Survey of Non-Regular Employment in
Europe and the United States
Report on the United Kingdom
March 2010
Produced for the Japanese Institute for Labour Policy and Training by
Dr Chris Forde
Work and Employment Relations Division
University of Leeds
and
Centre for Employee Relations Innovation and Change
Dr Gary Slater
Department of Development and Economic Studies
University of Bradford
and
Centre for Employee Relations Innovation and Change
Contents
1.
Introduction .................................................................................................................................... 4
2.
Non-regular employment in the UK: the economic and legal context........................................... 7
2.1 Introduction .................................................................................................................................. 7
2.2 The labour market context ........................................................................................................... 7
2.3
3.
Non-regular employment: definition and regulation ............................................................. 8
Patterns of non-regular work........................................................................................................14
3.1 The economic context.................................................................................................................14
3.3 Patterns of temporary work .......................................................................................................16
3.4 Part-time working in the UK .......................................................................................................20
3.5 Self-employment in the UK.........................................................................................................23
3.6 Accounting for the trends ...........................................................................................................25
4.
Background to the case studies ....................................................................................................27
4.1 Introduction ................................................................................................................................27
4.2 The case-study organisations......................................................................................................27
4.2.1 CarCo....................................................................................................................................28
4.2.2 FoodCo .................................................................................................................................29
4.2.3 EducationCo .........................................................................................................................30
5.
Transitions from non-regular to permanent employment ...........................................................32
5.1 Introduction ................................................................................................................................32
5.2 The use of non-regular workers to screen for permanent employment....................................32
5.3 Is non-regular employment voluntary? ......................................................................................34
5.4 The frequency of transitions to permanent employment ..........................................................37
5.5 Company requirements for the transition to permanent work .................................................40
5.6 Cycling between permanent and non-regular work within companies .....................................41
6.
Equal Treatment of Non-Regular Workers ...................................................................................43
6.1 Introduction ................................................................................................................................43
6.2 Non-regular job characteristics...................................................................................................43
6.2.1 Overall quality of non-regular jobs ......................................................................................43
6.2.2 Working Hours .....................................................................................................................45
6.2.3 Wages...................................................................................................................................45
6.2.4 Holiday leave and other entitlements .................................................................................48
6.2.5 Training and skill development............................................................................................50
6.2.6 Opportunities for progression .............................................................................................52
2
6.2.7 Union membership ..............................................................................................................52
6.3 Equal treatment with regular employees ...................................................................................53
7. Employment Stability........................................................................................................................54
7.1 Introduction ................................................................................................................................54
7.2 How long are single contract periods for non-regular workers?................................................54
7.3 What conditions must non-regular workers satisfy when renewing their contracts? ...............56
7.4 How often can a contract be repeatedly renewed? ...................................................................56
7.5 Employment security regulations for non-regular workers........................................................58
8.
Non-regular Workers and the Economic Crisis.............................................................................59
8.1 Introduction ................................................................................................................................59
8.2. Recession and non-regular workers in the UK...........................................................................59
8.3 Workforce adjustment and recession.........................................................................................59
8.4 Innovative changes to adjustment mechanisms.........................................................................60
8.5 Unions and the organisation of non-regular workers.................................................................61
9.
Conclusions ...................................................................................................................................62
9.1 Key themes..................................................................................................................................62
9.2 On-going debates........................................................................................................................62
References ............................................................................................................................................64
Appendix ...............................................................................................................................................69
3
1. Introduction
There has been long-standing interest in non-regular employment in the UK, at academic and policy
making levels. From concern in the 1980s over whether employers were strategically segmenting
their workforces into ‘core’ and ‘peripheral’ components, to discussion surrounding rising levels of
insecurity in the 1990s, through to current interest in employment regulation, protection and equal
treatment of workers, the nature and consequences of non-regular employment have long been
debated. Whilst much is now known about the nature of particular non-regular forms of
employment in the UK, from large scale surveys and nationally representative sources, there remain
important gaps in our knowledge. Furthermore, little is known about the impact of the current
economic recession on employers’ use of non-regular employment in the UK.
In this report, we examine the nature, evolution and consequences of non-regular employment in
the UK. How are non-regular forms of employment regulated, and how (and why) has regulation
shifted over recent years? What trends have we observed in non-regular employment, and how can
we account for these trends? Does non-regular employment act as a bridge to more permanent
forms of employment, and under what circumstances? How are non-regular workers treated, in legal
terms and in practice, compared to full-time permanent employees. What impact has the economic
recession had upon the use of, and strategies of employers towards, non-regular workers? Whilst
there is considerable debate about the meaning of the term ‘non-regular’, our starting point is to
define this in contrast to regular employment. In the UK context a ‘regular’ job is a permanent, fulltime employee job, under contract to a firm. Consequently ‘non-regular’ captures anything which
deviates from this full-time permanent norm. It thus includes temporary, part-time and selfemployed status.
In the chapters that follow, we examine non-regular forms of employment in the UK using a range of
sources. We draw on large-scale representative survey evidence, particularly from the UK Labour
Force Survey (LFS). Alongside this we utilise other survey sources, such as the Working in Britain
Survey, the British Household Panel Survey, the Annual Survey of Hours and Earnings and the
Workplace Employment Relations Survey. We also draw on ad-hoc survey evidence and from
relevant academic, policy and practitioner literature. Importantly, we also draw on evidence from
three case studies, conducted specifically for this project. These case studies comprise major
employers in the UK from manufacturing and services, and include cases from both the public and
private sectors. The case studies include detailed interviews with senior management
representatives about their use of the full-range of non-regular employees.
In Chapter 2, we look at the economic and legal context surrounding non-regular work in the UK. The
chapter begins by looking at debates in the 1980s, 1990s and 2000s surrounding non-regular work.
Interest in non-regular forms of work was fuelled by debates over the ‘flexible firm’ in the 1980s and
over levels of insecurity in the 1990s. The chapter then offers definitions of non-regular employment,
before looking at the regulation of these forms of work. It is only relatively recently that legislation
has been extended to cover some of the particular variants of non-regular employment. However, it
remains the case that under UK labour law the traditional presumption towards a permissive hiring
regime remains. Non-regular employment in the UK is subject to many fewer restrictions than other
European countries. Despite a partial strengthening of employment protection legislation under the
New Labour government since 1997, particularly for non-regular workers, the approach, however,
4
remains one of ‘minimum standards in a flexible labour market’ (McCarthy, 1997). There remain
important gaps in UK labour law for non-regular workers, which leave such workers in a vulnerable
position.
Chapter 3 looks at trends in non-regular employment. Temporary employment rose rapidly through
the 1990s following recession, but has fluctuated since 2000. Agency temporary employment has
continued to rise throughout the 1990s and 2000s. There is a long-standing trend towards the
growth of part-time work, with one in four workers in the UK employed on a part-time contract by
2009. Part-time working remains heavily gender-biased. Self-employment has remained fairly
consistent over the 1990s and 2000s. Overall, the data do not provide evidence of a secular shift to a
greater use of non-regular employment in the UK, although there are important cyclical, sectoral
and compositional differences amongst different types of regular work, which we explore in more
detail in Chapter 3. We also argue that given the broadly cyclical nature of non-regular employment
it is likely that there will be a temporary rise in such jobs once the economy begins to recover from
the 2008-9 recession.
In Chapter 4, we introduce the primary research case studies conducted for this project. Three
company case studies were conducted, across manufacturing and services and the public and private
sector. In each case, interviews were conducted with a senior member of management, and were
supplemented with background documentation. All three cases utilised a range of non-regular forms
of employment. The rationales for use, extent of use, treatment of non-regular workers in
comparison to permanent staff, and impact of the recession on the use of non-regular workers
varied across the three cases. The results from these case studies are presented in Chapters 5,6, 7
and 8, alongside further large-scale survey analysis.
In Chapter 5, the report examines transitions from non-regular to permanent employment. Many
have suggested that non-regular employment is indeed a bridge to more permanent employment,
but evidence on this issue remains patchy. We begin by reviewing evidence on whether employers
use non-regular contracts to screen for permanent employees. We then look at whether workers are
reluctantly taking up non-regular employment. We then move on to look at the extent of transitions
between non-regular and regular employment. We finish the chapter by considering whether
workers move back and forth between regular and non-regular positions.
In Chapter 6, we look at the nature and quality of non-regular jobs in comparison to permanent
employment. We have already reviewed, in chapter 2, the legal context of non-regular work. Many
studies have suggested that in practice non-regular jobs are inferior in terms of pay and conditions,
and overall job quality, when compared to regular employment. In this chapter we assess these
claims, using national level survey data and evidence from our case studies. We begin by looking at
national level data on job quality in non-regular work, along with some initial observations from our
case studies. This sets the scene for a more detailed discussion of particular aspects of non-regular
jobs, in comparison to permanent employment. We look in turn at working hours, wages, leave, skill
development, progression and membership of unions. We find significant differences between nonregular and regular employees across most of these dimensions.
5
In Chapter 7, we consider levels of employment stability for non-regular workers compared to other
groups. We look at the length of non-regular employment contracts drawing on survey evidence and
data from the three case studies conducted for the project. We then look at what conditions nonregular employees have to satisfy to renew their contracts. Thirdly, we look at how often nonregular contracts are renewed, using the case studies for primary evidence. Fourthly, we look at how
often contracts can be repeatedly renewed. Finally, we review some of the essential points of
employment security regulations for non-regular employment.
In Chapter 8, the report looks at the impact of the economic recession on non-regular workers.
Whilst many commentators have suggested that non-regular employees will be affected most
severely by restructuring and layoffs, there remains a lack of robust data on these claims. In this
chapter we begin by looking at how the economic recession has affected non-regular workers in the
UK. We then move on to look at rules for adjustment used by companies in the UK, and explore
some innovative strategies of adjustment that have emerged during the current recession. Finally,
we consider the question of how unions have organised non-regular workers. Our cases reveal quite
different strategies towards non-regular employees adopted by different employers. We seek to
explain some of the different approaches.
Finally, in Chapter 9 some brief conclusions about non-regular working in the UK are drawn and
some on-going, live issues noted.
6
2. Non-regular employment in the UK: the economic and legal context
2.1 Introduction
The turbulent macroeconomic environment of the 1980s and 1990s together with the resulting
policy responses have re-shaped the contours of the UK labour market. During the past 30 years
there has been a relative decline in the proportion of full-time, permanent ‘regular’ jobs. This
chapter examines the nature of these changes beginning with a discussion of overall labour market
conditions before moving on to a discussion of the legal framework and patterns of non-regular
work.
2.2 The labour market context
Academic and policy interest in non-regular employment in the UK grew following the deep
recession of the early 1980s. As the economy began to recover, a debate emerged around the extent
to which firms were re-segmenting their workforces into a stable, full-time ‘core’ and a flexible,
relatively insecure ‘periphery’ of workers on non-regular contracts. Traditionally this division had
been viewed as one that applied between firms; in the 1980s the division was identified within
‘flexible firms’ (Atkinson, 1985). Firms, it was said, were expanding their use of peripheral nonregular labour to provide a flexible buffer against increasingly unstable product markets. Much of
the subsequent literature focused on employer strategy in the use of non-regular labour contracts
(for example Hunter et al., 1993; Rubery and Wilkinson, 1995; Casey et al., 1997). Although far from
conclusive, research indicated that the responses were less a strategic step-change in employer
practices and more an extension of traditional reasons for seeking flexible employment solutions:
the need to meet temporary peaks in demand or a reflection of the difficulty in recruiting permanent,
full-time staff (McGregor and Sproull, 1991; Beatson, 1995).
Following the second major recession in the space of a decade, attention shifted in the 1990s to
insecurity across all workers, regular and non-regular. Partly this reflected the fact that until the mid1990s, very little net employment growth in the UK was due to full-time, permanent employment
(see Deakin and Reed, 2000). Secondly, it reflected an argument that work was becoming inherently
insecure due to the twin pressures of technological change and globalisation on product markets.
The corollary of greater product market competition was said to be greater pressure on labour costs
and hence greater use of non-regular employment. In the extreme, this, it was said, was leading to a
‘Brazilianization’ of employment as the old employment patterns and conditions of work became
unsustainable (Beck, 2000). Although not restricted to the UK, these themes were seized upon,
leading to a large academic literature mapping insecurity and exploring its connection to non-regular
employment. However, whilst a detailed survey of the job insecurity in the UK found evidence of a
worrying rise in perceptions of insecurity, these were often found to be linked to the loss of valued
job features (e.g. promotion opportunities; control over the pace of work) rather than due to the
fear of job loss or an increase in more inherently unstable non-regular jobs (Burchell et al., 2002).
Indeed, data on average job tenure indicated no clear secular trends towards shorter jobs and
greater labour market ‘churn’. Although average tenure was found to have fallen for UK men, this
7
was largely a legacy of the large number of redundancies made in the early 1980s recession; for
women, average tenure was actually lengthening over the period (Gregg et al., 2000).
From the mid-1990s, the UK economy and the labour market strengthened considerably, with a
constant expansion in output between 1992 and 2008. As unemployment fell, so too did perceived
insecurity. A detailed study by Green (2006) demonstrates that both objective and subjective
measures of job insecurity largely moved in line with aggregate unemployment in the UK labour
market. While the mid-1990s saw a temporary rise in reported insecurity, by the turn of the century
low unemployment rates were reflected by falling levels of insecurity across all types of job(Green,
2006, table 7.3). Indeed, although insecurity is, not surprisingly, found to be higher among
temporary job holders, here too the level fell. The same trend is clear for full-time and part-time
workers, with surprisingly little difference in the level of insecurity between them.
Thus, despite the wilder predictions, actual labour market outcomes highlight important continuities
particularly allied to the business cycle. Where change has occurred, this has tended to be
compositional. One explanation for the heightened interest in insecurity in the 1990s is that fact that
previously stable, white collar jobs in financial services and the professions experienced previously
unheard of job losses. Hence, the redistribution of insecurity towards more vocal sections of the
labour force may well have raised interest in the issue, rather than a secular shift towards a more
inherently insecure workforce (Green, 2006). As discussed in section 3.3 below, non-regular
employment in the UK has itself shown a strong cyclical pattern. This is not to deny that there has
been significant compositional change in terms of the incidence of non-regular employment across
occupations or industries. It does, however, suggest two important issues: first, that there is no
evidence of a secular shift to a greater use of non-regular employment in the UK and second, that
given the cyclical nature of non-regular employment it is likely that there will be a temporary rise in
such jobs once the economy begins to recover from the 2008-9 recession.
2.3 Non-regular employment: definition and regulation
In order to define non-regular employment, it is necessary to define ‘regular’ employment. In the
UK context this is a permanent, full-time employee job, under contract to a firm. Consequently ‘nonregular’ captures any deviation from this and includes: temporary jobs, part-time and self-employed
status. These non-regular employment forms will be examined in more detail below.
It is only relatively recently that legislation has been extended to cover some of the particular
variants of non-regular employment. However, it remains the case that under UK labour law the
traditional presumption towards a permissive hiring regime remains. In the UK the overriding
principle is that the parties to the employment relationship should be free to choose from a range of
employment forms (Deakin and Reed, 2000). Despite some recent changes, documented below, it
remains the case that employers do not have to justify the use of part-time or fixed-term contracts
nor are there currently any restrictions on temporary agency working. Indeed, temporary agency
workers are not even required to have employee status which leads to some vulnerability. This is
also discussed further below.
Overall this means that non-regular employment is subject to many fewer restrictions than other
European countries. On the OECD’s index of employment protection ‘strictness’ the UK has one of
8
the lowest scores, closer to the United States than other European economies, despite recent
increases in employment regulations and protection (see table 2.1).
Table 2.1 Strength of employment protection (EP) legislation, selected OECD countries,
1998 and 2008
Overall EP strictness
Scale 0-6
EP strictness for regular
employment
Scale 0-6
1998
2008
EP strictness for
temporary employment
Scale 0-6
1998
2008
1998
2008
Australia
1.5
1.4
1.5
1.4
0.9
0.9
Austria
2.4
2.2
2.9
2.4
1.5
1.5
Belgium
2.5
2.5
1.7
1.7
2.6
2.6
Denmark
1.9
1.8
1.6
1.6
1.4
1.4
France
2.8
2.9
2.3
2.5
3.6
3.6
Germany
2.6
2.4
2.7
3.0
2.0
1.2
Greece
3.5
2.8
2.2
2.3
4.8
3.1
Italy
3.1
2.4
1.8
1.8
3.6
2.0
Japan
1.6
1.4
1.9
1.9
1.4
1.0
Netherlands
2.8
2.1
3.1
2.7
2.4
1.2
Spain
3.0
3.0
2.6
2.5
3.2
3.5
United Kingdom
1.0
1.1
1.0
1.1
0.2
0.4
United States
0.6
0.6
0.2
0.2
0.2
0.2
Notes: Employment protection index is from 0 (lowest) to 6 (highest)
Source: OECD (2009)
Given the relatively low protection for temporary work, it might be expected that the UK has a high
incidence of these jobs. However, as is clear from table 1, regular employees in the UK enjoy
relatively little protection. As a result, employers have a wide margin of flexibility without recourse
to non-regular employment and, as shown below, the incidence of non-regular work in the UK is
relatively low. Indeed, as Deakin and Reed (2000, p.124) note, the employment protection
regulations that do exist are largely procedural rather than substantive weakening still further the
incentive to use non-regular employment practices since there are few costly obligations to evade.
This weak coverage of employment law is a legacy of a system in the UK that has historically given
precedence to collective bargaining over regulatory legislation. Employment protection legislation
emerged relatively late in the UK, with the principle of job security rights and corresponding
redundancy compensation payments dating from 1965 and unfair dismissal legislation legislation
following in 1971. Formed principally with full-time, permanent employees in mind, the effect of the
legislative floor of rights put into place was to exclude millions of workers either because they were
considered to be self-employed, not employees, or because they failed to qualify due to lack of
continuity of service.
9
What little protection there was further weakened by the Conservative governments of the 1980s
and early 1990s. For example, qualifying periods for unfair dismissal were extended from six months
to one year in 1979, then two years from 1985. Part-time employees working under eight hours per
week did not qualify for basic protection at all, whilst those working between eight and fifteen faced
a longer qualifying period of five years’ continuous service for basic employment protection. Fixedterm contract staff were allowed to waive their statutory right to dismissal protection, and
employers frequently took advantage of this by including the waiver clause in contracts. The selfemployed were excluded altogether, whilst in practice so too were casual and agency temporary
workers whose employment status in law was, and remains, unclear in many cases (Deakin and Reed,
2000).
The election of the New Labour government in 1997 saw a partial strengthening of employment
protection legislation, particularly for non-regular workers. The approach, however, remains one of
‘minimum standards in a flexible labour market’ (McCarthy, 1997). Differential thresholds facing
part-time workers had already been ruled unlawful in 1995 due to indirect sex discrimination, given
that the majority of part-time workers in the UK are women. The introduction of minimum standards
came largely as a result of the ending of the UK opt-out from the European Community’s Protocol on
Social Policy (the ‘social chapter’) of the Treaty of Maastricht. As a result and following European
directives, new Working Time Regulations have been introduced, to place a limit on working hours
and to formalise holiday entitlements. In addition, part-time and fixed-term contract workers now
have the right to the same treatment as full-time and permanent staff, and fixed-term staff cannot
waive their rights to dismissal and redundancy protection. In addition, the Labour government
introduced a national minimum wage in 1999 and reduced the qualifying period for unfair dismissal
protection to one year for all employees, although redundancy compensation still only applies after
two years’ service. Despite these and other changes, critics have pointed to the ‘minimalist’ strategy
underpinning the introduction of EU directives into UK law (Smith and Morton, 2006) and the fact
that there is limited scope for collective, union representation to secure individual rights or indeed a
well-resourced state infrastructure for enforcement (TUC, 2009a).
The biggest problem facing people with non-regular jobs is that the UK retains a complex system of
employment rights, with ‘employees’ able to access a higher standard of protection than ‘workers’,
who are often low paid (TUC, 2009a). Beyond these two categories are the self-employed who fall
outside of employment protection altogether. The status of ‘worker’ applies to individuals who
supply their own personal services to the employer under an individual contract and are
economically dependent on the employer's business (i.e. derive a high proportion of their income
from that employment) but who do not meet the requirements of employee status. This category
potentially includes freelance workers, sole traders, homeworkers and casual workers of various
kinds (see Burchell et al., 1999).This is a wider definition than employee status and it applies under
equal treatment legislation, the National Minimum Wage Act and Working Time Regulations. Table
2.2 sets out the main differences between the employment rights of workers and employees.
10
Table 2.2 Employment rights of workers and employees under UK employment law
STATUTORY EMPLOYMENT RIGHT
EMPLOYEES ONLY
ALL WORKERS
Discrimination
Protection from discrimination relating
to equal pay, sex, race, sexual orientation,
disability, age, religion

General Employment Rights
Written statement of employment
particulars, specifying: pay, hours of work,
holidays, sick pay arrangements and
disciplinary and grievance procedures
Itemised pay statement


Protection from unlawful deductions from
wages

Statutory sick pay

National Minimum Wage

Failure to be paid the NMW
agency workers and homeworkers
expressly covered (Note: Apprentices
under the age of 19, or aged over 19
and in the first 12 months of their
apprenticeship, are not entitled to the
National Minimum Wage)

Failure to allow access to records relating
to the NMW
Protection from unfair dismissal related to
NMW
Protection from detriment related to NMW
agency workers and homeworkers
expressly covered


11
STATUTORY EMPLOYMENT RIGHT
EMPLOYEES ONLY
ALL WORKERS
Working Time

Rights to daily rest, weekly rest and rest
breaks
agency workers
expressly covered

Paid annual leave
agency workers
expressly covered
Right not to be dismissed in relation to
working time


Right not to suffer detriment in relation to
working time
agency workers
expressly covered
Job Security / Unfair Dismissal
Statutory minimum notice periods
General right not to be unfairly dismissed
or unfairly selected for redundancy


Protection for terms and conditions,
continuity of employment and from
dismissal in case of transfer of an
undertaking

Right for union or workplace reps to be
informed or consulted about collective
redundancies or transfers of an undertaking
of affected employees

Protection from dismissal on grounds of
medical suspension, acting as occupational
pension trustee, for making a protected
disclosure, for asserting a statutory right
Right to statutory redundancy pay



Protection from dismissal relating to right
to be accompanied in grievance and
disciplinary procedures
This is the only unfair
dismissal right which applies
to non-employee workers
Non-regular Worker Rights
Equal treatment rights for part-time
workers
Equal treatment rights for those on fixedterm contracts


Source: adapted from TUC (2009a, pp.175-77)
12
The complexity of UK employment law is particularly important for temporary non-regular workers
who are most likely to suffer abuse (TUC, 2009a). Although fixed-term contract temporary work
tends to lead to employee status, very often temporary agency and casual jobs are offered in such a
way that individuals are entitled only to ‘worker’ status, and correspondingly weaker employment
protection (table 2.2). Given the low pay in many of these jobs, this further compounds labour
market disadvantage.
Problems also emerge with ‘self-employed’ status. Worker status is a form of ‘dependent selfemployment’ (Burchell et al., 1999) but recent evidence from the TUC (2009a) notes that in many
cases employers force workers to accept ‘bogus self employed’ status. This is by requiring workers to
establish themselves as directors of a limited company in their own right and then to hire out their
own services, through their own company, to the client. This is particularly common in the
construction industry and in homeworking. In reality, the economic dependence on the client and
the lack of independence and autonomy over their work that the hallmark of genuine self-employed
status mean that these workers have the characteristics of an employee but none of the protection
(see Burchell et al., 1999; Böheim and Muehlberger, 2006; TUC, 2009a). Indeed, research shows that
these workers are distinct from employees and independent self-employed workers, with an
increased likelihood of low education, low job tenure indicating job instability and, on average, they
are older workers (Böheim and Muehlberger, 2006). Again, this research suggests that the gaps in
UK labour law lead to a connection between vulnerable employment status and labour market
disadvantage (see also TUC, 2009a).
Through directives agreed at the European Union level and implemented into UK some protections
have been afforded to some non-regular workers. The Part-Time Worker (Prevention of Less
Favourable Treatment) Regulations implemented in 2000 and Fixed-term Employees (Prevention of
Less Favourable Treatment) Regulations implemented in the UK 2002 have established the principle
of non-discrimination by contract type regarding pay and conditions. Further, fixed-term workers
can request permanency if they have held two or more successive contracts with the same
employer within a four year period. As discussed later in the report, attempts to reach agreement
around similar provisions for agency workers have been much more controversial at the European
and UK level. Until equal treatment legislation applies to agency workers, however, they are at a
distinct disadvantage. Indeed, even when regulations have come into force it will still be possible to
evade them in some circumstances by falsely applying self-employment status, which remains a key
criticism of UK employment law (Burchell et al., 1999; Hendy and Ewing, 2003; TUC 2009a).
13
3. Patterns of non-regular work
This chapter examines the patterns of non-regular working in the UK in recent decades. In order to
provide some context, it begins with an outline of the wider economic and sectoral shifts and trends
that underpin labour market outcomes.
3.1 The economic context
The UK labour market has been particularly volatile in during the last thirty years, with two major
recessions leading to large employment losses in the early 1980s and 1990s. The long period of
constant expansion from 1992 has now come to an end as the UK struggles to recover from its
deepest recession since the 1930s (see figure 3.1).
Source: Authors’ analysis of data from Office for National Statistics
This macroeconomic volatility has overlaid longer-term trends. Chief amongst these is
deindustrialisation, as productivity gains and loss of markets lead to the shrinking importance of
manufacturing as a source of employment. In the UK competitive weaknesses and output instability
have led to both relative and absolute declines in manufacturing employment. Against this, output
and employment has been rising in the service sector. In particular, a major driver of employment in
the 1990s has been the financial and business services sector. Some contribution has also been
made by the distribution, catering and hotels sector and by ‘other services’ (cultural and leisure
industries, membership organisations and personal care, including hairdressing) but a much greater
rise is apparent in the public-sector dominated public administration, health and education sector
14
following a deliberate government strategy of expansion from 1997. Reflecting the property boom
of the last decade, construction jobs have also increased steadily (see figure 3.2).
Despite these shifts in the structure of the economy, manual employment still accounting for around
10.5 million of the 29 million jobs in the UK. Part-time work has expanded at the expense of full-time
employment, and female participation rates have increased significantly, such that women presently
constitute half of the paid labour force.
Source: Authors’ analysis of data from Office for National Statistics
These wider shifts provide the context for the more specific changes in the organisation of work and
employment that have informed academic and policy debates on insecurity, the quality of jobs and
work futures in general (see Nolan and Slater, 2010). The changing balance between regular and
non-regular employment has been of central concern and it is to these patterns that we now begin
to turn. Figure 3.3 shows patterns in the absolute number of employees by full and part-time status,
self-employment by full and part-time status and temporary jobs (as a subset of all employees).
Detailed discussion follows in subsequent sections, but in short the trends are clear: part-time
working is continuing a slow but steady increase, temporary working shows no secular trends and
self-employment is more or less constant. For the UK, the picture is one of very slow change away
from regular and towards non-regular working.
15
Figure 3.3 Employee and self-employed jobs by type, UK 1992 to 2009
7000
19500
19000
6000
18500
5000
18000
Part time employees
Full time self employed
17500
Part time self employed
4000
Thousands
Full time employees (right-scale)
3000
17000
Thousands
Temporary employees
16500
16000
2000
15500
1000
15000
0
14500
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Authors’ analysis of data from Office for National Statistics
In the following sections we examine non-regular working in more detail beginning with temporary
work.
3.3 Patterns of temporary work
Figure 3.4 shows that temporary employment in the UK peaked in 1997 at just about 1.7 million
workers (approximately 7 % of all employee jobs). The rapid rise through the 1990s following
recession was not sustained. Since 2000 the aggregate level of temporary employment has
fluctuated. There is some indication of a rise during the current recession and if the pattern of the
1990s is repeated it is to be expected that as employment recovers, much of the net growth will be
in temporary work. As yet, it is too early to tell.
Figure 3.4 also details the contribution of different forms of temporary working in the UK. The
classification comes from the official Labour Force Survey, in which employees identify the reason
for the temporary nature of their job as either: fixed term; a temporary agency job; a casual job; a
seasonal job; or some other reason. Close inspection of the data indicate that the decline in
temporary work can be attributed to falling numbers of fixed-term workers following the
introduction of equal treatment legislation in 2002. Against this, temporary agency working has
continued to increase.
16
Source: Authors’ analysis of Labour Force Survey data, various years
These aggregate data conceal radical shifts in particular sectors. Most striking is the expansion of
short, fixed-term contracts in the public services, particularly in health and education, beginning in
the early 1980s. In the private sector, temporary working increased in most sectors after the early
1980s, although often from a low base, and for the first time took root in industries, such as banking
and finance, previously associated with stable employment and ‘jobs for life’ (Nolan and Slater,
2003).
Figure 3.5 shows the share of total temporary jobs by industry. The composition of temporary jobs
shows cyclical as well as secular trends. Among the former, the manufacturing share of temporary
jobs rose sharply in the recovery of the mid to late 1990s. Longer-term trends include the small but
steady increase in the share accounted for by banking, finance and insurance services, one of the
main drivers of total job growth in the UK in recent years. Public administration, education and
health also accounts for an increasing share of temporary jobs, particularly from 2000, following
increased government spending.
17
Source: Authors’ analysis of Labour Force Survey data, various years
What type of jobs tend to be temporary? Figure 3.6 compares the share of permanent and
temporary jobs by occupation. Compared to permanent jobs, temporary jobs are over-represented
among both higher skilled (professional) and lower skilled (elementary) jobs. This reflects the
industrial structure of temporary work, with many of the professional temporary jobs located in the
public sector (nurses, teachers, social workers), whilst elementary occupations, which include
labourers, cleaners, shelf-fillers and security guards are spread across a range of industries.
Temporary jobs are also over-represented among personal service occupations. Again, these jobs
are spread across a number of industries, public and private, particularly ones that have seen
employment growth since the early 1990s. Occupations here include: assistant nurses; childcare
occupations; adult carers; teaching assistants; travel and leisure attendants; hairdressers and
beauticians and housekeepers.
18
Source: Authors’ analysis of Labour Force Survey data, various years
Further analysis of temporary worker characteristic is presented in the table A1 in the appendix.
Temporary working is now balanced in terms of gender (from female over-representation in the
early 1990s). Compared with permanent employees, temporary workers tend to be younger, with a
high proportion of agency and seasonal/casual workers under 30. Reflecting the importance of fixedterm contracts in professional work, this group has an over-representation of high qualifications.
Conversely, reflecting the age profile, seasonal-casual jobs tend to have lower qualifications. Nonwhite workers are over-represented in temporary working, and agency-working in particular is
associated with recent migrants, particularly temporary agency working among arrivals from the
new accession countries of the European Union.
Looking at the overlap with other non-regular employment features, temporary workers tend to be
more likely to work part-time than permanent employees. In 2008 the incidence among the latter
group was 24%. For temporary agency workers the proportion was 30%, for fixed-term workers 37%,
seasonal and casual workers 83% and for ‘other’ temporary workers 55% (table A1). Looking at those
who work through an agency on a self-employed basis (rather than as an employee), the incidence
of part-time working is much lower at 17%, however these are male-dominated jobs concentrated in
professional and skilled manual trades.
The use of temporary workers in UK workplaces has not changed in the last decade. Kersley et al.
(2005) report that 30% had employees on any type of temporary contract in 2004, similar to a
comparable 1998 survey finding of 32%. They also report that the use of temporary agency staff is
less common than fixed-term contracts although they are still utilised in 17% of all workplaces,
representing no change since 1998.
19
3.4 Part-time working in the UK
The growth in part-time employment is a long-standing trend. In 1971, one in six employees worked
part-time. By the end of 2009, with approximately 6.5 million part-timers out of 24.8 million
employees, this ratio had risen to one in four. Part-time working remains heavily gender-biased. In
1992, only 13% of male employees (16% of all men in employment) worked part-time. By 2009 this
proportion had risen to 22% (25% of all) (ONS 2010). The rise has been a slow and steady increase,
rather than a reaction to the current recession.
The continuing expansion of part-time employment has been sustained since 1979 by the net
creation of 7.2 million jobs in services. By 2004, 83% of workplaces employed part-time staff, with
these employees in the majority in 30% of workplaces (Kersley et al., 2005). Overwhelmingly filled by
women, these jobs are much more likely to be poorly paid, low-skilled and unstable (Stewart 1999).
Moreover, around half of part-time employees occupy ‘small’ jobs involving less than 16 working
hours, and almost 1 million work as few as eight paid hours per week (Nolan and Slater, 2003).
At industry level, those with high incidences of part-time working include wholesale and retail, and
hotels and catering in which almost half the workforce is employed part-time. In the public sector,
community services, health and education have the largest shares of part-time working (Nolan and
Slater, 2003). Figure 3.7 looks at this issue another way, focusing on the share of all part-time
working accounted for by each industry sector.
Source: Authors’ analysis of Labour Force Survey data, various years
The declining importance of manufacturing to part-time working reflects its broader decline. Against
this, some rise in the share in banking and finance is evident but it remains the case that retail and
20
wholesale distribution, hotels and restaurants and public administration, health and education
account for the bulk of part-time working, with a growth in the share of the latter evident in recent
years.
Source: Authors’ analysis of Labour Force Survey data, 2009
Turning to occupation, the over-representation of part-time working in clerical, personal service and
elementary occupations is not surprising given its gender and industry patterns (table 3.8). However,
although dominated by female workers, there are important occupational differences by gender.
21
Source: Authors’ analysis of Labour Force Survey data, 2009
Figure 3.9 indicates that part-time male employees are highly over-represented in sales and
customer service and elementary occupations (which includes basic retail jobs, cleaning and security
work). Thus, where men do work part-time, this tends to be in lower-skilled and lower-paid work,
whilst male full-time employment tends to be concentrated in higher skilled jobs.
The occupational patterns for part-time women are somewhat different (figure 3.10), with female
part-time working concentrated in clerical and personal service in addition to sales and elementary
jobs. The continuing growth in these occupations and their related industries underpin the
continued slow increase in the proportion of part-time working in the UK labour market as a whole.
22
Source: Authors’ analysis of Labour Force Survey data, 2009
3.5 Self-employment in the UK
As figure 3.3 above shows, self-employment in the UK has remained relatively constant in absolute
terms. In this section the industrial and occupational distribution of self-employment is considered
and some of the key characteristics of self-employed workers are discussed.
Turning first to the distribution of self-employment by industry, figure 3.11 shows that it is
dominated by construction and banking, finance and insurance which account for almost half of all
these jobs. In comparison to employee jobs, agriculture and fishing also account for a much greater
share of employee jobs.
23
Source: Authors’ analysis of Labour Force Survey data, 2009
The industrial concentration of self-employment is reflected by its occupational distribution. Figure
3.12 shows that self-employment is highly concentrated in skilled trades, reflecting the large share
of such work in construction, and in managerial and professional work. This latter association follows
from the large share of self-employment accounted for by the banking and finance industry and, to a
lesser extent, public administration, health and education. Compared to employee jobs, plant and
process operative occupations account for a higher share of self-employed workers and this in the
main is due to many drivers of taxis and goods vehicles being engaged on a self-employed basis.
24
Source: Authors’ analysis of Labour Force Survey data, 2009
Further information on the characteristics of the self-employed can be found in the appendix (table
A1). Self-employed workers (not working through an employment agency) tend to be older on
average than permanent employees, more likely to be male (73%) but with a similar qualification
and ethnicity profile.
3.6 Accounting for the trends
Various accounts have been put forward to explain these trends in non-regular work. The flurry of
interest around the notion of the ‘flexible firm’ noted in section 2.1?? above has subsided but many
modern accounts retain that approaches focus on external technological and competitive pressures
as the driver for labour market outcomes (see Nolan and Slater, 2010 for a critique). Rajan et al.
(1997), a government commissioned report, is typical. It notes that increases in non-regular follow
from the benefits both to employers in terms of reduced costs and workers in terms of flexibility.
Further, firms’ employment systems are shifting from an emphasis on security to one on
‘employability’ in which workers are provided with transferable as well as firm-specific skills, the
authors argue. In this context, greater use of non-regular employment is part of a wider shift by
firms to accommodate rapidly changing technology and customer demands.
More recent government analysis has largely accepted these drivers as the cause. Given their
perceived inevitability, the UK government has repeatedly announced its intention to retain and
enhance the UK’s flexible labour market (HM Treasury, 2003). Indeed, from the government
perspective there is little attempt to understand the drivers of non-regular employment; rather
25
these forms are embraced for meeting the needs of workers and firms. That said, some potential
downsides to non-regular employment are recognised, including the fact that rising part-time
employment may reflect the lack of opportunities for women to combine full-time work and family
responsibilities and that too much temporary working may harm the reproduction of skills (HM
Treasury, 2003: 36-7).
From the perspective of the trades unions, the growth in non-regular work cannot be separated
from the gaps in employment legislation that allow employers the scope to evade labour costs and
responsibilities, particularly in the use of temporary or self-employed labour (TUC, 2009a). This is
exacerbated, it is said, by the increasing importance of small firms to employment growth, where
labour standards may be lower and from lengthening corporate supply chains as private and public
organisations make greater use of sub-contractors. It is these firms that often utilise non-regular
labour, particularly temporary and ‘false’ self-employed workers. Despite the overall tighter labour
market until 2008, these trends have been supported by inward migration to the UK from former
Eastern Europe, leading to a ready supply of poorly informed and vulnerable workers, who are likely
to find employment in non-regular jobs (TUC, 2009a; see also table A1).
These arguments find some support in the academic literature. Grimshaw and Rubery (1998) point
to the shifting basis of power between employers and different sections of the labour force in
driving growth in non-regular work. They argue that firms have been taking increasing advantage of
the fact that labour market alternatives vary or have diminished across different sections of labour
supply by age, gender, ethnicity and migrant status, following deliberate changes to welfare benefit
and tax rules and shifting skills demands. This has then allowed firms to secure stable labour input
despite a worsening in the terms and conditions offered, including the security and stability of jobs.
Rather, firms have been able to fill these often low-paid, low quality jobs easily with disadvantaged
groups who face few real alternatives.
In the next chapter we turn to examine some of the patterns already outlined in more detail,
drawing on original case-study evidence.
26
4. Background to the case studies
4.1 Introduction
As part of the research, three case studies were conducted to examine various aspects of employers’
use of non-regular employment arrangements. The cases were selected to provide coverage of a
range of industrial sectors, and ‘mixes’ of non-regular and permanent employment arrangements.
In each of the cases, interviews were conducted with a senior member of management with
knowledge about employment arrangements, such as a Human Resources or Employment Relations
manager, or, in one case, with the Managing Director. Where possible, interviewees were
questioned on multiple occasions, to allow for reflection on previous answers. Interviews were
supplemented with background/contextual data on each of the three companies. These background
data were generated via the respondents themselves, or from publicly available sources. In two of
the cases interviews were conducted over the telephone, in a third case, interviews took place faceto face.
The interviews took place between November 2009 and February 2010. The length of each of the
interviews varied from 45 minutes to 90 minutes and covered a range of topics, including: contextual
and background data; company and establishment information; employment trends; use of nonregular employees; industrial and occupational distribution of non-regular employment; reasons for
using non-regular employees; the tasks conducted by non-regular employees; equal treatment of
non-regular employees; opportunities for progression to permanent employment; union
membership; and the use of non-regular workers in the economic recession.
The interviews were semi-structured in nature, to ensure that the aims and objectives of the project
could be achieved, but also to allow for emergent themes on the use of non-regular employment to
be discussed in more detail. In each of the three cases, the name of the company has been changed,
to preserve anonymity and confidentiality.
4.2 The case-study organisations
Contextual information on the three cases is provided in Table 4.1 below and a narrative on each of
these cases follows. In all three cases, the information gathered centred on non regular employment
within the entire organisation in the UK, rather than within a particular establishment. In all three
cases, however, respondents were able to also provide examples and evidence from within
particular establishments in their company in the UK. Indeed, in one of the cases (FoodCo), the
organisation existed as a single establishment.
27
Table 4.1 Overview of case-study companies
Company name
Activities
Employees in UK
CarCo
(private sector,
services)
Large
multinational
automotive
manufacturer.
UK operations
comprises car
sales and
dealership
network, parts,
warehousing and
UK central offices
(HR, finance and
administration)
Food production,
ready meals to
foodservice,
leisure, brewery
and convenience
sectors
Public sector
company
responsible for
providing
education
support services
for school age
children in
Northern city.
5000
FoodCo
(private sector,
manufacturing)
EducationCo
(public sector,
services)
Use of non
regular
employees
Agency staff
Fixed-term
contract staff
Casuals
Independent
contractors
Part-time
employees
Interview
200 employees,
at single
establishment
Part-time
Temporary
Agency (but not
at present)
Managing
Director
1100 direct
employees (HR,
estates, special
educational
needs staff, pupil
referral units)
HR responsibility
for further 17000
council
employees in the
area of education
(teachers,
support staff etc)
Part-time
Agency
Fixed-term
contracts
Casual
Independent
contractors
Variety of flexible
working
arrangements
HR Manager
Employee
relations manager
4.2.1 CarCo
CarCo is a global car manufacturer with head office in France. The company does not manufacture
cars in the UK. It employs 5000 workers in sales, distribution, finance, parts and human resources
activities. The largest majority of workers are employed in sales and warehousing, with around 450
employed in human resourcing. Of the 5000 staff in the UK, between 10-15 % are typically on nonregular contracts. The largest component of the non-regular workforce is agency workers, who
comprise approximately 10 % of the total workforce. Fixed-term contract workers make up 0.5 % of
the workforce, and some of the 450 head office staff (cleaning, catering) are employed via
independent contractors. Very few of the 5000 strong workforce are on part-time contracts of
employment.
28
The reasons why CarCo utilise non-regular workers varies according to contract type. Agency
workers have been used for a long time by CarCo as a means of providing flexibility. The use of
agency workers allows the firm to quickly vary numbers to meet changes in demand. Crucially, the
use of agency staff also allows the company to vary numbers of staff whilst simultaneously meeting
strict headcount targets imposed by the European Head Office. These headcount targets place upper
limits each year on the number of directly employed workers that the company can use (but no
limits are placed on the number of agency workers). Over the last decade, the company had evolved
a strategy which relied on the heavy use of agency temps to allow them to flex numbers without
overshooting head office direct employment staffing targets. Similar strategies have been revealed
in other case studies of employers’ use of agency staff in the UK (see Grimshaw et al., 2001; Purcell
et al., 2004; Coe et al., 2009).
There is a clear cost rationale for using agency staff at CarCo. Most of the agency temps at CarCo
have long tenure levels at the company (typically more than a year),with some agency temps
acquiring tenure levels of 10 years or more. Most are employed on core tasks. The company makes a
relatively arbitrary distinction between ‘temp temps’ (who are seen as disposable by the company,
and who are typically on contracts of less than a year) and ‘perm temps’ (on contracts of a year or
more) the latter receiving some of the fringe benefits enjoyed by permanent staff. ‘Perm temps’
form the majority of the agency workforce in CarCo. Hourly pay rates for agency staff, whilst higher
than those available on agency terms in other local firms, are lower than rates for permanent staff.
There are small numbers of workers on fixed-term and part-time contracts of employment in CarCo.
Both of these groups of workers are included in Head office headcounts of staff, meaning that one of
the key strategic rationales for using agency temps does not apply for fixed-term and part-time staff.
However, the interviewee at CarCo argued that there is ‘a bit more flexibility’ in their ability to vary
the number of fixed-term contract workers in relation to headcount targets. Fixed-term contract
workers at CarCo tend to be used for specialist skills or during recruitment freezes. Some workers
are employed via independent contractors, as the company contracts out its’ cleaning and catering
provisions in head office to third party contractors. The company also contracts out its call centre
operations in the UK. However, these workers tend to be employed directly by the contractor
performing the cleaning, catering or call centre services.
4.2.2 FoodCo
FoodCo is a food production company producing ‘ready meals’ for the foodservice, leisure, brewery
and convenience sectors in the UK and Europe. Established in the late 1980s, the company now
employs 200 workers, based in a single factory in England. The company is a supplier to many
established pub and restaurant chains and leisure parks. The company has benefitted from
government funding when it relocated, 5 years ago, to its current location, in a business park. The
company receives a grant of £18,000 from European Union funding, for each worker employed. Of
the two hundred staff, 80-85% are involved directly in food production, backed up by an
administrative, sales and management staff of 15 % of the total workforce. The production process is
assembly-line driven, and typically the company runs two shifts, from 6am-2pm and from 2pm-10pm.
At peak times, the company also runs a third shift.
29
The company employs the majority of staff on ‘open-ended’, permanent contracts. It employs
temporary staff as a means of ‘screening’ workers for permanent positions. Most assembly line
workers will begin on three-month temporary contracts, and workers will be converted to
permanent contracts subject to satisfactory performance after this period. At the time of the
interview, only a small proportion of the workforce (‘2 or 3 employees’, according to the managing
director) were on temporary contracts. The company had utilised agency staff in the past, as a
means of coping with regular peaks in demand (for example, in the run up to Christmas, where
demand for the company’s products was higher), and to provide extra staffing for urgent production
runs, but they were not using agency staff at present. When agency workers were used, they
typically comprised up to 5 % of the workforce. Few staff are employed on a part-time basis, and
none are employed as independent contractors. The company had used independent contractors in
the past, for specialist trades skills, but had found that enough of its permanent production staff had
the specialist skills that it currently required.
A particular feature of the company’s personnel strategy is its’ heavy use of migrant labour from
countries joined the European Union in 2004 and 2006. Of its 200 staff, 110 are migrant workers the
vast majority of whom work in assembly line roles. The majority of these migrant workers are Polish.
Others are from Estonia, Slovakia, Hungary, Czech Republic and Lithuania. The company explicitly
utilises migrant workers as part of a competitive strategy based around minimising labour costs, a
finding in line with other studies of migrant workers in the UK (see MacKenzie and Forde, 2009). The
company prefers to place migrant workers on direct employment contracts within the firm rather
than using an employment agency. Pay for new recruits is set at the minimum wage of £5.80 per
hour, although the company provides incentive payments and opportunities for progression once a
worker was made permanent.
Production in the company is organised around four production halls, with three product lines being
run in each hall. Product changeovers occur up to 6 times a day, so up to 70 products run on the
assembly lines in any given day. In each hall there is a factory manager, and a number of semiautonomous teams of 6-10 workers. These teams include a deputy team leader and a team leader.
4.2.3 EducationCo
EducationCo is a not-for-profit organisation owned by a local council in England and responsible for
providing all education support services that relate to children and young people of statutory school
age. The organisation employs 1,100 staff, and is responsible for human resource activities for a
further 17,000 of council employees, namely those involved in any aspect of education provision.
The 1,100 staff employed by EducationCo are concentrated in education roles (including educational
psychologists, special needs staff; staff in pupil referral units; specialists working on local and
national government school initiatives); buildings and estates staff, consultants, human resources
and finance. Whilst schools in the geographical area served by EducationCo have a choice over who
to use for their Human Resources requirements, EducationCo is currently chosen by all schools in
the area to provide this service (overseeing recruitment and selection activities, payroll, contracts
and some training provision). Of the 17,000 school based staff for whom EducationCo have human
resource responsibilities, 10,000 of these are employed as teachers in schools. Others are employed
as teaching assistants, learning mentors, librarians, and catering staff.
30
Non-regular employment is commonplace in EducationCo. Amongst the 1,100 staff employed in
EducationCo, approximately 30% work part-time. Part-time working is the most common form of
non-regular employment. Some workers are on fixed-term contracts, and this form of working has
become more common since the economic recession began in late 2007. The organisation also uses
casual staff. EducationCo employs some independent contractors in consultant positions, and
utilises agency staff to provide specialist skills or for one-off tasks. Amongst the 17,000 school based
staff, part-time employment, fixed-term contract employment and agency employment is also
commonplace. EducationCo has implemented a framework agreement which governs relationships
between the organisation and agencies, and sets out the terms and conditions of supplying agency
teachers to schools, as well as the supply of other temps. As part of this framework agreement, the
organisation has developed long-standing contractual arrangements with three employment
agencies, which set out terms of business, pay rates and margin levels. These agreements are
reviewed periodically (typically every 3 years). Whilst schools can utilise other employment agencies,
they currently tended to use one of these three agencies, since the organisation had secured
preferential terms and conditions of business with each of them (where the margin charged to the
organisation by the agency was lower than normal terms of business). EducationCo has also recently
set up a bank of supply teachers as a means of trying to reduce the overall costs of temporary
staffing to the organisation.
A particular feature of the organisation’s use of non-regular employment is the promotion (in
common with many other public sector organisations) of flexible working patterns. Many staff work
on flexible hours contracts, notably annualised hours, compressed hours, and ‘flexi hours’ (such as
7am-4pm or 10am-6pm). The majority of school based staff (16,000 out of 17,000) are employed on
term time only contracts. Therefore, notions of a standard full-time permanent contract are
somewhat different in this public sector context compared to the other two cases. The organisation
has explicitly developed and promoted flexible working arrangements. The organisation views these
policies as a means through which it can recruit and retain good staff in an economic climate where
local and national government budgetary constraints have limited pay increases. A permanent
employment contract in EducationCo thus covers a wide spectrum of flexible working arrangements,
and it is important to bear this in mind in comparing ‘standard’ contracts in this case with nonregular contracts.
31
5. Transitions from non-regular to permanent employment
5.1 Introduction
In this chapter we look at the extent to which non-regular employment acts as a bridge to more
permanent positions. We begin by reviewing evidence on whether employers use non-regular
contracts to screen for permanent employees. We then look at whether workers are reluctantly
taking up non-regular employment. We then move on to look at the extent of transitions between
non-regular and regular employment. We finish the chapter by considering whether workers move
back and forth between regular and non-regular positions. In each section we review existing
evidence and also draw directly from the three case studies conducted for this project.
5.2 The use of non-regular workers to screen for permanent employment
A range of previous studies have highlighted that employers use non-regular workers as a means of
screening workers for permanent positions. Representative national survey evidence suggest that
temporary employment contracts in particular are often offered to workers prior to a permanent
position. The 2004 Workplace Employment Relations Survey (WERS2004) found that 16% of
establishments that used fixed-term contract staff (equating to 4% of all establishments) did so as a
means of screening workers for permanent employment contracts (Kersley et al., 2005). This was
the fourth most popular reason cited by firms for using fixed-term contract workers (the three most
popular reasons were to cover temporary increases in demand, to cover long-term absence, and to
obtain specialist skills) (Kersley et al., 2005).
However, the WERS2004 survey did not find that screening was an important reason cited by users
of agency staff. Screening does not appear amongst the top 10 reasons cited by establishments
using agency staff in this survey. This finding is in contrast to other surveys which have found that
agency jobs are used by employers to trial workers for permanent positions. The government
department of Business Enterprise and Regulatory Reform (BERR, 2008) clearly states that ‘vetting
staff before permanent recruitment’ exists as a major reason why companies use temporary agency
workers (see also REC, 2008). White et al. (2004), using data from the 2000 Working in Britain
survey find that casual, temporary and agency contracts can act as a bridge to permanent
employment. The importance of screening rationales for using agency staff is also borne out by
pervious case study research. Grimshaw et al.’s (2001) case studies of employers using non-regular
contracts found that all of them used agency contracts to trial workers for permanent employment.
Forde (2001) conducted case studies with 8 employment agencies in two areas of the UK and found
that seven of the eight agencies had established formal ‘temp to perm schemes’ where agency
workers were employed on contracts of between 6-13 weeks before moving onto a permanent
contracts. This arrangement ‘locked-in’ users of agency staff into a relatively long-term contractual
arrangement with agencies, and provided agencies with a regular stream of fees from placing a temp
for 6-13 weeks, along with a one-off payment when a worker was made permanent.
The three case studies conducted for this study revealed extensive evidence of the use of temporary
and agency workers as a means of screening for permanent positions. However, there was little use
of part-time employment or independent contractors as a means of screening for permanent
employment. In FoodCo, all the production staff (approximately 170 workers out of a total
workforce of 200) started on a probationary 3 month temporary contract, and were moved to
permanent employment on satisfactory completion of this period:
32
‘We try and convert them very quickly from temporary to permanent.... we employ them for
3 months and after 3 months if they are any good we actually want to get them on to our
books permanently” (Managing Director, FoodCo).
In FoodCo, these workers were employed on direct temporary contracts. Agencies were perceived
by the company management to be a high cost method of obtaining potential permanent recruits
(due to the mark up fees and temp to perm fees charged by agencies), and management also had
reservations about the quality of temporary agency staff. The firm had moved away from using
agencies for screening in 2007 and now employed probationers only on direct temporary contracts.
The company was a heavy user of migrant workers from the EU, and used ‘word-of-mouth’ and
informal recruitment mechanisms to secure a supply of workers to begin on temporary contracts.
In EducationCo, fixed-term, casual and agency contracts were sometimes used to screen workers for
permanent employment. Workers on fixed-term and casual contracts were routinely invited to apply
for permanent vacancies in the firm, as part of an open, equitable recruitment process in the
organisation. EducationCo also utilised agency staff, particularly for the supply of temporary
teachers, and there was evidence of screening rationales for their use in some circumstances. The
Framework Agreement governing the use of agencies by EducationCo included provisions around
‘temp-to-perm’ arrangements, and detailed the fees to be charged by agencies when an agency
temp was made permanent.
In CarCo, agency workers comprised 10% of the total workforce. However, the company also
maintained a sharp distinction between agency and permanent staff, and had actively developed a
category of workers called ‘permanent temps’ who were engaged on long-term agency contracts
(often of 5 years or more) with the company. Alongside this group, there were also ‘temporary
temps’, on shorter, more disposable, agency contracts with the company. Temp-to-perm
arrangements between agencies and CarCo detailed the fees that could be charged when a
temporary agency worker is made permanent. The employment relations manager stated that
screening rationales for using agency staff were not particularly important. Transitions between
agency and permanent status were ‘very rare’. Instead, the company sought to keep workers on
agency contracts as a means of saving costs and of maintaining flexibility in the overall headcount.
This was possible since agency workers were not included in the annual headcount targets set by the
European Head office of CarCo for its subsidiaries:
‘We have a really restricted head count in the UK so our European Head Office dictates how
many permanent people we have working for us so we use agencies a lot.....so you will have
a situation where Head Office will say we need you to reduce your head count by X amount
of people.....so we get rid of those permanent staff and we just replace them with agency
staff” (Employee Relations Manager, CarCo).
33
5.3 Is non-regular employment voluntary?
The nationally representative UK Labour Force Survey offers consistent data since 1992 on the
reasons why employees take temporary and part-time jobs. Turning first of all to temporary jobs,
respondents who indicate that their job was not permanent are asked why they have taken a
temporary job. Two of the options for responses are: that they were in temporary work because
they could not find a permanent job (often termed ‘involuntary’ temporary workers); or that they
were in temporary work because they did not want a permanent job (commonly referred to as
‘voluntary’ temporary workers). These responses are charted in figure 5.1. It is important to note
that the proportions for these two responses do not sum to 100%, since a range of other responses
are possible.
Source: Authors’ analysis of Labour Force Survey data, various years
The proportion of involuntary temporary workers rose from 1992, reaching a peak in 1995, the rise
corresponding to the early years of employment growth following the 1990-1 recession, when much
of the net job growth was in temporary work. The differential between the proportion of temporary
workers who could not find a permanent job, and those who did not want a permanent job lessened
as the labour market tightened over the late 1990s. However, throughout the 1990s, the proportion
of involuntary temporary workers was always higher than the proportion of voluntary temporary
workers. By 2001, 28% were involuntary temps, whilst 30% were voluntary (the remainder were in
periods of training, or cited ‘other’ reasons for engaging in temporary work). Between 2000 and
2007 the proportion of involuntary temporary workers remained fairly stable around 25%, whilst the
proportion of voluntary temporary workers was consistently higher (at about 30%), reflecting the
relatively strong economic climate. From 2007 onwards, amidst a deepening economic recession,
34
the proportion of involuntary temporary workers has risen sharply, to stand at 30% (above the
proportion of voluntary temps at 28%) by 2009.
These broad patterns remain when the data are broken down by gender (figure 5.2). Men are more
likely to report that they are in temporary work because they cannot find a permanent job, whilst
women are more likely to report that they are in temporary work because they do not want a
permanent job. In the most recent Labour Force Survey estimates, from October to December 2009,
almost 39% of men reported that they were in temporary work because they could not find a
permanent job, whilst 21% reported that they did not want a permanent job. For women, the figures
were 31 % involuntary and 29% voluntary. Throughout the 1990s and 2000s, less than a third of
male temporary workers can be categorised as voluntary, and the corresponding figure for women
has never exceeded 40%. The conclusion that can be drawn from this is that the majority of
temporary employees are not actively choosing this form of work.
Source: Authors’ analysis of Labour Force Survey data, various years
Labour Force Survey data can also provide insights into why workers are in part-time work. Those
respondents who indicate that they are in part-time work are asked whether they selected this form
of work because they did not want a full-time job or because they could not find a full-time job. Over
the 1990s and 2000, the vast majority of part-time employees (between 65 and 90%) cite that they
did not want a full-time job. In October-December 2009, the most recent data available, 68% of parttime employees cited that they did not want a full-time job, whilst only 14% stated that they could
not find a full time job (ONS, 2009a). For women (who make up over 80% of the part-time
workforce), the proportion who did not want a full-time job stood at 82% in October to December
2009. Figure 5.3 provides a longer-term overview of voluntary and involuntary part-time working.
35
Source: Authors’ analysis of Labour Force Survey data, various years
Source: Authors’ analysis of Labour Force Survey data, various years
However, this should not be taken as straightforward evidence that workers are ‘choosing’ part-time
employment. Gash (2008) argues that women with family responsibilities are unlikely to have their
36
working preferences met without national policies supportive of maternal employment. In the UK,
with relatively little support for maternal employment (compared to many other European countries)
women are likely to be constrained in their choices of work. Tomlinson et al. (2008) argue that
women returners working often opt for part-time employment due to rigidities in the design of fulland part-time jobs. They find that the institutional environment in the UK may reproduce
occupational segregation, since many women opt for part-time jobs in occupational areas for which
they are over-qualified. In the UK context, then, the decision to choose part-time work is often a
constrained choice (see also O’Reilly and Fagan, 1998).
Turning to self-employment, questions were asked in the Labour Force Survey between 1999 and
2001 to self-employed individuals about their motivations for undertaking this form of work.
Respondents were provided with a range of possible reasons and were asked to select up to 4 of
them. Dawson et al. (2009) find that the most common reasons for becoming self-employed in the
UK during this period were: to gain independence (31%), the nature of the occupation (22%), wanted
more money (13%) and because the opportunity arose (13%). All of these reasons, they argue, might
be interpreted as ‘positive’ rationales (Dawson et al., 2009). Self-employment was selected following
redundancy by 9%, and 4% opted for this form of employment because no other jobs were available
(Dawson et al., 2009). Thus, they find little direct evidence for what they term ‘forced’
entrepreneurship; in other words, few individuals appear to have chosen self-employment out of
necessity because of loss of previous paid employment and a lack of other paid alternatives. The
proportion of ‘forced’ male self-employees is significantly higher than for women (12 % of men were
in self employment because they had lost their job compared to 4 % of self employed women),
however, ‘positive’ reasons remained dominant for male employees (Dawson et al., 2009). However,
these authors note that the time period covered by the data analysed extends across the middle of a
period of sustained economic growth in the UK economy, the late 1990s and early 2000s, and that
the picture might be quite different amidst an economic recession (Dawson et al., 2009). Indeed,
there is some recent evidence that workers are increasingly being ‘forced’ into self-employed (and
part-time) employment after losing full-time permanent jobs (Personnel Today, 2010).
5.4 The frequency of transitions to permanent employment
There is no systematic, generalisable data available to examine how often those who undertake nonregular employment involuntarily make the transition to permanent employment. However, there
are a number of sources that shed light on the broader question of transitions from non-regular to
permanent employment. Booth et al. (2002), using data the British Household Panel Survey from the
1990s look at where workers go on completion of temporary jobs. They find that 71% of men and 73%
of women in temporary jobs go to another job at the same employer, whilst 26% and 24%
respectively, go to a job at a different employer. Only 3% leave the labour force. Interestingly, very
few temporary jobs end with a move into unemployment, according to Booth et al. (2002). However,
these aggregate findings do not reveal whether temporary jobs end up bridging to permanent
employment.
Examining this particular question, Booth et al. (2002) find that of those employed in a seasonal or
casual job over 1991 to 1997, 28% of men and 34% of women ended up in permanent jobs. About 15%
ended up in permanent jobs within the first three months of their job (Booth et al., 2002). The
37
average seasonal-casual job duration before transitioning into permanent employment was 18
months for men and 26 months for women. For workers on fixed-term contracts, the picture is more
positive, with 38% of men and 36% of women ending up in permanent jobs. The average fixed-term
contract lasted 3 years for men and 3.5 years for women before being made permanent.
Forde and Slater (2002, 2005) analyse Labour Force Survey data on outflows from temporary work
over the 1990s. Using the panel element of the Labour Force Survey, it is possible to examine
transitions out of temporary work over a 12 month period. As expected, the proportion remaining
in employment (either temporary or permanent) over the year rose steadily from 78% in 1992 to 84%
in 1997, with a corresponding decline in the proportion entering unemployment, whereas the
proportion moving to inactivity showed no simple trend. Yet by 1999, despite several years of labour
market recovery, it remained the case that of those temporary workers still in employment one year
later, half were still in temporary jobs. Thus, over the course of the 1990s temporary workers
became increasingly likely to remain in a job, but it was no less likely to be a temporary job. By this
measure, temporary work is a ‘trap’ for at least as many workers as it is a ‘bridge’ to permanent
employment.
Table 5.1 One year transition rates from temporary work (LFS Panel Survey)
Status 1 year later
Permanent
Temporary
Origin
year in
temporary (%)
(%)
work
1993
41.3
37.1
1994
41.3
39.1
1995
40.9
38.4
1996
41.4
41.2
1997
42.8
41.6
1998
47.1
37.5
1999
41.7
41.1
Source: Forde and Slater (2002), Table 7.
Self-employed
Inactive
(%)
Unemployed
(ILO measure)
(%)
(%)
Weighted
number
(%)
3.0
2.3
2.6
2.3
1.7
1.1
1.0
7.9
8.2
9.6
4.3
4.8
3.7
4.7
10.7
9.0
8.3
10.6
9.2
10.5
11.5
994,135
1,203,671
1,291,882
1,473,161
1,596,536
1,412,595
1,446,265
Forde and Slater (2002) also show how employment stability varies between self-employment, parttime employment and various forms of temporary employment, by looking at annual transition rates
from each of these employment forms into employment, unemployment and inactivity, using the
Labour Force Survey panel. These findings are reported in table 5.2 below. Full-time permanent jobs
have the highest rate remaining in employment 1 year later, however the figure for the selfemployed is also very high (at 95%). Fixed-term contract workers and part-time employees are also
highly likely to remain in employment one year later.
Perhaps surprisingly, data shows that employment rates for agency workers are much lower than
most other forms of temporary work, with many moving into unemployment. Employment agencies
are often said to enhance labour market efficiency given their specialist focus on matching workers
to vacancies. Indeed, it is often argued that they are more efficient than state employment agencies
in this respect and their contribution leads to lower levels of frictional unemployment (see for
example CIETT, 2000: 19). However, the evidence in table 5.2 indicates that over a twelve month
38
period, agency workers are less likely than permanent, fixed-term contract and self-employed
workers to remain in employment.
Looked at another way, these results are less surprising. In order to be able to readily meet the
demands of client firms, temporary employment agencies generally seek an excess of workers “on
the books”, leading to underemployment for many (Forde, 2001). While registering with more than
one agency may lessen the chances underemployment, lack of availability for assignments tends to
lead to removal from the lists, rendering agency work patchy and insecure. Thus, it is not
immediately obvious that agencies reduce the pool of unemployed workers through enhanced
matching. Indeed, to the extent that they seek to retain a stock of surplus labour from which to draw
in the face of fluctuating demands from client firms, this may exacerbate transitions into
unemployment.
Table 5.2 Transitions from non-regular employment, Labour Force Survey panel
Status in 2000
Employed
Unemployed (ILO measure)
Status in 1999
Total Difference Total Difference Total
from fullfrom fulltime
time
permanent
permanent
Seasonal/casual 69.0
-27.6
4.0
+2.5
27.0
Fixed-term
91.9
-4.7
3.6
+2.1
4.5
Agency
83.9
-12.7
7.6
+6.1
8.6
Self employed
95.5
-1.1
1.2
-0.3
3.1
Part-time
89.7
-6.9
1.5
0
8.8
permanent
Full-time
96.6
1.5
1.9
permanent
Source: Forde and Slater (2002), Table 10.
Inactive
Difference Weighted
from fullnumber
time
permanent
+25.1
311,410
+2.6
682,308
+6.7
274,016
+1.4
2,864,827
+6.9
4,837,215
16,890,
487
Part-time, permanent workers are second only to the casual and agency temporary workers in
suffering low employment retention. However, rather than enter unemployment many leave the
labour market altogether. This is consistent with the female dominance of part-time working and the
difficulties of juggling work and family responsibilities noted, given the lack of affordable childcare in
the UK (Gregory and Connolly, 2008). Taylor (2004) is able to provide more detail on transitions from
self-employment. Using data from the British Household Panel Survey between 1991 and 2001,
Taylor looks at where self-employees are one year later. He finds that 87% of male self-employees
remained in self-employment (77% for women), 9 % were employees (14% for women), 2 % were
unemployed (1% women) and 2% were inactive (9% women), findings that are broadly similar to
those in table 5.2 above.
What do the case studies conducted for this project reveal about transitions from non-regular to
permanent employment? In each of the three cases, there was a possibility of making the transition
from non-regular to permanent contracts, although practice varied markedly across the companies.
In FoodCo, interviews suggested that almost without exception, probationary temporary workers
moved onto permanent employment contracts. At the time of the interviews, only 2-3 staff were
employed on 3 month temporary probationary contracts, with the remainder of the 170 production
39
staff having been converted into permanent contracts. All new recruits began on temporary
contracts in FoodCo. The high transition rates reflects, in large part, the particular dynamics of the
company’s recruitment strategy, which was centred on securing migrant workers from the countries
that had joined the EU in 2004 and 2006, particularly Poland. Turnover rates in the company were
very low, reflecting the perceived ‘strong work ethic and commitment to the company’ of migrant
workers (Managing Director, FoodCo).
In EducationCo, transitions from non-regular to permanent employment also occurred frequently,
and for some jobs, casual, fixed-term or agency contracts acted as a port of entry into an internal
labour market. Fixed-term and contract staff often made the transition to permanent employment,
for example, if the role they were covering was turned into a permanent position. A temporary
worker would be invited to apply for the permanent position as part of an open recruitment process.
Agency staff appeared less likely to move onto permanent employment contracts, since the
rationale for using these staff was typically to provide short-term flexibility or to generate cost
savings, rather than for screening purposes. Independent contractors, often employed as
consultants for educational services also rarely transitioned to permanent employment. Indeed,
since the beginning of the recent recession, transitions of all non-regular groups to permanent
employment had declined markedly, amidst freezes on recruiting for permanent jobs.
In CarCo, despite agency workers making up 10% of the workforce, transitions to permanent
employment were rare, because the company preferred to retain such workers on long-term agency
contracts, since they provided cost savings and facilitated the achievement of head office headcount
rates.
5.5 Company requirements for the transition to permanent work
The three case studies revealed a range of conditions that governed the transition from non-regular
to permanent employment contracts. In FoodCo, temporary probationary staff had to complete
basic induction processes around health and safety and food handling, and had to undertake a
standard performance appraisal in the company. Much of the training and appraisal requirements
placed on staff came about due to the company’s accreditation from Investors in People. This
required the company to follow best practice for training and appraisal for both temporary and
permanent staff. Beyond these ‘objective’ criteria for making a transition to permanent work, the
company also emphasised a range of more ‘subjective’ conditions, including behavioural and
personal characteristics:
‘(Workers need)......to get embedded in the culture of the company which is basically very
simply putting the customer quality first and being punctual, being efficient, being cooperative, being motivated and empowerment to develop their own skills and training....
you know just really wanting to be part of us.’ (Managing Director, FoodCo).
As noted above, the company was a heavy user of migrant labour from the EU, and as part of this
strategy, the company also placed emphasis on further subjective characteristics which related
broadly to ‘cultural fit’:
40
‘we look at it from a perspective of where they are going to fit, do they want to develop and
train and improve their English so to speak and what skills they come over with because
most come with degrees in one area or another area so they do have fundamental skills and
they have the skill and motivation.’ (Managing Director, FoodCo).
This finding is in keeping with other recent studies, which have highlighted the importance of
behavioural characteristics in employers’ selection criteria (see Thompson and Callaghan, 2002;
MacKenzie and Forde, 2009).
At CarCo, as already noted, transitions to permanent employment were rare. Indeed, in selecting its
agency temps, the company appeared to emphasise the importance of characteristics that might
favour these workers remaining in temporary employment:
‘The company likes temps who don’t want to do anything just do their job and kind of be
quiet’ (Employee Relations Manager CarCo).
In EducationCo, no unique requirements were placed on non-regular workers to make the transition
to permanent employment, beyond those expected of all applicants for permanent vacancies. As
noted earlier, as part of open and transparent recruitment and selection processes, non-regular
workers were able to apply for permanent vacancies, and were actively encouraged to apply. The
skills they had acquired on non-regular contracts did in some cases prove beneficial to their
application, if these skills were part of the of the person specification for the permanent position.
5.6 Cycling between permanent and non-regular work within companies
Survey evidence suggests that employers regularly change their overall mix of regular and nonregular workers. A study of the construction sector by Forde et al. (2009) found that around 30% of
firms sampled had made a conscious shift in their use of regular and the panoply of non-regular
contract alternatives over the last 5 years. In terms of the non-regular arrangements considered in
the present study, the most common shifts observed were away from direct employment to selfemployment, and from agency employment and self employment to direct employment (for further
evidence of employer strategies towards contingent and regular employment, see White et al.,
2004).
However, movement of workers back and forth between permanent and non-regular employment
status within the same company appears to be rare. In some sectors, workers have historically
moved between independent contractor, permanent employment, self-employed and agency status,
with their motives driven by the differential tax treatment of these statuses. Harvey (2001), for
example, reports the prevalence of ‘false’ self employment within the construction industry, where
workers were historically employed on self-employed contracts (even though they were dependent
upon a single employer for employment). Shifts between permanent, agency and self-employed
statuses often reflected changes in the tax provisions and benefits, for both employers and workers,
of these different states (see Harvey, 2001).
41
The case studies conducted for this project did reveal some evidence of movements back and forth
between regular and non-regular employment. In CarCo, some workers moved from agency to
permanent and back to agency contracts, dependent upon annual headcount targets (see Section
5.2 above). In EducationCo, movements back and forth between regular and non-regular
employment tended to occur as a result of worker demands for flexible working patterns. In
particular, workers were able to request a move from full-time to part-time work. Until recently,
such requests had generally been accepted, if a sound business case could be made. However, the
economic recession had impacted upon this situation, and there was less evidence of requests for
flexible working hours being accepted by the company.
42
6. Equal Treatment of Non-Regular Workers
6.1 Introduction
Many studies have suggested that non-regular jobs are inferior in terms of pay and conditions, and
overall job quality, when compared to regular employment. In this chapter we assess these claims,
using national level survey data and evidence from our case studies. We begin by looking at national
level data on job quality in non-regular work, along with some initial observations from our case
studies. This sets the scene for a more detailed discussion of particular aspects of non-regular jobs,
in comparison to permanent employment. We look in turn at working hours, wages, leave, skill
development, progression and membership of unions.
6.2 Non-regular job characteristics
6.2.1 Overall quality of non-regular jobs
Nationally representative data on the characteristics of non-regular jobs, compared to regular
employment can be found in a recent study by McGovern et al. (2004). Using the 2000 Working In
Britain survey, McGovern et al. focus on the characteristics of ‘bad jobs’ which they define as having
at least one of the following characteristics: low pay; no sick pay; no pension provision (beyond the
state scheme) and not being part of an internal labour market with opportunities for progression.
Taking all regular and non-regular jobs, they find that over one quarter of all employees (28.9%) are
low paid, just over one third have no pension (36.7%), a similar proportion have no sick pay (36.1%),
and half are in jobs that do not have a recognized promotion ladder (51.1%) (McGovern et al. 2004:
230). Only 1 in 4 (27.9%) of the British labour force are in jobs that are not bad along any of these
dimensions.
They then compare the characteristics of permanent jobs with a variety of non-regular jobs,
including temporary (a term including casual, seasonal and agency jobs), fixed-term and part-time
employment. Across each of these 4 dimensions, they find that non-regular jobs are generally worse
than permanent jobs. Their findings are summarised in table 6.1 below.
Table 6.1 Characteristics of regular and non-regular jobs
% of all
employees
in these
jobs
Full-time permanent
71.2
Full-time temporary
6
Full-time fixed- term
2.6
Part-time permanent
20.1
Part-time temporary
2.7
Part-time fixed term
1
All workers
100
Source: Mcgovern et al. (2004).
% with
low
wages
% with
no sick
pay
% with
no
pension
% with
no career
ladder
Mean number
of ‘bad’
characteristics
21.4
32.0
13.7
52.7
32.0
29.7
28.9
29.2
53.7
47.6
50.3
53.7
57.0
36.1
29.0
57.4
43.0
54.3
57.4
51.1
36.7
44.9
64.4
58.4
68.2
64.4
46.2
51.1
1.21
2.07
1.72
2.18
2.07
1.87
1.48
43
Temporary jobs (both part-time and full time) have the highest number of ‘bad’ job characteristics.
Part-time jobs are generally worse than their full-time equivalents. Compared to full-time
permanent jobs, temporary and fixed term full-time jobs are particularly poor in terms of sick pay
and pension provision. However, across each of the four characteristics, McGovern et al. find that
temporary and fixed-term jobs are worse than their permanent equivalents. However, the authors
note that non-regular workers do not have a monopoly on ‘bad’ job characteristics; many
permanent jobs are also poor along these dimensions.
In a multivariate setting, McGovern et al. (2004: 242) then control for a variety of personal
characteristics that might affect job quality (e.g. years of education, unionisation, sector, workplace
size). After including these controls, they find that non-regular jobs remain, on average, inferior to
regular jobs. Differences are less marked for those with high levels of education, in professional or
managerial occupations, in unionised settings and in larger workplaces.
The case studies examined in this report also revealed insights into the overall quality of non-regular
and regular employment. In EducationCo, non-regular workers tended to be used to cover peaks in
demand or to provide specialist skills. In cases where non-regular workers were being used to
provide specialist skills (for example, educational consultants employed as independent contractors,
or ‘healthy eating’ consultants bought in EducationCo on fixed-term contracts) the job description
for these workers, and their skill-set was not directly comparable to any permanent position.
However, all employees within EducationCo (regular and non-regular) were remunerated within the
Council’s pay grading structure. This structure allowed for the identification of comparable
competences between non-regular and regular staff (even though the precise roles being
undertaken by some non-regular staff were often unique).
Comparability of terms and conditions for non-regular staff had become increasingly important to
EducationCo since the implementation of fixed-term contract and part-time working directives from
Europe, which legislated for equal treatment of these staff to comparable permanent employees.
The Council’s grading structure was the main mechanism through which EducationCo sought to
ensure compliance with the regulations. The responsibility and autonomy granted to non-regular
workers varied from individual to individual. The HR manager interviewed for the project gave
examples of cases where non-regular workers had a high degree of autonomy and discretion (for
example, independent contractors, working on particular initiatives across schools in the area). The
level of autonomy and discretion might be reflected in the level that these workers were placed in
the Council’s pay grading structure.
At FoodCo there was no difference between temporary probationary staff and permanent staff in
terms of their qualifications and generic skills – both permanent and temporary staff were employed
undertaking comparable work on the assembly line production process. Positions of responsibility
and authority (team leader and deputy team leader) were only given to permanent staff. Permanent
employees also had higher levels of firm-specific skills, acquired through the induction programme,
and through other training programmes undertaken once they had been made permanent.
At CarCo, the scope of work undertaken by agency workers was identical to regular staff. ‘Temporary
temps’ (employed on relatively a short-term basis) by the company would not expect to have the
levels of responsibility of regular staff. But there were little differences between the responsibility
and authority levels that could be reached by ‘permanent temps’ (employed on a quasi-continuous
44
basis by CarCo). These temps were seen as part of the long-term workforce of the company, even
though material terms and conditions provided to these temps were inferior to directly employed
regular employees (see below).
6.2.2 Working Hours
Data from the Labour Force survey can be used to examine working hours for regular and nonregular workers. Recent data (from December 2008-February 2009) reveals 54% of all those in
employment work between 31 and 45 hours a week, whilst 19% of all those in employment work
over 45 hours a week. For men, a higher proportion work full-time (ONS, 2009b) with 60% working
31 to 45 hours a week, whilst 27% work over 45 hours per week. For women, 47% work 31 to 45
hours a week, whilst 7% work over 45 hours per week (ONS, 2009b). Looking at non-regular work,
the same source reveals that a high proportion of self-employed work long hours (over 45 hours per
week). Some 41% of all of the self-employed work 31 to 45 hours per week, whilst 30% work more
than 45 hours per week (ONS, 2009b). This is in keeping with other studies that have pointed to the
‘long hours’ culture associated with self-employment (TUC, 2009b).
For temporary workers, Green (2008) using Labour Force Survey data, finds that average usual
weekly hours for fixed-term contract workers stand at 34 hours a week, comparable to average
weekly hours for permanent staff. Seasonal/casual workers, on average, have lower usual working
hours, standing at 19 hours per week. Agency workers have average weekly working hours of 36 per
week and qualitative evidence suggests that ‘long-hours’ working is also commonplace amongst
agency workers (see e.g. ACAS, 2009; Forde, 2001; McDowell et al., 2008).
6.2.3 Wages
It is widely assumed that non-regular jobs are lower paid than comparable regular jobs, but what
does the evidence suggest? Comparable data for temporary jobs is available from Forde et al. (2008),
using the Labour Force Survey. Table 6.3 compares the hourly pay various forms of temporary job to
permanent jobs. Panel A shows the mean hourly wage by contract type. On average, all forms of
temporary job, with the exception of fixed-term contracts are paid considerably less per hour than
permanent employees. The ‘raw’ hourly wage differential is reported in Panel B, both in pounds and
as a proportion of the permanent wage. For example, the average hourly wage gap between
permanent and agency workers is £3.67 per hour (a 32% differential) and this figure rises to £5.22
per hour for male agency workers (a 41% differential). For female agency workers the hourly wage
gap is £1.89 (a 19% differential). Panel B also indicates whether the differences reported between
temporary and permanent workers’ average pay are statistically significant. With the exception of
fixed term contracts, the wage gaps are highly statistically significant and so a high degree of
confidence can be placed on the estimated differentials.
However, it is not sufficient to focus simply on the absolute wage differentials. A proportion of the
wage gap will be due to the different characteristics of temporary and permanent workers, such as
qualifications, age, job tenure, occupation, industry etc. Panel C reports the results of analysis that
takes these variations into account (using multiple regression analysis). As expected, the size of the
differential between agency, seasonal/casual and other temporary jobs on the one hand, and
permanent jobs drops (compare with Panel B), but a marked difference remains. Again, focusing in
on agency work, controlling for differences in characteristics, agency pay is 10% lower per hour. For
men, the gap is over 12% whilst for women it is nearly 6%. By way of comparison, it is interesting to
45
note that there is no significant wage penalty for fixed term contract workers (who are subject to
equal treatment legislation) whilst male agency workers experience a larger wage penalty than
comparable seasonal and casual workers.
Table 6.3 Hourly wages by contract type and gender, UK, 2007
All
Men
Women
A) Hourly wage (£)
Permanent (p)
11.47
12.70
10.15
Agency (a)
7.80
7.49
8.26
Fixed term (f)
11.44
12.64
10.48
Seasonal/
casual (sc)
Other temporary (o)
6.42
6.86
6.06
8.80
8.74
8.85
B) Wage difference (in £s)
(proportional gap between permanent and temporary in brackets)
(p) – (a)
3.67***
5.22***
(-32%)
(-41%)
1.89***
(-19%)
(p) – (f)
0.03
(-0.3%)
0.07
(-0.6%)
-0.33
(+3%)
(p) – (sc)
5.05***
(-44%)
5.84***
(-46%)
4.09***
(-40%)
(p) – (o)
2.68***
(-23%)
3.96***
(-31%)
1.30***
(-13%)
C) Wage differentials after controlling for worker characteristics
(hourly wage gap between permanent and temporary work, %)
Agency
-10.0***
-12.4***
-5.5**
Fixed-term
-3.3**
-4.4
-2.4
Seasonal/casual
-6.9***
-2.6
-11.4***
Other temporary
-12.9***
-16.2***
-10.9***
Source: Labour Force Survey, pooled quarterly datasets Jan/March – Oct./Dec. 2007.
Notes: Wages in constant (Spring 2007) pounds; data are weighted. Panel B: significance test of
difference in average wage included; Panel C: estimated by ordinary least squares regression;
significance test shown is of difference of estimate from zero: * indicates significant at 10% level
**significant at the 5% level *** significant at 1% level (no star signifies result is not statistically
significantly different from comparator). Full results available on request from authors.
Source: Forde et al., (2008)
46
Overall, this analysis shows significant wage differentials for agency, seasonal/casual and other
temporary workers, even after controlling for a range of factors that might explain the ‘raw’
differences.
For part-time workers, Hicks and Thomas (2009) using data from the Annual Survey of Hours and
Earnings (ASHE) find that average hourly pay for part-time workers £10.17, whilst for full-timers it is
£14.53 (a difference of 30%). For men, part-time average hourly earnings are £11.35, compared to
£15.34 for full-timers. For women average hourly earnings are £9.85 for part-timers compared to
£12.88 for full-timers. Table 6.4 summarises some recent evidence from the UK. Since part-time
work is dominated by women, studies often focus on the link between part-time and gender pay
discrimination. The first column of table 6.4 shows the simple, ‘raw’ gap between hourly earnings.
The second column shows the ‘adjusted’ gap, which is the difference in pay remaining when
variations in individual characteristics (age, qualifications etc.) are controlled for. The final column
shows how much of the raw gap is explained by those characteristics. The penalty for female parttime work is remarkably stable at 11%, compared with men. For women, the penalty to working
part-time rather than full-time is much smaller, but this masks the fact that women on average are
paid 11% less than men in the UK, even accounting for their differences (row 1 of table 6.4).
Table 6.4 Part-time hourly wage gaps by gender, UK, 1998–2004
Unadjusted gap
(%)
All female
employees to all
men
Full-time female to
full-time male
Female part-time
to male full-time
Female part-time
to male part-time
Female part-time
to female full-time
Percentage of gap
explained
23
Adjusted gap
(%)
11
14
10
29
37
11
70
20
11
45
25
2.5
90
52
Source: adapted from Metcalf (2009).
Manning and Petrongolo (2008) show that the part-time pay penalty for women has been rising
since the mid-1970s but they demonstrate that only half of the gap can be attributed to the
characteristics of the women working part-time. The remainder stems from the concentration of
part-time jobs in low-paid occupations. They show that the rise in this element derives in equal
measure from the growing segregation of part-time jobs in low-wage occupations and the impact of
the increase in overall wage inequality the level of pay in these low-wage jobs.
The case studies conducted for the project provide more detailed insights into pay equality and
differences. At FoodCo, all temporary staff were paid at the minimum wage of £5.80 per hour.
Differentials in pay were due to length of tenure, rather than due to the form of employment
contract that they were on. On transfer to a permanent contract after 3 months probation workers
did not automatically receive an increase in pay; these came after a period on an open-ended
contract. After each year of service, workers were also entitled to an annual increment. On
47
permanent employment contracts, workers also became eligible for the bonus system in the
company, which was paid annually, in relation to the company’s profitability, and for a range of
other benefits (see below).
In EducationCo, pay rates for all types of contracts were set in accordance with public sector agreed
pay rates. This meant that temporary and part-time staff were on comparable rates of hourly pay to
permanent staff, in line with Equal Treatment legislation for these workers. The HR manager at
EducationCo noted that workers would be recruited to a particular grade of job, which would have
an associated band of wage rates or salaries. Within this band, there was some discretion over
where a temporary or casual worker might be placed, so that some marginal differences in hourly
wages or monthly salaries between temporary and part-time staff might occur. Framework
agreements and public sector pay scales imposed some uniformity in pay rates between temporary,
part-time and permanent staff doing comparable work, and this uniformity had increased since the
implementation of EU fixed-term contract and part-time working directives. For agency staff, again,
hourly wage rates or salaries were determined by the skill level and competencies of a particular job,
although there was sometimes some movement in these agreed rates for agency staff, often
upwards, if particular types of agency worker proved difficult to recruit. This movement would still
be within a particular band or grade of job, in line with nationally agreed public sector pay scales.
In CarCo, nearly all non-regular workers were employed on agency contracts (10% of the total
workforce). Here, there were clear differences between pay rates for agency and permanent staff,
although in terms of other non-pay related benefits, agency workers and permanent workers were
treated comparably. Agency workers, even those ‘permanent temps’ who had accrued tenure levels
of 5 years or more, received an hourly rate of pay which was lower than permanent workers
undertaking the same job. This was a deliberate strategy used by the company to save costs and to
segment the workforce, yet as the Employee Relations Manager noted, it did have potentially
negative consequences:
‘the pay element is an issue, we are really good at giving benefits to employees, permanent,
temporary, agency whatever we are really good at doing it but we are not very good at pay....
I mean we pay really well as a Company and yet we don’t pay our agency very well. So that is
going to be a problem because we have such a lot of people that are not getting paid
comparably to permanent employees’ (Employee Relations Manager, CarCo).
6.2.4 Holiday leave and other entitlements
Under current labour law, non-regular workers are entitled to a range of rights under the provisions
of the National Minimum Wage and Working Time Regulations, either as ‘employees’ or ‘workers’.
The Working Time Regulations provides entitlement to 24 days of paid holiday per year (pro-rata for
those working part-time).
Table 6.5 provides details of actual holiday periods, as reported by UK temporary workers in the LFS.
To ensure comparability, the analysis here focuses on full-time workers only. The results indicate
that fixed-term contract workers receive comparable leave to permanent full-time employees.
48
However, other temporary workers, casual/seasonal temporary workers and agency temps receive
lower levels of annual paid holiday entitlement.
Table 6.5 Annual paid holiday entitlement, full-time workers, UK, 2007
Days
Weeks
Permanent
26.5
5.3
Agency
20.2
4.0
Fixed-term
26.8
5.4
Seasonal/casual
19.8
4.0
Other temporary
22.2
4.4
Source: Forde et al., (2008)
The case studies reveal that in terms of leave, there were some differences in treatment between
temporary and permanent staff, although this was not universal. In CarCo, ‘permanent temporary’
workers (those who had been working through an agency with the company for a long period) were
entitled to broadly similar levels of benefits to permanent staff, including leave and payment for
maternity leave. But they were not included in some company schemes such as the company car
ownership scheme. Benefits for both short-term and long-term temporary agency staff were
administered through the employment agency, rather than through the company itself:
‘it is managed through the agency so we tell the agency what an employee would get and
they would give them those things and we would pay for that’ (Employee Relations Manager,
CarCo).
In EducationCo, most non-regular workers (including fixed-term contract staff, casuals and part-time
staff) received comparable treatment to permanent employees in terms of leave. For agency
workers and many consultants, an allowance to cover leave was included in wage rates. For example,
fees charged by agencies would include a percentage to cover leave, and leave arrangements would
be administred by the employment agency.
In FoodCo, all workers were provided with statutory levels of annual leave. However, for permanent
workers only, this was was ‘topped up’ by the company with additional leave, connected to
individual performance. Permanent workers who performed well in appraisals, were given financial
incentives and additional leave. The company’s heavy use of migrant workers had led the firm to
develop a policy of providing airline tickets to workers who performed well in appraisals, which
workers used to visit families in Eastern Europe. The firm also had a work based bonus system,
where permanent employees could accrue points for undertaking overtime and high levels of
49
attendance. If they accrued high levels of points over a six month period, they were rewarded with
an additional week of paid holiday. The company argued that it made no business sense to open
these benefits to temporary staff, as there was no certainty until they were made permanent that
they would remain with the company long enough for the firm to recoup any investments made.
6.2.5 Training and skill development
There is widespread evidence that workers on regular and non-regular contracts receive different
levels of training and opportunities for skill development. Forde, MacKenzie and Robinson (2008)
examine employers’ use of non-regular workers (subcontractors, self-employed and agency labour)
in the construction sector. Based on a survey of 188 employers, they found that employers were
much more likely to provide training for direct staff than non-regular workers. Of firms using
subcontractors alongside direct staff, 7% did not provide training for direct staff, whilst 37% did not
provide training for subcontractors. For firms using self-employed and direct staff, 11% did not
provide training for direct staff, whilst 44% did not provide training for self-employed staff.
Differences were most marked between direct and agency staff. Of firms using both direct and
agency staff, 5.4% did not provide training for direct staff, whilst 42.4% did not provide training for
agency staff (Forde, MacKenzie and Robinson, 2008: 377). Training for non-regular workers was
often limited to on-the job training rather than formal on or off-site training (the latter being seen as
more expensive) (Forde, MacKenzie and Robinson, 2008: 379).
Large-scale surveys of employees also point to marked differences between non-regular and regular
staff in terms of training provision. Booth et al. (2002) using British Household Panel Survey Data
find that the male probability of receiving work-related training was 12% lower for workers on fixedterm contracts and 20% lower for men on seasonal-casual contracts, relative to permanent workers,
controlling for other factors. Female workers on fixed term contracts have a 7% lower probability
than permanent workers of being trained, while seasonal-casual females have a 15% lower
probability. Training intensity is also markedly lower for seasonal and casual workers. This group
tend to receive 9-12 days less training per year than their permanent counterparts. However, there
is no differential in training intensity between fixed-term contract and permanent workers (Booth et
al., 2002).
This issue is also examined by Forde, Slater and Green (2008), using Labour Force Survey data. They
found differences in training provision amongst different forms of temporary worker (see Table ??
below). In this survey, seasonal/casual, fixed-term and other temporary workers appear to receive
comparable or greater levels of training to permanent workers, However, agency workers receive
much less training than all other groups of temporary workers and permanent employees, with less
than 1 in 5 experiencing training of any type in the previous three months. Turning to training
received in the last four weeks, the proportion drops to 9 % - less than half the incidence of other
temporary workers, including casual and seasonal staff. This difference would seem sufficiently large
to raise some concerns about the developmental needs of the agency workforce.
50
Table 6.6 Incidence of training by job type, UK, 2007
Any training in last 3
months, %
Any training in last 4
weeks, %
Permanent
28.5
14.4
Agency
17.1
9.2
Fixed-term
37.6
22.3
Seasonal/casual
28.0
20.9
Other temporary
34.0
20.8
Source: Forde et al. (2008), analysis of Labour Force Survey, April-June 2007
The finding of a training penalty for temporary workers is confirmed by Arulampalam and Booth
(1998). The authors also explore the experience of part-time workers, and report that male parttime workers are 7% less likely to receive work-related training than full-time men, while female
part-time workers are 9% less likely to receive work-related training than their full-time counterparts.
What is the evidence from the case studies conducted for this project in relation to training and skills
development? At CarCo, agency workers received minimal training, even if they were a ‘permanent
temp’, with long tenure at the company. This strategy stood in stark contrast to the strategy towards
training adopted for permanent staff, as explained by the employee relations manager:
‘We have a massive budget for training generally for the whole company we are very into
training but yes you wouldn’t get (access to this) if you were a temp.... you wouldn’t get on
to those training courses......you would get on the job training and that would be it’.
(Employee Relations Manager, CarCo).
At EducationCo, workers on fixed-term or seasonal contracts were provided with training ‘as and
when, to meet the needs of their job’. However, in contrast to the strategy towards training adopted
for permanent staff, non-regular temporary, agency and self-employed workers were generally
expected to have the necessary skills on arrival in the company. Training provision was concentrated
on full-time and part-time directly employed staff. Training would be provided to other non-regular
workers to meet health and safety and to comply with legislation, however, the expectation of the
company was that they were ‘buying in’ skills from the market when using non-regular temporary,
agency and self-employed workers.
At FoodCo, most training opportunities were only available to permanent staff. Temporary workers
were provided with a four-day induction as a standard part of their probationary period, covering
health and safety and food handling issues. Other opportunities for training were limited to those
that had passed their probationary period and had been converted onto permanent open-ended
contracts. These opportunities were connected to progression in the company. Workers who were
51
selected to move to deputy team leader or team leader roles were entitled to further training and
skills development opportunities. However, such options were not open to temporary (or historically,
when the company used agencies, to agency staff). The Managing Director of the company took the
view that ‘there is no point trying to train temporary or agency staff’.
6.2.6 Opportunities for progression
The case studies revealed some opportunities for progression for temporary workers. However,
many of the opportunities were limited to permanent staff. In FoodCo, temporary workers were
made aware, during their 3 month probationary period of the possibilities for progressing to deputy
team leader or team leader status, with associated higher levels of pay. However, until they were
made permanent, they were unable to progress. Higher pay rates attached to team leader status
was one of the key mechanisms used by FoodCo to retain staff and minimise poaching from other
companies:
‘(when they are permanent) our workers can go from £5.80 to £9.80 to £11.80 but
otherwise .....they may move for an extra 10p’ (Managing Director, FoodCo)
At CarCo, there were limited opportunities for progression for temporary staff, since although
agency staff were fulfilling many core roles in the firm, at a number of different levels, they
remained as agency workers. The organisation sought to keep, above all, to keep them on agency
terms, since there were financial and strategic benefits to having a group of ‘permanent temps’:
‘So the likelihood is that the person who is in that (agency) role will be a perm temp because
they will always be needed so we need to give them some kind of benefit for staying with us
on an agency contract....but progression....would be very limited..... to be honest. The
Company likes temps who don’t want to do anything just do their job and kind of be quiet’
(Employee Relations Manager, CarCo).
6.2.7 Union membership
In the UK, participation of non-regular workers in labour unions is less extensive than regular
workers. Grainger and Crowther (2007) find that union density for permanent employees was 29%
whilst it stood at 17% for temporary employees. In the private sector, the figures were 17% density
for permanent staff and only 8% for temporary staff, whilst in the public sector, the figures were 61%
density for permanent staff and 33% for temporary staff. There were also difference between parttime and full-time workers. For full-time workers, union density stood at 31% whilst it was 21% for
part-time workers. Heery (2009) reports that many unions, following long-standing opposition to
non-regular ‘contingent’ labour, have begun to develop strategies reflecting a greater acceptance
towards contingent workers. However, there remain differences in attitudes towards particular
groups of contingent labour (for example agency labour) (see also MacKenzie, 2010).
52
6.3 Equal treatment with regular employees
The analysis in section 6.2.3 above reveals that pay gaps between regular and non-regular workers
often remain after controls are included to account for different personal and employment
characteristics of those undertaking regular and non-regular work. Forde et al. (2008) find significant
differences in hourly pay for agency, seasonal/casual and other temporary workers, even after
controlling for variations in personal and employment characteristics (see also Booth et al., 2002).
For self-employment, Parker (2004) finds that income inequality for self-employed workers is greater
than for regular employees. In other words, self-employed workers are to be found
disproportionately at the top end and the bottom end of income distributions. Given the polarised
occupational and industrial pattern of self-employment in the UK, discussed in Chapter 3, this is not
surprising. Indeed, some attribute part of the rising inequality in income in the UK over the 1980s
and early 1990s to the rise in self-employment that occurred over this period (see Parker, 2004, for a
review).
The case studies revealed mixed evidence on the extent of equity in treatment for regular and nonregular employees doing the same job. In EducationCo, public sector pay scales and grading
structures, in which non-regular workers were typically placed, helped to minimise discrepancies in
treatment for workers undertaking comparable work. In FoodCo, temporary and permanent
employees undertaking identical work were on similar hourly wage rates, but were entitled to
different work-related benefits, training and opportunities for promotion. Finally at CarCo, agency
workers, even where they were performing similar tasks to regular employees, appeared to receive
different hourly wage rates. However, the implementation of the European Directive on agency
working within the UK is likely to reduce such wage differentials between agency and comparable
permanent staff.
53
7. Employment Stability
7.1 Introduction
Do non-regular workers often have lower levels of employment stability than other groups of
workers? For example, it may be the case that temporary workers may ‘churn’ through a series of
short-term employment relationships, or that agency workers experience discontinuities in their
assignments. What are the legal regulations pertaining to employment security for different groups
of non-regular workers? In this chapter, we look at the length of non-regular employment contracts
drawing on survey evidence and data from the three case studies conducted for the project. We
then look at what conditions non-regular employees have to satisfy to renew their contracts. Thirdly,
we look at how often non-regular contracts are renewed, using the case studies for primary
evidence. Fourthly, we look at how often contracts can be repeatedly renewed. Finally, we review
some of the essential points of employment security regulations for non-regular employment.
7.2 How long are single contract periods for non-regular workers?
To address the question of how long single contracts for non-regular workers are, we draw on our
own ongoing research of temporary workers (see Forde and Slater, 2010). Using Labour Force Survey
data from 2008, we are able to compare average tenure levels for permanent employees, fixed-term
contract, agency, seasonal/casual and other temporary workers, and for self-employed workers. We
make the distinction between self-employed agency workers and other self employed, since our
research suggests that there are some important differences between these two types of selfemployed worker.
Average elapsed tenure levels for each of these groups are reported in table 7.1 below. Elapsed
tenure for all forms of temporary worker is much lower than for permanent employees. For example,
for fixed term contract workers, average elapsed tenure levels are 3 years and 2 months, compared
to almost 8 years for fixed-term workers. However, self-employed workers (discounting those who
work through agencies) tend to have long elapsed job tenures when compared to the permanent
workforce. It is important to note that the average values for temporary workers are skewed by a
very few extreme values. For example, the majority of agency workers will not have been in their
jobs for as long as 15 months. Research by Forde et al. (2008) finds that the median length of current
tenure for agency workers is much shorter, at 4.5 months, whilst the most common response to the
Labour Force Survey question of ‘how many months has your job lasted’ for agency workers is 1
month.
Table 7.1 Length of temporary jobs
Type of worker
Permanent
employee
SelfSelfAgency
employed employed temporary
agency
worker
Fixedterm
contract
Seasonal/
casual
Other
Tenure (months)
95
138
38
29
47
75
15
Source: Forde and Slater (2010)
54
These lower levels of tenure for agency workers can be seen through a closer examination of current
tenure figures, using 2007 LFS data (mean tenure levels are not directly comparable with table 7.2
above, since below we use 2007 data rather than 2008 data). Nearly one-quarter of agency workers
have tenure of less than 2 months, half have tenure of less than 6 months, and 73 % have current
tenure of less than 1 year.
Table 7.2 Agency workers and job tenure
Average tenure measure
Months
Mean
Median
Mode
Proportion of agency workers with tenure
of less than….
13.3
4.5
1
(cumulative %)
1 month
2 months
3 months
6 months
1 year
18 months
2 years
5 years
9
22
30
53
73
82
87
96
Source: Forde et al. (2008)
The case study research revealed further insights into contract periods for non-regular staff. In
EducationCo, contracts varied depending upon non-regular employment type. Self-employed
contractors, in some circumstances, were able to acquire tenure levels comparable to many
permanent staff. This was the case if the contractor was performing a role that was required over a
long period, for example, some educational consultants. However, EducationCo sought to recruit on
a more permanent basis if there was a long-term need. Fixed term contracts varied from anything
from 3 months to 2 years or more. Agency contracts were typically shorter in length. Part-time
workers were very common in EducationCo and tenure levels for part-timers were comparable to
full-time employees.
In FoodCo, there was only one form of non-regular contract: temporary staff. They were employed
on a single three month temporary contract. Workers on this contract were made permanent after
this period, following successful completion of probation. Temporary contracts were not renewed:
the company made ‘yes or no’ decisions on the suitability of staff for permanent employment after
this three month period. In the past, FoodCo had also used agency staff. These were employed on
very short-term contracts, typically for a few days or weeks, to cover a temporary peak in demand.
These agency contracts were not typically renewed.
In CarCo, most non regular workers were employed on agency contracts. The length of these agency
contracts was either ‘short-term’ (up to one year in length – workers on these contracts were called
55
‘temporary temps’) or longer-term. Interestingly, the longer-term agency contracts were typically
open-ended. The company reported that some permanent temps had acquired tenure levels of five
years or more, and were essentially viewed as ‘quasi-permanent’ by the company, if they were filling
a role that used to be undertaken by a permanent member of staff:
‘Because you do get...you can get security of employment, if you happen to get put in a role
where the (permanent job)...has been reduced, your job will always be there, it is not going
to go anywhere....so you are pretty much guaranteed that you are going to keep your job for
10 years or whatever’ (Employee Relations Manager, CarCo).
7.3 What conditions must non-regular workers satisfy when renewing their
contracts?
The conditions that non-regular workers needed to satisfy to move to permanent employment have
already been examined in section 5.2 above. Here, we examine conditions required for workers to
have their temporary contract renewed. In FoodCo, as noted in section 7.2 above, temporary
contracts were typically not renewed, hence there were no conditions to examine. In EducationCo,
fixed-term contracts could be renewed, subject to satisfactory job performance. Casual and agency
contracts were typically not renewed, although there was some flexibility on this if a short-term
need developed into a longer-term requirement. Council and government budgets were a critical
determinant of whether fixed-term contracts could be renewed and had an impact upon the length
of self-employed, agency and casual contracts. In the current economic environment, in the light of
local and central government budget cuts, EducationCo was seeking to examine its use of
consultants and also agency staff. In an attempt to cut costs, they had sought to develop their own
bank of temporary staff, as alternative to using agencies. This was expected to have an effect on the
use of agency staff and the length of agency contracts.
In CarCo, as noted in section 7.2, the company actively sought to retain workers on agency contracts.
Temporary temps often moved to ‘permanent temp’ status. Contracts for permanent temps were
typically open ended, or could be renewed any number of times. At present, there are no regulatory
restrictions on renewing agency contracts. The criteria used by the company for renewal focused on
objective performance criteria (for permanent temps, a standard appraisal was often undertaken by
a line manager). Subjective criteria were also seen to be important, particularly those that gave the
company some confidence that the permanent temp would want to stay on an agency contract. The
Employee relations Manager noted that they company was looking for temps who would just ‘do
their job...and kind of be quiet’ (see section 4.5 above).
7.4 How often can a contract be repeatedly renewed?
For fixed-term contract workers in the UK, the EU Fixed-Term Contract Directive (implemented in
2002) stipulates that an employee can be kept on successive fixed-term contracts for a limit of four
years. If a contract is extended beyond that, a fixed-term contract worker will become a permanent
employee. This is unless the employer can show a good reason why a worker should stay on a fixedterm contract. (DirectGov, 2009).
56
The four-year limit was introduced to prevent employers abusing the use of successive fixed-term
contracts to limit employees' employment rights. In some circumstances, the limit can be changed
by employers and employees agreeing a 'workforce' or 'collective' agreement. This agreement would
then provide an alternative scheme for preventing the abuse of fixed-term contracts. Workplace or
collective agreements can vary the limit on the length or number of successive contracts used by an
employer. They can also limit the use of successive contracts and set a list of reasons to justify
renewals of fixed-term contracts (DirectGov, 2009).
These limits also apply to casual and seasonal workers who have contracts with their employer,
effectively placing a limit of four years continuous length on these contracts, before the worker
would be entitled to a permanent position. However, at present, there is no legislation limiting the
renewal of agency contracts. The UK government is set to implement the European Agency Working
Directive in 2011. This will not place a limit on the number of times that an agency contract can be
renewed.
In the case of agency workers, the ‘triangular’ nature of the relationship between agency worker,
agency and employer may also impact upon the length of agency contract, and the number of times
a contract is renewed in practice. ‘Temp-to-perm’ contracts between agencies and employers, in
place at many agencies, seek to formalise the length of time a worker is on a temporary contract.
The agency industry has argued that these contracts offer a ‘stepping stone’ to permanent
employment. Forde (2001) has examined the operation of these schemes in practice. He found that
temp to perm schemes typically specified a temporary contract of between 6 to 13 weeks, thus
‘locking in’ an employer to a relatively lengthy agency assignment. During this period, the agency
secured a regular hourly fee from the firm for supplying the worker. If a worker was taken on
permanently, the agency would also secure a signing on fee from the employer, often between 1020% of the total wages over the temporary contract period.
In the case studies conducted for this project, there was no evidence of firms’ being ‘locked in’ by
the length of these temp-to-perm schemes. At CarCo, where agency workers formed 10% of the
workforce, agency contracts were open-ended, and could be ended by the firm at any time
(although in practice, they were often relatively long). However, there was some evidence that the
payment of a temp-to-perm fee did have an impact upon the length of agency contracts. CarCo did
not want to pay a ‘temp-to-perm fee’ when making an agency worker permanent, and had taken
action to try and avoid such a fee:
‘we tried our utmost to get out of paying the transfer fee. We have had some finance
people that have come in on agency contracts with a view to going permanent and we have
kept them on agency and then tried to avoid the transfer fee...we try and avoid the fee but
we have got quite a good relationship with the agency so they are quite happy to waive the
fee to keep the business. (Employee Relations Manager, CarCo).
57
7.5 Employment security regulations for non-regular workers
All employees and workers in the UK are entitled to a range of basic employment rights, including
the National Minimum Wage and Working Time Regulations (see table 2.2). Employees are entitled
to a range of additional rights relating to statutory sick pay, minimum notice period if a contract is to
be terminated; maternity and paternity pay; and protection against unfair dismissal. For non-regular
workers, employee rights vary. As employees, part-time employees are entitled to identical
employment rights to full-time employees. The EU part-time working directive, transposed into UK
law in 2000, also entitles part-time employees to comparable treatment (in terms of pay, for
example) to full-time employees. Only if the employer can demonstrate 'objective justification' for
different treatment is deviation from the principle of equality permitted. Practically this means that
the employer has to show that the reason is necessary and a legitimate means to meet a genuine
aim of the business, rather than because of the part-time status of the individual.
The EU Fixed-Term Contract Directive was transposed into UK law in 2002. This covers fixed-term,
contract, seasonal and casual staff with contracts with their employers, and offers temporary
workers (excluding agency workers) equal treatment in terms of pay, and some other conditions of
work, to comparable permanent workers (see DirectGov, 2009). Agency workers are entitled to basic
employment rights as stipulated by the National Minimum Wage and the Working Time Regulations.
However, agency workers are not currently entitled to equal treatment with comparable permanent
workers, although the EU Agency Working Directive will, when implemented, extend rights for
agency workers. It will provide them with equal treatment after 12 weeks continuous employment
with a client firm (see BIS, 2010). It is due to be implemented in the UK in 2011.
Employment legislation does not generally cover self-employed people. Self-employed workers do
benefit from protection for health and safety and, in some cases, protection against discrimination.
Rights and responsibilities for self-employed workers would be set out by the terms of the contract
with a client.
Green (2008) reviews the impact of the first 2 years of the Fixed-term Work Directive in the UK. He
argues that it has improved legal protection for fixed term contract staff, due to the ‘nondiscriminatory’ approach adopted in the regulations, along with strict limits on the duration of fixed
term contracts. However, he notes that up to half of casual staff (those without a contract with
their employer but effectively working on short fixed-term contracts) are not covered by the
provisions of the fixed-term contract regulations (Green, 2008). He also notes the ‘glaring’ gap in
employment protection for agency workers.
58
8. Non-regular Workers and the Economic Crisis
8.1 Introduction
The economic downturn since 2007 in the UK has had an impact upon the recruitment and selection
strategies and actions of employers. Many commentators have suggested that non-regular
employees will be affected most severely by restructuring and layoffs. What evidence is there to
back up these claims? In this chapter we begin by looking at how the economic recession has
affected non-regular workers in the UK. We then move on to look at rules for adjustment used by
companies in the UK, and innovative strategies of adjustment that have emerged during the current
recession. Finally, we consider the question of how unions have organised non-regular workers.
Where possible we draw on secondary source, along with direct evidence from our three case
studies.
8.2. Recession and non-regular workers in the UK
National-level data (reported in chapter 3) indicates that the recession has impacted in different
ways on individual forms of non-regular employment. The numbers in temporary employment
began to fall in the UK in the middle of 2007, reaching a trough towards the end of 2008. However,
they have risen, both in absolute terms and a percentage of total employment in 2009 and early
2010 (ONS, 2009; BBC, 2010). The numbers in self-employment rose over 2009, with particularly
sharp rises in the numbers of female self-employed (Grice, 2009). ‘Under-employment’, with
workers taking on part-time hours when they would prefer full-time employment, has also increased
during the economic recession (BBC, 2010).
An indication of the impact of the recession is shown in table 8.1 which charts the changing
composition of employment before and during the crisis.
Table 8.1 Changes in employment, UK, 2007 to 2009
Full-time employees
Part-time employees
Self-employed
Temporary employees
2007
18,964
6,396
3,821
1,485
2009
18,261
6,559
3,888
1,434
Thousands
Change
-703
+163
+67
-50
Notes: Full and part-time employees and temporary employees are not mutually exclusive categories (the
former will include the latter)
Source: ONS (2010), data for October to December quarter of LFS for each year.
8.3 Workforce adjustment and recession
In the three case studies examined for this project, the recession had impacted upon their use of
non-regular workers in very different ways. At EducationCo, the economic downturn and associated
budget cuts within central and local government had led to some fixed-term contracts not being
renewed. There had also been attempts to streamline the use of non-regular workers, for example
by reducing dependency upon agency staff and independent contractors. The HR manager
interviewed indicated that temporary staff would typically be ‘the first to go’ if jobs cuts were
59
needed, although other factors were also important, including skills and performance. However, it
was also noted that restrictions on permanent recruitment during the recession meant that
EducationCo had extended its use of temporary and agency staff as a means of filling important
roles. In the current economic climate, there was more flexibility for EducationCo to employ a
worker on a six-month or one year fixed-term contract than there was to employ someone on a
permanent basis.
At CarCo, job losses had occurred during the recession. Non-regular and regular employees had been
affected in largely similar ways:
‘It has been a total decrease in headcount....so we have had....a couple of compulsory
redundancies and a few dealership closures.......we are losing the same percentage across
the board of fixed term, agency and permanent heads’ (Employee Relations Manager,
CarCo).
The strategy adopted by the company, of employing agency temps on long-term open ended
contracts, meant that many had acquired firm specific skills. There were incentives, therefore to
retain these workers:
‘...so we do try and get rid of agency first, but it doesn’t always work that way, because you
have got someone who has been working here 10 years they have got the skill set that you
need so it is quite difficult’ (Employee Relations Manager, CarCo).
FoodCo reported that business had increased during the economic recession, and the company
continued to actively recruit employees.
8.4 Innovative changes to adjustment mechanisms
During the economic recession, there have been many examples of companies implementing
changes to their traditional adjustment mechanisms, some of which have impacted upon their use of
non-regular workers. In January 2009, for example, all 4,200 temporary and permanent Honda
workers in Swindon were temporarily laid off for 4 months, following a huge fall in demand for cars.
They resumed production in June 2009. In November 2008, 10,000 workers were laid off at British
Telecom, with the majority of these being agency and temporary staff. Under current legislation in
the UK, these workers were not entitled to redundancy pay. In February 2009, 850 agency workers
were amongst the first to be laid off, again without redundancy pay, at the BMW plant in Cowley
(see Bowcott and Hencke, 2009).
More generalisable evidence is available from a study conducted by the CBI in 2009, into employers’
responses to the recession (see CBI, 2009). Their survey of 704 firms found that most employers
were planning pay freezes (55%) or modest general increases in pay (39 %) in their next pay review.
Plans for pay freezes were most common in construction, retail and manufacturing (CBI, 2009). Two
60
thirds of employers were operating a recruitment freeze in part or all of their operations. The
majority of firms were making changes to their work patterns as a means of coping with the
economic downturn. The most popular changes to work patterns adopted by respondents were:
introducing more flexible working (45%); reducing overtime (43%); reducing use of agency staff
(33%); cutting shifts (26%); halting the use of agency workers (25%). Against this, 14% of
respondents said that they had increased the use of fixed-term contract workers (compared to 10%
who had reduced the use of fixed term contract workers). Furthermore, 7% had increased their use
of agency workers (all figures taken from CBI, 2009). On balance, this survey suggests that a key
response to the economic downturn by employers has been to reduce levels of non-regular workers.
However, there are examples of firms who have increased their use of non-regular workers.
8.5 Unions and the organisation of non-regular workers
We have already presented evidence on union density amongst non-regular workers. This evidence
revealed that non-regular workers were less likely than regular workers to be members of a trade
union. Heery (2009) provides a detailed analysis of the strategies of unions towards contingent
workers. He notes that many unions have historically pursued a strategy of opposition towards nonregular workers, on the basis that they undermine the collective terms and conditions agreed for
union members. Heery highlights four overall positions adopted by unions to non-regular workers:
exclusion; subordination (where contingent workers have secondary membership status and
reduced rights to participation); inclusion (contingent workers have equal rights to other union
members); and engagement (where contingent workers have differential rights, and there are
specialist union structures to ensure effective participation) (Heery, 2009). Heery notes a shift in the
policies of UK trade unions on non-regular workers away from exclusion and subordination, towards
inclusion and engagement. However, Heery’s research also reveals that only a minority of unions
have implemented specific actions to assist with the representation of contingent workers. Only 16%
of unions surveyed in his study had special subscription rates for fixed-term and agency staff. Only
18 % had targeted literature towards agency workers, and only 13 % had a targeted recruitment
campaign for agency workers (Heery, 2009: 433).
61
9. Conclusions
9.1 Key themes
This report has analysed non-regular working in the UK. There is no clear, secular trend towards an
increasing use of non-regular working either from employer surveys (such as WERS2004) or
household surveys (e.g. the LFS). Part-time working in the UK has been rising steadily for four
decades. Despite some, as yet largely anecdotal, evidence of an increase in part-time working in the
current recession, this form of employment remains largely the reserve of women. Rising rates of
female participation in the labour market, in the context of limited opportunities for affordable
childcare, are key drivers of this trend, rather than employer strategy. That said, the segmentation of
the labour force on the supply side does allow firms, at the margin, the opportunity to offer small
hours jobs and these have, historically, been associated with inferior terms and conditions. The
introduction of equal treatment regulations, following EU directives, should go some way to address
the latter problem, although as we have noted, occupational segregation as much as direct pay
discrimination, accounts for much of the penalty to part-time working.
Turning to self-employment, again there are no strong trends towards this form of working in the UK.
The largest change is the rise in part-time self-employment, but this remains a small proportion of
the total. Rather, self-employment remains concentrated in traditional occupational and industrial
areas. Temporary working has seen more variation in recent years. In part this stems from its
variegated nature (including casual, fixed-term and agency jobs). A key driver of fixed-term (and to
some extent agency working) is the public sector. This again suggests that there has been no radical
shift in private sector employer strategies. There is, however, an increasing use of agency workers
within the temporary employment sector and some evidence, as discussed here, of a greater use of
migrant workers in such jobs.
Overall, this report has highlighted that in the UK, non-regular work is often (although by no means
exclusively) associated with inferior terms and conditions. It is this tension between the flexibility
and cost savings desired by business and the poorer objective outcomes experienced by workers
that drive debates around regulation. We finish the report with a brief overview of some of these
issues.
9.2 On-going debates
The major on-going debate relating to non-regular working in the UK revolves around the
implementation of the EU Temporary Agency Work Directive. This has had a long gestation first at
the European level (finally being adopted by the European Parliament in 2008) and within the UK.
Moreover, to some extent the delays at the European level have followed from the reluctance of UK
ministers to sanction an agreement (see Countouris and Horton, 2009). A strong campaign of
opposition has been mounted by the REC, the employers’ organisation for temporary job agencies in
the UK throughout the debate at the EU and UK levels. The REC has focused on the flexibility that
agency working offers to workers and to firms, highlighting the role it plays for labour market
entrants (REC, 2009). However, against this trades unions have mounted an equally strong campaign,
focusing on the abuse of such contracts and the low-pay and discrimination that often results (see
TUC, 2009a).
62
Finally, following much political pressure the Government announced in January 2008 that tri-partite
discussions between Government, TUC and CBI would begin with a view to reaching an agreement
and allowing legislation to pass through the European Parliament. Following these discussions and
agreement, on February 1st 2010 the government introduced the Agency Workers Regulations 2010
to Parliament, using the means of a ‘statutory instrument’. If unchallenged and annulled during a 40day period, the Agency Workers Regulations 2010 will become law and implement the EU Directive,
leading to agency workers enjoying the right to the same pay, holiday and other basic working
conditions as directly recruited counterparts after 12 weeks in a given job. As with the earlier parttime and fixed-term directives, this should go some way to reducing some of the gaps identified for
this group of workers in this report. However, although addressing a glaring omission in UK labour
law, these regulations will not address the remaining fundamental confusions that still remain at the
heart of UK labour law, as discussed in chapter 2, and which still allow the scope for non-regular
employment to be allied with poor employment in the UK labour market.
63
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68
Appendix
Table A1: Descriptive statistics of characteristics of temporary and permanent employees,
pooled UK Labour Force Survey 2008, mean values
Self-employed
Temporary employees
SE
agency
Agency
Fixed
term
Seasonal/
casual
Other
temporary
0.27
0.21
0.48
0.56
0.55
0.56
0.51
0.73
0.79
0.52
0.44
0.45
0.44
16-19
0.05
0.01
0.01
0.07
0.06
0.35
0.12
20-24
0.10
0.03
0.06
0.23
0.16
0.24
0.21
25-29
0.12
0.07
0.14
0.18
0.14
0.06
0.11
30-34
0.11
0.09
0.11
0.10
0.11
0.03
0.07
35-39
0.12
0.13
0.15
0.09
0.12
0.04
0.09
40-44
0.13
0.15
0.14
0.07
0.10
0.05
0.06
45-49
0.12
0.14
0.12
0.08
0.09
0.04
0.08
50-54
0.10
0.12
0.06
0.07
0.07
0.03
0.05
55-59
0.08
0.11
0.06
0.06
0.06
0.04
0.08
60-64
0.05
0.10
0.08
0.04
0.06
0.06
0.08
65-69
0.01
0.04
0.05
0.01
0.03
0.04
0.03
70+
0.005
0.02
0.03
0.00
0.01
0.02
0.02
White
0.92
0.91
0.87
0.83
0.87
0.88
0.83
Asian
0.02
0.02
0.04
0.07
0.06
0.06
0.07
Black
0.04
0.05
0.03
0.06
0.03
0.01
0.02
Other ethnicity
0.02
0.02
0.06
0.05
0.04
0.04
0.07
Married
0.55
0.66
0.60
0.32
0.47
0.28
0.42
Aged 0-4
0.14
0.15
0.19
0.09
0.11
0.06
0.10
Aged 5-18
0.33
0.33
0.31
0.23
0.30
0.44
0.29
Permanent
SE
employees
non agency
Female
0.49
Male
Gender
Age
Ethnic origin
Children
69
A1 continued
Permanent
employees
Self-employed
SE
SE
agency
non agency
Agency
Temporary employees
Fixed
Seasonal/
Other
term
casual
temporary
Highest
qualification
Degree
0.24
0.23
0.27
0.26
0.45
0.15
0.29
Higher below
degree
0.10
0.08
0.11
0.09
0.09
0.06
0.13
A-level
0.23
0.27
0.22
0.19
0.19
0.33
0.20
GCSE
0.23
0.17
0.16
0.18
0.13
0.24
0.17
Other qualification
0.12
0.13
0.16
0.21
0.11
0.12
0.12
No qualification
0.08
0.11
0.08
0.08
0.03
0.10
0.08
In FT education
0.04
0.01
0.01
0.07
0.08
0.41
0.15
Tenure (months)
95
138
75
15
38
29
47
1 year since FT
ed
0.02
0.004
0.01
0.06
0.06
0.06
0.06
2 to 5 years since
FT ed
0.09
0.03
0.08
0.19
0.14
0.09
0.13
Over 5 years
since FT ed
0.85
0.96
0.90
0.66
0.71
0.42
0.65
Made redundant
in last 3 months
0.002
0.002
0.004
0.02
0.01
0.005
0.01
Part time
0.24
0.24
0.17
0.30
0.37
0.83
0.55
Public sector
0.27
0.00
0
0.25
0.54
0.21
0.41
Management
0.16
0.18
0.08
0.01
0.07
0.01
0.08
Professional
0.13
0.13
0.24
0.10
0.33
0.05
0.21
Associate
professional
0.15
0.16
0.18
0.08
0.18
0.07
0.12
Clerical
0.13
0.03
0.04
0.25
0.12
0.10
0.10
Skilled
0.08
0.30
0.22
0.04
0.03
0.04
0.05
Sales
0.08
0.02
0.02
0.04
0.13
0.18
0.10
Personal
0.08
0.06
0.05
0.10
0.05
0.12
0.13
Semi skilled
0.07
0.08
0.10
0.15
0.03
0.04
0.05
Unskilled
0.12
0.06
0.08
0.24
0.07
0.39
0.17
Occupation
70
A1 continued
Permanent
employees
Self-employed
SE
SE
agency
non agency
Agency
Temporary employees
Fixed
Seasonal/
Other
term
casual
temporary
Industry
Agriculture
0.01
0.05
0.01
0.004
0.01
0.02
0.004
Construction/mini
ng/gas & water
0.07
0.24
0.25
0.06
0.04
0.03
0.05
Manufacturing
0.13
0.06
0.08
0.17
0.07
0.04
0.07
Wholesale/retail
0.16
0.11
0.04
0.07
0.06
0.20
0.12
Hotel & catering
0.04
0.03
0.01
0.02
0.01
0.21
0.06
Transport
0.07
0.07
0.10
0.09
0.03
0.04
0.03
Finance
0.05
0.01
0.07
0.05
0.02
0.01
0.02
Real estate,
business services
0.11
0.18
0.20
0.21
0.11
0.07
0.09
Public
administration
0.08
0.01
0.03
0.06
0.09
0.02
0.07
Education
0.09
0.03
0.06
0.09
0.32
0.10
0.22
Health
0.13
0.07
0.06
0.13
0.17
0.09
0.17
Other community
0.05
0.12
0.11
0.04
0.08
0.17
0.08
Arrived in the UK
in 2004 or later
0.03
0.02
0.07
0.18
0.08
0.07
0.09
Country of
origin:old EU
0.004
0.00
0.01
0.01
0.02
0.005
0.01
Country of origin:
new EU
0.01
0.01
0.05
0.10
0.02
0.02
0.02
Inner London
0.05
0.06
0.13
0.09
0.07
0.05
0.07
Outer London
0.07
0.09
0.17
0.08
0.08
0.07
0.07
Rest of South
East
0.20
0.21
0.22
0.20
0.18
0.21
0.17
N (weighted)
24,016,548
3,709,212
89,697
236,663
598,298
388,643
163,462
Migrant status
Region
‘000s
71