Modelling and Measuring Atypical Employment

Lead Research Organisation: University of Oxford
Department Name: Economics

Abstract

Under a zero hours work contract (ZHC), individuals are not guaranteed work and are paid only for the actual hours of work carried out. Crucially, there is no guarantee of any work being performed: an employer only offers work when and as required; similarly, a worker performs the tasks offered only when and if it suits them. Since early 2013, ZHCs have become one of the highest-profile labour market issues in the UK. Frequent media reports on their use and abuse are polarised between those who see zero hours contracts as the epitome of exploitative, precarious employment, and those who consider them a sign of the efficient functioning of a modern labour market. Yet, despite their salience in public debate, many questions concerning the operation and impact of zero hours contracts (ZHCs) remain unanswered. This is primarily due to a lack of reliable empirical work in the area, arising from a dearth of accurate time series evidence on ZHCs in nationally representative datasets such as the Labour Force Survey.

In the first part of my research agenda, I will address this gap in knowledge with the help of a novel matched employee-employer panel, the workforce intelligence system of the adult social care sector in the UK. This dataset includes a more accurate measure of ZHCs than other sources, in addition to a host of other worker and employer characteristics. I will develop an economic model that allows for a limited availability of job offers and preferences for flexibility, and estimate its key parameters using the aforementioned dataset. In so doing, I will shed light on why individuals accept ZHC work - an absence of preferred alternatives or a preference for the flexibility that such an arrangement affords? - and explore how this varies across different groups of workers. Such results are needed to inform the debate on the regulation of these contracts, which has thus far suffered from a lack of reliable evidence.

It is difficult to measure ZHCs and other forms of atypical employment accurately because individuals often lack a sufficient understanding of their contractual situation (International Labour Organisation, 2003; Office for National Statistics, 2014). There are also wider challenges arising from a lack of congruence between employment law taxonomies and the classification of workers in labour market surveys. Lawyers are rarely interested in the label used to describe a particular working arrangement. Under UK employment law, individuals are typically assigned to one of three legal categories, with corresponding levels of employment protection: employee (highest level, incl. unfair dismissal), worker (basic rights, such as minimum wage), self-employed (very little). Atypical working arrangements such as ZHCs would be better identified and understood if researchers focused on operationalising these legal categories.

I will tackle this problem in the second part of my research agenda. Together with colleagues in the Oxford Faculty of Law, I will analyse the factors considered in written judgments and claimant forms from employment tribunal cases, and transcripts from interviews with judges. The aim of the project is to identify a set of measurable factors that are good indicators of the legal status of workers. Given this, I will develop a set of questions that can be included in labour market surveys to generate more reliable information on atypical work and the scope of employment protection rights. I will then bring together producers and users of labour market statistics to establish how to incorporate these indicators into labour market surveys. In so doing, this work will help to develop a more robust evidence base for future research into atypical work and employment protection legislation, as well as clarifying the key features of work arrangements that determine an individual's legal status. These results will be of crucial importance in informing employment legislation and dispute resolution.

Planned Impact

There are five main non-academic groups who will benefit from my research agenda:

1. Policy-makers within government (domestically and at the European level)
This group includes government and opposition politicians, as well as civil servants, notably those located at the Department for Business, Innovation and Skills (BIS) and the European Commission's DG Employment. Zero hours contracts (ZHCs) have been much debated in the political arena in recent years. Indeed, BIS has been criticised over its running of the ZHC consultation in 2013 and the recommendations the exercise produced (Freedland, 2014). My research will provide a better understanding of why individuals accept ZHC work, and how this varies across different groups in society; necessary information for any debate on further regulation.

2. Skills for Care & care providers.
Improved workforce planning in the adult social care sector is seen as crucial by Government, care providers, and clients (Centre for Workforce Intelligence, 2012). My research will generate a better understanding of individuals' preferences over different types of employment contract, and why they make employment transitions within the adult social sector. I have already established a relationship with the workforce intelligence team at Skills for Care and will leverage these contacts to suggest strategies to reduce turnover within the sector. This has the possibility of reducing turnover costs in the industry and increasing the continuity of care provision for users.

3. Office for National Statistics & producers of labour market surveys.
The methodology used by the Office for National Statistics (ONS) to record ZHCs in the Labour Force Survey has been criticised (ONS, 2014) and the variables currently collected by the LFS do not enable measurement of informal employment as defined by the International Labour Organisation (ILO) - see ILO (2003). I hope for my research to introduce new questions to this survey to enable atypical working arrangements and the scope of employment protection rights to be measured more accurately. If this occurs, the evidence base for future research in labour economics and empirical labour law will be improved, enabling a wider set of questions to be answered on the impact of employment protection legislation on individual behaviour and employment trends.

4. ACAS, Employment Tribunals, and claimant support bodies
Employment tribunal (ET) claimants are often uncertain as to whether they qualify for certain employment protection rights. My research will clarify the set of features of working arrangement that are referred to, to determine a worker's legal status by judges in the ET system. This will allow groups advising workers, including Acas, to provide better advice to potential claimants on their legal status, and thus employment protection coverage. This will help to prevent futile claims being bought to ETs, which in turn will help to reduce the burden on the system and, since the introduction of ET fees in 2013, help claimants to avoid unnecessary financial costs.

4. Trade unions and employer organisations
There is strong interest in aspects of my research agenda amongst both labour unions and employer organisations. My research will provide a more robust evidence base for those campaigning on the costs and benefits of ZHCs. It will also inform these parties on the scope of employment rights, another topic of concern. This has the potential to influence the issues they campaign on and the design of policy reforms that they advocate.

Publications

10 25 50
 
Description My proposal consisted of two inter-related research themes. First, I sought to understand why individuals accept atypical work-arrangements such as zero-hours contracts: a preference for these contracts or a lack of options? My first achievement is to develop a novel empirical strategy for separating these channels. Past approaches relied either on collecting additional data on what options were available to individuals or on making a number of strong assumptions about what variables influence preferences and what variables influence what options are available to individuals. My research is now written up as the paper "What Do Consumers Consider Before They Choose?" and is "Revise and Resubmit" at the top journal Quarterly Journal of Economics. My aim is to apply this framework to the labour supply setting in future work.

In a second project in this theme, I developed a working relationship with computer scientists at the University of Pennsylvania who work on "gig-economy" employment and the International Labour Organisation. I have analysed novel data on online platform work. A first research paper explored wage rates on Amazon Mechanical Turk. This paper received an Honourable Mention Award at the prestigious CHI Conference and was featured in The Atlantic. Follow up work on gender differences in working patterns, has uncovered a 20% gender pay gap. This paper was selected for the CEPR Labour Economics Symposium in September 2018 and I hope to have a finished draft complete by March 2019. I have now been awarded funding for further work in this area by the Turing Foundation alongside Professor Steve Machin at the London School of Economics.

My second research theme concerned the measurement of employment status and how economics could better harness insights from Law in its characterisation of labour market trends. Unfortunately my original research idea proved infeasible because the introduction of employment tribunal fees caused a large drop in employment tribunal claims and discouraged the enforcement of many low-value claims (such as those bought by insecure workers). This resulted in collaboration with Professor Jeremias Prassl at the Oxford Law Faculty on access to justice and the economic incentives to enforce employment rights. Our research won the Wedderburn Prize for the best paper published in the Modern Law Review in 2017 and was used to structure the successful Supreme Court challenge against the fees. We won the ESRC Outstanding Impact in Public Policy Prize and the O2RB Impact Prize for how we used the academic insights from our research to help bring about policy change, resulting in the abolition of employment tribunal fees and the repayment of over £30million to workers.

While I was unable to provide concrete, legally founded metrics for the measurement of employment status, in a research collaboration with Professor Jeremias Prassl and Professor Judith Freedman, we analyse the relationship between employment status, tax status and economic incentives. This work is written up in a special issue of the Oxford Review of Economic Policy that I edited on Technology & the Labour Market. This collaboration also resulted in a set of stakeholder workshops and a conference on Different Ways of Working, which bought together economists, lawyers and civil servants.
Exploitation Route Turing Foundation Grant: I have secured onward funding for research on gig-economy employment and zero-hours contracts with Professor Steve Machin at LSE. In this work we will be able to apply the methodological achievements made under this grant to the original data set I proposed (the NMDS-SC) and also make use of additional survey data that the Centre for Economic Performance has collected.

Methodology: the methodology developed under Research Question 1 is already being applied by graduate students and other researchers (e.g. Balgova (2018), Ischenko (2018))

Law & Economics: I am now considered a UK expert on law and economics. I am currently working with the Legal Education Foundation and the Turing Foundation on empirical research projects on the UK justice system. I have been asked for advice on the evaluation of future policies by HMCTS, the Ministry of Justice, and the Law Society.
Sectors Government, Democracy and Justice

 
Description 1. Employment Tribunals: Part of my research agenda was to explore how data on employment tribunal receipts could be used to develop better measures of labour market relationships. Once looking at the data, it became clear that the a recent policy change that introduced fees to enter the tribunals undermined the use of the data in this way as the number of employment claims is now very low and skewed to high value cases. As a result of this finding, I jointly wrote a paper with a colleague in the Oxford Law faculty outlining the economics behind the change in claimant behaviour arising from the grant. This paper has proven very influential. We engaged extensively with counsel for Unison and EHRC in the run up to the Supreme Court case on 27th March 2017, providing feedback on their argument and helping them to integrate the conclusions of our research paper. Our argument has been integrated into the barristers case as it provides a novel argument and evidence that supports their client and had not been recognised prior to my research. Our article was cited in the Supreme Court and has been acknowledged to have played a pivotal role in the Supreme Court declaring Employment Tribunal Fees illegal and the scheme being scrapped. 2. Zero Hours Contracts and Self Employment: In December 2016, I organised a workshop on "Different Ways of Working" alongside a tax lawyer and an employment lawyer, with approximately 20 attendees from various government departments. The event was run under Chatham House rules to encourage full participation and discussion of emerging government policy. The event was widely considered a success and we thus held an international conference in June 2017 to discuss solutions and ideas from other countries. Practitioners, the media and academics were invited. The themes of the conference were discussed in the Financial Times. I have also participated in a Nuffield Foundation event on zero hours and insecure work, which has resulted in new connections with policymakers at DWP and BEIS, in addition to trade union representatives.
Sector Government, Democracy and Justice
Impact Types Societal,Policy & public services

 
Description Referred to in UK Supreme Court Case on Employment Tribunal Fees
Geographic Reach National 
Policy Influence Type Citation in other policy documents
Impact There is a clear causal connection between my research and the system of employment tribunal fees being declared illegal by the UK Supreme Court in July 2017. This resulted in an immediate impact on tens of thousands claimants who had been deterred from bringing their cases before the courts, as well as an obligation on the Ministry of Justice to refund more than £30 million in illegally levied fees. More broadly, the judgment has wide implications for judicial review and fundamental rights protection in the run-up to Brexit, and in opening up challenges to the broader set of recent reforms to civil litigation and legal aid. I have also been approached by the Ministry of Justice to discuss design principles for a new system of fees and have consulted with the UN's International Labor Organisation on broader principles regarding reform of labour norms and rights enforcement for those on atypical work contracts. Enabling Impact: Early on, I circulated a draft version of our research findings amongst senior lawyers and members of the judiciary to gather feedback on how to structure the argument to be as powerful as possible in the eventual litigation. As a result, my co-author and I were put in formal contact with the senior barristers in charge of the case: Dinah Rose QC and Karon Monaghon QC, instructed by Unison, as well as Prof Michael Ford QC, counsel for the Equality and Humans Rights Commission. In the run-up to the case, we initiated repeated discussions with counsel, and provided detailed feedback on the final documentation submitted to the Supreme Court. In the autumn of 2016, we were invited to lead a discussion on claim enforcement at the UN's International Labour Organisation (ILO) in Geneva. We have since consulted on the enforcement of rights of zero-hours contract and gig workers on the basis of the research presented. I further engaged in extensive media work (e.g. articles in The Times, The Economist, and The Huffington Post) as well as online publicity on blogs and Twitter to explain our key arguments and illuminate the judgment's broader ramifications. The Editors of the Modern Law Review wrote to us soon thereafter, pointing out a hitherto unprecedented level of online engagement with our article on their website. Demonstrable Link: In February 2016, the Supreme Court granted Unison leave to appeal the Court of Appeal's decision that the fee regime had been legal. At this point, despite years of litigation, none of the arguments developed in our research had even been hinted in three separate decisions, all of which had unanimously found against the claimants. The Supreme Court heard the case in March 2017, with counsel and the Justices repeatedly discussing our research. They were eventually unanimous in finding the system of tribunal fees illegal. Lord Reed explicitly held that "even where fees are affordable, they prevent access to justice where they render it futile or irrational to bring a claim": the central argument developed in our research. My journal article was directly quoted from by Counsel for Unison to advance the argument that the fee regime rendered it irrational for individuals to bring low-value meritorious claims, undermining their effective access to justice. The Supreme Court also discussed additional economic arguments that we developed in our research, including the existence of positive externalities to the justice system. In five decisions on the same issue, this was the first time that the question of adverse economic incentives had been discussed in court proceedings. This line of argument occupied a central place in the eventual judgment, which has been hailed as a landmark constitutional case. A House of Commons Research briefing note, for example, explicitly highlights the importance of my research: "the Court was swayed by argument that fees restricted access to justice when set at levels that, compared to the amounts at stake, made it irrational to bring claims. While not cited in the judgment, the Court had heard argument based on an influential journal article by Oxford academics Abigail Adams and Jeremias Prassl " My article was the only academic piece to be cited as evidence in Court; it was also cited in the written arguments put forward by the Equality and Human Rights Commission. My co-author and I engaged extensively with counsel for both Unison and the EHRC in the run up to the case to help both parties develop the economic arguments presented in their skeleton cases. Extent of Impact: Following the decision, commentators agreed that its impact could hardly be overstated - whether for past and prospective claimants, fundamental rights protection, or indeed the vindication of constitutional rights anchored in Magna Carta. As regards past claimants, first, the Ministry of Justice has already begun to reimburse in excess of £30 million in illegally levied fees; it is also highly likely that future litigation will enable those discouraged from claiming to reopen cases despite the expiry of limitation periods. Even more importantly, workers no longer face a negative expected payoff from bringing high quality cases. Early evidence suggests that this has already led to a recovery in claim volume- witness not least the current stream of gig economy workers, from Uber drivers to Deliveroo cyclists, bringing successful claims against online platforms. Ability of future researchers to be inspired: Even more important, finally, is the prospect of our research's wider impact, far beyond the employment context. Since 2012, a number of high-profile reforms to the civil justice system and deep cuts to legal aid, have been justified by the very economic assumptions demolished in our article. This means that our link between constitutional protection and hard economic theory has already begun to allow researchers in areas as distinct as family law and criminal justice to find an empirical basis for vindicating claimants' fundamental rights and overturn near-unanimously condemned government policy. Further afield, the ILO's senior economist has been in touch with us to explore how our model could be used to challenge similar reforms in jurisdictions around the world, beginning with Brazil.
URL https://www.supremecourt.uk/cases/uksc-2015-0233.html
 
Description Turing-HSBC-ONS Data Sciene Award
Amount £115,000 (GBP)
Organisation Alan Turing Institute 
Sector Academic/University
Country Unknown
Start 10/2018 
End 06/2020
 
Description Center for Economic Performance 
Organisation London School of Economics and Political Science (University of London)
Department Centre for Economic Performance
PI Contribution We are now working jointly on zero-hours contracts and gig-economy employment in the UK. This has resulted in successful onward funding from the Turing Foundation.
Collaborator Contribution CEP has given me desk space in London and contributed research assistant time to develop the onward grant proppsal.
Impact Successful bid for an ONS-Turing Foundation Data Science grant in November 2018.
Start Year 2018
 
Description International Labour Organisation 
Organisation International Labour Organization (ILO)
Country Switzerland 
Sector Charity/Non Profit 
PI Contribution I have started to analyse a survey on "gig-economy" workers conducted by the ILO to better understand fragmented working conditions in the on-demand economy. This has led to a working paper on the gender pay gap in online labor markets with a senior ILO research economist, Janine Berg. I have further advised the ILO on the economics of Zero Hours Contracts, presenting research on the UK experience at their annual Decent Work conference and at a further special workshop.
Collaborator Contribution My contact at the ILO organised and funded the survey that I am analysing. I am also jointly writing a book chapter and research article with one of their Senior Economists.
Impact Presentation at the INWORK Gig-Economy workshop; Presentation at 2017 Regulating for Decent Work Conference; Presentation at ILO INWORK Zero-Hours Contract Policy roundtable; Presentation at ILO-Oxford Human Rights Hub "A Better Future for Women at Work" conference.
Start Year 2016
 
Description Advising Barristers (London) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Discussed conclusions from a research article arising from the grant, which is currently accepted for publication at the Modern Law Review, to inform a case on the legality for Employment Tribunal fees that is to be heard in the Supreme Court at the end of March 2017. The argument developed in the article was argued as part of their case and I commented on their skeleton argument extensively. The article was cited in court and has been acknowledged by those involved and third parties to have had a causal impact on the eventual outcome.
Year(s) Of Engagement Activity 2017
 
Description Different Ways of Working Conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Organised a conference for 100 people jointly with colleagues from the law faculty. Conference attended by academics, civil servants from HMRC, BEIS and the Treasury, journalists, think tanks and those in industry. The event was referred to in an article by Sarah O'Connor in the Financial Times. The aim was to bring people from a set of different disciplines together to discuss the challenges and solutions to issues of measurement and employment classification for tax and employment law purposes.
Year(s) Of Engagement Activity 2017
URL https://www.sbs.ox.ac.uk/faculty-research/tax/events/different-ways-working-reforming-employment-law...
 
Description Engaging with journalists about Employment Tribunal Fees case and outcome 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact At the time of the UK Supreme Court case on Employment Tribunal fees, I actively reached out to relevant journalists and wrote an Oxford University press release. This resulted in my research being covered in The Economist and the Times.
Year(s) Of Engagement Activity 2017
URL https://www.economist.com/news/britain/21719825-charging-employees-bring-employment-tribunalseven-if...
 
Description Financial Times Opinion Piece 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact In the days after the budget, I co-wrote an opinion piece on "myths about the gig-economy" in an attempt to explain the rationale behind the NICs reforms and to place the reforms in context.
Year(s) Of Engagement Activity 2017
 
Description ILO Zero Hours Contracts Roundtable 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact The ILO commissioned experts from a set of 10 countries to write reports on the role of zero-hours contracts in their national labour markets. I was commissioned to write about the UK perspective and shared the key details of the research at a policy focused roundtable. The discussion bought up a number of areas that were not well known by the ILO beforehand and has led to them concluding that further research is required before they can make public their own recommendations.
Year(s) Of Engagement Activity 2017
 
Description International Labour Organisation Workshop, International Roundtable on the On-Demand Economy (Geneva) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact 30 people attended a focused impact orientated roundtable on the gig-economy, zero-hours contracts and workers rights at the ILO, Geneva. I presented my work in the area and have been contacted by practitioner organisations subsequently for advice on structuring their campaigns on fair wages and decent working conditions for online workers.
Year(s) Of Engagement Activity 2017
 
Description International Labour Organisation Workshop, International Technical Seminar on the On-Demand Economy (Geneva) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact The Korea Labour Institute (KLI), with support from the Inclusive labour markets, labour relations and working conditions (INWORK) branch of the ILO, hosted an international seminar on the on-demand economy and its implications for decent work in September 2016 at ILO headquarters. The goal of the seminar was to bring together researchers as well as policymakers to address the economics of the on-demand economy, working conditions, and regulatory debates, with a view to developing policy recommendations that can support improved working conditions in this future area of work. I presented a joint paper with Janine Berg at the seminar, which has led to a developing relationship with lawyers and trade union officials at the event.
Year(s) Of Engagement Activity 2016
 
Description Panel Discussion, Department for Work and Pensions (London) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact One of three invited to participate in a panel discussion at DWP on "What role can the government play in supporting the labour market?". The event was broadcast to DWP regional offices.
Year(s) Of Engagement Activity 2017
 
Description Presentation at Nuffield Foundation event on Insecure Pay & Employment 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact I gave a presentation and participated in a panel discussion at the Nuffield Foundation event: "Living in a state of flux: how pay insecurity affects the choices and living standards of low income families". This was attended by a range of civil servants from DWP and BEIS, in addition to think tanks and trade union representatives. Civil servants followed up with me afterwards for additional information on the analysis presented and requests for further figures.
Year(s) Of Engagement Activity 2019
URL http://www.nuffieldfoundation.org/news/living-state-flux-how-pay-insecurity-affects-choices-and-livi...
 
Description Research seminar (London) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Professional Practitioners
Results and Impact Research seminar on the methodology that I am developing to model choice when not all options are available at the Institute for Fiscal Studies. After the seminar, I had a number of requests from postgraduate students at UCL to talk with me about how they could apply my research to their own topics after the seminar.
Year(s) Of Engagement Activity 2016
 
Description Undergraduate talk on Zero Hours Contracts & Limited Choice (Oxford) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Undergraduate students
Results and Impact I gave an accessible talk to undergraduate and postgraduate students at Oxford, most of whom were not economists, on the economics of zero hours contracts and recent labour market changes including the rise of self-employment and the so-called "gig" economy. The talk was over-subscribed and I stayed on for almost an hour after the talk ended to continue answering questions from students.
Year(s) Of Engagement Activity 2017
 
Description Workshop on Different Ways of Working (Oxford) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact I organised a workshop jointly with colleagues in the Faculty of Law at Oxford that will bought together academics and policy makers from a series of government departments including the Treasury, HMRC, BEIS, and OTS. The aim was to explore the current rules in employment law and tax law, and to work out how they are failing to meet the needs of employers, workers, and regulators. We spent a long time discussing the benefit of neutrality of the tax system. Government officials reported finding the event very helpful and many have expressed an interest in a future event to explore on-going developments.
Year(s) Of Engagement Activity 2016