22 August 2018

An overwhelming majority of UK small businesses are not using zero-hours contracts according to a new survey based on responses from over 550 firms, with the Federation of Small Businesses (FSB) calculating that 84% of small companies do not hire workers on non-guaranteed hours contracts.

According to FSB Chairman Mike Cherry, the results show not only that very few of the Federation’s members use zero-hours contracts but also that, where they do, they are creating arrangements that work for both employer and employee alike.

“Small firms often play host to the kinds of supportive, flexible and family-centred working environments than can be found lacking in big corporates,” he explained, adding that the findings show they also reward staff fairly.

Recent figures from the Office for National Statistics (ONS) show that in the second quarter of this year there were 780,000 people in employment on zero-hours contracts in their main job – down 104,000 on the previous year.

Survey responses also suggest that 60% of small firms were already paying all staff at least £7.83 an hour before this April’s rise in the National Living Wage (NLW) for those aged over 25.

Businesses that have seen wage bills rise as a result of the NLW increase are largely reducing profitability or absorbing costs (70%), although some are increasing prices (41%) and others say they are cutting back on investment (30%).

With apprentices under the age of 19 currently paid £3.70 an hour, the FSB wants the Apprenticeship Minimum Wage rate to be raised. That, it says, would help boost the number of apprentices following the recent drop in numbers.

“Young people taking on apprenticeships should not be paid so little,” Mr Cherry concluded. “If we really want to create parity of esteem between academic and vocational routes into work, then paying apprentices £25 a day is not helpful.”