to advise and help employers. This is a legal activity and I don’t see anything remotely objectionable about it.


About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Zero Hours COntracts and tagged , , . Bookmark the permalink.

1 Response to Advising on Zero-Hour Contracts: RBS Mentor and the Independent

  1. Phil Hyland says:

    A point to mention is that many of these consultancies’ fees are based on a percentage of the employer client’s annual payroll. No incentive to push zero hours in fact the reverse.

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