Market power should be considered in zero-hours contract policies, says RPC

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The employers’ market power over employees should be considered in a Government consultation about zero-hours contracts, independent assessors have advised.

The recommendation was among three published by the Regulatory Policy Committee (RPC) – an independent body set up by the Government to scrutinise evidence for regulations.

The committee of eight members gave the Government’s zero-hours employment contracts impact assessment an “amber” rating, meaning it was fit for purpose. However, it highlighted three areas where members felt the Government should provide further information or consider extra details.

The RPC identified the impact assessment had failed to consider the market power of employers over employees as a reason for Government intervention.

Its report stated: “If employers did not have market power, then employees – if they wished - would presumably, for example, be able to negotiate a move to guaranteed hours contracts without Government intervention.

“This might also explain why employees with zero-hours contracts accept clauses like exclusivity which disadvantage them.”

Secondly, the report suggested the Government should have provided more data about the distribution of zero-hours contracts used by the private and public sector.

Finally, the RPC suggested that before the Government could make a decision on whether to introduce legislation around zero-hours contracts it should provide estimates of the proposed impacts.

RPC chairman Michael Gibbons said the impact assessment lacked “the estimated costs and benefits, which will be needed at final stage”.

“We need this so we can do a robust assessment of one in, two out as required from the regulatory policy,” said Gibbons, referring to the one in, two out rule that aims to prevent Government policymakers creating new regulations that increase costs for business and voluntary organisations.

Gibbons said that while the RPC was policy-neutral, its comments were intended to guide people responding to the consultation, and influence the Government’s final decision.

“Our vision provides an anchor for some of the points of reference for people, including HR directors, in the evidence base, and can give them some advice based on our assessment of where the important points to discuss are,” he said.

“We would also expect, having sent this signal to the Department for Business, Innovation and Skills, for it to put particular effort into those three points in its final assessment.”

The RPC will report again at final consultation stage, and assess whether the Government adequately responded to evidence submitted to the consultation. Last year the body published around 500 consultation and final stage reviews of impact assessments.

BIS’s consultation into zero-hours contracts opened in December 2013 and will end on 13 March this year.

The consultation impact assessment states that while zero-hours contracts provide benefits to both employers and employees, evidence exists of “actual, or perceived, abuse in some cases, causing detriment to individuals”.

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