Employment Rights Bill
Monday 21st October 2024
(2 months ago)
Commons ChamberRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
21:59 - The House divided: - Ayes: 105 / Noes: 386 - Question accordingly negatived.
22:15 - The House divided: - Ayes: 386 / Noes: 105 - Question accordingly agreed to.
Mr Speaker
The reasoned amendment in the name of Kevin Hollinrake has been selected.
The Deputy Prime Minister (Angela Rayner)
I beg to move, That the Bill be now read a Second time.
I declare that I am a lifelong proud trade union member—[Hon. Members: “Hear, hear.] When the Government took office and I took this job, we promised the biggest upgrade to workers’ rights in a generation, nothing less than a new deal for working people. We said that we would introduce a Bill to deliver that within 100 days, and we have fulfilled the promise we made to the British public. Let us be clear: too many working people have had to wait too long for change.
Over decades, the good, secure jobs that our parents and grandparents could build a life on were replaced by low-paid and insecure work. Wages flatlined, in-work poverty grew, growth was strangled and the Tories left behind a battered economy that served no one. Today, this Labour Government, led by working people for working people, will start to turn the tide.
First, I want to note the reasoned amendment. Our reforms are ambitious—they have to be to bring real change. But we have engaged extensively and will continue to do so. Today we are publishing a package of consultations on strengthening statutory sick pay, zero-hours contracts, industrial relations, collective redundancy and fire and rehire. As the impact assessment we have published today shows, the Bill is a pro-growth Bill.
This landmark Bill—pro-growth, pro-business and pro-worker—will extend the employment protections given by the best British companies to millions more workers.
James Wild (North West Norfolk) (Con)
In a discourtesy to the House, the very extensive impact assessment to which the Deputy Prime Minister has referred was published only a couple of hours before the debate, but one thing that it says is that the estimated cost of the measures could be £4.5 billion a year. How does loading costs on to employers help to boost growth and job creation?
Angela Rayner
The impact assessment also makes it clear that the Bill will have a positive impact on growth. More than 10 million workers, in every corner of this country, will benefit from Labour’s plan, and the money in their pockets will go back into the economy and support businesses, in particular those on high streets.
Across the business spectrum, from giants like Sainsbury’s and Octopus Energy to small and medium-sized companies like Richer Sounds, successful firms already know that strong employee rights mean strong growth opportunities. The Secretary of State for Business and Trade and I have just been to the Co-op in County Durham to see how it retains valuable talent, boosts profits, and powers ahead with enlightened policies that support good working lives for its staff. The Bill will bring all businesses on board.
Graham Stuart (Beverley and Holderness) (Con)
The Government’s own impact assessment states that
“the impact on growth could”—
only could—
“be positive”,
and that any such impact
“would be small in magnitude.”
The negative impacts, not least on small businesses, will be very serious in magnitude, as my hon. Friend the Member for North West Norfolk (James Wild) laid out. Will the Deputy Prime Minister please explain how she will minimise the negative impacts?
Angela Rayner
We have already been working with businesses while bringing forward the Bill, and we will continue to do that through the consultations. We have recognised probation periods, for example, but we do not think that people should not have rights two years into their employment.
We are listening, but I say to Conservative Members, who promised employment Bill after employment Bill and then never delivered them, that the people of this country deserve secure fairness at work, and this Labour Government will deliver it. Almost 9 million employees will benefit from protection against unfair dismissal from day one, 1.7 million will benefit from new policies on flexible working, and up to 2 million will receive a right to bereavement leave. Thousands of pregnant women and mothers will benefit from new maternity protections, and tens of thousands of fathers and partners will be brought into the scope of paternity leave. We will deliver a genuine living wage that matches the cost of living.
In total, more than 10 million people will benefit from Labour’s plan in every corner of this country, so if you are in casual work, unable to rely on guaranteed hours, this Labour Government are delivering for you. If you are working hard on low pay and struggling to make ends meet, this Government are delivering for you. This is a Government back in the service of working people.
Dr Luke Evans (Hinckley and Bosworth) (Con)
Can the Deputy Prime Minister define “working people”?
Angela Rayner
The Conservatives had 14 years to support the working people of this—[Interruption.]
Angela Rayner
Will the hon. Member listen to my response? I gave way to him. For 14 years, the Tories promised employment Bills and an industrial strategy, and in 14 years they delivered the highest cost of living for the working people of this country. It will be this Labour Government who deliver for them.
This is a Government back in the service of working people, building an economy fit for the future and making work pay. For the first time ever, we have instructed the Low Pay Commission to take account of the cost of living when setting the minimum wage, because everyone deserves a proper living wage for a proper day’s work. We have already moved to protect 4 million self-employed workers from late payments with the new fair payment code, and we have already encouraged employers not to use the ineffective and failed minimum service laws, which did not stop a single day of industrial action while in force, before we repeal them for good. That is a bold start, but we are going further. The UK labour market is not delivering for workers or businesses, and it holds back the UK economy. We know that things have to change. The Bill marks a momentous opportunity to chart a new route to growth—one built from the bottom up and the middle out—alongside the £63 billion of investment into the UK that was announced last week. Higher growth, higher wages and higher productivity—a new partnership between workers and business.
Graham Stuart
I believe it is. The Deputy Prime Minister just talked about the amount of money coming into the economy as a result of the measures. Is it appropriate for her and other Members across the House to speak in the debate without mentioning what they have received in donations from trade unions, given how central the law around trade unions is to the Bill?
Mr Speaker
You are correct: it is not a point of order, even if the right hon. Gentleman thought that it was.
Wera Hobhouse
Sexual harassment in the workplace is absolutely horrendous and has been terrible in demotivating people from staying in their workplaces. Following my Worker Protection Act 2024 becoming law, the Government proposals go even further on third-party harassment in the workplace. Does the Deputy Prime Minister agree that the Bill will encourage people by making our workplaces safer?
Angela Rayner
I agree with the hon. Member and thank her for her work in that area. We must ensure that workplaces have a good culture that does not tolerate any form of harassment, including sexual harassment, because that is bad for business as well.
The major achievement of parts 1 and 2 of the Bill will be to strengthen rights for working people. That is personal for me: I started my working life as a carer on casual terms, not knowing if there would be a pay cheque next month. The fear of not being able to provide for my young family, and of losing everything, stuck with me. Now that I am at the Cabinet table, I am determined to deliver for the millions of people in the position that I was once in, and to bring all companies up to the standard of the best when it comes to workers’ rights. The Bill is a recognition and celebration of the many employers that are already implementing such measures and, in many cases, go much further.
Rosie Wrighting (Kettering) (Lab)
I welcome the new Labour Government’s approach to ensuring that my constituents feel the benefit of economic growth. As my right hon. Friend will know, more than 1 million people on zero-hours contracts will benefit from her guaranteed hours policy. Does she agree that the Bill will raise living standards across the country?
Angela Rayner
I agree, and can confirm to the House that the Bill will finally end the exploitative zero-hours contract. Up to 2.4 million workers will finally have the right to a contract that reflects the number of hours that they work.
For too long, working people have been subject to the shocking practice of fire and rehire. Often, even the threat of fire and rehire means that people voluntarily agree to lower pay and reduced terms and conditions. Our Bill will end those bullying tactics for good, putting an end to fire and rehire and to fire and replace, unless employers can prove that they face financial difficulties that threaten the survival of their business and that changing the employee’s contract was unavoidable. After years of campaigning, working people finally have a Government who listen. No longer will working people face the scourge of fire and rehire.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
A number of our constituents were threatened with fire and rehire during the covid pandemic—shameful acts by their employers. People were fearing for their livelihoods while that crisis was going on. Does my right hon. Friend agree that we have waited far too long and cannot end the scourge of fire and rehire soon enough in order to give workers the protection that they need and deserve?
Angela Rayner
I agree with my hon. Friend. The previous Government promised to do something about the practice but failed to do anything.
Dr Andrew Murrison (South West Wiltshire) (Con)
Does the Deputy Prime Minister agree that growth, if it comes, will come from small and medium-sized enterprises, which are the bedrock of industry in this country? Does she accept that although the measures may be capable of being accommodated by large businesses with big human resources departments, they certainly will not be by small and medium-sized enterprises, so the Bill is likely to damage the growth that she insists will come under a Labour Government?
Angela Rayner
I agree with the right hon. Gentleman on the importance of small and medium-sized businesses, which do a fantastic job and contribute widely to our economy. That is why we have engaged with small and medium-sized enterprises. Many of them understand that if there is clarity around what we are doing and if we consult like we did with probation periods, then we are working with them. But many of them also recognise that the scourge of insecure, low-paid work in this country at the moment is holding Britain’s economy back. That is what we are going to change.
Paul Waugh (Rochdale) (Lab/Co-op)
The Deputy Prime Minister referenced the extra help for working parents that the Bill will introduce. Does she agree that that stands in stark contrast to the suggestion of some on the Conservative Benches that maternity pay has “gone too far”?
Angela Rayner
I agree with my hon. Friend. When the previous Labour Government brought in the national minimum wage they had the same sort of arguments made at them, but what we actually saw was that the minimum wage lifted millions of people out of poverty. It will be this Labour Government who can stand proudly and say that we stood up for the workers, and for those good employers in our country that are doing the right thing by protecting and looking after their employees.
David Baines (St Helens North) (Lab)
We are clearly going to hear a lot of the same arguments that we heard years ago, when Labour introduced the minimum wage. Does the Deputy Prime Minister agree that good employers have nothing to fear from the Bill, and working people have a lot to celebrate?
Angela Rayner
I agree with my hon. Friend. The Bill is pro-worker and pro-business; that is the context in which the Bill has come to fruition. We have been consulting wide and long on the measures, and we believe they strike the right balance to get our economy working across the board, so that people can contribute and feel that their contribution is valued as part of the UK economy.
The Bill also delivers a once-in-a-generation upgrade of the rights of our proud seafarers. Never again will any company be able to get away scot-free with exploiting a loophole to sack employees without notice. No longer will our seas be the byword for a race to the bottom on standards.
The next step in our package to transform the rights of working people is on unfair dismissal. At present, employees must wait two years for basic protections against unfair dismissal, so it is not surprising that they can be loath to change jobs and restart the clock. That is not right. It deprives people of promotion opportunities and pay rises, and it limits businesses’ ability to recruit. Under the Bill, employees will not have to wait years for protection from unfair dismissal. Instead, they will receive it from day one. Those measures alone will benefit close to 9 million people.
Saqib Bhatti (Meriden and Solihull East) (Con)
The Deputy Prime Minister talks about seafarers not being abused, but did she apologise to DP World last week?
Angela Rayner
I do not know what the hon. Member is getting at. Maybe he is getting at the former Conservative Transport Secretary, who referred to them as pirates of the high seas or weasels—I do not know. I have just said clearly to all businesses in the UK that I want to work with them to ensure that we value their employees. Many of them are onboard: they recognise that it is good for business, good for growth and good for their employees.
Kit Malthouse (North West Hampshire) (Con)
I draw attention to my entry in the Register of Members’ Financial Interests.
In relation to the point raised by my right hon. Friend the Member for South West Wiltshire (Dr Murrison), I understand that the right hon. Lady believes she is fulfilling a manifesto commitment, and we have to respect that. However, I hope she recognises that while these regulations will apply across the whole of the economy, the dynamics within small businesses and—in particular—microbusinesses are very different from those within large businesses. For example, if a business only has four employees and all four apply for flexible working, as the Bill provides for, it becomes not just a logistical and administrative nightmare but a personal nightmare for the person who is trying to run that business. I hope that as the Bill progresses, the right hon. Lady will look at what has been a customary carve-out for small businesses and consider whether that might be appropriate for specific measures.
Angela Rayner
Some of the measures in the Bill do recognise the difference between large employers and smaller ones, but we also have to ensure fairness and clarity of purpose in this country, and I think this Bill strikes the right balance. As I have said to other hon. Members who have raised issues regarding small and medium businesses, we are working with those businesses. We have already listened regarding probation periods: the Bill now creates a new statutory probation period so that employers and employees can check whether a job is a good fit. If it turns out not to be right, the Bill allows for a new lighter-touch standard of fairness for employers to meet when they dismiss someone, so I think we are striking the right balance. We have worked very hard on this piece of legislation. If workers are dismissed unfairly, everyone deserves the right to protection, however long they have been in post. With Labour, they will have that right.
Turning to statutory sick pay, no one should feel forced to struggle through work when they are not well. Our view is simple: everyone should be entitled to sick pay from the first day that they are sick, regardless of their earnings, yet 1.3 million employees are currently excluded because they do not earn enough. That means that lower earners, including carers, go to work when ill because they cannot afford not to do so, risking infecting the vulnerable, the elderly, and others with whom they come into contact. No one should want that. Under this Bill, all employees will be entitled to sick pay however much they earn, and that sick pay will be paid from their first day of being ill.
Angela Rayner
I have already given way to the right hon. Member, and there are so many other Members who want to speak.
This Government know that the current system does not support working families. We said that we would make flexible working the default, and the Bill will do just that. Flexible working makes workers happier, and we know that businesses that offer it benefit from bigger, better and more diverse recruitment pools. At the same time, we recognise that not all workplaces can accommodate all flexible working requests, so businesses will be able to negotiate or reject unworkable requests as long as that rejection is reasonable.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
Who would decide whether a rejection is reasonable or unreasonable?
Angela Rayner
There will be statutory guidance, but of course, it would depend on the various different circumstances. We saw during the covid pandemic that people were able to be incredibly flexible in their work. It is with that mindset that I ask employees and employers to look at how they deliver services, because far too much talent goes out of our economy because of inflexibility. Employers should think about how much talent they can retain in their business by keeping people in work; many of the good employers already know that, and offer way more flexibility than we are suggesting in our Bill.
The current parental leave system is also outdated, which is not right. Under the Bill, fathers and partners will be able to give notice of their intention to take paternity leave and unpaid parental leave from their first day in a new job. New mums also lack the protection they deserve. We know that the Conservative party’s solution is to go back to the dark ages and scrap maternity pay altogether; if the Conservatives had their way, as a single mum, I would have been left with nothing. It was a Labour Government who introduced the maternity allowance as the number of mothers in the workforce grew, and while the Conservative party—out of step with modern Britain—cannot wait to get rid of it, I say that we will never, ever stop defending it.
Rachael Maskell (York Central) (Lab/Co-op)
I am grateful to my right hon. Friend for giving way—what an incredible legacy she is setting down today!
Adoptive parents clearly need time with their children as they bring them into their family, but self-employed adopters do not have the same privileges. Will my right hon. Friend look at how we can ensure that those parents also have proper statutory rights to take leave and receive pay?
Angela Rayner
I thank my hon. Friend for making that really important point. This is the start of a process. There are a number of consultations, such as for the self-employed and on a single category of worker, and they will continue, because some of these things are more complex than what we can deliver in this Bill. But I say to my hon. Friend and to other Members: please come to this in the spirit of what we want, which is to improve working people’s lives. As I have said, many employers already go above and beyond what we are saying in this Bill. I hope we can start to celebrate those employers who do so and to spread that across the economy.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
May I join others in celebrating this Bill and what it represents? My right hon. Friend talks about employers who are already going above and beyond. Frankly, they get it that, out there in the real world, supporting families is good for the economy and good for growth; that includes dads, who we all recognise have responsibilities. What more can she tell us about that spirit of openness in the Bill and the opportunities to look at parental leave, particularly paternity leave? What more can we do to help more families to take it up and get longer?
Angela Rayner
I thank my hon. Friend for making that important point. We all agree across the House that families play an important role, that businesses can help to support families, whatever size or shape they are, and that we must go much further to make that happen.
The Bill goes further by making it unlawful to dismiss pregnant women, mothers on maternity leave and mothers who return to work during a six-month period after they return, except in certain specific circumstances. For women in work, we will not stop there. Eight out of 10 menopausal women are in work. For most, there is no support. When workplaces fail to support women, we fail in our moral duty to treat people equally, and employers lose out on talent and skills. On pay, too, we are failing women. The national gender pay gap still stands at over 14% and is not narrowing fast enough, so we will be requiring action plans for large employers to address the pay gap and support women during the menopause.
It is a sad reality that women often find the workplace uncomfortable and unsafe. Sexual harassment at work can destroy confidence and ruin careers. We will do everything in our power to tackle it. The Bill will strengthen the duty on employers to prevent sexual harassment of employees, and it will strengthen protections for whistleblowers by making it explicit that if they do the right thing and speak up about sexual harassment, the law will protect them.
Through this Bill, the party of maternity pay and of the Equal Pay Act 1970 will introduce the next generation of rights for working women. Central to all these reforms is our belief that all employers should always support their employees. The best ones already do.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
In early September, over 500 Oscar Mayer workers, organised by Unite the Union, launched strikes against the company’s appalling use of fire and rehire. Many of these workers are my constituents and are facing serious threats to their pay and working conditions, with potential losses of up to £3,000 annually. I hugely support this legislation, but immediate action is crucial to protect my constituents and workers across the UK from such exploitative practices. Will my right hon. Friend provide clarity on the timescales for reforms to unfair dismissal?
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Before the Deputy Prime Minister responds, may I say that if there are declarations of interest to be made, even in interventions, they should be made on the Floor of the House?
Angela Rayner
I thank my hon. Friend for his intervention. That is why we have moved at pace. The previous Government promised an employment Bill to protect workers and they did not deliver. Within our first 100 days, we are delivering this employment Bill.
Losing a loved one is among the hardest things for any of us. That is why in this Bill we are setting a clear standard for businesses, giving employees the right to bereavement leave. Taken together, these new rights for working people—sick pay when they need it, an end to exploitative zero-hours contracts and to fire and rehire, bereavement leave, expanded entitlements, paternity leave and new protections for women in work—represent the biggest upgrade for working people in a generation, but we are not stopping there.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
Does my right hon. Friend agree that the Bill not only represents the biggest uplift in workers’ rights in a generation, but strengthens their enforcement through new enforcement measures? That stands in stark contrast to the Conservatives, who brought in unlawful employment tribunal fees.
Angela Rayner
My hon. Friend makes a very important point. We want the culture to change as well. We have had a race to the bottom where workers have not been protected, and we have seen the biggest wave of strike action because of the previous Government.
We want employers and trade unions to come together to grow our economy. The employers and the unions are up for that challenge, because we know that the world of work is fairer and more productive when working people can come together to negotiate fair pay and decent conditions. That is why we are reinstating the school support staff negotiating body in recognition of the vital role that support staff play in the workforce and in young people’s education.
As a former carer, I have said from day one that in this place I will champion carers and the complex, high-quality and professional work that they do. I am so proud to say that after 14 years, their extraordinary, life-saving contribution to our community will no longer be devalued by low pay and lack of career progression. For the first time, thanks to this Labour Government, there will be a historic fair pay agreement process in the adult social care sector, with a new body empowered to negotiate pay and conditions and ensure that training and a career structure are in place. At last, care will be rightly regarded as a multi-skilled profession and carers will be confident that they have the respect and income that they deserve for looking after our vulnerable loved ones and helping to manage the pressures on the NHS and in social care.
Paula Barker (Liverpool Wavertree) (Lab)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. Does my right hon. Friend agree that care workers are often the Cinderella service? They are low paid, but certainly not low skilled. It is time we got to grips with hostile employers who do not pay travel time.
Angela Rayner
My hon. Friend makes a very important point. The disparity in the terms and conditions for care workers actually impedes recruitment: we are seeing huge numbers of vacancies in the care sector. Through the fair pay agreement, I want to see carers being treated with fairness for the valuable contribution they make. They are also key to tackling the challenges we face in our NHS.
Alison Bennett (Mid Sussex) (LD)
I thank the right hon. Lady for raising the issue of care workers and the great contribution that they make by looking after those who need care. Does she agree that the minimum wage for a carer should be increased by £2 an hour, in line with Liberal Democrat policy?
Angela Rayner
We have already written to the Low Pay Commission, as I have set out, and we want to go further through the fair pay agreement to make sure that carers are recognised for the valuable role they play. Care workers are not just people who do the shopping or call in for 15 minutes; they handle complex needs in the community and look after some of our most vulnerable loved ones. They should get the recognition they deserve, and that is why we are taking these measures.
We know the valuable contribution that trade unions make. That is why we are resetting industrial relations. The Conservatives presided over strike Britain with their scorched earth approach to strikes. First, we are repealing the Strikes (Minimum Service Levels) Act 2023. Anyone with a brain could see that that legislation would do two things: increase tensions and fail to prevent a single day of industrial action. We said so at the time, and what happened? The rail dispute cost our economy over £1 billion. The law has failed and has no reason to stay on the statute book.
We are also repealing nearly every part of the flawed Trade Union Act 2016, which tried to smother trade unions in form filling and red tape and prevent them from doing their job. We will go further by strengthening the voice of working people by making it easier for trade unions to get recognised, giving them the right of access to workplaces and making sure that they have enough time to represent their members. When the rights of working people are flouted, a new fair work agency will be empowered to investigate. Today we are also launching a consultation on modernising trade union laws so that they are fit for the modern workplace and our modern economy.
In under 100 days, we have put together a transformative package that marks a new era for working people. We know that the Conservatives will oppose this every step of the way. We know because they have history, just as they opposed Labour’s minimum wage and now, shamefully, want to take us back to the dark ages when women were denied maternity pay. It is clear that they are out of step with modern Britain.
Our plans mark a new way forward—a new deal for working people, making jobs more secure and family friendly, banning exploitative zero-hours contracts, supporting women in work at every stage in their life, a genuine living wage and sick pay for the lowest earners, further and faster action to close the gender pay gap, ensuring that rights are enforced and that trade unions are strengthened, repealing the anti-worker, anti-union laws, turning the page on industrial relations and ending fire and rehire, while giving working people the basic rights that they deserve from day one in the job. This is a landmark moment, delivered in under 100 days. This is a pro-business, pro-worker, pro-growth Bill and a pro-business, pro-worker, pro-growth Government. Today, after 14 years of failure, we are starting a new chapter and decisively delivering a better Britain for working people.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Kevin Hollinrake (Thirsk and Malton) (Con)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House notes the balanced reforms made by previous Conservative governments to improve workers’ rights, including the National Living Wage, the prohibition of the use of exclusivity clauses or terms in zero hours contracts and the introduction of shared parental leave and pay, and declines to give a Second Reading to the Employment Rights Bill because it has been rushed into Parliament without full consultation to meet an arbitrary 100-day deadline and Monday 21 October 2024 Business Today: Chamber 19 has not been accompanied by an Impact Assessment considering the impact on the Employment Tribunal, especially as a result of the removal of the qualifying period for the right to claim unfair dismissal or the impact of the extra red tape on SMEs or the impact of establishing the Fair Work Agency; because the repeal of trade union laws will lead to more strikes and intimidation in the workplace, and will force taxpayers to foot the bill for inflation-busting pay hikes without public service reform; because the Bill undermines choice for workers about whether they want to fund political campaigning and forces firms and public bodies to bankroll more trade union facility time, including trade union diversity jobs; and because the Bill is contrary to the Government’s stated goals of improving productivity and economic growth and will increase costs for businesses and consumers.”
The Conservative party will always be the party of business, but we are pro-business and pro-worker, not least because many Conservative Members have been both workers and people who have started and grown their own businesses. Those who have done so are the first to appreciate the symbiotic relationship between the two. We acted during our time in office to improve workers’ rights in several areas: flexible working, parental leave, redundancy protections, ensuring that workers keep the tips left for them by their customers, and significant increases to the national living wage.
I started my first significant business back in 1992. Over three decades, we grew to become a national business employing hundreds of people. We valued every one of those people. We were one of The Sunday Times’s best 100 companies to work for and were certified by Investors in People. I believe that business is a force for good and that businesspeople do great service to our communities and the wider economy. As Winston Churchill put it, they are the strong horse that pulls the whole cart.
The question I now ask myself is whether I would start that small business again today if the Bill were in place. Sadly, the answer is probably no—certainly not a business that employed any people. The very high cost of these measures will be borne by all companies and passed on in the form of higher prices, reduced wages and lost jobs. The measures will fall most heavily on small businesses, for which they could be existential.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Does the hon. Member remember 1997 and 1998, when the Conservative party said that the social chapter and the national minimum wage would cost half a million jobs? In the late 1990s, half a million jobs were actually created.
Kevin Hollinrake
I was not here at the time, but it is clear nevertheless that the minimum wage and the national living wage have had a positive effect on prosperity in this country, and I would be the first to admit it. I want the hon. Lady, and other Government Members, to understand that those measures fell equally on all businesses across the UK. The measures in this Bill fall disproportionately hard on small businesses.
What the right hon. Member for Ashton-under-Lyne (Angela Rayner) fails to understand is that the implication of these measures, such as a day one right to an employment tribunal, is that even a spurious case of unfair dismissal costs time and money. It is potentially tens of thousands of pounds to defend that case. As one business organisation put it, “You lose when you are accused.” Most small businesses saddled with such a cost would be sunk without trace. It is not just that, but the deterrent effect, which it would have had on me, and which will be felt right across the economy and by every existing and aspirant business person across this entire nation. When the Deputy Prime Minister reflects on what she is hearing from people who have actually run a business, will she at the very least consider exempting small and medium enterprises from this catastrophic Bill?
Graham Stuart
Like my hon. Friend, I started a business—I started mine a little earlier than him, but that is how much older I am. I followed the Deputy Prime Minister’s speech as carefully as I could. From what I could understand, because of the changes in the Bill, someone can fail to turn up to work on day one claiming that they are sick and then, because they will now have rights against unfair dismissal, they will be able, without ever doing a day’s work, to hold a small business to ransom and put that business at risk.
Kevin Hollinrake
As drafted, that is certainly the case. My right hon. Friend is absolutely right. Members may not know that small businesses stand the cost of statutory sick pay. It is not reimbursed by the Government, so the Bill would have a significant cost for businesses.
Several hon. Members rose—
Richard Burgon (Leeds East) (Ind)
I have listened with interest to what the shadow Minister is saying about people being entitled to go all the way to an employment tribunal hearing from the moment they take up employment. Has he ever heard of pre-hearing reviews for employment tribunals?
Kevin Hollinrake
The point I was making is that the case may go all the way to an employment tribunal, as the hon. Gentleman knows, but there would also be the cost of defending the case even if it does not. That small business will have to bring consultants in and will have to speak to lawyers. That itself costs money, and in many cases that will be thousands of pounds. That is what the hon. Member fails to understand: when you are accused, you lose.
Several hon. Members rose—
Kevin Hollinrake
No, I will make a little progress. The cost of all these measures—in individual opportunities and to the wider economy—is huge. The Government may try to deny that, despite their clear lack of experience of the real world of business. It is extremely alarming that not one of those on the Front Bench today have ever started or run a business that employed anyone. Even worse than that, only one member of the Cabinet has ever done so, and that is the Secretary of State for Scotland.
Shamefully, given what is at stake, the Government cannot deny our case that the Bill will have a huge economic cost, because today—finally, two hours before this debate—they have actually produced the impact assessments. The cost of the Bill is on the very first page: up to £5 billion per annum. The word “uncertain” appears 302 times in those impact assessments, and the word “risk” is used 432 times, so the cost is likely to be much more.
Paula Barker
The shadow Minister has just said that shamefully there is only one person on our Front Bench who has run a business. How many of his Front-Bench team are trade union members?
Kevin Hollinrake
I am not a trade union member, and I would not know about my colleagues, but I started a business, as did my hon. Friend the Member for South Suffolk (James Cartlidge), as did the shadow Chancellor and as did many others in our party. We are proud of that fact.
This morning I met business representatives covering all parts of the British economy. Like us, they have serious reservations about this Bill. The Institute of Directors highlighted the fact that 57% of its members will be less likely to hire staff, with only 2% saying that would be more likely. The Confederation of British Industry said that the costs associated with this Bill cannot be afforded by 54% of businesses.
Jim Shannon (Strangford) (DUP)
This legislation applies to England and not Northern Ireland, but I echo the hon. Gentleman’s concerns. I am concerned about small and medium businesses that employ a small workforce. If one or two of them have a long-term illness, they may be off for a while, come back to work and then go off for a while. Is there not a need—I look to the Deputy Prime Minister—for a methodology whereby small businesses can employ someone in the short term for those positions, otherwise they will go to the wall?
Kevin Hollinrake
I agree. I was interested that the Deputy Prime Minister said that her menopause measures would be exclusive to large businesses. I welcome that, and I ask her to look at attaching the same conditions, ideally, to the entire Bill, but if not to certain parts of it. The risks for small businesses are simply catastrophic. Even one or two cases could completely sink a business.
Dr Luke Evans
When it comes to risk, is my hon. Friend concerned about the timing of this legislation if, as reported, the Budget raises national insurance for those businesses? Is that yet another risk in addition to this legislation?
Kevin Hollinrake
My hon. Friend is right. This morning we met representatives from UKHospitality, who said exactly that: the Bill is coming on the back of a number of changes and some difficult times during covid for industries that employ a lot of people, which will be particularly badly affected by this legislation. The Government should think twice about implementing it at this moment in time.
Sir Edward Leigh (Gainsborough) (Con)
My hon. Friend mentioned the 302 mentions of uncertainty. It is hard to know how that can foster growth. Let us be honest: businesses are already more highly taxed and regulated than ever before. We all know the reason—the pandemic— and we have to take responsibility for that. Will he assure me that, as a party, we will use this period of opposition to once again proclaim our values as a low-tax, deregulated economy? Otherwise, how will we foster growth in an increasingly competitive world? If we tax businesses more, we simply lay the foundation of a future Labour Government.
Kevin Hollinrake
I agree. We should be low tax and low regulation. One of the saving graces of this legislation is the detail, although the Bill itself is light on detail: many of the measures will be brought in through secondary legislation, therefore making it easier for a future Government to reverse some of the catastrophic changes.
Several hon. Members rose—
Kevin Hollinrake
I will make some progress. The Government’s own impact assessment acknowledges that the measures will mean price rises for consumers and job losses. In it, 40% of firms surveyed said that prices would go up, and 17% said that they will reduce the number of employees. That is hundreds of thousands of jobs at risk.
The criticism of the Bill does not stop there. The Institute for Fiscal Studies has warned that it risks lower employment rates and lower wages for employees. The Local Government Chronicle has warned that the Bill will place financial pressure on councils. The Recruitment and Employment Confederation has said that the Bill will fuel long and complex litigation. The Financial Times has warned that the Bill is causing deep unease among business leaders. In short, jobs down, wages down and prices up.
In their failed attempt to allays concerns about the Bill, the Deputy Prime Minister and the shadow Business Secretary have stated that they have consulted businesses—
The Secretary of State for Business and Trade (Jonathan Reynolds)
You are the shadow Business Secretary.
Kevin Hollinrake
Sorry, though I think the Prime Minister is guilty of similar; I do apologise. The Deputy Prime Minister and the Business Secretary have stated that they have consulted businesses. Really? The Federation of Small Businesses said not only that the Bill will
“inevitably deter small employers from taking on new people”,
but that it is a
“rushed job, clumsy, chaotic and poorly planned”
and that the Government are guilty of shallow engagement. So much for the “strong horse”. Several representatives at this morning’s meeting said that they have been talked to but not listened to—including those representing the hospitality and retails sectors some of the most labour-intensive in our economy, which is acknowledged in the impact assessment.
Kit Malthouse
Alongside the many negatives relating to the Bill that my hon. Friend has laid out, does he recognise the strong possibility that, particularly in small and micro businesses, the legislation could inject quite significant resentment among the staff body itself? For example, just to amplify my previous point, if you have six members of staff and three of them apply for flexible working, that has an immediate impact on those who do not have flexible working. The ability of the business to offer flexible working to future workers is also reduced, which turns the whole thing into a massive negotiation between six or seven people. That could have a significant impact on morale and sense of fair play within businesses themselves.
Kevin Hollinrake
My right hon. Friend is absolutely right. There speaks somebody who has actually run a business and understands the impact on a small employer. That is why we say there should be a carve-out, certainly for small and micro businesses.
We have to ask ourselves this: if the Government are not listening to businesses who “pull the whole cart”, who are they listening to? I think we all know the answer to that. A consultation is not five minutes inside No. 10 and a photo opportunity. Proper consultation is working with business, listening, taking your time and not rushing things—the exact opposite of what the Government have done. We know why that is. The Deputy Prime Minister made a misguided promise to Labour’s trade union paymasters that legislation would be introduced within 100 days. Despite 100 days of gloom and doom, talking the economy down and wrecking business confidence, they managed it—just.
The Government are not even listening to their own legal experts. Only last week the Attorney General said:
“excessive reliance on delegated powers, Henry VIII clauses, or skeleton legislation, upsets the proper balance between Parliament and the executive.”
Because the Bill is such a rushed job, it takes swathes of delegated powers, including Henry VIII powers, meaning the final policy will be decided later at the Secretary of State’s whim—not now by Parliament. Legislating that way is causing real concerns for businesses today. The Deputy Prime Minister and her colleagues preach stability, yet in the same breath they are causing instability, uncertainty and falling confidence at a cost of jobs and investment today. There are already 58,000 fewer payroll jobs than when Labour took office. Confidence levels at the Institute of Directors on future investment intentions have dropped from plus 30 in June to minus six today. The Government are planning 30 consultations on the measures in the Bill. They should have taken place before the Bill was introduced, so the legislation could be precise about what it will do.
Saqib Bhatti
I thank the shadow Secretary of State for giving way. He talks about trade unions. I have just seen a news update on the Unite union’s Birmingham hotel and conference centre being investigated by the Serious Fraud Office. The total cost was £112 million, but it has now been valued at £29 million. Who will hold the trade unions to account in the Bill?
Kevin Hollinrake
My hon. Friend makes a strong point. That certainly needs looking at very carefully.
As the Government’s attempt at business consultation has clearly failed, and as no one on their Front Bench has any business experience, I will draw the right hon. Lady a picture of what the Bill actually means for businesses.
Mr Richard Quigley (Isle of Wight West) (Lab)
As the owner of two successful small businesses—[Interruption.] I know Opposition Members like to do that—it’s pantomime—but they can listen. As the owner of two successful small businesses and an employer of 25 people in the hospitality sector, I welcome the Bill. Do Opposition Members agree that the main reason they are against this groundbreaking employment Bill is because they are embarrassed about their own record over the past 14 years?
Kevin Hollinrake
I welcome the fact that there is at least some business experience on the Government Benches. Perhaps the hon. Gentleman joined the wrong party.
The hon. Gentleman will recognise the picture of what the Bill means for businesses. They will be terrified to take new people on for fear of huge compliance costs and legal action. They will be tied up in red tape, something that the Prime Minister said he was taking an axe to. They will have to cope with measures such as the need to frequently recalculate all workers’ hours for each reference period for each separate employee, each of which will have a unique date as they will be required to proactively offer guaranteed hours. This is not even restricted to those on zero-hours contracts. It will be for anyone on low hours—a bureaucratic nightmare. They will have to deal with a new right to demand flexible working, such as a four-day week. The right hon. Member for Islington North (Jeremy Corbyn) must be proud. Businesses will have to become the free speech police to prevent any of their customers offending their staff. They will have to deal with a new regulator, the fair work agency, which will have the power to enter any business premises, confiscate documents and levy fines—all backed up by new criminal offences with penalties of up to two years in jail.
Emily Darlington (Milton Keynes Central) (Lab)
As someone who has started and run a business, I should like to know the hon. Gentleman’s opinion of the views of the former Business Secretary, the right hon. Member for North West Essex (Mrs Badenoch), that the minimum wage is a burden, that statutory maternity pay is excessive, and that equal pay protection in respect of race and disability is akin to segregation policies in South Africa—or does he want to distance his party from her comments?
Kevin Hollinrake
That is not what my right hon. Friend said at all. I worked with her when she was Business Secretary, and at no point did she ever say that about maternity pay. She was talking about regulation costs. She was simply pointing out that for many businesses, particularly in retail and hospitality, the rise in the national living wage has been very difficult to cope with. She was not talking about abolishing it. Businesses will have to deal with new union powers to gain access to any business premises and contact its staff—wonderful!—in order to recruit and organise members and make it much, much easier for a union to gain recognition. As the impact assessments state—this is great news; this will really cheer everyone up—there will be “increased industrial action” and tax rises to pay for increased pay demands. [Interruption.] That is what the Government’s impact assessments say. Labour Members should check their impact assessments. 1970s, here we come! There is much more, but in short, it all means that the tail will be wagging the dog.
Nigel Huddleston (Droitwich and Evesham) (Con)
I am sure that my hon. Friend will be aware of the history of Labour Governments since the second world war. Every single one of them has left office with employment higher than it was when they started. Is he concerned about the possibility that this Government will repeat the same mistakes, especially given their lack of business awareness and understanding of the private sector?
Kevin Hollinrake
I am very concerned about that. Today there are 4 million more jobs in our economy than there were in 2010, and 1.2 million fewer people are unemployed. I am very worried about the things that my hon. Friend is very worried about.
Making work pay is a laudable aim, but as one stakeholder put it this morning,
“work doesn’t pay if there’s no work”.
Most people recognise that one of the reasons why the UK is the third most popular destination in the world for inward investment, which creates hundreds of thousands of jobs throughout the economy, is the flexible labour market that the Government are now seeking to eliminate. Do the Deputy Prime Minister and her Cabinet colleagues realise that? Perhaps they secretly do, given that nine out of 10 of those Cabinet colleagues recruit on terms that are at odds with these new regulations. Sixteen Cabinet Ministers, including the Chancellor, the Foreign Secretary, the Home Secretary and the Energy Secretary, have hired people for roles that involve working outside regular hours and at weekends; six Cabinet Ministers have hired people to roles with extended probation periods; and seven Cabinet Ministers, including the Chief Secretary to the Treasury and the Deputy Prime Minister, have hired on “insecure” fixed-term contracts. Why would they introduce legislation that they do not understand or even comply with themselves? The answer is, of course, their union paymasters.
Much like the more than 200 Labour MPs who have taken trade union cash, the Deputy Prime Minister has her donations to think of. She declared her interests as a union member, but she did not declare her interests as someone who had taken £13,000 from unions in donations. The question of what is orderly is up to your judgment, Madam Deputy Speaker, but it seems to me that that should be declared at the start of any Member’s contribution.
This is not an Employment Rights Bill, but a trade union charter—a charter that will bring about no-knock warrants that allow unions to access all business premises, from the local takeaway to the local pub. Clearly, shutting the beer gardens is not enough for this Government; they are now relying on strike action to stop you getting a pint. Under this trade union charter, trade unions will revert to requiring people to opt out of donating to unions’ political funds. That will line Labour’s pockets with default donations from working people. This trade union charter will abolish the thresholds for strike action, unleashing waves of low-threshold strikes, and crippling public services by putting power in the hands of militant trade unions. This trade union charter will force employers to inform their staff that they can join a union at every turn. This trade union charter will reduce notice periods for strike action, meaning that businesses will be plagued by zero-warning strike action, which will unleash misery on the public at the last minute.
Tom Hayes (Bournemouth East) (Lab)
We have just had a general election. The Labour party won a historic majority on the basis of a manifesto that was pro-business, pro-worker and pro-growth. Through the Bill, we are bringing forward provisions that were sketched out in our manifesto. Why is the hon. Member choosing not to listen to the result of the election? In choosing to reject the provisions in the Bill, he is not learning from the result of the general election.
Kevin Hollinrake
We deserved to lose the election fair and square, but the hon. Gentleman should look at that result, because it was not a popular vote for Labour. The party’s popularity is dropping by the day, and the business confidence that we need to protect in this country is dropping by the day.
The Bill is a trade union charter. By repealing the Trade Union Act 2016, it will increase the number of strikes by 53%. It is a charter that will take Britain back to the 1970s—a stated goal of the Deputy Prime Minister. The public will pay the price not just through uncollected waste, dysfunctional local government and picket lines outside hospitals, as in the 1970s; they will be forced to pay through higher taxes—a fact that the Government have now admitted in the impact assessment, despite pledging not to increase taxes on working people.
At a time when the Government claim to be scrambling for cash and are taking the winter fuel payment from 9.5 million pensioners, they have the gall to drive up taxes to reward their trade union paymasters. That will be done not just through higher national insurance, a hike in fuel duty or whatever other punishing measures the Government choose, but through council tax. Because of the Government’s Corbyn-style collective bargaining for social care, councils will be required to stump up an additional £4.2 billion, or £150 per household.
The path that we took in government was pro-worker and pro-business. Whereas this Government put party first and country second, we worked in partnership with businesses and workers to deliver improvements without risking investment, unemployment and businesses going bust.
Sonia Kumar (Dudley) (Lab)
I just want to double-check: have you actually read the Bill? It talks about a consultation period with businesses, and the provisions will not be rolled out until 2026. There will be a probation period for certain businesses. We are pro-business, and maybe the shadow Minister should read the Bill properly.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. We should not refer to other colleagues in the Chamber as “you”. It is quite simple.
Kevin Hollinrake
I wish the hon. Member for Dudley (Sonia Kumar) was with me for the hour I spent with the representatives of organisations this morning. They do not feel as she does—that there is nothing to see here and nothing to worry about. They are very concerned, and we should all be worried about that.
Through our approach, we doubled the minimum wage, boosted employment by 4 million, cut taxes on working people by £900, cut youth unemployment, slashed the employment rate and rolled out the biggest ever expansion of free childcare. Our approach recognised that by harming business, which is the strong horse that pulls the whole cart, we are harming workers—a fact that this Government have clearly failed to grasp. This Bill puts the cart firmly before the horse. For small businesses particularly, it creates an existential crisis of a magnitude not seen since the pandemic. The future of hundreds of thousands of business people and millions of jobs is in the Deputy Prime Minister’s hands. I urge her to think again, withdraw this legislation and listen carefully, not just to the unions but to the voice of business, before it is too late.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Over 80 Members wish to contribute. To try to accommodate most of them, I will limit Back-Bench speeches to three minutes and maiden speeches to five minutes. The first Back-Bench contribution is from Mike Amesbury, and I know that he will not want me to cut him off.
Mike Amesbury (Runcorn and Helsby) (Lab)
I stand here not only as the Labour MP for Runcorn and Helsby, but as a former trade union convener and shop steward for the wonderful trade union Unison. I am also a GMB member and a member of the Union of Shop, Distributive and Allied Workers. I am proud to have the opportunity to speak in this Parliament with a trade union voice, coming from a working-class background, and as part of a Labour Government. How fantastic is that? I also proudly refer the House to my entry in the Register of Members’ Financial Interests. Have a look: it is very clean money—trade union money.
This is an important day for the history of the labour movement and for industrial relations in this country. This Employment Rights Bill is pro-business, pro-worker and pro-growth. This is exactly the change that we were elected to make, just a few weeks ago. The Bill works in partnership with business and trade unions. It is not the work of fiction—I say this respectfully—that the shadow Minister described in his response to my right hon. Friend the Deputy Prime Minister. Labour Members are pro-jobs, but pro good jobs. We are pro-business, but pro good business. The Bill is also good for Britain. We want to turn the page on an economy that has been blighted by insecurity, poor productivity and low pay, and we want growth that leaves nobody behind in our communities.
I pay homage to the architects of this landmark legislation: the trade unions, of course; the former shadow Minister, my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald); my good friend the Deputy Prime Minister; and my neighbouring MP and good friend the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders). We were elected on a manifesto for change, and today that change begins—delivered within 100 days, as the Deputy Prime Minister said.
The Bill brings forward 31 employment reforms to help young and not-so-young workers alike. It marks the end of exploitative zero-hours contracts and fire and rehire practices, establishes day one rights to paternity, parental and bereavement leave for millions of workers, improves statutory sickness pay and collective bargaining, and provides for fair pay agreements. It means that 9 million people will have protection from unfair dismissal from day one, and that over 1 million people on zero-hours contracts will benefit from a guaranteed hours policy. This will help many in all our constituencies. An additional 1.5 million parents taking unpaid parental leave will be brought into scope of employment rights from day one. This Bill is a game changer. It is a manifesto commitment that I and everyone on the Labour Benches were proud to be elected on, and I look forward to our labour coming to fruition over the next few months and years.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson, Sarah Gibson.
Sarah Gibson (Chippenham) (LD)
Broadly speaking, the Liberal Democrats support the Government’s desire to modernise employment rights and make them fit for the modern working world. I hope the Government will appreciate our constructive scrutiny of the Bill today, to ensure that it is as helpful as it can be, for workers and small businesses. In the interests of transparency, I would like to mention that I have been a small business owner for most of my adult life, but I have also been an employee. I will start by outlining the improvements that the Government should make to better support carers, parents and those who fall ill. I will then move on to what adjustments must be made so that small businesses receive adequate support.
Members across this House will know that fixing our social care system and adequately supporting carers is a key issue for the Liberal Democrats. The Bill makes no clear statutory commitment to introducing paid carer’s leave. That omission strikes us as a missed opportunity for the Government to adequately support carers’ ability to juggle employment with their caring responsibilities. The Government’s “Next Steps to Make Work Pay” paper, which accompanies this Bill, commits to reviewing the implementation of paid carer’s leave. However, the Liberal Democrats believe that the Government should go a step further. We will be looking to strengthen the legislation in this area, and we hope that the Government will not waste the opportunity to make genuine progress on carer’s leave. As ever, I am happy to meet Ministers at any time to discuss this in greater depth.
The Bill could do more to support parents. We welcome the Government’s proposal that parents should be able to benefit from support, irrespective of how long they have worked for their employer. We also support the proposal to introduce new rights to bereavement leave, which will allow employees to take much-needed leave from work to grieve the loss of a loved one. This will be especially important to those who lose a close relative or who experience a miscarriage.
The Liberal Democrats have called for measures to support parents through unemployment, and to extend parental pay and leave to self-employed parents, as has been mentioned. We have also called for measures to increase statutory maternity leave and shared parental leave to £350 a week, and to increase pay for paternity leave, with an income cap for high earners.
In addition to improving the Bill’s support for carers and parents, we also believe it could do more to support people when they fall ill. At £116.75 a week, statutory sick pay remains far below the minimum wage and is effectively a disincentive to take time off. This has a severe impact on public health, productivity and, ultimately, economic growth. A higher rate of sick pay would enable people to take time to recover without having to worry about making ends meet. Of course, any such measures should go hand in hand with appropriate financial support for small businesses.
That brings me to how this Bill can be improved for the benefit of small business owners, and I have already stated my interest. It is vital that small businesses are actively consulted on how to support them with any additional costs that the Bill may bring. Having spoken to many SMEs in my constituency, I would like to know what consideration the Government have given to the Bill’s proposals on changes to unfair dismissal during probationary periods. How will small businesses, which do not have the resources of HR professionals, be supported through these changes? Unfortunately, much of the crucial detail that would help such businesses to prepare for the impact of the Bill has been left to secondary legislation and further consultation. Although we support as much consultation as possible, the lack of detail in the Bill does not facilitate certainty and stability for businesses or workers.
The Liberal Democrats urge Ministers to ensure that new measures to support workers go hand in hand with support for small businesses, starting with the reform of our broken business rates system. The current system effectively taxes business premises and machinery, which discourages investment and heavily burdens key sectors in my constituency, from retail and manufacturing to renewable energy production. Again, if Ministers are open to meeting me and my Liberal Democrat colleagues, we would be happy to discuss our proposal for reforming this broken system and bolstering our SMEs.
This Bill has the potential to mark a new chapter in how we deliver fairness for both business owners and employees. We believe it will modernise our legislation to reflect the needs of today’s workforce.
Mr Will Forster (Woking) (LD)
My hon. Friend has said that the Bill does not go far enough to support families. In my Woking constituency, 350 children are unable to join the Scouts because of a lack of volunteers. Does she agree that the Government should consider adding to the Bill a right to ask for statutory volunteer leave?
Sarah Gibson
My hon. Friend makes an important point about volunteering across the country.
But the Government must go further. We must do more to support carers, parents and those who fall sick. The Bill must do more to provide small businesses with certainty, stability and transparency. We on the Liberal Democrat Benches look forward to the Bill’s passage and will work with colleagues to ensure it delivers on its full promise, but we hope that our proposals to improve the legislation are fully considered.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
As a proud member of the Community and USDAW trade unions, I am delighted with the legislation. In the short time available to me, I will focus on the particular issue of whether we work to live, or we live to work, because so far the debate in this place, particularly in the remarks made by Conservative Members, has sounded like something from the mesozoic era and the dying era of the dinosaurs.
Let us get something straight: tackling sexual harassment in the workforce is not about free speech, but about stopping a crime; flexible working does not mean people work less, just that they work flexibly; and rights do not make people irresponsible employees, any more than it is noticeable that our competitors internationally are ahead of us on this work. The measures in the Bill are about entrenching good practice, so that we have a race to the top, not a flounder to the bottom, as we did under the previous Government.
That is why I and others hope to push the Government to go further on maternity and paternity rights. It vital that the Bill contains protections for mothers around maternity discrimination, but such measures will only work if we include the other 50% and bring dads into the equation. We do not really have a gender pay gap in this country any more: we have a motherhood pay gap and a motherhood penalty. Women face the discrimination of being made unemployed not only when they have children but because they might have children, and women who have kids find that when they go back to work, they are considered to be less committed, capable and competent. Women who are childless are six times more likely to be recommended for a job and eight times more likely to be recommended for a promotion.
The issue cuts the other way too, because there is a fatherhood premium as fathers are considered to be more reliable employees. We must not entrench these inequalities but overturn them, so that dads can be part of their kids’ lives and mums can get a fair crack at being in the workforce. A third of dads in this country take no paternity leave at all; half of them say that is because they feel pressured financially to go back to work early. Modern employers get the problem and are offering more than the statutory minimum. Some 92% of fathers who are job hunting say flexibility makes all the difference when they choose which job to take. After the pandemic, the number of stay-at-home dads increased by a third. Frankly, dads want to step up to the plate, whatever Members on the Conservative Benches may think, and mothers want them to be there too.
Making such changes matters to the economy. The loss of productivity that comes from women caring for their parents or their children means that millions are being cut out of our economy. We have some of the longest working hours for dads in Europe, and some of the shortest working opportunities for mums. Putting in measures to support paternity leave will be good for both sides of the equation. Let us not be the generation in which dads say they never got the chance to know their teenage kids, and mums say they never got the opportunities they wanted. Let us amend the Bill to ensure paternity leave matches maternity—
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
I will speak to the amendment, especially about the Bill being rushed through without full consultation.
On 13 May 2014, I tabled a ten-minute rule Bill on the Prohibition of Unpaid Internships, as Members will see in volume 580 of Hansard, column 593. On 14 November 2016, I tabled a private Member’s Bill, the National Minimum Wage (Workplace Internships)—volume 616 of Hansard, column 1156. On 27 October 2017, Lord Holmes of Richmond tabled the Unpaid Work Experience (Prohibition). And on 5 February 2020, I co-sponsored the Unpaid Work Experience (Prohibition) Bill introduced by Alex Cunningham, the former Member for Stockton North, now retired.
Despite unpaid internships being mentioned in the Government’s policy documents on work, they are not in the Bill. The Government have said that they will tighten up the ban, but there is no ban on unpaid internships—they exist, as they did in the last Parliament, not least with many a Member on the opposite side of the House. If there were such a ban, it would not have to be mentioned in policy documents.
A ban should have been brought in alongside the Bill. There will be a lot of hubris on the Government Benches about bringing forward a landmark employment Bill, with Labour Members saying the Conservatives did nothing, despite all the evidence laid out by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) in his excellent opening speech. [Interruption.] It is all very well burying one’s head in the sand, but every one of the Bills I brought forward got kicked into the long grass, not least my private Member’s Bill, when the only Labour Member present was the shadow Minister. If Labour MPs had turned up, we might have been able to get a closure motion, but they decided not to. That has been the story throughout. If the Deputy Prime Minister does want the Bill to go through, she needs to fight off whatever it was that stopped it each time; I always started out with the commitment that it would happen, and then somehow people were convinced not to do it. I say that in a constructive way to the Deputy Prime Minister, who I know very well.
An intern should be defined as a worker. We were talking about an amendment to the National Minimum Wage Act 1998 that says that work experience is important, but after 20 days or four weeks in work, an intern should be treated as an employee. Work should always pay, and if someone is contributing after that period of time, they are adding something to the business.
Bradley Thomas (Bromsgrove) (Con)
Does my right hon. Friend agree that the fundamental approach behind the Bill should be one of pragmatism rather than tribal ideology?
Sir Alec Shelbrooke
I am grateful to my hon. Friend; pragmatism is important when we talk about business. In that spirit, there is a pragmatic reason why the Bill should not be given its Second Reading today—perhaps at some point it should, but I fear it has been rushed through to meet the spin about the first 100 days.
I would wager that few Labour Members today had plans to talk about unpaid internships, which is a very important issue. I could talk for a very long time about unpaid internships, as I have for hours in this Chamber previously. To ensure equal opportunities for young people, the issue of internships is vital, but it is one that is sadly lacking from the Bill. That speaks to the amendment tabled by my hon. Friend the Member for Thirsk and Malton: the Bill has to some extent been rushed.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I draw attention to my membership of the GMB. I support this landmark employment Bill, the biggest expansion of workers’ rights for a generation. Today we see the difference that a Labour Government can make for people up and down the country.
Although I support all aspects of the Bill, I will focus specifically on the transport sector. During and following the covid pandemic, transport workers faced the short end of the stick of poor employment practice. I welcome the end of fire and rehire. That unfair practice was used as a sledgehammer against workers, particularly during the pandemic, by companies such as British Airways, which tried it on more than 35,000 staff members, including many of my constituents in Hounslow. BA staff who had worked for decades faced the prospect of being sacked and rehired on poorer pay and weaker terms and conditions.
After huge pressure from trade unions, Labour MPs and the Transport Committee, BA dropped its plans, but other firms such as P&O have also exploited the weakness in UK employment law that the Bill is intended to address. Those practices are still happening, as my hon. Friend the Member for Montgomeryshire and Glyndŵr (Steve Witherden) highlighted in his intervention on the Deputy Prime Minister. When workers were facing fire and rehire, Labour was clear that a Labour Government would ban that practice, and I am pleased the Government are doing that. I welcome clause 22.
On minimum service levels, the Bill will also repeal and scrap the previous Government’s Strikes (Minimum Service Levels) Act 2023—a farcical bit of legislation designed to limit strike action. In Committee, when I pushed the rail operators on the proposed legislation, it was clear that they had not sought it and they appeared to have no plans to use it. The fact that so few rail operators chose to use the powers once they were enacted showed that the companies themselves doubted their value and use.
This Bill also brings in much-needed modernisation of our maritime laws. In the last Parliament, the then Chairs of the Transport Committee and the Business and Trade Committee—one Conservative, one Labour—jointly wrote to the then Government about the need to update our laws to protect maritime workers. I welcome the Bill’s closure of the loophole whereby ships registered overseas previously did not have to inform the UK Government of collective redundancies, and the fact that this Government have committed to further strengthen workers’ rights at sea.
In conclusion—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. I call Shivani Raja to make her maiden speech.
Shivani Raja (Leicester East) (Con)
It is with great privilege and a deep sense of responsibility that I stand before you today, Madam Deputy Speaker. As I take my place in this historic Chamber, I am acutely aware of the profound trust placed in us by the constituents of our great nation. I wish to express my heartfelt gratitude to the people of Leicester East for electing me to represent them in Parliament.
My story, like that of many in Leicester, is one of heritage, resilience and opportunity. My parents arrived in Leicester from Kenya and India in the late 1970s, bringing with them cultural and faith traditions and a remarkable work ethic. They made Rushey Mead their home, and I was born and raised there. From Herrick primary school to Soar Valley college and De Montfort University, Leicester has nurtured me every step of the way and for that I am deeply thankful.
As is customary, I pay tribute to Claudia Webbe, my immediate predecessor, who served the constituency to the very best of her ability. Claudia followed in the footsteps of Keith Vaz who, alongside Paul Boateng and Bernie Grant, broke new ground in the representation of people of colour in Parliament. In the election, I had the unique experience of standing against both Claudia and Keith—a testament to the vibrant political landscape of Leicester East.
Leicester is a city of remarkable history and diversity. Leicester hosts the largest Diwali festival outside India. It is home to the UK’s longest running comedy festival. It is one of England’s oldest cities, so much so that we found a king under one of our carparks; for those who do not know, one of our earliest kings, King Richard III, was found under a carpark in Leicester. The University of Leicester is the birthplace of DNA fingerprinting. Leicester is also home to the National Space Centre and we are proud of our contributions to the arts, sciences and sports.
We have got it all going on in Leicester, but if Members remain unconvinced that Leicester has influenced their life, because perhaps they are not a former monarch or a scientist in their spare time, Leicester has also given Britain icons like the late Lord Richard Attenborough and—very much living—Sir David Attenborough, Gary Lineker and Peter Shilton. Our city is where Walkers crisps were born and where fashion guru Gok Wan grew up. Leicester’s influence even extends to music, with entertainers like Engelbert Humperdinck and Showaddywaddy. So whether you have tucked into a bag of ready salted, gone to the cinema to watch “Jurassic Park” or boogied on down to “Hey Rock and Roll”, you’ve got Leicester to thank.
This is what true diversity looks like. In fact, in 2013 Leicester was described as the most multicultural city in the UK. Today, 59% of people living in Leicester are from ethnic minority groups, and 41% were born outside the UK. But most relevant to today’s debate is employment and businesses in my constituency. Leicester is located at the heart of England, and local businesses are the lifeblood of our city. Leicester was recognised as the UK’s most entrepreneurial city—a title that reflects the resilience, creativity and determination of its people. Our entrepreneurial scene is not just about numbers; it is about stories, of those who dared to dream big, hustled harder, and turned their ideas into reality.
The Employment Rights Bill threatens to undermine that spirit before those entrepreneurs have even made their first £1. The additional costs and regulations proposed will act as a barrier to entry, discouraging the very innovation and hard work that has earned Leicester that title. We must be cautious not to stifle the ambition of small business owners, who are the backbone of our economy. Our journey is one of innovation and community—a story of people coming together across different sectors and backgrounds to build something truly remarkable.
In a city as diverse as Leicester, many rely on flexible work to balance family commitments, faith observances or second jobs. By imposing blanket regulations that do not consider the unique needs of our communities, the Bill risks alienating the very workforce it aims to protect. We must ensure that employment regulations support businesses and workers alike. Imposing regulations that add costs without first offering support will harm the very people Labour claims to champion. For our small businesses in Leicester, many of which work with razor-thin margins, the burdens imposed by the Bill will be overwhelming. It is one thing to champion workers’ rights, but quite another to do so in a way that risks the survival of the very businesses that provide the jobs.
Let us not forget that successful businesses are the best way to secure meaningful long-term employment. Our decisions in this House will shape the future of our country for generations to come. It is imperative that we approach these challenges in a spirit of collaboration, transcending partisan divides to serve the best interests of all our constituents. With our nation facing economic challenges, the Bill risks raising costs for consumers and worsening the cost of living crisis, particularly in communities like Leicester East, where many are already struggling to make ends meet. We must find solutions that protect workers without penalising local businesses and their customers.
I am honoured to stand before the House as the Member for Leicester East, and I warmly invite you, Madam Deputy Speaker, and all hon. Members to visit our great city. You can join us for our glorious Diwali celebrations, our annual Pride parade or our vibrant Caribbean carnival. Come and experience the city where fish and chips are just as popular as samosas and kebabs, and where Stilton and Red Leicester cheeses sit alongside Italian pizza and French patisserie. The road ahead may be challenging, but it is also filled with possibilities. I firmly believe that not only Leicester’s but our country’s greatest days are ahead of us, and I am grateful to be able to play my part, championing my constituents in that endeavour.
Madam Deputy Speaker (Ms Nusrat Ghani)
I had to let that speech run over; I was waiting for my invitation to have samosas.
Mark Ferguson (Gateshead Central and Whickham) (Lab)
I pay tribute to the maiden speech of the hon. Member for Leicester East (Shivani Raja). I enjoyed her reminiscences about her community, and hearing about some of the more lively figures from the recent history of the Labour party. I proudly draw attention to my declarations in the Register of Members’ Financial Interests, which include my former role working for Unison, my membership of Unison, my donation from Unison, and being co-chair of its parliamentary group. Unison is Britain’s largest union, representing public service workers and in particular the low-paid women who will benefit so much from the Bill.
I pay tribute to all those who have worked tirelessly for years to build consensus around these changes—the biggest changes to rights at work in a generation. In particular, I thank those within Labour’s affiliated trade unions, on the Front Bench, and in Labour’s policy team for their hard work and dedication. Hon. Friends, including my hon. Friends the Members for Worsley and Eccles (Michael Wheeler), for Halifax (Kate Dearden), for Birmingham Northfield (Laurence Turner), for Tipton and Wednesbury (Antonia Bance) and for Knowsley (Anneliese Midgley), have been engaged in this work throughout. That is not an exhaustive list; many others on the Government Benches have worked tirelessly to help us to reach this day, and deserve immense credit.
This is the kind of Bill that is at the heart of why we are here. The Labour party was founded upon the idea that working people deserved representation in this place, that we were fit to govern, and that those who put in the bulk of the graft deserved to reap the rewards of their labours. Today is a landmark day in our party’s history, and in the history of employment rights in this country. The Bill is crammed full of improvements that are each worthy of a lengthy speech; however, I am down to my last minute and twenty seconds, so I will not do that. Let me say this instead: if you work, the Bill will change your working life for the better. We know why these changes are necessary. One in five of us is suffering from the effects of insecure work, with low pay, exploitative zero-hours contracts, and little or no sick pay.
Ms Polly Billington (East Thanet) (Lab)
My hon. Friend mentions that the measures in the Bill will be good for employees. Does he agree that they will also be good for business? My constituency’s economy is based on the entrepreneurialism of lots of small businesses and individuals creating work for themselves and for others. Does he agree that the Bill will support good employment policies in small businesses, helping with productivity and the retention of staff?
Mark Ferguson
I could not agree more. The people who will benefit from the Bill the most are not those who will buy stocks and shares but those who will spend their money on our thriving high streets, which this Government will build.
The care workers and teaching assistants I was proud to represent while working for Unison deserve pay and conditions that match the task of looking after us when we grow up and grow old. Stronger rights to collective bargaining through the school support staff and adult social care negotiating bodies are essential for recruitment and retention in those overlooked sectors. Could the legislation go further in those areas and in others? Of course—that is the nature of any Bill. The work of change is never done, but we should be in no doubt that this is the biggest, boldest and most welcome set of employment rights changes that all but the most experienced of us in this Chamber have considered. I know that the Government are committed to consulting widely with unions and businesses alike to ensure that.
This is what having a Labour Government means—rights from day one: banning exploitative zero-hours contracts; ending fire and rehire to lift employees from the insecurity felt by those working in the foundations of our economy; taking action on sick pay, and maternity and paternity rights; and holding unscrupulous employers to account through a genuine and comprehensive enforcement body. The Bill is pro-business, pro-worker, and focused on the challenges that millions of us face every day. It is one of the greatest honours in my life to have been involved with it, to speak on its behalf, and to vote for it this evening, mostly because I know the impact that it will have on my community in Gateshead Central and Whickham. The task of rebuilding Britain after 14 years of Tory rule is great, but our ambition for this country is greater still.
Graham Stuart (Beverley and Holderness) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests, and the contribution from small businesses to my election campaign earlier this year.
History is repeating itself. Labour’s antipathy and lack of understanding for business, and small business in particular, is rearing its ugly head again. This legislation will have ruinous results for those who desperately need a job and hope. The Federation of Small Businesses says:
“This legislation is a rushed job, clumsy, chaotic and poorly planned.”
The federation goes on to say that the Bill will increase economic inactivity. That is a rather sanitised way of referring to the ruined lives, dashed hopes and huge waste of human potential that the Bill will bring about. At the end of the debate, we need to hear from a Minister how the Bill will be changed so that it supports rather than undermines the 4 million additional jobs created since 2010 under the Conservatives.
The economic impact assessment, so rudely provided so late in the day, shows that the costs of the Bill will fall disproportionately on small businesses—something that we have heard no acknowledgment of from Government Members. Five out of nine measures will have that effect. Do Ministers have any plans to change that?
Joe Robertson (Isle of Wight East) (Con)
Does my right hon. Friend agree that provisions that are bad for small business are also bad for workers, bad for taxpayers, and bad for those who rely on welfare payments?
Graham Stuart
I entirely agree, and places like the Isle of Wight, with so many hospitality businesses, will pay a particularly high price. We should celebrate and support our wealth creators, not burden them with excessive taxes and regulations that kill the drive to work, invest and create wealth. Yet that is the destructive path that Labour is taking, with a jobs tax planned for every worker’s national insurance contributions in the Budget in a couple of weeks, and this Bill to deter SME employment.
Antonia Bance (Tipton and Wednesbury) (Lab)
The impact assessment published earlier was 900 pages long, which compares pretty well with some of the impact assessments published under the last Government, a number of which I had the misfortune to read. It confirms that the cost to business will represent less than 0.4% of total employment costs across the economy, and the majority of that will be transferred directly into the pockets of workers, helping to raise living standards and offset the last 14 years of standstill wages. Has the right hon. Gentleman managed to read the impact assessment yet?
Graham Stuart
Well, the impact assessment was provided rather late, but it is always good to have a spontaneous contribution to any debate.
Removing the lower earnings limit and the waiting period will also disproportionately hurt small businesses and microbusinesses. That is set out in black and white in the economic assessment, so will Ministers make changes? It is with dark comedy that the Government say that their top priority is economic growth. Labour inherited the fastest growing economy in the G7, with 4 million more people in work than in 2010—4 million. In 2010, by comparison, we inherited a note that said that the money was all gone.
Darren Paffey (Southampton Itchen) (Lab)
Will the right hon. Gentleman give way?
Graham Stuart
I will not.
History tells us that Labour Governments always end with unemployment higher than when they began. They do not do it because they are evil. As has been said, no one in the Cabinet comes from a business background; they simply do not understand the realities. This Government seem bent on destroying employment even faster than their predecessors.
Small businesses are the lifeblood of our economy. They do enormous social good. As the FSB says, smaller employers are
“the ones most likely to give opportunities to people furthest from the labour market, such as those returning after long-term health issues or caring responsibilities.”
Yet under these proposals, the
“Plans to give day one unfair dismissal rights to new employees will add to the risks associated with hiring people.”
That increased risk will inevitably deter small employers from taking on new people for fear of facing an employment tribunal simply because a new recruit turns out to be unsuited to the role. How will Ministers ensure that a company selling food at summer festivals is not bankrupted by having to offer a contract to someone who is not needed after that period is over?
The Government have had a disastrous start. It is no wonder that the legislation is chaotic and poorly planned, given that Labour Cabinet Ministers are never early for work but always early for the free buffet at the Emirates or at Taylor Swift concerts. The Deputy Prime Minister is selling out the country’s interests in favour of trade union interests—selling out the people who vote Labour for the people who fund Labour. The Bill is a catastrophe, and I hope the House opposes it today.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
I am proud to refer the House to my membership of Unite and my declarations in the Register of Members’ Financial Interests, and to advise Members that I have run several of my own businesses.
This is a great day, and I wholeheartedly congratulate my right hon. Friend the Deputy Prime Minister and colleagues for introducing this landmark legislation, which will transform the lives of millions of workers for the better. We know why it is needed: just look at the fire and replace at P&O, the fire and rehire of British Gas workers, and the denial of rights at Deliveroo and Hermes. The legislation has long been in development, and I was honoured, when I was shadow Secretary of State for Employment Rights, to work with our trade unions and other stakeholders on the new deal for working people. I place on record my thanks to the Institute of Employment Rights—particularly Lord Hendy KC and Professor Keith Ewing—and to my staff Karl Hansen and Eli Machover for their work on that paper.
I am delighted that Labour will give all workers day one rights on the job, ban zero-hours contracts and outlaw fire and rehire. In the Bill, we establish the day one rights to claim unfair dismissal and to paternity, parental and bereavement leave, we create a right to a guaranteed-hours contract and we tighten unfair dismissal protections. Labour will modernise union balloting, simplify union recognition and improve the right of entry to workplaces. The Bill removes unfair balloting laws on recognition and industrial action, and creates new duties on employers to facilitate unions’ access.
I am proud that that is being done, but much of the Bill is about setting up a framework, and there will be significant further steps, consultations and work to craft the detail. In particular, we cannot finally consign insecure work to history until we have resolved a defined single status of worker. I recognise the Government’s commitment to consulting on that. On zero hours, I trust that Ministers will provide reassurance that employers will not be able to exploit new rights to guaranteed hours by issuing short-hours contracts. There are many other issues arising from that, but I ask Ministers to consider in particular a statutory right to paid kinship leave on a par with adoption leave.
This is truly a landmark Bill, and it is crucial that we make these changes as soon as possible. This historic Bill will help to deliver the well-paid, secure, dignified, skilled and productive jobs and the prosperous economy that we all wish to see. I am delighted to support it this evening.
Saqib Bhatti (Meriden and Solihull East) (Con)
Many small business in Meriden and Solihull East are rightly concerned about the Bill for a number of reasons. Since the election, I have spoken a number of times demanding that the Government be more ambitious for growth, for our entrepreneurs and for our small businesses. Indeed, it is the moral duty of every Government to unleash the full potential of our businesses and, where possible, to create an environment to embolden entrepreneurs and encourage economic growth.
Instead, the Bill will kill off any ambition and any focus on growth. If we want to focus on inclusive growth, we must nurture our start-ups, scale-ups and small businesses, and let them be nimble in how they operate, rather than shackling them. That is how economic magic will start to happen. The businesses to which I have spoken are worried about the insufficient consultation. The Government’s impact assessment, which we received late, shows that small businesses are likely to be hit hardest. The costs, according to the Government’s own analysis, will be in the low billions—up to £5 billion. For a Government who keep talking about the alleged black hole, those low billions seem rather reckless. It proves that this is nothing more than an ideological Bill that does not ensure growth.
Andrew Griffith (Arundel and South Downs) (Con)
Does my hon. Friend agree that, with just nine days until Halloween, the impact assessment we have seen today is an early horror show?
Saqib Bhatti
My hon. Friend makes a valid point. A lot of people are in a holding pattern for business decisions on investment and employment.
All the Bill will do is leave our businesses at the mercy of the trade unions and take us back to the 1970s. It will merely align us with the growth-gobbling guidelines set by bureaucrats in Brussels and hold our businesses back. It is not just me who thinks this; I am going by the Government’s impact assessment. The CBI claims that employers expect Britain to become the worst place to invest and do business over the next five years—a damning indictment of the Government.
Markus Campbell-Savours (Penrith and Solway) (Lab)
Will the hon. Gentleman give way?
Saqib Bhatti
I will not.
What businesses want is less government, less regulation and more freedom. When making employment decisions, they require certainty and flexibility so that they can hire more people, but the Bill threatens to undermine the agility of businesses in ensuring that their workers maximise productivity. It does not encourage businesses to take risk, hire a budding new employee and reap the rewards; in fact, it does the complete opposite. The Federation of Small Businesses calls this legislation “clumsy and chaotic” and suggests that it will “increase economic inactivity.”
Let us be clear: the Bill is not really about employment rights or better conditions. Its focus is on repealing the 10-year ballot requirement on political funds, removing the opt-in default for trade union political funds, removing the need for proper consent to form a trade union, and so on. It is not the Employment Rights Bill; it is the trade union appeasement Bill. The Government are not prepared to stand up to the unions. We have seen them cave in to train drivers and give sweetheart deals without any savings for the taxpayer.
Saqib Bhatti
I will not.
We have seen the unions hold the Government to ransom at the expense of hard-working taxpayers. That is why the Bill is bad for small and medium-sized businesses—those arguments have been made already. Our SMEs cannot afford dozens of French-style regulations that bolster the power of the trade unions and threaten to increase the cost of employment by over £1,000. I am speaking to raise the concerns of many small and medium-sized businesses in Meriden and Solihull East about this legislation. It is rushed—businesses have not been properly consulted—and it gives more power to the trade unions. It will fail to maximise productivity and will severely weaken the case for businesses to hire new employees. It is a flawed Bill serving a flawed ideology.
Imran Hussain (Bradford East) (Ind)
I refer Members to my entry in the Register of Members’ Financial Interests.
I support and welcome this transformative Bill. I place on the record my thanks to my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald), the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), and the Deputy Prime Minister, with whom I have had the pleasure of working to play a small part in bringing this transformative legislation to the House.
In reality, the balance of power in our workplaces has been fundamentally set against employees for too long, meaning that the UK has some of the weakest labour protections in Europe, with legislation curbing the rights of working people to organise in defence of their rights, and insecure contracts and poor wage growth leaving one in five people struggling in poverty.
Under the last Tory Government, we saw an explosion in the growth of exploitative zero-hours contracts, unscrupulous fire and rehire practices, and the unforgiving and abusive gig economy. Ordinary working people across the country have experienced the most sustained period of wage stagnation for hundreds of years compared with our counterparts across Europe. Despite that exploitation of working people by bad bosses, the Tories never strayed from their mission of dismantling the power of trade unions to secure better jobs, pay and conditions for the ordinary people they represent, even in the middle of a cost of living crisis.
The Bill that we are discussing today, however, sets us on the road to implementing the transformative new deal for working people and to repealing the last Tory Government’s draconian anti-trade union legislation, which restricts people from organising in defence of their pay, terms and conditions. Spanning over 30 different measures, the Bill could give any of us a lot to talk about. However, as time does not permit that, I will concentrate on two or three areas.
With the establishment of a framework for fair pay agreements in the adult social care sector, the Government have acknowledged the immense benefits that collective sectoral bargaining can play. Social care workers are among the most crucial yet worst paid and badly treated groups of workers in our economy. I very much hope that the Government will introduce that framework for further sectors, and I encourage them to do so. Secondly, by ensuring that workplaces offer a guaranteed-hours policy to end the exploitation trap of zero-hours contracts that millions of workers find themselves in, the Bill ensures that we can provide the eight in 10 workers who desire greater stability more certainty over their contracted hours.
Thirdly, the Bill takes an important step towards widening access to statutory sick pay by removing the requirement to earn the lower earnings limit, and by making SSP payable from the first day of sickness. My sincere request to the Government is that, with the rate currently at £116.75 per week, we need in the consultation process—
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests. I rise today to express my concerns about the impact of the Employment Rights Bill on one of the most vulnerable groups in our workforce: seasonal workers. Those individuals form the backbone of key sectors such as tourism, agriculture and retail, particularly in my constituency of Bognor Regis and Littlehampton, where many depend on seasonal jobs for their livelihoods. I fear that the Bill will put their livelihoods at risk, as well as the viability of the businesses that employ them.
The devil is in the detail, and detail is what the legislation lacks. Labour claims that the Bill will protect workers, but for seasonal employees the increased regulation will likely have the opposite effect. Small and medium-sized businesses that rely on flexible, short-term contracts to meet seasonal demand will face rising costs and greater bureaucracy when trying to bring on staff. Clause 1 on the right to guaranteed hours is so laissez-faire about how that will be implemented in a real-world business environment that it leaves significant ambiguity and doubt in employers’ minds.
Graham Stuart
Does my hon. Friend agree that we need more detail from the Minister tonight on that specific provision, before the House can in good conscience give the Bill a Second Reading?
Alison Griffiths
I absolutely agree with my right hon. Friend that detail is precisely what is needed for the Bill to be implemented effectively.
In my constituency, seasonal employers such as theme parks are at the mercy of the British weather and a short season. On a rainy day takings will be minimal, and managing costs accordingly is vital to remain viable. Moreover, the student and retired populations in my constituency value the flexibility that those contracts offer. The Bill will disincentivise employers from offering short-term opportunities and reduce employment options for those who depend on temporary work.
Rebecca Harris (Castle Point) (Con)
My constituency also has a lot of seasonal workers and a seaside economy. Does my hon. Friend agree that young people often get their first step on the job ladder through those jobs? They may well not get that opportunity if the legislation is passed.
Alison Griffiths
I thank my hon. Friend for a stellar point. I think most of us, certainly on this side of the Chamber, started our working careers in those jobs—I certainly did. Disincentivising employers from offering short-term opportunities will reduce those employment options.
About 1 million people aged 16 and over reported being employed on a zero-hours contract between April and June 2024. On average, those workers worked fewer hours per week than others, and 60% said that they did not even want more hours. In the hospitality sector, 90% say that it is their desired contract.
In conclusion, we must ensure that protecting workers’ rights does not come at the cost of the jobs they rely on. I urge the House to carefully consider the consequences and to amend the Bill to safeguard opportunities for seasonal workers.
Lola McEvoy (Darlington) (Lab)
I refer Members to my entry in the Register of Members’ Financial Interests—I am a proud trade union member. It is with great pride that I rise to speak on the Bill today. I have spent my career championing a better deal for working people at the Living Wage Foundation, the organisation that works tirelessly to champion the plethora of business benefits of being a good employer, as well as at the GMB union, where I was proud to work alongside an army of volunteer trade union reps who have great courage in standing up for their colleagues, day in, day out.
The Bill has been warmly received by business because it is not radical. The Bill is reasonable, and it is illustrative of the way that Labour will govern for the time we are given that privilege. It is reasonable that people can earn a minimum wage that meets the cost of living. It is reasonable that people cannot be forced to sign away their current terms and conditions or lose their job. It is reasonable that people are not sexually harassed at work. It is reasonable that people working the same shift pattern, week in, week out, are given contracts that protect and reflect that. The Bill will do all that and more. The Bill will right some of the wrongs that have been pushing working people into wholly unacceptable hardship over the last 14 years.
In the spirit of that mission-led approach to Government, I ask the Minister to consider the following points that will improve physical and mental health outcomes, as well as support more people back to work. Will the Minister consider paid time off for preventive cancer screenings? I met a woman who worked in a hospital as a key worker for a private company. She could not afford to take unpaid leave to get her smear tests, so she missed them and then discovered she had stage 4 cervical cancer. Paid time off for preventive screenings, which good employers already offer, will support our health mission as well as save lives. People must not have to choose between catching cancer early and feeding their families.
On parental rights, I welcome the strengthening of maternity rights in the Bill. For too long women have been penalised for having children, and the hard truth is that mothers are being forced to leave the workforce or take low-paid part-time work to make ends meet. I appreciate that the Bill will make paternity rights a day one right, and I look forward to the review on parental leave, because we need to normalise fathers being able to support their new families and bond with their babies. Protecting fathers to enable them to take paternity leave will help level the playing field and improve men’s mental health, as fathers want to be with their babies.
Dr Zubir Ahmed (Glasgow South West) (Lab)
Sixty-one per cent of people in my constituency are in poverty despite being in work. Does my hon. Friend agree with me that it is only when work is made secure that we can truly grow our economy?
Lola McEvoy
I absolutely agree, because people want to work, and they want to work in good-quality jobs that allow them to spend a decent amount of time enjoying the things that matter in life.
The Bill will make thousands of my constituents in Darlington better off, safer and more secure at work. More than that, it will benefit businesses’ bottom lines, as they will have a happier, healthier and more productive workforce. That is essential for the growth we need to see, it is good for working people, it is good for business, and it is great for the economy.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Katie Lam to make her maiden speech.
Katie Lam (Weald of Kent) (Con)
Thank you, Madam Deputy Speaker, for letting me make not just my first contribution to this House, but the first contribution from the newly formed constituency of Weald of Kent. My predecessors are illustrious: William Hart Dyke helped invent tennis, Charles Barnett was a first-class cricketer, and Edward Percy Smith was a scriptwriter like me, penning the Hammer Horror hit “The Brides of Dracula”. We even have a Prime Minister in our history: Benjamin Disraeli began his parliamentary career representing a patch of Kent that includes the village of Linton, which is now in my constituency. However, only one of my predecessors, Ann Widdecombe, can boast Britain’s highest honour: an appearance on “Strictly Come Dancing”. [Laughter.]
Two of my most recent predecessors have left this place. Damian Green and Damian Collins both worked doggedly for the area and for the country in government—Damian Collins especially in the field of digital, culture, media and sport, the Select Committee for which he chaired for many years, and Damian Green with senior roles in government, all the way up to First Secretary of State. Both served my constituents with distinction, and on their behalf, I would like to say thank you.
I am not the first politician in my family. My grandmother came to Britain in 1937 at the age of 13 as a refugee from Germany. Her grandfather, Paul Heide, was a state senator and a fierce critic of the Nazis. When Hitler came to power, the whole family were arrested and stripped of their citizenship. After years in prison, Paul jumped out of the window of his second-floor cell and made it to Czechoslovakia despite his broken ankle. There, the family set up a resistance radio station broadcasting back over the border, until one night they were raided by the SS and one of the operators was shot dead. They managed to escape, and fled to England and freedom. My grandfather’s family were far less fortunate: Jews from Amsterdam, almost all of them were murdered in Sobibor and Auschwitz. One of them was eight years old.
My grandparents’ stories helped make me who I am, so even as a small child, I already knew the power of politics. It is an honour to take my place in Parliament, to serve my constituents and this country—the country that saved my family and saved the free world—but freedom does not come for free: it must be fought for. Every time I come into this Chamber, I see the shields that surround us and think of our country’s sacrifice. Colonel Victor Cazalet, whose shield is on the other side of the Chamber, lived in Cranbrook in my constituency. He had already served with distinction in the first world war, receiving the Military Cross for gallantry in 1917. He was killed in an air crash in world war two, as was Commander Rupert Brabner, whose shield is a few places further down. Commander Brabner was the Member for Hythe, a constituency that borders my own, and an ace Royal Navy pilot awarded the Distinguished Service Cross. We will remember them.
The weald of Kent has played its part in our nation’s sacrifices. Headcorn aerodrome operated in the second world war as RAF Lashenden, at the same time as Benenden school was converted for use as a military hospital, and Coxheath was once the British Army’s largest training ground. The constituency may be new, but the Kentish weald is anything but: Appledore was raided by the Vikings in 893, and the Archbishop of Canterbury had his palace at Charing as far back as the year 900. Enriched by ironmaking in Biddenden and clothmaking in Marden and Staplehurst, today the weald of Kent boasts hundreds of square miles of the most gorgeous countryside, surrounding two delightful towns—Tenterden and Cranbrook—as well as over 100 of Britain’s most charming villages, many 1,000 years old or more. From Aldington to Yalding, every one of the weald of Kent’s 56 civil parishes is a rural jewel. The area is awash with medieval churches, cricket clubs, intricate gardens, and a mosaic of farms growing the nation’s food—and now, vineyards growing the very finest British wine.
Do not take my word for it: the glory of the weald of Kent has been immortalised in films, books and television shows. H.E. Bates was inspired by his home, Little Chart, to write “The Darling Buds of May”, and the TV adaptation was filmed in Pluckley and neighbouring Bethersden. Godmersham Park was the inspiration for Jane Austen’s “Mansfield Park”, while Agatha Christie fans will know Chilham as the backdrop for episodes of “Poirot” and Smarden as a television stand-in for Miss Marple’s home, St Mary Mead. The steam train in the opening shot of “Downton Abbey” is the Kent and East Sussex railway, rolling from Rolvenden to Wittersham Road, and one of my favourite films, “Kind Hearts and Coronets”, shot its countryside scenes in Boughton Monchelsea.
Lastly, I should like to give a few personal thanks. First, I thank hon. Members on the Government Benches, for it was while delivering leaflets for their party that Grandma and Grandpa Lam met in the late 1940s. Had the Mill Hill Labour Club never existed, neither would this Conservative. [Laughter.] Secondly, I thank Alex, my family and my friends for all they have done for me. Thirdly, I thank the best Conservative association in the country. Finally, I thank the people of Weald of Kent who have sent me here to represent them. I will never look at the responsibility of being the Member of Parliament for Weald of Kent as merely a job; I will always treat it as an honour.
Madam Deputy Speaker (Ms Nusrat Ghani)
We now have another maiden speech. I call Sarah Smith.
Sarah Smith (Hyndburn) (Lab)
Thank you, Madam Deputy Speaker. As a proud trade union member, I refer to the House to my entry in the Register of Members’ Financial Interests, and congratulate the hon. Member for Weald of Kent (Katie Lam) on her moving maiden speech.
It is with great pride and humility that I rise today for the first time as the elected Member for Hyndburn and Haslingden. I start by paying tribute to my immediate predecessor, Sara Britcliffe, for her commitment to Hyndburn and for leading the way as the first woman to represent the constituency. I cannot make this speech without also paying tribute to the previous Labour Member, Graham Jones, whose selfless support and kindness I am privileged to have received. Graham is the most fierce champion of Lancashire: he has fought tirelessly for the people of Hyndburn, and is a man you always want in your corner. With the north-west of England being scourged with gambling-related suicides, particularly among young men, Graham led the successful campaign to reduce the maximum stake on fixed-odds betting terminals from £100 to just £2. That campaign will undoubtedly have saved and improved many lives.
It may surprise Members when I say that Hyndburn is not a real place. No one really relates to being from Hyndburn; instead, they identify proudly as a resident of Accrington, Great Harwood, Rishton, Altham, Oswaldtwistle, Clayton-le-Moors or Church. Each of those communities has its own rich history, culture and identity. My constituency is the home of the largest Tiffany glass collection in Europe, the Accrington Pals, and the Nori brick, which was used to build the Empire State Building. It is also the home of one of the 12 founder members of the football league, whose legacy is continued by Accrington Stanley football club. I am sure the House will join me in congratulating the boys on their third win on the trot against Barrow at the weekend.
Perhaps most significantly, my constituency was the engine of the industrial revolution during the 19th century. The invention of the spinning jenny, the mechanisation of calico printing, and the creation of turkey red and khaki dyes enabled the globalisation of the textile industry, but the huge wealth that the mill owners made was often at the cost of the workers, whose living and working conditions were terrible. I also represent the magnificent and diverse town of Haslingden, whose coat of arms reads “Nothing without labour”. That motto was a statement of solidarity: in 1826, amid loom-breaking riots in east Lancashire, hundreds of people in Haslingden attacked machinery in protest at pay cuts and their awful working conditions. Many perished due to poverty and hardship, but by 1850 and with the support of churches and reformers, a minimum wage was eventually introduced.
We stand in this Chamber almost 200 years later, and although things have of course improved hugely, too many of my constituents are still struggling to make ends meet with zero-hours contracts, low wages and insecure work. While in the 19th century, workers had to literally fight for basic rights, we now—thanks to trade unions and the Labour party—have representation of working people in this more civil way. That is why I welcome this Bill, which strengthens employees’ rights, stops the exploitative use of zero-hours contracts and, importantly, gives people the right to maternity and paternity pay from day one.
Hyndburn and Haslingden is a magnificent and beautiful constituency that I am proud to call home. It is where my husband James grew up and where we got married, in the beautiful church of St Peter and St Paul’s where his dad, Paul, was the vicar for 18 years. As well as showing dedication to his parish, Paul was instrumental in establishing the sixth-form provision at St Christopher’s school, which has changed the lives of countless young people. Tragically, we lost Paul within days of my election, so he is not here with us today, but I will continue to fight to break down all the barriers to opportunity that our children and young people face.
Without my family, I would not be standing here. I want to put on record how grateful I am to my parents, Rosemary and Gary, to my brother Mark, and to Margaux, James, Ellie and both the Ruths for believing in me and standing by me every step of the way. As a Christian, I also give thanks to Jesus for giving me this opportunity. As I go on this journey, I will remember always the verse in Micah and aim to carry out justice, to love mercy and to walk humbly with God throughout my time here.
I first got involved in politics because I think it is wrong that, far too often, the postcode where people are born determines so many of their life outcomes. For as long as I am privileged to represent Hyndburn and Haslingden, I will work tirelessly to ensure that children born in Clayton have the same life chances as those born in Chelsea, and I will make it my mission to represent them in the corridors of power, but I will also make it my mission to be present, transparent, and accessible as a local champion for the residents of Hyndburn and Haslingden.
Wera Hobhouse (Bath) (LD)
I congratulate the last two speakers on their powerful maiden speeches. Both of them were most moving. As we always discover in this place, there is more that unites us than divides us. What unites me with the hon. Member for Weald of Kent (Katie Lam) is clearly Jane Austen. I say to the hon. Member for Hyndburn (Sarah Smith) that I lived in east Lancashire for 15 years, and I know the area well. I was sorry to hear about the loss for her family.
I am pleased that many of the measures that we Liberal Democrats have been campaigning for over many years have been included in this Bill. I am most pleased about the reinstatement, in clauses 15 and 16, of the original wording of my Worker Protection (Amendment of Equality Act 2010) Act 2023. Introduced as a private Member’s Bill, my Act amended the Equality Act 2010 to better protect employees from workplace harassment and sexual harassment. In addition to creating a direct preventive duty, it would have created new liabilities for employers in cases of third-party harassment, unless employers took all reasonable steps to prevent it. That would have created protections similar to those that were originally in the Equality Act 2010, but were removed by the Enterprise and Regulatory Reform Act 2013. Amendments to my Bill in Committee in the Lords removed that clause, so that no such liability was created. The ridiculous argument was made that it would have prevented free speech. It therefore remains the case that employers have no liability for harassment of staff by third parties. My original Bill would also have created a new legal duty for employers to take “all reasonable steps” to prevent sexual harassment of their employees. As a result of amendments made by the Lords, that was reduced to “reasonable steps”.
Since my Bill passed into law, excellent progress has been made. A study by Culture Shift found that 66% of businesses felt that the prevention of sexual harassment is of high importance. However, according to WorkNest, three quarters of employers cited protection from harassment by third parties as a concern. There is clearly an appetite among businesses for including these protections in the Bill. Too many people suffer still from sexual harassment in the workplace. I congratulate the Government on taking further steps to remove that blight on our workplaces.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
As an MP from Cornwall, where we have seasonal workers aplenty, I should say that although the Bill talks about a suggested reference period of 12 weeks, after which average hours will be offered, employees do not have to accept that if they do not want to. They can choose to stay on zero-hours contracts.
We have a large demand for social care in Truro and Falmouth. Our population tends towards an older demographic. As many people leave friends and family to retire to Cornwall, the availability of care is especially important. Assistance for people who have disabilities, so that they can live independent lives and be supported into work if they choose that path, is crucial. Skilled care workers are chronically underpaid for what they do—they are often on the minimum wage—and good people leak out of the system, as it pays more to work in the local supermarket.
I worked as a teaching assistant at a local secondary school—I declare my interest in the register as a Unison member—and I was also an equity partner in a trade union law firm, so I have some experience of employing people, too. The pay for working in a school in a supporting role can also be very low—sometimes minimum wage. What the care and school sectors have in common, apart from poor rates of pay, is that, as others have said, they involve highly skilled jobs that are incredibly important for our society, and those who work in them are far more likely to be women. The Bill has many provisions that will help with sick pay and parental leave, and will give protection from unfair dismissal from day one. It also improves family-friendly rights, provides for flexible working, and has measures to tackle zero-hours and minimum-hours contracts. However, it also specifically gives respect and recognition to social care workers and school support staff through a fair pay agreement for adult social care, and by reinstating the school support staff negotiating body. This will be a game changer for those low-paid workers, mostly women, who work in care and in schools. It will mean that pay, terms and conditions for care workers and school support staff are negotiated nationally, and that a minimum is set across the country.
I am so pleased that the Government have chosen those two sectors as the first to have the opportunity for fair pay agreements. Women with caring responsibilities are often limited in the hours they can work. Historically, that has meant that, however skilled and important their jobs are, they have not been properly rewarded or looked after. Changing that will be transformational.
Truro and Falmouth has Cornwall’s only acute hospital and the seat of Cornwall unitary council within its boundaries. That means that we have a large number of people who work in the public sector. Many of those jobs have been contracted out, and the terms and conditions for those roles have been gradually eroded. This Bill enables Ministers to create a code to prevent the emergence of a two-tier workforce when outsourcing occurs. A new national procurement statement will make sure that the Government use their contracts to raise employment standards, not dilute them. This employment Bill is a huge step forward, and I am proud of it.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
It is a pleasure to follow several excellent maiden speeches this afternoon.
For an economy to thrive, both employers and employees must feel protected. Protections enable both parties to draw comfort. However, this Bill does not uphold that principle. In its approach and in its drafting, this Bill has fallen off its axis. It has, without doubt, landed in a place where it overwhelmingly favours the employee, to the detriment of any working balance with the employer. This should come as no great surprise. After all, given the paucity of private sector experience in the Cabinet, it was almost inevitable that this Bill would be seen through the prism of trade union bias. Having studied the Bill, one cannot fail to conclude that the Ministers who commissioned it have no understanding of the struggles faced by small and medium-sized businesses up and down the country.
While there is much to be derided in the Bill, there are two points I wish to raise for Ministers’ consideration. First, the abolition of the qualifying period for bringing an unfair dismissal claim will inevitably mean a rise in the number of claims presented to the employment tribunal. This will flood an already overwhelmed system. I ask the Minister: what true impact assessment has been made of that?
Under this Bill, bringing a claim for unfair dismissal becomes, to all intents and purposes, a day one right. There is a lack of clarity about the length of any probation period and the obligations on an employer when seeking to dismiss in that period. Inevitably, these obligations will increase the burden on SMEs, which will not have the depth of resources of their larger counterparts. The predictable consequence is that small businesses are likely to sink under the weight and cost of these additional requirements.
My second point relates to the proposed changes in respect of industrial action and trade union relations. By repealing the Strikes (Minimum Service Levels) Act 2023, lowering the ballot threshold for union action and requiring employers to direct their staff towards unions, the Government have demonstrated their willingness to bow down to their union paymasters, to the detriment of hard-working businesses and industry. The public will see this for what it is: a cheap effort to curry favour with the unions while lining the pocket of the Labour party.
It is clear from my conversations with small business owners in Solihull West and Shirley that the Government’s proposals will only hinder growth and productivity. These measures fail to strike the balance between employer and employee. They will choke our courts, cripple small businesses and stifle employment growth.
John McDonnell (Hayes and Harlington) (Ind)
I remind the hon. Member for Solihull West and Shirley (Dr Shastri-Hurst) that across those European countries with the highest union density, people have the best wages and working conditions and the greatest productivity, which somewhat undermines his last argument. I refer you to my entry in the Register of Members’ Financial Interests, Madam Deputy Speaker.
We are calling this the Employment Rights Bill, but it is not about rights as such; it is about power. When trade unions first discovered the concept of solidarity in the early industrial revolution, they discovered that, through unity, they could exert power to influence, to improve working conditions and wages, and to secure a better overall quality of life. Since 1979—I started work a few years before then—successive Conservative Governments have understood the distribution of power, and as a result they have used legislation to undermine trade union rights, so as to reduce the power of workers to defend themselves at work and improve their working conditions. All that the Bill does—I welcome it wholeheartedly—is take a small step to rebalance that power. It will not just improve wages and working conditions, but lead to a better economic situation for all concerned—employers and employees—full stop. That is what it is about.
Andy McDonald
Would my right hon. Friend agree with me that the steps outlined in this Bill will help to address insecure work, and will allow people to enjoy decent, secure wages and dignified work, as well as to plan for their future and that of their family?
John McDonnell
Yes, and as a result, people will work better, increase their productivity and improve the profitability of companies, which is beneficial to us all. It is as simple as that. However—there is a “but”—there are a few points on which I would press the Government to go a bit further. The first is sectoral collective bargaining and fair pay agreements. In the early 1970s, 86% of our workforce was covered by collective agreements, but that is now down to 20%. Where collective agreements have operated, they improve productivity, wages and conditions, and increase industrial harmony in the economy. We as a Government are starting off by introducing them for adult social care, which I thoroughly welcome, because there is such low pay and exploitation in the sector. However, I would like to see an enabling clause in the Bill, so that we can move on swiftly to other sectors in which we can get agreement across the trade union movement and engage with employers.
The second point is on single worker status, to which my hon. Friend alluded. Consultation is taking place on that, and it is absolutely critical, because we have seen some of the most exploitative practices in parts of the economy where workers have been forced into bogus self-employed status.
The third point is on insourcing. The Government have promised the biggest reform of insourcing in a generation. There is no mention in the Bill of insourcing, but there is mention of reform to procurement, and it is important that through our reforms to procurement, we bring forward insourcing as rapidly as possible. Outsourcing has produced an insecure, low-paid form of employment that is already resulting in industrial strife. Over the next couple of weeks, we could see strikes in virtually every Government Department because of what is happening on outsourcing.
On fire and rehire, the question is what a company has to do to prove that there is financial stress because of the economy. I also have two final points. One is on the seafarers’ charter; it has been mentioned that the second stage of discussions are taking place. That charter is critical if we are to provide basic protections for seafarers. Finally, prison officers have been denied the right to strike since 1994, and even Tony Blair said that he would restore that. I want to see that in this Bill, and I shall table an amendment accordingly.
Joe Robertson (Isle of Wight East) (Con)
I congratulate those who have given their maiden speeches today and spoken with such passion for and about their communities.
There is much in the Bill that I support, and I support the sentiment behind it. I am sure there is common ground in wanting to improve conditions and rights for workers, but there is a balance to be struck, and I have grave concerns about some provisions in the Bill—those that increase burden and red tape on employers and on employees, and those that are a threat to and a drag on economic productivity.
My first concern is the unnecessary introduction of a new concept of statutory probation. As the law currently stands, workers get protections against things like unfair dismissal. Those long-standing principles have survived different Governments, and indeed survive in this Bill. The debate has been about when those rights are accrued—whether it is after two years of employment or one—and there has been a fluctuation. This Bill attempts to introduce those rights from day one, but then to row back on them by introducing a statutory probation period, during which, in the Deputy Prime Minister’s own words, there is only a “light touch” approach to unfair dismissal. It creates a new concept that is vague and unclear, and it will increase the glut of litigation in the employment tribunal. Indeed, it will need to do so to create case law so that employees and employers can understand what a “light touch” approach to unfair dismissal means.
My second concern is the increased burden on smaller employers. Indeed, that is contained in the Government’s own analysis, and much has been said about that, so I will turn to my third issue: specific burdens in specific sectors, such as social care. The Government’s own analysis says that the Bill will increase costs for employers, but employers in social care cannot bear any more cost. The Government have said they will bring forward reform of social care; that must come first, before this law is brought into force.
Robbie Moore (Keighley and Ilkley) (Con)
Does my hon. Friend agree that the crux of the issue is that the Bill is lacking in detail? The issues he is discussing have been identified and indeed referenced in the Government’s own economic analysis, and we cannot get into the detail of this debate without having that level of information on the face of the Bill.
Joe Robertson
I agree that the Bill lacks detail. It also contains a lot of powers that are intended to come about through secondary legislation. For example, we do not know how long that probation period will be, because it is not set out in the legislation.
Turning to the NHS, we understand that the Chancellor will increase the money to the NHS in the Budget but, as an employer, the NHS will have increased costs through this Bill. If national insurance contributions on employers are to be raised in the Budget, it will have that cost as well. That means there will be less money available to cut waiting lists. I urge the Government to delay this Bill, get the detail right and put some detail into it, and ensure that sectors such as health and social care get the support first so that, as employers, they can deal with the increased costs from this legislation.
Becky Gittins (Clwyd East) (Lab)
Madam Deputy Speaker, I refer you to my entry in the Register of Members’ Financial Interests, where you will see that I have worked for a trade union that is not affiliated to the Labour party and that did not donate to my campaign. You will also see a number of other trade unions listed, not because of any campaign donations or vested interests —I can see why Opposition Members were led there; that is far more familiar to them—but because of the fantastic trade union representatives who have supported me and, I am sure, many Members on the Labour Benches. For me, that was Jim, my Unite rep in my very first job when training as a finance management trainee, all the way through to Laura, Trudy and Claire, the GMB reps who looked after me and supported me in my job before I was elected to this place.
I rise in support of the Bill, which is a central tenet of the Government’s policy to put working people at the heart of our economy and make work pay. As I said, I am a proud trade unionist, and I am proud to stand alongside millions of working people across the country who we depend on to drive our economy and provide the services we all need. I wish to call out some claims that I have heard from Opposition Members throughout this debate—and before; they are quite tired claims—that supporting the advancement of people’s rights at work is in some ways a vested interest. When were the working people of this country ever just a vested interest? It is in the interests of the working people of this country that we should be governing.
As a former trade union industrial officer, I know that finding a way forward in collaboration with those on both the employee and employer side is not always the easiest thing to do, but it is always the right and most productive way forward, so I am pleased that within their first 100 days, as promised, this Labour Government have presented this excellent Bill, and in doing so have ripped up many of the provisions in the Trade Union Act 2016. Rather than ameliorate industrial relations, that legislation was symptomatic of an aimlessly combative approach in that area that the previous Government drove forward. The effect, as we sadly know, was some of the worst disruption in decades. The public responded in July; they had had enough of that toxic and self-defeating approach.
I am delighted that measures in the Bill will modernise employment laws, with much of the Trade Union Act 2016 dismantled and, quite rightly, thrown in the bin. This upgrade for workers’ rights establishes day one rights for parental and bereavement leave for millions of workers, and statutory sick pay will be strengthened. The Bill is part of the platform for that approach. I welcome its content and the commitment to work with all stakeholders to ensure that it is implemented in such a way that benefits all my hard-working constituents of Clwyd East.
Chris Law (Dundee Central) (SNP)
The SNP broadly welcomes the core elements of the Bill, having long called for many of these changes. We have been clear in our opposition to zero-hours contracts, fire and rehire, and other forms of precarious employment that strip workers of job security. Indeed, former MP Gavin Newlands tried twice to introduce such measures with a private Member’s Bill. We have supported the removal of the lower earnings limit for statutory sick pay and the end of the waiting period, allowing those who are ill to access support from day one. Provisions for unpaid parental leave, paternity leave, and the right to claim unfair dismissal from day one are progressive steps towards workers’ rights that we must endorse. Similarly, scrapping anti-trade union laws such as the Strikes (Minimum Service Levels) Act 2023, is an important step in restoring the ability of unions to properly represent workers.
Johanna Baxter
Does the hon. Gentleman agree that if he is supportive of workers’ rights, those Unison members who are currently on strike in Perth and Kinross have a valid claim to a decent pay rise from his Government?
Chris Law
I think the question that the hon. Member refers to is with the Scottish Government, and of course we listen to trade unions in all cases. Indeed, a fair pay settlement was agreed with all unions, until we heard about this one recently. Our former colleague, Chris Stephens, fought tirelessly for trade unions, and spoke passionately in this House about rights for workers.
However, Labour has not gone far enough or acted swiftly enough with this Bill. Gaps remain in its plans, with around half the promised reforms being kicked into the long grass through consultation, meaning that we will not see changes implemented until next year, the year after, or perhaps even 2027. Critical elements—such as the commitment to a single status of worker, the right to switch off, and addressing pay discrimination through mandatory reporting of ethnicity and disability pay gaps—are missing entirely. The Bill was meant to be a defining piece of Labour’s first 100 days in office, but what good is meeting that deadline if the meaningful reforms are missing or will not come into effect for years? This Government are looking overly cautious and hesitant, and in the past weeks people have been writing to me, asking whether that is because the Government want to delay and find a convenient way out of implementing the measures.
The SNP Government in Scotland have taken meaningful steps to promote fair work practices, such as supporting collective bargaining, achieving real living wage employer status, and closing the gender pay gap faster than the rest of the UK, which contrasts sharply with the environment created by the previous UK Government. Devolving employment law to the Scottish Parliament would ensure that no worker in Scotland is disadvantaged by Westminster Governments. Indeed, Scottish Labour’s 2021 manifesto supported devolving employment rights—that might surprise some MPs present today. I look forward to their support to ensure that employment law is devolved to Scotland during this Parliament, so that workers in Scotland never again have to see their employment rights eroded by any future Tory-led Government.
The Scottish Trades Union Congress general secretary, Roz Foyer, commented that
“the Employment Rights Bill isn’t the terminus. It’s the first stop. This can be the foundations on which we can build.”
I agree. It is imperative that workers’ rights are improved by the Bill, but it must go further and faster, and look to devolve those powers so that we can guarantee that the rights of working people in Scotland are protected and strengthened.
Madam Deputy Speaker (Caroline Nokes)
I call Dr Marie Tidball to make her maiden speech.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I refer Members to my entry in the Register of Members’ Financial Interests. I am a proud member of the GMB, Unison, and Community trade unions.
When I was born, the room in Barnsley hospital was filled with flowers. No one knew how long I would live for or what operations I might need. Our communities in Penistone and Stocksbridge nurtured me growing up, and world-class NHS care at Barnsley and Sheffield children’s hospitals enabled me to walk and follow my ambitions. My local state education in Penistone helped me to catch up, and to go on to study law at university and fulfil my potential. My inimitable parents taught me that there was no such word as “can’t”, as well as the values of fairness, equality and justice—values at the heart of this Bill. I will use my skills and experiences, as the MP for our constituency, to give back to the communities that gave me so much, including incredible teachers and teaching assistants who helped to make education a way to overcome people’s assumptions about my disability, and to feel free. Achieving health and education equality is a huge asset to our country and critical to the health of our economy.
I am proud to be the first Member of Parliament for Penistone and Stocksbridge in over 100 years to have grown up there. Our rich agricultural heritage has put food on the country’s table, and the grit and determination of local miners, the steelworks in Stocksbridge and ironworks in Thorncliffe powered the industrial revolution, with the latter also producing Churchill tanks, which defended our country in world war two. Those sites remain economically important today, with the specialist LIBERTY Steel now producing steel that powers our UK aerospace industry.
The landscape of our very special constituency has helped to shape our laws before. Poignantly, the day of the general election marked 186 years since the Huskar pit disaster on 4 July 1838, when flooding caused the pit to collapse, killing 26 children. That tragedy led to the Mines and Collieries Act 1842, which banned women and girls, and boys under 10, from being employed in underground work. I learned about that tragedy at school and I knew then, as I know now, that law and politics have the power to improve people’s lives. The past we inherit; the future we build. This Bill makes the biggest upgrade to workers’ rights in a generation, with the driving purpose to change the lives of people across our country and make them better off. Ensuring that the very special people of the place that made me continue to innovate to change the world will be central to the work I do here.
Like the blooming heather that sweeps down the moors past the crystal waters of our rivers and reservoirs, towards our towns and villages, talent bursts forth in our constituency out of the dramatic landscape, gruelling weather, and lives hard-worked and hard-won. People in my constituency literally shoot for the stars: Grenoside’s Helen Sharman was the first British citizen to go into space in 1991; Thurlstone-born Nicholas Saunderson was a blind 17th-century Lucasian professor of mathematics at Cambridge university; and England international footballer, John Stones, also hails from that village, and follows a long and proud history of footballers who have gone through Penistone Church FC.
This summer also saw Olympians made in our constituency. Gunthwaite’s Becky Moody won bronze in dressage with her horse Jagerbomb. Caden Cunningham, who won silver, was trained in Oxspring at Quest Taekwondo. Musicians abound, too. Alex Turner of the Arctic Monkeys makes sure that High Green is resolutely on the map. We can also boast stellar folk singers like the talented Rachael McShane of Bellowhead and Cawthorne’s award-winning Kate Rusby, whose elegiac music of home has healed many a heart and inspired the mind. Ecclesfield produced Barry Hines, the author of “A Kestrel for a Knave”, which was turned into the acclaimed film “Kes”. He documented working-class lives for more than 40 years. Local author Matt Coyne’s “Frank and Red” was the literary comedic mug of hot chocolate that kept me going through the general election.
While our beliefs start from a different place, I share my predecessor Miriam Cates’s passion for education; I hope her new role gives her the chance for leadership on changing the safety of social media for young people. Angela Smith’s legacy as a good constituency MP is something that I aspire to. Helen Jackson’s work on community building in Northern Ireland, as Parliamentary Private Secretary to Mo Mowlam, provides lessons of hope that resonate in the times of hate that we must combat today. I am also grateful for Mick Clapham’s support; I know we will see his legacy on the mineworkers’ pension scheme continue under this Government.
Love, tolerance and doing things for other people are values knitted across the place I call home like the blankets woven from the yarn of Penistone sheep. To the people across Penistone and Stocksbridge: it is the privilege of my life to serve you. As your MP, I will work hard every day to be a strong voice for our communities and ensure that people growing up and growing old in our constituency can fulfil their potential. I will do what it takes to get things right and to get things done. We are a Government who will restore hope across our communities and bring people together. I cannot wait to work with Members across this House to make that change happen.
Lewis Cocking (Broxbourne) (Con)
I thank hon. Members for making their maiden speeches. As I have said before, I am a geographer, so it is a real pleasure to hear about our great United Kingdom and the different constituencies that we all represent.
Entrepreneurs in the towns and villages I represent across Broxbourne are working hard to take risks day in, day out to get our local economy growing and to create jobs, but I fear that the Bill could put all that at risk. Security in work should be available to everyone, but above all else it is getting the job in the first place that is the first vital step. Regrettably, the Government’s plan will only make it harder for businesses to hire new employees. Small business owners in my constituency cannot call on large human resources departments to make sense of these new rules. Increasing the number of day one rights will see them hesitant in making hiring decisions. As the Federation of Small Businesses has said, plans to give unfair dismissal rights from day one
“will inevitably deter small employers from taking on new people”
by raising the chance that new recruits will take their employer to a tribunal simply because they turn out to be unsuited to the role.
The principle of qualifying periods for workplace rights is sensible and fair. The Government must recognise that, because they have chosen not to include in the Bill a reform of the qualifying period of two years for statutory redundancy pay. A balance must be struck to avoid the burden falling too heavily on either the employer or the employee—especially for small business employees, who need the security and confidence that the qualifying period provides. It is clear that the Government’s plans do not strike that balance.
One thing I agree with the Government about is that we must get our economy growing faster, but this Bill, on which the Government have not consulted, is not the right way to achieve that. In this place, we should talk more about how to encourage firms to create growth.
Joe Robertson
My hon. Friend talks about growth. Does he agree that growth for small businesses is good for workers and that what is good for small business is therefore good for workers? Small business needs better protection in this legislation.
Lewis Cocking
I absolutely agree. If we do not create the next generation of entrepreneurs in this country through the education system, which the Government should be focusing on, rather than placing burdens on them—we have yet to hear the Government’s new Budget, which could increase taxes and put more burdens on small businesses—there will be fewer jobs in the market and fewer jobs for the people we are trying to represent and protect in this place.
It is Opposition Members who are standing up for small businesses. Small businesses are the backbone of my local economy in Broxbourne and the country at large. If we do not ensure a fair balance between workers and small businesses, small businesses will close and people will lose their jobs. I do not think the Government want that, so will they please reflect on the Bill, have a proper consultation and come back with something more suitable for small and medium-sized businesses across the country?
Apsana Begum (Poplar and Limehouse) (Ind)
I rise to speak as a proud trade unionist. I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
Too many people are in jobs that offer little or no security. My constituency casework has highlighted the reality of insecure work in the UK and has exposed the inadequacy of the law around worker protections. The rise of in-work poverty, workplace precarity, zero-hours contracts, bogus self-employment and contracting out puts workers at risk. We know that women and black, Asian and minority ethnic workers continue to face the disproportionate burden of working in insecure jobs with fewer rights and ongoing pay gaps.
After years of attacks on workers’ rights and hostility towards trade unions, it is a pleasure to welcome the Employment Rights Bill, which is without doubt a significant step forward for workers. I am particularly pleased to see the ballot thresholds from the Trade Union Act 2016 done away with, and to see the repeal of the Strikes (Minimum Service Levels) Act 2023, which trade unions have criticised as being undemocratic, unworkable and illegal.
I have long been concerned that current laws are already restricting the rights of workers to join and participate in trade unions and may breach international labour standards. Many of us would have liked to see the Bill completely ending fire and rehire and zero-hours contracts once and for all. I also understand that some unions are concerned about the rules allowing workers to have access to trade unions. They argue that the single best way to ensure that work pays more fairly is by expanding collective bargaining. I remain committed to strengthening trade union rights across the board.
I listened carefully to the Deputy Prime Minister, who rightly raised the plight of carers and parents in relation to employment rights. I would also like to raise the plight of survivors of domestic abuse and violence. The statutory guidance on the Domestic Abuse Act 2021 reminds us how pivotal the role and actions of an employer can be in the life of a survivor, who might only speak to managers and colleagues outside the home, as I know only too well as a survivor of ongoing abuse and harassment and having spoken to countless survivors. Employers should have a duty of care towards employees who are experiencing domestic abuse. I believe that the Bill could be further strengthened by bringing into scope the experiences of survivors of domestic abuse in the workplace. We should look at provisions such as flexible working and paid leave in that regard.
A thriving and just economy cannot be created without the full involvement and empowerment of the workforce. The Bill is an opportunity to lay the groundwork for a future in which workers can defend their pay, dignity and working conditions.
John Cooper (Dumfries and Galloway) (Con)
We have heard some electrifying and remarkable maiden speeches today. I rise to speak as a former member of a trade union. I do not miss the subs going out of my pay packet; it did little for me. This is no mere Bill, but a time machine that could take the whole country back decades. The unions are gonna party like it’s 1979. For your benefit, Madam Deputy Speaker—you were not there—1979 was the winter of discontent when the unions bit back, the rubbish piled high in the streets and a Labour PM was soon out with the bins.
With this hastily assembled Employment Rights Bill, Labour is feeding the union alligator that may yet eat it, too. That is because the Bill lacks balance, assuming that all employers are robber barons intent on exploiting workers. The Prime Minister has talked of growing the economy and cutting red tape, yet now we see the reality: proposals that will frighten firms away from taking on new staff and burden them with still more rules and regulations.
My constituent Rory, a forward-thinking dairy farmer, has written to me about Labour’s pledge
“to make Britain the best place to start and grow a business.”
Like me, he sees fine sentiments, but the Bill risks the opposite effect. There is even an expensive new layer of bureaucracy: the fair work agency, whose costs will be borne by business and passed on to the public. The people’s tape is deepest red.
The Bill makes it easier for militant unions to infiltrate workplaces, and it strips out sensible curbs on their power. Strikes will hit the public harder without Conservative safeguards such as those that guarantee minimum service levels. An impact assessment of the Trade Union Act 2016 indicated that it would cut strikes by about 35%.
John Cooper
No, I have waited 40 years for this. Much of the 2016 Act will be tossed into picket line braziers, and as ever it is the public who will suffer. The plan to make union funding of Labour opt-out, not opt-in, is another back-to-the-future move. It is naked opportunism from the Labour party.
The Bill will be hardest on small and medium-sized businesses, the backbone of the economy. We must not forget that they are run by people who are themselves workers and strivers. Napoleon disparagingly called us a nation of shopkeepers. With legislation as skewed as this, Labour risks shutting the shops and turning us into a nation of strikers and their union rep handmaidens. This skimpy Bill is so heavily skewed that it resembles the blade in Edgar Allan Poe’s “The Pit and the Pendulum”, leaving employers strapped in red tape between the ever-present pit of insolvency and the slice, slice, slice of costly, pro-union, anti-growth legislation.
Madam Deputy Speaker (Caroline Nokes)
I call Lorraine Beavers to make her maiden speech.
Lorraine Beavers (Blackpool North and Fleetwood) (Lab)
I congratulate all Members who have made their maiden speech today. I am a proud member of Unite the Union and the Communication Workers Union.
I would first like to pay tribute to my predecessor Paul Maynard. Paul worked incredibly hard for his constituents and was rightly proud to be the first person with cerebral palsy to become a Government Minister. I want to say thank you to Joan Humble, the first Labour MP to serve in my constituency, and to my hon. Friend the Member for Lancaster and Wyre (Cat Smith) for all her hard work and commitment to the people of Fleetwood. I also want to pay tribute to my mum and dad, the wonderful Ronnie and Brenda Shewan, who both sadly passed away this year. My dad saw me get selected, and my mum saw me get elected. Oh, how I miss them!
As a lifelong trade unionist and socialist, I am incredibly proud to be making my maiden speech on the Employment Rights Bill, which will be transformative for the working people I represent. The 16-year-old me began her journey in the labour movement at Larkholme high school in Fleetwood. In assembly one day, the headmaster asked if anyone’s dad was a lorry driver, and a girl called Susan raised her hand. He asked whether her dad had gone to work that day. When she said no, the head informed the school that the reason they did not get their cornflakes that morning was that Susan’s dad was refusing to go to work. I was incensed. I organised a demonstration outside the school gates that very lunchtime. The head was furious and demanded that we come back in, but we stood united and refused. Eventually we negotiated a deal, agreeing that the head would make a full apology at the next school assembly.
I understand that the Bill might not allow for picket lines inside schools, but without doubt it is the biggest upgrade to workers’ rights that we have seen for a generation. The fair pay agreement outlined in it will be transformative for the working people of my constituency, especially in social care, where low pay and poor conditions have led to a recruitment and retention crisis. With an end to fire and rehire, a clampdown on zero-hours contracts and more rights for unions to represent working people, the Bill will not just improve the lives of my constituents, but empower them.
It is an honour and a privilege to be the voice of the residents of Blackpool North and Fleetwood. I am the 15-year-old girl who brought the school out on strike. I am the Army wife. I am the mum who could not afford to buy new shoes for her girls. I am the mum who cycled an extra mile to save 50p because funds were low. I understand what it is like to be poor and struggle between paydays. Sadly, I know that some of my constituents are going through far worse poverty than I could ever imagine. I see the cost of living crisis, the massive rises in rent, food and clothing and the mortgages that young people can only dream of affording, and I want to make it better.
My constituency has the most beautiful coastline, nature reserves and communities. We speak to each other, we care for each other, we smile at each other and we look after each other. That is why so many people move to the Fylde coast. It is where I live with my husband John and where we brought up our two beautiful daughters, who have blessed us with four wonderful grandchildren. I would not live anywhere else but on the beautiful Fylde coast. It is where I am from, where I was born and where I have loved, laughed, worked, cried and grieved. It is my home and my safe space.
My constituency includes the towns, villages and hamlets of Fleetwood, Thornton, Cleveleys, Stanah, Anchorsholme, Carleton, Norcross, Norbreck, Bispham, Little Bispham and northern Blackpool. Carleton is listed in the 1086 Domesday book. Bispham is several hundred years older than Blackpool, and Fleetwood is the newest kid on the block, with the first bricks not being laid till 1836. I will serve every corner of my constituency and fight for a better future for all. I am here to fight for investment into my community, to fight for my constituents and to make sure that the funding my constituency so desperately needs is brought back home. That is the job my constituents sent me to do, and I intend to do it.
I am proud to have been elected alongside a Government who will deliver dentists for all, save our NHS and invest in our young and old alike; a Government who will invest in our communities, our armed forces, our police, our firefighters and more; a Government who care and leave no one behind; and a Government who make those with the broadest shoulders carry the heaviest load. This is my Government, this is my party, and we will deliver.
Steve Darling (Torbay) (LD)
I congratulate the hon. Member for Blackpool North and Fleetwood (Lorraine Beavers) on a powerful maiden speech. I broadly welcome the Bill before us—after all, it is clearing up the mess left by the previous Tory Government. However, I am concerned that the Government are not going far enough in certain areas, particularly on statutory sick pay. Presenteeism may mean that people are turning up to work when they should not be, both for their health and for productivity. It is important to enhance statutory sick pay, and I hope that Ministers will give it serious consideration.
As somebody who was adopted, I am delighted that the Bill talks about adoption, but I am shocked that the Government have not explored how they could support fostering. It is part of the rich tapestry of our families and our society in the United Kingdom, and it also helps our children’s services. Why are the Government choosing to be wilfully blind to foster carers in the Bill? It is shameful.
I would also like to reflect on Disability Confident employers. Disability Confident is a really important scheme. We know—I hear it on the news—that the Government are talking about trying to get people with health conditions out of benefits and into work. We applaud that, but why is the Bill silent on Disability Confident employers? This is a real opportunity to do things in a positive way, rather than blaming people with disabilities. I hope the Government will see common sense on that.
Ian Lavery (Blyth and Ashington) (Lab)
I refer the House to my declaration of interests.
The Employment Rights Bill is most welcome. It has been described by some on the Conservative Benches as a horror show. It is definitely not a horror show. It is described as a trade union Bill. I remind Opposition Members that it was the Conservative Government who introduced the Trade Union Act 2016, among many other anti-trade union pieces of legislation. One of the best things in this Bill is the repeal of much of what was in the 2016 anti-trade union legislation. This is the first time in my time as a Member of Parliament that there has been any repeal of anti-trade union legislation. I have to say that, like many other trade unionists and many other people in the workplace, I welcome that fact. Labour recognises that the relentless attacks on the trade union movement—the battering of ordinary working people from pillar to post—cannot and should not continue.
Andy McDonald
Does my hon. Friend agree that the Strikes (Minimum Service Levels) Act 2023 was a deliberate attempt to undermine people in the workplace? It was completely ignorant of the fact that the unions provide minimum service levels throughout some of the most difficult circumstances. Does that not tell us a lot about the previous Conservative Government?
Ian Lavery
Thanks for that intervention. Of course it says a lot about the previous Conservative Government. We on the Labour Benches should always remember and never forget what the Conservatives do whenever they are cornered or in difficulty: they revert to type and attack the trade union movement. That is what they do and have always done. You have seen some of the contributions here this evening. [Interruption.] Do you want to intervene? [Interruption.] Oh, so are you just going to continue to chunter? And when I give the opportunity of saying something responsible—
Madam Deputy Speaker (Caroline Nokes)
Order. The hon. Gentleman can sit. He has been here long enough to know that when he says “you”, he is referring to me. I sometimes let it pass when it is new Members who are not quite used to it, but he should know better.
Ian Lavery
My apologies, Madam Deputy Speaker. Yes, you are right, I should. I was being chuntered at by a Member on the Opposition Front Bench. My deepest apologies.
As I say, we must remember that the Conservatives revert to type.
Suella Braverman (Fareham and Waterlooville) (Con)
The hon. Gentleman is doing a very impressive impersonation of Arthur Scargill. The reality is that the Conservative Government left office with 4 million more people in work compared with the Labour inheritance, a growing economy and a smashed deficit. That is something we are proud of on this side of the House.
Ian Lavery
Thanks for the compliment.
I was saying that the Bill simply restores the balance. It seeks to reverse the injustice meted out to the trade unions and working people, and to rebuild the workplace that was ideologically destroyed by the Conservative Government. These are the first steps and they are so, so welcome. I have fought for them all my life. They are the first steps in a long journey, but look at what we have done within the first 100 days. I have only mentioned a few.
As my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald) says, we are repealing the minimum service levels laws and most of the Trade Union Act 2016, and ensuring that individuals have employment rights from day one, including sickness pay, although there is an argument that sickness pay is far too low. We are looking at bereavement payments and so on from day one. We are looking to address the scourge of zero-hours contracts. We are looking to address the scourge of fire and rehire. We are looking to introduce flexible working and entitlements to paternity and parental leave. We do this because it is the right thing.
I could spend hours outlining what I think is right in the Bill and perhaps some things we need to focus on in the coming weeks, but I will not do that. The reality is that this is a historic Bill that sets a framework for fairness for generations to come. Remember, the louder the screams from the Conservative party—the screaming, shouting and chuntering—the more we on the Labour Benches know that we are winning the argument. We know we are doing the right thing, so however loud you shout, we welcome it.
Bradley Thomas (Bromsgrove) (Con)
I congratulate those hon. Members who delivered their passionate and authentic maiden speeches today.
I am proud, like so many Members, to represent a constituency that is home to so many small and medium-sized businesses, which comprise the backbone of our local economy. I am deeply concerned that the reforms in the Bill will hurt both businesses and employees, as well as damage the economic growth that the Government claim to be striving for. The previous Government introduced and raised the national living wage, ending low pay and ensuring that work always pays more than benefits. They banned exclusivity clauses in zero-hours contracts, banning businesses from stopping workers on a zero-hours contract having another job, and delivered 800 jobs a day from 2010. The Conservative Government also introduced shared parental leave, giving more choice to families. We introduced new regulations on shared parental leave to give families more choice over how they take parental leave following the birth of a child.
Changes to business regulation need to strike a careful balance, but Labour’s Bill gets it wrong and will instead make it harder for businesses, damaging job creation and economic growth in the process. The Labour party has introduced a Bill at pace that does not strike the correct balance. As a result, our economy will be less competitive and growth will be hindered. Those warnings come not just from the Conservative Benches, but from across industry. The Scottish Chambers of Commerce highlighted how
“The proposed new rights to a tribunal access from day one will inevitably lead to more settlement agreements to avoid a lengthy and costly tribunal process, placing more burdens on businesses.”
The changes to employment law risk “fuelling long, complex litigation”, according the Recruitment and Employment Confederation.
There are a few parts of the new Bill to which I would like to draw attention. The likelihood of drawn-out dismissal processes has already been referred to. There is the question of how poor performance will be proved. There is the unnecessary right that will be given to trade unions to gain access to workplaces. On zero-hours contracts, many employers and employees do not want guaranteed hours and a minimum threshold. On flexible working, there is the material change proposal, a reasonableness test that will make—
Suella Braverman
My hon. Friend is making a very good speech highlighting the fatal flaws in the Bill. Does he agree that the Government’s own impact assessment on the economic implications show that it will be a disaster for small businesses, not just in Bromsgrove but in Fareham and Waterlooville? The costs that will be borne by businesses will cripple investment, strangle job creation and further stagnate growth.
Bradley Thomas
I thank my right hon. and learned Friend for her intervention and agree wholeheartedly with her points. The Bill will inhibit economic growth and ultimately bear down very heavily on those the Government claim they are trying to protect.
The reforms will prevent businesses from hiring new people and expanding. The Institute of Directors has warned that 57% of businesses are less likely to hire due to measures in the Bill. There are concerns that the Government have not carried out a consultation on collective redundancy, and have failed to outline why they view those proposals as beneficial. Make UK, an important industry body, has warned that the regulations will “significantly increase” red tape for businesses that are forced to make redundancies, and UKHospitality, which represents thousands of businesses on which many of our constituencies rely for their economic vitality, has said that for 90% of workers on zero-hours contracts, those are the desired contracts for them.
What we see here is a generational shift in employment law that will ramp up grievances and disputes and entrench unproductivity. As my right hon. and learned Friend the Member for Fareham and Waterlooville (Suella Braverman), pointed out, it will make it easier to strike and send us back to the 1970s, supporting militant unions. It will increase the number of strike hours in public service, and, as Unite the Union has pointed out, it is like Swiss cheese: full of holes. I hope that, as the Bill progresses through Parliament, the Government will listen to both the Opposition and industry in order to limit the damage it will cause businesses and working people.
Catherine Atkinson (Derby North) (Lab)
I congratulate the Deputy Prime Minister on introducing this groundbreaking Bill within the Government’s first 100 days. It is a careful product of many years of work and thought. I proudly declare the interests set out in the Register of Members’ Financial Interests, including my position as chair of the Society of Labour Lawyers, which has considered and campaigned on these issues for years. The many measures in the Bill create the conditions for jobs around which people can build lives and families, and will prevent legitimate businesses from being undercut by those who avoid their responsibilities. I welcome the provisions to tackle exploitative hiring and employment practices, which will benefit workers and businesses.
I will confine my remarks to enforcement and the fair work agency, because a right is not worth the paper it is written on unless it can be enforced. I was a barrister for 17 years, and for part of my career I had the honour of representing working people. I saw at first hand the race to the bottom on employment that took place under the last Government. Our country is unusual in having no labour rights commissioner, or central or local regulator. Many of the rights that successive Labour Governments have established, and for which the wider Labour movement campaigned, are instead delegated to individuals required to act themselves through the employment tribunal system.
As the Low Pay Commission has found, low-paid and exploited workers can be reluctant to speak out about abuses of their rights. Regulation of the labour market in the UK is fragmented and under-resourced, with an estimated one inspector per 10,000 workers. The creation of a fair work agency will help to enable enforcement of the national minimum wage, statutory sick pay, and a wider range of rights such as holiday pay, so that everyone plays by the same rules. It will help to protect businesses that are undercut by acting as a real deterrent. The current system clearly does not do that: last year 1.1 million employees did not receive any of the paid holiday to which they were entitled, and one in five of those on the minimum wage do not receive the correct pay. It is to the Government’s credit that the fair work agency will help the most vulnerable workers, including those who are victims of human trafficking. I hope that, as the Bill progresses, we will be able to consider whether the agency will also be able to help with safety and other workplace rights.
We have seen Conservative Governments provoke conflict and disruption in industrial relations, but growth and prosperity are only served by better co-operation and work practices, and that is what the Bill will deliver.
Wendy Chamberlain (North East Fife) (LD)
I rise not to speak about the Bill as a whole, but to focus on the provisions that will have an impact on unpaid carers. I refer to my entry in the Register of Members’ Financial Interests as a trustee of the Links Trust. I am to become a member of the board of the Fife Carers Centre, which supports unpaid carers across Fife including my constituency, and that will shortly be published in the register. It should therefore be no surprise to the Government that the first issue that I want to raise is their failure to include paid carer’s leave in the Bill, or even to commit themselves to it in their “Next Steps to Make Work Pay” document. I think that that is a mistake, and also a U-turn from their previous position. I remember that during a debate on my private Member’s Bill that became the Carer’s Leave Act 2023—I double-checked this in Hansard—the hon. Member for Bradford East (Imran Hussain), who was then shadow Minister for employment rights and who is no longer in the Chamber, said:
“We of course support the Bill, but it falls short of what unpaid carers really need, which is paid carer’s leave. Under the proposals set out in our new deal for working people, the next Labour Government will legislate to introduce just that”.—[Official Report, 21 October 2022; Vol. 720, c. 1004.]
Indeed, he committed himself to doing that at all subsequent stages.
I acknowledge that the “Next Steps” document does make some promises in relation to carer’s leave—both to review the operation of the 2023 Act that I was proud to pass, and to look at the benefits of making that leave paid—but that is it. I looked with excitement at today’s written statement—I do not know what that says about me—only to find four consultations, none of which referred to unpaid carers. My Liberal Democrat colleagues and I are calling on the Government to give certainty to unpaid carers: certainty about when that review will take place, certainty about what it will entail, and certainty that the Government are keeping their pre-election pledges to move forward with paid leave.
Will the Government provide an update on what is being done to inform businesses about carer’s leave as it stands, namely unpaid? It concerns me that there is not enough information out there for employers or workers. What are the Government doing to ensure that companies are passing the information to their employees, and that it is being recorded correctly in systems? That last point is important. If the Government want to review the operation of the current Carer’s Leave Act, presumably they will want to know about take-up, but I am hearing worrying stories that carer’s leave cannot be properly recorded in HR systems, and is therefore recorded as general unpaid leave or something similar. We do not need to wait for a review to ensure that the new leave continues to be rolled out properly and effectively.
There are other elements of the Bill that I welcome, especially those relating to flexible working. We know that for unpaid carers, flexible working can be one of the most important tools for staying in work. My request of the Government is that during the passage of the Bill, they flesh out a bit more what they mean by a reasonable or not reasonable rejection of a request for flexible working. I urge the Minister to use his time today to reassure unpaid carers that the Government are not turning their back on them, now that he is in a position to help them.
Paul Davies (Colne Valley) (Lab)
Let me begin by proudly declaring my membership of Unite, the GMB and the Community trade union, and at some time in the past, a member of the National Union of Mineworkers, like my hon. Friend the Member for Blyth and Ashington (Ian Lavery).
The Bill will transform the lives of workers across the United Kingdom. It is not just a set of reforms; it is a commitment to the hard-working people of this nation, a promise to ensure that their rights are protected and their voices are heard. For far too long, many workers in this country have endured poor working conditions, low pay, and a lack of job security. The previous Conservative Government failed to address these critical issues, leaving millions of workers vulnerable and undervalued. The Bill is the Government’s response to these injustices. It is a comprehensive package of reforms designed to upgrade workers’ rights, tackle poor working conditions, and benefit both businesses and workers. It is part of the Government’s broader effort to deliver economic security and growth to businesses, workers and communities.
One of the key aspects of the Bill is the improvement of pay and productivity. We recognise that fair wages are essential to the wellbeing of workers and their families. The Conservative Government’s policies led to stagnating wages and widening income inequality. The Bill aims to rectify that by ensuring that all workers in the UK are paid fairly for their hard work, and that businesses are incentivised to invest in their workforce. From my conversations with businesses and employees in my constituency, it is clear that fostering sustainable businesses and promoting growth are crucial. I have observed numerous businesses forming partnerships with their workforces, grounded in fair treatment that acknowledges employees’ dedication and hard work. The Bill supports and strengthens that approach. It also represents a new approach, a pro-business, pro-worker strategy that recognises the connection between economic growth and workers’ rights. By addressing issues such as poor working conditions and low pay, this Government aim to create a more balanced and sustainable economy.
The Bill is a testament to the Government’s commitment to creating a fairer and more equitable society. I am proud to support it, and to stand up for the rights of workers in my constituency and beyond.
Ellie Chowns (North Herefordshire) (Green)
I begin by welcoming this Bill on behalf of my Green colleagues. I would like to gently comment on the tone of some of this debate. I find myself on the Opposition Benches, but that is not to say that I share the sentiments expressed by Conservative Members. In particular, it is a shame that we have seen some very polarised debate today. I want to challenge the rhetoric of, “It’s workers versus employers and unions versus small businesses.” That is both ahistorical and economically illiterate, frankly. It is ahistorical because if we did not have workers organising together to improve their conditions, we would still have children up chimneys and women being paid a small fraction of what men are paid for doing the same work.
Such rhetoric is economically illiterate because inequality is bad for growth. It is not just me and Labour Members who say that; the International Monetary Fund has specified that inequality is bad for growth. Let us try to look for the common ground together, and to welcome measures that will improve work and the security of people who work. Let us recognise that, frankly, this Bill is long overdue, because we have seen the erosion of workers’ rights over decades. We are now in a position where work does not pay well enough for far too many people in our country, which is why we have so many people on in-work benefits.
I really welcome the sentiments expressed by the right hon. Member for Hayes and Harlington (John McDonnell), who pointed out that there are much better labour relations in countries where there is a positive recognition that workers’ rights go along with improved economic growth. As a country, let us try to move towards that point.
I want to briefly mention a few areas where I would like the Government to go further. The Bill’s failure to fully ban fire and rehire practices is inexplicable. It leaves a loophole or get-out clause that effectively condones this practice, and I do not think there can be any grounds for treating workers in purely transactional terms.
Zero-hours contracts are a complex area. I know that some people welcome the opportunity to have zero-hours contracts, but this flies in the face of what the majority of the public wants. The current model leaves far too much power in the hands of employers.
I want to briefly mention other aspects of equality. It is disappointing that this Bill does not uphold previous Labour pledges on mandatory disability and ethnicity pay gap reporting. It will lead to increased inequality between migrant workers and others, because it does not address the risks that migrant workers face when their visas are dependent on employers, and they may exit the country before they have had a chance to pursue their employment claims.
I would like to see kinship care treated in the same way as adoption leave. The hon. Member for Torbay (Steve Darling) talked about foster carers, too.
In summary, I welcome this bill, but there are areas where I would like to see the Government go further to protect workers’ rights.
Mike Tapp (Dover and Deal) (Lab)
It is an immense privilege to be here today as the Member of Parliament for Dover and Deal. I refer the House to my entry in the Register of Members’ Financial Interests: I am a proud small business owner and a union member, and it is fantastic to see so many Labour Members who are small business owners speaking in support of the Bill.
Over the past two years, I have knocked on thousands of doors, spoken to families, business owners and workers, and listened to their hopes and concerns. Today, I bring their voice to this House, but first I pay tribute to my predecessor, who was and still is an ardent champion on housing issues. Before the general election, she sent a clear message to the country when she crossed the Floor of the House to join the Labour party.
Dover and Deal is the gateway to Britain, with our port bringing £144 billion of trade into the country, but it is also a place rich in history, resilience and community spirit. From the iconic white cliffs to the finest castle in Britain, and from the newly reopened Roman painted house to the proud former mining communities in Aylesham, Snowdon and Betteshanger, we represent the very best of what it means to be British. We also have beautiful coastal paths with some truly great pub stops along the way, as Members have probably seen from my social media; they include the King’s Head and the Forresters in Deal, the Zetland Arms in Kingsdown and Cullins Yard in Dover. We have castles in Dover, Walmer and Deal. I wonder whether my constituency has the most castles in the country, but I am open to challenge on that.
My commitment to public service and hard work stems well and truly from my upbringing. One grandad flew the Catalina flying boats that took out Nazi submarines, and then went on to sell Colman’s mustard from Cambridge. The other grandad was a lifelong, distinguished Royal Mail worker, and that generation’s unwavering spirit of hard work runs through my family. My father, a dedicated police officer, and my mother, a social worker, showed me that real service is about standing strong for others. Their steadfast dedication to helping those in need taught me that strength is found not in titles, but in the service we provide to those around us. That lesson has guided me in my own life—in the Army, in a counter-terror role at the National Crime Agency, and now as the proud Member of Parliament for Dover and Deal.
But I do not stand here alone. I pay tribute to my wife—my hero—who came from Estonia at just 18 years of age, 16 years ago. She has always been and will always be my rock, having supported me through a very difficult and long campaign. Linda has shown remarkable resilience and dedication in turning her passion for dogs into her own thriving small business, which will continue to thrive and grow under this new Bill. We have two dogs of our own. Some of you will know Scooby from the campaign trail. He has become so famous that my Wikipedia page simply states:
“Personal life: He has a dog called Scooby.”
I assure you that I have more of a personal life than that—and a second dog, a puggle called Monki.
It is no secret that I am just a little bit patriotic. When you represent Dover and Deal, how could you not be? For centuries, we have stood strong against invaders and threats, from Napoleon to the Nazis. Dover and Deal has always been at the heart of Britain’s story, and I am committed to ensuring that we remain a proud and prosperous part of the country’s future. Dover and Deal is where national challenges meet local reality. We are a community on the frontline of issues such as border security, immigration and trade. We face these challenges with the strength and sense of duty that has always defined us. Under this Government, Dover and Deal will be treated with the respect it deserves. My vision is for a Dover and Deal where our community can thrive, with improved infrastructure, stronger public services and more opportunities for young people to build their futures there. We are more than a point of transit; we are a community of hard-working people who keep our port running, our businesses thriving and our public services going.
As we debate the future of workers’ rights, I want to say on record that the P&O Ferries scandal, which affected so many of my constituents, must never be repeated. That is why I fully support this Bill.
Nick Timothy (West Suffolk) (Con)
I congratulate the hon. Member for Dover and Deal (Mike Tapp) on his maiden speech. I look forward to the best dog in the world, Monty, taking on Scooby in the Westminster dog of the year competition.
Everybody in the House knows that every Labour Government in history have ended with unemployment higher than when they started. Bills like this are part of the reason why, whatever the intention. If the purpose of this Bill really is to improve workers’ rights, and it is not just about paying back £40 million of union donations made over the past few years, why is there no provision addressing one of the worst labour market abuses in our country: substitution clauses, which allow delivery drivers to lend their identities to others? These clauses are in contracts from huge firms such as Amazon and Deliveroo, and they fuel worker exploitation and immigration crime. We know that hundreds of thousands of people, many of whom cannot work here legally, trade identities. By undercutting British workers and exploiting those with no right to be here, these companies are privatising profits and socialising the costs that they cause, so why is that issue missing from the Bill?
Why will the Government do nothing about the international trading system? Countries aiming to run trade surpluses, such as China, hold down their labour costs and destroy industry in deficit countries such as ours. Trade wars, as two authors like to say, are class wars, and the Labour party usually likes to fight a class war, yet this Government want to flood Britain with cheap Chinese electric cars because of the Energy Secretary’s obsession with net zero. That is just one way in which our economic model needs to change, because while the Government’s characterisation of their inheritance is, I am afraid, cynical and wrong, there is a case for economic change, if only the Government were prepared to undertake it. I think the Business Secretary might be one of those capable of doing that, but I am not sure that some of his colleagues are. Today, Ministers could be launching a plan for reindustrialisation, for competitive energy prices, for domestic steel manufacturing and for a strategy taking in better infrastructure, skills and training, planning, regulatory reform and more—[Interruption.] Would the hon. Lady like to intervene?
Nick Timothy
The Government could be doing something about the fact that nearly 22% of the workforce is economically inactive and a record number of men is leaving the labour market. They could be backing British business.
Robbie Moore
This again highlights the point that there is so much detail yet to be released into the public domain about this Bill. I highlighted this before. Does my hon. Friend agree that if we had that detail, we could provide more reassurance to the small and larger businesses dealing with the challenges he has mentioned?
Nick Timothy
My hon. Friend is exactly right; I agree.
The Government could be backing British business, not burdening it with all these new regulations. Instead, we have an Energy Secretary driving up energy prices, a Chancellor planning a jobs tax, increases to capital gains tax and the imposition of inheritance tax on small family businesses, and a Deputy Prime Minister reregulating the labour market at a cost to business of £5 billion, to pay back the unions who fund the Labour party. The Prime Minister promised us that his priority was “growth, growth, growth”, but like everything else he said before the election, he did not mean it, because the only three things that this Bill will bring are more costs, less investment and fewer jobs.
Peter Swallow (Bracknell) (Lab)
Let me start by proudly declaring that, like 1.3 million working Brits, I am a member of Unison. Bracknell is a fantastic place to do business, and since my election I have spoken to plenty of businesses in my community, from SMEs to international businesses. In speaking with them, two things have come out time and again. First, there is relief that they finally have a Government who will put economic stability at the heart of everything they do, instead of chaos. Secondly, there is recognition that the Bill will be good not only for their workers but for businesses, because well supported staff who have more control over their lives and more reliable hours will work harder and for longer.
Workers who can adjust their terms, who are free from the threat of dismissal right after starting a family, who are entitled to leave after a loved one’s death, who are given the time to recover when they are sick, who no longer face exploitative zero-hours contracts or fire and rehire, and who are free from harassment are obviously happier and more committed. Indeed, many Bracknell businesses already offer many of the rights in this Bill, because they recognise that doing so makes them more attractive to good, skilled workers.
This Government are pro-business, pro-growth and pro-worker, and this Bill demonstrates that commitment. I note that the chief executive officer of the CBI, Rain Newton-Smith, has said:
“The government deserves credit for its willingness to engage with businesses and unions”.
There is a body of economic research that substantiates what we all feel to be true: workers’ rights are the foundations of a resilient, growing economy.
Nick Timothy
The hon. Gentleman just quoted the CBI approvingly. Can he name the chief executive of a real business who approves of this Bill?
Peter Swallow
I have spoken to many chief executives in my constituency who approve of this Bill. I will not go into private conversations, because I have not warned them that I was about to quote them in the House, but I am sure that we will hear many such examples in contributions from other Members.
This Bill will bring in historic new rights for working people. It will make work pay, and it will be good for boosting our national productivity and supporting businesses and growth in this country, because we all know that when workers feel that the jobs that they do are valued, they contribute more to the economy. That is why this Bill is good not only for workers but for businesses.
Alison Bennett (Mid Sussex) (LD)
I associate myself with the comments of my hon. Friend the Member for North East Fife (Wendy Chamberlain), and commend her for all her work on the Carer’s Leave Act 2023, which came into play in the previous Parliament. I want to build on that, and to emphasise the importance of the interplay of paid and unpaid care in ensuring that we look after the people in society who need our care. The comments of a constituent of mine in Mid Sussex come to mind. She was an unpaid carer for her mother, and told me that having paid carers come in helped her to sustain a normal mother-daughter relationship for that little bit longer.
The care workforce, and looking after the care workforce, are extremely important, and the Liberal Democrats welcome the fair pay proposals in this Bill, but we would like the Bill to go further. As I mentioned when I intervened on the Deputy Prime Minister, we would like the minimum wage for care workers to be £2 higher than the normal minimum wage. We would also like to build the esteem and career path of people who work in paid care—for example, by establishing a royal college of carers. Without that, we have a blocker to our workforce productivity. Caring and working must go hand in hand, but because regulations do not enable unpaid carers to look after their loved ones adequately, 600 people a day give up work to care for a loved one.
One of those people is Amanda, who used to live in Mid Sussex. She and her husband Nick look after their 21-year-old son Archie, who is autistic and learning disabled. Amanda is a modern foreign languages teacher, and there is a shortage of such teachers. As Archie was approaching adulthood, they realised that West Sussex county council would not be able to provide enough care for him, so the best thing that she could do was take her teacher’s pension early and claim the carer’s allowance. Because of the £151 a week limit on earnings for those on the carer’s allowance, Amanda is now excluded from the workforce. She cannot take up offers of supply teaching or exam invigilating that would boost the family income and be good for her mental health. We need to ensure that people can give care while being in the workforce, because this situation is not good for the nation’s productivity, or for the Government’s ambition to deliver growth.
Madam Deputy Speaker (Caroline Nokes)
I call Kenneth Stevenson to make his maiden speech.
Kenneth Stevenson (Airdrie and Shotts) (Lab)
It is a great pleasure to follow the maiden speech of my hon. Friend the Member for Dover and Deal (Mike Tapp), and the excellent maiden speeches of the hon. Members for Leicester East (Shivani Raja) and for Weald of Kent (Katie Lam), and my hon. Friends the Members for Hyndburn (Sarah Smith), for Penistone and Stocksbridge (Dr Tidball) and for Blackpool North and Fleetwood (Lorraine Beavers).
I make my maiden speech with a great deal of pride. Serving the people of Airdrie and Shotts is an immense privilege, and one that I will never take for granted. I hope that my dad, Howard, will be pleased as he watches at home, and that he knows that it is the value of hard work that he and my mum, Millie, instilled in me—along with the assistance of many others, including my wife, Julie, who is watching here today—that has brought me to this place.
The opportunity for me to make my maiden speech today is all the more special because we are debating the Employment Rights Bill. As we chapped doors across the constituency for over a year, our key commitment was to deliver an upgrade to workers’ rights the like of which has not been seen for a generation. I am delighted that we are making such rapid progress, and I thank the Minister and the Government for putting this at the forefront of our efforts to give Britain back its future. I look forward to seeing the impact of this Bill on workers in my constituency of Airdrie and Shotts, and across the country.
I pay tribute to my immediate predecessor, Anum Qaisar. I never questioned her commitment to the job she was elected to do, nor to the causes for which she fought so passionately. I wish her well in the future.
Looking back a bit further into the history of the Airdrie and Shotts constituency, and of the seats that came before it, I have to mention some of the giants who have served these communities. From Jennie Lee, a key figure in the creation of the Open University, where I obtained my qualification, to Peggy Herbison, a Shotts woman to her core, who led the way for women in politics and whose impact is still felt in Shotts to this day; and from John Reid, a pivotal figure in the last UK Labour Government, to John Smith, a truly excellent leader of my party, taken before his time, who put the Labour party firmly back on the path towards Government. Although, on reflection, I may be making a rod for my own back by mentioning such influential and consequential figures, it is only right that I recognise their contributions to this place, to the communities I now represent, to the Labour movement and, indeed, to this country.
Members will be surprised to hear this, but I am going to make a comparison between Airdrie and the ancient city of Rome—before Members ask, it is not the weather. Like Airdrie, Rome is also built on seven hills. A popular Airdrie pub quiz question is to name them, but I will not attempt to do so today, because of the risk of missing one out—what a start that would be!
The communities of Airdrie and Shotts, along with the many surrounding villages, are steeped in industrial history. These towns and villages, including Harthill, Eastfield, Salsburgh, Allanton, Bonkle, Hareshaw, Hartwood, Morningside, Cleland, Holytown, Newarthill, Newmains, Plains, Chapelhall, Gartness, Calderbank, Glenmavis, Caldercruix, Upperton, Longriggend, Wattston and Greengairs, are of great importance to the history of Scotland and the wider UK.
In coalmining, manufacturing, textiles, engineering and pharmaceuticals, the communities of Airdrie and Shotts have been home to skilled employment, and they have been at the centre of the various advances we have witnessed in previous decades. In fact, I completed my apprenticeship at a modern manufacturing facility in Shotts that was sadly closed during the times of rapid deindustrialisation. It was there that I learned my trade as an engineer and grew as a person. The advice of ex-miners, steel workers and foundry workers was invaluable. My second career as a lecturer at Anniesland college was informed by the people of Glasgow. I learned so much from my fellow lecturers and from the area’s students.
The Shotts factory humour is not generally something I would repeat in this Chamber, but I can share the first piece of advice I got as an apprentice: “Never argue with anybody stupider than yersel, son.” Oscar Wilde, it was not, and having listened to the discourse in this place, I am sure I will not need that advice here. Regardless, I will forever be indebted to the people of the area I was born, raised and worked in. I hope that legislation such as the Bill we are debating today will reignite the industrial and technological potential that exists within these communities.
There are two things I could not go without mentioning in my maiden speech. The first is the groups and organisations at the heart of my constituency. My Scottish colleagues will be well aware of the work and impact of St Andrew’s hospice in Airdrie. Many, if not most, people in Lanarkshire will have a relative or a family friend who was cared for by the hospice, and will therefore know its incredible value.
It is an immense honour and privilege to serve these people and communities. In me, they have a Member of Parliament who has lived in the constituency throughout my life, who values its potential and who is determined to overcome the challenges it faces. I will do my best to abide by my Stane primary school motto, “Persevere”, and by my Calderhead high school motto, “Facta non verba”—deeds, not words.
Today’s debate on the Employment Rights Bill is a critical step towards delivering a long-overdue new deal for working people, and it will be the working people of Airdrie and Shotts who I have in mind throughout my time in this Parliament.
Robbie Moore (Keighley and Ilkley) (Con)
I congratulate the hon. Member for Airdrie and Shotts (Kenneth Stevenson) on his maiden speech. Knowing his constituency a little, I can guarantee that the weather is not the link between Airdrie and Rome. I congratulate him on taking his place in this House.
Today’s debate is deeply important, and it will have huge ramifications for businesses of all sizes across the country. Hiring new staff is a big moment for small businesses, like many in Keighley and Ilkley, and it comes with huge potential but also risk. That is why many businesses in my constituency have contacted me in advance of the introduction of this Bill to express their concerns about the proposals before us today.
At a time when we need to grow the economy, we do not need a Bill that the Federation of Small Businesses has described as
“rushed…clumsy, chaotic and poorly planned.”
It has to be noted that this Bill will have a disproportionately negative impact on smaller businesses compared with larger companies that have their own HR departments.
Simply put, Labour’s day one rights and other similar measures are worrying for many small businesses across the country. The Government have made this situation worse by adding clause after clause of clarification, exception, regulation and definition, in an attempt to micromanage every possible situation for businesses across the country. This has created a quagmire of regulatory jargon that small businesses will simply have to cope with, and they will not be able to cope. The fear of falling foul of these regulations has been made clear to me by many businesses in Keighley and Ilkley.
The Bill will also prevent the backbone of our economy from hiring staff, expanding and growing our economy. Even the Government’s own economic analysis stipulates that the risks are highest for workers with the weakest attachment to the labour market, such as low-paid workers, disabled workers and the youngest workers, who are still gaining the experience and skills they require.
Rebecca Harris
An SME in my constituency once found someone sleeping rough on its premises and offered them a job. Does my hon. Friend agree that, when this Bill is enacted, it is very unlikely that a business will go to such lengths to give someone that kind of break in future?
Robbie Moore
I absolutely agree. My hon. Friend highlights that this Bill will not give businesses the certainty and confidence to recruit individuals who need that little bit more experience to get into the job market. Indeed, the Government’s own analysis points to an unintended consequence:
“Where businesses cannot absorb the increase in labour costs, they may look to pass them onto workers by reducing expenditures that benefit workers (e.g. staff training) or scaling back future improvements to T&CS (e.g. wage growth).”
This is not a pro-growth Bill, and it is not even a pro-work Bill; it is a pro-union Bill. The Government have even said this themselves. Their plan to make work pay has referred to this Bill as an “Employment Rights Union Bill”. Perhaps that is because the Bill is chock full of changes to union regulation made by our previous Conservative Government—changes that were specifically designed to protect the public from the unscrupulous practices of the unions and their more militant members.
Minimum service provisions were introduced by the last Government specifically to protect the public from being caught in the crossfire between the unions and the Government—yet, by lifting those restrictions with this Bill, Labour is showing that it is more interested in appeasing its union bosses than in ensuring that minimum service is guaranteed throughout any dispute between the public sector and the Government.
Nick Timothy
Earlier, I asked the hon. Member for Bracknell (Peter Swallow) whether there are any business leaders who actually support the Bill. Is my hon. Friend aware of any?
Robbie Moore
I have spoken to and received correspondence from many businesses, both small and large, in my constituency, but not one gave the Bill their full backing. In fact, they raised concerns about the relationship between the employer and employee being tampered with by the Government.
One of the most unsurprising parts of the Bill is clause 48, in which the Government want to force union members to pay into the political fund of the union, unless they explicitly decide to opt out. No matter what views hon. Members may have about unions, this clause is simply not right; working people should not be paying into political funds without giving their prior consent, especially when that money ends up in the pockets of a political party. Having received over £29 million in donations from the unions, we know which political party that money will end up going to—the party in government; and all this from a self-proclaimed Government of supposed transparency. Every employment is different, every job is different and every circumstance is different, but this Bill fails to recognise that.
Mr James Frith (Bury North) (Lab)
I will start by offering some home truths to Opposition Members: someone can be both a member of a union and an employer. I am a proud member of GMB, which donated to my campaign, but I am also proud to have started my own business. I have been an employer, taken risk, and understand the balance of risk and reward. Throughout the debate, Conservative Members, who claim to represent the party of business, have made false representations that are out of date and out of kilter with the debate that we are leading, having been elected with the majority that we have. They are keen to talk among themselves, with their plans to end maternity rights and all the progress the Labour party has made sacrosanct in British law and the experience of work in our economy, but I urge them to look at the result of the election and understand the direction of travel: the Labour party is once again making progress in this country.
Today’s leap forward for workers’ rights sits alongside the Government’s No. 1 mission of economic growth—that is, done with the workers not to them. We will be more productive, protective and prosperous, pro-business and pro-worker. The Bill rejects the idea that justice and fairness in the workplace need to come with an arbitrary waiting period. Day one rights will capture headlines, but will not cause alarm for most employers. The hon. Member for West Suffolk (Nick Timothy) asked which chief executives support this provision. I met chief executives on Friday who told me that as leaders in their field, they already do much of what we are advocating—so I say to those on the Opposition Benches: get with the programme.
Labour has a proud record to recall again today, as we advance these new rights. We have a record of raising the floor and the horizon for workers’ rights, whether through securing maternity, paternity or foster care leave, introducing the minimum wage or ensuring bank holidays. Through a principled link with our trade unions, the Labour party has fought for and delivered rights that once seemed radical but are now woven into our national life and experiences of work. These very advances, initially opposed by the Tories, have now come to be seen as the very standard of how working life in this country should be, and I am all for it, Madam Deputy Speaker—with time to spare.
Jim Shannon (Strangford) (DUP)
As hon. Members may be aware, I am not a career politician. I worked as a pork delivery driver with Henry Denny’s, until I opened my own small business as a pork retailer. I worked from early morning, before I did my work for the council and then for the Northern Ireland Assembly. I employed staff members. I did the books as well as I could, then handed them to my accountant. I delivered to local businesses and shopped local. I understand what it is to be a part of small business; indeed, it was a microbusiness. I say respectfully to the Minister that I know I would have struggled to implement some of the things currently under discussion, so I remind hon. Members of the implications of the Bill on small and microbusinesses. The Northern Ireland statistics will show why I hold those concerns.
Microbusinesses in Northern Ireland are no different from those in the United Kingdom mainland. Employment law is mostly devolved, but much of the law in Northern Ireland follows the direction of what is passed in the House of Commons, which is why I want to make my comments in a constructive fashion. The fact is that most employers are not skilled at making changes. The changes made by the Bill and additional obligations on employers must be made clear, be cost-effective and not mean that they need to hire an HR consultant, which is simply out of the question.
For example, I recently heard about a case of a small business that had worked out holiday pay using the online Government calculator. An employee moved to another job and queried the holiday pay. The Labour Relations Agency has said, according to the employees’ representation, that the owner owes approximately £800 per annum to each staff member. The owner has told me that they will need to close the business. I gave that example because I want to show what can go wrong—and, my goodness, it can go wrong at an absolute volume—with regulations that the Government put in place. The business is viable, but does not have the capacity to pay £10,000 in back pay to its staff. It used online tools to get it right, and yet has been left in an untenable situation. That makes it clear that when changes are made to employment practices, the advice for employers must be accurate and easy to understand. This is clearly not currently the case.
With great respect to colleagues on the Government Front Bench, the Bill is a curate’s egg—it is good in part, but not in every part. I welcome some of the measures, such as the end of zero-hours contracts and the enhanced protections, and look forward to seeing the minutiae of the detail.
Gavin Robinson (Belfast East) (DUP)
On Friday, I attended an event hosted by the Northern Ireland Chamber of Commerce and Industry. It offers the Government no ill will and wants to engage positively and pragmatically on the issues, but it is concerned. Does my hon. Friend agree that it would be useful if, instead of continual hubris and politics from one side to the other throughout this debate, there were a willingness on the part of Front-Bench Members to engage thoughtfully with businesses?
Jim Shannon
My right hon. Friend makes exactly the point that I want to make. Through the Bill, the Government are pushing forward legislation that is necessary and welcome, but they need to work better and more closely alongside small businesses and microbusinesses of the kind I worked with many moons ago, whenever I had hair—that is a thing of the past. We cannot expect almost 80% of small businesses to behave as if they have an HR department, a payroll department and a board when most of them are simply retailers as I was, hiring local people and trying to be a good boss in a world with changing obligations.
Support must be central to any change in legislation. Like my right hon. Friend the Member for Belfast East (Gavin Robinson), I ask the Secretary of State to take that point on board. If he is able to do so, I believe we can move forward constructively and help our businesses to maintain their status as employers.
Madam Deputy Speaker (Caroline Nokes)
I call Imogen Walker to make her maiden speech.
Imogen Walker (Hamilton and Clyde Valley) (Lab)
It is an honour to speak for the first time as the MP for Hamilton and Clyde Valley. I am delighted to have the opportunity to declare that I am a proud member of GMB, which does so much for so many.
My constituency has played an important part in the progress of employment rights, for reasons that I will come to shortly, so it is fitting that it is acknowledged here today. First, I pay tribute to Angela Crawley, who represented a large part of the area that I now cover and who has been so helpful in ensuring a handover; she was a dedicated MP and I am grateful to her. I also pay tribute to my hon. Friend the Member for Rutherglen (Michael Shanks), who is always a source of good advice and good humour. His historic win in Rutherglen and Hamilton West was the first sign in Scotland that people were prepared to put their trust in us again. We will remember that.
Hamilton and Clyde Valley is an extraordinary place. The ancient woods of the Clyde Valley are the oldest in Scotland. Entering them is like stepping into another world: you are as likely to meet a rabbit or a red deer as another human. You might see glimpses in the undergrowth of walls, buildings or just piles of stones. It is impossible to say how long they have been there, but they serve as a reminder that so many people have made their lives here before us. Most are long forgotten, but not all. The great Roman general Agrippa is thought to have set up camp just outside Lanark, but he did not stay. Opinions vary on how the Romans were ousted from Scotland: some that believe the Caledonians were just too much for them, while others say that the tribes were nowhere near as bloodthirsty as the midges.
Either way, Lanark is a very welcoming place now. People come from around the world to see New Lanark, Robert Owen’s vision of decent working and living conditions. He believed that people deserve more than just the means to survive, that men and women are equal and that how we treat our children matters. Most importantly, he put his principles into practice. That is what we must do here, because the progress we have made is hard won. It takes courage as well as compassion, and it must never be taken for granted.
In South Lanarkshire alone, nearly 5,500 people are paid at or below the national minimum wage. Many more have working conditions that can and will be improved by this Government. Across Hamilton and Clyde Valley, people need a Government who are back in the service of working people—from Hamilton, the fourth largest town in Scotland and home to 55,000 people, to Larkhall, Lesmahagow, ancient Lanark and our many villages, which all have their own character and close-knit communities. From the deep forests to farms, villages and towns, we truly have everything.
From there to Westminster is quite a journey in so many ways. I will not forget that I made that journey to serve and to protect the things that people care about: their homes, their families and their jobs. I have been given the chance to do that because of the support of so many people, starting with my dearly missed mother Isobel. She would have been so happy to see me here. She, too, believed in the power of education, hard work and opportunity to transform lives. Every evening, the television would go off so we could do our homework in peace. I can tell you from the bottom of my heart, Madam Deputy Speaker, that that was incredibly annoying when I could have been watching “Dallas”, but of course she was right.
On my father Jamieson’s side, generations across South Lanarkshire were shopkeepers and metalworkers, the kind of people who keep our country going and whose lives are changed by the decisions we make here—knocked back if we get it wrong and raised up when we get it right. I am the product of generations who sometimes thrived, often struggled and were ultimately given the opportunity to fulfil their potential through hard-won rights. I want that for everyone: the chance to make a good life for themselves and their loved ones. That is why I am here, and that is what this Government will do.
Graeme Downie (Dunfermline and Dollar) (Lab)
It is a privilege to follow the maiden speech of my hon. Friend the Member for Hamilton and Clyde Valley (Imogen Walker). I visited New Lanark on a school trip when I was younger, as many people in Scotland did, and it was a fantastic portrait of a beautiful part of the country. I pay tribute to other Members who have made a maiden speech today, including my hon. Friend the Member for Airdrie and Shotts (Kenneth Stevenson). I, too, know some of the language to which he was referring.
I draw attention to my declaration of interests, including my proud membership of Unison. I will use my short time to emphasise two elements of the Bill. Not only is it the greatest increase in workers’ rights in a generation, but it will ensure that the UK economy adapts to the changed landscape in which we find ourselves and to the businesses that will contribute to it and make us a success.
Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)
I draw attention to my entry in the Register of Members’ Financial Interests and to my proud membership of Community and Unison. My hon. Friend and I are both proud to represent Fife, but in some areas of Fife as many as one child in four still lives in poverty. Does he agree that by giving over 8,000 more workers more money in their pocket, the Bill will mean that more families have more money to spend and will help to make an important contribution to tackling child poverty in Fife?
Graeme Downie
Absolutely. At the core of the Bill is the need to raise wages for people across Fife, across Scotland and across the UK. That will be a key achievement of this Bill, which has been undertaken by this Labour Government within the 100 days that we promised the electorate.
The change in the landscape has been caused by a rapid advancement of technology in our economy, a shift in working patterns, the evolution of the largest contributors to the economy and welcome changes to the nature of family life, with an increase in shared parenting, as we have heard from so many Members across the Chamber. It is nothing but shameful that the previous Government took no action to adapt to those changes or help them to drive forward our economy. As ever, it has fallen to the Labour party to make the radical changes that we need to see. A look at the Opposition Benches tells us how much the Conservatives care not only about workers’ rights, but about the economy for the future.
I welcome clause 7, which will apply the objective test for an employer to refuse a reasonable request for flexible working. Like hon. Friends who have spoken today, I ran and owned a small business for 10 years. I know the benefits that businesses get from welcoming and embracing flexible working patterns. They assist with staff retention and improve and facilitate communication between employers and employees. They lead to more constructive relationships at work and—as I saw at first hand—to more productive teams and a business that is better for everyone involved. A shift to a clear objective test will further aid the process and will help both businesses and employees.
I also welcome clauses 20 and 21, which will provide additional protection for working parents. Along with my hon. Friend the Member for Makerfield (Josh Simons), I am delighted to support the Dad Shift campaign, which has been campaigning for better statutory paternity leave to help mums, dads, children and our economy. The benefits of modern and flexible paternity leave would help families to raise their children in the way they see fit, so they can still progress their own careers and contribute to the economy and to society. I would like to see more progress on those issues during the passage of the Bill, as hon. Friends have highlighted, but none the less it is an important first step in making sure that new parents have the right protections.
This is a long overdue Bill that would only ever be brought forward by a Labour Government—a Government who understand the changing nature of business, of society and of our workforce and who realise that only by bringing the three together can we push forward and grow our economy together, creating a more prosperous and fairer society across the UK.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. I will give an advisory notice: a lot of Members still want to get in, and interventions are cutting into other speakers’ times. The only people who suffer will be you. I am leaving the time limit at three minutes, which could just about get everyone in.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
Thank you, Madam Deputy Speaker. I will keep an eye on the time.
Like many other hon. Members, I refer the House to my declaration in the Register of Members’ Financial Interests as a proud member of GMB and Unison. We have all just fought a general election; the reality is that general elections can be expensive, so I make no apology for receiving support from the CWU, ASLEF and GMB unions. Without that support, I would not have been re-elected. It is important that we recognise that it is clean money from our hard-working trade union members. We should not be ashamed of that at all.
For many people in my constituency, the nature of the workforce has changed since 2010, yet over the past few years successive Governments have almost rolled back the hard-fought employment rights that we and many trade unions before us have fought for. During the covid pandemic, as I mentioned in an intervention earlier, a number of household-name organisations—multinational business making profits in the multimillions —thought it was okay to fire and rehire their staff. I stood up in this Chamber and raised concerns about constituents who faced the threat of sacking, including many BA workers and many GMB workers who worked for British Gas/Centrica. At a time when we wanted those workers to go out and do their vital jobs, the fact that those jobs could be taken away and they could be re-employed on worse contracts was just wrong.
We should welcome this legislation, which will be a big game-changer for many people across the workforce. In the short time I have, I want to highlight two areas in which we will see a big shift.
Vauxhall and Camberwell Green is home to many young people. TUC stats show that many people in their 30s have been with the employer for less than two years. Young people should be able to go to work, be proud of their work, put their roots down and start a family. Instead, they have insecure work with the threat of dismissal over their head and a lack of security. If young people are planning to start a family or purchase a house, they can be discriminated against by their boss. We want to see rights that will protect the very people we want to contribute to UK plc.
I ask Conservative Members to get with the times and help us to support growth for this country and its workers, including the many workers who are trade union members and who contribute to society. It is about time we supported workers and passed this legislation so that its pro-business and pro-worker measures can support UK plc.
Richard Burgon (Leeds East) (Ind)
I draw Members’ attention to my entry in the Register of Members’ Financial Interests. I have to start with reflections on some of the speeches from Conservative Members, although their Benches are now deserted. Those speeches brought back memories from when I was younger of watching my favourite actor, Rik Mayall, in his role as Alan B’Stard MP. Many Conservative Members seemed to be trying to reprise that role today. It was incredible and left me wondering what planet they are living on. It also took me back to Conservative Members objecting to the last Labour Government introducing the national minimum wage. They said it would have a cataclysmic effect on jobs across the country, when in fact it helped to move people towards getting a decent wage. Conservative Members do not seem to understand that many good employers follow such standards already, and we are enabling those good employers to operate on a level playing field with bad, rogue bosses who seek to undercut good employers left, right and centre.
Before I was first elected back in 2015, I was a trade union lawyer for 10 years, and I saw day in, day out how working people are held back by weak protections and anti-trade union laws. I am really proud to be here today to welcome and vote for this significant step forward in employment rights by a Labour Government. There is so much in the Bill to improve workers’ rights in a range of areas—parental leave, paternity leave, unfair dismissal, statutory sick pay, collective redundancies, tips, the duty to prevent sexual harassment and the requirement for firms of more than 250 employees to make equality plans. The Conservatives think this is bad news for business, for workers and for our country, but that could not be further from the truth.
As this important Bill makes progress, I hope that the Government will find ways to clarify and strengthen a small number of points. Some loopholes on fire and rehire need to be closed, and it would be great if we could further strengthen the rights of union access to workplaces. I would also welcome improvements in a host of other areas. For example, it is 30 years since the Tories took away prison officers’ right to strike, and I would like to see that returned. If people succeed in proving unfair dismissal at an employment tribunal and get a reinstatement order, I would like to see it made much more likely that they will, in fact, be reinstated.
I welcome the Bill, I am proud to vote for it and I think it is shameful that the Tories will vote against it.
Olivia Blake (Sheffield Hallam) (Lab)
I wish to make Members aware that I am a member of the GMB, as many Members on this side of the House seem to be.
It is great to take part in the debate. It is important to recognise the great history of women on these Benches and in our movement, such as Eleanor Marx’s role in setting up the GMB, Barbara Castle’s in passing the Equal Pay Act 1970 and, today, that of our very own Deputy Prime Minister in setting out another game-changing piece of legislation.
I want to focus on gender, because since the introduction of gender pay reporting in 2017, we have made some progress in making people aware of pay disparities in some of our workplaces, but the facts are still stark. The gender pay gap is stubbornly stuck at 14%. That is horrific enough, but in certain sectors, including care, the gap is even higher. Pay inequality compounds over the course of a woman’s life, meaning that she is more likely to live in poverty as a pensioner, and unable to gain opportunities that her male counterparts have had through their lives.
According to the TUC, the pay gap means that, on average, women effectively work for free for nearly two months of the year compared to men. At the current rate of progress, it could take another 20 years to close the gap. That is 20 years too long. While reporting has become an accepted part of employment practice, we must do much more than just raise awareness of the issue. We need concrete action, which is why I am proud that the Bill introduces much-needed regulations to require employees with more than 250 staff to publish a plan to address their gender pay gap. That will ensure that organisations are not only transparent about pay inequalities, but actively work to close them.
Another critical part of the Bill is the provision to support women experiencing menopause. Women between the ages of 45 and 54 make up 11% of our workforce and 23% of all women in the workforce—around 3.5 million women. Despite the growing number of women in the labour market of that age, the challenges they face from the menopause are often overlooked, leading to discriminatory practices and a lack of adequate workplace support. BUPA estimates that nearly 1 million women have been forced out of the labour market by menopausal symptoms. That is simply not good enough, which is why I am proud that the Bill takes steps to address it. Employers will be required to publish how they will better support women going through the menopause.
Sonia Kumar (Dudley) (Lab)
I declare my interests as a member of the GMB, Unison and the Chartered Society of Physiotherapy.
Dudley is home to thousands of small businesses and gig economy workers. Some 89% of those businesses are microbusinesses, and they will be watching closely to see that the Bill strikes the right balance between being pro-business and pro-worker. I believe that it does so. Alongside the “Next Steps to Make Work Pay” policy, the Bill offers a consultation period for businesses and a probation period, allowing them to shape practical and beneficial reforms, giving a voice to businesses and time to adjust, as it will not be rolled out until 2026. I dismiss the claim from Conservative Members that the Bill is rushed, and I hope that the Business Secretary will reaffirm that and reassure Conservative Members that specific guidance and support will be provided to smaller businesses in places such as Dudley so that they can implement the reforms effectively, without excessive costs.
The Bill includes welcome provisions that will strengthen statutory sick pay and provide financial stability for workers. Currently, 10 million people are not able to access basic health support at work, including up to 12,600 people in Dudley. The changes will ensure that no one is forced out of work due to ill health, helping to create workplaces that protect and promote the health of all employees.
For too long, workers have had to wait months for basic protections such as unfair dismissal rights. The Bill will change that by making them day one rights, so that workers are protected from the start of their employment.
Under successive Conservative Governments, access to justice for workers was weakened. Tribunal fees made it harder for workers to hold bad employers to account. Although those fees were eventually scrapped, the damage remains, and the Bill corrects those failures by giving workers the protection that they deserve from day one.
The Bill is also a significant step forward on gender equality. It makes parental leave a right from day one, allowing parents to access leave as soon as they start their job. That is particularly important in Dudley in sectors such as healthcare, education and the beauty industry, and will ensure that being a parent does not undermine a person’s job security.
At university, I was on a zero-hours contract in one of the biggest industries in Dudley. I remember when my colleagues and I would wait for the supervisors to produce a rota, and the uncertainty of not knowing who would be on the shift next. We were not alone; more than 1 million workers in the UK are stuck on these contracts, with more than 80% of them seeking predictable hours. The Bill reflects the values that we stand for of fairness, equality and dignity.
Tom Hayes (Bournemouth East) (Lab)
I proudly refer the House to my entry in the Register of Members’ Financial Interests. Bournemouth is blighted by insecurity, and Britain is paralysed by low pay. As somebody who grew up in very significant financial hardship, caring for two disabled parents, work for me was a route out of poverty. By working on several shop floors in Salford, I was able to earn enough money to go to university. Were it not for that opportunity, I would not be here today. Things were hard then, but they are so much harder today, so I welcome the Bill.
The Bill gives workers in Bournemouth the rights that they need, employers in Bournemouth the security that they need, and our economy in Bournemouth the tools that it needs to grow sustainably. I thank people across Bournemouth East, the constituency that I am so proud to represent, who have shared their thoughts and insights, and met with me about the Bill. I have represented their views and been a voice for their arguments, and I believe that the legislation is stronger as a result.
Across Britain, more than 1 million people on zero-hours contracts will benefit from the new guaranteed-hours policy; 1.5 million parents will benefit from unpaid parental leave as a day one right; and 9 million people who have been with their employer for less than two years will benefit from the new day one unfair dismissal policy. An estimated one in 25 employees did not get any of the paid holiday that they were entitled to last year. The new fair work agency will enforce holiday pay for the first time.
The Bill is a crucial, long-overdue step that directly benefits women at work. It will increase protection from sexual harassment. One in two women have been sexually harassed in the workplace, and four out of five do not report it to their employers. The legislation will empower tribunals to raise compensation in cases of sexual harassment where the employer failed to take reasonable steps to prevent it. An estimated 4,000 pregnant women and mothers returning from maternity leave a year will benefit from new protections. The Bill will also introduce gender pay gap action plans, and strengthen protection for workers through the menopause.
The Labour party made a promise to level the playing field at work by introducing the Bill early in the life of this Government. Promise made, promise kept. I am so proud and excited to be voting for this pro-worker, pro-business, pro-growth, pro-economy measure, and I commend the Deputy Prime Minister for bringing it forward. Bournemouth and Britain have been held back for too long. Together, we take a big step forward, with a measure that has been agreed and negotiated with businesses, trade unions and workers. We are fixing the foundations, and together we are shortening the journey towards the fairer society that so many people elected a Labour Government to bring forward.
Yuan Yang (Earley and Woodley) (Lab)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, in particular the perhaps interesting fact that, like the majority of journalists at the Financial Times, I am a proud member of the National Union of Journalists. I am able to enjoy that right to membership of a trade union, and the right to assembly and discussion that follows from it, because I am fortunate enough, unlike many of my aunts, cousins and uncles, to be a British citizen living in the UK who enjoys protection of not only my right to vote but my right to collective bargaining and representation in the workplace.
It is fitting that, in this historic debate on this advance in workers’ rights, we in the mother of Parliaments defend not just the right to representation in Parliament through our electoral system, but the right to representation in the workplace through collective bargaining and union access, because strong unions are a workplace form of democracy. I have seen what happens when people are denied that right. I have reported on labour abuses and wildcat strikes—the desperate measures that workers across the international supply chains of Amazon and Apple have gone to when their ability to form a union and advocate for their rights has not been protected by the state. That simply pushes problems underground.
Labour Members know that when workers have issues, there needs to be mediation and they need to be represented properly, through legal means. If that does not happen, it stores up long-term structural challenges for the economy. In the British economy, the wage share of our economic output has fallen since the 1980s. Union representation and density has also fallen throughout that time. It is no coincidence that the two things go together, in the UK and many economies across the OECD. There is a correlation between the strength of unions, and union density, and strong wage growth and worker protections in the workplace.
Beyond the costs to the economy, there are costs to individual households. When I vote for the Bill, I will be thinking of residents and households in my constituency of Earley and Woodley. I will be thinking of the parents I have delivered food parcels to with Woodley Lunch Bunch, who, despite working multiple jobs, are still unable to make ends meet and must resort to using food banks. I will be thinking of the supermarket workers in the Lower Earley Asda, who are—like many of their colleagues across the country—concerned about the threat of fire and rehire.
Above all, I will be thinking of frontline NHS workers in the Royal Berkshire hospital in the centre of Reading, who went to work day after day during the pandemic to clean up after people, suffering the threat of contagion. Many of them—especially those outsourced from private companies—were not afforded statutory sick pay because they were below the lower earnings limit. During the pandemic, the sick pay of many outsourced workers in the NHS was less than a quarter of the national living wage. That is a tragedy. Presenteeism caused by the lack of sick pay costs our economy by reducing productivity and increasing the likelihood of chronic health conditions. I am very proud to support the Bill.
Laurence Turner (Birmingham Northfield) (Lab)
I am glad to draw the House’s attention to my declaration in the Register of Members’ Financial Interests and to my membership of the GMB and Unite trade unions.
The Bill is at the start of its parliamentary stages, but today is also the culmination of years of hard work and consultation. It is important to recognise the accomplishment that the Bill’s introduction represents, and the Ministers, civil servants and special advisers involved deserve great credit. The Bill was born out of the undermining of the dignity and protection of work over many years, which falls heaviest on those in working-class occupations. We all know the effects that 15 years of wage stagnation has brought, the shameful limits that in-work poverty places on the potential of the people we represent, and the unfairness shouldered by those who are trapped on insecure contracts, including in the security and retail sectors in Birmingham Northfield. The Bill will make a real positive difference to their lives.
In the short time available to me I will focus on three measures. First, the 3,000 school support staff and care workers in my constituency are some of the lowest-paid people in public services. They are predominantly women who work under inadequate and outmoded terms and conditions, and their professionalism has gone unrecognised for far too long. I hope that the creation of a school support staff negotiating body and an adult social care negotiating body will have cross-party support.
Secondly, the condition of outsourced workers in public services has also been neglected. They are the invisible workforce who keep our hospitals running and our nation secure. For more than 100 years, under the fair wages resolution and the initial version of the two-tier code, Governments of all colours recognised the principle that outsourced workers should not be placed at detriment. The reinstatement of that principle is of critical importance.
Finally, I welcome the proposed reforms to trade union recognition and access arrangements. When the system has been shown to be open to abuse, it must be changed. In that sense, there is a direct line of continuity between the Grunwick dispute of the ’70s—in which the late Member for Birmingham Erdington, Jack Dromey, played such a prominent role—and the creation of a statutory recognition regime 20 years later. I have heard directly from GMB members about the disgraceful anti-union tactics that they have faced, which were not anticipated when the current law was drafted. They must not wait 20 years for remedy. This Bill is important and necessary, and I am proud to vote for it tonight.
Josh Simons (Makerfield) (Lab)
When Sam Woods, one of my predecessors as the MP for Makerfield, started his working life at just seven years old, he accompanied his father in the pit. By the time he died in 1915, he had become a strong representative for his fellow miners. He played an instrumental part in the formation of the Labour party and championed the legal limit of eight hours for a single mining shift in the Coal Mines Regulation Act 1908. He was, like me—as my entry in the Register of Members’ Financial Interests will attest—a proud trade union member.
Sam Woods’s story is partly about the Labour party’s moral purpose: to improve through Parliament the conditions, security and pay of working people in the United Kingdom. But his story is also about the transformative power of work itself. At its best, work is how we contribute to our family, our community and the trajectory of our nation. Coalmining powered Britain’s industrial revolution, providing industry, warmth and energy. It bound the work of ordinary men and women to the path of our nation. That spirit of production instilled the values of respect and hard work in the communities I represent—values I continue to hold dear. By contrast, the Conservative Benches—sadly, once again so sparsely populated—always sought to resist the change that makes work more secure and better paid. They pit the interests of businesses against workers, of finance against industry, and even sometimes the interests of men against women.
In Sam Woods’s time, Conservative Members said that regulations would bankrupt businesses and even increase unemployment. They said that they would harm communities such as mine. That is why I am particularly pleased the Bill introduces day one protections for pregnant women and rights to paternity leave. The impact assessment clearly anticipates the reforms will have a positive economic impact, which is good for mums, for dads and for growth. I look forward to the upcoming review of shared parental leave, which will cover maternity and paternity leave.
Through work, women organise their power to advocate for equality at work and at home. Through work, we build social bonds, relationships and our sense of purpose. Now, Britain once again has a Government who recognise that work is at the heart of how we participate in, and contribute to, our families, community and country. The industry and ingenuity of working people up and down this country is what makes us who we are. A century ago my predecessor Sam Woods changed the law because he understood that. Now, I am proud that this Government are once again restoring respect and dignity to work, as well as ensuring that all work is secure and well paid. That is why it is an honour to support the Bill tonight.
Darren Paffey (Southampton Itchen) (Lab)
As a proud member of Unison, I am delighted to refer to my entry in the Register of Members’ Financial Interests. It is such a pleasure to be here on the Government Benches and rise to back this pro-growth Bill. I do that proudly on behalf of the people of Southampton Itchen, because I know that it will change my constituents’ lives for the better. It is the largest overhaul of working people’s rights in decades, and it will truly make work pay. That is what this Government are about.
As things stand, unfortunately too many employers put their profits before their staff, and for 14 years the Tory Government were happy to just sit back and do nothing about that. One of my constituents shared with me their experience of having their contract changed to zero hours behind their back, leaving them without shifts and unable to make ends meet. That has to stop. The Bill rebalances that relationship and puts an end to the underhanded moves used by some employers. Instead it gives over 1 million people on zero-hours contracts those guaranteed hours, and provides all workers with the protections they deserve.
We know that a secure job is about more than just a salary; it is about someone having the peace of mind that they can put food on the table for themselves and their family. The Bill enshrines such basic rights in law. With over 16,000 unfair dismissal cases a year brought to tribunals, and over 200 cases every month in the south-east alone, workers are clearly facing unjust treatment. Removing the qualifying period for unfair dismissal will offer people greater security from day one and promote a fairer workplace.
I want my constituents to have better pay, a better life at work and better parental leave. They are already telling me about their optimism for the Bill. It is a Bill that will benefit employers too, by helping to keep people in work, increasing staff retention and reducing recruitment costs for employers. That is happening because this Labour Government are pro-business and pro-worker. By increasing those protections, levelling the playing field and modernising our working practices, today a new dawn is breaking for working people. I am proud that it is a transformational Labour Government bringing forward the crucial Employment Rights Bill within our first 100 days.
Kirith Entwistle (Bolton North East) (Lab)
I declare that I am a proud member of GMB, Community and the Union of Shop, Distributive and Allied Workers. I point Members to my entry in the Register of Members’ Financial Interests, where I declared donations from those unions. I stress that without that money, as a young mum with a small baby, fresh off maternity leave, I would not be standing in this place today. That is a privilege that I believe many Members on the Opposition Benches, which I note are largely empty, take for granted.
I welcome what is the biggest uplift in workers’ rights in a generation, building on the legacy of previous Labour Governments. Bolton North East has over 50% more youth unemployment than the national average. Those workers deserve dignity, stability and to know that their Government are on their side, and for the young people in my constituency, it is about knowing that they have a future. That is why I am incredibly proud to stand in this Chamber today, and I commend the Deputy Prime Minister and my right hon. and hon. Friends on the Front Benches on bringing this legislation before the House.
Improving the lives of working people is one of the things I came to this place to do, as I am sure many of my colleagues did too. With the Government’s “Next Steps” document already published, I sincerely hope Ministers will continue that close collaboration to finalise the practicalities of the Bill with our trade union movement—the fine details that will make all the difference to families in my constituency. Extending workers’ rights and protections is a crucial step towards making work pay, and I look forward to seeing further measures to make work pay, such as extending rights and protections for self-employed people so that all working people can benefit from these widespread changes.
This Bill marks a turning point for working families, not just in Bolton but across the UK. As a member of the Women and Equalities Select Committee, I am particularly pleased that among the Bill’s 30-plus reforms are increased protection from sexual harassment, the introduction of equality action plans, and strengthened rights for pregnant workers. I commend the Deputy Prime Minister and her ministerial team on bringing this Bill before the House, and I look forward to seeing its progression.
Mrs Sarah Russell (Congleton) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests and my membership of the Employment Lawyers Association, the Industrial Law Society, Unite the Union, Community and the Union of Shop, Distributive and Allied Workers.
The treatment of women in Harvey Weinstein’s companies, UKFast, and plenty of other organisations across the UK is notoriously horrific. A significant number of women work in workplaces that are basically run like medieval fiefdoms. Corporate governance in the UK appears to largely serve to cover up sexual harassment, and to do very little to prevent it.
As someone who has negotiated settlement agreements for a lot of women who have suffered sexual harassment or maternity discrimination, I do not recognise the descriptions of UK employees that I hear from Conservative Members. They appear to regard employees as desperate to bring employment tribunals at any possible opportunity, but my experience of representing women in those situations is that they are desperate to avoid bringing employment tribunal claims. They think that if they talk about what has happened to them, it will cause them significant reputational damage—that they will be blamed for their experiences, and that they will never work again.
As such, they sign settlement agreements meaning that they cannot talk about what has happened to them. They do so knowingly, and often for really quite small sums of money, because they are terrified of the amount it will cost them in legal fees if they try to pursue a claim to tribunal. That is one of the reasons why I am proud to be a member of trade unions and to have given advice to trade union members, because that enables those women to get the support they need to assert their basic workplace rights.
A 2016 TUC report talked about the fact that young women in particular, as well as women on zero-hours contracts, seem to be reporting higher levels of sexual harassment at work than other, older women. In short, those of us who get to a certain age like to hope that things have got better because we stop personally experiencing sexual harassment at work. Unfortunately, the reality is that younger workers, who have less access to advice and support and are more economically vulnerable, continue to receive that harassment year after year. Things are not getting better. Employment rights are fantastic, and it is great that we are improving access to them through this Bill, but when Conservative Members oppose our moves to restrict the use of zero-hours contracts, they do not understand—so far as I can tell—that those contracts, which keep women in precarious employment, are one of the mechanisms by which sexual harassment occurs. As such, I commend the Bill to the House.
Jon Pearce (High Peak) (Lab)
I, too, am a proud member of the GMB. I refer the House to my entry in the Register of Members’ Financial Interests.
This Bill delivers on a key Labour manifesto commitment. It provides a framework for the biggest change in workers’ rights in 50 years. We have heard in this debate that it will ban exploitative zero-hours contracts, abolish the scourge of fire and rehire, and modernise trade union laws. I would like to focus my comments, though, on the vital reforms that this Bill will deliver for young families, and particularly women, in my constituency of High Peak and across the country.
As the Conservative leadership debate is shamefully focusing on whether women should have less maternity pay, and whether a woman can be a mother and a leader, let me tell Opposition Members that they can—and they are, in businesses up and down this country. If the Conservatives joined us from wherever they are—perhaps somewhere in the 1950s—they might understand that far better.
Before I entered this House, I was an employment lawyer advising businesses small, medium and large. One of the occupational hazards was friends and families wanting advice about workplace rights. The most depressing aspect of those chats was that new mums wanted and needed those conversations most. The story was always basically the same: they had just returned to work from maternity leave, and their employer had informed them that they were no longer needed, their job no longer existed, or that they were at risk of redundancy. The joys of that first year to 18 months with a new baby were all but tarnished because of worries about the security of the mother’s job.
An estimated 4,000 pregnant women and mothers returning from maternity leave are dismissed each year. We have to do better if we are to improve productivity and grow our economy. We have to show young families and young mums that they matter, and that their contribution to society and our economy is valued. This Bill will do that. It will create the power to ban the dismissal of women who are pregnant, on maternity leave, or in the six months following their return from maternity leave.
It is depressing that the Opposition wish to portray protecting mums from dismissal as red tape and a burden on businesses, when good businesses know that this is the right thing to do. When I vote for the Bill, I will do it to show every working family in High Peak and in Britain that we are on their side. We are the party that values families.
Douglas McAllister (West Dunbartonshire) (Lab)
Thank you, Madam Speaker, for allowing me the privilege of speaking in this debate on the Government’s historic legislation. This really is the moment that all Labour Members fought so hard for. This is what I promised my community, the people of West Dunbartonshire, that my Labour Government and our Prime Minister would deliver. Some whom I spoke to on the doorstep had given up hope that anyone could change their life for the better. We promised them that we would deliver change—that we would make work pay, and make work fair.
This Bill will bring an end to years of low-paid, insecure employment, which not only failed our people but failed the economy. As a solicitor in private practice, I grew tired and demoralised from regularly having to advise my clients that there was nothing they could do to save their job or improve their working conditions because they had not worked for their employer for two years or more. We will establish day one rights, but please let us also take on board the Law Society’s advice. We must properly resource employment tribunals and fully fund legal aid to allow access to this justice that we seek to introduce.
I received a thank-you card from my constituent Sharon from Clydebank. She said to me:
“I wanted to tell you how the New Deal for Working People will make a difference to me. I am employed in social work. My wages have not increased in line with inflation, meaning a loss of income. I do a difficult, stressful job in public service and all staff are at breaking point. From banning exploitative zero hour contracts to ensuring we have access to workers’ rights from day one—thank you for supporting a New Deal for Working People.”
That is the change we promised.
This Bill signals the largest rights upgrade for workers in my constituency of West Dunbartonshire in a generation by ending exploitative zero-hours contracts and fire and rehire, and by establishing day one rights. Some 7% of the overall workforce in West Dunbartonshire is paid at or below national minimum wage rates. This Labour Government will make work pay for the lowest-paid in West Dunbartonshire, and assist employers in my constituency by helping them to retain their hard-working staff.
In Scotland, we had two bad Governments, and our job in Scotland is only half complete, because it has taken the SNP 15 years just to attach conditions to the Scottish Government’s grants on living wages—
Antonia Bance (Tipton and Wednesbury) (Lab)
As a proud member of Unite and a former TUC staffer, I draw the House’s attention to my entry in the Register of Members’ Financial Interests. In addition, I think ASLEF and the GMB for their kind support of my election campaign.
During the election, I met a young man in Great Bridge in my constituency who was living in a caravan on his parents’ drive, working in a warehouse on a zero-hours contract and not knowing what his pay packet would be from one week to the next. I say to him, to the one in eight black and Asian workers trapped in insecure jobs, and to the 1 million fellow citizens denied the security and the dignity of secure work: “We get it. We know you didn’t choose a zero-hours contract.” Eight in 10 workers on zero-hours contracts want regular hours. We will ban those disgraceful contracts and—listen up, colleagues —we will do so with the support of reputable businesses, such as Julian Richer’s Richer Sounds.
Raising the amount of collective bargaining is indispensable if we want to drive down poverty and inequality, and that is what this Bill will do. This Bill will allow unions to get into more workplaces and tell more workers why they should join a union. No employer needs to fear unions if they are confident that they act fairly towards their workers, and that their sites are safe, so we will legislate to make sure that unions can get into every workplace. After all, do we really think that ambulances would have been at those Sports Direct warehouses 76 times in two years, including for a woman who gave birth in the toilets, if there had been unions checking safety on that site? That is why unions need the right to go into workplaces. As a side note, the rules on access have to be practical, so I gently say to my right hon. Friends that the access agreements as drafted in the Bill give rogue employers just a few too many ways to keep unions out, and I hope we can sort that. This is not just about getting unions into workplaces; it is about getting unions recognised, and having the right to negotiate as equals at the table with the boss on wages, conditions and more. The changes on recognition are fantastic, and are to be celebrated. I hope we can go just a little further and end the three-year lockout, following a failed recognition ballot, that has kept unions out of the workplace, just as GMB workers are kept out of Amazon.
The working class are the backbone of this country. Contrary to what Opposition Front Benchers say, workers are the dog, not the tail. We all deserve security at work and a decent wage. I will be so proud to vote for this Bill—
Steve Yemm (Mansfield) (Lab)
I, too, draw the House’s attention to my entry in the Register of Members’ Financial Interests, and my membership of Unite and the GMB.
I welcome the Bill, and I know that my constituents in Mansfield will, too. There are two key aspects of it that they will be particularly keen to see. First, it offers the right to collective bargaining on pay for those in social care. People in that sector do incredible work, with long shifts and unsociable hours. I am sure that the whole House will join me in thanking the more than 1.5 million people who work in social care across the UK. It is a scandal that, despite the importance of their work, many are paid the minimum wage and struggle to provide for their family. I recall a particularly striking encounter on the doorstep in Mansfield during the recent general election campaign; I spoke to a former adult care worker, who told me that they had become a dog walker because the pay was better. We are a nation of dog lovers, but that is not acceptable to me.
The second aspect relates to sick pay. Millions of workers in the UK are entitled to minimum statutory sick pay only, which stands at £116 a week, and they are not eligible for any sick pay for the first three days of sickness. Opposition Members clearly feel that that is perfectly acceptable, because they took no action on it over the past 14 years, but I wonder how many of them could feed their family and pay their bills on £116 a week. Only recently, almost 300 workers in my constituency have been on strike, including porters, cleaners and cooks employed by Medirest, a private contractor in my local NHS trust in Mansfield. Supported by my union, the GMB, they took a stand, because Medirest company bosses refused to keep their terms and conditions, including on sickness pay, in line with those of colleagues employed directly by the NHS. All those workers wanted was the right to reasonable sick pay. The Bill will help to strengthen statutory sick pay, and for that reason my constituents and I support it, and I commend it to the House.
Nadia Whittome (Nottingham East) (Lab)
I refer Members to my entry in the Register of Members’ Financial Interests. I am a proud GMB member; I am told that there are now more of us here than there are Conservative MPs.
Our economy is fundamentally rigged against millions of workers. How else could we describe an economy where many people’s pay does not cover the essentials, where there are people in work who are reliant on food banks, and where the state has to top up poverty wages through universal credit? Nottingham has some of the lowest average incomes in the country, and my constituents are tired. They are tired of living from pay cheque to pay cheque, tired of being unable to save, and tired of having to choose between going to work sick or falling into debt. People’s mental health is suffering as they work multiple jobs to make ends meet, or worry that they will not be given enough hours to pay the bills. That cannot go on, which is why the Bill is so important.
The Bill is about making work pay and creating a better work-life balance, and a more family-friendly economy. It is about fixing the problems that previous Conservative Governments allowed to fester, or even encouraged. The 1 million people on zero-hours contracts deserve security, and the Bill will give them the option of guaranteed hours. Those who miss work because they are sick deserve to be paid, and the Bill will entitle them to statutory sick pay from day one. Every worker deserves to earn enough to afford the essentials, and the Bill will mean that the cost of living is accounted for when setting the minimum wage, and remove discriminatory age bands.
The Bill is an investment in our future. Making work pay will give people more money to spend in the local economy, and improve people’s health, easing the pressure on public services. We have heard scare stories from Conservative Members before. They told us that the minimum wage would cause an unemployment crisis; it was not true. They want the public to fear trade unions, but trade unionists are not the bogeymen that the Conservative party presents them as. They are our postmen, our child’s teacher, and the nurse who cared for our sick parents. Trade unions are the combined power of millions of ordinary working people. From health and safety improvements to holding bad bosses to account and advancing gender equality, trade unions are a force for good in all our lives. I welcome their strengthening through the Bill, but I would like us to go further and scrap every anti-union law introduced since the Thatcher Government came to power. We must not stop here. The Bill is a vital first step to delivering the new deal for working people and resetting our rigged economy, but it is just that—a first step. We must also close all fire and rehire loopholes, create a single status of worker, and extend collective bargaining.
Andrew Cooper (Mid Cheshire) (Lab)
Like many of us today, I proudly say that I am a member of the GMB and of USDAW. Alas, I cannot declare any donations from either of those organisations, but we do still have a good stock of USDAW carrier bags, which everybody knows are the cornerstone of any Labour campaign centre. I was also recently the director of a mid-sized technology firm. The attitude from those on the shadow Front Bench towards flexible working is frankly out of date and divorced from where the labour market is currently in that sector and many others. Perhaps they might like to reflect on that.
I welcome the Employment Rights Bill and its potential to reshape the landscape of employment in our country to help deliver economic growth and to make work pay. For too long, British workers have endured the burdens of insecure contracts, low pay and inadequate protection in the workplace. That cannot and must not continue, and it is exactly what the Bill will fix. It will enhance the rights and wellbeing of workers and restore dignity, fairness and respect to the workplace, while fostering a robust environment for businesses and contributing to the overall health of the economy. Whether it is ending exploitative zero-hours contracts and fire and rehire practices, establishing day one rights for paternity, parental and bereavement leave for millions of workers, or strengthening statutory sick pay, this Bill is a pivotal step towards achieving fairer and more equitable workplaces.
In the limited time I have, I want to consider the Bill’s provisions on collective bargaining in two sectors. The return of the school support staff negotiating body is an important and welcome first step in improving the pay and conditions of teaching assistants, technicians and others who do vital work keeping our schools running. Their work often requires specialist technical knowledge. They are providing essential support for children with special educational needs, and they are also disproportionately women, and their pay has not kept pace with teachers because of wider pay freezes in local government. I hope that this step will precipitate a broader reassessment of the value of school support staff and ultimately bring about the demise of unfair “term-time only” contracts that see staff lose around £4,000 a year.
The Bill’s provision to establish an adult social care negotiating body is also incredibly welcome, but I urge the Minister to go further and provide a framework to provide for a negotiating body in any sector, with the sectoral specific definitions implemented in secondary legislation. That would the allow the Secretary of State to roll out collective bargaining more quickly and easily to other similar sectors. I urge Ministers to give that consideration, as the Department brings amendments to the Bill in its passage through the House.
Taken as a whole, the measures in this Bill, along with our wider plan to make work pay, promise to create a future where every worker can thrive, businesses can flourish and our economy can prosper. That is why I am proud to support it.
Alex McIntyre (Gloucester) (Lab)
I must declare that I am a proud member of the Community and GMB unions, and—this may be of interest to the Opposition— in my previous role I was an employment lawyer to organisations from FTSE 100 companies to our NHS. The shadow Minister, the hon. Member for Thirsk and Malton (Kevin Hollinrake) might like to reflect on and apologise for his patronising comments to Government Members.
The Bill will provide the most substantial upgrade to workers’ rights in a generation and greatly benefit many in my constituency of Gloucester. Secure, well-paid work for all my constituents is the best way to tackle the legacy of the Tory cost of living crisis. The Bill will take action on zero-hours contracts, which leave workers vulnerable to financial instability and uncertainty. I support the Government in ending that exploitative practice, so that my constituents can benefit from guaranteed hours.
The Bill will strengthen the right to flexible working, which is essential not only for enhancing work-life balance, but for reducing pay gaps in our workplaces. I support measures by the Government to support people in Gloucester to enter back into work in an inclusive and supportive way. The Conservatives doubled the qualifying period for unfair dismissal, leaving 8.5 million workers without protection. The Government will establish an unfair dismissal policy from day one, which will directly support many of my constituents, particularly those on lower incomes.
The Bill will strengthen paternity leave and champion the rights of women in the workplace through enhanced menopause support and protection from sexual harassment. It will improve the pay and conditions of school support staff and social care workers. We all rely on those vital services, and I am pleased to support the Government in valuing the vital work of our social care workers, particularly those in my constituency.
Let us not forget the consequences of Conservative policies, which have led to chaotic industrial relations, leaving many of my constituents worse off amid a cost of living crisis. After 14 years of stagnating wages, millions of lives has been disrupted and our economy has suffered immensely. Industrial action in the NHS alone cost taxpayers £1.7 billion—a staggering sum that could have been invested in the public services that we all rely on. The Conservatives have consistently opposed workers’ rights, but we will always champion them. I have been shocked by the vitriol from the Opposition towards hard-working people getting basic rights like not being sexually harassed at work; they are out of touch.
This Government will deliver a stronger, fairer and brighter future by making work pay, growing the economy, raising living standards and creating opportunities for all. The Bill marks the beginning of a new deal for working people and a brighter future for Gloucester.
Lee Barron (Corby and East Northamptonshire) (Lab)
I declare my proud membership of the Communication Workers Union and that, by virtue of my last name, I am the only legitimate union Barron in this House—I am proud of that fact.
The Bill is a step change and a new deal for working people. It is transformational for so many in my constituency of Corby and East Northants because, for too long, the world of work has not paid. Let’s make no bones about it: this is about growth. We do not believe that the economy can grow based on insecure jobs, zero-hours contracts and bogus self-employment. People need more than that to feed their families. That is why the Bill is so essential. This legislation will give working people a sense of fairness in the world of work, where they can play their part in building our economy and be treated as they should be in our society—with the security, dignity and respect that a job should bring. Our values should not stop at the front door of our workplace; they are an essential part of it.
In this debate, Opposition Members have turned around and said that we are doing this to them: “Businesses don’t want this; no one wants it apart from you lot.” Well, if they had a look at the poll conducted by the Institute for Public Policy Research along with the TUC, they would see that 60% of employers said that employees should have more security at work; 74% believed that strengthening employment rights would improve workforce retention; 73% said that strengthening employment rights would boost productivity; 61% thought that stronger employment rights would have a positive impact on business profitability; and 73% said that they would be prepared to support giving employees protection from unfair dismissal from the first day. This is not being done to anybody. It is being done with them, and we should be proud of that.
Here is my final point: we pay millions to people who look after our money, but we pay peanuts to those who look after our people. That needs to change. That is why I am so pleased to support the improvements to pay and conditions through fair pay agreements, starting in the care sector. They are the ones who need it. We need to deal with the recruitment and retention of the people who look after our loved ones, so that they know from one day to the next who will be coming around and washing their bodies. It needs to be done; it cannot stay as it is. That is why we should support the Bill.
Mr Jonathan Brash (Hartlepool) (Lab)
As many Members have done, I proudly register my membership of the GMB and Unison, and that I am a co-owner of a small business.
One of the consequences of the last 14 years is insecurity in every part of British life. Hartlepool people, who I represent, are insecure in their communities, in their homes and in their jobs. That is why I welcome the Bill, which has security at its heart, banning exploitative zero-hours contracts, ending fire and rehire, and providing day one rights. Listening to Opposition Members—maybe the shadow Minister could reflect on this in his wind-up speech—I would like to know on what day the Conservative party believes it suddenly becomes not okay to unfairly dismiss somebody. What is that time? If it is anything other than day one, then quite frankly they are abandoning the workers of this country.
The Bill does more than give security to workers. It gives people dignity: the dignity to grieve without having to ask permission; the dignity to choose to become a parent without having to worry if it will affect their opportunities in the workplace; the dignity of knowing that they can afford to be ill; and the dignity of knowing that they can turn up to work and be safe. Security and dignity are what British workers, including in Hartlepool, deserve. When people have security and dignity in the workplace, they get opportunity: the opportunity to grow, to develop, to train, to become better at what they do and to become more productive.
In recent days, I have heard people on the right of politics suggest that the Bill is somehow an attack on the “wealth creators” of our country. What nonsense. Let us be absolutely clear: the wealth of this country is created by its workers. Through the dignity, security and opportunity that the Bill provides, we will grow our economy and give respect to every worker in my constituency and beyond.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
I draw the attention of the House to my entry in the Register of Members’ Financial Interests.
As a GMB member, it is a great pleasure to speak in this debate. I feel, and my hon. Friends feel, that a substantial uplift to employment rights is long overdue. For far too long, it has been too difficult to get ahead, and too many working people—people who have worked hard—have seen their finances deteriorate, pushing them into hardship. They have done the right thing that society expects of them and they are getting very little in return: they have cut back on the essentials; they have sought extra hours at work; they have had to find second jobs; they have sold furnishings and accessed food pantries just to keep their heads above water—and they find that there is still too much month at the end of their money.
In 2022, the Low Pay Commission estimated that 20% of minimum wage workers and 20% of living wage workers did not receive what they had earnt in wages, sick pay and holiday. The great pay robbery will not be left to continue anymore. That is why it is crucial that the Bill establishes the fair work agency, making sure that everyone is playing by the same rules—and those rules are simple: dignity in work and fair pay. The Bill is long overdue and far too many are missing out on what they are owed.
In the groundbreaking first days of this Labour Government, they mandated that the minimum wage must reflect the cost of living not just this year but every year, matching the earnings of hard-working people to the bills they face for food, energy and transport. Across Scotland, that means a direct pay boost to over 100,000 people, including to over 2,500 people in the West Lothian area and 3,000 people in the Falkirk area. I am proud that this Labour Government are leading business and trade unions to work together to get the economy fired up and to make sure that the people of this country are paid fairly.
The Bill is starting where we left off, with a plan to make work pay, and with fair sick pay, real holiday pay, a clampdown on precarious employment, an end to fire and rehire, and proper hours of work and proper earnings to match. The Bill makes it clear that it is time to go for growth: a stronger, fairer, brighter future for work in the UK.
Brian Leishman (Alloa and Grangemouth) (Lab)
Let me declare first that I am a proud member of both Unite the Union and the Community trade union, and secondly that I am even prouder that the Bill will positively transform thousands of lives across the Clackmannanshire and Falkirk council areas that I serve in this place.
I thank my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and my hon. Friend the Member for Leeds East (Richard Burgon) for their comments about prison officers. Under section 127 of the Criminal Justice and Public Order Act 1994, prison officers were banned from taking industrial action. Correctly, the Scottish Parliament restored the right to strike in 2015, but today prison officers in the rest of the United Kingdom find themselves in a poorer position than their Scottish counterparts, in that they are not allowed to withdraw their labour.
Section 127 has also limited trade unions’ ability to protect prison officers from wage stagnation and attacks on their terms and conditions, which has led to a recruitment and retention crisis and, naturally, to low morale. As in professions such as nursing, the police, the fire brigades and teaching, it is often the camaraderie of colleagues on the shift that keeps things going in a job that provides a vital public service that has been disgracefully underfunded.
The state of our prisons is well documented. Ruthless Conservative austerity has hammered the service. More than a quarter of prison officers have left since 2012. Prison officers were not exempted from the Conservative Government’s raising of the public sector pension age to 68, which, given the physical nature of the day-to-day work, is obviously unfair, unrealistic and, of course, incredibly dangerous. Since that wealth of experience has left, violence directed at both officers and prisoners has escalated.
The prison system is another mess that this Government have inherited and must now sort. Prison officers should have the right to retire at 60 or after 30 years’ service: it is just the right thing to do for employees. No one should feel like a disposable commodity that is there to be exploited and then discarded when every last ounce of work has been wrung out of them. It is also right that prison officers in the rest of the UK achieve parity with Scottish prison officers: they too should have a fundamental right to withdraw their labour.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. There will now be an immediate two-minute speaking limit.
Mary Kelly Foy (City of Durham) (Lab)
I declare my interest as a member of Unison and Unite. In May last year, I condemned the Strikes (Minimum Service Levels) Act 2023 for the consequences that it would have for trade unions. I welcome the fact that this Bill will repeal that Act, and I pay tribute to trade unions and their members for their tireless campaigning. I am keen to hear from the Minister whether the protections for pregnant workers, specifically the right to maternity pay, will be a day one right, and whether there is scope to circumscribe redundancy during pregnancy and maternity leave. If so, will he consider adding those changes to the Bill at a later stage?
There is no doubt that the Bill is hugely positive. However, like my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman), I want to say something about prison officers, who cannot strike because of section 127 of the Criminal Justice and Public Order Act, that Tory-era legislation. There are three prisons in my constituency and I know about the hardships that prison officers face, which are pushing many of them to the brink. I hope that the Minister will be able to meet representatives from the POA and work to repeal section 127 so that its members can have real equality with their fellow trade unionists in other unions.
What we have here is a series of policies that will drastically improve the lives of workers across the country. The Bill is an important first step towards ensuring that all workers can realise their own dignity and worth through their work. The fact that we have it before us today is a testament to the strength of organised labour and the resolve of trade unionists throughout the country.
Zarah Sultana (Coventry South) (Ind)
I am a member of Unite the Union and am the parliamentary chair of the Fire Brigades Union. I refer Members to my entry in the Register of Members’ Financial Interests.
After years of Tory attacks on trade unions and workers’ rights, the Bill will begin to reverse decades of Thatcherite anti-union laws, marking a real shift in the balance of power at work. The repeal of minimum service levels for strikes is a major victory: those laws were tools of class warfare that were designed to break the unions and silence workers. Scrapping them restores the right to strike, a win for every worker.
Equally important is the removal of the undemocratic ballot thresholds imposed by the Tories in 2016. Those barriers undermined collective action. By removing them, we reclaim the power taken from us. Permitting electronic and workplace balloting is another welcome move that will expand democratic participation, but it is not enough. We must go further and repeal every single anti-trade union law since Thatcher.
In its current form, the Bill retains the six-month mandate on strike ballots. Strikes are not battles of a few days or weeks; they are drawn-out struggles for justice and dignity. Workers in Coventry South who are fighting union-busting corporate giants such as Amazon know that these fights can last years. They need mandates that match the reality. We should abolish them entirely and repeal the Trade Union Act 2016 in its entirety, as the Government committed to doing.
Sectoral collective bargaining for social care and support staff is a good start, but all workers across all industries deserve that protection. Voluntary agreements on union access are not enough. Union organisers need guaranteed automatic access. We should also guarantee automatic union recognition when a majority of members join.
Workers have already waited for a decade under Tory rule while their rights have been stripped away, their wages have stagnated and they have been subjected to rogue operators such as P&O. We cannot afford more delays while powerful interests water down reforms. This legislation is a victory for the trade union movement, but the fight is far from over. We need radical change, and that is what I will keep fighting for.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests. I am a proud member of the Communication Workers Union and the GMB and am a former official of Unison.
It is a huge source of personal pride to me as a former trade union official that our Government have introduced a Bill that will deliver the greatest uplift in workers’ rights in a generation. While the Conservatives have focused on scaremongering during this debate, it is important to remember the facts. Hard-working people are the trade union movement of this country. No one on the Government Benches will deny our pride in that.
The TUC estimates that 1.1 million employees did not receive any of the holiday pay to which they were entitled last year. This Bill supports those ordinary hard-working people. Last year, 4,000 pregnant women and mothers returning from maternity leave were dismissed. This Bill supports those hard-working people. Some 1.7 million people are out of the labour market because they have to look after their family. This Bill supports those hard-working people. There are 3,800 workers across my constituency of Paisley and Renfrewshire South who earn the minimum wage. This Bill supports those hard-working people. I commend it to the House and am pleased that our Government have strengthened its enforcement measures.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. The Front-Bench speeches will start at 9.40 pm, so the final Back-Bench speaker will be Michael Wheeler.
Michael Wheeler (Worsley and Eccles) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests, to my membership of USDAW and the GMB and to the fact that I chair USDAW’s parliamentary group.
I spent my career as a trade unionist working to better the lives of people in low-paid and insecure work. They are exactly the sort of people who will benefit from the measures in the Bill, but the Bill goes so much further. I am proud to have stood on an election platform that put improving the conditions of all workers at the heart of the change that was promised. I am even prouder to be stood here today supporting the Government who are delivering that.
I will focus on one element of the Bill: the right to a contract that reflects the hours that someone regularly works. Too many people are contracted for pitifully few hours and are utterly reliant on additional hours that can fluctuate too wildly to provide financial security, with no guarantee that they will not be taken away at the whim of an employer. Measures in the Bill will take steps to rebalance that. If the hours are regularly needed by the employer and worked by the worker, it is only fair that they are guaranteed in the contract.
While hugely welcoming the Bill, I urge the Minister to consider the use of the word “low” in its drafting, as it might unfortunately limit the benefits and lead to unintended consequences. I ask the Minister to work with trade unions, as the organised representatives of workers, to ensure that the maximum number of working people benefit from this new right. I will be proud to vote for this Bill tonight. I commend it to the House.
Gareth Bacon (Orpington) (Con)
We are approaching the end of a long and robust debate, with a total of 71 speeches so far and no fewer than seven maiden speeches. The hon. Member for Hyndburn (Sarah Smith) spoke powerfully and very impressively. The hon. Member for Penistone and Stocksbridge (Dr Tidball) spoke memorably of overcoming considerable adversity and of her considerable achievements, culminating in her arrival in this House. The hon. Member for Blackpool North and Fleetwood (Lorraine Beavers) gave a moving tribute to her late parents. The hon. Member for Dover and Deal (Mike Tapp) laid down an ambitious claim to have the highest number of castles in his constituency and talked of his grandfather serving on flying boats in world war two, which is something that he and I share. The hon. Member for Airdrie and Shotts (Kenneth Stevenson) spoke of his and his family’s great pride in his taking his seat here in Parliament. The hon. Member for Hamilton and Clyde Valley (Imogen Walker) spoke fluently about the history of her constituency, in a deeply impressive speech.
On the Opposition side, my hon. Friend the Member for Leicester East (Shivani Raja) talked about the entrepreneurial spirit of Leicestershire and about her fears that it could be eroded by the Bill. She also, I suspect, achieved a first for Parliament by managing to shoehorn a reference to Showaddywaddy into Hansard. My hon. Friend the Member for Weald of Kent (Katie Lam) spoke movingly of her grandparents’ escape from Nazi Germany and amusingly of the Labour party’s contribution to introducing her parents, ultimately leading to the creation of a future Conservative MP. I commend all hon. Members who made their first mark in this House in a debate on so important a subject. I am sure that they will serve their constituents diligently in the coming years; I wish them all well.
There is much that the Opposition believe is wrong with the Bill, but I have limited time, so I will focus primarily on one element—the role of the trade unions, because their influence runs right through it. If, as expected, the House declines to support the amendment in the name of the shadow Business Secretary, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), and grants the Bill a Second Reading, there will be time to explore the Bill’s many other problems in Committee.
A running theme throughout the debate was hon. Members’ enthusiastic declarations of membership of trade unions, but for some reason they forgot to mention how much they have received in financial donations from them. I remind them and the House that, according to the LabourList website, the Government MPs who have spoken today have accumulated a total of £371,974 in donations from the trade unions. Those donations are no surprise. The public are quickly becoming acclimatised to the idea that this Labour party is in the pocket of the highest bidder, whether that be Taylor Swift, Lord Alli or indeed the trade unions.
I was, however, pleasantly surprised by the number of hon. Members on the Government Benches who have spoken in today’s debate. When I attended the Bill briefing kindly organised by the Under-Secretary of State for Business and Trade, the hon. Member for Ellesmere Port and Bromborough (Justin Madders), just a handful of Labour Members were in attendance, but today they have turned up in great numbers to sing the Bill’s praises. It is to their credit that they are here. Perhaps they have read or watched news of the harm that this Bill will bring and are quietly apprehensive, but have put their heads above the parapet regardless. However, when push comes to shove, they remember that they will be up for re-election in four or five years’ time, and they have to think about their trade union donors.
Very early in this debate, my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) said that the Bill is about not growth, but ideology. He is right. This is a trade union charter that will send Britain back to the 1970s. Of course, we know that that is a goal of the Deputy Prime Minister, who has said that she wants to repeal union legislation dating back as far as the 1980s. I appreciate that neither the Secretary of State for Business and Trade nor the Deputy Prime Minister was born until the 1980s, so they will not remember the time when Britain was brought to a grinding halt by the trade unions. The lights were switched off, bodies were left unburied and rubbish piled up all over the place. It is at this point that I remind Members that their constituents will see how they vote today.
I understand that the inboxes of Labour Members are already full, following the freebie scandal, the cash-for-access scandal, the political choice to take away the winter fuel payment and the concerns about tax rises in the Budget. They have my sympathy, but I warn them that their inboxes are about to get even busier. When the junior doctors strike, meaning that their constituents cannot access important medical treatment, they will know that it was facilitated by this legislation. When local councils strike, meaning that their constituents cannot get their bins collected, they will know that it was facilitated by this legislation. When the train drivers strike, meaning that their constituents cannot see their loved ones, they will know that it was facilitated by this legislation. And when small businesses fail because they cannot cope with the massive extra bureaucracy and costs, they will know that it was facilitated by this legislation. As the letters pile high from constituents who are unable to access the services they expect, Labour Members might want to hire more staff, or ask their current staff to work late, but they will be prevented from doing so by the very regulations brought in by this legislation, which they support.
Labour’s misunderstanding of labour relations goes right to the top. When the Secretary of State for Health and Social Care announced that a deal had been reached with the British Medical Association, he said that he was making a real difference. However, we now know that the deal has failed and the BMA is already beginning preparations for further strike action just weeks after accepting the pay deal.
I represent a Greater London constituency and I, of course, remember the Mayor of London’s promise that there would be no Transport for London strikes under his regime, but that is not going very well either. We now learn, thanks to the latest copy of Civil Service World, that there are set to be strikes in the Secretary of State’s own Department. All of that was before this Bill was introduced.
It is clear that, despite being in the pocket of its trade union paymasters, Labour’s approach to industrial relations has failed and will continue to fail. Much of the reason for that future failure will be the rushed job that is this Bill. It has been rushed to the House so quickly that it contains fewer than half of the measures included in the plan to make work pay—a fact recognised by the Government’s “Next Steps to Make Work Pay” document. A vast amount of it will require secondary legislation to take effect.
The Prime Minister has talked incessantly of the Government’s mission to pursue growth, which is an entirely laudable aim, but growth does not just happen. Sometimes, the Government have to do things to facilitate it, and sometimes the Government must not do things that would jeopardise it. The measures in this rushed Bill threaten to destroy any prospect of economic growth.
I am sure the Secretary of State will deny it, but the fact remains that the trade unions will always win out against the Labour party. The unions have donated almost £30 million to the Labour party since 2020. According to LabourList, 16 Cabinet Ministers and more than 200 Labour MPs have received training and donations, averaging £9,500 each. This rushed Bill is the first part of what the trade unions have bought with their money: the chance to massively increase their power base, not just in the public sector but in the private sector, especially in small businesses. This will not lead to growth, unless the Prime Minister is talking about growth in red tape and growth in the trade unions’ ability to choke the economy.
This rushed Bill is not a charter for economic growth; it is a charter for industrial strife, plunging productivity, rising unemployment, inflation and economic ruin. This rushed Bill is not fit for purpose, and the Government should withdraw it and think again.
The Secretary of State for Business and Trade (Jonathan Reynolds)
I thank right hon. and hon. Members across the House for an informed debate on the Employment Rights Bill and the Government’s plan to make work pay. In closing, I declare to the House that I am a proud member of the Unite and USDAW trade unions. Even more proudly, I declare that I come from exactly the kind of working-class family that stands to gain from the measures.
As this is Second Reading, let us remember the history and context leading up to the debate. In recent times, work has changed a great deal. We have seen the impact of technology and the gig economy, and we have had working from home in the pandemic. Many things have changed what work is for many people. That has created a need to consider whether our employment laws are up to date.
Indeed, it was the Conservatives, under Boris Johnson, who first promised an employment Bill in their 2019 manifesto, but they did not deliver. The subsequent Queen’s Speech, after the 2019 election, included an employment Bill, but again the Conservatives did not deliver. In contrast, this Labour Government not only promised an employment Bill; we have delivered one, and in just 100 days. Meanwhile, it appears that some Conservative Members do not even support the existing provision of things like maternity pay, so there have been some differences in opinion between Members on opposite sides of the House today.
It is a proud day for the new Government, but it is a prouder day for Britain’s workers, many of whom can now look forward to a future with far greater security and stability than they have at present. Quite simply, good work and good wages are what this Labour Government were sent to this place to deliver, and that is exactly what this Bill is about.
I take pride in the fact that the new Government have worked closely with all parties in drawing up this legislation, acting pragmatically and listening at all times. The result is a Bill that will make a huge difference to the lives of millions of working people, while being proportionate, fair and reasonable in the asks it makes of business, recognising that the majority of businesses operating in the UK already do so to a higher standard than even this Bill would introduce.
We would not have known that from listening to the depressing speeches made by Conservative Members today. People would not know that Sainsbury’s already pays a living wage; that instead of zero-hours contacts, McDonald’s already offers contracts that provide guaranteed hours; that the Mace Group offers full trade union access to workers on construction sites; that Mars Wrigley offers equal parental leave; and that BT Group already has carer’s leave. Frankly, what we heard from the Conservatives today was binary, outdated and extremely depressing, but I was delighted to hear such significant support for the Bill from the Government Benches, and from all around the House.
Some Members raised specific points. I wish I had time to respond to all of them, but I want to acknowledge the tremendous maiden speeches we heard. The hon. Member for Leicester East (Shivani Raja) gave an incredibly gracious speech about her predecessors, in a very skilful way, which is not easy when she had to defeat several of them to get her place in the House. The hon. Member for Weald of Kent (Katie Lam) told an incredibly powerful family story, woven into a wonderful description of her constituency, and she extolled the romantic benefits of campaigning for the Labour party, which is something we can all get behind.
My hon. Friend the Member for Hyndburn (Sarah Smith) captured the glorious industrial heritage of her area in a way that was extremely relevant to today’s debate. My hon. Friend the Member for Penistone and Stocksbridge (Dr Tidball) gave a speech that testified to the fact that politics can be a force for good, and it was wonderful to hear. My hon. Friend the Member for Blackpool North and Fleetwood (Lorraine Beavers) showed passion and commitment in every word she spoke; I cannot wait to hear more from her. My hon. Friend the Member for Dover and Deal (Mike Tapp) showed his commitment to public service, which has run throughout his entire life; again, it was a wonderful speech to listen to. My hon. Friend the Member for Airdrie and Shotts (Kenneth Stevenson) managed to draw a comparison between his constituency and ancient Rome, which was particularly skilful. His speech was funny, warm, authentic and passionate. Finally, my hon. Friend the Member for Hamilton and Clyde Valley (Imogen Walker), the MP for the area known for Robert Owen, made a wonderful and apt contribution to the debate, with a tribute to hard work and the rewards it can bring—again, it was wonderful to listen to.
Unfortunately, I must give the House some negative advice: to reject the reasoned amendment in the name of the new shadow Secretary of State, the hon. Member for Thirsk and Malton (Kevin Hollinrake). Quite frankly, lads, it is a bit of a mess, isn’t it, as motions go? It claims credit for measures the Conservatives once opposed, such as the minimum wage. It opposes the fair work agency, which they used to support. It claims that there will be more strikes, when they presided over a record number of days lost to strike action, and it shows even less self-awareness when it comes to the burdens on small businesses. Let us not forget who called the referendum on leaving the European Union, with no preparation for either result.
The serious point is this: the Conservative record was one of stagnant wages, low business investment and low productivity. Frankly, it was a record of failure. That is why we must act differently. The shadow Secretary of State claims that the Bill is rushed. Nothing could be further from the truth. The fact that the Bill is ready in 100 days is testament to the brilliance of the civil service and the resilience of the British model of government.
The impact assessment we have published shows that these measures will increase total employment costs by 0.4%, but we know that smaller businesses face proportionately greater up-front costs from regulatory changes. That is why we are working with them closely to make sure that these reforms, and the speed at which they are implemented, work for them. However, I want to be clear that we will not allow for the creation of a two-tier market where someone’s protection as a worker depends on the size of their employer. That would create an uneven playing field and exactly the kind of disincentive to grow that we saw too many of under the last Conservative Government.
The shadow Secretary of State also raised the question of vexatious claims under day one rights. The point he missed was that there are already some day one rights. Protection for whistleblowers is a day one right. Disability discrimination protection is a day one right. If his worry is vexatious claims, those could be brought under the existing system. I thought that was a major weakness in his argument.
We heard speeches paying tribute to what this Bill will do on parental leave. On fire and rehire, I pay tribute to my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald) for his work preparing these measures.
I will also say one more thing on impact assessments to set that 0.4% impact on the UK’s total pay bill in context. Last year, the UK’s total wage costs were £1.3 trillion. To draft a Bill that will have such an impact for so many workers, with a direct benefit transferred to low-paid workers, and to keep it as proportionate as that is, I believe, an achievement.
Finally, on zero-hours contracts, we are not taking away flexibility, but making flexibility two-way. We are ensuring that workers have the right to a contract that reflects the number of hours they regularly work, while allowing them to remain on a zero-hours contract if that is what they want. We are making sure that flexibility works in both directions. There is no reason why that should in any way adversely affect seasonal work compared with what we have at present.
To close, this is a proud day for this Labour Government. This is a change of direction. It is a change to a better and more productive culture of industrial relations in this country. In the case we are making as a new Government, we are not alone. Study after study shows the benefits of investing in the workforce, in better productivity, better resilience and more market dynamism. This Bill makes good on our promise to the British people to change their lives for the better, to deliver an economy that works for them, and to end the poor pay, poor working conditions and poor job security that have held too many people back for too long. For all those reasons, I proudly commend this Bill to the House.
Question put, That the amendment be made.
Employment Rights Bill (First sitting)
Tuesday 26th November 2024
(3 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 26 November 2024 - (26 Nov 2024)
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, I remind Members to please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Date Time Witness Tuesday 26 November 2024 Until no later than 10.10 am The Confederation of British Industry; The British Chambers of Commerce; The Institute of Directors Tuesday 26 November 2024 Until no later than 10.40 am The Federation of Small Businesses; Startup Coalition Tuesday 26 November 2024 Until no later than 11.25 am The Chartered Institute of Personnel and Development; The Chartered Management Institute; The Happy Business School Tuesday 26 November 2024 Until no later than 2.30 pm UKHospitality; The Recruitment and Employment Confederation Tuesday 26 November 2024 Until no later than 3.00 pm Make UK; The Food and Drink Federation Tuesday 26 November 2024 Until no later than 3.40 pm DFDS; Nautilus International; The National Union of Rail, Maritime and Transport Workers Tuesday 26 November 2024 Until no later than 4.30 pm The Trades Union Congress; The Scottish Trades Union Congress; UNISON; Unite the Union Tuesday 26 November 2024 Until no later than 5.00 pm The Fawcett Society; Pregnant Then Screwed Tuesday 26 November 2024 Until no later than 5.15 pm The Civil Engineering Contractors Association Thursday 28 November 2024 Until no later than 12.10 pm Co-op; The British Retail Consortium; The Association of Convenience Stores Thursday 28 November 2024 Until no later than 12.40 pm The Union of Shop, Distributive and Allied Workers; Community Thursday 28 November 2024 Until no later than 1.00 pm The Resolution Foundation Thursday 28 November 2024 Until no later than 2.30 pm GMB; Prospect Thursday 28 November 2024 Until no later than 3.10 pm Professor Alan Bogg (Professor in Law, University of Bristol); Professor Melanie Simms (Professor of Work and Employment, University of Glasgow); Professor Simon F Deakin (Professor of Law, University of Cambridge) Thursday 28 November 2024 Until no later than 3.40 pm GAIL’s Bakery; DCS Group Thursday 28 November 2024 Until no later than 4.10 pm The Equality and Human Rights Commission; Margaret Beels OBE (Director of Labour Market Enforcement) Thursday 28 November 2024 Until no later than 4.40 pm Female Founder Finance; The Women’s Budget Group Thursday 28 November 2024 Until no later than 5.00 pm The Department for Business and Trade
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. Unless there are any objections, we will not sit in private to discuss how to go ahead with the questions; it is a waste of time. In view of the time available, I hope that we can take these matters formally.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 26 November 2024) meet—
(a) at 2.00 pm on Tuesday 26 November 2024;
(b) at 11.30 am and 2.00 pm on Thursday 28 November 2024;
(c) at 9.25 am and 2.00 pm on Tuesday 3 December 2024;
(d) at 11.30 am and 2.00 pm on Thursday 5 December 2024;
(e) at 9.25 am and 2.00 pm on Tuesday 10 December 2024;
(f) at 11.30 am and 2.00 pm on Thursday 12 December 2024;
(g) at 9.25 am and 2.00 pm on Tuesday 17 December 2024;
(h) at 9.25 am and 2.00 pm on Tuesday 7 January 2025;
(i) at 11.30 am and 2.00 pm on Thursday 9 January 2025;
(j) at 9.25 am and 2.00 pm on Tuesday 14 January 2025;
(k) at 11.30 am and 2.00 pm on Thursday 16 January 2025;
(l) at 9.25 am and 2.00 pm on Tuesday 21 January 2025;
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 4; Schedule 1; Clauses 5 to 19; Schedule 2; Clauses 20 to 28; Schedule 3; Clauses 29 to 72; Schedule 4; Clauses 73 to 98; Schedule 5; Clauses 99 to 110; Schedules 6 and 7; Clauses 111 and 112; new Clauses; new Schedules; Clauses 113 to 119; remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 21 January 2025.—(Justin Madders.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Justin Madders.)
The Chair
Copies of the written evidence received by the Committee will be made available in the Committee Room.
We now come to the motion to sit in private. We have agreed not to, effectively, but I will give people the chance to object to the motion.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Justin Madders.)
The Chair
If nobody objects, we will not sit in private before we start hearing from witnesses. Do any Members wish to make a declaration of interests in connection with the Bill?
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I refer to my declaration in Register of Members’ Financial Interests as a trade union member.
Michael Wheeler (Worsley and Eccles) (Lab)
I also refer to my declaration in the Register of Members’ Financial Interests, and my membership of the Union of Shop, Distributive and Allied Workers and GMB.
Anneliese Midgley (Knowsley) (Lab)
I also refer to my declaration of interests. I am member of Unite and GMB.
Alison Hume (Scarborough and Whitby) (Lab)
I also refer to my declaration of interests and my membership of Unison and the Writers’ Guild of Great Britain.
Jon Pearce (High Peak) (Lab)
I also refer to my declaration of interests. I am a member of GMB.
Laurence Turner (Birmingham Northfield) (Lab)
I draw people’s attention to my declarations in the Register of Members’ Financial Interests. I am also a member of the Unite and GMB trade unions.
Alex McIntyre (Gloucester) (Lab)
I refer to my membership of the GMB and Community unions, and my previous membership of the Employment Lawyers Association.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I also refer to my declaration of interests. I am a member of the Community union, Unison and GMB.
The Minister for Equalities (Dame Nia Griffith)
I also refer to my declaration of interests. I am a member of the USDAW trade union.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
I also refer to my declaration of interests. I am a member of the Unison and Community trade unions.
Justin Madders
Mr Stringer, I do not think that I actually mentioned my trade union memberships. For the record, the individual unions are Unite and GMB.
The Chair
Thank you, Minister. If any interests are particularly relevant to a Member’s questioning or speech, they should declare them again at the appropriate time.
Examination of Witnesses
Matthew Percival, Jane Gratton and Alex Hall-Chen gave evidence.
The Chair
Thank you. I turn to Greg Smith to ask the first question on behalf of the official Opposition.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Jane Gratton: Let me just say that there is a lot in the Bill that represents what good businesses are doing already, but there are five areas where we have received concerns from members. First, on trade union access and ballot thresholds, increasing access and making it easier and quicker for unions to call strike action does not mean that the union is representative of the workforce, and does not improve the relationship with employers. From our members’ point of view, it simply makes it easier to reach an end point that nobody wants. They can see nothing in the Bill to reassure businesses that the relationship will be better, so we do not think that there should be any change to union access or ballot thresholds.
Matthew Percival: Our members support the idea of thoughtfully designed and appropriately enforced employment laws—a strong floor of rights that supports fair competition in the labour market. It is not as simple as saying that employment laws are bad for business; lots of them are very good. That is why we have supported a number in the past, as well as a number of the measures in the Bill, very much as Jane said for her members.
Your question encourages me to give a quick checklist of the top issues, in the order that they come up in the Bill. There are a number of areas of concern around the regulation of zero-hours contracts, which has less to do with zero-hours contracts and more to do with the issue of guaranteed hours within contracts—it is low-hours contracts as well.
We get a number of concerns about the removal of waiting days from statutory sick pay. We get concerns around the landing of probation periods during the initial period of employment, which are more about the tribunal risk than the sorts of processes that employers might put in place. It is the cost of demonstrating compliance, rather than having a good process, that is more of a concern.
In the redundancy space, we are quite concerned about the increase in the frequency with which people will be put at risk of redundancy and the greater uncertainty for people in that environment, and that there might be an unintended kickback for workers. In the fire and rehire proposals, there is a risk that we might be making it easier to make people redundant than to change contracts, so we might go too far and not find that landing zone where it is a last resort short of redundancy.
In the industrial relations space, there are a number of concerns similar to those that Jane outlined. A big one is that there has been a lot of focus on the trigger threshold for whether a ballot for recognition should take place. Between 10% and 2% is what the Bill outlines, but the far more significant change from employers’ perspective is the removal of a requirement for a sufficient level of support in the result of the ballot. There is a risk that it could, in the extreme, become a simple majority vote in which hardly anyone votes in a large workforce but it leads to recognition.
Alex Hall-Chen: I completely agree with what has been said so far. I would add that a key fear for us is the cumulative impact of all the 28 reforms in the Bill coupled with everything else that is happening in the employment space. Taken as a whole, the measures make hiring someone riskier and more expensive for businesses. Our research shows that businesses will hire fewer people as a result.
We polled over 700 business leaders on this topic in August and 57% said that the reforms would make them less likely to hire. I would say that the situation has actually worsened since then, given recent announcements around employers’ national insurance contributions, so the cumulative impact cannot be overstated. For the first time since October 2020 our data is now showing that more business leaders expect to reduce their headcount in the coming year than increase it. The Bill is a key reason for that change.
Greg Smith
Q
Matthew Percival: It is very difficult to put a number to it, because there are so many unanswered questions in areas where details are intended to be put into the Bill at a later stage. That leads to a wide range of potential estimates about the impact of a number of the measures. Work we are doing at the moment will give us updated figures on sentiment around a number of measures. We are looking to publish that soon, and I will make sure that we include those numbers in our written evidence.
Jane Gratton: The feedback we have had from members has been concern about increased cost, complexity and lack of flexibility to manage the workforce in the way that a business needs to. Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights, unless there were at least a nine-month probation period with a light-touch approach. There would be a preference for contractors and temporary staff, again to reduce the risk and avoid legal complications. To give some figures, 38% said that there would be a hiring freeze, 25% said that the Bill would result in less pay, and 30% spoke of less investment in their business. There would be significant risks and costs, particularly to small and medium-sized enterprises.
Alex Hall-Chen: In addition to considering recruitment levels at the higher level, we are also getting feedback about types of recruitment and the impact that the policies will have on that. We have had a lot of feedback, particularly with respect to day one protection against unfair dismissal, that essentially boils down to the fact that, under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher. I think there are really important questions about what that means for people on the fringes of the labour market, especially as those are precisely the people the Government need to get back into work to meet their 80% employment rate target.
Justin Madders
Q
On a more general point, Jane in particular said that a lot of the businesses you represent do a lot of the things in the Bill already. Do you think it is important that we have a level playing field so that good businesses are encouraged to treat their staff properly?
Jane Gratton: Yes. There has been a cautious welcome for some of the measures in the Bill—lots of businesses agree with the sentiment that it is about fair pay, security and non-discriminatory workplaces—but the question is around the proportionality of the changes that are being introduced in relation to the problem that the Government think needs to be addressed. From a business point of view, it is about the additional complexity and, in respect of some of the detail of the measures, the restrictions that the Bill will impose.
For example, on changing the “one establishment” rule, the feedback from members has been, “For every change, will we have to consult all our employees across all of our businesses, even if they are doing completely different things at different ends of the country, with different levels of skill and job role? It is disruptive for the business and unsettling for every employee.” It is about the detail. In principle we all want these things, but the detail of some of the measures and the impact they are likely to have is causing a lot of concern.
Matthew Percival: You are right to say there is a live consultation on a number of measures, and the consultations on a number of things are promised to come but have not started yet. That is why I resisted putting a figure on what it would currently cost, because there is a wide variance in what that could end up being. We are committed to trying to find a landing zone for the Bill that means that the Government can deliver their ambitions, which include the Bill not having a negative impact on the ambitions around growth or the focus today, outside this room, on the “Get Britain Working” agenda and an 80% employment rate. We want to stitch all those things together and find that landing zone.
It is a credit to you and to colleagues that the engagement we have had up until now has led to things like some movement on the recognition of the importance of a probation period. There is so much in the Bill and we have only really scratched the surface in terms of what we have been able to get into the detail of so far. We are hoping that through this process, and as the Bill progresses through Parliament, we are able to give the same amount of attention to the rest of the Bill.
Justin Madders
I can assure you of that, do not worry.
Alex Hall-Chen: I echo Jane’s point about there being quite significant support in the business community for parts of the Bill. A good example is fire and rehire: two thirds of IOD members agreed with the principle of outlawing fire and rehire. Where we have concerns is, as others have said, around not only proportionality but the detail. On fire and rehire, for instance, there is concern that it will make any changes to contracts, whether or not they are actually net positive for both the employee and the employer, much more difficult to achieve.
Justin Madders
Q
Jane Gratton: Employers know that a happy and engaged workforce is more productive. It is in their interest to make sure that they look after their workforces, and most businesses are good, caring employers. The worry with the legislation is that in trying to address bad behaviour by a tiny minority of businesses—of bad actors—the cumulative impact and cost of all this will have a negative impact on the majority of very good businesses. Again, it comes down to the proportionality. These are huge changes, and one concern is that they have been brought in at such pace—although we are very grateful to the Minister and the Department for the time they have been able to give us in terms of consultation—that there are things written into the Bill that our members do not feel they have had sufficient time to be consulted on, because of the pace of change.
I think we need further engagement on some of these key aspects, including the reference period for offering guaranteed hours and extending those things to agency workers. There is a lot of disquiet around how that would work, particularly for companies that offer seasonal work, such as Christmas and holiday periods. How does a 12-week reference period equate to that? It does not seem to work. It would be better to have a 26-week period, for example. There are a lot of things.
The other thing that has come up often is a real nervousness around removing all the waiting days for statutory sick pay. Again, employers are really on board with supporting people who have a long period of illness, but some of the feedback from members has been that it is the single day of sickness absenteeism that causes the most disruption and impact. Rather than its being day one, a lot of employers have said, “Could it be from day two? Can we pay from day two, so the Government meets us halfway?” The overwhelming response from businesses has been, “Can Government please minimise the additional cost of these regulations on all businesses, but particularly on small and medium-sized companies?”
Matthew Percival: Yes, there is a lot of confidence in the idea that employee engagement helps to boost productivity; that is why businesses make it a priority. I am not sure they believe that much in this Bill is going to increase productivity, though, because they are not convinced that much in this Bill is going to improve employee engagement.
To take a couple of practical examples, I already mentioned in the industrial relations space the importance of the recognition process, where there is a great deal of concern that, if you recognise a trade union that does not speak for much more than a tiny proportion of your workforce, and you elevate that voice ahead of the voice of the actual workforce, that is not going to boost employee engagement. Employers are happy to work with trade unions who are the representatives of their workforces, and it is right that they should do that, and it is right that, if there are any employers who will not do that voluntarily, there is a statutory process that can force them and bring them to the table. But in the same way that we have employment law not because every employer has negative intentions, but because there are a small minority who have the potential to abuse their power, it is also appropriate to regulate the actions of trade unions in the industrial relations space.
Another quick practical example within the zero-hours contract aspect of this regulation is that crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal. We think there could be two other constructions worthy of consideration.
One of those constructions could be a right to request framework, where there are good tests on when an employer needs to accept a request versus not, just as we have around flexible working currently. Or you could call it a right to have, if you like, but at the moment I have not seen a difference between a right to request that an employer has to accept other than in limited circumstances, and a right to have that you do not have the right to have if an employer meets the same test for limited circumstances. What really matters is not whether you call it a right to request or a right to have, but what the test is for when an employer accepts the request. That would minimise significantly the administrative burden, rather than calculating lots of offers for people who will not want to accept them.
A number of individual businesses have told us that, if the Bill is to go with the grain of the good practice that already exists within industry, they will monitor people’s hours where they already have mechanisms to do so, and there will be a trigger for a conversation between the individual and their line manager in the event that their hours regularly exceed the hours guaranteed in their contract. Those who have that policy in place tell us that, most often, that leads to no change in contract. The hours are picked up as extra hours, and the individual does not want to guarantee them in their contract. There will be occasions when the individual does change contract, but those businesses say that the majority of people in that situation do not want to change their contractual arrangements, so we are hoping to minimise the admin burden.
Alex Hall-Chen: I just want to emphasise that employers absolutely recognise the link between the two. That is why, in many cases, they are ahead of the legislation. A good example of that is flexible working: 90% of IOD members’ organisations already offer at least one form of flexible working to their employees.
The concern is about the scale of the changes and the costs associated with them. We know from the Government’s impact assessment that that may be as high as £5 billion a year, with the cost disproportionately falling on small and medium-sized enterprises. A frequent piece of feedback that we get from members is that they feel that the Government do not understand how difficult it is to run an SME at the moment and just how tight profit margins are. That is primarily where we are coming from. These changes are huge—to an extent, they are unprecedented—and will impact on those already very fine profit margins.
Steve Darling (Torbay) (LD)
Q
Jane Gratton: It is really important that there is a probationary period, and it should be at least nine months. Businesses ideally want a 12-month probationary period, not least because some individuals are required to undertake mandatory training, which takes 12 months or more. We could live with a nine-month probationary period.
The key thing is that there should be a light-touch approach during that period so that businesses are not discouraged from taking a risk on employees. Employers should not have to introduce very stringent performance monitoring from day one, which helps neither the employee nor the business. Having structure during the probation period is good, but businesses need to be able to end the relationship on the basis of ability or performance, as we do now. There should be no greater risk to an employer of an employment tribunal than there is currently during the probation period.
Matthew Percival: Typically, a business’s standard probation period is no longer than six months. However, that does not mean that it is appropriate to set in regulation a limit on probation periods of six months. That is important for us, because a common response of an employer who sees that an individual is not performing quite to the level that they would want to be able to confirm them in post is to say, “Okay, we have gone through our standard probationary period, but we are willing to continue to invest in you, offer you more support and training, and extend that probation period, rather than rush to a firm yes or no decision for confirming employment.”
It is important that the regulations do not prevent the employer good practice of being willing to extend someone’s probation and give them more time to adapt to work, particularly if we are thinking about the challenge of getting people back into work who have had a period out of work. That is a big public policy and economic priority at the moment. We are in the same camp: certainly no less than nine months, so that there is that extra time before an employer is forced to make a firm yes or no decision on confirming employment, but preferably 12 months.
Alex Hall-Chen: Similarly, the feedback we have had from members is that their probation periods tend to be between three and six months, but as the other panellists have said, given exemptions around training and the potential to extend probation periods, nine months would be the minimum and 12 months would be preferable. As to the specific process, the lighter-touch dismissal process is better. We have done research that suggests that even a light-touch dismissal process, as defined by Government at the moment, would not solve the issue. A third of our members said that it would not mitigate their concerns around this policy at all, and half said that it would only partially mitigate their concerns, so we remain worried about the impact that this policy will have.
Steve Darling
Q
Matthew Percival: If we were talking about staggering things, the way I would do it would be to start with areas where there is already cross-industry support and where workers, trade unions and businesses can already agree that there are areas where the Bill can be a helpful step in the right direction. To give a few examples, we have previously supported the idea that it is wrong that you should turn up for work expecting an eight-hour shift, be sent home after two hours and only be paid for two hours. There should be a right for compensation there. We have supported fixing that through legislation for years now. A Bill to bring that forward would be something we welcome and support.
We have previously supported removing the lower earnings limit within the statutory sick pay system. It feels like a hangover from when it was a publicly funded benefit rather than an employment right in a relationship between an employer and their employee. We have supported the extension around third-party harassment. We have supported what the previous Government were calling a single enforcement body and in this Bill is a fair work agency. Outside the Bill but within the wider “Make Work Pay” package, we have supported the introduction of mandatory ethnicity pay gap reporting and action plans to go alongside reports on gender pay gap reporting.
There are a number of areas where you can bring forward things in a way that can achieve consensus across social partners. But if we were staggering things, in a number of the other areas I would take more time to think how it actually will land. Beyond just staggering things, there are some aspects in the Bill—we have each touched on a number of them already so I will not repeat them—that feel like they are just a step in the wrong direction, and when the step in the wrong direction is made is less important than the direction of the step.
Jane Gratton: As I said earlier, there is lots in the Bill that we support, and there is lots that good employers are doing already. As Matthew said on the compensation of shifts, we certainly support that, and we would be very happy about the fair work agency to create a level playing field and measures around workplace equity. For us, it is about the difficulty that the SMEs will have in getting to grips with this. If you think about it, most will not have access to HR and legal support. They are going to need a lot of time to get to grips with this and to understand what is required of them. To get those processes in place, they are going to need a lot of guidance and support. We think ACAS and the tribunals system would need to be significantly boosted in their resources to cope with what we anticipate will be a lot of additional demands on them. On that very much phased approach, I would agree with Matthew about starting with the things we agree on and looking at the detail of some of the things in the Bill where we think more consultation is required.
Alex Hall-Chen: I would emphasise two factors for consideration in staggering, the first being cost. As we are all well aware, the additional costs that are coming up very shortly, particularly related to employers’ national insurance contributions, are substantial, so the more that increases to employment-related costs can be staggered, the better, such as around statutory sick pay. The other, to support what Jane said, would be around tribunal capacity. There is a particular concern that these changes, particularly around protection against unfair dismissal from day one of employment, will be introduced before the tribunal system has been sufficiently reformed to be able to deal with the influx of cases that will come with them.
Chris Law (Dundee Central) (SNP)
Q
Matthew Percival: No; it is that I think there is so much in the Bill that it is not a question of where we could do more. What is already on the table is far too much for businesses to be able to engage with in its entirety. And bearing in mind that the Bill is only one aspect of the Government’s agenda, I am already finding that it is very hard for our members to engage on the breadth of topics at the pace at which the Government hope to get engagement. To squeeze anything more in at this time would just mean another issue that cannot be properly considered before we would get to legislation.
That is not say that there cannot be other conversations about other topics at other times. There are aspects of “Make Work Pay” that are not in the Bill because they are being developed; a number of them are being discussed and consulted on outside of this Bill process to support the development of those issues. But I would not be suggesting there is a lack of urgency in any way for any of these things.
The best legislation will come from having a process that stakeholders have the capacity and engagement to contribute to, rather than feeling that they have to choose one or two things to engage with and ignore the rest, which then does not get proper attention.
Jane Gratton: I would agree. The reflection from members is that they are overwhelmed with all the changes that are being put in front of them through the Bill and the wider plan to make work pay. We have said from the outset, “Please take your time with this, consult carefully and make sure we get it right.”
The biggest concern we have with all this is the cost and complexity for SMEs. They are very much behind the Government in wanting to get 80% employment. They want to help tackle economic inactivity and bring people back into work. It is good for all of us to be able to utilise those skills and resources that are under-utilised at the moment, and to help people, and to go further to support people who may be on the margins of the workforce and need additional help. But SMEs cannot do that if they are faced with additional complexity and more restrictions on what they can do, and more risk of getting it wrong. It is the risk of getting it wrong that is the problem. Someone said to me, in respect of the harassment and the inclusion of the word “or” in terms of the reasonable steps that employers have to take, “I want to comply, but as drafted, I don’t know how I could guarantee that I am compliant.” It is that complexity that is the problem. I would say, “Let’s not go further right now; let’s do this at the right pace and bring employers with us.”
Alex Hall-Chen: I would agree with what others have said. I would add that if there are areas where more ambition is needed, it is around how we can make sure that the policies that will be implemented via the Bill are sustainable and can actually be implemented on the ground in business. That partly returns to the point I made earlier around the already creaking tribunal system, but also a recognition of the costs that this will have, particularly for SMEs. That is why, for instance, we have been calling for the reinstatement of the statutory sick pay rebate scheme for SMEs. That is where we would like to see more ambition.
Alex McIntyre
Q
The Chair
If the witnesses can be brief with their answers, we will fit one more question in.
Jane Gratton: A lot of our members do not use zero-hours contracts; they tend to be used in industries where they need that flexibility, and the feedback is that a lot of the workers who want zero-hours contracts want them to fit in with their own studying or caring responsibilities, or whatever it might be. Where the flexibility is mutually beneficial, that is fine and zero-hours contracts should be able to continue, but I agree with you that, if somebody wants a permanent contract, over a suitable reference period they should be allowed to have one.
Matthew Percival: This is one of those issues where we are looking for that landing zone I was describing. It is equally fair to recognise that there are some people who work on zero-hours contracts and do not want to, and others who do and want to continue to work on that basis because it suits them. How do we find a landing zone that supports both? The challenge is that, if our intervention is too blunt and makes it risky to allow people to work more hours than their minimum contract guarantees, it also increases the cost premium for employers of offering it to people who want it, as well as those who do not. Our challenge is how to find that middle ground that achieves both objectives, rather than being forced into a trade-off that potentially means making the experience of work worse for some people at the same time as better for some others. We are interested in more winners and fewer losers, rather than just different winners and different losers.
Alex Hall-Chen: Our research found that the majority of business leaders think zero-hours contracts have an important role to play but should be reformed. Our concern is about the detail rather than the principle.
Mr Peter Bedford (Mid Leicestershire) (Con)
Q
Matthew Percival: This is a question of broader context as well. We have already mentioned the changes at the Budget and how the impact of the threshold element of the national insurance changes in particular is concentrated in sectors that currently employ a large number of young people. The Bill also ends up focusing on the same area, and those businesses often speak about a triple whammy, because they are the same businesses that are affected by national living wage increases. In all three aspects, you end up with a similar group of businesses that face particular costs, and therefore, where there are unintended consequences, they are disproportionately likely to be faced by young people.
Jane Gratton: I think it might just influence an employer’s choice at the recruitment stage. If they have someone who comes along who has no experience but who they could take a chance on, or someone who is more experienced, and then there is the cost and the risk through the day one rights, it might just influence that decision. That is a worry, because that is not going to help us to tackle NEETs—people not in employment, education or training.
Alex Hall-Chen: I agree with that. I spoke to an SME just yesterday who said, essentially, that they will have to change their current recruitment process of taking on younger people and training them up, because it is too risky, given the reforms happening in the space, so they will focus on more experienced employees who can demonstrate previous competence.
The Chair
That brings us to the end of the time allotted for the Committee to ask these witnesses questions. On behalf of the Committee, may I thank the three witnesses for giving us full and very clear answers? Thank you very much.
Examination of Witnesses
David Hale and Dom Hallas gave evidence.
The Chair
We will now hear oral evidence from David Hale, head of public affairs at the Federation of Small Businesses, and Dom Hallas, executive director of Startup Coalition UK.
We must stick to the timings in the programme order that the Committee has agreed. For this session, we have until 10.40 am. Would the witnesses briefly introduce themselves for the record?
David Hale: I am David Hale, from the Federation of Small Businesses.
Dom Hallas: I am Dom Hallas, executive director of the Startup Coalition, which is a lobby group for tech start-ups and scale-ups in the UK.
Greg Smith
Q
David Hale: The impact assessment was quite clear that the bill would be more than £5 billion a year. For example, it did not include any of the consequential impacts on businesses from the changes to unfair dismissal. It merely counted the ability of the Government to change. Changes to unfair dismissal are one of the things that businesses flagged, so £5 billion is very much at the low end of that estimate. You may well have seen the Regulatory Policy Committee say yesterday that the impact assessment as a whole is not fit for purpose.
The only question about the £5 billion, or the £5 billion-plus, is where that cost is borne. Obviously, businesses can bear the cost. People who are not in work can bear the cost, or people who are in work can bear the cost through wages or through lower hours. The £5 billion is a very low estimate, but where that cost falls is the more complex question.
Dom Hallas: The starting point from our perspective is that tech start-ups and scale-ups are unusual businesses—unusual small businesses, frankly. They scale rapidly—they can be growing at 50% or 100% a year. They pay unusually well—disproportionately well. The average salary is in the range of £50,000 to £60,000. They change really fast, because they are scaling and doing things really quickly. They treat staff like royalty—they treat them incredibly well—because it is a highly competitive labour market for technology talent, and they need to be able to hire in it.
That means they really value flexibility. I cannot speak to the £5 billion figure, and the reports out today throw some scepticism on that. What I will not do is sit here today and tell you that this piece of legislation would be disastrous for our ecosystem—clearly not—but what it would do is present a series of speed bumps, a series of bumps in the road, for these kinds of businesses, the cumulative effect of which is to chip away at some of the flexibility that our companies prize.
Greg Smith
Q
Do you think the lack of flexibility, or making the rules more rigid, as this Bill does, and some of the factors that previous witnesses talked about—dissuading people to take on new hires and making the risk of new hires that much greater—will dissuade more people from choosing to leave payroll and start up on their own, whether through self-employment or registering a business?
Dom Hallas: I leave self-employment to one side, but from the perspective of an entrepreneur trying to build one of our tech businesses, the truth is that any number of things the Government may or not do in policy are not necessarily what persuades or dissuades someone from starting a business. The reality is that they are probably going to do it anyway. The question is, are we going to make it harder or easier for them? In truth, what we consistently see—and I think this is where you have the conversations around taxation and the Budget layered on top—is the risk of a number of pebbles in the stream for entrepreneurs that will not prevent them from trying to build their business, because they will crack on and try to do it. One of the things we consistently talk to entrepreneurs about when we ask them about policy is, “What are the challenges you face?” The answer they give far too frequently is, “There are loads of things, but we just have to get on with it.”
I put to the Committee that the question is ultimately how we prevent our policy environment from being seen as a barrier to overcome by the entrepreneur community and the founders who are building these kinds of businesses and creating these kinds of jobs. How do we create a situation that is as open and flexible as possible for them to operate and, therefore, a competitive jobs market that will ensure that the workers are treated really well?
Greg Smith
Mr Hale, do you have a view on that perspective?
David Hale: If the Government had a good process for the Bill, which I do not think they do, we would be exploring what the participation harm is. Part of that is not just whether firms choose to recruit, but who they choose to recruit. On the whether, from a small-business perspective, you might get a contract, you might choose to scale to meet it, or you might not. It is not the case that all small businesses will choose to scale regardless. There is a risk there, and if you increase risk, you lessen the chance that somebody will do that. Part of the importance of participation harm is not just whether, but which people are employed.
We know we have a CV culture in this country. We know that managers at all levels—I am talking not only small employers, but managers in small and large businesses—look down CVs and look for gaps. If people find gaps in CVs, we know that in the UK, they are less likely to feel that that is a risk they can bear. If you add risk to employment, part of the problem is not just whether they take that risk, but who they take that risk with.
Small businesses are currently most likely to take that risk. Small businesses currently recruit most from outside the labour market. If they do not do that—and we know that small businesses are responsive to risk—it is not just small businesses that lose out, but the businesses that in turn recruit from them. Larger businesses might well be more likely to recruit someone who has two years at a small business on their CV or experience doing bar work when they were a student, and they might benefit from the introduction to work they have had. But the whether and who is currently missing from the conversation, and I think that is because we have had such a quick process. That is the main thing. Does the Bill help somebody take that leap? The Government should be making that case. I have not seen a case for how the Bill would help somebody want to recruit more.
Greg Smith
Q
David Hale: There seems to be a big question about whether the Bill should be split up. It is a very large Bill. Overwhelm is the primary response. The second response is, to put it politely, bemusement about what the Government are trying to achieve and how these measures are intended to achieve it. We know the very high level, but the high level does not match the measures. If you are talking about security at work, the Bill does not appear to give extra security at work. There is bemusement about that.
Like most of us, small businesses are scared of getting sued, so there is fear about that. The Bill increases the risk of litigation against small businesses. The next question is about the possible harms of the response to that fear, which are things like the participation harm, harm to the work environment, and harm to individuals and the whole economy from the knock-on effects. I am not sure whether there are 28 or 70 measures—maybe some of you could list them all, but I do not think anyone else could. I do not think a small business would be able to tell you what they are or implement them all at once, so there is a question about whether the Bill should be split up.
Dom Hallas: I agree on the scale point. The Bill has a big impact. The top practical concern from a start-up ecosystem perspective is day one rights and exactly what that means. Obviously, there is an open discussion about the probationary period and exactly how that is going to work. From a start-up ecosystem perspective, the core point is ultimately that you have fast-moving businesses whose needs change, and the experiences of employees change.
The practical impact of the Bill in that area will be that people are less likely to continue to take a risk on someone, even when they have hired them after a probation period, because of the changes the Government are looking at. What we will get is a situation where employees who might be doing well, but not as well as you might hope, are more likely to see their employment terminated at that stage, as opposed to over a longer timeframe, with the business saying, “Well, we can’t take the risk.” So there seems to be a perverse incentive that ends up being created.
Justin Madders
Q
David Hale: To go back to the previous question, what I hope you will support is the introduction of a statutory sick pay rebate in the Bill. We have always been very clear that a rebate is important with any changes that increase SSP costs, because if you do not have a rebate, you systematically disadvantage the firms that take on people who are sick or likely to get sick, and those firms are already not supported enough by Government policy.
If you want to make changes to statutory sick pay, as the Bill proposes, you should put in a statutory sick pay rebate to cater for the risk to small firms. Say a firm has six staff members and two are off at the same time, that is 33% of the workforce. It would be very useful if the Government stepped up and actually supported firms that are taking on the people they are talking about. So it is a question more for you than for me: will the Bill include a rebate or not?
Justin Madders
Q
David Hale: It is a good question. It partly goes back to the overwhelm. We can talk to only so many small businesses at a time, and we can talk to them about only so many things. We can say, “If the changes to unfair dismissal come in, how will that change your recruitment?” We can have that conversation, or we can say, “If there are changes to zero-hours contracts, will that mean you have to ban swapping shifts in your business, just to cater for your regulatory risks?” We can explore those things, but only one at a time. We have 40 minutes today. We will spend less than a minute talking about each of the measures in the Bill. That overwhelm has a time consequence for good engagement and good exploration.
I do not want the officials who have engaged with us about the Bill to feel that that is not appreciated, but I do think there are process problems. This Committee is taking evidence from different groups in turn to explore the Bill over a two-day period, I think, but that is not the approach that the Department has taken, and that is a problem. At the Department level, each measure would have to be explored in turn, with different groups coming together. At the moment, the way in which the process has worked has created more division than is necessary. It has set up two sides—worker representatives and business representatives—and set them in opposition, without providing a voice for those at the biggest potential risk, which is the people who are out of work.
That is on the broad scale, but there are a lot of practical things, too: can we have regular meetings, organised at the same time each week, rather than them coming in and out of diaries, and that sort of thing? That is a practical issue, but those issues are important.
The Chair
Dom, do you have anything to add?
Dom Hallas: Just on the process point. People sit here on our side of the table and say, “Things aren’t being communicated well,” when the problem—let us be honest—is with the policy.
One of the broad challenges here, especially for small businesses, which David and I work with, is that, with an impactful piece of legislation, even communicating to them what is going on is difficult. They are a disparate group; we certainly cannot sit here and claim to represent the entirety of the tech start-up community, even if we work with a big community of businesses.
I am mindful of two things: the length of the implementation period is absolutely important, but the way the Government go about it and choose to operate in that period is also important. What does it mean, frankly, to explain to employers what their obligations are? How are we going to go through that process? We need to think about that coherently now, so that we do not get to that period later and, suddenly, it is panic stations. That will be really important.
Steve Darling
Q
David Hale: That is a slightly difficult question. You could think of Torbay and pick out hospitality, which might well have particular issues with the proposal. But you could also pick out larger businesses that recruit people when they are young and allow them to gain worthwhile skills in hospitality; they will miss out from the proposal. So it is a difficult question.
It is easier to identify the workers, or potential workers, who are most likely to miss out—that is, people who will present as a risk in a recruitment scenario. Certain businesses are more likely to recruit people who will present as a risk in a recruitment scenario. Such businesses tend to be smaller and will probably—more than usual, if not overwhelmingly—include sectors like hospitality.
The other businesses that will struggle are those that are mainly paid by the Government—the Government set their prices, in effect—such as social care and childcare. Those businesses will struggle because other businesses can put up costs, but they can only put up costs if the Government and Parliament agree to put up how much they pay and, in particular, the way they pay it—the way in which social care tariffs work very much encourages a zero-hours model. As a consequence, that would probably have to be changed to make the proposal work. But this is across the board for recruiters—there are different impacts for different businesses.
Dom Hallas: Speaking as a tech start-up and scale-up ecosystem organisation, in practice this proposal does not disproportionately affect any individual part of the ecosystem. Broadly speaking, it has the same impact.
Michael Wheeler
Q
Dom Hallas: I think that cuts to the question that Steve asked, which was about the different sectors and impacts. I can only speak for the tech start-ups and scale-ups that we work with. In practice, as I said, you have a very highly paid and mostly highly skilled sector, where the benefits and rights afforded to employees way outweigh any current statutory requirements. It is a highly competitive labour market, but that comes with the trade-off of flexibility. These businesses scale and they fail very frequently; that is part of the nature of the business. I think that, in truth, both employers and employees go into that relationship in our particular space with their eyes pretty open to that. So in our particular part of the world, I would challenge that assertion a little bit.
What I would say more broadly though—I think this is important and cuts to an area where we think the Bill could be improved for our space from both an employer perspective and an employee perspective—is that one area where we see potential further progress is banning non-compete agreements. In California, where really successful technology ecosystems have been built in silicon valley, one of the cornerstones of that has been that there are no non-compete agreements allowed in law. That offers more flexibility from a labour market perspective in many cases, but it also benefits employees significantly, because that flexibility comes to their benefit as well.
From our point of view, employers are, frankly, scrambling like hell to try and find the employees to fill these tech jobs, and the employees are very highly paid. If those businesses fail, or their needs change, that is, in our view, part of the trade-off with those kinds of businesses. I appreciate that that might not be the case across every sector, but providing that flexibility is a core part of that trade-off.
David Hale: Typically, flexibility is a demand from employees rather than a demand from employers. Most employers would love the same people to turn up each week for the same shift; most employees would like to be able to work their shifts around their day-to-day lives. Most workplaces come to an accommodation on that, with things like shift-swapping.
What I am not clear on is where there is gain. Take zero hours and the scenario where this Bill ends up meaning that somebody who has worked the same hours for 12 weeks in a row is offered a contract. Somebody who an employer has employed for the same hours for 12 weeks in a row is likely to be either somebody they would like to give a contract to or somebody who has worked in a seasonal role. Those are the two scenarios. That employee is unlikely to be the employee who wants more hours or regular hours, because the employer is already giving them that. So there is not really a gain that is very obvious. What there is, is a lack of flexibility, because the response to the legal risk will be for employers to say to employees, “Actually, I need to keep an eye on precisely how many hours you are working each week for a reference period. So, no, you are not allowed to swap shifts.” That is a damage to flexibility, with no obvious gain for people who have been working 12 weeks in a row, who, frankly, the employer probably wants to agree a permanent contract for, but does not.
Laurence Turner
Q
Dom Hallas: When I talked about employment law in that context, it was as part of a broader range of work we do with what we call platform businesses. They might be traditionally known as gig economy platforms, sharing economy platforms or online marketplaces that have two sides—someone who wants to sell something and someone wants to buy something, whether that is services or goods. The gaps in law that exist there are an increasing problem, because many of these platforms want to be able to offer support to the people who leverage them, but they are not able to do so because of the restrictive nature of employment law.
The challenge at the moment is that the Bill does not necessarily address that. There is clearly a way of potentially having further conversations on that. Obviously, some of that is being discussed down the line, including whether there is a single status for workers. We are not sure whether that is exactly the right approach, but there is a conversation to be had with Government about what is the right approach.
In the meantime, what we have is a structure built by court case, which I do not think is helpful for anyone concerned. It is frustrating for a number of unions and workers’ rights organisations that have been campaigning on this issue, but also for a wide variety of platforms—they are not the very biggest ones that are taking things all the way to court. They would prefer some clarity so that they could potentially offer additional benefits to people who leverage their platforms. That is the first thing to say.
A significant portion of the Bill is made up of things that we either have no view on or that, broadly speaking, would be fine. The reality is that I am not going to sit here and say that it is going to be catastrophic for the tech start-up community. In truth, it is not going to be.
David Hale: There are steps in the Bill on strengthening paternity and maternity protection, and that is one of the reasons why I talk about splitting the Bill up. Those seem like good things that probably have a positive impact on the workforce as a whole. As I said, because of the overwhelm, we are still going through the detail, but those seem like good measures. Would it not be better to focus on good measures, and things where the risks, costs and trade-offs are understood, and to make a decision to proceed positively with those?
Compared to the last speakers, we are less likely to have a particular view on the trade union aspects of the legislation. On the trade union aspects, it is fairly well understood what the measures are and what their impact will be—that is decision-ready. The bits that are not decision-ready are the proposals around unfair dismissal and zero-hours contracts. The bit that could be decision-ready but is not is probably around SSP and the question of a rebate.
The Chair
Anneliese Midgley is next. If we are brief with the question and answers, we will have time for one more question after this.
Anneliese Midgley
Q
David Hale: No, it is the opposite. FSB provides services to members, and one of the biggest services it provides is legal advice. One of the biggest things it provides legal advice for is employment relationships. Obviously, it is in the narrow interest of FSB as an organisation for employment law to be more complicated and less usable. However, we do not come here to argue for things that make FSB a more valuable product; we come here to argue for reasons why we do not have to exist—because the Government have made life easy enough for small businesses. We are owned and run by our members, and we are constitutionally required to act in the interests of small businesses.
Obviously, the more complicated employment law is made, the more likely we are to have people join and call an employment line. It would be irresponsible of us to try and change the law to make it more complicated and to make a bigger use case for joining FSB. We would never do that and we do not do that. It would be in the narrow interests of FSB for employment law to be complicated, but that is not what we are here to do.
Uma Kumaran (Stratford and Bow) (Lab)
Q
The Chair
It will have to be a one-sentence answer.
David Hale: I do not particularly mean to express strong views. I am trying to highlight the things that we need to have a better idea of before the legislation is in place. As you say, we have large-scale surveys out to try and work out what the possible impact of the Bill will be. We will run focus groups with businesses to try and work through what the consequences of the Bill will be. To do that, it would be useful to have a better understanding of what exactly the Bill will look like. But I am very happy to talk whenever about any specific measures in the Bill, and to ensure that how small businesses will react is linked to how decision makers will decide what is in the Bill.
Dom Hallas: I would just add that your experience is probably correct, Uma, but the reason for that is slightly different: no businesses will even know at this stage that the Bill will have any impact on them. The reality is that they are completely ignorant about what is happening in Parliament, when it comes to the way in which their businesses are changing. You see that on Budget day: even though there are weeks of conversations about what may or may not be coming, a number of businesses are suddenly surprised that things have changed for them. That is a practical concern, and that is precisely why you should engage with business both through this process and after it, not just by talking to people like me and David—although we are obviously always happy to be here—but more generally by doing as much outreach as possible with businesses on the ground that are trying to build stuff every day.
The Chair
Order. I am sorry to interrupt you, but we have come to the end of the time allotted. On behalf of the Committee, I thank both witnesses for the evidence they have given this morning. Thank you very much.
Examination of Witnesses
Ben Willmott, Cathryn Moses-Stone and Carly Cannings gave evidence.
The Chair
We will now hear oral evidence from Ben Willmott, head of public policy for the Chartered Institute of Personnel and Development; Cathryn Moses-Stone, head of policy at the Chartered Management Institute; and Carly Cannings, founder of The Happy Business School. Once again, we must stick to the timings on the programme motion, so this session will have to end at 11.25 am. Will the witnesses briefly introduce themselves for the record?
Ben Willmott: I am Ben Willmott, and I am head of public policy at the CIPD, which is the professional institute for human resources and people development in the UK. We have 160,000 members, who are mainly HR directors, HR managers and HR advisers working as practitioners in organisations across all sizes and sectors of business. We also have about 15,000 self-employed HR consultants among our membership, who work with tens of thousands of small firms to help build their HR and people management capability.
Cathryn Moses-Stone: My name is Cathryn Moses-Stone, and I am head of policy at the Chartered Management Institute. We are the leading professional body dedicated to raising the standards of management and leadership excellence across the UK. We have more than 220,000 members, and more than 150,000 people are currently studying on one of our management and leadership programmes. Our royal charter defines our charitable mission as increasing the number and standard of professionally qualified managers across the UK.
Carly Cannings: I am Carly Cannings, founder of The Happy Business School. I am a workplace culture consultant, and I help organisations to create happy, thriving, people-centric cultures.
Greg Smith
Q
Ben Willmott: There is no doubt that the cumulative impact of the proposed regulatory changes will be significant. Our members are responsible for making changes to employment contracts and workplace policies to ensure they align with any changes in employment legislation. They communicate any changes to staff and, crucially, ensure that managers have information, advice and, where necessary, training so that they meet any new legal obligations in the workplace.
Of course, we know that there will be a likely increase in the number of tribunal applications, which our members will have to respond to. That has not just potential compensation costs; there are HR and management costs to responding to tribunal claims, even those that do not actually make it to tribunal in the end and those that do not have any merit. Without a doubt, there will be a significant impact on workload.
The other point I want to make is that the time resources spent on those activities mean that employers will not have the time to invest in addressing the skills gap, upskilling staff and supporting technology adoption. That is the other challenge, which may undermine the other productive activities that you want HR and people management specialists to engage in.
So, yes, phasing these measures and really thinking about how they will be implementable is really important.
Cathryn Moses-Stone: Echoing Ben’s last point, which moves the discussion on quite nicely, we know that broadly there is quite strong support for the Bill among British managers. We have polled our managers over the past year and the last month, and in the last month over 75% were supportive of improved workers’ rights as a means to boosting productivity and 65% felt that it should be a top national priority. But obviously these are just changes. We know that they are meant to be the catalyst for implementing better working practices and more improved working cultures; the extent to which they can do that will very much depend on the implementation, which depends on the time and the process that we give to the managers who have to deliver it day to day, on the ground, to get it right.
Our data shows that over 82% of people are accidental managers, which means they go into a management position without any formal management training. If you are expecting them to deliver a whole suite of really complicated reforms, we need to ensure that the consultation period is long enough and that they are consulted in the right ways. Also, things like the fair work agency really have to take into consideration what the legislation means for allowing managers and leaders to upskill to deliver things in the right way, and the agency should not assume ill intent as a first port of call but work with people to understand what it might look like for them in practice, when they deliver it in their organisations.
Carly Cannings: I would probably echo the comments of the other panel members. It is not necessarily a case of splitting the Bill up; it is about giving enough time, and enough time with the detail. On reading the Bill initially, it is quite obvious that there are intentionally large gaps, because they are to be filled by secondary legislation for the most part. It is a case of ensuring that employers have enough time to get used to the changes introduced by the broad brush of the Bill, which should then be followed up with further consultation and enough notice on those changes.
Greg Smith
Q
Ben Willmott: We understand that the changes to the unfair dismissal regime in any new initial or statutory probation period will not come in until autumn 2026 at the earliest—that is the sort of timeframe you need to be thinking about. The other thing is that, because of all the other measures, it would help if you could push that out, as that is possibly the most substantive change that will affect all workplaces. If you could phase in some of the other changes over a longer period of time—say three years in total—that would certainly help.
The other point I have been echoing is that ACAS absolutely needs more resources to support the implementation process. We have called for ACAS’s budget to be doubled to £120 million a year. It is really crucial to support compliance, particularly among those small and medium-sized businesses that we know are more likely to fall foul through accidental non-compliance. They are less likely to know what their employment regulation obligations are and have less resources to adapt to the changes.
Cathryn Moses-Stone: Similarly, we would like to see consultation throughout the whole of 2025, which would be a really nice long period to try to understand exactly what the legislation means for managers. When we are looking at training courses and development for managers and leaders, that does not happen overnight. If there is an understanding that there will be a management gap in some particular area of the Bill, you then have adequate time to try to find the ways to support the people delivering it to upskill, so that they can do it in the right way. Although we cannot give specifics, I think 2026 echoes a decent period of time with implementation.
Greg Smith
Q
Cathryn Moses-Stone: I cannot talk to the specifics of the Bill’s initial cost implications, but I can talk to the cost implications of having really highly trained managers in the workplace. When thinking about general management training, we know that chartered managers, on average, boost a business’s revenue by £59,000. We know that the average pay rise of a chartered manager is £13,000. We see in a lot of our data that there is a direct productivity impact on an organisation from having highly skilled, highly trained managers who are able to implement policies that increase retention, retain talent, boost morale and create a more positive workplace culture, which prevents turnover, which saves a business from losing money.
It probably also comes back to the point that managers need time to get it right and to understand it, so that the burden on their business in the long run is not huge because they have the right amount of time to understand how they will work with their employees so that they do not have to escalate everything to tribunal. The early training period is crucial for the wider cost savings, because we know that there are lots of concerns from businesses on these issues, as well as the broader sentiment of being in support of the Bill.
Ben Willmott: One of the challenges for a business looking to upskill its managers is that that will incur a cost. If we look at the proposed increases in employment costs overall, we see those from the different measures in the Bill and those from the changes in the Budget, which also need to be taken into account. Businesses will have to find the money to upskill and train their managers. That is one reason why we are saying that ACAS needs to be resourced, particularly to help those smaller businesses that are more resource-challenged and have less knowledge and capability around the HR and people-management side of the business, which is so important to this.
Carly Cannings: Ben made a really important point about making sure that small businesses are adequately resourced to deal with the changes. I am, as many employers are—as the statistics bear out—very supportive of raising the standards of employment, and the Bill certainly takes a step in the right direction towards raising standards. The balance that needs to be struck is about making sure that employers, and particularly small employers, are able to cope with the changes.
There are lots of businesses out there already doing really good things, and some of the things in the Bill will be measures, practices and policies that lots of employers already have in place. That is not the case for everyone and, in particular, that might not be the case for small businesses. Echoing Ben’s point, small businesses are more likely to fall foul of the legislation accidentally, rather than intentionally, because they do not have the right access to support and advice in the same way. That is an important point that must not be missed.
Cathryn Moses-Stone: Would it be all right if I added a point? It is true, obviously, that there is a cost to training managers, but that is why we are also really concerned about the proposed defunding of the level 7 apprenticeships, because there will be a huge knock-on impact. Potentially, a huge skills gap could open up in highly trained management across the UK, at a time when businesses are going to be required to know their staff and to implement the legislation in the right way. We are concerned about how that aligns with the development and delivery of the Bill.
Justin Madders
Q
I have a more general question about what you see as the current weaknesses in the employment rights sphere. What do we need to do to give people more protection and security at work? Do you think the Bill addresses that?
Ben Willmott: The introduction of the fair work agency—a single enforcement body—is a positive step forward, but there needs to be further thought about how to improve the labour market enforcement system. We need a long-term strategy to improve labour market enforcement that includes not just a fair work agency but the Equality and Human Rights Commission and the Health and Safety Executive, not in a single enforcement body but as part of the strategy. We need measures to improve the efficiency of the employment tribunal system, which we know is swamped, and we need to increase the overall number of labour market inspectors—by international standards the UK is under-resourced on the number of inspectors.
As I have said before, we also need to significantly increase ACAS’s budget so that it can help small firms to comply. If labour market enforcement is about getting the carrot and stick balance right, that is why it is so crucial that ACAS can play that role in helping to raise employment standards. Businesses that are not bad employers—those that are poorly resourced, or might be knowledge-poor or time-poor, particularly micro and small firms—tend to fall foul of legislation because of those issues, not because of any malicious intent.
Cathryn Moses-Stone: I will start with the latter part of the question. We have a lot of data showing the impact of good management practice on both productivity and an improved workplace culture. Much of the Bill falls into that camp. For example, we know that one third of employees have cited negative work culture as a driver for leaving their organisation. That is obviously driven by ineffective management. We know that when managers in organisations have mutual trust and respect with their direct reports, they find that productivity rises. Poorly managed teams have lower motivation, satisfaction and retention. We believe a lot of the elements of the Bill are tied up in driving much of that in a positive way.
The things we are worried about, which echo what I have said before and what Ben has said, come down to implementation—that is, what the fair work agency looks like, how it behaves, how it supports, and how it gives space for managers to upskill. We know that 40% of our managers have expressed some concern about the detail of some of the policy, such as the right to disconnect. For example, what defines business-critical comms, versus just maintaining team comms?
We know that with high-quality management training—helping people to understand how to have difficult conversations, prioritise and have emotional intelligence—people can navigate those things much more effectively in the workplace. Our worry is about what the implementation will look like and about how managers and leaders will be supported in respect of the fair work agency.
Carly Cannings: I think the Bill is about raising minimum standards. As I said previously, a lot of employers are doing a lot of good things. Let us be realistic about the impact of the Bill: it is about raising minimum standards. Cathryn alluded to the bigger picture of creating happy, thriving workplace cultures, and it goes far further than that. This is not a call for further legislation; for me, legislation is about raising minimum standards. There is so much more outside and beyond legislation that makes a real difference to whether somebody has a happy, thriving workplace culture, and the benefits of that culture.
Thank you, Cathryn. You have done a very good job of outlining the things that I see in reality and when working with my clients—the factors that play a part in creating a workplace culture. Like I said, for me the Bill is about raising minimum standards.
Justin Madders
Q
Cathryn, you spoke about surveys with your managers and about the strong support for the Bill, and you said that there is nothing in the proposals that should alarm a responsible business. Given what you also said about the pace of implementation and the need to continue dialogue, if we get that right, would you still say there is nothing in the proposals that should alarm a responsible employer?
Cathryn Moses-Stone: First, the right to disconnect was just a useful example of the sort of concerns we hear.
We are not saying there is nothing for businesses to be alarmed about. One of the challenges that managers and leaders face is implementing and managing change across their organisations, and that is a complex thing. That comes back to our point that we have a whole suite of data on the impact that highly skilled managers have on managing change in their organisations, and the knock-on impact that has on recruitment, retention, productivity and the success of a business. It does not mean it is easy and straightforward; I do not think many things that managers and leaders do are easy and straightforward. Again, it comes back to the core principle of having the right amount of time and being able to support managers to skill up. That at least gives them the tools to be able to tackle these complicated things head on, because they will be complicated.
Ben Willmott: I absolutely agree that there is a significant role for well-designed, effectively enforced employment regulation to support overall improvement in employment standards and to support efforts to improve employee engagement and productivity. The key is that it has to be well-designed regulation. If it is excessive or too complex to implement on the ground, it will lead to increased costs, and that will undermine the ability of businesses to improve job quality, invest in recruitment and skills, and support technology adoption and things that will drive productivity. That is why, as we move forward, the consultation is so important.
An example of a measure in the Bill is around the reference period for workers to have the right to guaranteed hours. It is not set out in the Bill, but in “Next Steps” it is set at 12 weeks. In our view it is crucial that there should be consultation on the 12-week reference period. The Government have set out their principles for a modern industrial relations framework: accountability, proportionality, collaboration and balancing the interests of business and workers. Those principles need to apply as we roll out and implement the proposals, so 12 weeks is a test that should be subject to consultation, because it is so important to the functioning of that right. That is the sort of thing where we want to see consultation—where it would help to decide that the ultimate regulation is effectively designed and can work.
Steve Darling
Q
Ben Willmott: The Bill is focusing businesses’ minds on how they recruit, manage and develop their people. I will refer to comments I made earlier. If the measures in the Bill are designed the right way, they can support improvements in overall employment standards. But if consultation is not effective and measures are introduced that are not workable, it will have the opposite effect. It is about finding the right balance.
Cathryn Moses-Stone: Similarly, we have a lot of data that shows that policies like flexible working, enhanced family-friendly rights and day one rights make employees feel valued and supported, which in turn drives better performance.
We did a study last year looking at the impact of trained managers in effectively delivering hybrid working. By way of example, 68% of our managers said that hybrid working made it easier to increase their work productivity, and that was a result of managers being trained to manage teams that work in a hybrid way. We know that where managers trust their direct reports—this is what our evidence shows—they find that productivity rises. As I have already said, poorly managed teams face lower motivation, satisfaction and retention, and ultimately impact on business delivery. So really good management in designing work that allows employees to thrive is important.
We must remember that managers are employees themselves. Managers want it to work for themselves as much as they want it to work for employees. That in turn will boost productivity at the higher levels of the organisation as well. We have lots of data that backs that up. Again, it is all about how the legislation is implemented and all about the time and space that is given to support managers to do that.
Ben Willmott: The other thing I would add is that our members are certainly supportive of the ambition behind the Bill. Our member survey shows that there is significant support for changes to improve statutory sick pay and to improve parental leave.
There are definitely areas of the Bill that have support, but I will give an example of an issue. When talking to members in sectors that might bear more cost from changes to statutory sick pay, we found they were much more sanguine in September than they were after the Budget, because they are now thinking about it in the context of broader changes. The cumulative effect of changes and increases in employment costs needs to be taken into account when we think about individual measures.
Carly Cannings: On the point about productivity, if you look at what makes a workforce productive, there are lots of things that go in the mix, such as feeling engaged in the work you are doing and valued by your managers, as well as having an environment around you that offers things such as flexibility. The factors that lead to productivity are broad. We need to be realistic about the measures in this Bill and how far they will go to support productivity, given that lots of employers are probably already meeting lots of these minimum thresholds.
It is a step in the right direction. It raises the profile of things such as flexible working, so hopefully more businesses will adopt it—it is now a day one right anyway. It definitely moves in the right direction in terms of creating that happy, engaged workforce who feel valued and able to work in a way that works for them and their employer. Again, it is back to that point about raising minimum standards. There is more to this element about workplace culture and productivity than just minimum standards of employment legislation.
Cathryn Moses-Stone: Echoing that, it is important to acknowledge that lots of forward-thinking employers are already doing a lot of this stuff anyway. They are doing it for a reason, because they are seeing the impact on their business. That must not be forgotten.
Chris Law
Q
Carly Cannings: It was not a criticism when I said that it was about minimum standards. As I said, creating a happy, thriving, engaged workforce is more than just legislation. It is not to be misunderstood as a criticism of those minimum levels, but equally, you do not want to tie the hands of good employers by making them jump through too many hoops around legislation.
For me, this Bill is about raising the standards of those employers who are not necessarily doing, and need a bit of encouragement to do, the right things. We need to be mindful of the balance. The previous panel mentioned the impact on small businesses and the importance of not going too far the other way in over-legislating that ties the hands of small businesses. It is very much not a criticism; it is a realistic statement of the Bill being part of the package.
Ben Willmott: We have done a lot of research over the last few years looking at the level of HR capability and people management capability in small firms, and what sort of support they need. The research has involved more than 500 small firms, and shows the very low level of HR knowledge and capability within them. They do not have in-house access to professional HR practitioners; most of them do not use any sort of external professional HR consultancy support either.
There are a lot of issues that you probably would not imagine. A lot of small firms may not even have written employment contracts or written terms and conditions of employment. There is a lot of informality still in that part of the economy. That is the point I was making earlier. We really do need to find ways of providing better quality, more accessible advice and support to help these small firms meet their obligations and improve the overall level of employment standards in the economy.
Cathryn Moses-Stone: From our perspective, we would hope that this is a broader catalyst and a driver to see better-led and managed organisations across the board. We want to see more investment in management and leadership in general. We have lots of evidence looking at the impact of better-trained managers in the public sector and how that can support public service reform. We have evidence for what that looks like in healthcare education settings. We have evidence for what that looks like for delivering green skills and AI, and for how that is a driver of more investment in management and leadership across the board, given the evidence we have and what it does for workplace growth, productivity, our economy and people’s happiness.
Again, I emphasise the point that 82% of people are accidental managers. We have all heard—I am sure everyone in this room has, in their time—about a bad manager and the impact that that can have on an organisation. We see this, hopefully, as a bit of a catalyst for further investment and the thought given to M&L in general.
Nick Timothy (West Suffolk) (Con)
Q
May we explore the trade-offs a little? With this kind of legal framework, to what extent will managers be able to focus properly on the core purpose of their businesses, as opposed to compliance with the law? To what extent will managers be able to invest properly in training and new technologies to aid productivity, rather than have the costs set out in the impact assessment?
Ben Willmott: That is a really important point. I alluded to it earlier. We know that one of the things that will drive productivity will be looking at how businesses can identify and address skills gaps, which will require thinking about how we train and develop our staff and managers. We know that responsible technology adoption will, to a large degree, depend on the people element—things like job design, or making sure that people are trained and have the right skills to use technology, and that we are consulting employees in advance so that their views help shape how the technology is implemented.
Businesses only have so much bandwidth, so I think that there is a real challenge there, particularly for our members, who are on the frontline of trying to ensure compliance. At the same time, the business will be asking them to help improve workplace productivity through those other activities. That needs to be thought about when we think about how regulation interacts with other factors that might support workplace productivity.
Carly Cannings: You are right—there is an inevitable trade-off. Even employers who are now broadly compliant or doing good things will have some costs associated with bringing in changes to policies that reflect the actual detail of the Bill, for example. They might be broadly doing something good in that space, but it might not quite align with the provisions of the Bill. It is important to make the point that it is going to have an impact on employers, even those that are doing good things in that space already. But the way to offset that is by phasing the changes through—not dumping them all on employers all in one go, but helping them to navigate the changes. This has already been alluded to, but it is making sure that they have that support through the implementation phase.
Cathryn Moses-Stone: I am pretty much in agreement with Carly. Obviously, there will be an initial trade-off, and investment will be required, but I guess our point is that it is for longer-term gain. Once we have got those happier and more supported managers, and therefore workplaces, these things will become elements that save the business money in the long run. Understanding that broader piece is important, and making sure that the process is there in order to upskill and train people in the right ways. It will be about a clear understanding of, “Will this agency be there to support them in the right ways?”, rather than just being a place to go as a last resort, assuming a slap on the wrist and ill intent. What is the support package alongside this to manage some of those trade-offs?
Michael Wheeler
Q
“on a mission to help organisations build people-centric workplace cultures, where happy people can thrive.”
Which measures in the Bill will be most transformative and help you in that mission?
Carly Cannings: Not to labour the point further, but this is about setting minimum standards, and creating happy, thriving workplace cultures is far broader than employment legislation. On the stuff around flexibility, some of which has already come in through previous legislation, a common theme with organisations I work with is that having good, flexible working policies generally goes down very well with employers. As with everything, there is a balance to be struck, but some of the firming up of the flexibility rights is good. But as I said, lots of the businesses I work with are already doing good things in that space. It is more about bringing up the standards for the others. This is just a small part in that bigger picture, but a move in the right direction. I suppose it is raising the profile of those rights and broadening them.
Alison Hume
Q
Carly Cannings: That is a good point. Arguably, from my reading of the Bill, there is not a lot of specific focus on those rights. It is about standards across the board. There are already some protections, particularly unfair dismissal rules. Even though the qualifying period is likely to change, there are still the protected characteristic rights—the day one rights that already exist.
I have to say that, from my reading, the Bill does not scream out that there is lots in there that will help specifically those with disabilities and long-term health conditions. Flexible working is definitely part of that picture, but the big change was making it a day one right, which has already been done. The legislation is just tightening that up further. Being able to have flexibility is a big issue for people in terms of accessing work, so that is probably the biggest one. But as I say, a lot of that work has been done in making it a day one right.
Uma Kumaran
Q
Carly Cannings: I have reached out to businesses to try to get a sense of what is going on. At the moment, because there are lots of gaps in the detail, employers probably are not focusing their minds so much on the detail of the Bill. I suppose it comes off the back of the Budget and the NI changes. There is probably a lot for employers to get their heads around at the moment.
The consultation and engagement should be kept going so that businesses understand what is coming. Back to Cathryn’s point about seeing the greater good of this, if you get through what might be some initial pain in making some changes to your policy and implementing those changes, it is for the greater good. I suppose a lot of what I talk about is joining the dots between having happy, thriving workplaces and having more productive, successful businesses. It is about understanding that raising these standards and making working environments better for people is better for not just the people in them but the businesses themselves.
Ben Willmott: I think we need to look at how the system as a whole will work, particularly on that point about labour market enforcement. We have to look at not only national enforcement efforts but how efforts to support small firms work at a regional level, such as with combined authority areas, and the interface and being joined up at that level is really important.
One of the things that we are doing currently is the Government-funded HR support pilots through which we provide a limited amount of pump-priming HR consultancy support. We are working with Angus council in Scotland, as well as the Tees Valley combined authority and the Bournemouth, Christchurch and Poole council. They have a number of our CIPD-qualified HR consultants who provide up to two days of pump-priming HR consultancy support to small firms. That is being evaluated by the behavioural insights team to understand what good-quality business support on the people side looks like, and what a cost-effective system of providing that would look like as well. Some of those areas also need to be thought about if we are looking at creating a system where there can be a step change in people management capability and employment standards.
Cathryn Moses-Stone: Just to add one more thing, we need to streamline the enforcement processes and provide really clear guidance and support. It is all about those comms coming from Government, not just the scaremongering legal side. A small business should be able to log on and ask, “What support can I get? Can I get short modular courses on management training to help me figure out the legalities of this?” What resources will be available to support and not just regulate? You cannot regulate positive workplace culture into existence.
Dr Tidball
Q
Carly Cannings: How much time have we got?
The Chair
Not very long, actually.
Carly Cannings: There are a number of factors there. It is definitely about creating the right ecosystem and asking: do people feel connected to the work that they do? Do they feel purpose and meaning behind their work? Are their efforts recognised and valued? What is the dialogue and relationship like between leader and employee? Do people feel autonomous in their role? Do they feel that they are being micromanaged, or do they feel that they have autonomy and flexibility to do their work in the way that they want to? Do they feel that they are listened to? Do they feel that there is a sense of trust and respect? Is there transparency within the organisation? I could go on and on, but I am conscious that Cathryn might want to chip in.
Cathryn Moses-Stone: Unsurprisingly, I will say that skilled managers do that really well.
The Chair
I am going to move on to Anneliese Midgley for the last question very briefly, and with a brief answer.
Anneliese Midgley
Q
Cathryn Moses-Stone: I think it leads on from what Carly was saying. They see the direct benefits of creating happy, supported, trusting and inclusive workplaces. We have a lot of research that shows that really highly-trained managers and leaders create more inclusive workplaces, which has a really positive knock-on effect on both the business and people’s happiness. I think that everything I have said probably builds towards that same argument. It is better for the business as well as people.
The Chair
Thank you—that is a good point on which to finish. That brings us to the end of time allotted for the Committee to ask questions of the three witnesses before us in this sitting. I thank those witnesses for giving clear answers to the questions. The Committee will meet again this afternoon in the Boothroyd room.
Employment Rights Bill (Second sitting)
Tuesday 26th November 2024
(3 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 26 November 2024 - (26 Nov 2024)
The Chair
I remind Members that questions are not limited to what is in the brief, but your questions must be within the scope of the Bill. In line with this morning’s session, for each panel of witnesses I propose to call the shadow Minister to ask the first question, then the Minister, and then the Liberal Democrat spokesperson. I will then go back and forth between the Government and Opposition sides. Anyone who wants to ask a question should catch my eye. We must stick to the cut-off times specified in the programme order, so I will interrupt questioning if necessary. I remind Members that they must declare any relevant interests both when speaking in Committee and when asking questions. We are being broadcast.
Before we start hearing from witnesses, do any Members wish to make a declaration of interests in connection with the Bill?
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair, Ms Vaz. I refer to my entry in the Register of Members’ Financial Interests and to my membership of Unite and the GMB.
The Minister for Equalities (Dame Nia Griffith)
I refer to my entry in the Register of Members’ Financial Interests and my membership of USDAW, the Union of Shop, Distributive and Allied Workers.
Michael Wheeler (Worsley and Eccles) (Lab)
I refer to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and USDAW.
Anneliese Midgley (Knowsley) (Lab)
I refer to my declaration of interests and my membership of Unite and the GMB.
Alison Hume (Scarborough and Whitby) (Lab)
I refer to my declaration of interests and my membership of Unison and the Writers’ Guild of Great Britain.
Jon Pearce (High Peak) (Lab)
I refer to my declaration in the Register of Members’ Financial Interests. I am a member of the GMB.
Laurence Turner (Birmingham Northfield) (Lab)
I again refer to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
Alex McIntyre (Gloucester) (Lab)
I am a member of the GMB and Community unions, and until the general election was a member of the Employment Lawyers Association.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I refer again to my declaration of interests and to my membership of the Community union, Unison and the GMB.
Uma Kumaran (Stratford and Bow) (Lab)
I refer Members to my declaration of interests and my membership of the GMB union.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
I refer Members to my declaration of interests and to my membership of Unison and Community trade unions.
Examination of Witnesses
Allen Simpson and Neil Carberry gave evidence.
The Chair
We will now hear oral evidence from Allen Simpson, the deputy CEO of UKHospitality, and from Neil Carberry, chief executive of the Recruitment and Employment Confederation. We have until 2.30 pm for this panel. Would the witnesses introduce themselves briefly?
Neil Carberry: I am Neil Carberry. I am the chief executive of the Recruitment and Employment Confederation, which is the sector body for the UK’s talent, recruitment and staffing businesses. We represent about 3,200, mostly family-owned, businesses across the UK.
Allen Simpson: Hello everyone. I am Allen Simpson. I am the deputy CEO of UKHospitality which, as the name suggests, represents the hospitality sector in the UK—about 3.5 million people in total.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Good afternoon. May I start with Mr Simpson? UKHospitality has been quite critical of this Bill in the media and in a wider setting. You have just said you represent a very large number of people. Do you think after this Bill is passed and becomes an Act—I think we can safely assume it will, with the parliamentary arithmetic at the moment—there will be more, or fewer, people employed in hospitality in the United Kingdom?
Allen Simpson: I would slightly reject your characterisation. I think in general we agree with the principles behind the reforms, and many of the substantial reforms themselves. There are areas where we will have to nuance the detail of things like reference periods and zero-hours contracts—we will get into that, I am sure. My bigger concern, however, is the aggregate costs of what we saw in the Budget with the regressive impact on lower earners in particular. Will this create more or fewer jobs? I think the Government’s analysis suggests that it is fewer, but let us balance that against making sure that workers’ rights are protected.
Greg Smith
Q
Allen Simpson: I have a red, amber and green list in front of me, so I can tell you what is on the red if that is useful. First, it is the aggregate cost: the cost of this, alongside the employer national insurance and national living wage increases, is going to be a barrier to employment. You can take the 50,000 job losses that the Government’s impact assessment describes or the 100,000 that Deutsche Bank have, but there is an aggregate cost question.
More specifically, there is a question around the variation of contracts—we can talk about that in more detail—and making sure that that protects against what we can probably call a P&O event. Equally, we need to allow for like a restaurant moving from one high-street premises to another so that contracts are not accidentally novated. There are questions around how we manage union thresholds, which we need to think through in detail. Those would be my reds, but equally, I have ambers and greens as well.
Greg Smith
Q
Allen Simpson: There is something around statutory sick pay, which is worth considering. There is a tendency, when we look at what a good job means, to build around the paradigm of an office, when working in hospitality—not unlike my wife, who is a nurse, working in a medical setting—is a different way of working. We need to think about whether or not sick pay kicking in from day two might be more appropriate than day one. Equally, I have an amber around the notice of shifts and how we manage things like major events at Ascot, Wembley or anywhere else. You did not ask, but I will say that for green, I am very supportive of changes in general to zero-hours contracts.
Greg Smith
Q
Allen Simpson: It is about 17% in total. If you look at who those people are, they are largely who you would think—students and people with caring responsibilities. I think about my mum, who worked on what we would now call a zero-hours contract while raising me and my brothers. That 17% is going to skew younger and largely skew female. There is a really interesting question around making sure you have a legal structure that allows people who want to work flexibly to do it, but also making sure that the people who want to work in a more settled, structured way—maybe because they have more responsibilities financially—to be able to do that as well. I broadly think the proposals in the Bill are the right ones.
I have a question about the reference period. I know Ireland has a 52-week reference period for estimating what your set of regular hours is, which possibly feels too long. I have always held 26 weeks in mind as a number which allows you to cope with things like seasonal working, but equally allows the worker the right to choose whether they want to work flexibly or in a more fixed way.
Greg Smith
Q
Allen Simpson: I come back to the point that you need the right legal structure. I think it is legitimate for someone who in practice is working 30 hours a week regularly and has been doing so for the last year to ask for that to be reflected in a different form of contract. That is absolutely right. It is worth saying that the data shows—and it does not matter how you look at this—that most people on zero-hours contracts are happy with that. In fact, if you advertise a zero-hours contract, you will get more applicants. To a degree, as long as it is in the gift of the employee to say, “Well, I am working these regular hours and I want that reflected in a permanent contract”, that is the right balance. However, it is important that the Government move their thinking, as they have, to recognise that zero-hours contracts are a really important social fairness point because they allow access to work for people who cannot necessarily offer their employer set hours every week—again, I come back to my mum when I was a kid. Having that distinction in law is really important.
Greg Smith
Q
Neil Carberry: I will not repeat what Allen said about the aggregate cost of the Bill, but clearly it is an enormous piece of legislation, coming at a time when businesses—particularly consumer-facing businesses—have been through the pandemic, are carrying more debt and are struggling to drive the growth that the Government want. Among my members, as with many business organisations, the tone of the debate about the Bill was changed by the Budget. That was particularly around the shift on the threshold, which directly pushes up the costs of all of the people for whom an employer’s decision to hire is maybe more marginal. I associate myself with Allen’s comments on that.
More specifically, for those who are not familiar with it, our sector places 1 million people into new permanent jobs every year, but it placed 1 million people as temporary workers into workplaces today. So I come at this from the point of view of what do those people need to have good, positive, healthy working lives. Colleagues may remember the attempt to change the conduct regulations to allow agency workers to replace striking workers, which we opposed, because at the REC we believe in protecting temps and putting them in the right space.
The most important thing for our sector is the proposal to apply the same tests and rules on zero-hours contracts to agency workers as to directly employed workers. I will be really frank about that: there is a power in the Bill, we have been through the consultation, and we cannot see how any of the approaches in the consultation work. For some of the reasons that Allen has set out, agency workers are well protected. They benefit from the Employment Agencies Act 1973, from their own set of conduct regulations—the Conduct of Employment Agencies and Employment Businesses Regulations 2003, passed by the last Labour Government—and from the Agency Workers Regulations 2010.
There is a lot we can do to deliver the Government’s commitment to more certainty for agency workers—it is just not by applying the powers in the Bill. We fear that the Government are trying to avoid direct employers moving to agency to avoid the powers in the Bill. A few direct employers doing that is not worth damaging the employment prospects of 1 million people. For instance, if a supply teacher in a school has worked the autumn term to cover a sickness absence, and then the absent teacher comes back, we cannot see how giving that supply teacher a right to a contract from that school is good for the school or the supply teacher. Ultimately, we think that we will just see a move to using more overtime and lengthening the working hours of existing staff. That will be net negative for the workforce.
I think there are things that we can do on the zero-hours rules to protect agency workers, but it is not applying the proposals in the Bill. More generally, I think our members would say that the Bill feels a little undercooked in its thinking. I think it is a very quick Bill, and that there is quite a lot in it that employment lawyers and our members are looking at and thinking, “How would that work?” A classic example would be the collective consultation sections of the Bill. I do not think it is in anyone’s interests for large companies employing thousands of people to be stuck in perpetual collective consultation when they are shutting down one site with 20 people in it. That is just an example of one of the things that maybe need to be worked out through regulation—lots of this is in regulation—but we need to ensure that we are not putting up barriers to employment with the Bill.
Justin Madders
Q
Allen Simpson: It is more about the unknown. Again, reasonable notice is an important principle and there should be protections. I think that the challenge will be—I notice, by the way, from what I understand from having read what is, again, a complex and lengthy piece of work, that the Government are intending to leave it to case law and employment tribunal systems to figure out what “reasonable notice” means. In general, with different sorts of work, it is reasonable to say that there are different versions of what “reasonable notice” means. If I were going to go and work on an oil rig for three months, I would want more notice of a change of shifts than if I was going to work in the local pub. Therefore, I think it is partly about figuring out what the right starting position for notice is. It is partly about reflecting differences in things, such as whether it comes with a residential element; there are questions around that.
Then there are some practical things that I think will come out in the wash, but do need considering, such as shift swapping. What if two chefs say, “Do you mind covering Saturday, because I want to go out with my friends?” “Yes, of course; that’s fine.” Is that allowed, or can that decision only be taken outwith that notice period? There are also questions around other things. What if you put out a message saying, “There is a shift available; does anybody want it?” Have you made an offer of employment to everybody you have put that message out to? Is there a time after which you are not allowed to do that? One last thing: what if somebody agrees to move their shifts around—so you say on the Friday, “Do you mind coming in this Saturday and you can have next Saturday off?” “Yes, absolutely. Fine.” Is that acceptable?
Therefore, there are there are some practical questions about, first of all, the principle of different suitable notices of shifts depending on different forms of work, and about some practicalities, which I am sure are solvable, around the management of it.
Justin Madders
Q
Neil Carberry: I think it is reasonably well noted that we were disappointed that an employment Bill was not brought forward in the last Parliament. It is time to raise enforcement standards. One of the most common worries that I hear about this Bill, for which I will not hold you accountable, Minister, is the experience that businesses have had of being the ones who comply and take on the on-costs—there are quite significant costs associated with this Bill—and then watching people flout the law and not face enforcement, so a fair work agency is a good idea.
If I may, I have a couple of guide points that we have heard from our members. One is that we are great fans of the Employment Agency Standards Inspectorate. We think it does excellent work as our regulator. It sometimes annoys the hell out of me, but that is what it is for. The team there are deeply expert, and, in the creation of the fair work agency, I would be—if you would forgive a Scottishism—scunnered if we lost that expertise. Maintaining expertise as we move into the FWA is really important, and that goes with properly resourcing the FWA and giving it the capacity to maybe draw down some of the claims that currently take two years to go to employment tribunal.
The other thing, which is maybe a bit more challenging, is that, when we have done this in the past, success has been delivered by making these bodies of the labour market, not of the Government. If you go back to the 1970s, the Health and Safety at Work etc. Act 1974 was guided into existence for its first two decades by the Health and Safety Commission.
As a former low pay commissioner, I will say that we hear a lot about businesses’ views of the minimum wage in the ’90s; they were against the minimum wage at £7.20 an hour in 1999, and that is why it was not introduced. They were in favour of one at the introductory rate, which was developed by the Low Pay Commission. I would really like to see the FWA have that kind of tripartite guiding force to make sure that it is as much of us and our union colleagues as it is of the Government.
Steve Darling (Torbay) (LD)
Q
Allen Simpson: Yes, I think so, but fundamentally—because of the dispersed nature of hospitality, which is one of very few sectors that employ people everywhere, versus other sectors, which are much more clustered—I would make the broader point that we have a tendency to think of economics in terms of raw productivity, when actually there is the need to think about it in terms of social productivity and access to growth.
My sector is one of a relatively limited number of sectors that provide a substantive route into careers training and management for non-graduates around the country. Anything that has an asymmetric impact on my sector is going to have an asymmetric impact on the people my sector provides employment for. Again, we saw this with the Budget; increases in national insurance contributions are going to take away nearly half the pay rises expected to lower earners, and maybe 20% or 25% of the pay rises expected for higher earners. That will of course have the same geographic footprint as you would expect.
Steve Darling
Q
Neil Carberry: I regret that we are not at the end of the session, because it would have been lovely to meet Jennie.
Let me reflect on the REC’s experience. Over the past two years, we have placed 3,200 people into work from long-term unemployment through the Government’s restart scheme, and many of those people have faced barriers associated with disability. Allen reflected earlier on the flexibility offered by hospitality. Agency work also gives us a chance to do things a bit differently; it is not nine-to-five in the office. Access to Work is obviously an excellent scheme, but it only goes so far.
I will give you an example from Birmingham, where we have placed a single father into work. His challenge was not his own disability; he has a severely disabled child. The school to which one child goes is on one side of the city and the mainstream school the other child goes to is on the other side of the city, so he cannot do a nine-to-five. We have been able to place him into work on a flexible contract—when he can work, on a zero-hours contract. That is creating some opportunity.
What is really important in the whole Bill is to meet the workforce where they are, and they are somewhere different from where they were 10 or 15 years ago. This need for flexibility is how people manage. Let me round off with my favourite example. We have a member which fills Christmas shifts for John Lewis up at Magna Park in Milton Keynes. That is 3,000 jobs every day between August and Christmas, making sure that you get your Christmas presents. Ten years ago, they needed 3,500 candidates to fill those jobs because people got sick, had a week off, and obviously did not work seven days a week. Now they need 12,000 candidates, because people have greater choice: they are sitting at home, signed up to five or six of my members, and they are taking the shifts they want. For instance—this is an example that we have used in our own “temp work works” campaign—we have a temp worker who is managing a chronic illness, and they are working in the ways that they can work. If we think about the Government’s agenda today, I think embracing flexible work and agency work on that front, as an enabler for people, is really important.
Michael Wheeler
Q
Allen Simpson: Turnover is higher in hospitality than in many other sectors. Part of that is what you might call non-regretted turnover—that is, people who are in hospitality for a period and move on to their wider career, people who were students, or people with caring responsibilities. There are also people who move on for other reasons.
For people who want to be on a fixed-hours contract and are currently on a flexible contract, I absolutely agree that the ability to move from one to the other should help with retention—that seems absolutely true, yes. Equally, there are other elements of the Bill that provide a really suitable balance towards the worker and that will have exactly the same effect. The question is balancing that real value, which is absolutely there, against the unintended consequences of, as Neil has indicated, creating a hurdle rate, which means that it is hard to bring people into the workforce.
We saw, I think today, that there are 2.8 million people in the UK who are unemployed for health reasons. This is a sector able to bring those people in, and we need to make sure that we are both retaining and giving opportunities to people already in the sector and providing access to the sector for those 2.8 million people.
The Chair
Before I call Nick Timothy, we do not have long left now, and other Members are indicating that they want to speak. Could questions be quick and answers be slightly shorter, too?
Nick Timothy (West Suffolk) (Con)
Q
Allen Simpson: I think that is right, but the bigger impact was the Budget. Whether you take the Government’s number of 50,000 or Deutsche Bank’s number of 100,000— I have no way to tell between those two things, so let’s split the difference—there will certainly be job losses as a result. We should expect that those job losses will heavily weigh on people on minimum wage, because you can adjust the demand curve when you get to set the prices, but you cannot if the prices are set. Hospitality will bear a disproportionately large number of those losses, for sure.
If you want some qual, I was speaking to a publican who runs a series of pubs across the south-east, and his net profits at the moment are about £300,000 across the set of pubs. He estimates that next year, running the same numbers with next year’s costs, he will lose about £60,000. Clearly, his judgment is about exactly how much of that bears on raising prices, on him reducing his profits and on reduced salaries for the workers.
Alison Hume
Q
Neil Carberry: I am happy to say that from our point of view, it does not. Allen mentioned earlier the reference period, and that is how you would allow for seasonal work to be properly reflected. That balance to be struck is between protecting the interests of workers in the east coast’s hospitality industry while also protecting hospitality businesses who we know are often, as Allen said, hard-pressed. The reference period is absolutely key.
Allen Simpson: I recognise that. I said 26 weeks as a sensible reference period. Ireland’s 52-week reference period is probably longer than we need. The clarity on exclusions around fixed-term contracts and genuine casual work is material. And then, there is something in the Bill around where there is no work available after that period. It does need to be no work or limited work, because you could have a business that is still open, but the number of people staying in the hotel, say, is materially down. It needs to be possible to reflect that, and I do not think the Bill does at the moment. But that is a practical matter that does not affect the principles of what the Bill is trying to achieve.
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank both our witnesses for their evidence.
Examination of Witnesses
Jamie Cater and Jim Bligh gave evidence.
The Chair
Good afternoon. We will now hear oral evidence from Jamie Cater, the senior policy manager for employment at Make UK, and Jim Bligh, the director of corporate affairs for the Food and Drink Federation. We have until 3 pm for this panel. Could the witnesses please briefly introduce themselves for the record?
Jamie Cater: I am Jamie Cater, the senior policy manager for employment at Make UK.
Jim Bligh: I am Jim Bligh, the director of corporate affairs at the Food and Drink Federation. We represent thousands of businesses around the UK in the food and drink manufacturing industry in every constituency in the country.
Greg Smith
Q
Jamie Cater: It is worth starting by saying that we welcome the underpinning principles of the Bill. UK manufacturers are committed to providing good, well-paid work. We think that genuine exploitation and bad practice in the labour market should be addressed, so we are supportive of a lot of what the Government are trying to achieve through this legislation.
There are specific measures that reflect policy recommendations that Make UK has made previously on behalf of manufacturers—for example, the extension of eligibility for statutory sick pay, making it an entitlement from day one of sickness and removing the lower earnings limit. We think that is the right thing to do, although we would like to see additional financial support for the smallest employers to help with the cost burden of that—a rebate scheme, as there was during the covid-19 pandemic. Our members also support some of the measures on things such as equal pay, parental leave and family-friendly rights.
I would list four areas of concern for us: two on individual rights and two on collective rights. On individual rights, we have some concerns around the detail of the implementation of the right to guaranteed hours. Some of that detail around the definition of regular working hours and the scope and structure of the 12-week reference period for that right to guaranteed hours will come forward in the secondary legislation. Secondly, we have concerns about the structure of the statutory probation period that will accompany the day one protection from unfair dismissal.
On collective rights, the first area of concern is around consultation requirements for collective redundancy and the impact that that will have on businesses, particularly large businesses, in our sector. We have concerns about the extent to which they will be required to consult and the potential disruption associated with that. The second area is dismissal and re-engagement, or fire and rehire, where there is a very high bar set. We think it is right that there is a robust approach to that practice and we have supported previous measures, such as the existing code of practice. But we are concerned that the approach taken in this legislation might restrict the ability of employers to take the action they need to take and that the way the measure is worded in the Bill is currently too restrictive.
Jim Bligh: We pride ourselves on being good employers of the half a million people around the country who are sector employees. We simply would not be able to feed our population of 70 million people without their commitment, hard work and dedication.
We know that a flexible labour market is the hallmark of a growing economy, and we are keen to protect that. We are very receptive to a lot of the ideas in the Bill, thinking about maternity and paternity provision, the pregnancy improvements, the lower earnings limit for the statutory sick pay rules—which is a sensible thing now we have moved away from that being a state benefit —and the recognition of the importance of flexible working, which our sector offers, too. We are strongly supportive of a single enforcement agency.
There are some areas we would like Government to look at in a bit more detail, and to consult fully with businesses in a way that follows best practice, through 12-week consultations in particular. We note with interest the concerns that the Regulatory Policy Committee expressed yesterday in its analysis.
For us, there are five areas where we think Government could work with businesses and unions to come up with a pragmatic solution that will help meet the objectives of both. For us, those are around unfair dismissal and probation periods; collective redundancies and similar concerns to those other witnesses have expressed today; some technicalities around zero-hours contracts and, specifically, definitions; flexible working and the admin burden that that poses for smaller businesses, now the burden of proof is shifting; and some concerns about the secondary powers of Ministers, which are quite wide-ranging, particularly on ballot thresholds. Broadly, however, we are receptive to the ideas in the Bill, and we look forward to working with Government to implement them.
Greg Smith
Q
Jim Bligh: Unfair dismissal and the probation periods are a concern for us. Most of our sector uses three or six-month probation periods now. About 85% of our members have told us that that is what they will use. About 6% use 12 months. There would be, I think, a concern about a nine-month period—the reduction from two years. It is critical that performance management from day one does not put a significant burden on SMEs in particular, and it is important that we keep the flexibility. If something is not right for the employee and not right for the employer—that performance is not there, that quality standards or whatever are not met—there should be flexibility in ending that employment relationship, on both sides.
What concerns us about the Bill’s proposals is that young people or people re-entering the workforce—which rightly is a priority for Government as well, and I note that Liz Kendall is speaking about this in the House at the moment—could be shut out under the changes that are coming through in the Bill. Our proposal would be to revert to a 12-month probation period. Obviously, people automatically qualify for unfair dismissal on some elements. It is right that those elements are retained, but it is important to us that you keep that flexibility from 12 months, that you have a light-touch approach and a process there as well, but also that we have enough time to implement.
What concerns us is that we are talking now about changes that will come in, I think, in two years’ time—that is a commitment from Government. That period is welcome, but we are not certain what the final provisions of the Bill will be. There is a long commitment to consultation, which we also welcome. Our proposal would be to implement two years after Royal Assent, to make sure that that concrete security and guarantee is there and that the goalposts are not shifted for employees and employers as they start.
Jamie Cater: I would echo that and agree with those comments. Stepping back slightly to look at the bigger picture, it has become difficult for us, with members, to separate out the impact of the legislation and the impact of the autumn Budget—the increase in employer NICs in particular, but in general the tax burden on businesses. That, taken together with the measures in the Bill, increases the cost and the admin associated with taking on people. There is a risk that that disproportionately impacts people on the edges of the labour market, I suppose.
It is very welcome that the Work and Pensions Secretary is today talking about how to reduce economic inactivity, particularly focusing on skills and health. We really support that focus, but there is a danger that the measures in the Bill, combined with the total cost impact, will make employers less likely to take that risk on someone.
On the protection for unfair dismissal in the statutory probation period, we typically hear from members that the usual approach would be to have a six-month probation period in an employment contract. They might then have a bit of additional flexibility for someone who is a borderline candidate if they need to be kept on probation for a bit longer, perhaps if they need a bit more skills training, experience or additional guidance in something before a firm decision is made about permanent recruitment.
Members often talk to us about effectively a six plus three model, where there is a contractual six-month probation period with the flexibility for an additional three months’ probation if there is a bit of uncertainty. The Government’s stated preference for a nine-month statutory probation period feels about right. That is probably the minimum; we would not want to see it go any lower than that. I think our preference would be 12 months, just to give that additional leeway, but nine months is probably about right for what we see reflected in standard practice from our members.
Justin Madders
Q
Jamie Cater: To come back to the impact of things like statutory sick pay, I think that will help with productivity and retention. We see a huge amount of feedback from member companies about their own investment in health and wellbeing, and the positive impact of that in keeping people in work, helping with productivity and reducing presenteeism. I think the measures on statutory sick pay will help with all those things, including reducing long-term sickness absence, reducing presenteeism and improving people’s productivity. I think all those measures are really positive.
However, what we need to be careful of, and what we are concerned about—going back again to the impact of the Bill alongside the autumn Budget—is that it does not reduce or restrict employers’ ability to continue to invest in all those other things that also improve productivity. We have heard concerns about impacts on training budgets, internal budgets for things like occupational health and wellbeing, and investment in technology and new machinery that can help workers to become more productive and efficient. There is a risk that some of the costs associated with the Bill and the autumn Budget mean that those internal investment budgets will be squeezed. There is an opportunity, through some of the measures in the Bill, to improve productivity and improve security for people in the labour market, but we need to ensure that some of those other measures are not undermining those benefits.
Jim Bligh: I agree with that as well, and I endorse everything that Jamie just said. I think that the statutory sick pay clarifications are particularly helpful, and the clarity on parental leave should be helpful too. Flexibility is also important, and we need to ensure that the flexible working practices that are already widespread in our sector, as I know they are in other sectors as well, are protected and clear. I think there are concerns that potentially outweigh some of those benefits, which we are very keen to explore with the Government through the consultation periods.
Justin Madders
Q
Jim Bligh: I think we would accept that your manifesto had a pledge to remove it from two years and take it back down. We are aware, and we are grateful for the fact, that Government have moved it from day one up to nine months—I think that is really important. Pragmatically, we should look at a 12-month window instead, which worked well before and we think could work well again in future.
Jamie Cater: This depends on the detail of what comes in secondary legislation and on further consultation about exactly how that statutory probation period works, particularly the light-touch process for fair dismissal during the nine-month period.
From our perspective, the lighter touch the better. Businesses will want to know that they will have what they need in terms of following the correct process. I am thinking about ACAS having the capacity to update things like their disciplinary and grievance procedures. If and when there are claims going to an employment tribunal around unfair dismissal, the tribunal system must have the resources to deal with the potential uptick in the number of claims going through that system. So it is about how that fair dismissal process works following the consultation process, and then ACAS and the employment tribunal having the right resources to cope with that.
Steve Darling
Q
Jim Bligh: I want to speak specifically on that to flexible working. Most of our sector, as I said, offers flexible working. I think most employers do generally, and they really see the benefits of that for employee engagement. There are eight reasons at the moment why you might reject a flexible working request, most of which are based on business need, quality, performance and so on. The concern with the proposal in the Bill is that the burden has shifted to the employer to prove business need. It could be a real challenge for smaller businesses to have to evidence that point.
If you are a small business, as many of you will know from your constituents, you may well be running the business, the finances, the sales and the HR. This adds yet more process into what should be a fairly simple system—a system that we know works, through the stats. People will request flexible working and very often that will be accommodated. The concern for us is that small businesses will be unfairly penalised on that front in particular.
Jamie Cater: I agree. Coming back to the question of timing, it is helpful, as has already been mentioned, that there is a period where not only is there further consultation for organisations like ours to feed into the details and feed in the views of small businesses who make up around 90% of manufacturing, but a period for businesses to be able to see what is coming, plan for it and make preparations. That period between now and 2026 is really important.
Generally, there is a role for Government and organisations like ours, who represent those businesses but also provide support and advice to them, to work together around the communications and make sure that people are aware of the changes—what they mean for them in practice and for SMEs who might not have HR directors, HR departments and access to lots of specialist support. We can do what we can with Government to make sure that businesses really understand what is coming, how they can comply and how they can look at things like best practice to make sure they are ahead of the curve, if maybe they need to be.
Laurence Turner
Q
Jim Bligh: I would be happy to write to you with more details. We have not had direct feedback from members. Very often, the businesses that we work with in the UK, whether large or small, are the UK arm—they will operate their HR and legal policies and all the rest of it in and from the UK for the UK market.
To go back to something I said earlier, flexible labour markets are the hallmark of growing economies and of growing productive food and drink manufacturing sectors around the world. Global businesses would say that the UK has done really well on that front in recent years, so would not want to go any further backwards. I am happy to write to the Committee after this with more information about international examples.
Jamie Cater: Anecdotally, some concern has been expressed by our members about the competitiveness of the UK when it comes to manufacturing and the measures in the Bill. There is a concern from member companies that might be headquartered elsewhere or have significant operations in countries outside the UK that it is becoming harder, more expensive and more challenging to employ people in the UK.
The Government have done a lot of very welcome stuff in developing an industrial strategy that gives a lot more certainty and confidence for lots of businesses to invest generally in operations in the UK, but when we think about the total cost of the Bill and its administrative and regulatory impacts, there is a bit of concern that it is becoming less attractive to employ people in the UK versus elsewhere. We are increasingly having conversations with members about that.
Nick Timothy
Q
Jamie Cater: A lot of those up-front costs will have to go into training, in particular for HR managers, people managers and line managers, not just to ensure regulatory compliance but for employers that want to think about how their broader culture and organisational culture reflects the principles of the Bill. Lots will go into ensuring compliance and wider training of staff.
I mentioned earlier that there was concern that the Budget announcements on NICs—you mentioned the living wage and minimum wage as well—may make it more difficult to take the risk of employing people who might require additional training and, more broadly, that training budgets might get squeezed. It is already difficult and has been made challenging over recent years for our members to recruit the apprentices that they need; I am thinking about the apprenticeship levy and wider skills policy.
The challenge, I suppose, is that given that training budgets are getting squeezed the money effectively goes increasingly into training managers rather than necessarily into the young people who need the trade and technical skills to work on shop floors and production lines. The risk is that that could further weaken manufacturers’ already unfavourable position when it comes to investing in the technically skilled workforces of the future. That is where we see the real risk.
Jim Bligh: I agree with Jamie on all that and would add two more specific examples. I have mentioned the administration burden, which falls particularly on small businesses but really falls on them all. There are two examples of where that might come in. One is on the collective redundancy proposals for consultation, which remove the single establishment. If you are a large business with, say, four or five different sites and you are making more than 20 people redundant at one of those sites, the expectation will be, according to how we read the Bill, that you consult across all those sites.
Previous witnesses have called this a perpetual consultation, and that is a concern that we have as well —that it would be quite hard to manage. It is administratively really difficult to manage something like that across five different sites in a business. It could also lead to uncertainty and confusion among employees, who are being constantly consulted on restructuring and changes to other parts of the business in other local areas that have no impacts on them.
The other point on zero-hours contracts is that there is a risk that with a short reference period of 12 weeks, you end up not aligning with seasonal spikes in demand, so you end up paying people substantially more to do contracts that actually are not required, given that that does not reflect a full season. So our proposal, like others’, is for something more reflective and closer to the Ireland model. We would suggest a 26-week reference period; that covers most elements of seasonality in a business.
Chris Murray
Q
I think, Mr Cater, you said that a lot of your organisations already go beyond the provisions that are based in this law. Do you think that the legislation could lead to more of a level playing field, where the organisations that are already treating their staff well are unaffected, but others would have to change and improve—a kind of levelling up in how people’s staff are treated?
Jamie Cater: The important thing for levelling the playing field is the fair work agency, and making sure that we have an approach to enforcement of labour market policy and regulation that is properly resourced and does have that level playing field. I said right at the start that we support efforts to remove and address genuine exploitation and bad practice in the labour market. We have confidence that the fair work agency can begin to do that.
On our concerns about the Bill, we have talked a lot about statutory probation periods, but on guaranteed hours and so on, I think there is the potential to create a level playing field as long as we have the caveats that allow that genuine two-sided flexibility where it works in the interests of both the employee and the employer—retaining, for example, zero-hours contracts where they work for both parties, as in many instances they do, so that employers and employees can still benefit from those arrangements.
Some of our concerns around the right to guaranteed hours are in things like the definition of regular working hours, and the scope, which Jim has alluded to, of the reference period, where we think there is a risk of an unintended consequence because it captures a much broader range of flexible contracts than just literal zero-hours contracts or low-hours contracts. The example that we use in manufacturing is annualised hours contracts, where employees are guaranteed a minimum number of hours over a 12-month period. They have much more financial security in terms of pay, but those hours can still vary on a week-by-week or month-by-month basis. We would not consider that to be an example of, to use the words of the plan to make work pay, “exploitative zero-hours contracts”, but depending on where that 12-week reference period falls, and depending on how you define regular working hours and what the number of those hours might be, a form of flexible employment like that could end up being in scope when maybe it is not appropriate for it to be.
We want to ensure that there are no unintended consequences where arrangements like that, which provide financial security, stable employment plus flexibility for both parties—which should be retained—unintentionally fall within scope of the measures in the Bill, because that would mean that the Bill is not a level playing field; we would be in a situation where good options for both parties had effectively been taken off the table.
The Chair
We have a few seconds left.
Jim Bligh: For me, it is about enforcement and having a really strong, well-resourced enforcement agency. That means making sure that people are aware and can be supported to comply, and then that the enforcement, fines and so on come after that. That is about having a really well-enforced system. It is also about making sure that, on the other side, the employment tribunal system can cope. That is a really important part of enforcement. At the moment, at best, we have six-month employment tribunal delays; at worst, the delay is two years. That is an area of the system that we need to look at.
The Chair
Order. That brings us to the end of the allotted time for questions. I thank the two witnesses very much for their evidence.
Examination of Witnesses
Gemma Griffin MBE, Martyn Gray and Mick Lynch gave evidence.
The Chair
We will now hear oral evidence from Gemma Griffin, vice-president of global crewing for DFDS, Martyn Gray, director of organising for Nautilus International, and Mick Lynch, general secretary of the RMT. We have until 3.40 pm for this panel. Could the witnesses briefly introduce themselves for the record?
Gemma Griffin: Good afternoon. My name is Gemma Griffin. I am the vice-president and head of global crewing for DFDS, which is a pan-European, Mediterranean and African ferry and logistics organisation. I am based in Dover, where we operate a number of vessels between the UK and France.
Martyn Gray: I am Martyn Gray, the director of organising at Nautilus International. We are an international trade union and professional association representing 20,000 maritime professionals, primarily in the UK, the Netherlands and Switzerland.
Mick Lynch: Hello, I am Mick Lynch, general secretary of the RMT. We are a majority railway union, but the M is for the maritime sector. We organise the ratings, as opposed to Martyn’s officers—that is the way the world works. They are seafarers around the world, although they are less around the world these days, mainly in the ferries sector and in offshore energy, where we have crew service vessels too.
Greg Smith
Q
Gemma Griffin: Just to make it clear, we are talking about seafarers, so I am not here to represent the shore-based colleagues in our organisation. As it stands, I do not believe—my learned colleagues beside me have more experience with shore-based stuff—that our seafarers are currently covered by the Bill. My understanding is that there is an opportunity today to talk to your good selves about ways or mechanisms by which we may be able to enshrine something for seafarers, so that they can be afforded similar rights and opportunities as shore-based workers.
The key point in the Bill currently relates to fire and rehire. That is the sort of stuff that we as DFDS are very pleased that you will be banning, and I hope that it does actually refer to seafarers as well. For us, that is the biggest concern among the many others that we have, as an operator that is simply looking for a fair and level playing field. That is particularly the case when we talk about the straits of Dover, where we move from UK territorial waters straight into French territorial waters, with no international waters where one might use the normal ways of international seafaring legislation. We are really hoping that we can capture some of the things that we believe our seafarers are at risk of losing if we do not extend the legislation to them in whatever way we can.
Greg Smith
Q
Gemma Griffin: Our land-based staff are already covered.
Greg Smith
But on the question about the unintended consequences of elements of the Bill—
Gemma Griffin: Do I see any unintended consequences for our land-based employees?
Greg Smith
Yes.
Gemma Griffin: No, is the answer, because we are very much trying to create a situation in which our colleagues have rights and are treated fairly. The most important thing is that there is a level playing field and that whoever operates in the same space as us, the law applies to them. If we are all UK-based and have UK contracts, I imagine that would be the case.
To make it clear, my area of expertise is seafarers. I am not really involved on the UK side, so I do not want to overreach and maybe show my absolute ignorance in that respect. I apologise.
Greg Smith
Mr Gray?
Martyn Gray: To clarify, I am a director of organising for a trade union, so I will answer from the perspective of whether the legislation goes far enough, if that is okay.
Greg Smith
Sure.
Martyn Gray: No, is the very short answer to that. It needs to go further in terms of protections for those who work at sea. There are still monumental gaps in the protections that are afforded to seafarers compared with the protections afforded to land-based workers, even under existing employment legislation, and those gaps still need to be closed up.
This legislation comes some of the way to addressing some of the challenges we saw in the wake of the decision by P&O Ferries to terminate, without notice and without consideration, 786 people in March 2022, but it still does not go far enough to place the rights and protections of those who work at sea on parity with the rights and protections of those who work in shore-based roles and with shore-based employment contracts. More still needs to be done, and more can still be done, that will allow for greater protections to be delivered for those who work at sea. That is fully within the remit of this Parliament to legislate for.
Mick Lynch: From my point of view, I do not think there will be unintended consequences. I hope the intended consequences go far enough, but maybe we will have to have more legislation. We had lots of legislation against the unions under previous Governments, so hopefully we can get more legislation in favour of workers and their organisations.
The Bill does not go far enough, but we can improve it during this process. One of the things we would like to see is the power for trade unions to get redress—injunctive power—against people like P&O, which was never considered. We were told that if we took action against P&O—and there was a slim possibility of it—we could be liable for all its revenue loss for every day of trading, which could have been up to £15 million or £20 million a day. That is impossible for workers and their organisations to take forward.
You have to remember that P&O deliberately broke the law to get rid of its workforce and to undermine good shipping companies. We have employers such as P&O and Irish Ferries working out of our ports that undermine good businesses. I just caught the end of the previous session, when the witnesses hoped that there would be a lifting of all boats—to use that pun—to create a playing field that is fairer. It will never be completely level, but it would be fairer on all the good businesses in Britain—British businesses and those working in Britain—to make the pirates, which is what we consider P&O to be, come up to the standards of everyone else doing business here. Businesses should treat their workers well, treat the environment well and treat their passengers well. If you do all those things, you will run a successful business despite a marginal increase in overhead.
Let us not forget that people like P&O are dramatically resourced by the richest people on the globe. P&O deliberately took that step to exploit our laws—as poor as they were, left to us by previous Governments—because it knew it would get away with it. What P&O has got to be aware of in the future is that it will not get away with it without consequences for its business and reputation. Unfortunately, the previous Government allowed P&O to shed its skin and leave it behind, along with all those people it made unemployed, and carry on as if nothing had happened. That is a shame on all those people who allowed P&O to do that.
Greg Smith
Q
Mick Lynch: Not particularly. We make arrangements with our employers—we have private sector employers and public sector employers—through collective agreements. I imagine that we will always create decent arrangements with all our employers, whether they are road transport, rail or maritime, about appropriate release for our people, so that is not a thing that concerns us overly at this time.
Martyn Gray: I have no particular concerns about the way facility time seems to be structured. I think overall it will prove to be beneficial. I know there are some in the trade union movement who would like to see more on that, but again, I think that, with the maritime aspect and the practicalities of working around that, what is proposed in the Bill is helpful.
Gemma Griffin: There is not a problem from our perspective. We see both RMT and Nautilus as partners in our endeavours to do the right thing for our people, so we are fully supportive.
Justin Madders
Q
Mick Lynch: I am hoping it will be, Minister. I am hoping that bad employers will have to think twice about being badder again, in P&O’s terms. I have to emphasise that we were on good terms with P&O. We— both unions—were negotiating their new vessels. They deceived us deliberately. They took legal advice that, rather than negotiate with us the new-technology vessels that were coming in, they would rather sack all their people and break the law, and use security guards to get our people out.
We need good enforcement, a powerful agency that knows what it is doing and has a clear remit, and the right deterrents. I think that goes into company law in some ways. I do not think any of those people were worried about being disbarred as directors, as fit and proper persons and all the rest of it, and I do not think they were worried about their profits being affected by any fine they would get. As it happens, I do not think anything has happened to them at all. As a director, you have got to think about whether you are going to pay your VAT, whether you are going to pass on the national insurance, and whether you are going to pay the rates and all the bills from your suppliers. You should be thinking very seriously about the consequences for you in employment law, and other laws related to employment.
But as trade unions—as representatives of the workers —we have got to have the power to intervene where we know employers are breaking the law. That is a real shortcoming. The power is all with the employers. They can injunct me personally. They can injunct my trade union. They can close us down for making clerical errors on ballots—just misnaming or misbranding the grades in a dispute—and they will do it if they get any chance. We have no power to injunct them on behalf of our members, it seems. I think that needs to be considered. The fair work agency and its enforcement powers should be at the level of injunction to stop these rogues getting away with it in the future.
Martyn Gray: I agree with that. I would add that what is quite helpful is the Bill’s removal of vessels being treated as individual establishments. That is particularly helpful when it comes to redundancy consultations, and what we saw with previous case law under previous legislation. In the case of Seahorse Maritime v. Nautilus International it was determined that each individual vessel had to be treated as a single establishment. That removed the right for operators with significant GB links anyway—in those particular circumstances—to circumvent the need to consult with recognised trade unions on what amounted to mass redundancies. There were more than 20 people being made redundant from that particular employer, but they were able to circumvent that, because each individual vessel was treated as a single establishment. That is a really helpful feature of the Bill, and something that I think should be celebrated and praised. It is going to be very helpful in our being able to defend our members’ rights and hold companies to account for their responsibilities when going through a redundancy process or collective consultation on business restructuring in organisations.
Linking that point to P&O Ferries, it would not have made a difference there; each of the P&O Ferries establishments was more than 20, so there would have been a requirement for the collective consultation anyway. Indeed, two of the P&O Ferries operations would have been more than 100 people, so they would have required slightly lengthier consultation periods under the legislation. However, this Bill will be helpful in a wider maritime context, where there are smaller numbers of seafarers engaged, in being able to defend their rights and interests and really hold a company to account over the need to make those redundancies. The change to fire and rehire is quite helpful as well, with businesses needing to demonstrate a clear and identifiable need instead of seemingly being able to operate on a whim.
Gemma Griffin: I do not disagree with any of that. Talking about significant ties to the UK, this is something that you have to keep in your mind. Often in shipping there are myriad different employers based outside the UK—the flag of the vessel can be EU, in many cases, or UK or whatever. When you look at the Dover straits, yes, DFDS has both UK and French flagged vessels, but our vessels are doing 42 sailings a day in and out of Dover port, and up to 54 in the summertime. Other operators are doing more or less the same. If that is not a clear link to the UK, I would like to know what is. It is not the same as one sailing every day out of a port in the North sea.
As an operator that holds our seafarers in good stead as the absolute backbone of our organisation, I would like to be able to see a way of capturing that in UK law, so that we will not find yet another loophole, with the flag state being responsible but doing nothing and the port state, in this case the UK, wanting to do something but not capable of doing it. That sounded like a bit of a riddle—I do apologise.
Justin Madders
Q
Let me pick up on something you said earlier, Mick, though others can answer as well if they want. You talked about injunctive relief as a potential solution to the threat of fire and rehire. We are consulting at the moment on measures including interim relief as a potential action that unions can take on behalf of their members. Can you say a little bit about why you would prefer injunctive relief, rather than interim relief?
Mick Lynch: Interim relief can take time, and I am not convinced that tribunals will have the power and the kudos to achieve it. I am not a lawyer, as you know, Minister, but I want the ability for unions to make an intervention on behalf of workers. It would have to be based on law and something that the company has done wrong, but it seems to me that injunctions are immediate and carry the weight of a higher court. When we get injuncted under the anti-trade union laws, it is at the High Court and it is immediate, and there is no doubt about the effect of that injunction. If you want to defy it, it is on your organisation’s head, whether that is a trade union or a multinational company.
If it is not called injunctive relief, I do not mind—I do not mind whatever way the Bill comes out—as long as it has the power of immediacy and enforceability through proper channels. That is what we want to see. We do not just want a slap on the wrist that the company factors in; if you have added another £10,000 to the fine, but they are sacking 2,000 people, they do not really care. What we want is for them to be forced to stop the activity, subject to the full force of the law, not just a minor blip on their spreadsheet. Whether it is called an injunction or interim relief, I do not mind. If the tribunals are beefed up so that they can do that, that is fine, because that can be a good channel as well. I am open to suggestions on that, but I hope we get the power to do it.
Justin Madders
Does anyone else want to respond?
Martyn Gray: We have spoken about unintended consequences, but an intended consequence of this Bill is addressing an imbalance between the rights of employers and of employees and workers in the UK. As a trade union, we are subject to much higher bars and thresholds when it comes to being prevented from enforcing the rights of our members or the rights of workers, and from standing up for what is right, what is appropriate and what is fair. It would be good to have a mechanism where an employer can be held to the same scrutiny, can be held to account in the same way and with the same preventive immediacy, without the consequences that we would have to face—because employers do not face the consequences if that injunction is granted and it then turns out not to be fair or appropriate, or if it is done on appeal; that is just dealt with.
This measure is about fairness and being appropriate. It is right that unions can make interventions on behalf of the members they represent, and can do so without needing to worry about having to put significant amounts of members’ money at risk. Should that then turn out to be something that needs to be resolved at a later date, unions tend not to pick those particular fights and arguments without having first looked very carefully at what is within the realms of the law and what is not. It would be extremely unusual that that mechanism would be abused, should it be granted. It is really important to ensure that the intended consequences of placing the rights of workers and of employers, and of trying to increase the rights of workers to a point at which they can address some of the imbalance, are supportive here. That would be a big help in being able to defend the rights of workers.
Gemma Griffin: I agree. The very nature of the thing is that employers and organisations are larger than employees. If employees are not able to collect themselves to a sum total where their voices can be heard, then they have no chance. There is something fundamentally wrong in this day and age that a union agreement can just be put to one side and actions taken—just completely and utterly taking the voice away from employees. When we look at how the United Kingdom operates on an international level, we are quite happy to sit with the unions and employers to negotiate at International Labour Organisation level and International Maritime Organisation level and so on—but when we come home into our own shores, those rules do not apply. The unions are not the enemy of our organisations.
It is a really poor message that we are sending out: that organisations that do the right thing and, like DFDS, recognise employees’ rights are disadvantaged, because before we sell a single ticket to a passenger, we are already hugely more costly than our operators in the same field. But we make the choice to start a race to the top instead of joining that race to the bottom.
Steve Darling
Q
Mick Lynch: If it makes us come to the table and some employers—employer groups, even—feel that they are not exempted from collective arrangements, that will be better. Some people will not like this, but in the ’70s, 82% of the workforce were covered by collective bargaining; it is now 20%. There are arguments about that and I do not want to relive the last 40 or 50 years, but that figure is clearly too low. The ILO, the International Monetary Fund and all sorts of bodies are saying that the lack of collective arrangements is forcing this race to the bottom.
But it is not just workers who get pushed to the bottom; these businesses get pushed to the bottom as well. People are now bidding on contractual margins that are completely unrealistic. I hear it from some of the clients I go into; when I am talking about contract cleaners or contract caterers—all sorts of people—they know that the people bidding for the business cannot make even a reasonable margin of maybe 2%. In a business, you would be hoping to get 5%, 10% or maybe even better, but people know that they are underbidding other people, because that is the poor state of employment law. But it is also because we have not got sectoral collective bargaining. You have had previous speakers here from the Engineering Employers’ Federation, as it used to be called—it used to run a massive collectively bargained sector in this industry. If we had that, we would have better arrangements all round and people would not be allowed to go rogue. I am hoping that there will be some provision for that in the law, so that all employers will know—whether I am working on a construction site, or the high seas, or running a window cleaning business—I cannot go below a certain level, and there will be no sweatshops or mass exploitation in the future. The trade unions must have a say in that. They must have a say even in non-union sites. That is what we used to get: the big firms used to set the trends and the perspective of where an industry should be, and many smaller businesses voluntarily followed the union agreement. They were not just union agreements but industry agreements. We have to get back to some idea of that, that the industry stands for this. But many of those employers’ federations have broken up now, and they do not even feel they need to talk to the trade unions.
I hope this Bill brings a lot of voluntary recognition, so that in the future many workers—certainly more than 50%—are covered by collective arrangements in one form or another. By the way, the EU wants 80%, for those of you still hankering after that. That is the new measure.
Martyn Gray: I believe it was in the early ’90s that the National Maritime Board last met, which used to undertake sectoral collective bargaining between the shipping industry, maritime trade unions—which then would have been both of our predecessor organisations—and the UK Chamber of Shipping, which would establish the rates of pay for both unions to then take away to individual employers and build upon. The situation exists elsewhere in the world. In the Netherlands, my colleagues are negotiating an agreement with the merchant navy equivalent in the Netherlands for commercial shipping. They are negotiating that as we speak with shipowner representatives and seafarer representatives, and they are setting what that standard looks like in the Netherlands for the minimum increase, and then we work with other employers to build on that with what we can do. It sets the minimum standard.
Envisioning what sits within this, sectoral collective bargaining will be key. We see the start of that with the fair pay agreements as they have been coming through, but sectoral collective bargaining will really help deliver the biggest gains and the biggest partnership between unions and between employers, as it should work—and does in many instances—in the maritime context. It will be crucial for solving one of the biggest challenges the UK faces at the moment—the productivity crisis. Actually working together to solve that will be done not only through sectoral collective bargaining, but by talking about how industry works. Unions, the workforce and experts in each industry should be setting the standard of what that looks like and working together to improve it and generate those productivity gains. Everybody benefits when productivity increases: workers have better pay and conditions, and employers make a profit, and have better operations and better certainty. It is win-win.
Gemma Griffin: We operate in a number of countries with sectoral agreements like this—France, Denmark, and the Netherlands—and it does make a level playing field for all competitors. You know there is a rate of pay that is fair, and that everybody else is paying, and you can focus on just doing business.
Anneliese Midgley
Q
“In the fire and rehire proposals, there is a risk that we might be making it easier to make people redundant than to change contracts”.
Do you agree?
Mick Lynch: No, I do not agree with that at all. Defending fire and rehire, or fire and replace as P&O were doing, is defending the immoral. Maybe the CBI knows a thing or two about immoral behaviour—I do not know why they would be standing up against that. We negotiate contract changes all the time, and the great problem with P&O is that they deceived us. They told us that they were going to negotiate change for new technology, new vessels and new ways of working. There probably would have been some job losses, and we would have dealt with that through normal processes. They decided to sabotage that because it was quicker, and they wanted to get imported foreign labour on those vessels at £4 and £5 an hour, rather than a collective agreement. I do not see good employers struggling with that. I do not see decent businesses struggling with negotiating contract changes, staffing level changes or new technology agreements, which we will all need right across business. We will talk to DFDS about that, hopefully in the near future, as well as Stena and all the other good shipping companies.
We are talking about it on the railway. Every trade unionist who comes in front of any of you will say that we are constantly negotiating change. At the end of the second world war, my union had half a million members, while the railway employed 1.2 million people—that has obviously changed. We had sectoral collective bargaining all through that, and most employers had never heard of fire and rehire. You can retool an economy inside collective arrangements, and our European partners have shown us that. If you refit your economy based on consensus, change and looking after people who have to leave, you will have a more successful business. If you just guillotine the whole process, your reputation will be in ruins. I do not accept the CBI’s position. It was probably against the health and safety at work Act and the sex equality Act. All those Acts brought impacts on business, and there is no doubt that the Factories Act was a bit burdensome for the mill owners and mining companies of this country. Everything is difficult for a business, but you have to live inside the regulations in a democracy, and that is what it should be about.
Martyn Gray: I suppose to some extent it is the difference between doing what is easy and what is right. It is disappointing that there is an attitude among some elements of business in this country to opt for what is easy, as opposed to doing what is right.
Negotiating with trade unions is fairly straightforward. To use the example of P&O Ferries in 2020, at the height of the covid pandemic, we negotiated redundancies as it reduced its operations and went through that process. Mr Hebblethwaite did not want to get back around the table with us because we held P&O Ferries to account over its business proposals in 2020, and we ensured that the redundancies it made were absolutely necessary and were to rightsize the business. We fed back on all its proposals and we engaged very heavily in that process in 2020, when we went through two rounds of redundancies with that particular employer. P&O Ferries then said that we could not engage with what it was proposing, because it knew the proposals were wrong and morally reprehensible. It wiped out a long-standing, collectively bargained workforce that offered quality jobs, as well as employment and training opportunities, across many deprived coastal communities. The loss of those jobs is still being felt in Kingston upon Hull, Birkenhead, Liverpool and Dover. P&O Ferries was able to say, “Actually, because what we are suggesting is so wrong, we have just decided to push ahead and do it anyway, knowing that there will be limited repercussions,” and that is to some extent why we are here talking about it.
That highlighted just how easy it was for businesses to make the wrong decisions. It is shocking and abysmal, but unfortunately not surprising, that the CBI did not recognise that those easy options are what are putting us in this position, where regulation needs to be developed. I disagree with what the CBI said, and I disagree that this Bill would make it the preferred option to go through a redundancy, or fire and rehire, rather than to engage with trade unions. When negotiating with trade unions, we understand the business operations and we can help, and we have helped.
I have been engaged in countless redundancy conversations with employers in the maritime industry where we have been able to look at things differently. We have been able to support what those businesses are going through by talking about the number of redundancies that potentially need to be made, and we have supported them in building jobs back in, in their plans for growth and in their changes to terms and conditions. That has protected jobs, and we have negotiated our way through that for the betterment of the business and the people that it employs. For the CBI and some business elements to take the approach that it is easier to fire and rehire, instead of negotiating, is really short-sighted and problematic for the future.
The Chair
I am going to try to get in three more Members in five minutes, but would you like to respond to that, Gemma?
Gemma Griffin: Just to say that jobs either exist or they do not. It is very black and white for me. Fire and rehire is always a bit of a horror story, particularly when you look long term at the skills and intelligence that the people have on your operation on how to work. For me there is always another solution. That is my point of view.
Chris Law (Dundee Central) (SNP)
Q
Mick Lynch: I think we have to be very careful, because companies are very good at creating entities that are subsidiaries of subsidiaries that are based in other jurisdictions, with all sorts of measures that are far too complicated for a simple soul like me. I would like the reporting of a business to be very straightforward. Everyone will know whether a business is failing, and fire and rehire for a failing business is not going to work in many instances. Certainly on the onshore side, it is likely that the business will fold before such measures can be brought. And of course it is very difficult to do what P&O did because it relies on bringing people from overseas to replace people.
Grant Shapps, last year, or the year before, said at one stage that he was going to replace all the railway workers in Britain, so there was actually a Government Minister promoting fire and rehire during our dispute. So I think we have to be very careful not to allow loopholes. I know that accountants and auditors are very good at creating loopholes, but as far as possible it has got to be plain for the layperson to see whether a business is struggling and has genuine business needs to get any hint of an exemption, and they should be very rare indeed if they are to exist.
Martyn Gray: Quite simply, if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option. If we are looking at a scenario where directors are happy to say under companies legislation that it is a going concern but they need to do a complete restructure, strip away the employment rights, strip away the benefits, strip away working conditions—things that have been long fought over for many years of negotiation or long thought over for many years of discussions: all the benefits that sit within employment contracts—and strip them back to a minimum, that business is not in a position where it can consider itself a going concern. So I would set a really high threshold and then allow for scrutiny from the relevant bodies. If it turns out that that could have been avoided—fire and rehire in those scenarios—it is clear that those directors should not have gone through that and there must be consequences. So there is probably room for improvement, some tweaks and changes, but I would put it quite simply.
Gemma Griffin: A classic example is that during covid, overnight 80% of our business was gone and we had vessels that were worth a lot of money and a lot of crew. There were the inevitable discussions on redundancies or just stopping and what was going to happen. We made a deal with Nautilus and RMT that we would work on this together, because we were hoping things would come back. It was only in year two that we really had some sense that things would come back. But one of the things that we did was collectively go out to our workforce and say, “It is these jobs versus how about if we work together and we do a pay freeze for the two years and we just take that pain together so that we can have the jobs at the end of it.” And we did that together. If something is going to go bust, it is going to go bust. But if there was a way of keeping the money in a better way—suspending the training and non-essential stuff—we made operational changes. It is too easy to leave it in as a loophole. That loophole is like you are just taking the profits out of the pockets of your people. So I think we need to be careful there.
Mr Peter Bedford (Mid Leicestershire) (Con)
Q
Mick Lynch: Well, we would like it very straightforward that there is going to be provision—an amendment—for sectoral collective bargaining. If there is proper sectoral collective bargaining across the economy, many of the issues that people are dealing with as individuals—individual rights, which they have to enforce for themselves, in many cases—will be dealt with. There is a lot of discussion about probation. We have probation agreements with every employer that we deal with, and we do not defend people who are incompetent or incapable. We have a process, and if we have sectoral collective bargaining, all those things will be covered.
The Chair
Order. I am sorry, but that brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank all our witnesses for their evidence.
Examination of Witnesses
Paul Nowak, Maggi Ferncombe, Dave Moxham and Hannah Reed gave evidence.
The Chair
We will now hear oral evidence from Paul Nowak, general secretary of the TUC; Maggi Ferncombe, director of political strategy and transformation for Unison; Dave Moxham, deputy general secretary of the STUC; and Hannah Reed, co-ordinator of constitutional affairs for Unite. We have until 4.30 pm for this panel. I ask the witnesses to introduce themselves briefly for the record.
Paul Nowak: My name is Paul Nowak, and I am the general secretary of the TUC. We represent 48 unions and 5.3 million workers right across the economy in the UK.
Maggi Ferncombe: I am Maggi Ferncombe, director of political strategy and transformation for Unison. Unison is a public sector union representing 1.3 million members.
Dave Moxham: My name is Dave Moxham, and I am deputy general secretary at the STUC, which is the independent but sister organisation to the TUC in Scotland.
Hannah Reed: I am Hannah Reed, and I am co-ordinator of constitutional affairs at Unite. Unite has a membership of well over 1 million members. We represent members across a wide range of sectors, including manufacturing, food and transport, and services including health, local authorities and hospitality.
Greg Smith
Q
Paul Nowak: I think this will be the biggest upgrade to workers’ and trade union rights in a generation. It is very likely that we will see increased unionisation as a result of the Bill, and I think that would be a good thing. Bodies as disparate as the International Monetary Fund and the OECD have talked about the benefits of unions and collective bargaining in modern economies—benefits in terms of improved productivity and business performance, but also benefits for workers in terms of increased pay, better access to things like skills and more equal and fair workplaces. I do not think there is a direct link; you do not pass a piece of legislation and trade union membership and collective bargaining go up, but the repeal of the Trade Union Act 2016 and the repeal of the minimum service level legislation—the strikes Act—and other measures in the Bill will help unions to organise. That will be good for employees and good for workers, but good for employers and good for the UK economy as well.
Greg Smith
Q
Paul Nowak: It is important to put that £5 billion into a figure; that is something like 0.4% of the overall wage bill. The TUC has published research today, again involving very moderate estimates. In the impact assessment, the Government talked about potential benefits to the economy from this Bill, in terms of things like improved staff retention, improved productivity and bringing back into work people who are currently outside the labour market—there are now 900,000 or so less people in the labour market than there were before the pandemic. At a very moderate estimate, we believe that that will generate £13 billion for the UK economy.
For a small number of employers, there will undoubtedly be increased costs. If you do not pay sick pay from day one at the moment, or if you use zero-hours contracts, it may well cost you more. Those benefits will transfer directly to low-paid insecure workers. I think it is really important to make the point that most employers do not use zero-hours contracts. Most workers in this country are entitled to sick pay from day one. This Bill levels the playing field for those good employers who, at the moment, are in danger of being undercut by those who play more fast and loose with the livelihoods of their workforces.
Maggi Ferncombe: From Unison’s perspective, the Bill means that in certain sectors, workers will no longer be dispensable. There are some really perilous conditions out there for some of our workers, and we all know that valued workers who are paid a good salary and have better security at work are more productive. In our sector, we find that the public service is then better for service users, it is better for society and it will be better for the economy.
Dave Moxham: I will be brief. We have a productivity problem in Scotland and across the UK, and that is largely because workers are not, either collectively or individually, being sufficiently engaged or consulted, and they are not being sufficiently used to drive productivity and success within their own workplaces. Trade unionism, in my experience, helps with that. We are day and daily inundated with problems in workplaces that are not unionised, which have to be dealt with in other ways. The employment tribunal is full of these situations. Our experience, and it is long held, is that trade-unionised workplaces actually avoid those problems. I would say that we are fortunate in Scotland—it is not perfect—to already have a Government who recognise that collective bargaining and fair work are drivers for success, and I very much hope that this Bill will add strength to that for us and see that approach reflected across the whole of the UK.
Hannah Reed: Thank you very much for the question. We represent working people—that is what trade unions are. Overall, we represent nearly 7 million working people within this country. Being part of a trade union brings clear benefits for working people. It provides them with better legal representation and representation in the workplace to resolve issues at work. It will often provide them with better access to training, and it will provide them with better career opportunities.
We very much hope that this Bill will encourage and enable more people to make the positive choice of joining a trade union, and that could be done by providing a right of access to millions of workers. Regrettably, the majority of workers in this country do not have the option at the moment to meet with a trade union in the workplace. We hope that the Bill, through measures on the fair pay agreement, the new negotiating arrangements on school support staff and the changes to statutory recognition, will enable more workers to have a say over their pay terms and conditions. We also hope that, through the introduction of statutory equality rights, the Bill will ensure that issues such as harassment, bullying, sex discrimination and unequal pay in the workplace can be properly addressed in this country to ensure that all companies meet those standards. We know there are good companies that meet good standards in the workplace, but we would like to see more companies and organisations meeting those standards, and we very much hope that this Bill is a starting point for ensuring that everyone has a decent working life.
Greg Smith
Q
Hannah Reed: There are already statutory definitions in legislation of who is a worker. It will generally be workers—in some instances, it will be employees—who will benefit from the range of rights in this legislation. Our trade unions are also looking forward to working with the Government on their forthcoming review of employment status, the purpose of which may well be to look at extending protections for self-employed workers, such as freelancers and others.
Unite represents a lot of self-employed workers in the construction industry who are not self-employed by choice, and they have fewer rights as a result. We would like workers who face a higher risk of injury in the workplace and who often lose out on pay and conditions, as well as freelancers and others, to have full employment rights. We are working initially from the definitions of “worker” and “employee” that are set out in law, but we very much look forward to the Government bringing forward measures to extend protections to all working people.
Greg Smith
Q
Paul Nowak: Can I make a point first about the symbiotic nature of the relationship between Labour and the unions? We certainly have a shared history and shared values, and in some cases we have unions that are affiliated to the Labour party. The TUC represents those 5.3 million workers regardless of who is in government, and it does not have a formal relationship with the Labour party. Our job as trade unionists is always to want more and better for working people. I think it is important to recognise that this will be the biggest upgrade to workers’ rights in decades—I was going to say in a generation, but it is more than that. It will directly benefit millions of working people.
I came in at the end of the last panel, and Mick was talking about sectoral collective bargaining. The Government have indicated that the first fair pay agreement will be in social care. We would love to see that approach—those fair pay agreements—rolled out to other sectors of the economy. That is a point that we will make going forward.
It would be churlish not to accept that the Bill is a big upgrade to workers’ rights and to union rights. This will be the first time that a Government have repealed anti-union legislation in my 35 years as a union activist, and I think it is really important that they do. If we take the minimum service levels legislation as an example, we always warned that it would be unworkable. It was red-flagged by the Regulatory Policy Committee and by the Government’s own impact assessment when it was introduced, and not a single employer has ever used the legislation. We will be positive; there will always be more that we would like any Government to do on behalf of working people, but this is a really important piece of legislation.
Maggi Ferncombe: I agree. To be frank, as the largest trade union in the country, the political stripe of the Government does not matter to us; we will obviously do what we can to improve public services and the terms and conditions and salaries of workers in those public services. You asked what more we would want, but, to be honest with you, we want an extension of what is already in the Bill: the opportunity to have some sort of legal mechanism for collective claims. Individual workers, unions when they are involved, employers and employment tribunals spend hundreds and hundreds of hours trying to deal with individual claims from individual workers. An unintended consequence would be the savings to employers from not having to deal with individual claims that take years to go through tribunals. If there was an opportunity to have a mechanism to deal with it collectively, it would save everyone time and money, including employers.
Dave Moxham: We have a disproportionate number of zero-hours contracts in Scotland, probably because we have proportionally more small businesses as part of the UK economy. We welcome the moves in the Bill to address that. I heard the evidence given by the last panel, and from our perspective the majority of employers do not use them but they have an intensive impact. For the last 10 years, the STUC has run a campaign called BetterThanZero, which goes out daily and talks to these workers, who are predominantly, but far from all, young workers. The impact on their lives—ergo the impact on the economy because of their lack of stability, certainty and security—has a far wider effect than on just the individual and cannot be overestimated. When we look at the provisions currently in the Bill, we certainly believe that what defines a short-hours contract and some of the other things that have yet to be decided need to be quite strong. If you go on to the internet, you can already see discussions among employers about how they will circumvent the proposals, so that will be one area where we will be looking for strength.
Hannah Reed: There is an awful lot to welcome in the Bill, and I will not take up the Committee’s time by listing it. We can submit evidence to you on equality rights, trade union rights and so on.
Like all Committee members, I am sure, we are keen to ensure that the Bill comes out as watertight legislation that makes a real difference to people’s rights. There are some elements of the Bill where we would want to continue working with you as a Committee and with the Government to tighten up what we consider to be potential loopholes, and I will briefly name three areas.
The first is the provisions on fire and rehire. Unite’s concerns are that some of the uses of heavy-handed tactics by employers that we saw during the pandemic and since could still be lawful under this Bill. We are concerned that employers may be able to justify fire and rehire in certain circumstances, and our view is that there needs to be a total ban. We are not confident that the employment tribunals will look behind the corporate veil or question an employer’s arguments for why they needed to use fire and rehire tactics, so we do not think it goes far enough. Importantly, there is nothing in the Bill at the present time that stops the employer from sacking the workforce. While we welcome the Government’s consultation on interim relief, we, like previous participants. would like to see some measures before that that stop the employer and require them to open their books to demonstrate to forensic accountants that changes are needed, and to provide a genuine opportunity for negotiation with trade unions. We are very equipped; we know what needs to be done if changes are needed.
Secondly, we would like to see further measures in the Bill to extend collective bargaining. Very briefly, we recognise that there are important measures on statutory recognition in the Bill, but we would like the Government to consider going further, particularly to ensure that laws prevent the abusive practices seen in the recent Amazon campaign. We would also like faster routes to recognition. Workers often have to wait for six months and are repeatedly asked, “Do you want statutory recognition?” They repeatedly say, “Yes, we want statutory recognition,” but employers are given time to fight against the workers’ will. We think there should be a faster route to automatic recognition.
The last point I would raise is on access. I have already talked about the benefits of working people having the opportunity to meet with trade unions in the workplace, to tackle discrimination and press for better pay and conditions through negotiation. We would like to ask the Government to look at the access measures, to see if there are ways of having a default or free-standing right of access so working people have a genuine right to democracy and representation at work.
Justin Madders
Q
Paul Nowak: The research was based on a very modest estimate, taken from the Government’s own suggestions that there would be improvements on things like productivity, reducing absenteeism and bringing back into the workforce people who currently find it difficult to access the workforce, for example because they have caring responsibilities or a need to balance work and family life. We assumed a 1% uptick across those measures —as I say, a very modest assessment—which meant £13 billion-worth of positive impact on the UK economy.
In many ways, this just reflects what already happens in unionised workplaces. One of the things I do as the general secretary of the TUC is to visit places up and down the country, large and small. Some of the most successful and most productive employers in this country —whether it is Airbus, Jaguar Land Rover, Rolls-Royce or, indeed, our largest private sector retailer—are employers who have close working relationships with trade unions and treat their staff with respect.
This legislation is really important, Minister, because it does what it says on the tin. It is about making work pay, and for far too many people in this country, work does not pay at the moment. We have a problem with low-paid, insecure employment, with over a million people on zero-hours contracts. Overwhelmingly, when you ask those individuals if they would like the right to guaranteed hours, poll after poll shows that 80%-plus say they would. When you play that out in practice—I know that the Work Foundation did some work with Wetherspoons. When Wetherspoons offered their staff a choice between zero hours and guaranteed hours, 99% of their staff took the guaranteed hours. That is good for those workers, but it is also good for employers, because workers who are securely employed, who feel good about their work and who are supported at work are more productive, and employers are more likely to invest in them. I genuinely believe that this legislation is win-win—it is a win for employees and workers but a win for employers as well, and it is good for the UK economy overall.
Justin Madders
Q
Maggi Ferncombe: Let us take a sector within Unison such as the care sector, where you have low-paid workers who, some of whom are on zero-hours contracts or working away from home, potentially for 10 or 12 hours a day, but only getting paid for five of those. The amount of money they put into their local economy will be a lot smaller than if you had a fair pay agreement with proper regulation, where people were paid adequate salaries and had better opportunities to train.
We must bear in mind that the care sector has one of the largest vacancy rates, with 130,000 vacancies at the moment. That is simply because care workers are either taking on additional part-time jobs in the evening or morning—I do not know when they have time—or taking on jobs in supermarkets or call centres because they can get paid far more. If they were paid a better salary, they would put more money into their local economy and would pay more tax. Ultimately, that would be the benefit for the economy from that particular sector. Those 130,000 vacancies are a growing problem; we are an ageing population, and having a properly remunerated workforce in social care will bring nothing but benefits. It is very hard to quantify how much that will be; it all depends on what the fair pay agreement comes out with.
Dave Moxham: I will just quote a number of different quantifications. I know that small businesses, particularly in hospitality, have been a large focus for this Bill and more generally. The estimates made by hospitality businesses of the cost of staff turnover are anything from £5,000 an employee to £15,000 an employee, although none of those are my estimates. Then consider that it is an industry with incredibly high turnover—we are talking a 30%-plus turnover. I have not done the sums, because there are various estimates, but you can work out how a relative improvement in retention would impact the hospitality sector. Some of the measures here that we believe would encourage lower-paid hospitality members to stay in the workplace would have an incredible impact.
Hannah Reed: We do hope that the Bill will lead to an expansion in collective bargaining, because it is the tried and tested method and internationally recognised as the best way of improving pay and conditions and reducing staff turnover. We know that there is a skills shortage in this country; reducing turnover and investing in skills, which is what trade unions work with employers to do, will have significant economic benefits, including improved productivity.
I must confess that today I quickly read the Regulatory Policy Committee report, which raised questions about whether the measures in the Bill are justified. Speaking as a trade unionist who speaks on a daily basis to working people, there is not a single measure in the Bill that is not needed. One of the risks with impact assessments carried out by the Government—we hope that the Government will look at this—is that often they capture quantitative data but do not look at the qualitative data. What is the actual experience of working people in the workplace? Where is the harm and what needs to be addressed? We know that in hospitality, for example, one of the big issues our members face is a lack of security or certainty over hours. The costs of childcare for hospitality workers are huge, and the inability to pay rents or even dream of saving for a mortgage is a very significant problem.
There are also real problems of sexual harassment. One of the things that really surprised me was that the RPC said that it could not see a justification for further regulation of third-party harassment. To give some statistics, the NHS staff survey this year showed that 8.67% of NHS staff experience some form of harassment by either the public or patients every year. We know that there are major staff shortages in the NHS. Exposing our workforce to harassment by third parties is a major problem.
In hospitality, it is far more rife. Unite did our own survey that showed that 89% of our members reported being subject to some form of sexual harassment in the last year. Many of them—56%—said that that was from customers, and at least half our members said that they were considering leaving the workplace because of the sexual harassment they have experienced. There are many rights in the Bill that we believe will help to deliver better employment and support businesses to become more productive and more profitable.
Justin Madders
Q
Paul Nowak: I think it is a misplaced concern. Union recognition ballots are the only democratic test that we have where we would expect not only to get simple majorities, but to have 40% of those who are eligible to vote voting in favour. I think it puts a barrier in place towards unionisation. We would not use that democratic test in a parliamentary election, a local council election or the election of a leader of a political party, and it seems perverse to put that obligation on unions and workplaces.
Unions derive their credibility and their ability to represent people from being genuinely representative of the workforce, and it is in nobody’s interest to have a union that only represents a minority of the workforce. Unions are always striving to represent the majority of the workforce in workplaces, and I think we do that and prove that very effectively in workplace after workplace.
At the moment, the system is effectively gamed towards hostile employers to frustrate the will of people to join a union. We effectively count abstentions as no votes. Again, that is not a democratic test that we would put up anywhere else. Taken alongside the other provisions in the Bill, including the union right to access the workplace, the simplification of the recognition procedure is really important in representing the democratic view of the workforce.
Going back to a previous point, I think it is important to say this, Minister. No piece of legislation requires people to join a union or requires a workforce to vote for union recognition. All those decisions rest with the workers themselves. That is a really important underpinning point for the way we do trade unionism in this country. With this change in legislation, we get a level playing field for unions.
Justin Madders
Does anyone else want to come back on that one?
Maggi Ferncombe: Can I just make a point? It is almost like unions are the enemy, when you hear certain businesses talk. Unions have a common goal with every employer where we organise, and that is for the organisation to do well, because that means that the staff and the workers will do well as well. Especially in the sectors that I represent, we have an absolute common goal with all the public sector bodies. We want good-quality public services. Working with trade unions is the best way to achieve that, and good employers know that. Good employers know that working with us will save them time, money and energy. They will have a workforce that are much happier in what they are doing, and they will be more productive, with less sick days. The statistics are all around. Putting additional barriers in place where workers cannot undertake the fundamental right of joining a trade union—I think it is a false barrier, to be perfectly honest with you, because if workers really want to join, they will.
Dave Moxham: Very briefly on the access issue, individual workers should have the right to say yes or no, but in order to exercise their right, they need to know the possibility. The possibility comes from very simple, but hopefully very straightforward and not bureaucratic, arrangements that expect an employer once in a while to provide access for a union to speak to those workers. It should be really simple. You do not get to exercise the right to say yes or no if you do not know in the first place.
Hannah Reed: I have one quick comment. I totally agree with the points on access. Trying to think about it from an employer’s perspective, if a substantial number of workers within your workplace are saying, “We want trade union recognition,” ignoring that—saying no to those requests—must have an impact on staff morale.
Another point we would add is that our concern is that the statutory recognition provisions are not balanced. All the provisions at present tend to be weighted too much towards the employer, because the employer can delay the process, providing them with more and more time during statutory recognition to invest resources and put pressure on workers not to vote for recognition.
We welcome the consultation from the Government, and we want to work with them to strengthen the provisions to provide much earlier access, so that it becomes the norm in the workplace that the trade union is present and that workers can ask questions, but also that there are stronger unfair practice provisions. I know that we look at international practices, and I noticed in the States just last week that the National Labour Relations Board actually made it unlawful for employers to hold meetings with staff for the purpose of trying to convince them not to support recognition.
Could you imagine a law within the UK—we hope we could get to this point—where there is actually a level playing field, and where employers cannot create a hostile environment and say to workers, “You cannot have a democratic right. You cannot have your choice to have a say”? That is what collective bargaining is: giving workers a say over their own pay and their own terms and conditions. That is not something that is foreign; it is just about empowering workers to have their voices heard by their employers.
The Chair
Thank you. I would just say to the panel that we have lots of Members who want to ask questions, so please be brief, and do not necessarily repeat what everyone else has said. If you want to put in written evidence, you can do that too. I call the Liberal Democrat spokesperson, Steve Darling.
Steve Darling
Q
Paul Nowak: Absolutely, Mr Darling. I think the evidence is clear from research undertaken by, for example, the Joseph Rowntree Foundation that employers tend to invest less in staff who are insecure and low paid. What we want to do is create a situation where employers are investing in staff. We have a problem in the UK: if you look at employer investment in skills, it is about half the EU average, so I think we want to move away from a low-skill, high-turnover situation.
Somebody talked before about the impact of staff churn. I was at an employer at the end of last week where they had 46% staff turnover each and every year. As the trade union representatives pointed out to me, every new person being recruited by that business works out at around £4,500 per person. I think that the Bill actually incentivises employers to invest in their staff, and to invest in the way that they use staff, and that certainly will have a positive impact on productivity.
There is also the fact that, when you give workers a collective voice, they are more likely to work with employers on things such as the introduction of new technology. How are we going to get to net zero in a way that secures good-quality employment? What does that mean for training? It really does open up the potential for much more productive working relationships.
Uma Kumaran
Q
Paul, 136 years ago, Sarah Chapman was first elected as the TUC rep from the then-formed Matchmakers’ Union. She fought ardently for women’s rights, and she made great representations at the TUC for women’s rights, but it has been 136 years and there is still much more to do for women in the workplace. I am really pleased to see that the TUC has said that
“Labour’s Employment Rights Bill is so vital for women’s pay and equality.”
I am keen to hear your thoughts on why you think that is, and other reflections from the panel.
Paul Nowak: It would be good to hear from colleagues from Unison and Unite, who directly represent hundreds of thousands of women at work. We know, for example, that women are more likely to be employed on zero-hours contracts, and are more likely to be in low-paid occupations. I think things like the fair pay agreement in social care could have a transformative impact on the lives of hundreds of thousands of women who go out to work.
That is alongside all the other provisions in the Bill—for example, the presumption around flexible working, which will allow people to balance work and family life but also, crucially, allow us to bring people back into the labour market who are struggling at the moment to find work that suits their caring and other responsibilities. There is a whole range of provisions in the Bill that will have a direct, positive impact on women at work, and a direct impact on those sectors in which we know that low-paid, insecure employment is most concentrated—retail, social care and hospitality.
Maggi Ferncombe: I represent Unison. We are 80% women. I talked at the very beginning about the significant difference this Bill will make, but I will give you some examples. Paul touched on flexible working. You could sum up this Bill in lots of different ways, but it is going to make such a difference to carers who care as a profession but also to carers who have caring responsibilities outside work, most of whom are women.
I will not touch on the fair pay agreement, because Paul already has, but the other area is the reinstatement of the school support staff negotiating body. These workers are again majority women and majority working part time. It will be transformative for those workers to have a set of standard terms and conditions, opportunities for training and salary, and not to have to take part-time jobs outside of their school work to be able to make ends meet. That will be the transformation for women.
Dave Moxham: We have been fortunate in Scotland—not completely fortunate—to get a bit of a head start on some of this discussion, particularly about low-paid care workers. We have a strong developing consensus that care workers’ voices are women’s voices in the collective bargaining arena, and that is something that we want to develop in Scotland. It is something that I think the Bill may just have to address for Scotland, because this is one of those situations where, because of the devolved nature of the delivery of care, we may need to invest powers in the Scottish Government rather than the Secretary of State. That is something we would intend to submit to the Committee on.
But I think we have really good early indications that a living wage for care workers, and the full involvement of unionised care workers in the delivery and shaping of their services, can pay enormous dividends. We are a long way from getting it right in Scotland, but I think we have got a good start there, which I hope some of the legislation here will reflect.
Hannah Reed: Very briefly, I fully endorse what colleagues have said. I am not going to repeat it, so as not to take the Committee’s time. Many women are part of trade unions because they want their voices heard and they want to be able to address issues such as inequality, bullying and pay discrimination in the workplace. The introduction of equality reps’ rights will provide an important focus to say that equality must be at the heart of the negotiating agenda within workplaces.
Alongside that, I recognise that there are improvements to parental rights that will help to ensure that there is a fairer share of parental responsibilities in the home. We have already talked about a lot of zero-hours contract workers being women. One of the things we are very aware of in hospitality is that, too often, employers bring in too many workers for shifts and say: “Sorry, we do not need you any more. Go home.” They then cancel a shift without any compensation for the workers for their travel time, costs or childcare. We hope the Bill will help to address some of those concerns.
Chris Law
Q
Dave Moxham: There is a growing consensus in favour of the devolution of employment law to Scotland, but I think we all know that the Bill cannot achieve all of that, whether this Committee was in agreement with it or not. What is of interest to us is the interface between employment law at a UK level and the responsibilities of the Scottish Government, who obviously employ the vast majority of the public sector in Scotland. In a sense, that is what I am referring to here. Through procurement and other regulations, the Scottish Government are working with us to deliver collective bargaining arrangements in Scotland, which interface and have a potential complication—if not conflict—with what is in this Bill. We would like that to be looked at.
It is important to recognise that not all employment law is reserved to Westminster. In Scotland, there are the Agricultural Wages Board and the employment tribunals already, and a range of other things are devolved. Partly with respect to Wales, which I will not try to speak for, but definitely with respect to Scotland, which I will, there may be aspects of this Bill that might need to be looked at, particularly the relative responsibilities of the two Parliaments.
Dr Tidball
Q
Paul Nowak: Why is it so important at the moment? We have 8 million people who are reliant on statutory sick pay, which does not kick in until day three of illness. That means that you literally have people, often disabled workers but not exclusively, dragging themselves into work despite the fact that they are ill, and they are often then spreading ill health. I will give you a practical example, Dr Tidball. I was at a mental health hospital in Blackpool last year where a group of women workers had needed to take strike action, while working in an NHS mental health hospital, because they did not have access to day one sick pay. They are people who were going into an NHS setting when they were clearly unwell, because they could not afford to take time off.
We also have an issue where we have over a million very low-paid workers, mainly women, who do not get any sick pay at all because they do not meet the lower earnings threshold. I think that the Bill will be transformative, and we will get to a situation where people are not afraid to take time off if they are ill because they are worried about whether they will be able to pay the rent, mortgage or bills. I think it is absolutely essential, and a really important part of those basic day one rights that every worker should be entitled to.
Maggi Ferncombe: I concur with everything Paul said. I would only add that we end up with different workers working in the same workplace under different terms and conditions. One group of workers who cannot afford to take a day sick, because they do not get paid, potentially bring in an illness and infect other people. In the public sector, such as in health settings, they are infecting not only the workforce but the public. It will be significantly different for all of those people.
Hannah Reed: As we saw from the pandemic, it is really horrendous when people feel pressured to go into work and put themselves and their colleagues at risk. Therefore, day one rights to SSP are obviously really critical. Moving forward, we would like to see an uplift in SSP because we still have one of the lowest rates in Europe, but the Bill represents a significant step forward, as does the recognition that there will be more collective bargaining. We as trade unions will negotiate for day one rights, often at full pay and not simply at the level of statutory rights.
We are also looking forward, not just with the Bill but moving forward with the wider “Make Work Pay” measures, to working with the Government on the health and safety review. It is regrettable that there is nothing in the Bill on health and safety. We hope that the Government will continue to prioritise that, addressing not only issues about mental health in the workplace but the impact of long covid, which disadvantages some people. We recognise that not everything can be done with this Bill, but we look forward to that ongoing programme of work.
Nick Timothy
Q
Paul Nowak: Perhaps I could have a quick go at those questions. I would not describe it as a fundamental rebalancing; I would describe it, as I said, as the biggest upgrade in workers’ rights in decades, and one that has been desperately needed for years. I hesitate to say this, but I think there has been a political consensus that this rebalancing, if you want to describe it as such, needs to take place. If you cast your mind back to 2016-17, Theresa May commissioned Matthew Taylor to undertake his review of modern employment practices. I think there were between 50 and 60 recommendations in his piece of work. The then Government promised 20 times or more in Parliament that they would bring forward an employment Bill and they did not. There was actually a recognition under successive Conservative Governments that the labour market was not working, that it was letting down far too many workers and that it was not working on its own terms, with low productivity and so on.
I hope that there is a political consensus that we do need to shift the balance. On the relationship with the Departments, I have been at the roundtables with union colleagues and also with representatives from the CBI and the other business organisations, and I think it genuinely has been a collaborative effort. What has been said to trade unions and what has been said to business has been exactly the same. The message has been consistent, and I think that is a good way of working.
I do not think you can draw a line between this legislation and an increase in industrial action. Indeed, I would flip that point. Previous Governments introduced the Trade Union Act 2016, which was designed to make it harder, effectively, for workers to take industrial action, and then last year they presided over the biggest strike wave in our recent history. I stood—not because I am some trade union anorak on these issues—on more picket lines last year than I have in the previous 20 years combined, despite the fact that it was made harder for workers to take industrial action. Actually, I think the focus of the previous Government, and I think the focus of this Government, is not on trying to legislate industrial problems out of existence, but on trying to resolve disputes and on finding ways of working together.
I was on the council of ACAS for 11 years. There will always be individual and collective disputes in workplaces; that is a fact of life in modern workplaces. How you manage those disputes and how you put in place the right, proper framework of law to give workers an effective voice is really important, and I think this legislation helps to do that.
Maggi Ferncombe: Good industrial relations will mean fewer strikes; it is as simple as that. If workers feel that they have been listened to through their trade union, and that we have been able to find a solution—hopefully—to any of the issues, the likelihood of workers feeling that they have no option but to take strike action will lessen.
Dave Moxham: I fully concur.
Hannah Reed: From Unite’s perspective, we would say that this is a step towards rebalancing power relations in the workplace. We think that at the moment there are too many gaps in the Bill and we have to include in that zero-hours contracts. We think it is too easy for the employer to game the measures, but we look forward to working with the Committee on tightening those provisions up.
I want to pay absolute tribute to the Department—the civil servants as well as the Ministers—for the work that it has done in recent weeks and months, and for genuinely engaging. I have been in employment rights policy work for generations, and I have never seen anything like this level of engagement in terms of civil servants and also Ministers giving their time to both sides of industry.
I want to reiterate the point that I think has been made by Unison: collaborative working relationships are dependent on both sides. Too often—we have experienced this in recent years—employers have resorted to hard strong-arm tactics such as fire and rehire, sacking workforces and driving up casualisation in the workplace. That increases insecurity and damages morale in the workplace. We would like to be in workplaces where employers come to the table, have genuine negotiations and recognise the importance of investing in the workforce, building security and offering a genuinely fair share of the outcomes from what workers do, not simply increasing the profit margin.
Alex McIntyre
Q
Paul Nowak: It has a massive uncertainty in terms of people not being able to plan their lives and not knowing whether they are going to be working enough hours to pay the bills and to meet their rent or mortgage at the end of the month. Overwhelmingly, those on zero-hours contracts want guaranteed hours. The vast majority of the British public, regardless of who they voted for at the last election, want to see an end to zero-hours contracts. We polled 1,000 large, medium and small employers, and 70% of them believe that getting rid of zero-hours contracts will drive improvements in productivity.
I will make one final point. We hear a lot about the potential cost to employers, the potential impact on recruitment and so on, but some of those points were made during the introduction of the minimum wage.
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank you all for your evidence. We now move to the next panel.
Examination of Witnesses
Jemima Olchawski and Joeli Brearley gave evidence.
The Chair
We will now hear oral evidence from Jemima Olchawski, chief executive officer of the Fawcett Society, and Joeli Brearley, founder and CEO of Pregnant Then Screwed. We have until 5 pm for this panel. Could the witnesses briefly introduce themselves for the record?
Jemima Olchawski: Hi, I am Jemima Olchawski, chief executive of the Fawcett Society. We are the UK’s only member-powered organisation dedicated to ending sexism and misogyny for all women.
Joeli Brearley: Hello, I am Joeli Brearley. I am the CEO and founder of Pregnant Then Screwed. We exist to end the motherhood penalty. We run support services for women who experience issues at work and we campaign on issues that we think cause the motherhood penalty.
Greg Smith
Q
Jemima Olchawski: At Fawcett, we really welcome the Bill. Overall, we still have an economy and workplaces that consistently disadvantage and exclude women. That means that they are much more likely to be on zero-hours contracts, to be in low-paid work and to be held back by a lack of access to quality flexible part-time work. Each of those issues is intensified for most black and minoritised women, and for disabled women. The situation results in serious consequences for individual women. We have a gender pay gap of just under 14%. On average, women take home just over £630 a month less than men. It also has a detrimental impact on our economy, because it is a marker of the ways in which women are not fully participating or contributing to the economy at their full potential. Estimates indicate that that means we are missing out on tens of billions of pounds of GDP.
We strongly support the measures as an important step towards redressing that balance. In particular, we are pleased to see the inclusion of equalities action plans as an important way to get employers to drive forward progress on the gender pay gap. We are glad to see the emphasis on the importance of flexible working and the day one right to statutory sick pay, which will have a disproportionate beneficial impact on women, as well as further protection from sexual harassment in the workplace. Some 40% of women experience sexual harassment at some point during their career.
There are areas where we would like to see additional inclusions or things going further. Flexible working is incredibly important for women who have caring responsibilities and continue to do the majority of unpaid care, and having access to flexible work is vital to enable them to progress and earn to their full potential. We would like to see a duty on employers to advertise jobs as flexible, rather than a situation where women have to wait until they are in a job before they can begin that conversation. You cannot move into a new job if you are not sure whether you will be able to replicate the flexibility that you have in an existing role. That leads to women being under-employed and their skills underused.
The day one rights to maternity, paternity and parental leave are important, but they have to be remunerated. There has to be a day one right to pay if we actually want people to take it. Particularly if we want men to take on more caring roles, we need to make sure we have a refocus on remunerated leave, and that includes parental leave. We welcome the fact that there will be a review, but we need to think about this as part of those measures.
I would like to see more around equal pay in the Bill. Measures could be taken that would support women to access fair pay, such as pay transparency and ending salary history questions. The last thing I would like to see more on is making sure that there is proper enforcement of those rights—that the enforcement bodies are properly resourced and have the teeth to ensure that the rights really hold.
Joeli Brearley: It is a big question that you have asked. I support everything that Jemima has just said. We are very supportive of the Bill, but I think there is a lack of clarity on some of the areas that we are particularly interested in. On flexible working, we are really pleased to see that the Government want to make it the default way of working. That is really important, but we need to know exactly how, and what mechanisms will be in place to do that. The current law on flexible working isn’t working. We want to see an advertising duty as well, which I am sure we can explore in a bit more detail later.
We are also very supportive of parental leave being moved to a day one right. It is kind of amazing that that is not in place already. But without it being remunerated, take-up will be very low. We would have liked to see more on parental leave. We have a shockingly low rate of pay for maternity. We have the worst paternity benefit in Europe. This is causing huge problems for families, particularly new families that have just had a baby. They are getting themselves into terrible amounts of debt. Also the way that our parental leave system is structured means that women are responsible for the care of a baby. They tend to take long periods of time out of work, whereas men tend to go back to work very quickly. They fall into the role of breadwinner, and the woman falls into the role of caregiver, and that continues for the rest of their lives—which is why there is such a large gender pay gap.
The redundancy protections are great. Again, we are very pleased to see that, but we need specifics about what it means. We would like to see that pregnant women and new parents can only be made redundant in exceptional circumstances. By that we mean when a business is closing or perhaps when a service has stopped being delivered. It is very difficult, if you are made redundant when you are pregnant or have just had a baby, to get another job. Often you are made redundant and then cannot access statutory maternity pay. These are very particular circumstances. We know that many women are still being made redundant when they are pregnant or when they are new mums; 17% of calls we get to Pregnant Then Screwed are related to redundancy, so it is a big problem.
What we do not have at the moment, but really need, is data that shows us what is happening on the ground. A report was done by the Equality and Human Rights Commission under the coalition Government that found that 54,000 women a year are pushed out of their jobs for getting pregnant or for taking maternity leave, and 77% of new mums experience some form of discrimination. That report was done in 2016, and there was a guarantee at that point that the report would be done again five years later. It is now nine years later and we still do not have any new data to show us exactly what is happening on the ground. Without it we are making decisions in the dark, so we would really push for that report to be done again.
We would have liked to see something in the Bill on non-disclosure agreements. Our research found that 435,293 mothers had been gagged by non-disclosure agreements when experiencing some form of discrimination. It is a serious problem. Again, we do not know what is happening in companies across the country. Women tend to experience this form of discrimination and are then forced to sign these agreements and are given a low amount of compensation. They suffer mental health consequences because of that. We want to see the UK follow what Ireland has recently done, so that non-disclosure agreements cannot be enforced unless the claimant wants them to be. We would also have liked to see something in the Bill on miscarriage leave, because at the moment there is no right to any leave or pay if you miscarry before 24 weeks. We would have liked to see something on fertility treatment. As many of you will know, we have a baby crisis in the UK—we are not having enough babies. We want to encourage people to have fertility treatment, so we need a legal right to time off.
We would like to see something on reasonable adjustments. There are currently reasonable adjustments if someone has a disability, but not if they have a dependant with a disability. Many mothers of disabled children are struggling in the workplace because they need time off for appointments, or whatever it may be. We would like to see a requirement for all employers to publish parental leave policies.
Justin Madders
Q
Jemima Olchawski: There is strong evidence that the majority of sexual harassment experienced in the workplace comes from third parties. This is where someone experiences harassment from a client, customer or patient. Some of those who are most vulnerable would include those working in retail and hospitality. It is essential that anyone working in those environments is as safe as they can be and respected in their workplace. We would consider it essential that employers’ responsibility to take reasonable steps to prevent harassment includes third parties, because as a victim, it is not relevant that the person was not a direct co-employee. What matters is the harm experienced. It is absolutely within the bounds of good practice and reasonable steps for employers to address that.
Joeli Brearley: Nothing from me. It is not my area.
Steve Darling
Q
Jemima Olchawski: It could be strengthened by having clear guidance and expectations around the reasonable steps that will prevent. That should include multiple reporting routes, which might be anonymous if that feels more appropriate, and training for managers. Our research shows that managers want to respond appropriately, but often when those conversations come up, they do not know what the right thing to do is. Consequently, lots of those conversations end up going badly, and young people or employees do not get the support they need.
It is also important that enforcement agencies have the resource to investigate whether policies and procedures are in place, so that we can embed a culture of prevention rather than just respond decently when incidents happen. That is in the interests of employers too, because cultures where there is bullying or harassment are bad for productivity and staff turnover. It is in everyone’s interest to ensure we address this and cut it off at the pass.
Joeli Brearley: The only thing I would add is that when women experience sexual harassment or any form of discrimination and want to access justice, the justice system is currently failing them—it is not working. We know, certainly in cases of pregnancy and maternity discrimination, that fewer than 1% of women who have that experience even raise a tribunal claim. Part of what we need to do is extend that time limit to raise a claim. It is currently three months. It needs to be at least six months, so that women have the opportunity to recover from their experience before they start to go through that onerous, difficult process of raising a tribunal claim.
Alison Hume
Q
Joeli Brearley: I started Pregnant Then Screwed 10 years ago, because of my own experience with pregnancy discrimination. I was pushed out of my job the day after I informed my employer that I was pregnant, and it was the tribunal time limit that prevented me from taking action against my employer. When I started campaigning on these various issues and talking to people within Government about them, I honestly felt like nobody was listening. It really felt like I was banging my head against a brick wall. Nobody really had any interest in what we were talking about. Certainly over the last 10 years, the dial has not moved very much at all. I mean, we have seen changes in flexible working law and changes in redundancy protections, but they are minor tweaks.
This Bill takes a significant step forward, but of course I am always going to say that there is a lot more that we can do. I was particularly excited to see the flexible working part of the Bill, but if we do not get this right—cross the t’s and dot the i’s—then it will make very little difference whatsoever.
Thank you for your comments; they were very kind.
Dr Tidball
Q
Jemima Olchawski: We know that women are currently more likely to miss out on statutory sick pay because they do not earn enough to meet the threshold or have not been in their roles as long; you heard evidence earlier about the impact on people who have to try to work when they are not well enough, and the impact on incomes through people not being able to work. Women are more likely to be juggling work and care, so they are more likely to need the flexibility and protections in this Bill. That is why getting the piece around flexibility is so important, whether it is because you are caring for children, for disabled children or for elderly relatives. We also know that one in 10 women we surveyed in our research who had been experiencing the menopause had left their workplace as a result of their symptoms, and flexible work and support in the workplace is really important to enable them to continue to participate when they are at the peak of their careers and skill levels. They should be allowed to thrive and be in their prime.
We know that the majority of households in poverty have at least one adult in work, but at the moment we do not have a system that properly supports either lone parent families, which are predominantly women, or households where both parents want to work. We also know that 40% of women who are not working would work more hours, or would work paid hours, if they had access to flexible working, so these measures are also really important as a part of overall efforts to address poverty and prevent child poverty.
Joeli Brearley: Adding to what Jemima has said, particularly on flexible working, the current law is that you have a day one right to request flexible working, and that has obviously moved from having had six months in a job. A right to request is still a right to decline, and we strongly feel that it does not go far enough in changing the dial on flexible working.
I know that the RPC opinion on flexible working has said that there is no evidence that we need to change the law on this. There will never be enough official evidence because those who want flexible working tend either to ask for what they think that they can get—or, if they know that it will not be granted, they do not ask for it at all. TUC research found that a third of people who want flexible working do not ask for it, despite needing it, because they think it will be rejected, and a further third ask for what they think that they can get, rather than what they actually need to manage their personal and professional obligations.
To really change the dial on flexible working, you have got to switch this on its head, and an advertising duty would do that. It is a hugely ambitious change; it is not a slight tweak to the current legislation, which is a much easier thing to do. An advertising duty would ensure that employers design jobs as flexible from the outset. It would mean that, in a job advert, employers would have to stipulate the types of flexible working available, and the candidate they chose would have a legal right to take up employment on whatever arrangement was stipulated in that job advert. The pushback on this has been, “Well, not all jobs can be flexible.” That is of course true, so if you do not believe that a job can be done flexibly, you could stipulate that and set out the reasons why.
The duty would particularly impact the women we work with. They would not be in a situation where they are having to move job. At the moment, they need to go to a new job and then ask for the flexibility they need to fulfil their personal and professional obligations. If at that point they find out that that is not possible, they have to leave that job—and both employer and employee lose out. We are currently trying to shoehorn flexibility into a very rigid structure, and we need to really change the culture. We believe that an advertising duty is the way in which you do that.
If we are not going to be that ambitious, and an advertising duty is off the table, we really need to reduce the number of reasons that you can decline a flexible working request—we believe that it can be reduced to three. We need to make it a legal right to be able to request flexible working from the point at which a job is offered rather than the first day of employment. That makes complete sense for everybody. Finally, we need to have the ability to appeal decisions to a third body, perhaps the single enforcement body. We also want employers to have to publish their flexible working policies online so that employees can see them. It would be a game changer and would really shift the way in which our employment market works, and it certainly would be a game changer for women.
The other thing in the Bill that I would really like to talk about is parental leave—the fact that it is not remunerated and that you are moving it to the first day of employment. We know that the take-up will be very low. We did some research with the Centre for Progressive Policy that found that if you increase paternity leave to six weeks and pay it at 90% of salary, you reduce the gender pay gap by 4% and you increase labour force participation, particularly by women. We really need to keep up with our European counterparts and increase paternity leave. Two weeks at £182 a week is not good enough, and we know that one in four dads are not even taking their two weeks because they cannot afford to do so. Families are losing out as a result. It is really bad for kids if dads and second parents are not enabled to spend time with their children. It is really bad for women, and it is a big cause of the gender pay gap, so we would really like to see the parental leave review happen as quickly as possible, and paternity leave increased, ringfenced and paid properly.
Jemima Olchawski: To come back on flexible working, Fawcett has been campaigning for that advertising duty and agrees that it is really important to make these measures meaningful. It is also important to recognise that this is good for employers because it increases the pool of talent that they have access to, rather than being able to get applications only from people who meet a rigid but not relevant set of criteria. It broadens it out to everyone who genuinely can do the job, which benefits everyone and is hugely important for enabling women to succeed at work.
Chris Law
Q
Joeli Brearley: Sure. Non-disclosure agreements are a real problem. We do not know how many exist, or how many women who experience discrimination—I am saying women because I work with women; of course, men sign them as well—sign them, because of course they are non-disclosure agreements, so nobody can talk about them. We run a mentor programme where we pair up women who are taking legal action against an employer with somebody who has been through that process, and in 90% of the cases that we work with, they end up signing a non-disclosure agreement.
Chris Law
Ninety per cent?
Joeli Brearley: Ninety per cent; it is a significant proportion. Often, these are for quite measly sums of money. They are pushed on women when they are feeling very vulnerable. Women are told that, if they sign this non-disclosure agreement, they will get a really good reference and it will all go away—“You get this lump sum of money, off you go.” But what they mean is that you cannot talk about what has happened to anybody. Legally, you can talk about it to your spouse and your lawyer, but that is about it. That really damages the mental health of women who sign them, because they cannot say what has happened to them. They sort of harbour this dirty secret, and that really is very damaging to them.
It also means that we do not know what is happening behind companies’ closed doors. I can tell you now that there are companies that win awards for being brilliant employers for women, but behind closed doors they are pushing women out when they are pregnant and forcing them to sign non-disclosure agreements so they cannot talk about it publicly.
Along with Zelda Perkins, who runs Can’t Buy My Silence, we would like to see that non-disclosure agreements are unenforceable unless the claimant—the person signing it—wants them to be enforced. That is a piece of legislation that Ireland has just pushed through: making NDAs unenforceable unless the claimant would like them enforced, and unless the documents are written in very clear language—often non-disclosure agreements are really complicated to read and nobody can fully understand them—and there is still the opportunity to report what happened to a trade union and to the ombudsman. Again, at the moment nobody knows what is happening because, by their very nature, non-disclosure agreements stop you talking to anybody, so we would like to see a similar change here.
Uma Kumaran
Q
You have both talked about maternity provisions and what they could mean for the country. More broadly, what is the benefit to the economy and to businesses of having stronger maternity provisions as set out in the Bill?
Joeli Brearley: By maternity provisions, do you mean maternity leave and pay?
Uma Kumaran
Yes, maternity rights.
Joeli Brearley: As I mentioned before, we know that 54,000 women a year are pushed out of their jobs from the point that they get pregnant, while pregnant, while taking maternity leave or just after they return. That is one in nine; it is a woman every 10 minutes.
What tends to happen is that it takes those women a very long time to recover. Sometimes it is a slow drip feed of bullying and harassment, because people know that just pushing them out is unlawful and they could go to tribunal. This is severely damaging to women’s careers, and to their first year with their new baby—it really damages their mental health—and it is a big contributor to the gender pay gap. We do not know exactly how much it contributes to the gender pay gap, but it obviously is a big contributor.
What we need to see—and what we have been campaigning for—to change this is, first, ringfenced, properly paid paternity leave, because until an employer sees any employee as somebody who could go off when they have a child, they will always have a bias against women. At the moment, men do not take time off—a maximum of two weeks, often—once they have become a father, so they are not seen as a risk, whereas women are seen as a risk, so that bias starts in the recruitment process. We know that if we ringfence paternity leave and pay it properly, men will take time out, which also reduces the unpaid labour gap; we know that men tend to do less of the unpaid labour, so taking these steps would mean that women could excel more in their careers.
Secondly—I know it is not within this Committee’s scope but I have to mention it—our childcare system is a chaotic mess. It needs to be affordable and it needs to be accessible. Until that happens, women will take a step back from their careers. We also need enhanced redundancy protections, like what is in this Bill, but we need them to be very specific and to be about, “If the business fails—”
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank you both for your evidence. We now move to the next panel.
Examination of Witness
Alasdair Reisner gave evidence.
The Chair
We will now hear evidence from Alasdair Reisner, CEO of the Civil Engineering Contractors Association. We have until 5.15 pm for this witness. Could you set out for the record who you are and your background?
Alasdair Reisner: Certainly. First, thank you very much for inviting me to give evidence today. I am Alasdair Reisner, chief executive of the Civil Engineering Contractors Association, but I also come here wearing a couple of other hats. I am a member of the Construction Industry Joint Council, which is the largest collective agreement for the construction industry, representing about 250,000 employees. I am also a member of the Construction Leadership Council, which is the umbrella body for the industry. I lead its culture-of-workplace activities to try to improve the workplaces of construction businesses.
Greg Smith
Q
Alasdair Reisner: One of the benefits of being tail-end Charlie is that I have been able to watch some of the earlier evidence, so I was primed for this question. From an industry perspective, the first reaction is that it is a very big Bill, and that does create challenges. We have about 360,000 employers in our industry, more than half of which employ fewer than four people, so even raising awareness of the existence of the Bill is a particular challenge. In terms of how we take things forward, whatever happens during the rest of this process, a big engagement process is required to raise awareness of the outcome.
That said, generally speaking, based on the feedback that we have had, I think there is a lot of positivity about some elements of the Bill, particularly on tackling sexual harassment and looking at improving equality in the industry. I think our members would say that this is stuff that they do as custom and practice already, so it is almost raising the level of the wider industry and trying to cut out poor behaviour among not bad actors in industry, but those that are less developed.
There are a couple of points where we do have particular concerns. One is the redundancy piece. I suspect that, as MPs, you are all sick and tired of people special pleading and saying that their industry is different, but I am afraid that I am going to say that our industry is different. We deliver on a geographical basis, and when a project comes to an end, understandably, there will be cases where redundancy is the only option. To enforce upon the whole business the requirement for consultation feels like it was not the intent of this policy. It seems that we should spend some time trying to find a way through that works and results in productive outcomes. I have seen personally the impact of people being on multiple rounds of redundancy. It is miserable for the individual, and that is what I think we should seek to avoid.
The other area we have some concerns about—we have heard this a number of times today—is day one unfair dismissal claims. In construction, it takes a lot of time to get people ready to work. Coming down from two years to day one feels like a big step for an industry that, as I articulated, may not even be aware that this is coming towards them. We would want to look at how that might work. I am sure you may have questions on that, so I do not want to spend the time garbling on—I would rather give you the chance to ask questions.
Greg Smith
Q
Alasdair Reisner: It is an interesting question. There is the notification element and the consultation element. I suppose we have to ask what the policy is trying to achieve. If it were trying to avoid people almost hiding redundancies by doing them in small units, I do not think we would have any complaints about ensuring that notification was still required. It is where you are forcing people into consultation who are never going to be made redundant, yet they find themselves under the scope of that. Splitting those two things apart—so you would still have the notification, but you would not necessarily have the consultation for those who are unaffected—is something we are exploring. I do not want to say that that is the silver bullet that will solve things. We have not even discussed that collectively as an industry; we are just trying to consider what options might be on the table.
Justin Madders
Q
Alasdair Reisner: It is a cliché, but we rely on the people we work with, and they must be represented. Having good, positive relationships with the employees’ representatives is crucial. The CIJC has for decades provided us with that vehicle—I should say that it is not the largest overall; it is just the largest in the construction sector. I think back to covid, when we needed a relationship with the workforce that provided us with the independence —I have to say that Unite was brilliant at that time—to engage with the rest of the industry to say, “We’re all working collectively towards a common good.”
From discussing the Bill with members over the past few days, I know that one of the potential concerns is that it might in some way undermine existing collective agreements. I do not think that is written in the Bill; it is more in the discussion that has happened prior to the Bill. That is something we would like to protect. I am not going to pretend it is all sunshine and roses—sometimes it can be quite challenging—but I think we would want to ensure that whatever the outcome of the Bill, there is a strong, positive partnership between the employers’ representatives and the employees’ representatives.
Steve Darling
Q
Alasdair Reisner: As an employer representative body, it is very easy to say, “Here are all the problems associated with the Bill.” I think we should be nervous about that, because there is a democratic mandate for what is going forward. Equally, I think we should be honest and say that we do see that it will create an additional burden for industry, although I am going to be very honest and say that we do not have good research at industry level to know what the nature of that is. However, it seems palpable that there will be impacts, as there are with some of the other policy changes we have seen, and which you would expect with the change between two Governments.
At the risk of looking like I am trying to duck the question, there are both pros and cons with the Bill—it is as simple as that. The particular concerns we have are around redundancy and day one unfair dismissal. Those are the things we want to focus on specifically, as those are the policies that are likely to have the unintended consequences.
Laurence Turner
Q
Alasdair Reisner: That is very kind. I was not expecting that at all. It is something that we are extraordinarily passionate about. We have done a lot of work on mental wellbeing, which I think is also incredibly relevant to this Committee, because we are looking at a culture in the workplace that drives mental health. Unfortunately, as an industry, we have really poor mental wellbeing issues, particularly for those at the very bottom end of the skills levels. That is our problem, and we need to do more on that. Sorry, I cannot remember the specifics of your first question.
Laurence Turner
Do you see opportunities for marrying the levelling up of employment standards with productivity gains in construction?
Alasdair Reisner: In terms of industry productivity, there is a lot to do, but one of the biggest drivers will be people being happy and healthy at work, and being provided with appropriate training that drives their competence to deliver. So yes, I think there is something there. Ultimately, there are big challenges that sit outside the employment space. At the minute, we are not even measuring productivity properly. Knowing whether we are improving starts with having the first clue about what we are supposed to be measuring. I should say that there is good work going on in that space at the moment.
Chris Murray
Q
Alasdair Reisner: There is a characterisation that construction sought migrant labour as a way of undermining the cost of the existing workforce, but—I hold my hands up; I am a lobbyist for the industry—that is just not true. A lot of people do not understand that we are a relatively high-paying industry. We used migrant labour where there was a lack of capacity in the industry, and it was almost a balancing item to meet that capacity; it was not about undermining costs. I am confident that, whatever we do on employment rights, we will still have a challenge around meeting our future skills needs. I do not think migration is the answer; I think there is a long-term piece around us recruiting more effectively domestically.
Chris Murray
Q
Alasdair Reisner: It cannot hurt to have measures that make the world of work in the construction industry more attractive to try to defeat that perception, but there are much bigger factors driving it.
Jon Pearce
Q
Alasdair Reisner: I should first clarify that I am not an expert in redundancy. However, based on the conversations we have had, you have to look at how individual employers would respond to the new environment. I do not think this would ever be the case, but it is almost as though people feel that the only way out of this will be to have a permanent rolling redundancy consultation within their business to try to address the fact that there are people on geographical sites who are coming off and going on all the time. Under a new approach, there is no other easy route that would help to address that issue.
The Chair
On behalf of the Committee, let me say thank you very much for your evidence. You are definitely not a tail-end Charlie.
Alasdair Reisner: Thank you very much.
The Chair
That brings us to the end of today’s session. The Committee will meet again at 11.30 am on Thursday 28 November to continue hearing oral evidence on the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Third sitting)
Thursday 28th November 2024
(3 weeks, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 28 November 2024 - (28 Nov 2024)
The Chair
We are now sitting in public and the proceedings are being broadcast. In line with the sittings on Tuesday, for each panel of witnesses I propose to call the shadow Minister to ask the first question, followed by the Minister and the Liberal Democrat spokesman. I will attempt to alternate between Opposition and Government Members. That will not always be possible, because sometimes three people from one side want to speak and nobody from the other, but I will aim to balance it up. We have to stick to the cut-off time specified in the programme order, and I will interrupt questioning if necessary.
Can I remind Members that they must declare any relevant interests when asking questions? Before we start hearing from witnesses, do any Members wish to make a declaration of interest that they have not already declared in connection with the Bill? Members should ensure that interests are declared before speaking or tabling amendments. If there are no questions or declarations, I will move to the first set of witnesses.
Examination of Witnesses
Claire Costello, Helen Dickinson OBE and James Lowman gave evidence.
The Chair
We will hear oral evidence from Claire Costello, chief people officer at the Co-op, Helen Dickinson, chief executive of the British Retail Consortium, and James Lowman, chief executive of the Association of Convenience Stores. We have until 12.10 pm for this panel. Would the witnesses be good enough to introduce themselves for the record—very briefly, as we are pressed for time?
Claire Costello: I am Claire Costello, chief people and inclusion officer for the Co-op. For those who do not know the Co-op, we are a retailer, funeral care provider, insurance provider and legal services provider. We employ 55,000 people. I am very happy to be part of this process.
Helen Dickinson: I am Helen Dickinson, chief executive of the BRC. The BRC is the lead trade body for the retail industry. Our members cover larger businesses like the Co-op and many others, down to smaller businesses. We also have in our membership some trade associations that represent independent retailers.
James Lowman: I am James Lowman, chief executive of the Association of Convenience Stores. Our members are the people who operate local shops in villages, estates and high streets up and down the country. There are about 50,000 of them in the UK.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Claire Costello: We are very supportive of the opportunity provided by the Bill. As a co-operative, and a very old co-operative at that, the health and wellbeing of our colleagues is incredibly important to us. We are very supportive of the principles of what we are looking to drive for here, but the challenge around the detail needs to be looked at.
For example, what does it mean to have a probationary period that enables a colleague to join you and ensures, first, that you give them the right opportunities to develop and grow and, secondly, that, if they are not suitable, you have the opportunity to enable them to leave the business? I will give you a couple of stats. Of our leavers last year, 75% had been with us for less than two years, and 36% of the people we asked to leave the business had been with us for less than three months. That is a really good example that shows that it just does not work out sometimes.
Could the probationary period be a barrier with unintended consequences? Yes. Are there things you can do around that to minimise it? I would say so, but again, we need to make sure the detail of the Bill does not drive unintended consequences. It must leave enough flexibility for employers within the broader groups represented on the panel and for us. We want to support people from disadvantaged backgrounds and bring ex-offenders into the organisation. We are working very hard to support them across a number of areas, so we do not want that to be an issue. We would work really hard to make sure that it is not an issue at the Co-op, but ultimately, on a broader footprint, it is something to be mindful of.
Greg Smith
Q
Claire Costello: I think it is more about the fact that the Bill will drive more tribunals if people feel that they have a route to do that, so that might make people a bit reticent. There is also the timescale. We have a three-month probationary period, so nine months is fine, but there is a point about day one rights to leave. That does not stop you supporting a new starter into the business and, if it does not work out, being able to manage that exit, but it is about doing it without incurring significant costs at every single level. That does not mean just the formalised cost of going through an employment tribunal, but the time it takes to hear a case within the business. Good organisations make sure it is heard at different levels, and then a grievance is raised and you have an appeal. It is very time consuming to do it in the right way, but that is what we want to do. Again, it sucks up time, resource and cost within an organisation, when what you want is to spend the time enabling people to be successful, and driving productivity and driving the benefit for the business you work in.
Greg Smith
Q
Claire Costello: Not yet, because there is not enough detail for us to do that. We are really keen to see what the more detailed asks look like.
Greg Smith
Q
Claire Costello: Yes, there will be on-costs from the Bill. Do I think it is the right thing overall? Again, we are broadly supportive of where it is heading, but there will be on-costs in there.
Greg Smith
Q
Helen Dickinson: Thank you very much for this opportunity. We are probably going to end up violently agreeing with each other, but let us see how we go.
There is real alignment on the objectives of the Bill: to improve working practices, have the right culture between employees and businesses, and weed unscrupulous employers out of the system by targeting them. It is great to have the opportunity to talk to you. I am sure that, from a Co-op and a wider retail industry point of view, many responsible businesses are already undertaking some of the processes in lots of parts of the Bill—things like the right to flexible working—and I think everybody is supportive of and aligned on proposals like a single enforcement body.
Building on Claire’s comments, the challenge comes in certain areas where the devil is in the detail. Claire mentioned probation periods; what does the guidance and the framework for a fair dismissal process look like? I have a list: guaranteed hours, union recognition and collective consultation. In all those areas, there is some detail that we can delve into to see where the challenges might sit. It is about making sure that the implementation does not end up in the scenario where too much cost is added, or too much process is put in place that disincentivises employing people from a disadvantaged background or in the entry-level jobs that the industry is so good at providing. Part of that is in the Bill, but a lot relating to how some of these things will get implemented will be done through the consultation process that comes after. Shall I dip into guaranteed hours, as an example?
Greg Smith
Please do.
Helen Dickinson: A reference period is conceptually a good idea—the question is whether it is too short. I know that some people who appeared in front of the Committee earlier this week suggested that it should be slightly longer. I think requiring a business to offer the hours of that reference period in every single circumstance does not really take into account the peaks and troughs, the flexibility that retail businesses need or that lots of people who work in retail already have, and how the actual implementation could be framed to give people the opportunity to opt out or to have the right to request, as opposed to the right to have.
That is an example of where the implementation could be very onerous, very expensive and disincentivising, or, if it is implemented in a way that actually works for businesses and employees—because a lot of people value that flexibility—can create the win-win that the framework and the objectives of the Bill are seeking.
James Lowman: I agree with much of what Claire and Helen said, so in the interests of time, I will not repeat that. To give a bit more flavour on convenience stores, we see ourselves as an exemplar of flexible, local, secure working—98% of colleagues have a contract, and zero-hours contracts are used very little. More than a third of our colleagues walk to work. We are the ultimate local, flexible employer. Most requests for flexible working, whether in the formal, legislative framework or not, are agreed to, because if you have good people, you want to keep them in the business and you want to accommodate what are usually other responsibilities, which are often about care for children or older relatives.
Specifically on probationary periods and early rights, 84% of people who work in our sector have been there for more than one year. Most people who have been there for that period of time stay on. Half of people working in our sector have been there for more than five years, so we have a longevity of employment, but there is a spike of people who move on quite quickly because it is not right for them. Seasonality, of course, could cause that. There is a particular challenge when we are talking about encouraging our members, as we do, to look at bringing in people from typically underutilised backgrounds, whether that is care-experienced people, ex-forces or ex-offenders. We produced a document with the Retail Sector Council last year looking at opportunities for those people.
For everyone starting a business, there is always a chance that it just does not work out. It just does not transpire that it is the job for them. Sensible probationary periods—they do not have to be too long—will allow that to play out without undue risk to the employer.
The final point I would make is that in an independent business—we represent some large businesses, but 71% of convenience stores are independently operated—the person running the business is the finance director, the buying director, the marketing director, the operations director and the HR director. No specialist resource is being called on, so additional processes to manage someone leaving the business are particularly burdensome for smaller organisations who do not always have people like Claire and her colleagues to help them through that.
Greg Smith
Q
James Lowman: There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.
There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.
I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Q
Claire Costello: As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.
Helen Dickinson: I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.
At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.
James Lowman: I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.
It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.
Helen Dickinson: So does sickness.
James Lowman: And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.
Justin Madders
Q
Claire Costello: All of the above. We pride ourselves on being as forward thinking as we can be. There is always an affordability in there, but we tend to listen very clearly to our colleagues. We work closely with our unions as well. We have focused on areas that our colleagues have told us are important to them. If I look at the bereavement policy in the Bill, for example, we built that in. We worked with Cruse, a charity that is significant in that sector, and have done something pretty unique in terms of support.
The Bill is a great development for industry. There are things that we have done, which were already quite different, in there. We do not insist that it is within the first 50 days; we ask for them to use it flexibly, because it could be a significant birthday or date. We also do not limit it to direct family members because, in today’s modern family and society, it is not always your parents who are the closest to you. We have made it based on the relationship that you have with the person that has passed, and therefore what bereavement means to you may be different.
You might want to take a week off at the beginning. It may be that you want a couple of days, and then four or five weeks later you need a couple of days, or even a year later you need to take time off because it is an anniversary and you need to support people. Things like that are where we have written policies and worked with our colleagues to do something that works for them. It is to drive retention. It is to drive engagement. It does mean that we have, hopefully, a happy group of people who want to work with us. As a member-based organisation, that is important to us.
Another good example on the bereavement policy is that I noticed that it did not cover pregnancy loss. Again, that is a policy that we have worked really hard on and I think that is an opportunity to put something slightly different into the Bill, because bereavement is bereavement. How do we make sure that it covers all aspects of it in the right way?
Justin Madders
Q
Helen Dickinson: No, the overarching point is exactly as has been said. The most successful retail businesses are ones that have highly engaged workforces that are aligned to the objectives of the business and feel part of the success of a company. People who feel like that are going to work harder and the business is going to be more successful. It is all part of a reinforcing system. If it is done well, from an individual company point of view, the exemplars are the more successful businesses. It comes back to ensuring that the Bill targets those at the bottom of the pile, those that are not engaging in the right way in having forums for employee engagement or having a two-way dialogue on flexible working or whatever it might be. It should be a win-win, but I think the risk is big in terms of making sure that we do not end up with those unintended consequences.
James Lowman: Retail is based on respect for colleagues and customers. That is how businesses work, and I think that the Bill and the principles here are very much in line with that.
Steve Darling (Torbay) (LD)
Q
Helen Dickinson: That would help. I am jumping straight in, because I feel quite strongly about this one. I do not want to rerun some of the challenges of the Budget, but the pace of additional costs that have come in for every business—particularly for retail, because of the nature of flexible work, with a lot of part-time contracts and the changing of the threshold—means that every single retailer in the country needs to look very hard at their investment plans and workforce plans, and everything that sits around that.
I think that everybody sort of breathed a sigh of relief with the clarity that the timetable was for 2026, but even now, looking at the scale of the proposals, it would be great to have more visibility over the sequencing of the different consultations, so that the industry can gear up in the right way to be able to respond effectively to them, and to make sure that we have longer than six-week periods to respond, with four consultations all going on at the same time, because that all makes it quite a challenge.
Coming back to the direct point of your question, in terms of implementation, if there are changes that need to be made in companies, I think that a run-in, or an implementation period that is workable and that gives those companies the chance to make any changes to processes, is a necessity for ensuring that the Bill lands in the right way and that we do not again end up with some of those unintended consequences. I think the Budget has unfortunately made the backdrop that much more challenging, just because of the things that people already need to deal with now and over the next six months.
Claire Costello: I will add to the piece around implementation timing: it is really easy to think of this as, “Oh, it’s straightforward; it’s about writing a policy, then, once you are in a business, sharing that with your colleagues, making sure that your line managers know what is expected of them, and landing it.” Much of what we are talking about here will require businesses, certainly larger businesses, to think about how their systems are set up as well. It changes your payroll system; it changes your workforce management system. All that is doable, but it is at the same time as other changes that organisations will be working on in the background as well. That is what we need to factor in.
On top of that, where we then have colleagues who are themselves impacted by the changes, it is about making sure that you have time to make sure that they understand that and what it means to them. It is about that run-in. It is about more than the cost; it is quite significant from the point of view of process, understanding and implementation. That is the ask, really—it is the detail and the time.
Helen Dickinson: I am sure that James will have points from a sort of one-establishment type business, but, for multi-site businesses, you could be talking about 10, 100 or 1,000 stores and distribution centres up and down the country, so we should not underestimate the significance of the need for up-front visibility of the changes.
James Lowman: The other change that has happened with the Budget and those additional significant costs on businesses is about how retail businesses respond to them. In maybe a medium-sized business—among our medium-sized members—they might have had to take out layers of management. That might include, for example, HR functions and things like that, and losing that support. In an individual store, with an independent retailer, that retailer is probably working more shifts behind the counter and in the store themselves, rather than working on the business and managing the business. That will be a consequence.
Decisions are being made to cut back shifts to compensate for those significant additional costs, so the ability and the time available for businesses of all sizes—particularly some of the smaller and medium-sized ones —to implement these changes is less than it was before the Budget, or before April. That is the reality of it.
Again, yes, it is partly about timing—that is very important and I align myself with what Helen and Claire have said about that—but that also makes it even more important that the guidance and regulations are absolutely right, so that those already increasingly and additionally stretched businesses are not spending more time in employment tribunals and having to deal with complex interpretations with their colleagues, or struggling to fill shifts and therefore having to work more hours themselves.
Steve Darling
Q
James Lowman: We need absolute clarity on what “reasonable steps” means. Those reasonable steps should not be onerous, given the reality of 15 million people coming to the store every day, whose behaviour we unfortunately cannot control—believe me, if we could, we would. Having clarity and reasonableness in all reasonable steps is the thing to do, and there is an opportunity to build on that; the ShopKind campaign, for example, has been very successful. That is one way we could channel those steps to promote good behaviour among customers.
Alex McIntyre (Gloucester) (Lab)
Q
You also mention an increase in employment tribunal claims. We would hope that most employers would follow the new legislation and therefore avoid those claims, but we both know that there are a small number of bad-faith actors who will always try to find a claim. There are already claims that individuals can bring from day one, but do you think you will see a big increase in bad-faith claims, or do you think they are already there in the system?
Claire Costello: I will take the point about unions first. The strong relationship we have with the union means that we can work in a very collaboratively challenging way together—do not get me wrong; it is not without having difficult conversations, but that is the point. A healthy relationship is like a healthy marriage. You do not just give up on each other. You have those difficult conversations with each other and face into issues and look for solutions. The key for me is looking for solutions. Having very progressive relationships means that you can talk about the direction of the business and what you need to do, and work together on finding solutions. That is what we have found with our relationships. It is not always easy, but it is absolutely the better way of going forward.
In terms of employment tribunals, I think you are right. The reason we think it would go up is that, as with all things, when something becomes more available, by virtue of that fact there will be more people who want to use it. We do not have the absolute evidence to say it, because it is not there today, but the reality will be that if you can take their employer to court, why would you not? There will be more individuals who would wish to do so. We have said before that it is about having clarity and making sure that we understand what reasonable looks like and what the steps are that would be expected. It is more about the onus of extra work that this will bring to each of the areas. As I said, we follow all of the processes very strictly, and we try to make sure that we have a very fair and open conversation with all of our colleagues. The challenge will always be that you cannot make everybody happy all the time.
Mr Peter Bedford (Mid Leicestershire) (Con)
Q
Claire Costello: Gosh, that is a good question. I do not see why it would make a difference to productivity itself, because at the end of the day you are still bringing someone new into the organisation. I think it would be a longer-term impact. If we did start to see more people raising a grievance because they want to leave or because we have said, “Actually, this is not the right role for you.”, it would be the time perspective that would be drawn on. That is more your line managers, store managers and leaders around the organisation that would draw on to that resource. I kind of see it as more of a longer play in terms of productivity.
Mr Bedford
Q
Claire Costello: Absolutely, and I think that was what James was referring to as well, when you think about the smaller stores within the convenience sector. But for us, it absolutely is about the time that it takes for line managers and regional managers. Do not forget that we are not just a retail provider, so it would be within our funeral homes, when we should be out looking after clients at the most difficult times in their lives, and our insurance organisations, as well as legal services. It is across the whole organisation for us.
But yes, it is the line management time that goes into following these processes, doing them well and making sure that everybody is having the right hearings that they should be having. It is a time-consuming process. It is right because, absolutely, we want to make sure that everybody has a fair hearing and that the right decisions are being made for the right reasons. However, it is time-consuming and that is the concern.
Alison Hume (Scarborough and Whitby) (Lab)
Q
James Lowman: By and large, we set out shifts; we have clear shifts that are worked to. It would be rare that a shift got cancelled at short notice. With convenience stores, fundamentally we are open for those hours; we need to fill those hours. It would have to be something pretty extraordinary that would lead to a cancellation, for example a massive disruption to delivery. We would be bringing in extra colleagues to deal with a delivery, which then gets cancelled, so that work is not there for them to do. However, even that is relatively rare, so we provide consistency of hours.
It is more common that the challenge is dealing with sick leave and then having to fill shifts, and additional shifts coming in. That is when you might get some later changes and later notice, because someone has phoned in sick that morning, so you need to fill the shift that morning; you need to have a person in the store, or—worst case—the store could not open. Again, however, a lot of that is done colleague to colleague, in terms of filling those shifts.
Regarding the impact, there are a whole range of people working in our stores, for some of whom it is a second income in their household. But for many, it is the first income in their household, so it is very important that we provide that local, flexible and secure work to people. In many ways, this Bill is enshrining and codifying things that are already common practice in our sector.
Sarah Gibson (Chippenham) (LD)
Q
James Lowman: We probably do not support the idea of exemptions. We think the rights should apply whoever you work for, and we do not want small businesses to be cast as being less good employers, with fewer protections for their colleagues.
However, the guidance needs to be applicable to and usable by businesses of all sizes. The guidance and regulations cannot be drafted from the perspective of, “What is your HR director going to do? What is the machine of the business going to do?”, when that is not the reality. For the vast majority of businesses in this country, the process will be much more driven by individuals having conversations, in order to encourage not only that flexibility and clarity, but practicality.
With good guidance and regulations, there should not be a need for exemptions. As I say, we do not want small businesses to be viewed in any way as being worse employers; in many ways, they often have advantages that allow them to be better employers.
The Chair
I call Michael Wheeler to ask a very brief question, which should receive a brief answer.
Michael Wheeler (Worsley and Eccles) (Lab)
Q
I will just circle back to guaranteed hours. Although I appreciate that flexibility is of value in the sector, if the hours are there in the business and regularly being worked, would you not agree that that demonstrates there is a need for those hours in the business to be worked, and therefore, in the interests of fairness and financial security for workers, should those hours not be guaranteed for them?
Helen Dickinson: Again, it comes back to how. A lot of people who work flexibly want to vary their hours because they have other commitments, either family commitments or caring commitments. From an employee perspective, they should absolutely have the right to request flexibility, or to be able to have future hours that reflect something that they have over whatever reference period it is, whether it is 12 weeks or longer. If the regulations end up requiring that reference period—and, by definition, requiring employer to offer whatever that period is to the employee, just by process—peaks and troughs around peak trading periods and employees’ other commitments will cause the company to end up in a continual process of changing people’s hourly patterns, all the time and for a lot of people. When a company has multiple locations, and tens of thousands or hundreds of thousands of employees, it could be quite difficult.
I think we are absolutely agreed on the principle. The question is how you implement it, and whether there is a way to implement it that gives the employee the right to request, rather than putting the onus on the company to put in a whole load of process that actually, at the end of the day, might not be what the employee wants.
The Chair
Order. I have to bring this session to an end. We have run out of the allotted time, and sadly, there are some Members of the Committee who did not get the opportunity to ask the questions that they wanted to ask. However, I thank the witnesses for the time they have spent with the Committee.
Examination of Witnesses
Joanne Cairns and Liron Velleman gave evidence.
The Chair
We will now hear oral evidence from Joanne Cairns, head of research and policy at the Union of Shop, Distributive and Allied Workers, and Liron Velleman, head of politics at Community. This session can continue until 12.40 pm.
Greg Smith
Q
The Chair
I should have asked you to very briefly—in a sentence—introduce yourselves. Will you do so at the start of your answers? Thank you.
Joanne Cairns: I am Joanne Cairns. I am the head of research and policy at USDAW, which represents over 360,000 members, mainly in the retail sector, but we also have members in distribution, food manufacturing, pharmaceuticals and a number of other sectors.
We do not share the concerns about the impact assessments. We think that the impact assessments demonstrate the impact of the Bill. There are obviously areas that need further clarification, which will be looked at through consultation. In terms of the impact on our members, we believe that it will be extremely positive, particularly for low-paid workers and women workers. The TUC analysis estimates that the reforms in the Bill will benefit the wider economy by over £13 billion a year, which it considers to be a conservative estimate.
Greg Smith
Sorry, £30 million?
Joanne Cairns: No, £13 billion. That was one of the more conservative estimates in the range that it looked at. That would be through reducing workplace stress, improving staff wellbeing, resolving disputes, reducing workplace conflict and increasing labour market participation.
Liron Velleman: My name is Liron Velleman. I work at Community union as the head of politics. We represent about 45,000 members across the economy, from steels, metals and manufacturing to the justice sector, education and early years, and the self-employed. Of course, we would always welcome any more evidence to show why the Bill would impact our members positively. Our members have been crying out for this change for the last 14 years, and even longer than that. It is important that we continue to make sure that the Bill does what it says on the tin, which is to make work pay but also to make our members’ and their families’ lives better.
Greg Smith
Q
Liron Velleman: At Community, we are confident that the Bill would represent a positive step for our existing members and would allow for greater coverage of trade union membership across the sectors we work in. For example, in the third sector or in education and early years—especially in early years, where, in some of the private provision of nurseries and early years settings, there is not currently as much trade union coverage—the Bill would make it easier for people to join a trade union and see the benefits of membership. On whether it would bring full unionisation of the economy, I am not sure it would necessarily go that far, but some of the onus is on trade unions to make sure that we are delivering, in a modern way, the best way for working people in this country to understand the benefits that they could receive by joining one of our unions.
Joanne Cairns: I agree with Liron. We have good relationships with a number of major employers where we are recognised. You heard earlier from the Co-op. We are recognised there and by a number of other major employers. However, across the retail sector, trade union membership is currently at around only 12%, which is a similar level to the rest of the private sector. Very often, the reason people have not joined a union is simply that they have not had the opportunity to find out about what a union does—nobody has ever asked them to join a trade union. We think that the rights that the Bill will bring in around access to workplaces will be particularly important. The Bill will also simplify the statutory framework around recognition, which is currently extremely burdensome and makes it very difficult for trade unions to gain statutory recognition, particularly with larger employers.
Justin Madders
Q
Joanne Cairns: Across the whole economy, precarious employment is a major issue. There is clearly a need for policy intervention in the labour market. The TUC estimates that one in eight people are in precarious employment, and that has risen by 1 million people since 2011. It has risen nearly three times faster than secure employment. That is certainly backed up by what we see with our members. Living standards have fallen quite significantly, and the impact of insecure work on our members is significant.
Of our members, 40% tell us that they have missed meals to pay their bills, 73% cannot afford to take time off work when they are ill, 15% struggle to pay their bills every month, and more than half have told us that financial worries are having an impact on their mental health. The level of statutory sick pay and the three waiting days for it is an issue of major concern for our members, as is having contracts that do not reflect the hours that they normally work. We welcome the Government taking action in those areas.
Steve Darling
Q
Liron Velleman: The Bill should have a positive impact on productivity. Following on from Joanne’s previous answer, when people are in insecure work, they are worried about whether they are going to lose their job tomorrow, whether they will lose some of their benefits or pay, and whether they will have the security of knowing what shifts they will be working. Tightening up lots of parts of employment legislation currently on the statute book should give workers extra confidence, so that they will be able to be happy at work and work more flexibly, representing the current state of the economy rather than keeping to how things were. That should, in totality, result in greater productivity for businesses as well as for individual workers.
Laurence Turner (Birmingham Northfield) (Lab)
Q
The Bill covers part of the “Make Work Pay” agenda. Are there other measures in the “Make Work Pay” document published earlier this year that should be included in the Bill?
Liron Velleman: The Bill clearly represents a great step forward in improving workers’ rights. For some of our members, it is in some ways a Bill for employees’ rights, rather than an employment rights Bill. Our members in the self-employed sector are looking for rights and protections to reflect the nature of the work that they do. In the “Next Steps to Make Work Pay” document, there are clear suggestions that there will be greater rights and protections for self-employed members, but that is a priority that we would like to see as part of the Bill, to fully grasp the current employment landscape in this country.
There is also a point around the consultation on new surveillance technology in the workplace. Clearly, technology in the workplace is one of the biggest benefits to lots of our members and to businesses, but it is also one of the biggest challenges when we think about the new world of work. Making sure that workers understand and are trained on, and can get to grips with, technology in the workplace, surveillance or otherwise, is vital to ensuring that they have the best rights and protections at work. Those two things would be our strong priorities for the Bill.
Joanne Cairns: For us, one of the key areas is statutory sick pay. The removal of the three waiting days and the lower earnings limit is extremely important and will make a massive difference to a lot of low-paid workers. However, the Government committed to strengthening SSP, and we would like the level of SSP to be looked at. It is well documented that the current level of SSP is below what people can afford to live on. If you earn the national living wage, you earn only around a quarter of your salary when receiving SSP, which has a significant impact on low-paid workers. That said, the removal of the three waiting days is extremely important and will make a big difference.
In respect of the right to guaranteed hours, which we warmly welcome, it is very important that the way it is implemented covers as many workers as possible. The commitment from the Government was that everyone would have the right to a contract that reflects the hours they normally work. We are concerned about the inclusion of the term “low hours” in the “Next Steps” document, which we feel could have the unintended consequences of making the right apply less widely than it should, and potentially undermining its effectiveness.
Chris Law (Dundee Central) (SNP)
Q
Joanne Cairns: We welcome the Government’s commitment to tackling fire and rehire. It is an issue not only when fire and rehire tactics are used, but when they are used by employers in negotiations as a form of threat to try to force unions or individuals to accept terms that they may not be happy with. Around a third of our members have been asked to change their contracted hours to support business need in the last 12 months, and one in five of them said that they felt forced into agreeing to the change, having been threatened with fire and rehire. It is a major issue. You referenced our legal case against Tesco, which demonstrates that this issue affects members in all sorts of workplaces.
Our preference would be for an outright ban on fire and rehire, and we would prefer the provision to be removed. If that provision stays in the Bill, our concern would be about the use of the word “likely”. We would like either for the word “likely” to be removed in reference to financial problems, or, at the very least, for there to be stringent guidance and a high bar set for the definition of “likely”.
Liron Velleman: At Community we had a similar case on fire and rehire back in 2021 with Clarks shoes. Our members at a distribution centre in Street in Somerset were threatened with a huge reduction in their hourly wage and the removal of their sick pay and coffee breaks. After a long campaign from our members in the union, and solidarity from across the UK, we managed to force the company to reverse its decision through ACAS mediation, but it clearly should not have been allowed to happen in that way at all. Our general secretary said at the time that, until fire and rehire is outlawed, no worker is safe from the harms that it can cause.
We hugely welcome the Government’s efforts to end fire and rehire, but we have similar concerns to USDAW about how the language about “likely” financial distress will be used in reality, given that it is rarely good-faith employers that use tactics such as fire and rehire in their workplaces. We do understand that there might be absolutely exceptional circumstances where the business would otherwise close. The question is whether the word “likely” will cast the net too wide and allow bad-faith employers to continue fire and rehire, even if the stated intention is for that not to happen.
Anneliese Midgley (Knowsley) (Lab)
Q
Liron Velleman: We rarely deal with collective redundancy on multiple establishments, other than for a few establishments, but it is important for the Committee to understand that collective redundancy is not always a huge battle between employers and unions. It gets into the news that this employer and that union are fighting to the death over something, but usually collective redundancy is an opportunity for employers and unions to sit around the table and try to minimise the impact on the workforce. Even with employers that unions might have a difficult relationship with, collective redundancy is usually an opportunity to do that.
It is very well known that Tata Steel recently announced collective redundancies at its steelworks in Port Talbot in south Wales. The original stated redundancy figure was around 2,500, but after work between the unions and the employer, that number has been heavily reduced through cross-matching and through finding training opportunities. Unions are not there just to say, “We are going to keep our members’ jobs for the sake of it,” and scream from the rooftops. Collective redundancy is an opportunity to allow mitigations to protect workers. Any improvements to rules around collective redundancy—whether that is reducing the number of employees needed to start a collective redundancy scheme, increasing the timeframe for that to happen, or looking at the establishment rule—are hugely welcome.
Joanne Cairns: On the establishment rule, we are very pleased that the loophole is now being removed. We took a significant legal case on behalf of our members who were employed in Woolworths, where 27,000 employees were made redundant in a single redundancy exercise when the company went into administration. In 200 stores with fewer than 20 employees each, there were 3,000 employees who were not entitled to any protective award even though collective consultation had not taken place. That was purely because they were employed in establishments with fewer than 20 people, even though the decisions were being made far above that level and affected 27,000 employees. It is just common sense that that is now being corrected.
We are aware that the issue of scope has been raised in this Committee. We went back and looked at the Trade Union and Labour Relations (Consolidation) Act 1992. Clause 23 of the Bill would not alter what section 188 of the 1992 Act says about
“the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”
It would not mean that workers are being consulted over redundancies that do not affect them; it would just mean that workers who are affected by the redundancies, or their representatives, would be consulted regardless of the size of the establishment that they are working at. We do not see people being involved in consultation exercises that do not affect them; that will not be a result of the Bill.
Nick Timothy (West Suffolk) (Con)
Q
You are obviously pleased with the legislation, and I know you think it could go further; I just want to ask a little about how you would characterise your engagement with the Department. Was it very welcoming? How many meetings did you have with Ministers and officials? Were draft clauses shared with you? How constructive was it?
Liron Velleman: Community has a productive relationship with the Department for Business and Trade. We have had productive relationships with parts of the Department for a number of years, but unfortunately not on a political level for the last 14 years. It is welcome that this Government have seen a sea change in how they want to do relationships with trade unions.
Nick Timothy
But could you answer specifically my questions about how many meetings you have had with Ministers and officials and whether clauses were shared with you?
Liron Velleman: I believe that meetings between Ministers and whoever they meet with will be on the public record, so I am sure you would be able to find that.
Nick Timothy
But you are not answering my question. I am asking you a question; I would like you to answer it.
Liron Velleman: I am not sure how many meetings we have had with Ministers related to this Bill.
Nick Timothy
Okay. Joanne Cairns?
Joanne Cairns: We have been involved in a number of roundtable meetings with DBT, which have been very helpful in understanding what the Government’s intentions are on a number of aspects of the Bill. I do not know exactly how many meetings we have been involved in, but the engagement of DBT with unions has been good, as it appears to have been with business as well.
Uma Kumaran (Stratford and Bow) (Lab)
Q
Joanne Cairns: Many of our members are juggling paid jobs with caring responsibilities, whether that is childcare or looking after disabled partners and relatives. The majority of our members are women; the burden of care continues to fall disproportionately on women, so we really welcome a number of the measures in the Bill that will help workers with caring responsibilities, including the right to parental leave and paternity leave being from day one of employment. We welcome the shift in the burden to employers to justify why they have refused a request for flexible working, and the new right to bereavement leave, which widens the current provision entitling bereaved parents to statutory parental bereavement leave.
We think that there are some areas in which those rights could be strengthened. We welcome the Government’s commitment to review parental leave more widely outside the Bill; we will be engaging with that review. We think we need to look at the length of paid maternity and paternity leave, the provision of paid carer’s leave and the wider support that is needed to make sure that those rights work effectively for working families.
On flexible working, the shift to employers having to justify their refusal is welcome, but there are still eight business grounds on which employers can refuse a request. It is still very difficult for employees to ask for flexible working; they are often concerned about what the repercussions of making a request might be. We recently surveyed our members with caring responsibilities and found that only just over half were even aware of the right to request flexible working. Of those who were aware, only half had used it. We would like a more robust framework for making requests for flexible working. For example, we could abolish the restriction on the number of applications that can be made in a 12-month period; extend the right to all workers, not just employees; and ensure that there is a right to appeal if a request is refused.
However, I would say that there has been some really important progress through the Bill and, we hope, through the review of parental leave to support working families.
Liron Velleman: I do not want to repeat what Joanne has said, but I have a small point to make. The day one right to request flexible working is so important. So many people start a new job and then work out, “Okay, how am I going to balance this with my caring responsibilities?” If they cannot make that request for the first six months and they really struggle to make sure their kids are picked up from school or to deal with their elderly parents, they might find a not great way of dealing with it. It is then quite difficult to turn around to their employer and make the request six months down the line. It is so much better to be able to say, as a day one right, “This is what I want to give to this new employment that I have just received, but this is the world I exist in and these are the other responsibilities I have—how can we best make that work?” We know that our members will see a huge benefit from that, especially if they move to a new workplace.
The Chair
As there are no further questions, let me thank our two witnesses for attending.
Examination of Witness
Nye Cominetti gave evidence.
The Chair
We will now hear oral evidence from Nye Cominetti. We have until 1 pm for this panel. Could you briefly introduce yourself, Nye?
Nye Cominetti: Hello, everyone. Thanks for inviting me along today. I am principal economist at the Resolution Foundation, a think-tank based just down the road. Our mission is to improve living standards for families on low to middle incomes. As part of that, we research and write about the labour market, along with various other issues. We have been interested in the employment reforms since they have been under way.
Greg Smith
Q
Nye Cominetti: Sorry, is the question whether the impact assessment is fit for purpose or whether the regulations themselves are fit for purpose?
Greg Smith
Well, the Regulatory Policy Committee has said that eight of the impact assessments for this Bill—the separate columns—are not fit for purpose. Do you think the Bill had its tyres kicked hard enough before it went into Second Reading and Public Bill Committee?
Nye Cominetti: It is very hard to assess the impact of the Bill, as many of the details are yet to be determined. The Government said that they wanted to do this within their first 100 days, and they managed to do so, but that meant that they had to leave many “fill in the blank later” bits in the Bill, so I do not particularly blame the civil servants in the Department for Business and Trade for having struggled to come up with clear numbers on the costings and the potential impact.
For example, on the right to a regular contract, the impact on business will depend on how “low” is defined, in terms of the qualifying threshold that workers will have to reach. It will depend on how businesses have to go about making the offer to workers. It will depend on how regularly those offers have to be made, which relates to the reference period. In the light of all those unknowns, it would be very difficult for the Department to have come up with firm numbers. I think in the end they said £5 billion, but it is hard to know whether that is a good or a bad number.
I would not be so negative as to say that they have failed in any sense; I just think that they were given a very difficult job. As more detail becomes available, it would be great if the civil servants who have already put a lot of thought into the process could come back and say, “Now that we know a bit more about what is actually going to be happening, here is our updated view on what the impact of the regulations might be.”
Greg Smith
Q
Nye Cominetti: No. I can describe in general terms how we might think about the potential impact, but I think any researcher or economist who tried to put a number on it would be misleadingly specific or misleadingly accurate. Not only do we not know what the direction of the impact might be—it could be that there are small positive or negative impacts on the size of GDP—but it is very hard to get a sense of the scale of the impacts. If you want some kind of judgment, the impact on economic growth will probably be very low—very close to zero. My expectation is that it will possibly be negative, but that is an incredibly hard judgment to reach, because you can point to impacts in both directions.
It is very uncertain, but the important point to make is that that does not mean that we should not be going ahead with these reforms. We should not be pursuing only those reforms where we can say, “The impact on GDP will be x,” even if not very confidently. One of the first things that this Bill should do is improve working lives for workers. It may be that we cannot put a monetary value on that, or that there is no associated impact on GDP, but to me that is the main and the first reason why many of these reforms should be undertaken.
Greg Smith
Q
Nye Cominetti: The same number, would be my best guess.
Greg Smith
What do you base that on?
Nye Cominetti: Internationally, we can draw scatter plots of the employment level in a country and the extent of employment regulation, and basically those lines come out flat. You have some countries with very high employment and very high levels of regulation, and some countries with lower employment and high regulation, so there is no clear relationship with the employment levels across countries. That is confirmed by the OECD, which has done lots of detailed work looking into the impact of periods when countries have either rowed back on reforms or expanded them.
What we do see in the employment data is that when you beef up the reforms around dismissals for individual or collective workers, you tend to see lower hiring rates. So the rate at which workers move around the economy will probably slow down if you make it significantly harder for employers to fire workers, and that gives rise to potential implications for productivity growth. Now, I still think those effects will be small. When the Office for Budget Responsibility, in one or two years’ time, starts putting the numbers into its forecasts, I expect them to be very small indeed. My expectation is that the employment level will be very, very narrowly lower if anything.
To give you some sense of scale, the OBR said it thinks that the employer national insurance contributions bill will be about £25 billion, and that that would lower the employment level in this country by 0.2%. The DBT said that it thinks the direct costs of the measures, including sick pay, are in the order of magnitude of £5 billion. If you compare those numbers, that starts to give you a sense of the scale of potential employment effects that we are talking about. I am sorry not to give you a more exciting answer, but my best guess is that the impact on employment levels will be small.
Justin Madders
Q
Nye Cominetti: It is a good question. One of the ways that I like to think about this package of reforms is that it extends to low-paid workers the kind of everyday flexibilities and dignities at work that people in professional jobs such as me and you take for granted. It is not the case that all low-paid workers hate their job or face the risk of losing their job every week, but it is the case that they experience a higher level of insecurity than higher-paid workers do.
You can look at that in various ways. In recessions, low-paid workers are more likely to lose their job, so they face a higher risk of losing their job in downturns. They are also more likely to rely on statutory sick pay if they fall ill, so for many low-paid workers, falling ill comes with an income shock. That is not the case for someone like me: if I fall ill, I go home and pick up an online meeting or two if I can, but if I cannot, I will get paid as normal. That is not the case for many low-paid workers, so that is a real insecurity.
Obviously, there are zero-hours contracts as well. For low-paid workers, I think roughly one in 10 is on a zero-hours contract. For higher-paid workers—the top fifth in the hourly pay distribution—it is a vanishingly small number and very uncommon indeed. I am sure that you have heard plenty of evidence about the kind of impact on security that zero-hours contracts can bring to some—not all—workers.
The most illuminating statistic is probably that 2 million workers say that they are fairly or very anxious about unexpected changes to their hours of work. You might think that that is because that comes with not just an impact on their life—“I do not know which days I’m going to be working next week, and I have to make it work alongside childcare”—but a potential income risk as well. In many respects, the working lives of low-paid workers are less secure than those of higher-paid workers. My hope is that some of these measures will go some way to redressing that balance.
Justin Madders
Q
Nye Cominetti: I would not want to try. It is not quite the same, but the closest that some studies have tried to get is saying to workers, “Would you consider this alternative job, which would improve your terms and conditions in these respects, but offer you lower pay?” That tries to get at the question of how much pay people would be willing to trade off for those other benefits, such as a more stable income or a better relationship with management.
It does not directly answer your question, but there was a study in America of Walmart workers which found that they would accept a 7% pay cut in exchange for being treated with better dignity by their managers, including things such as better advance notice of their shifts and not getting messed around late in the day to come in and pick up extra hours. I definitely cannot quantify it, but more ambitious researchers might be able to.
Steve Darling
Q
Nye Cominetti: Well, I have a few caveats. First, overall employment rates are lower in high-deprivation areas, so we need to remember that all these measures will have an effect on workers, rather than those who are not working. If you want to improve income levels, this is not the place to do it. As I was just saying, however, we know that low-paid workers experience those issues of insecurity at higher rates than high-paid workers.
You also need to remember that there is not a one-for-one overlap between high pay and high income and low pay and low income. Some low-income households will have higher-paid individuals in them, but because of having a large family or having only one earner rather than two, they will still end up in that low-income category. That caveat aside, it is still the case that any measures that improve working lives for low-paid workers will have the biggest impact on lower-income households.
There are questions about what the knock-on effects are going to be. If you were really optimistic, you might say that some of these measures to improve job quality could even have a positive labour supply effect. We know that, in the 2010s, that was a big driver of improved income at the bottom and massively increased employment among low-income households. So an optimistic take on these measures might be that you could trigger some of those kinds of effects, but that is much more uncertain.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
Q
Nye Cominetti: That is a tricky question. If measures to tackle zero-hours contracts are put in place effectively, I think that they will mainly smooth the income of those individuals rather than necessarily raise their level of pay. There might be a knock-on impact on the level of pay if workers have better outside options and can more readily bargain for pay increases or shop around for jobs, but the first effect that you would hope to achieve through these measures is smoothing pay—taking away the volatility from week to week. There is plenty of evidence that that is the element of those jobs that households struggle with most, not the level of hourly pay.
We know that, through minimum wage action, we have massively improved earnings for the lowest-paid workers, but it is the volatility that is most difficult to deal with, as I think anyone sitting here would readily agree. If someone is thinking, “Next week, my pay might go down by 20% or 50%, or maybe my hours will be zeroed down entirely,” it does not take much for us to imagine the impact of that not just on their wellbeing and psychology, but on their spending decisions. They might think, “I can’t afford to commit to that spending now, given that I’m uncertain about what my pay is going to be next week.”
If these measures are done well and genuinely smooth the incomes of those experiencing the worst volatility, I would expect improvements in individuals’ wellbeing. Potentially—again, more optimistically—you might see knock-on positive effects on the economy more broadly, if people feel more comfortable spending because they know what their pay is going to be in future. But as I have said a few times, that is definitely much more uncertain.
Sarah Gibson
Q
Nye Cominetti: The bit of the Bill that most obviously addresses that is the right to request flexible work, which is being strengthened, as I am sure you know—employers now have to give a justification for saying no. When you look at surveys of workers with disabilities or elderly workers, flexibility is very often mentioned as something that might have helped them to stay in work.
If you will allow me to make a second point, surrounding all these measures and, in fact, our employment framework more generally, are questions of enforcement and worker power—they are sitting at the side, but they are absolutely crucial. There are many existing rights that workers have on paper, but because our enforcement systems are fairly weak, especially compared with other countries where the state does more of the job of enforcing these rights, people do not necessarily experience in reality the entitlements that the law says they should have.
Even in a world where workers gain that strengthened right to flexible work, that means little if they, for example, look at the employment tribunal system delays and think, “Well, that’s an impossibility. There’s no point fighting my employer over this. I’m never going to win that,” or, “I can’t spend the next two years waiting to win that.” So the answer is yes, but only if we also resolve some of the existing problems about people’s ability to enforce their own entitlements.
Laurence Turner
Q
Nye Cominetti: You are right: labour market statistics are not currently in a good place. The Office for National Statistics’ labour force survey is in the doldrums in terms of response rates; so if you wanted to increase the resources going into that, I would welcome that, as a researcher. Realistically, many of these knock-on benefits are incredibly hard to estimate. Personally, I think we have to accept a world where we say, we know that workers will benefit in terms of wellbeing from some of these measures. I do not think you need to put a monetary value on that to say it is worth doing, personally, but I know that is not necessarily the way that Government Departments think about these things.
In terms of the costs—businesses will be saying, “If you do this measure, I will have to reduce hiring by this much”—I think we could be moving from relying on what businesses say. I know that many businesses will be engaging with these processes in good faith, but the history, for example with the minimum wage, is for businesses to say, “If you raise this cost there will be dire consequences: job losses will look like x and y,” and in the end that does not turn out to happen because businesses find ways to adapt. That does not mean that will happen this time—there is no guarantee that you can keep pulling off the same trick of raising labour costs and not triggering an impact on employment—but looking for evidence on what has actually happened in response to similar changes in the past or in other countries, rather than relying on what businesses say, might be a better guide. But that might be controversial.
Chris Law
Q
Nye Cominetti: Thank you for the question. I was hoping to get the chance to talk about sick pay specifically. That is one area where the Government have gone halfway to addressing an area of insecurity. Removing the lower earnings limit is great; the lowest earners, mainly women working few hours, all have access to SSP now, which is excellent.
Removing waiting days is an important change as well. It will no longer be the case that you have to wait four days to receive anything and, as you know, for most people who are off sick for a few days with a cold, that is a one or two-day situation, not a week. Those measures are good, but what they do is extend a very low level of coverage to more workers. As you say, we have not resolved the fundamental problem that if SSP is what you rely on, as is the case for a majority of low-paid workers, you will still face a very serious income shock if that is what your employer ends up paying you when you do that.
Raising the level of SSP comes with a much bigger cost. First, it would be employers that would pay it, and then the Government would face a decision about whether to reimburse, perhaps, smaller employers facing the largest cost, as has happened in the past. It is a more costly measure, which is why the Government have not done it, but I hope that they have it on their list to address it soon because, as you say, it remains the case that for our low-paid workers, falling sick means earning less and facing an income shock. I do not think that is right.
You can either look at high-paid workers who do not experience that shock, or you can look at the vast majority of rich countries who have set in place a statutory minimum much higher than we have in the UK. That is not the case in the US, but almost all European countries—not just the Scandinavian countries that we look to as the far end of the scale in terms of welfare state provision, but the vast majority of countries across Europe—have a sick pay system that is much more generous and offers much more protection to workers than does the system in the UK. So yes, I would agree that that remains a glaring unaddressed problem.
The Chair
I am afraid that brings us to the end of the time allotted for the Committee to ask questions of this witness, and for this sitting. I thank you very much for coming along this afternoon and answering the Committee’s questions.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Fourth sitting)
Thursday 28th November 2024
(3 weeks, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 28 November 2024 - (28 Nov 2024)
The Chair
Welcome back. Will the witnesses introduce themselves, please?
Mike Clancy: I am Mike Clancy, general secretary of the Prospect trade union.
Andy Prendergast: I am Andy Prendergast, GMB union national secretary for the private sector.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Mike Clancy: The primary purpose of the Bill is to reset employment relations, and trade unions are an important part of that. I have the privilege of sitting on the ACAS council, which is a tripartite body responsible for overseeing good employment relations and good practice. That demonstrates that unions, employers and independents can work together successfully. I see that as the primary purpose.
The reality is that in so many jurisdictions that have positive employment relations and that are addressing their productivity challenge, unions play a very important role. An objective to have the right level of trade union membership in the economy, so that working people have a voice, is at the heart of the Bill. Previous Administrations have restricted the ability of working people to have a voice. So there is a real opportunity to, first, improve employee relations; secondly, ensure that working people generally have a voice; and thirdly, ensure that unions are part of the fabric of the economy in a way that addresses the challenges ahead. I would say that the Bill can deliver all those objectives.
Greg Smith
Q
Mike Clancy: The key thing we would like to see is that access to workplaces is not confined to physical premises, but is also digital. That applies where union recognition already exists. We need to ensure that we can address the workplaces of today and tomorrow, not just those of the past. Physical access is important, but many workplaces have remote, hybrid, virtual working arrangements, so we would want the Bill to be amended to ensure that digital access, in a way that is compliant with data protection, is addressed.
Greg Smith
Q
Mike Clancy: It probably looks like ensuring that the best practice from employers now—who allow us access to their intranet and to electronic and digital means, in terms of their staff—becomes the norm, and that it complies with data protection. That happens in workplaces up and down the country now, but some employers see the law in a different way.
An important thing to get across is that if you start to talk to an employer about organising their workplace, the best way to do it is by consensus. That means understanding the employer—understanding the nature of their product and what their concerns may be—as well as making sure that their workforce’s aspirations, if they want a collective voice, are delivered in a way that works successfully for all parties. The access conservation needs to reflect the nature of the workplace as it is now, not just as it has been. It should not be confined to physical premises.
Andy Prendergast: From our point of view, this is very much a 21st century Bill for a 21st century economy. It is not about looking back; it is about trying to make sure that what we have is fit for purpose, moving forward. Unionisation rates are around 20% at the moment. If we look at a graph of unionisation and also at a graph of rising inequality and the fall in productivity, we will see that they are almost perfect correlations. We believe that collective bargaining is a way of improving things. That has been identified by organisations as diverse as the World Economic Forum and the Church of England. If the Bill ends up with higher levels of unionisation, which leaves lower levels of inequality, we believe that that will be a good thing.
On where the Bill is lacking, I think, like Mike, that we need to make sure that there is a digital aspect of access. Many of our members working for gig economy platforms in parts of the new economy do not have the old workplace that we traditionally know. It is not a factory and not necessarily an office. So we have to talk about how rights can be accessed by people who work remotely, who work from home, or who simply do not have a workplace.
There is one area where the Bill could be strengthened. We welcome the improvements in statutory sick pay, but we do not believe that they go far enough. We did a survey today of care workers at HC-One that shows that over one third cannot afford to take sick leave. We saw during the pandemic that having people go to work when ill, potentially spreading diseases, is bad for everyone. We think something could be done on that later that would ultimately help workers and help the economy generally.
Greg Smith
Q
Andy Prendergast: They key thing for us is that everyone who ultimately wants to join a trade union has the option to do so. It is important that people are aware of their rights, aware that they can join trade unions, and aware that they have a right to, for example, SSP on day one, statutory holidays and the minimum wage. Rights that people do not know about and that cannot be enforced are ultimately no use. This is shamelessly partisan, but I would like to see union rates being far higher, and I think that the economy as a whole would benefit from that.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Q
Andy Prendergast: I think the Bill is a major step in the right direction. One of the big problems that we have seen, certainly over the last 30 to 40 years, is the huge increase in insecurity in the workforce. That tends to have a massive impact on the individual concerned and their ability to fully partake in the economy, and to make long-term commitments through mortgages and loans—the kind of stuff that drives the economy. Ultimately, we have seen that as they have lost their guaranteed hours—in zero-hours jobs, for example—and there has been the removal of their employment rights, those people are less able to exercise those rights. So we see the Bill as a major way of moving industrial relations forward.
We would also point to the work around the pandemic. In the last 14 years, we were very much locked out of Government in most areas, yet when the pandemic came around, there was a fantastic bit of work between the CBI, the TUC and the Government, with Rishi Sunak standing on the steps of No. 10 talking about the fantastic work that led to the furlough scheme, which saved millions of jobs and millions of people from poverty. What surprised us is that that great work was then stopped virtually as quickly as it happened. If we look at other G7 countries, a tripartite system is what drives higher levels of productivity, lower levels of inequality, and ultimately, higher levels of investment and economic outcomes. We think that the Bill is a long overdue step in the right direction of moving some power back towards workers and away from businesses, too many of which exist for exploitation.
Mike Clancy: I echo those comments. If we look at the responses from the business community, yes, there is going to be some anxiety about the detail and how it will work—again, I reference my experience not just in ACAS, but from working with employers more generally—but we find ways to do this and operate in practice successfully. Good employers have nothing to fear in the Bill. That is not just good employers that are larger, and we think that with the right degree of consultation, which the Government have committed to, we will be able to address those areas where there are a few wrinkles and things to ensure work in practice.
We have to reflect on what the alternative was. The deregulatory, more de minimis approach to employment regulation applied previously, and if that trajectory had continued, we would not have addressed the issues of precarious work and productivity, and we would not have been able to do that in a way that looks at the workforce of the 21st century, as opposed to looking backwards.
There is a lot in the Bill, but that is not surprising. There will probably be a long period of adjustment. With the right consultation, I think we will get to a position where we look back at this as a milestone in changing how we do things, a paradigm shift in relations. I think that it will drive better engagement not just for unionised workforces, but for workforces more generally, because that is where employers will see that they can answer the challenges on the next generation of technology insertion and organisational design, and make sure that they can get the talent that they need.
Sarah Gibson (Chippenham) (LD)
Q
Andy Prendergast: As a union that represents a large number of relatively low-paid people, we regularly come across the barriers to getting back into employment. One of the big ones we have seen is the expectation of flexibility, and specifically one-sided flexibility. We have a lot of people who are on benefits and want to work; unfortunately, often the only jobs they are offered are zero-hours jobs. It is difficult for people on benefits, because it is a bureaucratic nightmare to get on them, and people need to be supported to come off them to a guaranteed wage in a guaranteed job. Too often, they are offered zero-hours contracts, which replaces the guarantee of certain levels of benefit payments with uneven levels of reward. We want to get people back into meaningful work.
There are clauses in the Bill on removing exploitative zero-hours contracts—and the point there is “exploitative”. We look after thousands of Uber drivers, for example, and for them flexibility is very much the driving point. In the same way, a number of people benefit from being on genuine zero-hours contracts. At the same time, organisations such as McDonald’s and Wetherspoons have 80% to 90% of their staff on zero-hours contracts. There is no excuse for that. We find that the moment an individual chooses to exercise their flexibility is the moment they stop being offered shifts. That is a major block on people coming back to work, particularly when they are on universal credit.
We want to be able to give people genuine offers of employment so that they can better themselves, fully take part in the economy and deliver for them and their families. The Bill goes some way towards addressing that.
Mike Clancy: I should make a general point before addressing more specifically the part of the economy your question focuses on. A failure of our economy for many decades now—in contrast with other economies with high levels of unionisation, collective agreement and partnership—is that we have not taken the fear out of change in the economy. That can mean that people’s reaction to change, and their ability to operate in the labour market, is correspondingly reduced. A lot of economies are able to ensure that if people lose employment, they are able to come back into employment much quicker—there are either statutory minima or collective agreements between employers, trade unions and others to make that happen. The Bill asks some fundamental questions about how we want to organise ourselves in the economy and says that, actually, it is better to have places where we convene and talk about the challenges than to do it company by company and enterprise by enterprise, and have an atomised conversation.
Andy touched on zero-hours contracts; we represent a lot of self-employed people, many of whom value their self-employment. Indeed, it is part of the process in film and TV production. They have experienced the precarity of that environment in recent years, particularly in relation to covid, and subsequently there have been other issues in respect of production. The legislation needs to look holistically at the economy. It is important to talk about flexibility in a way that engages all types of worker, not just those who may be able to work hybrid or remotely. The fact that the Bill makes employers, unions and others think about the flexibility proposition has got to benefit people’s ability to come back into the workplace.
Anneliese Midgley (Knowsley) (Lab)
Q
I want to ask about balloting. What are the practical implications for your unions of paper balloting? What sort of difference do you think electronic balloting will bring?
Andy Prendergast: It has been a somewhat strange situation in that, as far as I am aware, the only legally required paper ballot relates to industrial action. That sometimes creates a major impediment for us taking industrial action when that is the clear view of the workforce. There was a certain irony, not lost on us, that when Liz Truss was elected, effectively as Prime Minister, that was done via an electronic ballot. We have been told consistently by people in this House that electronic ballots are not safe and secure, yet you can have one to elect a Prime Minister but you cannot have one to take industrial action. If I am absolutely honest, the state of the Post Office does not help. We often have to have a fast turnaround on a ballot. Where I live, I normally get the post about every eight days. We end up with an antiquated system that simply does not work for this purpose.
If you look at electronic ballots, the important thing is that people have the opportunity to take part in a democratic process. It is a process that is allowed under the International Labour Organisation freedom of association rules and the European convention on human rights. It is vital that people are able to partake in democracy. We believe it is something of a strange situation that the one area that currently requires paper ballots is industrial action law. If I were cynical, I would argue that that is specifically to stop industrial action taking place.
For us, industrial action is always an absolute last resort, but at times it is necessary. People do not always like industrial disputes, but when you look at what they have achieved over the years, from equal pay via Ford Dagenham to the eight-hour working day, having weekends off, and significantly improved health and safety, it is important that workers have the ability to hold their employers to account in that way. Ultimately, something that simply allows them to take part in that democratic process has to be a good thing.
Mike Clancy: For too long, the arguments for inhibiting electronic balloting have, in my view, been entirely bogus. If you look at it from an employer’s perspective, they want the most representative turnout if they have a trade union in their midst, particularly in the context of difficult circumstances where industrial action may be in contemplation—and so does the trade union. We want a representative turnout, and we also want to be able to send a clear message if we get to a juncture where bargaining or something else in the process is proving to be difficult.
Electronic balloting is going to enable exactly that. The idea—this is where I feel the argument has been very bogus—that it cannot be done securely is in the face of all the evidence to the contrary. The sooner this particular clause can be progressed and made real, the better. Clearly, it will improve not only engagement, but the validity of results, and I believe that is absolutely something that trade unions want. The sooner we can do it, the better.
Chris Law (Dundee Central) (SNP)
Q
Mike Clancy: I am sure we will both have our views on the subject, but on fire and rehire, this is the space in which some of the most egregious employer behaviour has played out—behaviour that probably most in the business community look away from, because it is not the way they want to conduct their business with their workforces. We therefore absolutely welcome the fact that the Bill focuses on that dynamic. It has no place in good employment relations. But of course there has to be a space in which you evaluate, if an employer has a genuine financial challenge, whether it has some form of defence in that regard.
I cannot emphasise enough—in a way, this is not seen enough in the national media, on social media and so on—that day in, day out, trade unions solve problems with employers. They face difficult business circumstances at times, and they work with employers, communicate with their members and the workforce, and come out with some form of proposition that goes some way to resolving the issue. Therefore, the number of times that employers should fall foul of these provisions should be very small. If you conduct your engagement with your workforce either through a trade union or workforce representatives and in compliance with the law, and you are not seeking to evade your responsibilities—you see the importance of open book and sharing the finances, because that is all part of keeping the workforce engaged —this is really a minimum platform to deal with the employers who might sit on the extremes. I think it is very important that this has been addressed. It is sending a message about how we should do business around here.
Chris Law
Q
Mike Clancy: We will be going through clause by clause, will we not? We will have to look at where there is potential for employers to exploit these sorts of loopholes. What you have to understand is that often in employment relations, sensible employers read the writing on the wall. The rights of access may or may not come in for some time, but employers will think, “Right, we are moving into an environment where we need to engage with our workforce differently.” Other employers will say, “Look, that sort of behaviour is frowned upon in public policy. We are not going to go near it.” I do not think we should lose sight of the direction that the Bill sets on these matters. Let us be clear about the context. This is a big endeavour, and there will be detail to work through for both employers and trade unions. I think we should set out on this in the way that we mean to go forward. Let us do it co-operatively where we can.
Andy Prendergast: Just following up on fire and rehire, I was involved in resolving the British Gas dispute, where close to 500 members of ours got fired because they would not sign a new contract. At the time, it was roundly condemned across the House. The Prime Minister at the time got up and said that it was dishonourable, and that has very much been our view.
The real concern for us, as Mike says, is that, as trade unions, we sometimes have to make very difficult decisions. Following 2008, I would go into factories to negotiate pay cuts to keep people in work. It was heartbreaking, but we had to do it because it was the right thing to do. Overwhelmingly, we had those conversations not because of fire and rehire, but because, ultimately, we could convince our members that that was the best way of securing their jobs. We did something similar during covid.
The big issue for us is that if you look at British Gas, it is a highly profitable company and it went down a route that was, frankly, disastrous for it as a business and that it is still recovering from. We need to stop that behaviour happening. A contract is a contract. In this country it is almost your word, and if you are willing to break that it asks questions about whether you went into it honourably in the first place.
Some of the points you make are right. We have seen lots of financial engineering. We see inter-company debt. I think there is a concern long term that we may find cases where companies have engineered a financial position that allows them to do something they otherwise would not. That will have to be dealt with on a case-by-case basis. Where we have collective rights, we can still take action on that when we need to. This Bill takes a significant step in the right direction towards a point where the expectation is that contracts are honoured and that companies are prevented from boosting profits at the cost of their workforce.
On the SSP point, as a trade union we are used to negotiating improvements. Occasionally we cannot let perfect get in the way of good. I am pleased that we are talking about an improvement on SSP. Does it go far enough? I do not believe it does. I think that will have to be looked at long term. There are huge areas, such as care, where it is catastrophic that people do not feel that they can take time off, and, as I said before, that has a real impact, but at the moment I am happy that, for once, we are talking about an improvement to this. Personally, I am always of the view that we bank it and move forward.
Michael Wheeler (Worsley and Eccles) (Lab)
Q
Andy Prendergast: When you look at the school support staff negotiating body, this is something that has been on the agenda for about the last 25 years. We have found overwhelmingly in schools that teachers have national bargaining and very clear terms and conditions that are vigorously enforced, but unfortunately for the support staff, it is almost like the soft underbelly. So often when schools enter financial difficulties, heads—when you read the school returns, they have often given themselves quite large pay rises—end up cutting hours and pay from some of the lower-paid people.
Over the last quarter of a century, we have seen a transformation in what schools are like. Most of us remember schools having one teacher and that was it. Now, we see increasingly more pupils with special educational needs go into mainstream education, and they need that additional support. People from vulnerable backgrounds get the support of teaching assistants, and we have seen educational outcomes really improve off the back of that.
For us, particularly as we see more and more academisation and more and more fragmentation, we often find that there is an undercut-and-poach approach from different schools, which ultimately means that one benefits at the expense of another. It is not helpful when we get into that situation. The school support staff negotiating body allows for minimum standards and the extra professionalisation of roles, which really have changed over the last 25 years. Originally, there was a little bit of a stereotype that teaching assistants were there to clean paint pots and tidy up. Now, they do very detailed work on things like phonics and supporting pupils with special educational needs and disabilities, and they really help to deliver classes. I think it is time that professionalism was recognised and rewarded.
Nick Timothy (West Suffolk) (Con)
Q
Andy Prendergast: Personally, I was involved in two meetings, and they were tripartite ones. They were quite robust exchanges where we had Ministers, civil servants, people from the employers’ associations and large employers, and also people from trade unions. I think those meetings were really quite helpful. We were raising points that sometimes they would argue with or agree with, and they raised points that sometimes made us look at things differently.
In the wider sense of the union, we have had quite a lot of engagement, but I would expect a union to be engaged over a Bill that has a huge amount of clauses about trade unions. In terms of whether we saw any of it in advance, no. We were very much holding our breath when the Bill came through. Part of my job is to tell people things and make cases, and to be told that they have heard, and then something comes out that is the complete antithesis of everything that we talked about.
As I said, we did not see the Bill in advance. When it turned up, there were some things we liked an awful lot. Some things, as we said beforehand, did not go far enough. The majority of engagement was tripartite, and I think both ourselves and the business organisations that have taken part in that process have helped understand it, and we have got to something we can all live with. That is certainly our impression.
Mike Clancy: I would just emphasise that Prospect is not affiliated with a political party, so any comments I make are based on evidence of the past and the present. We have had proportionate engagement. We have not kept a count or a register in that regard. Frankly, probably trade unions and business would want more and more time on this, and I am sure that will be a challenge going forward.
What I think was most positive, and something I had not seen in my career before, was a tripartite meeting with a range of very senior business representatives, trade unions and civic society with officials, the Business Secretary and the Deputy Prime Minister back in August. That is important because it demonstrates that we can get in a room, we can talk to each other and we can resolve problems. That, for me, is the absolute core of this Bill and the “Next Steps to Make Work Pay” agenda. I hope that we can do more of that. I have talked a lot—I have had the privilege of doing this job for a long time—about how we have lost convening spaces in the economy in the past period, so we may be shouting over fences or making our cases separately to Government. Government is difficult, and it is about problem solving. The more that business, trade unions and civic society can come together and say, “Look, we’ve got our differences at the edges, but we can do this together. This is how we would fashion an outcome within the public policy you set,” the better. We will always want more, but to be fair, with their strong pace and intensity, the Government and their supporting officials have done an admirable job in convening us.
The Chair
Thank you very much. I am afraid that we now have to go on to the next panel of witnesses.
Examination of Witnesses
Professor Alan Bogg, Professor Melanie Simms and Professor Simon Deakin gave evidence.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
It may be that I do not ask a question, but for clarity, Professor Alan Bogg was my professor for labour law many years ago, and we were at one point work colleagues.
The Chair
I do not know what the collective noun for professors is—a proliferation, perhaps. Anyway, could you please introduce yourselves briefly?
Professor Bogg: I am Professor Alan Bogg, and I am a professor at the University of Bristol and a barrister at Old Square Chambers.
Professor Deakin: I am Simon Deakin, and I am a law professor at the University of Cambridge.
Professor Simms: I am Melanie Simms, and I am professor of work and employment at the University of Glasgow.
Greg Smith
Q
Professor Deakin: I would not say that it has holes in it. It is perfectly normal to legislate in this way and defer complex matters to regulations. As a potential Act of Parliament, it is no more or less complex than similar Acts that we have had in the past. Labour law has always been complex and very granular. There are many provisions in the Act that will take effect without the need for further delegated legislation, and there are quite detailed schedules. I do not have a problem with the way it has been drafted, but there are issues with its scope and coverage, which we might go on to discuss.
Professor Bogg: It is a very ambitious piece of legislation, and it was delivered at lightning speed—in 100 days—which is an important part of the context. The collective labour law dimension of what is in the Bill is actually very simple. Much of it is in the form of repeal, and there are some proposals for tweaks to the existing structure. In terms of the collective dimension, I do not think the Bill has holes in it. It gives a tolerably clear indication of what the relevant provisions will look like and what needs to be done.
In terms of the individual provisions, it is fair to say that there is detail that needs to be worked out on day one dismissal protections and on guaranteed hours, but those are very complex issues and I do not think there is anything unusual about that. It is the beginning of a conversation, not the end of the conversation, and that is why we are here today.
Professor Simms: I am not actually a professor of law; I am a professor of work and employment, and general employment relations. I am always interested in the system as a whole, and how law and the implementation of all kinds of other pressures collectively shape employment relationships.
I agree with my two colleagues that the Bill is a very useful starting point. Law can only ever go so far in determining the rules of the employment relationship. It will always rest on wider social systems, economic systems and so on.
Greg Smith
Q
Professor Deakin: The RPC said that about some of the impact assessments—it raised a red flag over some of them. They are concerned not so much with the legal drafting as with the economic effects of the law. The impact assessments are engaging in a cost-benefit analysis, which is attempting to put some numbers on the impact the law might have on the economy in terms of cost to employers and knock-on employment effects. Actually, they have quite a strict protocol to deal with. What counts as a cost is set out in some detail in protocols that we could discuss. For example, the cost to private parties—to employers—counts as a cost even if that is simply redistributing to households and to workers. From an economic point of view, we would be interested not so much in the private cost, but in the impact on the economy as a whole. Do these laws interfere with the way markets work? Are they going to lead to unacceptable costs, or will they produce countervailing benefits?
As a scholar interested in the economics of law, and having researched the impact of labour law, I was surprised by some comments in the RPC documentation. I was very surprised to read the RPC suggest that there may not be inequality of bargaining power in certain sectors, such as the public sector or transport, where there are very large employers, some of which are effectively monopolies. There will probably always be some inequality of bargaining power between individual workers and even smaller employers, but we have trade unions and collective bargaining because there is that inequality of bargaining power. The part of the Bill that addresses the ability of unions to organise, and to organise industrial action, in sectors where there are very powerful employers does seem to me to address a fundamental issue of inequality of bargaining power.
Elsewhere, the RPC asks for more evidence about asymmetric information and productivity. I thought the impact assessments were actually very good, in citing secondary sources on those very issues, and also balanced. They cited—I should declare an interest—work I wrote, but they also cited other work. You will see scholars cited in the impact assessments who have a less positive view than I do about the economic effects of labour laws. There are no citations at all in the RPC documentation. Now, that may be because that is not the job of the RPC. Fair enough, but I should have thought that the RPC request for more information and clarification from the Department for Business and Trade could quite straightforwardly be met.
Professor Bogg: I support much of what Simon said. Focusing on the collective reforms, there has been scaremongering about re-unionisation of the economy and how radical this all is. You would think that we were going back to 1965 in terms of the reform of the strike laws, when actually we are probably going back to 2015 with a few tweaks. The minimum service levels framework is being repealed, but as far as I am aware it was never used. There was a prospect of its use once, but it was so inflammatory that the employer in the ASLEF dispute stepped back from using it. The Trade Union Act 2016 ballot thresholds will be repealed. In that context, and with a few proposed adjustments to strike law, this is not very radical. It takes the UK from a hyper-restrictive framework in comparative terms, to a restrictive framework in comparative terms. In terms of the overall international context, even if all of this makes its way on to the statute book, the UK will still have one of the most restrictive strike laws in Europe.
Professor Simms: I could not agree more. It sets out an agenda that would be regarded as incredibly restrictive in many comparator countries. I think it is better than what we have at the moment, which is such a restrictive context particularly for trade unions and strike action. Concerns have been raised by the International Labour Organisation about the UK’s restriction on strike activity. In my judgment this, as drafted, does not take us fully into compliance even with some of the concerns expressed by the ILO—it is still incredibly restrictive.
Greg Smith
Q
Professor Simms: We have to be realistic about the resource capacity of our trade union movement at the moment. There are certainly things in the Bill that will make life simpler for trade unions—not necessarily easier, but it will require less resource to, for example, organise for a ballot, or to organise a re-balloting during a period of industrial action. At best case, that frees up some capacity to get on with the nitty-gritty of representing workers in the workplace and solving workplace problems. I cannot prove that that is going to happen, obviously, but that is certainly more than possible. But will it free up sufficient capacity to try and organise in the breadth of the retail sector, for example—lots of small employers? Personally, I think that is unlikely. I do not think that the UK trade union movement has that resource capacity at the moment.
Professor Deakin: Historically, what drives unionisation and strike levels is the economy. High inflation drives strike action and tends to drive union membership. Union membership, union activity and strike activity are highly sensitive to the wider economic context, which at the moment probably does not favour a massive increase in union membership. I would be very surprised if this particular measure moves the dial much on membership, and I do not think it will move the dial much on industrial action either.
What could happen, especially with the arrangements for sectoral pay bargaining, is that many workers, whether or not they are in a trade union, would benefit from sector-wide collective norms. That would be the case where the arrangements come in for two sectors that are mentioned in the Bill, and hopefully that is just the start. Other European countries and many countries outside Europe have sectoral collective agreements that, in effect, set a floor for an industry or sector. I am not sure whether you would call that re-unionisation, but I think the coverage of collective agreements is perhaps more important than simple membership, although unions depend on membership for their finances. The economic effects will turn very much on coverage.
Professor Bogg: As I said, the reforms to strike law are fairly modest, and I think that is true of collective bargaining laws. There are two incremental nudges towards sectoral institutions in two sectors, and there are some very modest tweaks proposed to the statutory union recognition procedure—lowering the preliminary membership threshold, potentially, and removing the majority support likely threshold—but it is difficult to see. I do not know what re-unionisation means, I must confess, but I will be very surprised if you see a radical upsurge in union recognition as a result of these very sensible but cautious changes in the legislation.
Justin Madders
Q
I want to ask you in particular, Professor Deakin, about the impact of the regulations on increased productivity and innovation—the general economic benefits. Do you think that that will have a positive impact on such issues?
Professor Deakin: I think so. The evidence internationally is that there is a strong correlation between stronger labour protection and both productivity and innovation. I think that sentiment in the research community has shifted very much in the past 20 years. That is partly because we have better data and probably better methods. Certainly, a generation ago, the World Bank was quite hostile to the idea of labour law and said that labour laws, in aiming to help workers, might harm them. That, however, is no longer the World Bank’s position. The World Bank has said that there can be too little labour law in an economy—too little protection for innovation and productivity.
Of course, productivity has many causes, and the way we regulate labour is only one issue. If we are talking about labour law, though, these reforms are essential to help improve the productivity position. Will this law on its own lead to an improvement in UK productivity? Not necessarily, because that depends upon how we regulate other areas of the economy, and that is affected very much by the way corporate governance works and also by training and other aspects that are not all covered by the Bill. But is this Bill essential in the area of labour law for improving economic performance? Absolutely. Does it go in the right direction? Yes, it does.
The research we have done in Cambridge, which I mentioned in my written evidence, shows that, on average, strengthening employment laws in this country in the last 50 years has had pro-employment effects, for various reasons. That is, as I said in my notes, not a predication or a forecast, but historically in this country, stronger labour laws are not associated with unemployment.
Professor Simms: Could I chip in as well and emphasise the point that Simon has just made about skills and training? Skills and training of managers—the professionalisation of managers—and of our workforce are really crucial ways of shaping productivity and innovation. They intersect very strongly with some of the issues in the Bill.
In general, the push to professionalise management of work—the managerial decisions—is a really important part of that more complex story that Simon has just spoken to. The signals through the law, but also through other areas of policy, to managers, organisations and employers about the professionalisation of their management are a really important thing that the state can do to support that general up-tick in productivity and innovation in general.
Justin Madders
Professor Bogg, do you want to add anything?
Professor Bogg: I am just a simple lawyer; I would not like to offer any views on the economics of it all. I will defer to my expert colleagues.
Justin Madders
Q
Professor Bogg: This is really the most critical point of all. We can enact shiny rights and put them on the statute book, and if they are not enforced, there is not much point to the entire exercise. What will be critical is the proper resourcing for a new body. The right direction of travel is for that to occur through a new agency, rather than having to co-ordinate across different agencies. I think that will make things more efficient.
It is also important that the employment tribunal system is properly resourced. I saw the welcome announcement that the time limits will move from three months to six months, in line with the earlier Law Commission recommendation. As the Lady Chief Justice said, the rule of law costs money in order for it to be done properly, so the tribunal system will have to be properly resourced. There needs to be a commitment to a principle of effective access to dissuasive remedies. That is absolutely central to all of this working or not working.
Professor Simms: Can I pick up on the enforcement case? It is important for the Committee to properly understand that the organisations that will be merged into a new agency have had to cut back, to some extent, on their advice and guidance to employers and employees because of the challenges of resourcing over the last years. They still work in those spaces, but they cannot do it at the scale that they have previously—ACAS in particular. Re-resourcing that expertise to support both employers and workers’ unions to make good decisions that never become a breach of any rights is really important.
Justin Madders
Professor Deakin, anything to add?
Professor Deakin: Enforcement is really critical. We do not have an effective enforcement regime in this country. Recent research on the minimum wage, for example, shows that on the whole, employers that do not comply with it can actually save money by not doing so. They are rarely punished, fined or required to pay wages back in a way that even covers the gains they make by not paying the minimum wage. We are not effectively prosecuting minimum wage breaches. We treat breaches of the criminal law involving theft in a supermarket, for example, and in other contexts extremely seriously. We do not treat wage theft with anything like the same seriousness.
There are hardly any company director disqualifications in cases of non-payment of the minimum wage. The message being given, or the one that has been given, is that compliance with the legal obligations is in some sense optional, and not complying can be profitable for firms. We are not the only country in that position. It is also an issue in the United States.
However, we can do more. We can certainly resource the inspectorate. In my note, I suggested that we can also facilitate collective remedies in addition to individual employment tribunal claims. It is difficult for an individual to take a claim to a tribunal, and it can also be costly for employers, who will, in many cases, have to organise a legal team to fight a case, and they will not get their costs back. It seems to me that neither side is necessarily happy with the way the employment tribunal system is working.
I believe that collective remedies, particularly through arbitration, which can be brought by trade unions—hopefully in future to the Central Arbitration Committee —are more effective than individual claims in many cases. It is not just a question of resourcing the new fair work agency. I think there should be a greater role for collective arbitration, and in my note I made some suggestions based on precedents from the 1970s, which could easily be used again.
Sarah Gibson
Q
Professor Deakin: There is a difference between a complex measure, written initially for lawyers to implement, and communication about that measure once it is enacted. I believe that the essential changes being made by the Bill can be effectively communicated. However, I entirely understand the problem faced by many smaller firms, which often lack resources when confronted with a legal claim. They may be able to take out insurance to cover their costs, but often it is the time spent in dealing with the dispute that is the real issue. I researched that about a decade ago, but I do not think the issues have changed. Often, litigants—claimants—feel unhappy about the way the employment tribunal system is working. Employers also often feel unhappy, even if they win a claim. Since that time, there has been an enormous growth in delays before employment tribunal claims are heard. It is an important issue.
Communication from the Department to all employers will be essential. However, I also think that there is scope for collective remedies, and to reassure smaller enterprises that other firms are complying with the law, so they do not feel under that much pressure not to comply because they see other employers not complying. I very much hope that we are moving towards a system of labour law in which we need less enforcement and litigation, with an inspectorate that is trusted by both sides. Countries such as Japan and Sweden, for example, have extremely low litigation rates. That is partly because they have highly effective inspectorate systems, and also because employers of all sizes have come to accept the importance of labour standards.
Professor Simms: I think that returns us to my point about the importance of agencies such as ACAS being able to advise in a way that is accessible. ACAS runs a free-access telephone service to support anybody with a problem at work, whether that is a small business owner or manager, or an individual employee. That kind of service, which people can use to ask questions, is an incredibly important part of any change. We know that a lot of the enterprise agencies also offer a similar kind of support. It is those support mechanisms, as well as the communication, that I think are really important. Just because the law is complex does not mean that we have to explain it in a complicated way.
Professor Bogg: These are real concerns, and they obviously need to be taken seriously. I can see that the day one dismissal protection may well cause real anxiety for small firms. I think the point has been made that you would not expect a small business owner to look through the Employment Rights Bill. I was up at 5 o’clock this morning feverishly sweating as I read my way through it, and it would not be reasonable to expect people without legal qualifications to do that. What will be crucial in later phases of this roll-out is having guidance, such as codes of practice, that are written in accessible ways for employers to be able to do the right thing, which most employers actually want to do. I think that is really important.
The area that will require a little bit more thought is the guaranteed hours provisions, which are complex. Some of that complexity is inevitable because this is a fiendishly difficult issue, given the range of different contractual arrangements that we have in labour markets, but I do not think that is beyond the bounds of smart legislators dealing with this as it goes through the process.
Alison Hume (Scarborough and Whitby) (Lab)
Q
Professor Simms: We were warned about this question, and I am going to be very cheeky and ask for two. First, I think a clear and proactive right to strike and join a trade union would go a long way to bringing us into line with many of our comparator countries. I also have some concerns about the negotiating bodies, which really look quite like pay review bodies at the moment, rather than free collective bargaining between the parties deciding their own issues and what works for them. Those are the two areas I would focus on.
Professor Deakin: I would make a change on fire and rehire. I think that the provisions on unfair dismissal are helpful but will not address the problem of collective agreements being undercut. At best, at the moment, the remedy for an unfair dismissal is almost certainly going to be compensation, when what is needed is a mechanism to embed terms and conditions going forward. The Department is consulting on reforms to the interim relief procedure, but I would go further. I think there has to be a change to the remedy for unfair dismissal so that the previous terms can very clearly be reinstated. At the moment, it is not possible to enforce a reinstatement order. You have to go to the county court even for compensation, but in the case of a reinstatement order, the employer can resist it and just pay compensation.
In my opinion, there should be a collective arbitration mechanism. The Central Arbitration Committee should have the power to reinsert terms and conditions for the affected categories of workers, and that would be true of the persons hired, if that happens to replace those who have been dismissed. That mechanism existed under 1970s legislation and would provide the kind of collective remedy that we have just been discussing. It would be important for stabilising terms and conditions in labour markets and avoiding the need for individuals to bring complex claims before employment tribunals. I also have ideas about zero-hours contracts, but you said just one.
Professor Bogg: I have said that I think enforcement is the critical dimension of the conversation about all of this Bill. One specific change that I think would be valuable is to remove the presumption that collective agreements are not legally enforceable. That puts the UK in an almost unique position in the world. One aspect of the P&O Ferries scandal that is not often discussed is that there were collective agreements in place, but because of the statutory presumption that they were not legally binding, P&O Ferries was able to put the collective agreements in the bin. I am not saying that I would mandate them to be legally enforceable, but I would remove the statutory presumption, which would give a signal to the parties that they could make them legally enforceable. I think that would bring some real value to the enforcement dimension of UK labour law.
Nick Timothy
Q
“It is very likely we will see increased unionisation as a result of the Bill”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 67.]
and Mick Lynch said that the Bill will mean that “many workers”—more than 50%, he hoped—
“are covered by collective arrangements in one form or another.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 62.]
That is up from 22% today. So I think it is fair to describe that as re-unionisation. I do not really understand why the Labour party would be so ashamed of doing such a favour for the Labour movement, of which it is a part. But anyway, you just mentioned P&O. I just wanted to ask you, who did you think was right about P&O? Was it the Transport Secretary or the Prime Minister when he slapped her down for criticising them?
Professor Deakin: I am not sure I quite understand the question.
Nick Timothy
It is about employment rights. We have been discussing P&O throughout the whole—
The Chair
If nobody wants to answer the question because you don’t know the answer, that is fine.
Professor Deakin: I can tell you what I think about P&O.
Nick Timothy
Q
One of my concerns about labour market regulation relates to the use of substitution clauses by firms like Amazon and Deliveroo, where they give a licence to a courier and the courier is then entitled to share that licence with others. The expectation is that responsibility for checks for things like the status of the substitute, in terms of whether they can work legally and so on, and responsibility for the pay that will be provided to that person, all lies not with Deliveroo or Amazon, but with the person that they have contracted with in the first place. That is not dealt with in the Bill at all; I think it should be. Can you expand on that, please?
Professor Deakin: Of course, the issue of employment status has been deferred, has it not, to a consultation? But unless a way is found to include workers like the Deliveroo workers within the scope of protective labour law, the proposals to improve collective bargaining rights and many other rights will just fall away. Large businesses like Deliveroo, I would say, need workers; and if our labour law system cannot describe those workers as protected by one means or another, there is a clear defect in it.
There are various ways to get to that point. They do not all turn upon the definition of worker, or the use of a substitution clause to get you outside the scope of the current law. In some cases, and in some countries, independent contractors are protected by labour law rights, even if they do not count as employees. In our past, homeworkers who might have employed other people had legal rights under labour laws. So this issue absolutely has to be addressed. I understand it is out for consultation. Many of the measures contained in the Bill would not be effective, unfortunately, if this issue was not grappled with.
Professor Bogg: In the situation that you have just described, I think part of the driver for the use of substitution clauses is that they are used to avoid employment status. So in any review of employment status, a key thing that will need to be addressed is the problem of substitution clauses as a way of avoiding either employee or worker status. There is quite a simple way to do that, which is to treat personal work as an indicative rather than a conclusive factor, because it then just drops back into the range of things that the tribunal will look at.
In a situation where a large company is relying on wilful blindness to avoid responsibilities under migration rules or under health and safety legislation, there is a very simple response, which is to impose criminal liability on large corporations that try to rely on wilful blindness to avoid obligations in primary legislation. That is a very straightforward way of tackling an abusive avoidance of rules that are very important to enforce.
Dr Tidball
Q
Professor Deakin: If we take the whole of individual employment law, for example, the Bill will bring us closer to the OECD average, but there will still be various respects in which we would not be as protective of individual rights as other countries, especially when they relate to remedies for unfair dismissal. Enforcement could be made much more effective, but there is no doubt that the Bill brings us closer to the OECD norm—and not just there: many countries in east Asia and other parts of the world will have labour law systems that are at least as protective as ours. So it is a corrective.
On the other hand, I emphasise that UK employment law has never been as deregulatory as US law has, for example. We are not in a situation, as US unions and US workers are, of starting from scratch. We also have a history of labour law that we can build on. That makes it easier to think of this as the first step in a rolling programme that will effectively restore us to where we were before the 1980s. In the 1970s, more than 80% of workers in this country were covered by a collective agreement. Union membership was around 55% or even 60%, but coverage was over 80%. We had a very progressive employment protection law at that point.
Going back further, we were the first country not just to industrialise, but to have modern factory legislation. We now know that the implementation of the Factory Acts led to not just protection and things like the weekend, but improved productivity. This history is important for us.
Professor Bogg: This Bill seems as radical as it does only because the baseline is so low, and it is very important to keep that in view. Let us assume that this Bill is not enacted—if you look at the OECD countries, we are the fifth least regulated on dismissal protection out of 38 countries, and we are the third least regulated on hiring on temporary contracts. That is where we are in OECD terms, so the measures on dismissal protections and guaranteed hours will push the UK back into an intermediate position in the OECD. I do not think the Bill marks any kind of revolution just yet; it just pushes the UK back into the mainstream of other civilised OECD countries with employment regulation that works effectively.
Professor Simms: To return to enforcement, the challenges of both individual and collective enforcement in the UK at the moment really do add extra difficulty. Not only do the rights not exist in general—there are relatively few rights in general—but they are very difficult to enforce.
Chris Law
Q
Professor Simms: Clearly, there will be a period of adjustment. The Chartered Institute of Personnel and Development, which represents human resources specialists in the UK, has indicated that a period of 12 to 18 months would probably be a sensible adjustment period. Business and managers in the UK tend to want to conform to whatever employment rights and regulation there is. The challenge is communication, and communicating clearly in a way that then allows them to access knowledge, skills, training and development for their capacity to do those things. It will take time—it always does—but the general trend, certainly over my lifetime, has been that where new rights have been introduced in this area, most UK companies want to come into line as promptly as they reasonably can. We are talking not decades.
Professor Deakin: I think it would be really important to build a consensus on this issue, because what can be achieved in this Bill will begin a process that will have to be rolled out further if we are to have a modern system of labour market regulation, and that will require cross-party consensus. I very much hope that that will be possible.
The Chair
I am sorry; we do not have time for any more contributions, but thank you for your attendance.
Examination of Witnesses
Luke Johnson and Michael Lorimer gave evidence.
The Chair
Good afternoon. Thank you very much for coming along. Would each of you introduce yourself, please?
Luke Johnson: My name is Luke Johnson. I have been an entrepreneur and investor for the best part of 40 years, and I am currently the co-owner and the director of various businesses employing roughly 10,000 people.
Michael Lorimer: I am Michael Lorimer; I am the chief executive of the DCS Group. We employ about 600 people. We are in the fast-moving consumer goods sector, and we have the world’s biggest non-food clients. When you buy shampoo, shower gel or Fairy liquid from a convenience store or a discount retailer, we have probably distributed it and indeed made some of it, because we have a manufacturing division as well. That is quite unusual, I think—for a distribution business to actually invent a manufacturing business—in the last 10 years. We are based in Oxfordshire and Redditch, in Worcestershire.
Greg Smith
Q
Luke Johnson: I think you need to put it in context. From my various decades of creating businesses and jobs, I would say that we now have among the highest ever levels of tax burden and of overall regulation and legislation, and that this is a high-cost country. Job vacancies have been falling for at least 15 months. Unemployment is going up. Interest rates are massively higher than they used to be. Insolvency specialists tell me that they are rubbing their hands because they think that next year will be very busy. I would say that even if we do not suffer a technical recession next year, it is odds-on that there will be a serious slowdown. I am at the cutting edge of businesses, and, in some cases, some of my companies might not survive next year. I do not know how many Committee members have ever been involved in starting and growing a company and keeping it from failing, but it is not much fun.
The idea that now is a good moment for small and medium-sized businesses—which, let’s face it, are the future; they are the ones that disproportionately innovate and, actually, disproportionately create most of the jobs. They are the ones that are the next big businesses; every business started as a small business once. On the idea that companies that can barely afford any form of HR could stomach a big new Bill of 150 pages and 28 measures, they will not even have time to read it. The idea that they can adopt something like this when they are facing quite possibly—we have to remember that they have the hangover of two years when so many of them were shut. They have legacy debts and energy prices. Electricity prices in this country are the highest of any developed nation. Try manufacturing things here now. The timing of this is beyond belief, and that needs to be put into context. Whether £5 billion is the real cost or not, it is death by 1,000 cuts because you never know until you get a big tribunal what the real cost is, for example.
Michael Lorimer: I agree. Obviously, a Bill like this does not exist in splendid isolation if you are running a business. Luke has identified the increased costs of doing business, which are severe and impact small to medium-sized enterprises most, which, as you will be aware, represent 80% of the employment in this country. There was the news yesterday about the White Paper, “Get Britain Working”, and as a top line, I am very supportive of that. I think that is absolutely brilliant. Getting 2.8 million people back into work is something I am very passionate about. In Banbury, we are beside an area of deprivation, with a lot of people on benefits, and a lot of young people who are feeling quite depressed about life. We would love to be offering those people jobs—I cannot emphasise that enough. For six months of the year we have temporary staff coming in, and we are very glad they come—they come from different countries, work very hard and do great work for us.
My concern, without being able to give you a number on it, is that for some of the riskier hires that might come from the areas around where our business is based—in other words, people not in education, employment or training, kids who have not worked before, or people who have been unemployed for a long time; you hear on the radio every day that people in their 50s cannot get a job—businesses will be very slow to take a risk because of the day one legislation that is coming down the track. We have an HR department, so we can deal with this to some extent, but as you slide down the road and find businesses that employ maybe less than 20 or 10 people, there will be deep concerns and perceptions that this is just too expensive and scary.
I was hugely encouraged by the White Paper—I think the top-line aspirations are absolutely the right ones. It is the same direction of travel, towards 2 million jobs, that the Jobs Foundation have published a report on this week, and that the Centre for Social Justice are focused on. I would exhort all of you politicians, regardless of your colour, to get behind the concept of getting Britain working. But my fear is that this torpedoes a lot of those plans—genuinely, that is my fear.
Greg Smith
Q
Luke Johnson: We are still grappling with the fallout from the Budget. There are millions of pounds of additional tax that some of my companies will have to pay, and a 6.7% increase in the national living wage, when average inflation is 2% or 3%. As for the idea that many businesses have already given deep thought to this new piece of 150-page legislation—when we already have such things as the Employment Rights Act 1996, the Equality Act 2010, the Health and Safety at Work etc. Act 1974, and many other pieces of legislation—I dare say that large companies have given it some thought, but most of the businesses I am involved with are not so big. I think they will wait and see what the final result is before trying to measure whether it leaves the business smaller.
With any piece of legislation like this, we have to remember that it is not just the current jobs affected, but the unseen jobs and opportunities that were never created. I urge you to look at the fact that, for the first time in many years, the number of businesses being created in this country has been falling or stagnant for five years. That is more or less the first time in decades. If we lose the full employment we have enjoyed and the enterprise economy that we have managed to create—I believe it to be much more fragile than some might believe—it will be incredibly hard to get back. Jobs do not just fall from the sky. They appear because companies are created by risk takers, and they take a risk with every job they create. Jobs only exist because they are helping that business to progress, and 80% of jobs are nothing to do with the Government—they are private sector. If you crush the private sector, you crush jobs. All the research shows that the single most important ingredient for a happy society is jobs. Without jobs, you do not have civilisation.
Michael Lorimer: Our turnover is in the public domain, so I can share it with you. We will probably turn over about £370 million this year. We are in a high-turnover, very tight-margin business, so if we make £10 million net, that is about the height of it. It is very difficult to estimate the increased cost of national insurance contributions and the national living wage, because not all the details are yet clear, but we think it will be somewhere between £1.5 million and £1.8 million. That is quite a big chunk out of our net profit.
We do not have a huge problem with it. We are a company that believes strongly in creating prosperity. The national living wage is something that our hearts have no problem with, because we would like to see people getting paid correctly, but we have to mitigate that. That is something that we just have to get on with. Our company has grown successively every year since it started 30 years ago, in top line, bottom line and people numbers.
I need to stress this again to you: the passion that we have is growth and job creation. When we see people coming into the business, working their way through it, earning more money, developing their career and prospering, that is what brings us the greatest joy of all. My concern, which I have to repeat, is that businesses smaller than ours—following on from Luke’s point, we were a small business at one stage—are going to find it very hard to get on that growth trajectory.
Justin Madders
Q
Michael Lorimer: From my perspective, there is a pretty good balance between employer and employee at the minute. I am sure you could unpick that, and there could be cases for either side, but as somebody who runs a business in, quote unquote, a “fast-moving environment”—in fact, Luke Johnson’s business is much faster-moving even than ours—where you are focusing on driving your business and trying to get results, I think that there is actually a good balance. I am not particularly in favour of tinkering too much with it. That is my personal view.
Luke Johnson: I would slightly differ, in that I think some areas are increasingly onerous for employers. Increasingly, when I talk to entrepreneurs, they are looking to outsource, offshore or automate rather than employ people. Not all of that is legislation and regulation; post furlough and lockdowns, there is a vast amount of talk among employers and owners of businesses about workforce motivation. That goes back to a point that Michael made earlier about the number of people not in work who are of working age and able-bodied. I think this is an issue for society as a whole, and I think a happy society is one in which people are productively occupied.
I am surprised that you say that many employers want greater protections for their staff. They are very entitled to give them to them if they want. They do not need to rely on the Government for that; they can just give them better contracts if they want.
There are a number of concerning aspects to the Bill, which could be counterproductive if the objective is higher living standards. As I understand it, this Government’s priority is wealth creation, prosperity and jobs. Ultimately, although I do not believe that this legislation will be devastating to employers, I think it will be damaging for job creation and therefore counterproductive to wealth creation and to achieving higher standards of living.
Sarah Gibson
Q
You mention that you are concerned about day one rights. I wonder about the changes in the probation period. We seem to be in agreement that it might affect where you draw your prospective employees from. Can you suggest any amendments to the Bill that might encourage the entrepreneurial small businesses we so rely on to continue to take on staff from areas of deprivation or the long-term unemployed—those who currently struggle to get work?
Michael Lorimer: I was at a breakfast yesterday morning for the launch the Jobs Foundation’s report, “Two Million Jobs”. A chap from Sheffield spoke who runs an organisation that gets young people into work. He gave the example of a kid—I cannot remember his name—who would not normally find it easy to get a job interview. They trained him and helped him to get the right attire to get him into a job. The point was that this guy looked very risky—he had not worked, and he came from a long line of people who had not really seen any value in work—but he got the job because the people interviewing him saw something that they thought was worth working with. They knew they were taking a risk; they did. He has turned out to be an absolutely superb kid and is now progressing well.
Equally, yesterday I spoke to a friend of mine, a CEO of a business, who had somebody who interviewed incredibly well, did very well for the first 12 months, got promoted and at month 13 or 14 became an absolute monster to manage. Under the two-year rights, they were able to sort that out.
As we all know, you can get the interview stage right or wrong with hires. For SMEs, you just need to give comfort and space that hopefully they will get the right hires, but that if they do get the wrong hires and it is not the right fit, there is an escape route. Personally, I do not want to put a time on that. Our system works well for us at the minute, but I am sure Luke might have an opinion.
Luke Johnson: I find this a big piece of legislation, by my standards: 150 pages is probably what you are used to, but as someone running a business who has 1,000 other things to do than read a 150-page piece of legislation about employment, I find the whole thing rather a surprise. The Prime Minister said that he wants to
“rip out the bureaucracy that blocks investment”.
If there is a genuine belief in the Government that this legislation will boost investment, I have a bridge to sell them.
Laurence Turner
Q
“I do not think there is a direct link; you do not pass a piece of legislation and trade union membership and collective bargaining go up”.––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 67.]
Another witness, Mick Lynch, said that personally he hoped to see 50% collective bargaining coverage. That is compared with 39% now. It seems like thin margarine to me and certainly not a unionisation of the economy, but there we go.
My question to the panel is the same question that was put to employers’ federations earlier this week. We all understand the points that you have made, but are there specific measures in the Bill that you welcome?
Michael Lorimer: No.
Luke Johnson: No.
Michael Lorimer: I am not trying to be contrarian, but I think Luke’s point is a very good one. There are 150 pages and 28 new measures, or whatever it is. Apart from anything else, it is an administrative burden. I welcome the White Paper hugely, but there is nothing in here that I am excited about.
Luke Johnson: I will give you an example of one very specific issue that may arise that I do not think has been thought through properly, and its unintended consequences. There is an adjustment to collective redundancy rights. This would, I guess, normally apply in a business that is going through a very severe restructuring and possibly an insolvency.
What happens in an insolvency is that a buyer can keep that business alive and keep a chunk of the jobs, at least, from going by buying it out of administration. The one thing that goes through an administration is the TUPE rights of the employees. If you are only buying a small portion of that business, normally you can carve out only TUPE rights relating to the staff of the bit you are buying—let us say that it is several divisions, departments or whatever. As I understand it, this will tighten that, as proposed, such that almost any buyer of any part of that business will face the TUPE rights of the whole workforce. The unintended consequence will therefore be that parts of a business that were good and that could survive will not; they will be shut. The whole thing will be shut and all the jobs will be lost.
I do not think that whoever drew up that part of the legislation has fully thought it through, because it is in society’s interest that where businesses can be saved and rescued—I have been involved on both sides in those situations—they should be. It is always a great deal easier in certain respects to save a business that has failed because it had too much debt, or some other problem, than to start all over again from scratch.
Michael Lorimer: Perhaps I should add that there are aspects of this that I am quite neutral or comfortable about. There are some things around bereavement, and so on, that are all good. I emphasise that my focus today is around the day one stuff and flexibility.
Nick Timothy
It is quite conspicuous that you are the first two witnesses, I think, who actually run businesses yourselves, and your evidence is rather different from much of the—
Luke Johnson: Has any of the other witnesses ever created a single job?
Nick Timothy
I would have to leave that to them.
Michael Lorimer: I did think, Nick, that we could have met in the endangered species part of the Natural History Museum, as business leaders.
Nick Timothy
Q
Luke Johnson: I think there is a complacency about our current prosperity. There is this belief that jobs will always appear, that businesses will always invest and that living standards will naturally rise. It sometimes feels as if Britain is a nation running on fumes at the moment. We have large amounts of debt, certainly at Government levels. We have public spending projected to take, I think, 45% of GDP—a very high level compared with 10 years ago—and that crowds out the private sector. Interest rates, especially if you have to borrow from the bank, are pretty punitive.
As for the idea that we can continue to occupy the role in the world that we used to occupy decades ago, it is a dramatically more competitive place. There are dozens and dozens more countries where money can be invested, factories can be sited and jobs can be created. Many of them are much lower-cost than we are. They might argue that they have a hungrier workforce, or whatever it may be. No country has ever taxed and regulated its way to a higher standard of living. It feels as if that is what this Government are about. They need to get real about how prosperous economies are actually created.
Michael Lorimer: If I were speaking to him, I would say, “Listen well to those who matter most.” To go back to the White Paper, you simply cannot create jobs without the private sector on board. You can listen to all sorts of people who will give you incredibly important stakeholder advice, but if you want to create jobs and grow the economy, the business community has to be on board. If we want to create prosperity, the private sector is where it is going to happen. I would say, “Listen well to those who matter most.”
Secondly, I would say, “Take your time and consult widely on this.” I feel that at the minute the consultation is not wide enough. We are here today: there are two of us speaking, broadly on the same message. Take time and do not rush it through for the sake of meeting a timescale. Take time and speak to business. Go out to the country and speak to small and medium-sized businesses and employer groups.
A lot of this stuff is not controversial. It is tick-box and—to go back to the first question—it is reinforcing a lot of stuff we do in the business anyway. We have 600 employees; at the minute I think we have three people in total on long-term sick, so we do not have a lot of problems. We have an engaged workforce and we are delighted to pay people well, at above the national living wage. All that stuff is about us trying not only to help our people to prosper, but to help our customers and the Banbury community to prosper. All this feels quite counterproductive and could have a lot of unforeseen consequences.
Michael Wheeler
Q
Luke Johnson: It has already been raised, but if you introduce lots of rights like paternity rights and flexible working rights from day one, you risk having more problems, and that will be a cost. For example, there is a new obligation to protect employees from harassment. That sounds wonderful, but if you are in the licensed trade, as I am, that means that a single remark from a single customer could lead to a harassment claim for which you are responsible. How on earth are we to police that?
I do not know whether you are at all familiar with the state of the hospitality trade, but it is pretty dismal. We had two years where we were barely allowed to open; we have had unprecedented energy costs; we have higher rates; we obviously have all the costs for NIC and so forth from the Budget; and we have at best flat, if not declining, sales. I fear that hundreds more—if not thousands more—hospitality businesses will shut next year for good. That is obviously not the fault of this legislation, but it is petrol on the flames.
I suspect that a lot of the organisations you are hearing from are very large corporates with huge HR departments. In a way, they want to keep out new, young and innovative competition, because that is how big companies often behave. Building walls of regulation suits them, but that is not how you get a growing, vibrant and innovative economy. You get that through lots of smaller, younger businesses growing, coming up with new ideas and challenging the incumbents.
Michael Wheeler
Q
Michael Lorimer: It goes back to what Luke said about a lot of this day one stuff. I do not want to paint a picture that we do not do a lot of this stuff already, because we work on the basis that if you recruit well and you train and develop well, you will not have as many problems down the line. But it is easy for us because we have an HR department and legal advice, so if we do hit the buffers we can deal with it. For smaller businesses—the entrepreneurial businesses that Luke mentioned—the perception, which of course is always stronger than the reality, is that it will create a lot of fear and concern.
I was in a shop recently and it took a long time for me to pay for a pair of Wellington boots. I said, “Are you busy?” He said, “No, but so-and-so left and we are not replacing him, because we’re very fearful. We’re a small business with two or three employees, and we’re anxious about what’s coming down the line.” You just need to be very mindful. That is where wide consultation comes in: you need to speak to people and see where the sore points are going to be.
The Chair
I am afraid that that brings us to the end of this panel, because we are not allowed to go beyond 3.40 pm. Thank you both very much for sharing with us your knowledge and experience, based on your work as employers.
Examination of Witnesses
John Kirkpatrick and Margaret Beels OBE gave evidence.
The Chair
We now come to the next panel. Good afternoon and thank you for coming along. Can I ask you both to introduce yourselves briefly?
John Kirkpatrick: Thank you, Sir Christopher. I am John Kirkpatrick, the chief executive of the Equality and Human Rights Commission which, as I am sure colleagues know, is the regulator and enforcer of the Equality Act 2010 and one of the UK’s national human rights institutions.
Margaret Beels: I am Margaret Beels, the director of labour market enforcement. I am aware that people are not always familiar with what that role does. It was created in 2016 by the Conservative Government, who perceived that there was a lack of joined-up thinking between different enforcement bodies. They perceived that my role would help by creating a strategy to apply to three of the bodies that have an important role in enforcement: the national minimum wage team, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority. I have a statutory responsibility under the Immigration Act 2016 to produce a strategy that covers the activities of those bodies, and to report on whether the strategies that I have set have made a blind bit of difference to what has gone on. Most recently—
The Chair
Sorry; I think that is enough. Perhaps if you have more to say, you will be able to bring it out in answer to questions.
Greg Smith
Q
John Kirkpatrick: I am not sure you would necessarily expect me to answer that question directly, Mr Smith. Nevertheless, I will say that yes, you are quite right: impact assessments are very important to us.
Let me say a bit more about that in the context of the Bill. As an example, I will take some of the provisions designed to improve opportunity and to regulate particular forms of contract. We know from our work that women and disabled people have lower rates of employment than men and able-bodied people, and we know that younger workers are more likely to be in zero-hours contracts than workers of other ages, and so on and so forth. The measures in the Bill that are designed to protect the interests of those people with protected characteristics may well be beneficial to them, but not if the result is that those jobs then vanish rather than improve.
What I would put back to the Committee, and potentially to the Government, is the real importance of assessing up front the likely implications of the measures that Parliament wants to put in place. If it does enact the measures, subsequently reviewing and monitoring them to know what impact they have actually had would be really important. I should probably put in my advertisement, at the end of that comment, that it seems to us that only if they do that will the Government be fulfilling their obligations, under the public sector equality duty, to assess the impact of the things they want to do on those in whose interests they seek to act.
Margaret Beels: I would address the question in a similar way, in the sense that when we look at the labour market, we see the job situation being very flexible, but one person’s flexibility can be another person’s precariousness. We are about to publish some research—in fact, we will publish it tomorrow—that is based on a survey of workers, which demonstrates that about 10% of workers are in precarious work and about 8% of workers get stuck in precarious work. That is the matter that needs to be addressed.
Greg Smith
Q
John Kirkpatrick: The answer is that it is hard to tell. You have already heard evidence on that—I heard some of the evidence this afternoon and you have heard other evidence in other sessions—from others who are arguably better qualified to answer the question than I am. As I say, I encourage you as a Committee to encourage the Government to ensure that it thinks that point through carefully, as you consider the Bill, and to bear that advice in mind as you scrutinise it.
Margaret Beels: My office has not done that analysis and I would be guessing if I answered the question.
Justin Madders
Q
Margaret Beels: I took on this role in the expectation that there was going to be a single enforcement body, which the previous Government had referred to but did not bring about. I was strongly supportive of the creation of a single body and accordingly I am supportive of the creation of the fair work agency.
From my perspective, which involves looking at what has worked under the existing arrangements and what could work better, I went back and looked at the recommendations in the strategy that I most recently published, on 11 November, and it had 12 recommendations. I looked at them and considered how things are working out now under three bodies with different governance, different plans and different ways of doing things, and whether I think that under a fair work agency regime those things would be done better. A fairly quick assessment is that half of them would definitely be done better; the other things would probably be done much the same. The ones that relate to having a better joined-up approach, to greater efficiency and to better sharing of information among bodies are the things that I think the fair work agency will do a lot better.
Justin Madders
Q
Margaret Beels: One of the things I found it hard to do was to assess the impact of the different bodies, because they all have their own governance arrangements. I have a statutory responsibility to decide whether more should be spent in one body or in another. In practice, however, because they run under their own governance, it is really hard to do that and assess whether spending a bit more on national minimum wage enforcement or a bit less on employment agencies would be better value for money, because value for money for the public purse is really important. We are all public servants: we are all accountable to you as parliamentarians and to the public. I have found it really difficult to answer that question about the effectiveness of the different activities.
Justin Madders
Q
John Kirkpatrick: It is clear, Minister, that a number of people with protected characteristics are particularly vulnerable to the sorts of practice or exploitation that the fair work agency would devote itself to being concerned about. I would defer to Margaret on whether the unification of the existing authorities will make for improved enforcement. If it does, it will clearly be of benefit to those people.
I suppose the one thing I would add is that it is really important in this kind of area and these parts of the labour market that there is clarity on both employers’ obligations and employee’s rights, and what their sources of redress might be if those rights are breached. Real clarity and distinction of who enforces what seems to me very important. There is no difference between us on this, nor anything in the Bill that would confuse that. The maintenance of that clarity, so that people can understand what their rights are and how to exercise them, seems to us an important precondition to the Bill being successful in that aim.
Margaret Beels: The research I referred to, which is being published tomorrow, demonstrates that the workers more at risk of precarious work are female workers and younger workers, as well as workers from a lower-working-class background. The industries in which they work that are most at risk of being precarious are hospitality, retail, agriculture and construction. I think, to the extent that the Bill will address some of the issues affecting more precarious workers, that will be of benefit.
Sarah Gibson
Q
Are there any specific areas of the Bill that you think could be simplified? Obviously, we have been discussing other things outside the remit of the Bill, but within the Bill itself are there any specific areas that, if they were simplified, would make enforcement easier and more effective?
Margaret Beels: I have responsibility for the national minimum wage team, and when I talk to them about what they do, they often refer to the fact that the complaints that come to them are not valid. They are made without full understanding by the workers of their rights around the national minimum wage. The teams talk about training their inspectors for six months, and it troubles me that that is an area where it is difficult to know whether you are being paid correctly.
From my point of view, I would favour arrangements that are better at communicating with workers as to what their rights are. I know that ACAS does a brilliant job, and the national minimum wage team themselves and the other agencies all try to communicate better, but I think there is an issue with the national minimum wage. If you pay a worker the national minimum wage, the chances are that they are not being paid the national minimum wage. To play it safe, businesses should be paying comfortably above it to ensure that they are okay.
John Kirkpatrick: I do not have a huge amount to add to that. I recognise that most enforcement of the Equality Act 2010 comes through the tribunal system, which imposes a burden on the individual to understand their rights and have access to appropriate advice, redress and so on. We can do a certain amount of enforcement ourselves.
The other thing that we will do, as the enforcer of the Equality Act, is try to provide as much clarity of guidance as we can. In a sense, that is the first step in an enforcement process. The most recent example, I suppose, would be the guidance that we consulted on and published on the Worker Protection (Amendment of Equality Act 2010) Act 2023, which came into force only a few weeks ago. We felt it desirable and necessary to put quite a lot more guidance into the public domain to help both employers and employees to understand their rights.
In a sense, the lesson from that is that yes, that is something we can own the responsibility for doing in our area of work, as others do in other areas—ACAS does work on this, as do others. The important thing is that the initial law is as clear and straightforward as it can be. I urge the Committee to have that in mind as it thinks about the legislation before it. The clarity and simplicity of the underlying law is the thing that makes it easier to enforce.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
Q
First, what is your assessment of how effective the GLAA has been, given how it was constructed, and how has it been able to perform its functions? Secondly, specifically on modern slavery—thinking about those the GLAA was set up to protect, such as the Morecambe Bay cockle workers—how do you see those functions working in a single enforcement body?
Margaret Beels: It is really important that, in setting up the new body, the three bodies sit down to think about what they do well, so that when we bring them together, we will bring the best of what is done. One of the recommendations in my most recent strategy is to encourage them to start the dialogue with each other at every level—so what an inspector from, for example, the Employment Agency Standards Inspectorate does when they go out, versus what is done when a compliance inspector goes out from the GLAA.
I gather a lot of evidence from stakeholders, and they will say, “This works really well here,” or, “That works really well there.” In informing the fair work agency, there should not be a presumption that something will always be done one way because that is done by this lot; instead, we should look at the journey of non-compliance. It is important to help businesses to be compliant; that is, by far, the best way to achieve compliance.
Who is good at doing the communication with businesses, then? The national minimum wage team do that as well—they have their geographical compliance approach and they try to go out to help business. How do we build that into the structure of what is done? When it comes to deliberate non-compliance and modern slavery, you need to have the teeth to deal with that. The modern slavery dimension will move across into the fair work agency, but then it will have the whole spectrum of looking at how things are done.
Resources will be important to the fair work agency. All the bodies will talk about the fact that they do not have the resources that they would like to do the full job that they are there to do. I go back to challenge them: “Can you show me the value for money in what you are doing? Are you being as efficient as you might be?” My strategy talks about the use of artificial intelligence—are they building those tools into how they do things, so that they can have the maximum efficiency possible? Then, as they come together, will they listen to each other to make sure that they pick the best?
Steve Darling (Torbay) (LD)
Q
John Kirkpatrick: We start from the position that everyone has the right to a workplace in which they are free from the risk of discrimination or of harassment. In our view, that ought to be the way it works. We have lots of evidence, as I am sure you and other Members have from your constituents. For example, from our “Turning the tables” report, we know that a quarter of respondents had been harassed by third parties in the workplace. That is a particular issue for people in customer-facing roles.
It was interesting to hear Margaret talking about sectors that are vulnerable to exploitation. Some of those where we have found vulnerability—[Interruption.]
The Chair
Do not worry about the bell.
John Kirkpatrick: I will carry on, as long as I am audible, Sir Christopher.
We have found similar sectors where people are vulnerable. We have issued specific guidance, often in combination with relevant trade associations, in sectors like hospitality and the performing arts, which appear particularly prone to instances of sexual harassment. We continue to do a lot of work on this; we have active enforcement activity, for example, with McDonald’s. We have also made an announcement only today with the Welsh Rugby Union; as some of you will be aware, they have had their difficulties in this area, but they have agreed with us a section 23 agreement, as we call it, to rectify what is going on.
It is really important. We are broadly comfortable with the provisions in the Bill that strengthen the sanctions on sexual harassment. We know that we are responsible for enforcing some of those that already exist, and we are concerned that the scale of that enforcement will be challenging for us and that we—Margaret spoke earlier about resources—will need the capacity to be able to do what we can to help enforce the measures that Parliament puts in place.
Margaret Beels: I am well aware from the evidence that comes to me that one of things that vulnerable workers also experience is sexual harassment. They are so desperate to keep their jobs that they will accept that, because it is the price of getting the next shift. That is unacceptable.
Uma Kumaran (Stratford and Bow) (Lab)
Q
John Kirkpatrick: I think I said earlier that to the extent that some of those protected characteristic groups have worse experiences in the labour market than others, protecting them is absolutely desirable. The only risk is to the flexibility of employment, which can even include such things as zero-hours contracts, which are very convenient and desirable for some people. If those opportunities were to diminish, that would be of some concern, but I think that that does no more than repeat the point I made earlier that we need, both in advance and subsequently, to monitor very carefully the impact of these measures on levels of employment and quality of employment, which is what I think they are aimed at.
Margaret Beels: In terms of the sectors that we regard as being at the highest risk of labour exploitation, which is what I worry about, such as agriculture, the car-washing industry, construction or adult social care—we have not talked much about adult social care, but I have been doing quite a lot of work in relation to workers’ experiences in adult social care—I welcome the measures in the Bill that will start to address some of those issues. I know that the Bill will not necessarily address the totality of those problems, because there are obviously issues around the finance for improving those things, but previous speakers talked about what we as a nation value. We need to value our adult social care workers and the work they do, and to give them more support.
John Kirkpatrick: Since Margaret has introduced social care as a particular sector, I might add that the work we have done in the past on the workforce in that sector again showed an issue that I referred to earlier, which is the challenge of people being able to understand their rights, particularly where those rights are complicated and are not necessarily written in the most accessible language, even in the best guidance. That can be really challenging, and has been particularly for ethnic minority workers in the health and social care sector among others.
Margaret Beels: It was quite striking in the work I did on adult social care that about a third of domiciliary workers in England are on zero-hours contracts. That does seem a very high number.
The Chair
If there are no further questions, may I thank you both for coming along and sharing your expertise with us this afternoon?
Examination of Witness
Dr Mary-Ann Stephenson gave evidence.
The Chair
Dr Stephenson, would you please introduce yourself briefly?
Dr Stephenson: Thank you very much for inviting me here this afternoon. My name is Mary-Ann Stephenson. I am the director of the UK Women’s Budget Group, which is a feminist economics think-tank that works to analyse the impact of economic policy on women and men, and on different groups of women and men.
Greg Smith
Q
Dr Stephenson: We think this Bill marks an important step in the right direction in improving the rights of women in the workplace. We particularly welcome the provisions on zero-hours contracts, which will benefit over half a million women. We also welcome the changes to statutory sick pay; 73% of those who currently do not qualify for sick pay because they earn too little are women.
We welcome the fair pay agreement in social care—I know that the previous speakers talked about social care, and it would be good to talk a bit more about that. Obviously, women are the majority of workers in the social care sector, but they are also the majority of those needing care. Improving pay and conditions for social care workers will also have a beneficial impact on the recipients of care, because it will reduce turnover in the sector, which is a really big problem at the moment. There would also be a knock-on impact on unpaid carers, the majority of whom are also women—care is very much a female-dominated sector.
We welcome the improved day one rights to paternity and parental leave. These are often seen as particularly beneficial to fathers and partners, but we believe that women will also benefit from them. Women’s unpaid work is at the heart of their economic inequality; women do 50% more unpaid work than men. The time when a child is born is often the point at which the distribution of unpaid work gets fixed. Most parents go into parenthood thinking that they want to have a more egalitarian sharing of care than maybe their parents did when they were growing up. But as one person described it to me, “You wake up one day, and you suddenly find yourself back in the 1950s,” because of the very limited rights that fathers and second parents have. So we think that this policy will benefit women as well.
We welcome the greater protection against pregnancy and maternity discrimination. We know that you heard earlier this week from the Fawcett Society and Pregnant Then Screwed about flexible working and sexual harassment, and we very much support their positions.
There are some areas where we would like the Bill to go further. On statutory sick pay, for example, we think that the Government needs to increase the rate. The low rate at the moment means that even those who are entitled to it often continue to go to work when they are ill, which is not only bad for them, but bad for public health—
Greg Smith
Q
Dr Stephenson: At least at the level of maternity pay, for example. We are one of only four countries in Europe that does not extend some right to sick pay to self-employed people, so we think we should do that.
We were disappointed that the Government went back on their original proposals that people who were previously on zero-hours contracts who had shifts cancelled at the last minute should be reimbursed for those shifts. That is a particular problem for women, who often have to arrange childcare if they are in paid work, so having a shift cancelled means not just the loss of the pay, but paying out for childcare.
We think that this is a missed opportunity to improve rights to maternity pay—we know that that is under review—but particularly to deal with the discrepancy between statutory maternity pay and maternity allowance for people claiming universal credit. At the moment, statutory sick pay counts as pay for the purposes of universal credit, but maternity allowance counts as a benefit, so you lose universal credit pound for pound. If you are not entitled to statutory maternity pay and must go on maternity allowance, you are basically losing whatever money you get off universal credit. We are also supportive of the call from the Fawcett Society and Pregnant Then Screwed for a duty to advertise jobs as flexible.
We think that underpinning all this is the problem with our civil legal system; having improved rights at work is only as important as your ability to exercise those rights. Since the reduction to civil legal aid under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the only area of employment law that is covered by legal aid is discrimination law. Many people do not even know that they have a discrimination case until they see a lawyer in the first place, so if this Bill is to have the effect that the Government want, they need to look at provisions around civil legal aid.
Greg Smith
Q
Dr Stephenson: Yes, that is something that we have also called for. This is where a woman loses a pregnancy before the point at which it counts as a stillbirth. Late pregnancy loss can be extremely traumatic and have health implications for women as well as psychological implications, and we think that the right to paid leave in those circumstances is really important.
Justin Madders
Q
Dr Stephenson: We have not done as much work in this area as organisations such as the Fawcett Society or some of the trade unions, but we are very conscious that for women working in the hospitality sector, for example, third-party harassment can be a really serious issue. We think it is important that women have those rights and protections, but beyond that it is more that we would support them than that we have done much detailed work.
Sarah Gibson
Q
Dr Stephenson: Obviously, the provisions about paternity and parental leave as a day one right will benefit those with caring responsibilities. We are pleased to see that there are plans to review carers’ entitlement. The problem with leave for carers is that it is one of the lowest-paid benefits that we have in the UK. Very many carers end up in poverty as a result. We know that there are higher rates of physical and mental health problems among carers because of the poverty, the strains caused by caring and the difficulties of balancing caring work with paid work. Obviously, the flexible work provisions will go a long way to helping people with caring responsibilities, and we think that is a very good thing.
Alex McIntyre (Gloucester) (Lab)
Q
Dr Stephenson: Yes. What we know is that at every point at which women’s rights have been improved in the labour market—the Equal Pay Act 1970, the Sex Discrimination Act 1975 and the introduction of the national minimum wage, where women were the majority of those who benefited—there have always been some people who have said, “This will be disastrous for business and will lead us to stop employing women,” but that has not actually happened. The proportion of women in the labour market has gone up, and businesses have benefited from having an increased number of women in the labour market.
I think that what is proposed around paternity and parental leave is relatively minimal, compared with what is available in a number of other European countries, for example. I do not think that this will be disastrous for business. I do think that if we want women to be able to survive and thrive in the labour market, we have to redress the balance where women of child-bearing age are seen as much more of a risk for employers than men are. We know that in the long term we will all benefit from legislation that makes things better for parents and makes it easier for people to have children and to raise a family, because one of the crises that we are facing on a global scale is a falling birth rate. A society where there are not enough young people to work and pay the taxes that will support those of us here today when we are in our old age and to care for us when we are old is a society that is in trouble. Part of doing this is improving rights for parents when they have small children, so that people have the children they want to have, rather than thinking, “We can’t afford to do this.”
Anneliese Midgley
Q
Dr Stephenson: I am also an employer, and we have an incredibly flexible working policy. I think flexible work is largely beneficial for employers as well as workers, not least because it enables you to recruit and retain the best staff. At the moment, the labour market is relatively tight, particularly in some parts of the country and in some sectors. We have higher levels of, for example, economic inactivity among women than men and we know that this is something the Government want to do something about.
One of the reasons for economic inactivity among women is caring responsibilities. There are large numbers of women who are not in the labour market who said that they would like to be in paid work if they could find a job that gave them the flexibility they needed. That can only be a benefit to wider society, and ultimately to employers, first, because they can attract the best people and, secondly, because we are more likely to have a strong and growing economy.
Uma Kumaran
Q
Dr Stephenson: As I said, the flexible working provisions particularly benefit women’s labour market participation. Some of it is not just about participation, but about improved pay and conditions; for example, the end to exploitative zero-hours contracts improves women’s position in the labour market, which means they are less likely to leave the labour market.
Another thing is the fair pay agreements in social care, if they were seen as a starting point and extended so that, having started out with social care and looked at how it worked, you looked at other sectors such as early education and childcare. That is a sector very similar to social care, particularly now we have the big extension of funded hours coming in—largely private provision delivering public services that are majority publicly funded, with a majority female workforce on low pay and often working part time. That model of fair pay agreements could not just support women working in those sectors, but support more women into the labour market, if you had available, affordable early education and childcare.
We did some work with the Centre for Local Economic Strategies last year looking at the loss to the economy from women’s under-participation compared with men, and that loss comes to £88.7 billion. Enabling women to enter the labour market, to stay in the labour market or to increase their working hours has the potential to bring real benefit to both the national and local economy.
Alison Hume
Q
Dr Stephenson: Having a better enforcement body and proper enforcement of the living wage and equalising minimum wage rates with living wage rates for workers under 21—the hospitality industry in particular employs large numbers of younger people—will be really important. Good employers want to do the right thing, and they are undercut by bad employers who are deliberately breaking the law, so better enforcement is important.
To go back to my earlier point, outwith this Bill it is also important to look at access to proper legal advice for people in those situations. It can be very difficult—we have advice deserts in this country. One of the impacts of cuts to civil legal aid has been a reduction in any lawyers with specialism in certain areas, because the loss of legal aid has meant less money in the sector and fewer people going in to develop that specialism. Even if you can afford to pay, it can be quite hard to find a lawyer for certain areas. The enforcement mechanism will make a big difference, but we also need to look at legal aid.
Dr Tidball
Q
Secondly, we heard from an earlier witness that they were not certain whether the Bill would lead to a decrease in jobs among people with protected characteristics. What is your perspective on the role of the Bill in positively affecting those who have protected characteristics, particularly women and disabled women?
Dr Stephenson: On your first point, as I said earlier, women’s unpaid work is at the heart of their economic inequality. One thing we need to do is to have a better balance of those unpaid caring responsibilities between women and men.
The paternity and parental leave changes in the Bill are a step—a small step. We need to go much further, because we still have one of the biggest gaps in Europe between the entitlement for fathers and second parents and the entitlement for mothers. We also need men to have periods of leave in their own right that they are not taking while the mother is on leave.
The thing about paternity leave is that it is generally taken immediately after the birth and it is about providing support to a new mother just after she has given birth. It is a very difficult time: the first time you do not know what you are doing, and the second time you normally have a toddler to look after as well as a baby, so you need more than one pair of hands.
If we are going to change patterns of caring, there needs to be provision that would encourage and support men to have leave after their partners have gone back to work, where they are the sole carer, because it is not until you are the sole carer in charge of a baby that you actually understand what it is really like. If you are one of two parents at all times, there is always somebody else to do it. That needs a different type of leave.
We have called for a period of maternity leave, which is about recovering from childbirth, establishing breastfeeding and so on; for a period of paternity/partner leave, which is about supporting a new mother; and then for both parents to have a period of what we would call parental leave, which is about caring for a child. Both of those need to be paid, and they need to be individualised. We think that would make a difference. That is something that we hope would come out of longer-term reviews of maternity, paternity and parental leave.
In terms of whether the Bill would lead to a decrease in jobs for people with protected characteristics, as I said earlier, that warning is often heard when you improve employment rights—that actually, it will lead to job losses. That has not proved to be the case thus far, and I do not think the changes in the Bill are so significant that they would lead to job losses. For example, the changes to paternity leave are relatively minimal—it is about making it a day one right, rather than making people wait. It will really help those whom it benefits, but it would be unusual for an employer to go, “Actually, men now have a day one right to paternity leave, therefore I’m not going to employ them.” Of course, men have a protected characteristic of sex, just as women do.
In many areas, improving the situation of workers on zero-hours contracts, who are more likely to be from ethnic minority backgrounds, is more likely to improve their overall standard of living. It will help to lift them and their families out of poverty, so it is more likely to be beneficial.
Laurence Turner
Q
Dr Stephenson: I can speak to the first question; the second is probably beyond my area of knowledge. We welcome the move to include outsourced workers in gender pay gap reporting. We think that this has been a gap. We are very conscious that you will quite often see that the lowest paid workers, particularly in the public sector, are now outsourced. One of the reasons why people say pay in the public sector is better on average than in the private sector is not because it is better job for job; it is because the lowest paid workers have been moved out of the public sector and into the private sector, and a large proportion of those workers are women, for example cleaners, canteen cooks and so on.
Counting those workers in is really important, as is anything that encourages greater insourcing of workers. What we have seen with outsourcing is that the efficiencies and so-called savings have been largely at the expense of the pay and conditions of those outsourced workers.
The Chair
Thank you very much for coming along and giving your evidence.
Examination of Witness
Justin Madders MP gave evidence.
The Chair
We now come to the finale—the Minister. Can you briefly introduce yourself for the record, please?
Justin Madders: Good afternoon. My name is Justin Madders. I am the Minister for Employment Rights, Competition and Markets. I also state for the record that I am a member of the GMB and Unite trade unions.
Greg Smith
Q
Justin Madders: Thank you for the question. I think the first thing to say is that it is not that unusual. In the last three years, there have been 10 red-rated Bills. Obviously, as the shadow Minister, you will be aware that it was your Government that introduced those. I think there is a challenge here that that all newly elected Governments face: obviously, we have a clear manifesto commitment to deliver on our agenda to make work pay and a clear manifesto commitment to introduce the legislation within 100 days of taking office. That means that, by definition, there is not the time and scope for the normal dialogue and informal conversations that you would get between the Department and the RPC before the final impact assessment is published. I think there is a fundamental challenge there.
As you would expect, we undertook quite a lot work in opposition to develop our policies, but because that is not part of the formal process, we were not able to take that into account. The alternative was for us to wait six or 12 months before we got that impact assessment into a position where the RPC was happy with it, and I do not think the public would really forgive us for having that hiatus between taking office and legislating.
It is also worth saying that, if you look at the individual assessments, two thirds of them have been greenlit, so they are getting approval from the RPC. We acknowledge that there is more work to do on some of them, and we will continue to work with the RPC. I also have a little sympathy with some of the difficulties that the RPC had in coming to its conclusions.
A good example of that is the repeal of the Strikes (Minimum Service Levels) Act 2023, which the RPC has noted was red-rated when it was introduced as a Bill anyway. As that Act was poorly evidence-based in the first place, and has never actually been used since it came into force, it was very difficult for the RPC to have any real evidence on what the impact of a repeal would be. Our critique would be that the reason for that is because it was unworkable anyway, but I understand in the circumstances why the RPC would have some difficulty making a judgment on that.
On some of the other measures where it said that there was no evidence base, such as some of the equalities measures, we heard some pretty clear evidence both today and on Tuesday—for example, from the Fawcett Society and Pregnant Then Screwed—about some of the real impacts on individuals of the policies in the Bill. I would also say that I do not think there was any real evidence that there is not a need for this legislation. The general thrust from most witnesses was that this Bill would deal with some of the challenges in the labour market. Although not every witness said that, that was generally the case. Of course, as we move forward and get more evidence, we will happily work with the RPC to try to improve those reds to greens.
Greg Smith
Q
Justin Madders: I think it is important that we stick to our promises, and this measure was very popular with the public during the election. I think they wanted to see action quickly. We have had 14 years of atrophy and decline in the labour market—you are obviously not going to agree with that comment, but that would be our analysis—so the need to act quickly was there. A lot of these provisions will not actually become law for a number of months, if not years—in particular unfair dismissal, which we are saying will come in in autumn 2026 at the earliest. There is an awful lot more time to continue to engage and consult, and we intend to do that. Of course, because of the very detailed nature of employment law, a lot of it is developed in secondary legislation and also codes of practice. That is the completely normal practice, and that is why a lot of it is framed in this way.
Greg Smith
Q
Justin Madders: Yes, I do. I have to say, I did not agree with much of their evidence. I think it would be fair to say that they are outliers in what we heard while we engaged with businesses. Most businesses understood the importance of engaging and of enhancing workplace rights, and see the benefits of it. I can provide you with a list of all the organisations we have engaged with. It is certainly over 140 organisations. The majority of those are employers or employer organisations, so I think we have been pretty comprehensive. We are continuing that next week and will continue to do it for the rest of the Bill’s passage.
Greg Smith
Q
Justin Madders: I have sympathy with what was said there. The first thing to say is that the rates for maternity leave and allowance are set by the Department for Work and Pensions. I probably cannot say much more than that at this stage, although I have had some initial discussions with that Department about what we can do to reform this area, because we recognise that it is quite an outdated system.
Greg Smith
And on bereavement leave?
Justin Madders: Again, that is something I am sympathetic to. I understand that the Women and Equalities Committee is undertaking an inquiry on that at the moment, and we are going to see what it says.
Sarah Gibson
Q
Justin Madders: There were two questions there. On probationary periods, there will be more work done on that. The evidence that I picked up is that most employers feel that six months is about the right period. The reason why we have expressed a preference for nine months, which we are obviously engaging on anyway, is that we recognise that there will be occasions when people might be on the cusp of being hired or fired at that point and the employer just wants a little bit more time to work with them. We think that is a reasonable point, and we have responded to employers’ concerns on that.
As we move forward with this legislation, we will certainly be looking to ensure that all businesses, particularly small businesses, have readily available and easily understandable resources so that they know what they need to do. We do not want to pass a lot of laws that allow employers to fall into traps. We want them to comply with best practice, which is what we are trying to set out in this Bill.
Sarah Gibson
Q
Justin Madders: I think we all recognise the point that was made by a number of witnesses. I think that even Matt Hancock, when he was Health Secretary during the pandemic, said that he did not think that SSP was at a rate that anyone could live on. It should be pointed out, though, that this is within the remit of the Department for Work and Pensions; the Secretary of State has the ability to set the rate, and I cannot really tread on their toes. We recognise that at the moment there are several million people who do not qualify for statutory sick pay at all. Our focus in this Bill is on making sure that they qualify for that right.
Sarah Gibson
Q
Justin Madders: I take the point. I do not want to deflect, but that is really for the Department for Work and Pensions. What we are trying to do with flexible working is to make sure that as many people as possible are able to work in circumstances that suit them. We think that if we get this right, it will be transformative for lots of people who are locked out of the labour market at the moment, and that is what we are trying to achieve.
Chris Murray
Q
Justin Madders: Over the last 14 years, there has been a pretty hostile environment for trade unionists. That has been ramped up in recent years, which is why we have seen in the last couple of years the highest number of industrial relations disputes for about 40 years. The solution is not to continue to legislate to make it harder for people to strike; it is actually to change the culture and attitude towards industrial relations.
We are trying to make sure that trade unions have the opportunity to operate on a level playing field, and I think that we have heard plenty of evidence from both employers and trade unions that when there is a constructive relationship, businesses benefit and individual workers benefit. There is plenty of evidence that trade union members usually have better pay, and better terms and conditions—that is recognised throughout the world—and that is something that we want to help facilitate under this legislation.
Nick Timothy
Q
Justin Madders: I think that is actually a challenge for the trade union movement. I think that they would accept that this is really up to them. Personally, as a trade union member and someone who has been actively involved in the trade union movement for many years, I see the absolute advantages and benefits of being a trade union member, but it is really up to them to get into the workplaces, explain their advantages to the workforce and then engage on a tripartite basis with Government, business and workers to improve everyone’s working lives.
Nick Timothy
Q
Justin Madders: I would imagine that there are quite a few.
Nick Timothy
Can you name some?
Justin Madders: I cannot name individual CEOs. Octopus has been very positive, Sainsbury’s has been very positive and, as we heard today, the Co-op has been very positive. I think the CBI welcomed the Bill and welcomed the engagement as well, and Make UK too. There are quite a lot of organisations on the employer side that are generally welcoming of the intentions of the Bill, and I think that has been reflected in the evidence.
Nick Timothy
Q
Justin Madders: I think you will find that the Co-op is a real business, and it employs an awful lot of people.
Alison Hume
Q
Justin Madders: That is a really good question. One of the reasons was in your question—there are 1.6 million people employed in the sector. It is a huge part of the economy. Unfortunately, at the moment, as we heard in the evidence, it is characterised by poor terms and conditions and high numbers of zero-hours contracts, and quite often minimum wage is not enforced properly. These are people doing really important jobs in our society. They deserve a voice and a collective opportunity to raise terms and conditions, and the opportunity to work with employers to develop a career path. This is a transformative structure that will hopefully change the lives of many working people and, of course, the people they care for.
Uma Kumaran
Q
Justin Madders: There is generally an acceptance, both in the economic analysis we have heard from some of the witnesses today and from businesses themselves, that getting a motivated, engaged and retained workforce is good for productivity and the business overall. Having a more engaged and well-remunerated workforce has been shown to actually boost profits. The fact that the OECD was referred to by the Resolution Foundation as a body that believes that greater workers’ rights actually improve the economic outcome of the country is a really important factor that we need to emphasise.
Michael Wheeler
Q
Justin Madders: There are an awful lot of people who will benefit if we get this right. I am talking about people who do not know from one week to the next how many hours they will have or whether they will be paid enough to put food on the table. Our reforms on zero-hours contracts will really help with that. People who can be arbitrarily sacked for no reason for the first two years of their employment—about 9 million people—will benefit from that. The 1.6 million people in the social care sector will benefit. There are 900,000 people a year who will benefit from bereavement leave entitlements. Overall, as ACAS has suggested, the cost of disputes to the economy can be up to £30 billion a year. Just imagine what a difference it would make if we could shave a fraction off that. I think that the Bill is setting a new culture in our country about how we do workplace relations. It is putting the value of the worker/employee relationship with businesses at the heart of everything we do.
Dr Tidball
Q
Justin Madders: Obviously, the TUC report is not an official Government document, but it has some interesting figures. It reckons that we could gain up to £974 million from reducing the number of days that people take off due to stress and anxiety because of poor working conditions; another £930 million a year from improved staff wellbeing; £168 million a year from improved minimum wage compliance; £510 million a year from reduced industrial action; £8 billion a year, potentially, from improved industrial relations; and up to £2.6 billion a year from increased labour market participation—there are a number of reasons why that might be the case. We do not know how much of those figures will be delivered, because an awful lot of variables are in there, but it is an impressive attempt to quantify, in a way that we cannot, given the rules of Government the positive impacts of the Bill on the wider economy.
Anneliese Midgley
Q
Justin Madders: Engagement continues, and there will be more next week—we are meeting a group of small and medium-sized businesses—but to date 140 different stakeholders have attended official or ministerial meetings. You will have heard from many of the witnesses that they have been quite impressed, I think, with the level of engagement and how we have listened to concerns expressed about the Bill. We also undertook extensive engagement in opposition. We will continue to do that. We are moving through some live consultations at the moment. As we develop the Bill and some of the regulations and codes of practice that will follow it, there will continue to be engagement throughout. We are very clear that that is the best way to deliver excellent legislation, and we will continue it.
Laurence Turner
Q
Justin Madders: I hope it will have a positive impact on industrial relations. The way strike action spiralled in recent years was probably the result of frustration with a Government who were not listening to the voice of workers, were not prepared to address their concerns, and were actively moving to frustrate legitimate acts by trade unions to take industrial action. It is about the culture and the level of engagement, as much as it is about the legislation, but there is no suggestion, as far as I can see, that the Bill will massively increase strike action, as some people might have suggested.
The Chair
As there are no further questions, I thank the Minister on behalf of the Committee for his evidence.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Fifth sitting)
Tuesday 3rd December 2024
(2 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 December 2024 - (3 Dec 2024)
The Committee divided: - Ayes: 4 / Noes: 14 - Question accordingly negatived.
The Chair
Good morning, everyone. Will everyone please switch their electronic devices off or to silent mode?
We now begin line-by-line consideration of the Bill. The selection list for today’s sittings is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped for debate. The purpose of grouping is to limit, in so far as is possible, the repetition of the same points in debate. The amendments appear in the amendment paper in the order in which they relate to the Bill.
A Member who has put their name to the lead amendment in a group is called first; in the case of a stand part debate, the Minister will be called first. Other Members are then free to indicate by bobbing that they wish to speak in the debate. At the end of a debate on a group of amendments, new clauses or new schedules, I shall again call the Member who moved the lead amendment or new clause. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or new clause, or to seek a decision. If any Member wishes to press any other amendments in a group to a vote—including grouped new clauses and new schedules—they will need to let me know. I shall use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on relevant amendments. I hope that explanation is helpful.
I remind Members about the rules on declarations of interests, as set out in the code of conduct. We will not go around the room now, but if you want to speak, you should declare your interest at that time.
Clause 1
Right to guaranteed hours
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 137, in clause 1, page 2, line 6, at end insert—
“27ABA Reference to an employer
(1) For the purposes of Chapters 2 to 4 of this Part, references to an ‘employer’ do not apply to an employer defined as a small and medium sized enterprise under subsection (2).
(2) For the purposes of this section, a ‘small and medium sized enterprise’ means an organisation or person employing 500 or fewer employees.”
This amendment would exclude small and medium sized enterprises from the Bill’s provisions on zero hours contracts.
The Chair
With this it will be convenient to discuss the following:
Amendment 138, in clause 7, page 24, line 33, leave out subsections (3) to (5) and insert—
“(3) In paragraph (b) of subsection (1), after ‘shall’, insert ‘, in the case of an employer with fewer than 500 employees,’
(3B) In subsection (1), after paragraph (b), insert—
‘(c) may, in the case of an employer with 500 or more employees, refuse the application only if—
(i) the employer considers that the application should be refused on a ground or grounds listed in subsection (1ZA), and
(ii) it is reasonable for the employer to refuse the application on that ground or those grounds.
(1ZA) The grounds mentioned in subsection (1)(b) are—
(a) the burden of additional costs;
(b) detrimental effect on ability to meet customer demand;
(c) inability to re-organise work among existing staff;
(d) inability to recruit additional staff;
(e) detrimental impact on quality;
(f) detrimental impact on performance;
(g) insufficiency of work during the periods the employee proposes to work;
(h) planned structural changes;
(i) any other grounds specified by the Secretary of State in regulations.’
(4) After subsection (1ZA) insert—
‘(1ZB) If an employer with 500 employees or more refuses an application under section 80F, the notification under subsection (1)(aa) must—
(a) state the ground or grounds for refusing the application, and
(b) explain why the employer considers that it is reasonable to refuse the application on that ground or those grounds.’
(5) After subsection (1D) insert—
(1E) The steps which an employer with 500 employees or more must take in order to comply with subsection (1)(aza) include, among others, any steps specified in regulations made by the Secretary of State.”
This amendment would exclude small and medium sized enterprises—here defined as employers with fewer than 500 employees—from the Bill’s provisions on flexible working requests.
Amendment 139, in clause 16, page 30, line 24, at end insert—
“(1D) For the purposes of subsection (1A), an ‘employer’ means an organisation or person employing 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from the Bill’s duty for employers to prevent harassment.
Amendment 141, in schedule 2, page 110, leave out paragraph 1 and insert—
“1 In section 108 of the Employment Rights Act, for subsection (1), substitute—
(1) In the case of an employer with 500 or more employees, section 94 does not apply to the dismissal of an employee unless the employee has been continuously employed for a period of not less than two years ending with the effective date of termination.”
This amendment would exclude employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed.
Amendment 142, in schedule 2, page 112, line 5, at end insert—
“(1A) Regulations under subsection (1) shall apply only to employers with 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from regulations relating to removing the qualifying period for the right not to be unfairly dismissed.
Amendment 140, in clause 22, page 33, line 44, at end insert—
“(aa) ‘employer’ means a person employing 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from the Bill’s provisions on dismissal for failing to agree a variation of contract.
Greg Smith
It is a pleasure to serve under your chairmanship, Ms Vaz, on this bright and breezy December morning. It will be the new year by the time we finish our consideration of the Bill—let us see whether we are all as fresh after Christmas as we are today.
I shall briefly talk through the Opposition’s rationale for each of the grouped amendments. The lead amendment, amendment 137, seeks to exclude small and medium-sized enterprises from the Bill’s provisions on zero-hours contracts. The amendment is part of a set of amendments in my name intended to ameliorate the burden of the Bill for small and medium-sized businesses, defined as those with 500 or fewer employees.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Will the shadow Minister give way?
Justin Madders
I refer to my registered interests and my trade union membership.
The shadow Minister might well have anticipated my question. Obviously, we acknowledge that the Bill is being brought through at good pace, which means that sometimes mistakes occur. I cannot help but notice that the amendment on today’s paper is slightly different from the one that appeared in previous weeks, which excluded businesses with 500 or more employees, rather than 500 or fewer. Will he clarify whether he is seeking to cosy up to big business or that was indeed an error?
Greg Smith
I am almost grateful for the Minister’s intervention. He was very perceptive to note the minor clerical error in the amendment that was previously submitted. That has now been corrected. Of course, the Conservative party stands with all business, but particularly with small and medium-sized enterprises, which, I can clarify for the record, we define as those with 500 or fewer employees.
The Regulatory Policy Committee has rated as red the identification of options and the choice of the policy in the Bill on zero-hours contracts and guaranteed hours. That means, in effect, that the Government have not justified the provisions in the Bill, the problem they are trying to solve, why they are needed or why they would work. The provisions on zero-hours contracts will create additional burdens on all businesses. The Opposition are particularly concerned about smaller businesses, which have less resource and resilience to cope with the measures: they do not have large HR or legal departments to help them navigate the additional requirements that will be placed on them. The Institute of Directors told us in its evidence that
“crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 11, Q4.]
I am confident that the Minister will try to refute these points and somehow paint the amendment as creating a two-tier workforce, which it would not. I urge the Government to recognise the bureaucracy burden and risk that the zero-hours contract provisions will create for smaller businesses in particular. Providing for guaranteed offers of hours after 12 weeks would create a lot of additional administration for our small and medium-sized enterprises. I gently ask the Minister how credible he thinks it is that employees will reject offers made and that the process will have to start all over again.
Amendment 138 is similar to amendment 137 in what it seeks to do, but excludes small and medium-sized enterprises—again, defined as those with fewer than 500 employees—from the Bill’s provisions on flexible working requests. The RPC has said that the Government have presented “little evidence” that employers are refusing requests for flexible working unreasonably. When I talk to businesses in my constituency, I do not come across any complaints that flexible working is being refused unreasonably; I find many businesses that have, certainly in the post-covid era, made huge offers to their employees of working from home, mixed hours and working around the school run, or whatever it might be. It does not seem to me to be a particular problem in most businesses that I speak to. I want to give the Minister the opportunity to present some of his evidence for the necessity of these provisions. What led to the decision that these flexible working clauses are needed? If they are not, I urge the Government to accept our amendment to exempt SMEs from them.
Jon Pearce (High Peak) (Lab)
The amendments may create a two-tier workforce, as the shadow Minister suggested. Does he know how many employees in the UK would not have the benefit of these rights if we made the amendments he is suggesting?
Greg Smith
I understand the point the hon. Gentleman is trying to make, but the Opposition’s concern is that the burdens that the Bill’s provisions—including this one—place on many businesses will actually result in fewer jobs in the overall labour market in the United Kingdom. I cannot for one second accept that anybody in this House wants there to be fewer jobs in the economy as a whole. If small businesses are placed under the burdens that are addressed by the amendments, and do not make additional hires or take the risk on individuals for jobs, we will be in a very bad place. If small businesses—the backbone of our economy—are not hiring, not growing and not going on to become medium-sized and large businesses, the people who pay for that are workers and people looking for a job or to progress their careers.
Alex McIntyre (Gloucester) (Lab)
I refer the Committee to my membership of GMB and Community, and to my former membership of the Employment Lawyers Association.
I am somewhat confused by the shadow Minister’s comments. On the one hand, he says that every business in his constituency offers flexible working already and therefore there is no requirement for this legislation; on the other hand, he says it is such a burden to businesses that it will stop them employing people. If everyone is doing it already and we are still employing people, what is the problem?
Greg Smith
I did not say that every business is offering flexible working. I said that, having visited businesses in my constituency, I am yet to find a problem around any business’s offering flexible working, or any employee or constituent with a complaint about an inability to get flexible working—quite the opposite, in fact.
If we consider the cumulative impact of all the measures in the Bill, they will certainly place a burden on business. The Opposition are trying to ensure that we take only those measures that will work—only those that will have a direct positive impact and will not be a burden on the HR department. Well, most small businesses do not have an HR department; often, it is the director or another member of the team who has to take on that additional job and understand the burden of regulation, on top of whatever their main contract has them doing. If we get rid of the measures that are simply not necessary, that will mean less of a burden on businesses, notwithstanding the point, which the hon. Member for Gloucester rightly highlighted, that the majority of businesses that I speak to do not have a problem offering flexible working—perhaps some businesses in other Members’ constituencies do.
The point of going through the Bill line by line in Committee is to metaphorically kick the tyres to ensure that its provisions are not a burden on business and will not have unintended consequences. As I said earlier, I cannot for one second believe that anybody in this House wants to see fewer jobs in the overall economy.
Sarah Gibson (Chippenham) (LD)
I draw the Committee’s attention to my declaration of interests. I have run a small business for the last 20 years. It would probably even be considered a microbusiness, because a lot of professional services are. In the south-west, acquiring and retaining professional staff is extremely difficult for small businesses—certainly, retaining them is. Does the shadow Minister not think that if we create a two-tier system, where someone working for a larger business has better rights than someone working for a small business, it will be even more difficult for small businesses to hire and retain staff?
Greg Smith
The point we have to look at, across the six amendments that we are considering in this group, is the reality of small and medium-sized businesses. I congratulate the hon. Lady on running her own business. I was self-employed for 15 years before I was a Member of this House, so I understand the challenges. Small and medium-sized businesses are the backbone of our economy but, by definition, because they are small or medium sized, they struggle—as she rightly says—not just to employ across the piece, but to obtain the legal advice, HR advice and professional services to help them navigate the panoply of regulations, rules and laws that this place has passed over the generations, as the current Government are seeking to do again through this Bill.
The way I look at politics, the best way to govern is to ensure as light a touch as possible on business and to limit the necessity of sourcing additional HR and professional services and so on that small businesses just cannot afford. If they are forced down the route of sourcing expensive professional services, that will have a knock-on effect on the real wages that they can pay to their staff and on the ultimate cost to the consumer of whatever service or product they are providing—that is a basic law of economics.
Although I would never advocate a two-tier approach in principle, there is a real difference between businesses in our economy that can simply have massive HR and legal services departments, without having to outsource them or bring them in at expensive rates, and businesses that cannot. If we accept that reality, perhaps we can look at the burden of additional regulations that might be necessary to help real people and real businesses to grow the economy, so that small businesses can become medium and then large businesses, and can be successful.
The Opposition tabled amendment 138 to exempt small businesses from the flexible working provisions. As I said, small businesses are being clobbered by the Government. Retail, hospitality and leisure relief has been cut, which has led to increased business rates bills, and employer national insurance contributions are going up, which Bloomberg economists estimate will cost 130,000 jobs. I cannot see the justification for putting those provisions in the Bill. We would be grateful if the Minister could provide a full and frank rationale for them—or, if not, support our amendment.
Amendment 139 would exclude businesses with fewer than 500 employees from the Bill’s duty on employers to prevent third-party—I stress third-party—harassment. Of course, harassment in any form is totally, deeply and completely unacceptable in our country, and I am in no way trying to say otherwise, but the RPC has said that the Government have not provided “sufficient evidence” of the prevalence of third-party harassment or its impact to justify the approach taken in the Bill. I genuinely believe that every hon. Member wants to ensure that nobody in this country is harassed in any way, but, through that lens, we need to understand the evidence for the necessity of this particular provision about third-party harassment.
Alison Hume (Scarborough and Whitby) (Lab)
I draw the Committee’s attention to my declaration of interests and my membership of the trade unions Unison and the Writers’ Guild of Great Britain.
I am pleased that the Bill will increase protection from sexual harassment, being one of those middle-class women of a certain age—the Government’s commitment to holding workplace offenders to account cannot come soon enough. Last week, we heard that there is strong evidence that the majority of sexual harassment in the workplace, particularly in retail and hospitality, comes from third parties—a client, customer or patient. Surely, the hon. Member would agree that it is essential that employers can take reasonable steps to prevent harassment by third parties, because the net effect on the victim is the same whether that behaviour comes from a direct co-employee or a third party.
Greg Smith
I am grateful to the hon. Lady, who makes an accurate and fair point. I repeat that harassment of any form, sexual or whatever, is deeply and totally unacceptable and wrong, and must be stamped out. The point that the Opposition are probing in amendment 139 is the proportionality of the impact on businesses—particularly small businesses—given the control that they have over third parties, and whether other laws that are already on the statute book should be used to fully ensure that anybody guilty of any form of harassment is brought to justice under the law. We are trying to understand how the particular measure in clause 1 would work, and its proportionality.
Laurence Turner (Birmingham Northfield) (Lab)
I again draw attention to my declarations in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.
Does the shadow Minister recognise that the prominent case of the Presidents Club harassment, which was exposed by the Financial Times some years ago, did apply to an employer that employed fewer than 500 people? That was specifically in respect of sexual harassment. The House has accepted the principle that measures should be put in place to prevent third-party sexual harassment; it did so last year, through the private Member’s Bill process—including for the SMEs that the shadow Minister refers to. The most famous case on third-party harassment was the Bernard Manning case in 1996, which covered racial harassment; and recent tribunal judgments, including in 2019, have exposed gaps in the law. So does the shadow Minister recognise that there are important proven cases of third-party harassment that go beyond the current legal framework, that would be remedied by the provisions in the Bill?
Greg Smith
I am grateful to the hon. Gentleman. I will not seek to mislead the Committee by saying that I am across the Presidents Club case, but I am aware of the Manning case. Undoubtedly there are holes in the law, because harassment does take place in workplaces and outside workplaces up and down the land. Conservative Members categorically want that stamped out and want those guilty of those offences to face justice. However, as we go through the Bill line by line, we need to ask ourselves, “Does this proposal work, or are there other laws—criminal laws if necessary—to ensure that the authorities have the absolute ability to bring such prosecutions and ensure that those guilty of these horrible crimes are brought to justice?”
Amendments 141 and 142 are part of the set of amendments around ensuring that SMEs are not given undue burdens. These are about excluding employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed. RPC, which has had a lot to say about the Bill, has said that the day one unfair dismissal rights are estimated to cost businesses around £43.2 million per year.
Justin Madders
The shadow Minister may be familiar with this line of questioning, because it is basically the same issue as earlier. I may have misinterpreted the way that amendment 141 interplays with the Employment Rights Act 1996, but the amendment refers to
“an employer with 500 or more employees,”
although the explanatory note then says 500 or fewer. Will the shadow Minister clarify what the intention is?
Greg Smith
I am clear that it should be 500 or fewer. I will not pretend to guess how some of the misdrafting may have occurred; it happens to all parties when they are in government and in opposition. I can remember a couple of errors in Bill Committees when I was sat on the Back Benches on the opposite side from the then Opposition. I apologise to the Committee for any errors. For the clarity of the record, we mean 500 or fewer employees when we are defining an SME.
To be asked to give Government the power to make regulations with no idea what the regulations imposed on businesses will be, is clearly not a position we want to be in. The Government admit that the day one unfair dismissal rights could have negative impacts on employment and hiring, which could include incentivising employers to turn to temporary or fixed-term workers. The day one unfair dismissal rights could make it more difficult for those unemployed or economically inactive to access jobs, through overall negative impacts on employment and/or a strengthening of insider power. Alex Hall-Chen from the Institute of Directors warned the Committee that
“under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 8, Q2.]
There are important questions about what that means for people on the fringes of the labour market, especially as they are precisely the people the Government say that they need to get back into work to meet their 80% employment rate target.
We should all reflect on this point from the evidence that we heard last week: very many people in our society deserve a second chance in life. They might have made mistakes before, or be on a path to rehabilitation from offending or something else—whatever it might be—and I would hate it if people who found themselves in that position were not able to get a second chance. Employers that are willing to give second or even third chances should have the best empowerment to do so, to get people who find themselves in that position into work and on to the path to a better life.
I fear that the unintended consequence of the legislation will be to shut many people who find themselves in that position out of the ability to get a job, to improve their lives and to get themselves on to a better path. SMEs will feel the burden of the new regulations particularly acutely without large HR and legal teams, as I have said.
Mr Peter Bedford (Mid Leicestershire) (Con)
The Bill as drafted seems to skew a competitive advantage in favour of large businesses. Earlier, my hon. Friend mentioned that small and medium-sized businesses are the key to economic growth in our country. These amendments will enable them to compete evenly because, as he says, they do not have large HR functions, or the support mechanisms that large businesses have. The amendments will redress the unfairness in the Bill.
Greg Smith
I am grateful to my hon. Friend for that input. He is absolutely right, and his argument hits the nail on the head. The point we are trying to get across through the amendments in my name and that of my hon. Friends in Committee is that small businesses sometimes just do not have the resource to go through the heavy, burdensome regulations that big businesses can navigate. Mega-businesses probably have more employees in their HR or legal department than most small businesses have altogether.
Laurence Turner
I am grateful to the shadow Minister for giving way; he has been generous with his time. On the point about perverse incentives, does he accept that if this group of amendments were in force, it would create a perverse incentive for the creation of umbrella companies and other forms of employment law evasion? If we are to enforce the provisions that we seek to pass in the Bill, instead of introducing a new dimension to employment law through the exemptions that he proposes, the only way to do that is to have a consistent approach across employers.
Greg Smith
I understand the hon. Gentleman’s point about umbrella companies. He almost tempts me to get on to one of my hobby horses, which is IR35, but that would be way out of scope, so I promise not to go there.
My principal point is that there are always unintended consequences. And yes, in some respects, while acknowledging the reality of the contribution that small businesses make to our economy and their ability to meet a heavy regulatory demand, there may have to be other steps around that to prevent the further perverse incentives that the hon. Gentleman mentions. But I come back to my central argument: if we clobber small businesses down, there will be fewer jobs, and small businesses will not be growing, which means that the whole UK economy is not growing. His Government purport to want to see the economy grow. The Budget flew in the face of that, but, if we take as read the desire of all Members to see a growing economy in the United Kingdom, we cannot have that without small business, medium-sized enterprises or, frankly, the self-employed.
Let us not forget that, as we came out of the 2008 crash and through the coalition years, a huge part of economic growth came from the growth of self-employment, which led to those self-employed registering as companies, growing and—many of them—being a huge success story. If the Bill has the unintended consequence of reducing the incentive for entrepreneurs to set up on their own, start a business and employ people, that is a very unhappy place to be.
Michael Wheeler (Worsley and Eccles) (Lab)
I refer the Committee to my declaration in the Register of Members’ Financial Interests and my trade union memberships. When the shadow Minister listed the groups upon whom growth depends, he seemed to miss a rather large group—the workers. Does he accept that the purpose of the Bill is to create good employment and valued workforces? As we heard in evidence, good employment and valued workforces lead to increased productivity. Opposition Members are often keen to refer to the cumulative burden. As we are now on their fourth or fifth amendment, all in the same vein—about excluding millions of workers in this country from the benefits of the Bill—does he accept that the cumulative effect is to create a set of wrecking amendments that will remove the benefits of this Bill from millions of people in this country?
Greg Smith
The hon. Gentleman makes his point well, but I fundamentally disagree that these are in any way, shape or form wrecking amendments. Where we have common ground and where we do agree is that, of course, no business is anything without its employees—the people who actually do the work. However, where I think he and I may disagree, and I do not want to put words into his mouth, so I invite him to intervene on me again if I get this wrong, is about the person who has risked their capital—who has either borrowed money or risked money to have to start that business— who runs that business, who is the director of that business, being as much a working person as everybody else within it. Businesses only exist because of human beings—before our AI overlords come in and take over everything, way into the future. Of course, workers are at the hub of that, but the people who run the businesses are as much working people as everybody else.
To come back to the central point, there will be no workers, or fewer workers, if there are not people to actually employ them in the first place. If the Bill’s unintended consequences are that SMEs—and perhaps larger businesses, but to be frank, it is more likely to be SMEs—are disincentivised from taking people on, disincentivised from growing their workforce, I do not think anybody will be happy.
Michael Wheeler
The shadow Minister invited clarification and an intervention. I do not think that anyone is disputing some of what he says, though we will dispute much. In the context of the Bill, he talks much about, as he put it, the mounting burden, but with little evidence—though he seems to quite like evidence when referencing the RPC. Does he accept, though, that the fundamental principle of the Bill is a rebalancing within the economy between workers and their employers, that nothing in it goes beyond that, and that some rebalancing is actually needed within that relationship for growth across the whole economy?
Greg Smith
I understand the hon. Gentleman’s point. Of course, it is no surprise that a Labour Government would seek to bring in such a Bill. We knew it was coming; it was in their manifesto. We will come to the question of whether they really needed to rush this out in 100 days, given the number of Government amendments that we will consider later. It is, by definition, a rebalancing, and I hesitate to say this for perhaps the fourth, fifth or sixth time, but this process is about kicking the tyres.
I welcome our debate in Committee. The point of a Bill Committee is to go through provisions in far more detail than we can on Second Reading in the main Chamber, or even on Report or Third Reading further down the line. Even if Conservative Members would not have gone about making changes in this way, we need to be certain that the Government of the day succeed in their aims. The Labour party has a mandate to govern the country and we want to be a constructive Opposition. Although we might not agree with everything that the Government do—or maybe nothing that they do—it is in the country’s interest that they succeed. Therefore, kicking the tyres on the Bill and ensuring that unintended consequences are ironed out in Committee is a good debate to have and a fundamental purpose behind why we will all will spend our Tuesdays and Thursdays together through to the end of January.
Nick Timothy (West Suffolk) (Con)
On the cumulative effect of the pressures that are building on business, during our evidence sessions last week with various witnesses, the compelling point was made that we should not look at the Bill in isolation. The impact assessment states that the costs are a minimum £5 billion a year for business. Some witnesses thought that that was actually an underestimate, and that the true figure will be higher and will grow when more details emerge as we go through this process. We should also look at the Bill alongside decisions such as the equalisation of the national living wage for young people, the increase in employer’s national insurance contributions and other business taxes that were in the Budget. I thought my hon. Friend might want to say something about the cumulative effects of all those decisions.
Greg Smith
My hon. Friend is right. The cumulative impact of other measures should be considered in the round. I might gently push back by saying that some of those matters are perhaps not fully in scope of the amendments that we are discussing. However, he is absolutely right that the Bill has to be considered in the light of other factors relating to other decisions in Government, be that fiscal events or other legislation. That goes to the nub of this set of amendments. This is about whether some of the measures are proportionate given the Government’s original intent in the Bill, and whether some of the original intent in the Bill, from which these amendments seek to exclude SMEs, will be the metaphorical straw that breaks the camel’s back.
Amendment 140 excludes employers with fewer than 500 employees from the Bill’s provisions on dismissal for failing to agree a variation of contact—this is also part of our set of amendments. We have questions about the wisdom of clause 22, or at least we seek reassurance from the Minister that it will not prevent employers from improving working conditions or working practices. I would like to remove yet another burden on small and medium-sized business unless and until the Government can prove that that measure is needed and proportionate, and that, critically, the benefits will outweigh the costs.
Alex McIntyre
My experience in business goes way back. My parents ran a small business and, although I would not say I was a worker at it, I helped out from the age of nine. I got my first job at a small business when I was 12, and I worked in the hospitality trade throughout my school and university years, all at small and medium-sized enterprises. I spoke last week about the fact that I was on a zero-hours contract for the most part while I was there. I then became an employment lawyer advising businesses, from start-ups to FTSE 100 companies and global conglomerates. So I have some experience in these matters, and I am very grateful to be on the Committee.
Let me go back to my experience on a zero-hours contract. We are talking about amendments that would take out SMEs from many of these provisions, and I want to draw on two of my experiences and say why I think this issue is important. I mentioned the first last week: when I was on a zero-hours contract at the hotel that I worked at in my later teens, everybody in that business was on a zero-hours contract. As a 15-year-old, I was quite happy to be on a zero-hours contract. I had to balance it with playing rugby and my studies, but in the summer I could flex up and work longer hours. However, for many of my colleagues, that was their full-time job; it was the job that paid their rent or mortgage—if they had been lucky enough to buy a house—looked after their kids and provided the heating each winter. But when it came to it, it was open to abuse, and the manager I had would vary hours based not on demand, but on whether she liked the individual or not.
I remember vividly that one week a colleague refused—quite rightly, I would say—to take the manager’s personal shopping up to her fourth-floor flat, because he was really busy behind the bar; he was the only barman on shift. He usually worked between 50 and 60 hours a week; for the next month, he was given five hours a week. He had two children, and rent to pay. I just do not agree with the amendment suggesting that that is fine and that that abuse of someone’s rights could continue indefinitely.
Mr Bedford
The example the hon. Gentleman has just given would be covered anyway by employment law. If an individual is being discriminated against, they could take that to a tribunal under current employment law. The amendment would not in any way dilute the rights that currently exist in that respect.
Alex McIntyre
Well, the individual would be able to raise a grievance, but discrimination requires it to be related to a protected characteristic, and there is no protected characteristic saying that just because someone disagrees with a manager, he would be able to bring a claim under the Equality Act 2010 for discrimination. He might be able to raise a grievance about that, but that requires an employer to have a fair grievance process and to actually follow through. Is that individual, who is already on very low pay and struggling to pay his rent and feed his kids, going to take that grievance through a tribunal system that the previous Government allowed to really suffer? Eighteen to 24 months is the standard waiting time to get any form of justice, so I do not think it is appropriate to say that he would be able just to go to a tribunal. What he really needed was guaranteed hours and small businesses being prevented from abusing people by saying that they can continue to work 60 hours but not offering them a regular-hours contract.
My second point is on sexual harassment or harassment by third parties. When I was 15 years old, I worked at a Christmas party for midwives at that same hotel, and during that party I was sexually assaulted in the workplace. I was groped by the midwives and told that because I was only 15, they would be able to teach me a thing or two. When I approached my manager about it, he said I should enjoy that kind of attention because I was a man. I am really conscious that female colleagues suffered way worse than I did. Just because businesses are smaller, that does not mean that the impact on victims and people working there is any less.
However, the wording of the Bill is “all reasonable steps”, and the “reasonable” test is taken into account when tribunals consider such matters and what reasonable steps need to be taken by businesses. The size of a business is often something that tribunals will take into account when they look at what “all reasonable steps” would mean. In my example, there were reasonable steps that could have been taken, but I was told that I had to get back in there and carry on working with that party. Excluding small businesses would prevent them from having the duty to look after their employees when they are suffering harassment in the workplace.
To come back to the point made by the hon. Member for Mid Leicestershire about competing evenly, my hon. Friend the Member for Birmingham Northfield has already talked about some of the perverse outcomes that the amendment might lead to. Unscrupulous employers who want to get around the legislation in whatever way they can might end up setting up umbrella companies in order to do that if this amendment were passed. A two-tier employment system would be a barrier to growth for companies, because it would say, “If you grow your company and continue to do well, you are going to put additional regulation on to the company.” There would be a perverse incentive for businesses to grow to 499 employees and stop there.
Sir Ashley Fox (Bridgwater) (Con)
On the hon. Gentleman’s point about employers wanting to set up separate entities to keep below a limit, he will be aware that in the Budget the Chancellor increased the employment allowance, to protect small businesses from her otherwise devastating increase in national insurance charges, and there is no indication that the Exchequer is incapable of managing that. Equally, with small business rate relief, there is no indication that local councils cannot distinguish between employers that are setting up different business and those that are taking advantage of that. Why does the hon. Gentleman think that employers would be able to exploit what he describes as a loophole—but what we would say is there to protect small businesses—and yet the Government are perfectly happy to have similar allowances for national insurance and through rate relief?
Alex McIntyre
If we are looking at the numbers, I am glad that somebody on the Opposition Benches is finally acknowledging that we have massively increased employment allowance, taking many small businesses out of paying national insurance contributions altogether. It is nice to finally have some recognition of some of the good stuff this Government are doing for small businesses.
To return to the point, though, there is a big difference between having four employees, which would allow somebody to employ people on the national living wage, and having 500 employees. It would be much easier for a large business to exploit the kind of loopholes that are being suggested by reorganising itself into blocks of 499 employees than it would be for a business of a couple of thousand employees to be split into organisations of four employees or fewer, so I think that that is what is much more likely to happen.
I will not name names, but I have been in the trade for a long time, and whenever there is employment legislation, businesses will be considering how best to deal with it, and some are more aggressive than others. In this case, aggressive employers would potentially exploit that loophole, as my hon. Friend the Member for Birmingham Northfield suggested. We are creating a level playing field, which is an important part of this Bill. We heard in evidence last week that many employers are already doing so many of the good things in this Bill. This is a levelling of the playing field, to stop people undercutting good employers with what are, quite frankly, shoddy employment practices.
To sum up, I fully support the Bill, and I do not support the amendment. We should not create a two-tier employment system, where instances such as those that I and my colleagues suffered, like others working on zero-hours contracts in small and medium-sized enterprises, are allowed to go unchecked. We should continue to create a level playing field, as the Minister has suggested. It is important that we encourage all small and medium-sized enterprises to be good employers because, as the hon. Member for Chippenham said, staff retention in small and medium-sized enterprise is difficult. Being good employers—offering flexible working and ensuring that people have regular hours, if that is what they are working—can only benefit small and medium-sized enterprises, as they grow and expand their businesses.
Sarah Gibson
As I have stated, I am concerned for small businesses and have spoken to many across my constituency of Chippenham that are extremely concerned about the cumulative effects of these measures on businesses without an HR department and about the huge cost they will impose. However, although I welcome the amendment, I am seriously concerned that if we create a system in which the rights of those who work for small businesses are curtailed, that will affect their ability to take on extra staff.
I feel as though I could have supported the amendment if it had been drafted for seriously small businesses, rather than SMEs of up to 500 employees. I struggle to think of a firm in my constituency with that many employees that does not have an HR department, because they would be struggling as a single employer—I used to struggle as the HR department of my own business with 15 employees. If the number of employees in the amendment could be brought down to around 20, it would be much more acceptable to those kinds of small businesses, but as it is, I would find it difficult to support.
Laurence Turner
I rise to make two brief points that have not been made in this debate. The first, which is narrow, is that we already have a legal definition of SMEs under the Companies Acts 2006, which defines the upper limit as 249 employees. I acknowledge that the previous Government’s position was to extend to new regulations the higher thresholds that those on the shadow Front Bench are seeking to put forward through these amendments. I am happy to be corrected, but I do not believe that any legislation incorporating that position was subsequently carried. There is a serious point here. These may be probing amendments—we will find out shortly—but this process is not the right point to introduce a new legal definition.
Sir Ashley Fox
The hon. Gentleman makes a serious point that 250 employees is the current legal definition. If the Opposition were to show flexibility in accepting that 250 definition, would he and the Labour party accept the amendments for small and medium-sized businesses with up to 250 employees?
Laurence Turner
My personal view is that they should not be accepted, but the hon. Gentleman surely knows that he should not seek an opinion on the party position from a Back-Bench MP.
My second point is on the sectors that would be affected by the amendments. My hon. Friend the Member for Gloucester made an incredibly powerful contribution, which we all thank him for having the courage to make, about his experience in the hospitality industry. I want to talk about the social care sector, and it is important to remember that one in three workers on a zero-hours contract in England works in adult social care.
In a former life, I spent many hours going through the corporate structures of social care employers, and their accounts and other filings. It is commonplace for an individual care home to be constituted as an individual employer, even though they ultimately all share a common ownership structure, so what appears to be a small business is often not one. During the pandemic, there was a complex interaction between care workers on zero-hours contracts and a lack of access to statutory sick pay, and there was a direct link between SSP coverage and high rates of infection, and indeed deaths, in those homes among both workers and residents.
The measures in the Bill will make real progress. Going back to points that have been covered already, I fear that this group of amendments will have serious unintended and perverse consequences, and I encourage Members to vote against it.
Justin Madders
I congratulate the shadow Minister on tabling the amendments and on the measured way in which he presented them. However, it will not come as any surprise to him to hear that we will not be able to support any of them.
The intention of amendment 137—or amended amendment 137—is to exclude SMEs from the provisions in clauses 1, 2 and 3. As we understand it, the additional amendments would commit the Government to exempting employers with fewer than 500 employees from measures designed to improve access to flexible working, from their obligations not to permit the harassment of their employees by third parties, from unfair dismissal provisions and from the measure designed to stop unscrupulous fire and rehire practices.
I understand that the general thrust of the shadow Minister’s argument was about the impact on SMEs and the lack of an evidence base for some of the policies. The general response has to be that we will not accept a two-tier system of employment rights in this country. We believe that everyone should have the same rights and protections in the workplace, and that is fundamental to our principles.
I will address some of the specific points. The shadow Minister mentioned the RPC’s criticism of our proposals on zero-hours contracts. There is legion evidence about the impact of those contracts on individuals. I am grateful to my hon. Friend the Member for Gloucester, who spoke movingly about his own personal experience, including of third-party harassment. His example of the individual who was, effectively, punished when they refused to take a bag of shopping upstairs was telling, and it showed the risks of the power balance in zero-hours relationships. I think that that individual, having already been punished for refusing to take shopping upstairs, would have received similar retribution had he raised a grievance. That goes to show some of the challenges of the power balance for people working on zero-hours contracts.
There is considerable evidence on the impact of the zero-hours contracts. According to the Chartered Institute of Personnel and Development, 22% of workers on zero-hours contracts do not believe that their contractual arrangements suit their life, and the previous Government’s Taylor review in 2017 found that many workers on zero-hours contracts struggled with that one-sided flexibility and power imbalance, where employers often require employees to be available.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I thank the Minister for his speech so far. We heard a lot from the Opposition about the cumulative impact on business, and I wonder whether he might say something about the cumulative benefit for workers. We know that 2 million zero-hours workers may benefit from the changes in the Bill, and we also heard evidence last week from a number of small businesses, or those who work with them, that they do not want a two-tier system. They said there are benefits in these provisions that will lead to not only better quality rights for those currently on zero-hours contracts but happier businesses with a more productive workforce.
Justin Madders
On a very fundamental level, if an employee has less money coming than in the previous week, they face a challenge in paying their bills, whether that is their mortgage, their rent or whatever costs they face. That is a very clear challenge to individuals on zero-hours contracts. A great number of studies show that people in insecure work have lower levels of job satisfaction and poorer physical and mental health, and there are also issues linked to lower levels of work productivity. As my hon. Friend mentioned, there is evidence that proper workforce planning is good for businesses, as well as individual workers. I am afraid that any exceptions creating a two-tier labour market would just exacerbate some of the challenges we see in that area. That would create a downward pressure, distort competitiveness at the expense of larger businesses and, as we have heard, create a disincentive for smaller businesses to grow.
Chris Law (Dundee Central) (SNP)
I have heard the Minister reference two-tier rights in employment law several times. I want to raise a fundamental issue in this Bill: zero-hours contracts and the different legal categories of a worker. It is a general principle that labour law should be universal in its application, and our labour rights should apply to everyone who works for others. I just wanted some clarification, as without clarification on the legal status of all those who work, the rights in the Bill are allocated piecemeal.
I will give some examples: some rights are given to employees with contracts of employment; some rights are given to limb (b) workers, such as Deliveroo riders in Independent Workers Union of Great Britain v. Central Arbitration Committee and Deliveroo last year, or gig workers who are denied the status of employees; and some rights are given to other new ad hoc definitions of workers, such as workers on non-contractual zero-hours arrangements. The situation of the false self-employed, including those employed by umbrella companies or personal service companies, as well as anomalous workers such as foster carers, is not otherwise dealt with, and their rights are left opaque. Fundamentally, I am asking whether a new clause is required to ensure that all rights contained within the Bill apply to workers defined as
“any individual who is engaged by another to provide labour and is not, in the provision of that labour, genuinely operating a business on his or her own account”.
Justin Madders
I understand the point that the hon. Member is making. I think it would not need a new clause but a new Bill, because there is a whole range of very complicated issues about worker status. It is something that we are committed to looking at in our “Next Steps” document, and there is a whole range of issues in that sector. The hon. Member referred to foster carers—I should clarify for the record that I am a foster carer. Personally, I would not consider that to be employment, but I know there are others who believe that it is. He also mentioned various arrangements within the gig economy, and the shadow Minister mentioned IR35. We can very quickly get into a very detailed argument about who would be classed as a worker and who would not, and that needs a much more considered and lengthy examination. That is why, as much as we would have liked to, we were not able to get it in the Bill in the time allowed, but I absolutely understand the point the hon. Member is making.
On the amendments before us, the disincentive for an employer to grow would, unfortunately, be an unintended consequence of their provisions. There could even be a scenario where there would be an argument in an employment tribunal about how big an employer actually was. My hon. Friend the Member for Birmingham Northfield talked about some of the complicated structures that we see, and we know that some employers deliberately structure themselves to avoid particular laws. That would go against the policy objectives, which are to create a level playing field across the board, avoid undercutting and ensure that best practice is spread throughout.
We must not create a two-tier system. That is not consistent with what we are trying to achieve. It would harm not just workers, but small businesses, and, as the hon. Member for Chippenham said, would create an incentive for workers at smaller employers to leave. If someone does not get any protection for two years working for one employer, they will go and work for someone who will give them that protection. That applies to lots of the other rights as well.
On the unfair dismissal amendment, there was a brief period in the 1980s where there was a slightly different employer size qualification for unfair dismissal. I think it was 21—some way below the number that the shadow Minister is proposing—but even the Thatcher Government decided that was not a tenable situation and removed that in the end. I gently point out to the shadow Minister that the amendment as drafted would not have the effect that he hopes. I hope he will not push it to a vote.
On the issues about the impact on small employers, that is why we have legislated to include a statutory probationary period to ensure that there is not an undue burden on businesses.
Jon Pearce
I should refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB.
The shadow Minister talks about employment rights from day one and the extra burden, when the reality is that cases of discrimination and whistleblowing can be brought on day one. Giving some structure to the probationary period will actually assist many employers. In my experience in private practice advising businesses, many of them found themselves subject to claims of discrimination because they failed to go through a proper process. The Bill will assist businesses in giving a greater structure and could potentially lessen the burden on employers with regard to the threat of litigation.
Justin Madders
I think I understand the point my hon. Friend is making: sometimes, an individual who is aggrieved about their treatment will find a legal claim to pursue the employer even if it does not necessarily fit their circumstances. Giving a much clearer structure for employers will hopefully allow closure—I think that is probably the right word—for both sides.
The shadow Minister asked about the evidence on flexible working. I refer him to a Flexible Jobs Index survey in 2023 which found that nine in 10 people wanted to work flexibly, but only six in 10 were able to do so. There is clear evidence, and we heard plenty in the evidence sessions about that.
I will briefly touch on the issue of third-party harassment. My hon. Friend the Member for Birmingham Northfield gave a scholarly run-through of some of the issues, but for the benefit of the Committee, third-party harassment was actually unlawful for the five years between 2008 and 2013, and I am certainly not aware of businesses claiming that that was an undue burden. That was repealed in 2013 because, at the time, it was considered that there were broader protections available regarding third-party harassment. However, that interpretation was challenged in the Nailard judgment in 2018, which found that employees were not in fact protected against third-party harassment. One of the intentions behind the Bill is to close that gap. We think it is absolutely fundamental that, if someone is being harassed at work, it should not matter how big their employer is. Harassment is unacceptable in all its forms, whoever someone works for and however big their employer is, and we intend to close that gap.
Greg Smith
I think that we have had a good—possibly lengthy for a Bill Committee—debate on this group of six amendments. My fundamental concern and argument is around the cumulative impact and the risk of the unintended consequence—I do not think we have got the reassurance we require on that—that these measures could actually dissuade SMEs. I accept that we can debate how to precisely define SMEs, from the Liberal Democrats’ quite low-ball position of around 20, to the 249 mark, or to the 500 mark in our own amendments but, if the net result—the unintended consequence—is fewer jobs overall in the economy, nobody wins.
I certainly want to reassure the Committee, on the point about third-party harassment, that the Opposition absolutely want all forms of harassment stamped out, for sure. I thank the hon. Member for Gloucester for sharing his personal story with the Committee; clearly what happened to him was wholly unacceptable, and I am very sorry that he had to endure it, as many other people do around the country. The question that we are posing is whether this the right law to do it, or are there other laws required to be as firm as humanly possible to stamp down on those unacceptable behaviours? Our point stands—that concern stands—that this measure could, in the words of the hon. Member for Birmingham Northfield, actually create a “perverse incentive” for employers not to give people that chance in life, not to grow their workforce, and not to take that risk or that gamble that, in turn, would grow the economy, which I think we all want them to do.
As we are mindful of the need to probe this measure a little bit further and to get some of those definitions right, we reserve the right to revisit this on Report but, for the time being, we will not be pushing any of those six amendments to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 149, in clause 1, page 2, line 29, leave out
“a number of hours (‘the minimum number of hours’) not exceeding a specified number of hours”
and insert
“two hours or fewer per week (‘the minimum number of hours’)”.
This amendment defines the number of hours that would constitute a “low hours” contract.
Hopefully we can have a little bit more speed with this debate. In amendment 149, we seek to define a low-hours contract to mean that fewer than two hours’ work is made available during the week. I want to be clear with the Committee that this is a probing amendment, because we are not saying that two hours should constitute a low-hours contract. The Opposition want to know how the Government would define a low-hours contract. The probing amendment will hopefully enable us to understand the Government’s intent fully.
The Government have sadly failed both to consult widely with business and to conduct proper policy development work, and they have thereby introduced a Bill without giving Members across the House a clue as to the actual objective of the definition of a low-hours contract. This is a simple and straightforward probing amendment. I would be grateful to the Minister for some clarity on the Government’s definition of a low-hours contract and on what that definition will be used for.
Michael Wheeler
I appreciate that the shadow Minister has said that it is a probing amendment. I wish it was not quite so ridiculous, in all honesty—it is an utter low ball—but I will speak to it and to the clause it seeks to amend.
Greg Smith
I know the hon. Gentleman is new to the House, but sometimes one has to be a bit ridiculous to prove a point and to get answers. Does he agree?
Michael Wheeler
Well, I agree on my newness, and maybe as I gain more experience, I will encounter more ridiculousness in this place than I already have—in fact, I am sure I will. I wish to speak to the amendment, despite its probing nature. In my view, and I hope the Minister would agree, the clause is designed to promote stability and financial security for those who currently lack it because of the number of hours that are baked into their contracts. To set the bar as low as two hours would run counter to that purpose.
The measure has been widely trailed and debated in the run-up to the election and in this Committee. I highlight a few things that I hope the Minister will speak to with a view to that purpose. I hope that we would all agree that tackling the insecurity that millions of people in our economy face is a worthy aim, and that that is not limited just to those on zero-hours contracts but includes those on low-hours contracts who regularly work more than their set hours.
I spoke of a rebalancing earlier, and that is about fairness and the quality of employment. As part of that, it is only right that, where need is demonstrated, employees are offered—not given; there is still an element of choice—the opportunity to have those hours baked into their contracts, as is set out in the Bill. That would improve their financial security, their work-life balance, the predictability of their hours, and their ability to live their lives, to which their income is incredibly important.
I am looking forward to hearing the Minister roundly reject this amendment, but I also want him to address some other parts of the clause, specifically the inverse of the amendment, the phrase,
“not exceeding a specified number of hours”.
I hope we would want to see this measure apply to as many workers—
Sir Ashley Fox
The hon. Gentleman spoke of the need for employees to have stability and security, but would he not agree that the Bill causes great instability and insecurity for many small business owners precisely because it is so vaguely and badly drafted? The Government have submitted 109 amendments of their own. There are two new schedules and large parts of the Bill that have been left to be amended by future regulations. The Minister spoke earlier about the probation period, but we do not know how long that will be. What is a low-hours contract? It has taken the Opposition to say, “How about two?”—a ridiculous number, we admit—to show that there are enormous parts of the Bill that are not properly drafted. Would it not be better for the Government to just take this Bill away and start again?
Michael Wheeler
I would not agree, which will not surprise the hon. Member. I gently suggest that the number of Government amendments will possibly provide the clarity that he asks for—they will be baked in, and will provide that clarity. This is part of the process of getting the provisions right for all involved. I would suggest that it reflects exactly the opposite of what the hon. Member suggests.
I return to the point about stability and instability. If the basis of the provision is to have hours regularly worked included in contracts, having that contractual term would provide not only stability for the employee, but predictability and stability for the employer. I am sure we can agree that stability all round is beneficial.
However, I come on to possible unintended consequences. The term,
“not exceeding a specified number of hours”,
could do with some clarity, in order to provide that stability and to ensure that the measure applies to the widest number of people within our workforce, to fulfil the intended aim. There is also the phrase “regularity”. Will the Minister consider how to clarify that term to provide the clarity that we would all welcome? Finally, I come on to the term, “excluded worker”. As I have said, we want to see as many people as possible covered by the Bill, so that they feel the benefits of it. The provisions are measured, for both workers and employers. I would welcome the Minister’s commitment to consider those points, as well as his roundly rejecting the ridiculous premise on which the amendment is based.
Justin Madders
I am grateful to the shadow Minister for clarifying that this is a probing amendment, and possibly also that it is a ridiculous amendment, although I am not sure that that is the best way to persuade us to accept it. He will not be surprised to hear that we will not accept it.
An important point has been raised, and my hon. Friend the Member for Worsley and Eccles has asked a number of questions about what the amendment is trying to achieve. As I understand it, the amendment would mean that only workers on zero-hours contracts or arrangements, and those with two hours or fewer guaranteed per week, would be covered by the regulations. It would also remove the power to make regulations setting the maximum number of hours for those low-hours contracts to be in scope of the provisions.
The low-hours concept will be crucial in determining how many workers end up in scope of the right to guaranteed hours. That is partly intended as an anti-avoidance measure, to prevent employers from avoiding the duty to offer guaranteed hours by moving a worker on to a contract guaranteeing a very small number of hours. I think we can all see that, if the shadow Minister’s amendment were accepted, we would soon be talking in the lexicon about two-hours contracts, rather than zero-hours contract, and that would not deal with the questions of stability and security that we are trying to address.
We will consult on what we mean by low hours. We think it is very important to get this point absolutely right, and we understand that pitching it at a level that works for both the business and the worker will be absolutely critical. We are committed to working in partnership.
We are looking to clarify the provision in regulations. We understand that there are arguments about the detail being in the Bill, but the counter-argument is that putting the details in regulations gives us more flexibility to review the provisions as we move along. It is fair to say that we do not expect the number to end up being two hours. I do not think there has been any evidence put forward for that.
Greg Smith
As I said to the hon. Member for Worsley and Eccles, sometimes something a little obscure is needed in order to get noticed and to get an answer.
There is a serious question on what constitutes a low-hours contract. The Minister has just said he will consult, but presumably he will consult on a range—the consultation document will not be a blank piece of paper inviting people to say exactly what they think. What is the range in which the Government believe a low-hours contract should be defined, which will be within that consultation he has promised?
Justin Madders
The shadow Minister tempts me to pre-empt what we will put in the consultation. I have had a number of conversations with my hon. Friend the Member for Worsley and Eccles over many years, because he has great experience of the retail sector, where there is a great deal of insecurity of work. People who work in that sector can be on guaranteed hours of 16 hours a week but still face insecurity. Equally, a lot of the people that we are trying to help here have no guaranteed hours at all. There is an argument that anyone below full-time hours—again, there is a debate about what that means—could be within scope.
That is why we are holding a consultation, to enable us to understand exactly who will be affected—whether we are trying to catch everyone or target the people who suffer the greatest insecurity of work. That is the purpose of the consultation. I know the shadow Minister will probably want to get some figures out of me today, but I am afraid I will not be able to oblige.
Chris Law
I am sorry to stop the Minister in his tracks, but it is quite an important point. There is in the Bill what I would consider to be a loophole, which enables employers to offer a guaranteed-hours contract where there is work of a short-term nature. There are some issues with that. I would like to know the justifications for it, and whether it is going to consultation. Does it mean that people engaged on such terms will be engaged on a zero-hours basis, or will they be employed on a guaranteed-hours basis? It is not clear in the Bill. If the former, why is it not possible for such workers to have a guaranteed-hours contract if they otherwise meet the proposed statutory criteria? What safeguards will there be to ensure that the power is not abused, in order to avoid a guaranteed-hours contract? I am sure that, in the spirit of the Bill, we want to ensure that that is tightened. There is nothing in the Bill for that, either.
What is the difference between a short-term contract and a fixed-term contract? Will there be a legal status for someone engaged on a short-term contract? Are they an employee, a limb (b) worker, or neither? Lastly, will non-renewal of a short-term contract be a dismissal for the purposes of unfair dismissal in the case of workers who are employees? That is a lot of questions, but I want to know whether there will be further consultation that may result in amendments to the Bill.
Justin Madders
The hon. Gentleman asked so many questions that I did not have a chance to make a note of them. A lot of the issues he raised will be dealt with by amendments that we will debate today or later in the Bill’s passage, but I take his points. We are trying to legislate in a way that prevents unintended consequences and loopholes. I would say to the shadow Minister, “Watch this space,” and encourage him to take part in the consultation, but we cannot accept his amendment.
Greg Smith
It is no surprise that the Government are unwilling to accept the amendment; it is a probing amendment, so we would probably have been quite upset if they had. The fundamental point I still want to get at, while making clear the probing nature of the amendment and that we will withdraw it, is that while I am half reassured by the consultation, it is critical that there is clarity and definition for businesses out there that want to understand what is coming down the line in this piece of legislation. Everyone knows the parliamentary arithmetic at the moment; this will become law at some point during this Session.
While it is never an ideal scenario to legislate first and consult second—it is far better to do it the other way round—we need greater clarity, as soon as is humanly possible, on how the Government intend to define low-hours contracts as they go to consultation. I cannot accept that there will not be some floor and ceiling within the range that the Government seek to consult on, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 152, in clause 1, page 3, line 2, after “not” insert
“on a fixed-term contract or”.
This amendment will exempt a worker on fixed-term contracts from being categorised as a “qualifying worker”.
This too will hopefully be a relatively straightforward debate. The amendment seeks to exempt workers on fixed-term contracts from being categorised as qualifying workers. This is a probing amendment in my name, on behalf of the official Opposition. We would like to understand why it is proportionate, particularly for small and medium-sized enterprises, for the provisions on guaranteed hours to apply to workers on fixed-term contracts, given that we still do not know the length of the reference period. Is it proportionate for a business to have to make an offer of guaranteed hours to a worker whose contract will in any event come to an end just after the reference period? In last week’s evidence sessions, some witnesses talked about workers who are perhaps on a very specific construction project with a definite end point—when the railway station is built, there is nothing left to build on that project—so it is not possible to escape the fixed-term nature of some contracts. Without knowing the length of the Government’s proposed reference period, it is impossible to make a judgment on the effect of extending guaranteed hours to workers on those fixed-term contracts. I should be grateful if the Minister would provide clarity on that, so that this probing amendment can be put to bed, or further questions can be asked down the road.
Justin Madders
The shadow Minister will not be surprised to hear that we will resist the amendment. First, it is important to note that the Bill does not ban the use of fixed-term contracts, or seek to force employers to make workers on fixed-term contracts permanent. That is not our intention. We recognise that in some cases, a fixed-term contract will be the most appropriate one for both worker and employer. For example, under the Bill’s provisions, it would be reasonable to enter into a limited-term contract where the contract is entered into for the worker to perform a specific task, and the contract will end once that task is completed. Many fixed-term contracts also already have clearly stated guaranteed hours within them.
However, where a fixed-term contract is used, we think it is important that within that fixed-term period, workers have the same right to guaranteed hours as those on permanent contracts. For eligible workers, if the fixed-term contract does not guarantee more hours than what are considered to be low hours as set out in the regulations—which we will come to in due course—and is longer than the anticipated reference period of 12 weeks, which we will continue to work on, then employers will be required to offer a guaranteed-hours contract for the remainder of the contract, reflecting the hours worked regularly over the reference period. The amendment would create a serious loophole in the legislation, allowing employers to use fixed-term contracts to evade the purposes of the legislation entirely. There would be no mechanism to prevent the use of a fixed-term contract for 12 weeks or longer, so eligible workers would not have certainty of their hours. We would open up a serious loophole, which I am afraid unscrupulous employers would exploit. I therefore ask the hon. Member to withdraw the amendment.
Greg Smith
I accept the points made by the Minister, but I still think there is a relative concern. We in no way, shape or form want to create loopholes—certainly not for any unscrupulous employer, and I want that to be very clear and on the record—but we do totally accept that there are some very legitimate fixed-term contracts out there, such as certain construction projects.
Greg Smith
I hope, from the nodding coming from the Government Front Bench, that Ministers agree with this. We will withdraw the amendment, but this point needs considerably more debate as the Bill progresses to ensure that while no loopholes for the unscrupulous are created, and that protections are there for employers around fixed-term contracts.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 151, in clause 1, page 3, line 2, after “worker” leave out
“(but see section 27BV for power to make provision about agency workers)”.
This amendment is consequential on the amendment that removes the ability of the Secretary of State to make regulations to make provision for agency workers to have similar provision to the right to guaranteed hours.
The Chair
With this it will be convenient to discuss amendment 150, in clause 4, page 23, line 24, leave out “2,”.
This amendment removes the ability of the Secretary of State to make regulations to make provision for agency workers to have similar provision to the right to guaranteed hours.
Greg Smith
There are just a couple more Opposition amendments to go before we get to some Government ones. Amendments 150 and 151 propose to exclude agency workers from the provisions on the right to guaranteed hours. The provisions in the Bill relating to agency workers are another example of the Government’s not having done proper policy work before introducing the Bill. I fully understand their desire to get it out within 100 days, but sometimes, if a Government have a mandate for five years, 100 days can seem quite quick.
The Bill specifies that the right to guaranteed hours with reasonable notice of the cancellation of a shift does not apply to agency workers, but it includes a Henry VIII power to extend those provisions to agency workers at a later date. I therefore ask the Minister the following questions. Why is it not straightforwardly on the face of the Bill that those provisions apply to agency workers? Why the Henry VIII power? What is the policy decision? In the Government’s mind, are agency workers included in the principle, as well as the letter, of this legislation? We have concerns about these provisions, which could be extended to agency workers. How would the employment relationship then work? Who would dictate the hours? If it is the end user rather than the agency, surely they become the employer? It all becomes rather confusing.
Is this measure an attempt to ban agency working by the back door? I think everyone would accept that agency workers are sometimes some of the biggest heroes in our economy, as they fill gaps when full-time workers on contracts are unable to get to work that day, for whatever reason—be it sickness or anything else—particularly in key professions such as nursing, healthcare and teaching.
Until the Government can explain their intention, the Opposition do not believe it is responsible for the House to give them the powers to entirely change at a later date the policy position set out on the face of the Bill. We need clarity right now, so that this Committee, and the whole House later in the Bill’s progress, can come to a proper, informed decision.
Justin Madders
I am grateful to the shadow Minister for tabling these amendments. He will again be unsurprised to learn that we will not be accepting them.
The Bill fulfils our pledge to end exploitative zero-hours contracts. We are introducing a right to guaranteed hours to eligible workers on zero and low-hours contracts, to give them the greater security and stability that all workers deserve. Although workers may choose agency work because they value flexibility, they can also experience the one-sided flexibility and insecurity that we have talked about already. If we do not include a power to include agency workers, there is a risk that employers wishing to evade the Bill will simply shift their workforce on to agency work to avoid giving them rights.
Sir Ashley Fox
What is more important in relation to this amendment is that the Government are granting themselves a Henry VIII power to amend their own Bill. The Minister really should say whether agency workers are intended be within its scope. He must not just say, “We will make this up at a later date.” We need clarity on that point. In previous Parliaments, the Labour party rightly criticised Conservative Governments for introducing Henry VIII clauses, but it is doing precisely the same thing because it has not actually made a decision. Will the Minister please answer this question: does he intend agency workers to be covered or not?
Justin Madders
I am grateful for the hon. Member’s question. It is our intention to include agency workers, which is why we have been consulting. The consultation finished yesterday on how best to apply the Bill to agency workers, because we understand it is a different relationship. There are a range of considerations, which is why the power has been taken in this way. I am sure that the hon. Member would criticise me if we had set out the scope of the Bill without having taken that consultation first. We are concerned about ensuring that there is a level playing field and not creating another loophole. We will now engage with the responses that we have had to the consultation.
Laurence Turner
The Minister spoke about the insecurity that can hang over agency workers, and said that their employment situation does not always represent genuine flexibility. As someone who has been an agency worker, I can certainly identify with what he says. On the point around regulations, does he agree that this is a long-standing precedent in employment law, dating all the way back to the Employment Agencies Act 1973, under which the current agency workers regulations are made? In terms of powers, this is nothing new.
Justin Madders
I am grateful to my hon. Friend for his intervention. Much employment law, particularly in relation to agency workers, is dealt with by regulations; that is appropriate because of the detail required. It is not a break with the past, albeit I accept the criticisms that we may be seen to be taking part for ourselves; I think it is entirely consistent with the way this has operated previously. It is something that we shall now consider in terms of the responses to the consultation. For those reasons, I think the hon. Member for Mid Buckinghamshire should withdraw his amendment.
Greg Smith
I accept many of the Minister’s points about the consultation, but as my hon. Friend the Member for Bridgwater has made clear, there is a Henry VIII power here. When legislation as wide as this is proposed, it is a big problem to have such a lack of clarity about where it will lead for agency workers, who are such a critical part of our economy and our workforce across many sectors. Given the Henry VIII element, we seek a Division.
Question put, That the amendment be made.
Greg Smith
I beg to move amendment 143, in clause 1, page 3, line 17, leave out “with the specified day” and insert
“18 months after the day on which the period began”.
This amendment defines each initial reference period as being 18 months long.
The Chair
With this it will be convenient to discuss amendment 144, in clause 1, page 3, line 19, leave out “with the specified days” and insert
“18 months after the day on which the period began”.
This amendment defines each subsequent reference period as being 18 months long.
Greg Smith
This is the last group of Opposition amendments for a little while. Amendments 143 and 144 would specify the length of the reference period as 18 months. The RPC, which was widely referenced in the first set of amendments, has said that the Government have not justified why they are pursuing—
Michael Wheeler
It is a quick intervention: I am just wondering whether the amendment’s reference to 18 months is another example of the ridiculousness that we were talking about.
Greg Smith
It is certainly probing. Like earlier amendments, it is intended to spark debate so that we can understand where the Government sit on the issue, what is coming down the line and what businesses can expect in the real world once the Bill receives Royal Assent at some point next year.
The last Conservative Government removed exclusivity clauses in zero-hours contracts, tackling those contracts that were potentially exploitative. The clause that the amendment seeks to amend is based on the flawed assumption that employers will exploit their employees and that all the power in the relationship lies with the employer. There is no doubt that some do, but the Opposition do not hold the presumption that all will. Those that do should be challenged, but the vast majority do not seek to exploit their employees.
The London School of Economics has found that zero-hours contract jobs have 25% more applicants than permanent positions in the same role. That flexibility is clearly sought after by employees. The author of the study said:
“Policymakers should be cautious with how heavily the use of zero-hours contracts is regulated.”
The RPC has asked the Government to clarify the likelihood that the Bill’s provisions on zero-hours contracts will increase unemployment and worklessness, and how far that risk is mitigated by zero-hours contracts remaining potentially available. I would be grateful if the Minister clarified the extent to which they will remain available. What is his view on the impact that the policy will have on workers who might like to work fewer than the guaranteed number of hours a day? Some people may desire that.
We believe the legislation should include the exact length of the reference period. I accept Government Members’ point about the 18-month figure, but as I said to the hon. Member for Worsley and Eccles, it is about triggering a debate, kicking the tyres and getting to a reasonable but considered position on what the reference period should be. The Opposition’s point is that we should know what it is. It is not just politicians in this House and the other place who need to know, but the real businesses, entrepreneurs and drivers of our economy who employ real people. They need to understand what the legislation is going to specify and what the rules are by which they are going to have to play the game.
Laurence Turner
The Workers (Predictable Terms and Conditions) Act 2023 sets the reference period at 12 weeks. The hon. Gentleman says that 18 months is probably an artificially high number. Does he think that the 12-week reference period, which the previous Government supported just 12 months ago, is in about the right place?
Greg Smith
The hon. Gentleman is absolutely right that the previous Government set the reference period at 12 weeks. What we do not have clarity on is whether the Bill will change that. Will the new Government shorten it or lengthen it? It is about clarity. This is a rushed Bill, published in 100 days. We do not have the answers or the hard data that we need for debate and that individual Members need so that they can go to businesses in their constituency and take a view before they vote on Report or on Third Reading.
We heard from several witnesses that the length of the reference period needs to account for seasonal work. UKHospitality has put 26 weeks forward as a sensible length. That is not necessarily the Opposition’s position, but we would be foolish to ignore the evidence that the hospitality sector presented to us last week.
The amendment is intended to test what the Minister is planning and—ever the most critical question in politics—why. How will we ensure that the length will not be overly burdensome and that it will take account of the different needs of so many sectors?
Sarah Gibson
Like previous amendments, the amendment highlights a serious concern among quite a lot of local businesses to which I have spoken, especially SMEs, which is that a considerable amount of detail has not been included in the Bill and is being left to secondary legislation. Although consultation is highly welcome, it needs to happen as fast as possible, because the interim period between seeing the Bill and getting the detail is causing a huge amount of stress and uncertainty for businesses working in ever more complicated conditions.
Sir Ashley Fox
I want to talk about the reference period in relation to the hospitality and tourism industry, which is particularly important to my constituency of Bridgwater and to many other constituencies in the south-west of England. Clearly a lot of seasonal workers are employed, and although I would prefer there to be no reference period, the Government have a mandate to introduce one. Any reference period of less than 26 weeks will cause great difficulty for businesses that may start engaging people just before Easter and are looking for employment to end in September or October, according to their business need. The fact that that detail is left to secondary legislation causes concern to those businesses.
Alex McIntyre
Does the hon. Member not agree that most businesses in hospitality know their seasons very well? They come every year and they tend to operate on a relatively regular basis—that is how seasons work. As has been highlighted, businesses could use fixed-term contracts to ensure that they have appropriate staffing for the season. Those contracts would end at the appropriate time, negating the need for a longer reference period.
Sir Ashley Fox
I am grateful to the hon. Member for making that point, but in Burnham-on-Sea in my constituency there are many very small businesses, with perhaps two or three employees, that take on an extra person or two during the summer season. This summer has been particularly bad because there has been an awful lot of rain. Business needs change. The danger is that if there were a short reference period and we were fortunate enough to have a very hot and sunny April, May and June but a very wet July, August and September, businesses would be employing more staff because they had to, rather than because it was justified by the business conditions.
This is just not necessary. It is Government regulation for the sake of it, and it will make life more difficult for small business owners. Every time Government Members have risen to speak, they have declared that they are a member of one union or another, but very few have actually run a small business. I did run a small business. I was self-employed before I came to this place. It is challenging, because you are on your own: you take the decision whether to employ someone or not. Dare I say it, there are too few Government Members who have set up small businesses and who have actually employed people and experienced that challenge. That is part of why they do not understand how difficult this regulation would make life for some very small businesses.
Justin Madders
The amendment tabled by the hon. Member for Mid Buckinghamshire seeks to amend clause 1 to specify in the Bill that the initial and subsequent reference periods for the right to guaranteed hours will be 18 months long. I do not think he is prepared to concede that it is a ridiculous amendment, but shall we say that it was ambitious? Can we agree on that?
Greg Smith
Of course it is on the absurd end of the spectrum, but as I said to the hon. Member for Worsley and Eccles, that is to highlight the issue. Sometimes, when we have a total lack of clarity and of the information that real businesses need, as the hon. Member for Chippenham highlighted, we throw in a stone to try to get a proper answer. That is what the Opposition seek, and I will be incredibly grateful if the Minister now tells us what he wants the reference period to be.
Justin Madders
I am grateful to the shadow Minister for intervening, but there is not a total lack of clarity. We have been clear all along, including when we were in opposition, that the reference period should be 12 weeks. However, we want to continue dialogue with businesses to ensure that we get the right answer to the question of how long the reference period should be for guaranteed hours. As we heard, it is an established period that has been used in the previous Government’s legislation, in the workers’ predictable terms and conditions provisions and under the Agency Workers Regulations 2010. It is an established principle in law that 12 weeks is about right for a reference period. Nevertheless, we will continue to consult and engage with businesses, trade unions and all employers’ organisations about whether it is right.
At the moment, our considered view is that 12 weeks is the right period; we certainly do not believe that 18 months is. [Interruption.] I think the shadow Minister is nodding. We do not think that 18 months is a realistic proposition. I understand the point about seasonal work, but 18 months would take us through half a dozen seasons. He will probably accept that that would not necessarily work.
As for why this measure is needed, the shadow Minister said that the Opposition do not presume that all employers set out to exploit their workforce. I make it clear that the Government do not presume that either; we believe that good businesses are good for their workers and good for the wider economy. We heard plenty of witnesses give evidence last week about the good industrial relations that they practise and the benefits for their workers. The point of the Bill, however, is that we know that not everyone is a good employer. We need to weed out bad practice, because we believe that all workers deserve the same protections in the economy.
The shadow Minister asked whether zero-hours contracts will still be available for those who might not want to work guaranteed hours. He will be aware that the legislation does not compel an individual to accept an offer of guaranteed hours; it has been set up in that way for the individual. There are examples of people—possibly including my hon. Friend the Member for Gloucester in his earlier years—whom zero-hours contracts suit better. If that is what he genuinely wants to continue working on, he is entitled to do so.
The hon. Member for Chippenham asked about the speed at which we are operating. I think she wants us to go faster, so she might need a word with the shadow Minister, who wants us to go a little slower. We are clear that we will take our time before we introduce a lot of the provisions, because we want to get the detail right and we want to engage with businesses. An awful lot of the press coverage is understandably raising anxiety levels, but a lot of it is based on speculation rather than on the law, because the law has not yet been set: the Bill has not been passed, and the regulations and the codes of practice that will follow have not been produced. It is important that we take our time, because we want to work with businesses as we produce information going forward.
The hon. Member for Bridgwater made a point about seasonal work that we heard on various occasions during our evidence sessions, but I think my hon. Friend the Member for Gloucester has answered it: if an employer knows that they will be busy for particular parts of the year, a fixed-term contract is the answer.
On the question of business experience, I can claim to have set up my own business when I was 17—I am not saying that it was a FTSE 100-listed effort or anything—and before I was elected I worked in the private sector for 20 years.
We do not think that the shadow Minister’s amendment would deliver the policy outcome that we seek. I suspect he recognises that, too, so I invite him to withdraw it.
Greg Smith
Of course we will withdraw the amendment, but the critical question is why the Minister has referred to 12 weeks, but it is not in the legislation. As he considers tabling amendments of his own in Committee or on Report, I urge him to lock that in, so that certainty for business is on the face of the Bill, rather than things being left open.
Justin Madders
If we put 12 weeks on the face of the Bill, would the Opposition support it?
Greg Smith
Our own legislation last year cited 12 weeks. There is clearly a lot in the Bill that we oppose because we just do not think it works in the interests of British business or workers, but 12 weeks would at least give us some certainty that would be consistent with the previous Government. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Sixth sitting)
Tuesday 3rd December 2024
(2 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 December 2024 - (3 Dec 2024)
The Committee divided: - Ayes: 16 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move amendment 6, in clause 1, page 7, line 7, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Justin Madders
It is a pleasure to see you in the Chair, Mr Stringer. I apologise in advance to the Committee because amendment 10 is rather technical, as several amendments are this afternoon. The amendment is required to clarify wording and intent. It clarifies which worker’s contract or arrangement needs to be considered, in cases where a worker has worked under multiple contracts or arrangements during a relevant period, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply, or a guaranteed hours offer that has been made is to be treated as withdrawn.
Amendment 10 effectively means that once there is a relevant termination in such cases, the provision is not treated as meaning that the duty ceases to apply where the worker goes on to be offered further limited-term contracts from the employer. It is essentially a clarification and an anti-avoidance measure. Given that there are rather a lot of those today, I will not detain the Committee any longer.
Amendment 6 agreed to.
Amendments made: 7, in clause 1, page 7, line 10, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 8, in clause 1, page 7, line 16, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 9, in clause 1, page 7, line 19, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 10, in clause 1, page 7, line 20, at end insert—
“(2A) Where a qualifying worker works for an employer under more than one worker’s contract, or in accordance with the terms of more than one arrangement, during—
(a) the relevant reference period,
(b) the offer period, or
(c) the response period,
the references in subsections (1) and (2) to the worker’s contract or (as the case may be) the arrangement are to the worker’s contract under which, or (as the case may be) the arrangement in accordance with the terms of which, the qualifying worker last worked for the employer before the end of the period in question.”—(Justin Madders.)
This amendment clarifies which worker’s contract or arrangement needs to be considered, in multiple contract/arrangement cases, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.
Justin Madders
I beg to move amendment 11, in clause 1, page 8, line 7, at end insert—
“(5A) Where, by virtue of subsection (2), a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn, the employer must, by no later than the end of the response period, give a notice to the qualifying worker stating this to be the case.
(5B) Where, by virtue of regulations under subsection (5)—
(a) an employer who would otherwise have been subject to the duty imposed by section 27BA(1) in relation to a qualifying worker and a particular reference period is not required to make a guaranteed hours offer to the qualifying worker, or
(b) a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn,
the employer must give a notice to the qualifying worker that states which provision of the regulations has produced the effect referred to in paragraph (a) or (b) (as the case may be).
(5C) A notice under subsection (5B) must be given by an employer to a qualifying worker—
(a) where it is required to be given by virtue of paragraph (a) of that subsection, by no later than the end of the offer period;
(b) where it is required to be given by virtue of paragraph (b) of that subsection, by no later than the end of the response period.
(5D) The Secretary of State may by regulations make provision about—
(a) the form and manner in which a notice under subsection (5A) or (5B) must be given;
(b) when a notice under subsection (5A) or (5B) is to be treated as having been given.”
This amendment requires an employer to give a notice to a qualifying worker where the employer’s duty to make a guaranteed hours offer to the worker does not apply, or an offer already made is treated as having been withdrawn, as a result of proposed section 27BD(2), or regulations made under proposed section 27BD(5), of the Employment Rights Act 1996.
The Chair
With this it will be convenient to discuss Government amendments 13 to 15, 19, 20, 23, 44 and 45.
Justin Madders
Amendment 11 will introduce a duty on employers to inform workers when an exemption applies and the employer is exempt from their obligation to offer a worker a guaranteed hours contract. Any exemptions to the duty to offer guaranteed hours will be defined in regulations.
Amendment 11 will also introduce a duty on employers to inform workers where an offer of guaranteed hours already given is to be treated as withdrawn because a relevant termination has taken place. That will ensure that workers are aware of when they are not receiving a guaranteed hours offer because an exemption applies. It will allow workers to check that the exemption is applicable to them, and then enable them to enforce their right to guaranteed hours where an exemption is not applicable.
Associated consequential amendments 14, 19 and 44 will ensure that workers will be able to take a complaint to an employment tribunal if the worker is not provided with a notice of exemption or a notice of the withdrawal of an offer already made. That will also be the case where a notice has been provided but should not have been, or where a notice has been provided but cites the wrong exemption.
Amendment 13 will introduce a new duty on employers that will ensure that workers who would likely qualify for a guaranteed hours offer are aware of certain information about the right to guaranteed hours. That will help to ensure that workers are informed about the new right and can therefore take decisions about their working hours during their reference period based on the information they receive about their possible right to a guaranteed hours offer.
Further consequential amendments 15, 23 and 45 have been made to ensure that a worker may enforce their right to be informed about the right to a guaranteed hours offer by taking a complaint to an employment tribunal. A consequential amendment 20 has been made to define the period within which a complaint of this nature may be taken to a tribunal. I think we might get to that later in relation to the general application of extended time limits.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. As a precursor to my comments on these specific amendments, I note that the sheer volume of Government amendments that we are considering really goes to show that the Bill might have met a political objective in being published in 100 days, but that it was not ready to be published in those 100 days. At worst, that is a discourtesy to the House and, at best, it shows that the legislation simply has not been drafted properly. These changes simply would not have been necessary had due diligence been done on the Bill before it was published.
I would like to focus on amendment 13 from this group of amendments. That amendment requires employers to give their employees access to certain information to be specified in regulations—we are back to our old friend of regulations to come. Let me ask the Minister the following: what information will amendment 13 require employers to make available? Why? And what further burden will be imposed later down the line by regulations, thanks to the power taken in the clauses? Employees will be able to take their employer to a tribunal for not providing this information, as provided for in amendment 15, so I suggest to the Committee and the Minister that it is vital that we can understand the requirements that the clause will place on employers.
Justin Madders
I am grateful for the shadow Minister’s questions. No doubt during the passage of the Bill we will come back on several occasions to that point about the number of amendments. I just place on record my gratitude to the civil service and the Office of the Parliamentary Counsel for their work in getting the Bill published to the parliamentary deadline that was politically set. Of course, lots of Bills have amendments as they progress. As is consistent with our wish to engage thoughtfully, we may still have further amendments.
As for the shadow Minister’s questions, it is entirely usual to put that sort of detailed information in regulation, and we would not normally specify it in a Bill. We are trying to ensure that workers who are captured by the zero-hours legislation are aware that they are captured by it and are entitled to certain rights, such as the offer of a guaranteed hours contract. This is about making sure that some of the most vulnerable people in society, who are often exploited by zero-hours contracts, are at least given the information to ensure that their rights are enforced. We will work with businesses and employers, and representatives and trade unions on the precise detail of the information to be provided, but this is about making sure that all parties are aware of their legal obligations. I hope that the shadow Minister understands that this is an important part of the legislation.
Amendment 11 agreed to.
Justin Madders
I beg to move amendment 12, in clause 1, page 8, leave out lines 8 and 9 and insert—
“(6) For the purposes of subsection (3)(c) (and subsection (4)(b), which applies subsection (3)(c))—
(a) subsection (8) of section 27BB (when it is reasonable for a worker’s contract to be entered into as a limited-term contract) applies as it applies for the purposes of that section;
(b) it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—
(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
This amendment adds a rebuttable presumption to the existing provision made by proposed section 27BD(6) of the Employment Rights Act 1996. The presumption will apply when determining whether there has been a relevant termination for the purposes of that section such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.
The amendment will close a potential loophole that could mean that workers might not be entitled to a guaranteed hours offer if they are employed on a series of limited-term contracts to undertake the same or similar work. It will do that by adding a rebuttal presumption, that it will not be considered reasonable to have entered into a limited-term contract where a worker undertook work that was the same or similar in more than one contract during the relevant period. That means that the relevant termination provisions would not apply and the employer would not be excepted from its duty to offer guaranteed hours. An employer would have to offer guaranteed hours to the worker, even if that worker’s last contract was terminated at the end of the relevant period, unless it was reasonable for the employer to have entered into a limited-term contract with the worker and the presumption is rebutted, which could then lead to a relevant termination.
Under proposed new section 27BB(8) of the Employment Rights Act 1996—as referred to in the amendment—it is “reasonable” for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract will end when it is performed; if the worker is needed only until some event occurs and the contract will then end; or if the worker is needed only for some other temporary need to be specified in regulations.
To be clear, whether it is “reasonable” for the employer to enter into a limited-term contract during the relevant periods affects only whether the right to guaranteed hours applies. If such a contract is not “reasonable”, it is still a lawful contract and may, of course, be an acceptable means of conducting business. As such, the presumption introduced by the amendment would apply only to determine whether there was a relevant termination of a limited-term contract, where a worker is engaged on a series of limited-term contracts doing the same or similar work. The presumption will not prevent an employer from engaging a worker on a series of fixed-term contracts, but it will act as an anti-avoidance measure to ensure that an employer cannot get around its duty to offer guaranteed hours by engaging the worker on a series of limited-term contracts even though they are actually doing the same work.
Greg Smith
Amendment 12 states that it is to be presumed by tribunals
“that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract”
if the work done
“was of the same or a similar nature”
as the work undertaken by other employees, with the following conditions:
“(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
I have stressed the wording of the amendment because I would be grateful if the Minister could clarify what protection the clause is designed to give employees. The vast majority of businesses reading that could easily be forgiven for getting slightly confused. Why is that wording necessary, particularly on this measure, to create the protections that I think I understand the Government want to achieve? The amendment might result in confusion from most businesses.
Alex McIntyre (Gloucester) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the Minister for introducing this amendment. It makes a lot of sense to make sure that we avoid the opportunity for unscrupulous employers to try to get around the legislation by entering into a series of short-term/fixed-term contracts so that they do not have to make anybody an offer.
We spoke at length this morning about making sure that responsible employers are encouraged, but ensuring that the loopholes are closed is equally important. Although Government Members are seeking to comment on the number of amendments, this is an example where the amendments are excellent and very well thought through. It makes an awful lot of sense to take into account the responses from experts and the consultation responses that the Department is receiving to make sure that the legislation works not only for businesses, but for employers. The amendment is very sensible, and I encourage everyone to vote in favour of it.
Sarah Gibson (Chippenham) (LD)
As I am sure the Minister knows, the Liberal Democrats as a group are convinced that a lot of elements of this Bill go a long way towards strengthening workers’ rights. There is no doubt about that. However, when I see these amendments and listen to the comments of Opposition colleagues, I am constantly concerned about what I am beginning to see as the plight of small and medium-sized businesses that are not being taken into consideration. This amendment alone is hugely complicated to understand. I have visions of contractors and small businesses in the construction industry in my constituency, who quite often are the employer, coming home after a long day’s work to do the admin side of their business and trying to unravel this. I highlight the construction industry because fixed-term contracts for employees are not only common, but incredibly useful. Building projects—like this one, with the works we are doing here—do actually come to a finite conclusion, and a fixed-term contract is therefore appropriate. I express my continuing concerns about this matter and some of the other amendments in connection with small businesses.
Michael Wheeler (Worsley and Eccles) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I will speak to these Government amendments collectively, because although they are incredibly technical, we must not lose sight of their purpose, which is to promote good employment. If there are loopholes and readily available routes by which employers can avoid the measures laid out in this Bill, we will see good employers undercut and workers not feeling the benefits. I welcome this as part of the Government doing their job to strengthen the legislation by introducing well thought out amendments to close loopholes and ensure that it is as strong as it can be. I commend this and the other amendments as being not simply technical—although they are—but part of what really gives the Bill teeth in achieving its purposes.
Sir Ashley Fox (Bridgwater) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. I would like the Minister to deal with these points when he concludes, because I am concerned about the effect of an amendment that is as complicated as Government amendment 12 is on the small businesses that make up the bulk of business in my constituency. They will not have the benefit of an employment lawyer, such as the hon. Member for Gloucester, and they will not have an HR department. I ask the Minister to glance at the wording of the amendment and imagine that you do not spend your day job in a solicitor’s office, or a trade union office, or perhaps in the Palace of Westminster. You are wondering whether to employ someone and then you read that
“it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—
(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
There are all sorts of technical legal terms used. The point is that you want this to apply to all small businesses, no matter how small—whether they have one, or two, or three employees. This point applies generally to the Bill. When the assessment of the Bill put the costs at £5 billion, the majority of which would fall on small businesses, I think it had exactly this sort of legal gobbledegook in mind. Very small businesses are going to have to deal with this, and they will probably not be able to understand it.
Alex McIntyre
I am grateful to the hon. Gentleman for touting out my services as a legal adviser, but I have committed to not taking any second jobs, and certainly none that involves legal services in the Cayman Islands. What I will say is that all of us here, as individuals, are governed by laws in our day-to-day lives. I doubt that many Members will be familiar with, on a detailed basis, the provisions of the Consumer Rights Act 2015, for example, but there are guidance documents and the Money Saving Expert is fantastic. If you ever have an issue with one of your financial products, there is always a guide that can be provided. I am sure that alongside the Bill there will be updated guidance—from ACAS, for example. Does the hon. Member for Bridgwater agree that although small businesses may not be able to take legal advice, there will be guidance documents? They are not expected to read the whole Bill line by line. There will be guidance, on websites such as that of ACAS, that is readily available to all employers, in which they will be able to get an explanation of some of these provisions.
The Chair
Order. There are just two points I wish to make, as lightly as I can. First, if hon. Members refer to “you”, they are referring to me. We use the normal debating protocols that apply in the Chamber. Secondly, if hon. Members wish to do so and catch my eye, they can speak more than once in a debate, so interventions should be kept as precise and short as possible.
Sir Ashley Fox
I am grateful for your guidance, Mr Stringer. To answer the intervention from the hon. Member for Gloucester, I am sure that small businesses will receive guidance from Money Saving Expert, ACAS and Citizens Advice, but the problem is that if they get it wrong, they will be sued and it will cost them money. That will be a real fear in their minds. Then a small businessman, faced with this sort of gobbledegook, asks himself, “Are you going to take the risk of employing that extra person, faced as you are with the fact that they get their rights from day one?” It all adds up to the cumulative effect of small businesses being less likely to employ people. It adds to the cost and the burden. It is a great shame that the Government are bringing in such vast amounts of detailed amendments and expecting small business owners to make sense of them.
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Stringer. I would like to amplify the issues raised from the Opposition side of the room. There are serious concerns, and we need to ensure that the regulations are as simple as possible and easy for employers to understand. I fear that this is a charter for HR consultants and lawyers, rather than driving the agenda that I am sure most people in the room genuinely wish to see being driven forward. I ask the Minister whether, before we reach the end of this Bill stage, further simplification could be brought forward.
Jon Pearce (High Peak) (Lab)
It is a pleasure to serve under your chairship, Mr Stringer. The Agency Workers Regulations 2010 came into force in October 2011, under the leadership of David Cameron and the coalition, and there is similar wording in the agency worker regs. Regulation 9(4)(a) states that
“the most likely explanation for the structure of the assignment, or assignments, mentioned in paragraph (3) is that H, or the temporary work agency supplying the agency worker to H, or, where applicable, H and one or more hirers connected to H, intended to prevent the agency worker from being entitled to, or from continuing to be entitled to, the rights conferred by regulation 5”.
The legislation that we are considering is not out of the ordinary in its complexity. This is just necessary—
Sir Ashley Fox
Would the hon. Gentleman accept that this legislation will be imposed on businesses with perhaps one employee? There will be no exemption for any minimum size.
Jon Pearce
Yes, I would, and it is entirely right that it should be. We have to have a level playing field within the UK; otherwise, we see all the perverse incentives that hon. Members, including the shadow Minister, the hon. Member for Mid Buckinghamshire, are keen to avoid. We cannot have a two-tier workforce.
Returning to my original point, law is often complex in the way it is written, but that does not mean it will be complex in its application. It will only be complex where there are attempts to avoid it. It is absolutely right that the law is tight on this so that we do not have huge amounts of avoidance within the business sector from unscrupulous employers. Most employers, as we know, do not exploit zero-hours contracts, for example, so it is entirely right that we make sure that those who wish to exploit them cannot.
Sarah Gibson
The hon. Member for High Peak quotes an equally incomprehensible piece of legislation. It occurs to me that some time ago, the banking industry was accused of a similar problem when it spoke to its clients and was obliged to improve its conversation and make sure that it was intelligible. Surely this is an opportunity for us to be able to do the same. If we are going to apply legislation to sole practitioners, effectively, who are taking on one or two employees, is it so much to ask that we do not have one single sentence that lasts an entire paragraph?
Sarah Gibson
I will not for a second, but will afterwards, if that is okay. I have spent the last 20 years deciphering the Town and Country Planning Act 1990, and recently had the pleasure of teaching two postgraduate students the Fire Safety Act 2021. Neither of those two pieces of legislation are easily understandable, and it does not help the industry that I know so well, which is employers who come straight out of school and into industry. They do a fantastic job, but they do not need added complication. I believe that the hon. Member for Bridgwater makes a good point in saying that it is not beyond us to make legislation slightly easier to read. Sorry, I was going to give way.
Justin Madders
We have had a good debate on this amendment. It is fair to say that my reaction when I first saw the amendment was similar—that it is quite wordy. However, that is the way our legislation is crafted in this country, and it is not unusual. We will make sure that when we drill down into the practical applicability of the Bill, we produce regulations. There will be guidance on gov.uk. ACAS will get involved.
The amendment is intended to deal with a particular situation. I do not believe most employers will behave in that way, but we know that some might, and that some will deliberately avoid their obligations to give a right to a guaranteed-hours contract. It may be, in the words of the hon. Member for Bridgwater, “gobbledegook”, but I can assure him that ACAS documents and Government guidance on employment rights are not gobbledegook; they are easily accessible. We are committed to making sure that when the Bill is passed, the legislation is easily accessible, because it will not work otherwise. That is clearly part of our aim.
It is pretty clear what section 27BB(8) actually means in terms of when it will be reasonable not to offer guaranteed hours, but I appreciate that that is very easy for us sat in this room to say, having indulged in the niceties of the legislation. It is not what will end up on businesses’ doorsteps. We will not give them a copy of the Bill through the post and say, “Knock yourselves out.” They will get proper support and guidance because that is how we want our employment relations to work. We want them to be practical; we want them to be effective; we want people to be able to understand what their rights and obligations are. On that note, I commend the amendment to the Committee.
Amendment 12 agreed to.
Amendments made: 13, in clause 1, page 10, line 11, at end insert—
“Information
27BEA Information about rights conferred by Chapter 2
(1) An employer who employs a worker who it is reasonable to consider might become a qualifying worker of the employer in relation to a reference period (whether the initial reference period, or a subsequent reference period, as defined in section 27BA) must take reasonable steps, within the initial information period, to ensure that the worker is aware of specified information relating to the rights conferred on workers by this Chapter.
(2) An employer who is subject to the duty in subsection (1) in relation to a worker must take reasonable steps to ensure that, after the end of the initial information period, the worker continues to have access to the specified information referred to in that subsection at all times when—
(a) the worker is employed by the employer, and
(b) it is reasonable to consider that the worker might become (or might again become) a qualifying worker of the employer in relation to a reference period.
(3) “The initial information period”, in relation to a worker and the worker’s employer, means the period of two weeks beginning with—
(a) where the worker is employed by the employer on the day on which section 27BA(1) comes into force (“the commencement day”), the commencement day, or
(b) where the worker is not so employed, the first day after the commencement day on which the worker is employed by the employer.
(4) But where, on the day referred to in subsection (3)(a) or (b), it was not reasonable to consider that the worker might become a qualifying worker of the employer in relation to any reference period, subsection (3) is to be read as if it provided for the “initial information period” to mean the period of two weeks beginning with the day on which it becomes reasonable so to consider.
Enforcement”.
This amendment imposes a duty on employers to ensure workers who have the potential to qualify for a guaranteed hours offer are aware of, and continue to have access to, certain information (to be specified in regulations).
Amendment 14, in clause 1, page 11, line 11, at end insert—
“(4A) A worker may present a complaint to an employment tribunal that the worker’s employer—
(a) has failed to give to the worker a notice under section 27BD(5A) or (5B);
(b) has given to the worker a notice under section 27BD(5A) or (5B)(b) in circumstances in which the employer should not have done so;
(c) has given to the worker a notice in purported compliance with section 27BD(5B) that does not refer to any provision of the regulations or refers to the wrong provision.”
This amendment is consequential on amendment 11.
Amendment 15, in clause 1, page 11, line 11, at end insert—
“(4B) A worker may present a complaint to an employment tribunal that the worker’s employer has failed to comply with—
(a) the duty imposed by section 27BEA(1);
(b) the duty imposed by section 27BEA(2).”—(Justin Madders.)
This amendment is consequential on amendment 13.
Justin Madders
I beg to move amendment 16, in clause 1, page 11, line 18, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(1) of the Employment Rights Act 1996 from three months to six months.
The Chair
With this it will be convenient to discuss the following:
Government amendments 17, 18, 21, 22, 28, 29, 33 to 36 and 83.
Government new clause 10—Increase in time limits for making claims.
Government new schedule 2—Increase in time limits for making claims.
Government amendments 108 and 109.
Justin Madders
This group of amendments is not quite as daunting as it sounds, because they all deal with the same point, which is the extension of time limits for making claims.
New schedule 2 amends time limits for making claims in employment tribunals from three months to six months. In recent years, as we know, demand has increased sharply. Increasing the time limit from three to six months will help to reduce pressure on the employment tribunal system, allowing parties to try to resolve their differences before resorting to formal litigation. The amendments apply to time limits for the majority of employment tribunal claims, including claims under the Employment Rights Act 1996, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Equality Act 2010. If Members are interested, the full list of claims is set out in the new schedule.
Government amendments 16 to 18, 22, 28, 29, 33 to 36 and 83 ensure that the change is reflected for cases relating to rights that will be introduced by the Bill. Amendments 16 to 18 and 22 will increase the time limit for taking a claim to an employment tribunal that relates to the right to guaranteed hours from three months to six months. Amendments 28 and 29 will increase the time limit for taking a claim that relates to the right to reasonable notice of shifts from three months to six months. Amendments 33 to 36 will increase the time limit for taking a claim that relates to the right to payment for a cancelled, moved or curtailed shift from three months to six months. Amendment 83 will increase the time limit for taking a claim that relates to whether a worker, or a former worker, believes they have been subject to a detriment by an employer on grounds of industrial action.
Finally, Government amendment 21 is a small technical amendment, which will correct an incorrect section reference. The words “this section” currently refer to section 27BG, which relates to time limits for bringing a complaint, but they should—as I am sure everyone noticed—refer to section 27BF, the correct section under which a complaint may be brought to an employment tribunal.
On a more general note, Members may be aware that a number of years ago, the Law Commission recommended that the time limit for bringing employment tribunal claims should be increased from three months to six months. This set of amendments simply seeks to implement that recommendation.
Greg Smith
Quite a list of amendments and edits to the 100-day-old Bill.
I will start where the Minister left off. The amendments extend the time for employees to bring a case to the employment tribunal from three to six months if they believe their employer has breached the duties imposed by the Bill. That includes the provisions around zero-hours contracts and the right to reasonable notice. In that light, a reasonable question would be: why were the provisions not included in the Bill on introduction? What changed? Was that an oversight, or something never originally intended to be included in the Bill? What is the rationale? Furthermore, what is the rationale for increasing the period from three to six months? That is not a modest change—not a matter of a couple of days, a fortnight or something that most people might deem reasonable; that is a substantial shift. It is only right and proper that the Minister, when he responds, gives a full explanation for such a huge change from the original provisions in the Bill.
Data from His Majesty’s Courts and Tribunals Service shows the backlog in employment tribunals, with outstanding cases increasing 18% on last year. To add in additional burdens will add to the overall burden on the service, so as part of the consideration of the Bill and of the amendments it is crucial to understand what the Government will do not just to clear that backlog, but to create the capacity in the service to deal with the increase in demand that the Bill will undoubtedly bring about. I shall be grateful if the Minister will comment on his discussions with the Ministry of Justice to deliver on that.
Businesses, especially small and medium-sized enterprises, rely on the tribunals service being able to process claims quickly so, if the Government are to bring about such a huge and significant change to demand on the service, they should put in place the relevant steps. Have the Government undertaken any assessment of the impact that such an extension will have on employment tribunals, or the likely number of claims? It would help to know what, under the amendments, the Government’s assumptions are—will the level of increase that the Opposition fear come about?
Is there a model—I fully accept that such models are rarely 100% accurate, but they give the country and the service planners an important ballpark figure to be working around, going into the future—and, off the back of that, what is the impact on businesses, particularly small and medium-sized enterprises? If there is no such modelling—if there is no ballpark figure that the Government are working to—why not?
My final question on this group of amendments is: why does the Minister believe that it is proportionate or sensible to double the window in which an employee can bring a claim? Surely the three-month window is sufficient. As I said, the Opposition would like to understand why that doubling is so necessary.
Alex McIntyre
Apologies, Mr Stringer, if I inadvertently used “you” in my previous intervention. That was a mistake; I apologise.
I am grateful to the Minister for tabling these amendments. This is an important set of suggestions to extend time limits for bringing lots of tribunal claims. In my previous professional experience, the change will benefit businesses up and down the country, because one of the biggest issues for anyone involved in advising employers on employment law is the rush to bring employment tribunal proceedings, owing to the three-month time limit. It often stops negotiations from progressing fully, preventing an out-of-court agreement being reached at an early stage. In a commercial setting, most businesses are given six years to bring claims under contract against other businesses. It is only really in employment law that we have such a narrow window for people to bring their claims.
I am interested in the shadow Minister’s comments on employment tribunals—they are broken, but the responsibility for breaking the employment tribunals sits firmly on Opposition Members. We had years of under-investment in our courts and tribunals, and we have really long backlogs. The issue there for employers is that, given the actions of the previous Government, they are spending far too much money on people like me, as such proceedings take a significant amount of time.
Greg Smith
I understand why, in our combative political system, the hon. Gentleman wants to bring up the previous Government’s record. I gently suggest that the covid pandemic had a big impact on all court backlogs, be it tribunals or otherwise, and I ask him to reflect on the fact that the Bill will add to the pressure on the tribunal service. How much does he think it will add? Given that the Labour party is in government and in charge, rather than just pointing the finger at the previous Government, can he tell us what will materially happen to increase capacity in the tribunal service?
Alex McIntyre
The Committee received a submission from Lewis Silkin, a leading legal expert in the field of employment law. It says that some of the Government’s proposals will lead to a reduction in claims, and certainly in complex claims such as those that many employees with less than two years’ service may make under the Equality Act 2010 because they do not qualify for unfair dismissal rights.
The tribunal deals with unfair dismissal claims very quickly. Such claims tend to receive one, two or three days of consideration by a tribunal, at the most, whereas Equality Act claims are often listed for longer than a week. Giving people unfair dismissal rights from day one will reduce the number of people who have to bring Equality Act or whistleblowing claims to try to fit their circumstances, and that will mean a reduction in the number of tribunal sitting days.
I will not step on the Minister’s toes when it comes to the Department’s modelling for tribunals, but it is important to remember that as a result of the measure, more people will be able to negotiate and negotiations will be more sensible. Let us think about the anatomy of an employment tribunal claim. Day one starts when something happens to an individual. In the case of being sacked or being discriminated against, that thing is quite traumatic, so in the first week or so, employees are not generally thinking about their legal options. That is one week gone already. Then people have to look at getting legal advice, contact their trade union and look at the options available, all of which take time. By the time they are in a position to think, “Perhaps I will negotiate with the employer,” they are already two months down the line.
If an employee rushes through an employment tribunal claim, the practical implications are that the claim is really complex, the employee does not quite understand their legal claims and an awful lot of tribunal time and business time is spent on trying to clarify things. If we give employees longer, we will find that more claims are sensibly put. Employees will have obtained legal advice or sought support from their trade unions, and they will have had time to negotiate with employers about potential out-of-court settlements.
This is important and, most significantly, it is about access to justice: many people who are timed out of bringing a claim did not even realise that they had one in the first place. Not everyone has immediate access to the knowledge that they have rights at work and that employment tribunals exist, so it is important that we try to level the playing field to ensure that employees have time to bring claims in the best possible way. Not everyone is a lawyer. Individual employees, like many small businesses, do not have the benefit of being able to call up their local employment lawyer to get advice on potential claims. Preparing a claim takes time, and the measure means that employees will be able to make more sensible claims.
It is a very positive change, and I am glad that it is being made. The Law Commission recommended several years ago that the time limit should be extended from three to six months, so this is not an arbitrary time that has been plucked out of nowhere; it is based on Law Commission suggestions, as I understand it. I encourage all hon. Members to vote in favour of the measure.
Steve Darling
The hon. Member for Gloucester has ably made the legal case for why this measure is a worthwhile way to support our communities. I am aware, from my 30 years of supporting people in Torbay, that quite often those who are less legally literate face real challenges in getting themselves organised within the three-month period. The measure will support those who would otherwise fall by the wayside. It is a real opportunity for employers to make sure that tribunal applications are appropriate and to support those in greater need in our communities. I truly welcome it, and I am sure that my hon. Friend the Member for Chippenham does as well.
Laurence Turner (Birmingham Northfield) (Lab)
I follow my hon. Friend the Member for Gloucester and the hon. Member for Torbay, who both made very able speeches.
The shadow Minister, the hon. Member for Mid Buckinghamshire, asked about the justification for extending the current time limit from three to six months. One argument is set out in the Law Commission’s 2020 report, which argues that some of the current problems that employment tribunals experience are linked to late applications and the onerous requirement for applications, particularly in equalities cases, to demonstrate that there was a clear justification or inability regarding not submitting a claim in time. Those edge cases are adding to the current backlog and creating the incentive, which has been discussed already in this Committee, for people to bring cases under the Equality Act 2010, which is putting severe pressure on the limited number of specialist employment tribunal judges who deal with equalities matters.
Another argument is that there is an inconsistency in the law, because the time limit for equal pay cases is six months. The effect of these measures would be to equalise the time limit for other unfair dismissal and discrimination claims with that of equal pay.
In the previous Government’s 2021 response to the Law Commission’s report, they said—I hope this is taken in the constructive spirit with which it is intended—that the recommendations were welcome, but that it was not the right time to make such changes. I am therefore keen to hear the shadow Minister’s position on this extension, because the last Government’s position seemed a little like St Augustine’s prayer—“Let us equalise access to justice, but not yet!” I very much welcome the fact that these measures have been brought forward and that we now have a chance to equalise that time limit.
Last week, we heard from one of the witnesses, Joeli Brearley, that:
“I was pushed out of my job the day after I informed my employer that I was pregnant, and it was the tribunal time limit that prevented me from taking action against my employer.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 84, Q79.]
There are many such cases where, because of someone’s particular circumstances, they are not able to bring a case, or the burden of bringing a case within three months is too onerous. The requirement in equalities cases for a claimant to prove that an extension was just and equitable, or that it had not been reasonably practicable to bring a case in time, is adding to that burden on the tribunal system.
The Law Commission’s report was published in 2020, so the then Government had four years to model the impact of the changes that they were considering. If Conservative Members know of any impact analyses undertaken under the previous Government, I would very much like to hear about them.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I thank my hon. Friends the Members for Birmingham Northfield and for Gloucester for their ably made speeches outlining the very good and pragmatic reasons for the measure. They made points about ensuring that there is a good preliminary process to prevent litigation and laid out all the evidence with regard to the Law Commission.
The shadow Minister asked the Minister about principle, which my hon. Friends the Members for Birmingham Northfield and for Gloucester also touched on. It is clear that, after 14 years of Conservative Members not considering principle when it comes to access to justice, we are making these changes particularly for disabled employees and women who often have very complex lives. Disability is not static—it is dynamic, and health conditions fluctuate—so three months is a very short time period for people to put a case together if they have complex and fluctuating health conditions. It is right that the measure brings that time period up to the level of other equalities cases.
It is also fair to say that many working people have a huge amount to juggle in their day-to-day lives. For me, it is a point of great principle that this Government want to make it easier for them to access their rights and to access justice by giving them more time, being cognisant, as we are, of the many challenges that they might face just to keep a roof over their heads and to keep their family in a stable and supported situation.
The need to strengthen access to justice in such circumstances is important. We heard a great deal in the evidence presented to us about the many barriers for various groups and about the effect of the measure on women. It will give women an opportunity to have a longer period of time at the most challenging and complex moments of their life, such as during pregnancy and post birth, which seems to be eminently sensible and principled.
Uma Kumaran (Stratford and Bow) (Lab)
It is a pleasure to once again serve under your chairship, Mr Stringer. I refer the Committee to my declaration in the Register of Members’ Financial Interests and I am a member of the GMB. My hon. Friend the Member for Penistone and Stocksbridge spoke powerfully—
Uma Kumaran
Thank you, Mr Stringer. I am glad Members got some steps in and I hope they have come back reinvigorated.
Members across the Committee have spoken eloquently today about why they support the bold measures in the Bill, which is the best upgrade to worker’s rights that we have seen in a generation. I pay particular tribute to my hon. Friend the Member for Gloucester for sharing his personal story. That is why we are here; it is about the people behind those stories. The Bill is about making a difference to people’s lives.
We started this month by marking World AIDS Day. The National AIDS Trust supports the amendments to increase the time limit for claims from three months to six, to bring the Bill in line with the Law Commission’s 2020 recommendation. With a diagnosis such as HIV/AIDS, three months is nothing. When a person is diagnosed, they have to go to their doctor, assess the impact the diagnosis will have on their life, and in some cases discuss how to break it to their family, friends and employers. Adding a ticking time limit of three months for their job and their livelihood can be so distressing. That is why I remind Members to remember the people behind the stories—the people we seek to serve and to help.
This is not just about the people; it also impacts business, as we have heard from Opposition Members. We have seen inclusive employers standing with the National AIDS Trust, not just in the UK but around the world, to support the asks that were brought forward to mark World AIDS Day. That is why I urge Members to support the amendments to increase the time limit from three months to six.
Sir Ashley Fox
There is one point that I would like the Minister to clarify. Some of his colleagues have said that, by extending the limit from three months to six, we will avoid a large number of claims, as there will be more time to negotiate and they will be concluded in good time. Other colleagues have said that this is an access to justice point, since lots of claims are being missed out because the time limit is too short. Can the Minister clarify, for the benefit of small businesses, whether they will face more or fewer claims? It seems to me that the Government have not decided whether this is a reform to reduce the number of claims that small businesses will face, or whether it will significantly increase the number of claims. Whatever the justice of each individual claim, small business owners will have to deal with its legal consequences and devote time to it. I think they would appreciate knowing whether there will be more or fewer claims.
Uma Kumaran
Statistically, less than 1% of women who have been subject to pregnancy or maternity discrimination pursue a claim in an employment tribunal. While making the case for business, it is important to realise that we are talking about a very small percentage of people. As we heard from my hon. Friend the Member for Penistone and Stocksbridge, these things can make a huge difference to people’s lives, and we are talking about very specific amendments that will make a real difference to the lives of working people.
Nick Timothy (West Suffolk) (Con)
I want to add a couple of thoughts, not so much about the principle of the amendments, but about what they say about the process. I note what the hon. Member for Birmingham Northfield said about the history and about the Law Commission having made its proposals in 2020. That rather adds to our confusion about why the amendments are being introduced in Committee and why they were not part of the Bill on Second Reading. I would be grateful if the Minister could tell us a little about the preparation of the Bill and what his officials said at the time of Second Reading about how many more amendments would be necessary in Committee and about its readiness. Will he also tell us more about the precise impact of the amendments, and what they mean for the Bill’s impact assessment?
Justin Madders
We have had a pretty wide-ranging debate. Generally, there has been support for the amendments. I welcome the Liberal Democrats’ support and hope they carry on in the same spirit for the rest of the Bill—we will see about that.
On the principle of what we are trying to achieve, let me take the Committee back to a time before the advent of the employment lawyer, when we had a thing called industrial tribunals. Industrial tribunals were about having a speedy and informal way to resolve industrial disputes where there was an individual issue. As time has passed, employment law has grown and industrial tribunals have become employment tribunals, and the original time limits have not been able to keep pace with the range of developments.
A number of examples have been given for why some people will not be able to enforce their rights, because of the strict time limits. Equally, there is evidence that enabling a longer period between a claim being discovered and a tribunal deadline being set means that there is more opportunity for parties to try to resolve their differences. On maternity leave in particular, I recall many occasions when a woman has returned to work and tried to crack on with things but been discriminated against all the time, yet because of the understandable pressures and her eagerness to try to get on, she has not acted as quickly as she should have done.
I will give a recent practical example of a constituent who came into my surgery. He had been involved in a road traffic accident while he was working, and he had been dismissed for that. He was not a member of a trade union and had taken no legal advice on his situation. Clearly, I am not in a position to give him legal advice, because I am not insured to do so, but I pointed out to him that he might want to think about talking to someone about his rights with respect to unfair dismissal. The point I am trying to make is that I was having that conversation two months after he was dismissed, which does not give him—or, indeed, the employer—much time to try to resolve things. It would be preferable for that individual to have the opportunity to have a dialogue with his employer, possibly get a process done correctly, and be reinstated. Because the time limits are so pressured, though, if he did go away and take legal advice, he will probably have been told that the only realistic avenue for him was to put a claim in as soon as possible.
There will be real benefits to the amendments, not just for making sure that people are able to enforce their rights, but in giving people more opportunity and time to resolve their differences before proceeding to litigation. For that reason, the impact assessment has not really been able to pin down a particular figure for the impact of these measures. It is probably fair to say that there are a number of other measures in the Bill that may impact tribunal claims, not least the introduction of the fair work agency. The possibility for that agency to enforce holiday pay claims and wages claims, for example, could take a significant burden off the tribunal.
Let me return to the original point of the amendments. They are about removing anomalies and giving people more time to resolve their differences. It has been an anomaly in the law for many years that equal pay claims and redundancy pay claims can be brought up to six months after the termination of employment, but most other claims cannot. Indeed, there are some claims that, depending on where they are progressed, can take even longer, such as certain types of employment-related claims that go through county court. This is about ensuring consistency.
Justin Madders
He is shaking his head—that is good. I certainly do not envisage that to be the case, but we recognise there is a backlog in the employment tribunals. Like many public services, they are under pressure, and there is a plan to recruit more judges in the new year.
Jon Pearce
I want to pick up a point that the shadow Minister made about the effect of the pandemic on the backlog of employment tribunal claims. When the last Labour Government left office, the time between a claim being brought and the first hearing was about 30 weeks. By 2019—pre-pandemic—it had increased to 38 weeks. We are now at about 55 weeks. We have seen a huge increase in that time, but it was already rising significantly pre-pandemic.
Justin Madders
There are a whole range of Government performance indicators where trends were already going in the wrong direction before covid hit, and that is just another of them. We recognise that there is more to be done to deal with the backlog, which is why we intend to recruit more judges in the new year. We hope that the Bill will not increase demand on the tribunal service, and that the extra time we are giving and the other powers we are giving the fair work agency will encourage people to resolve their disputes without going to litigation. We understand that it is a tremendous expense to go to employment tribunal, and of course, by that point, the employment relationship is already fractured beyond repair. This is the right thing to do, it is consistent with the Law Commission’s recommendations, and we think it will improve access to justice.
Amendment 16 agreed to.
Amendments made: 17, in clause 1, page 11, line 22, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(2) of the Employment Rights Act 1996 from three months to six months.
Amendment 18, in clause 1, page 11, line 26, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(3) of the Employment Rights Act 1996 from three months to six months.
Amendment 19, in clause 1, page 11, line 28, at end insert—
“(3A) An employment tribunal must not consider a complaint under section 27BF(4A)(a) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on or before which the notice should have been given (see section 27BD(5A) and (5C)).
(3B) An employment tribunal must not consider a complaint under section 27BF(4A)(b) or (c) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on which the notice is given.”
This amendment is consequential on amendment 14.
Amendment 20, in clause 1, page 11, line 28, at end insert—
“(3C) An employment tribunal must not consider a complaint under section 27BF(4B)(a)unless it is presented before the end of the period of six months beginning with the day after the last day of the initial information period (see section 27BEA(3) and (4)).
(3D) An employment tribunal must not consider a complaint under section 27BF(4B)(b) unless it is presented before the end of the period of six months beginning with the day on which the worker first becomes aware of the failure to which the complaint relates.”
This amendment is consequential on amendment 15.
Amendment 21, in clause 1, page 11, line 30, leave out “this section” and insert “section 27BF”.
This amendment corrects an incorrect section reference.
Amendment 22, in clause 1, page 11, line 31, leave out “three” and insert “six”.
This amendment is consequential on amendments 16, 17 and 18.
Amendment 23, in clause 1, page 11, line 36, leave out “(3)” and insert “(3D)”.—(Justin Madders.)
This amendment is consequential on amendment 20.
Question proposed, That the clause, as amended, stand part of the Bill.
Justin Madders
Here we are, three and a bit hours in, and we are on the stand part debate for clause 1. I hope we can make swifter progress, but I am sure Members will appreciate that we have debated a number of amendments to this clause, from both sides of the Committee.
I will talk a little about clause 1, because it is central to our aim to improve working relations in this country. It introduces a new right to guaranteed hours, which, alongside some of the other measures in the Bill, will address the issue of one-sided flexibility by ensuring that those who are in scope of the Bill receive a baseline of security and predictability that has been sadly lacking to date.
Our ability to care for loved ones, provide essentials, look after our health and deal with life and its challenges all relies on an element of predictability in our circumstances and finances. We know that a stable base makes us more resilient and more able to deal with challenges that come our way. Raising children, supporting family and our communities, making mortgage and rent payments, effective budgeting, and regular exercise are all good for the individual and for our society, and none combines easily with the unpredictability that some people face in their working lives.
The proposed provisions on guaranteed hours and on notice regarding shifts, which we will come to in due course, will go some way to helping the many workers who work regularly—often for the same employer, and some of them for years—but who do not have the security of knowing there will be a pay packet next week or next month. These proposals, which are the result of engagement with employers and social partners, will introduce fair and proportionate duties. Many of these have already been adopted by our most forward-looking employers. The duties are rightly ambitious but also, if we continue to work collaboratively, workable and achievable.
I will now explain the effects of each new section inserted into the Employment Rights Act 1996 by clause 1—this is effectively a series of new clauses inserted into our favourite, the 1996 Act. The first is new section 27BA, which outlines a new duty that will be placed on employers to offer qualifying workers guaranteed hours based on those hours worked during the reference period. While I hear and am considering the calls for the reference period to be put on the face of the Bill, at the moment the intention is for it to be specified in regulations. It is expected to be 12 weeks. The reason why consideration is being given to putting the initial and subsequent reference periods in regulations rather than in the Bill is that that will allow changes to be made to those periods. This is a novel right and we want to consider the emerging evidence on how it works in practice and, indeed, how it is evaded. However, I hear the calls about the need for certainty, and I will continue to engage with all relevant parties on whether this is something that we should put on the face of the Bill.
New section 27BA outlines the qualifying criteria for this new right, which will be targeted at workers who are on zero-hours contracts or zero-hours arrangements, or have some guaranteed hours—up to a maximum number that will be defined in regulations—but work in excess of those hours, and whose hours over the reference period meet the conditions for regularity or number. Agency workers are not in the scope of the new section, but separate provisions may be made for them using the power in new section 27BV. We recently closed a consultation on applying the rights to guaranteed hours, notice of shifts and payment for cancelled shifts to agency workers. We will now analyse the responses to that consultation and consider whether to seek to amend the Bill later during its passage.
The conditions for regularity and number of hours worked that must be satisfied during the initial reference period, as well as conditions for subsequent reference periods, will be set out in regulations following consultation. That will enable us to ensure that the measure is appropriately targeted at those workers who work regularly and in excess of their contracted hours. Although our intention is to minimise exemptions, regulations may be made to exclude categories of workers from the provisions, providing us with the flexibility to adjust the scope of this new right over time to respond to emerging practices. I have to say that at this stage I am not able to conceive of any particular exemptions that would apply, but I think it is important that we keep that power in the Bill.
New section 27BB sets out the requirements that a guaranteed hours offer must meet. It allows a guaranteed hours offer to take the form of either a variation of terms and conditions or a new contract, depending on the circumstances. A guaranteed hours offer may take the form of an offer to vary terms and conditions only if the worker worked under a single worker’s contract from the beginning of the relevant reference period until the day after an offer is made or later. That would allow all other terms of the contract, other than hours and length of employment, to be kept the same.
Where a worker has been engaged on more than one worker’s contract between the beginning of the reference period and the making of a guaranteed hours offer, that offer should take the form of an offer to enter into a new worker’s contract. Where a new contract is proposed, it must propose terms and conditions that, taken as a whole, are no less favourable than the terms and conditions relating to matters other than working hours and length of employment that the qualifying worker had when working for the employer during the relevant reference period.
New section 27BB also allows regulations to set out details on how it is to be determined whether the hours offered in the guaranteed hours offer reflect those worked during a reference period. It also makes provisions around the use of limited-term contracts by employers offering guaranteed hours. “Limited-term contracts” means fixed-term contracts and those that are to end by virtue of a limiting event. That ensures that employers can continue to use limited-term contracts where it is reasonable to do so.
The new section provides that, where the guaranteed hours offer takes the form of an offer to vary terms and conditions, the contract should usually become permanent. That should be done by removing the provision stipulating the termination of the contract by virtue of a limiting event, unless it can be said on the day after the offer is made that it would be reasonable for that contract to be entered into for a limited term.
The use of a limited-term contract will be regarded as reasonable where the worker is needed only to perform a specific task and the contract ends after it is completed, or likewise for a particular event, or in other circumstances where the employer considers there is a temporary need, as set out in the regulations. For example, if would be reasonable for a contract to be of a limited term where a worker is providing cover for a colleague on parental leave.
New section 27BC sets out requirements for a guaranteed hours offer where that offer takes the form of an offer to enter into a new worker’s contract and a worker has had more than one set of terms and conditions during the reference period. Its provisions will protect workers from being moved on to the worst of all the terms and conditions that they worked under during the reference period. Where an employer makes an offer of guaranteed hours with less favourable terms than the best the worker worked under the during the reference period, new section 27BC introduces a duty on employers to give the worker a notice explaining how the proposed terms and conditions constitute a
“proportionate means of achieving a legitimate aim.”
This will help to protect workers against being given less favourable terms and conditions in contravention of the aims of the Bill.
New section 27BD provides for exceptions to the duty to offer guaranteed hours, including circumstances in which an offer already made should be treated as having been withdrawn. Exceptions will apply if the worker’s contract or arrangement is terminated during the reference period or offer period and it is a “relevant termination”. Similarly, where an offer of guaranteed hours has been made and there is a relevant termination of that worker’s contract during the response period, the offer will be treated as having been withdrawn.
A relevant termination takes place where the worker decides to terminate the worker’s contract through no fault of the employer; the employer had a qualifying reason for terminating the contract and acted reasonably in treating that reason as sufficient to terminate the contract; or a worker’s limited-term contract ends by virtue of a limiting event and it was reasonable for that contract to have been entered into for a limited term. A qualifying reason is a reason that, when an employer is dismissing an employer, can be a fair reason for dismissal under section 98 of the Employment Rights Act 1996.
New section 27BD also allows regulations to be made to specify circumstances in which the duty to offer guaranteed offers does not apply, and it is that section that sets out offer and response periods. The response period, during which a worker must respond to an offer, will begin on the day after an offer is made and its duration will be set out in regulations.
We have made amendments to new section 27BD that will require employers to inform a worker when circumstances exist that exempt them from their duty to offer guaranteed hours, and similarly where a guaranteed hours offer is treated as having been withdrawn as a result of an exemption applying. That will ensure that workers are aware of which exemption applies, and that their employer has not merely failed to offer guaranteed hours. Any exemptions will of course be defined in regulations. Similarly, a further amendment requires that a notice is given where a guaranteed hours offer is treated as having been withdrawn as a result of a relevant termination. We have made further amendments to the new section, designed to close a potential loophole.
As previously drafted, the provisions could have meant that in situations where an employer employs a worker on a series of short-term contracts and the last contract of the period terminates with a limiting event, that could have been treated as a relevant termination. As a result, an employer might not have been required to offer the worker guaranteed hours. The amendment has added a rebuttable presumption, which presumes that it is unreasonable for an employer to engage a worker on a series of limited-term contracts to undertake the same work, and that would therefore not be a relevant termination excepting the employer from their duty to offer guaranteed hours. If the employer fails to rebut that presumption, no exception will apply and the employer will still be required to offer guaranteed hours.
New section 27BE sets out how the worker accepts or rejects an offer, and when the new contract or varied terms and conditions are deemed to take effect. It provides that a worker who does not respond to an offer will be treated as having rejected it, because we would not wish workers to be moved on to guaranteed hours if they had not specifically agreed to them. It provides for regulations to set the form and manner in which the worker must respond to the employer’s offer, and when the response is taken as having been given.
Chris Law (Dundee Central) (SNP)
On new section 27BE, there is a lack of formality relating to the worker’s right to refuse an offer of a regular-hours contract. Indeed, the risk is that workers could be coerced into rejecting an offer if it is clear that the employer would prefer the existing arrangements to continue. There are similar arrangements in respect of the working time regulations on workers’ right to opt out of the 48-hour working week; by contrast with the Bill’s provisions on zero-hours contracts, the working time regulations do not apply to all workers, and those who opt-out may revoke their decision to do so, although there are arguably no adequate safeguards there either.
The Secretary of State will have the power to make regulations about the form and manner of the notice under proposed new section 27BE, and reference is made to a response time that is undefined, but the question is whether it would be appropriate for Parliament to give the Minister stronger guidance by requiring that the response period should be at least one week; that the worker has a right to seek advice from an independent trade union before making a decision; that the worker has a right to be accompanied by a trade union official under section 10 of the Employment Relations Act 1999 in any meeting to discuss an offer; and that the worker may revoke a rejection of an offer at any time on giving one week’s notice to the employer. Does the Minister agree that those safeguards need to be incorporated into the Bill so that an employee is not coerced by their employer into rejecting a contract that is not in their best interest?
Justin Madders
A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.
Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.
New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.
To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.
New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.
Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.
Greg Smith
I am grateful to the Minister for that comprehensive outline of clause 1 but, as I reflect on our debate over today’s two sittings on the amendments to clause 1—the Government amendments that now form part of clause 1 and the Opposition’s substantive amendments, which were not accepted, and our probing amendments, which did not produce the answers we were looking for—I remain concerned that, putting aside some of the noble intentions beneath the Bill, there is still the lack of clarity we have spoken about regarding so many areas of clause 1.
The Minister himself admitted earlier that some things are still to be consulted on and that others are yet to be brought forward through secondary legislation. I am afraid that just does not cut it for businesses up and down the country that are still struggling with the aftermath of covid, the invasion of Ukraine and so many other factors. They need certainty. They need to know, if the rules of the game are changing, exactly what they are changing to—not some ballpark or some in-principle movement towards, but precisely the rules that they are being asked to play by.
Businesses will, of course, comply with any legislation passed by this House and this Parliament, but this provision is an unreasonable ask of them, whether in respect of what would constitute a low-hours contract, fixed-term contracts for qualifying workers or agency workers, or the exact definition of the reference period. It is simply an unacceptable proposition to those who run businesses, particularly, as multiple parties have said today, small businesses, be they microbusinesses or medium-sized enterprises—I fully accept that we can debate the exact number of employees that constitutes a small or medium-sized enterprise.
I recognise many of the good points the Minister made in his speech, and there are many things that we in the Opposition can get behind—at least in principle, if not in the precise lettering of the detail—but the lack of clarity, the Henry VIII powers in some parts and the “still to consult” parts in others make it very difficult for the Opposition to support clause 1 as it currently stands.
As I said earlier, we want to be a constructive Opposition. We might not agree with the Government’s standpoint on many things, but it is important for the United Kingdom that they succeed in their endeavours and that they do not provide an environment in which there will be fewer jobs, not more, with businesses being more reticent to take on new members of staff. That goes particularly to the points around how people who are deserving of a second chance in life, no matter what has happened to them before, may not get that opportunity because it is too big a risk for small businesses that are struggling to get around all the new regulations, rules and laws.
I particularly highlight again the point about small businesses just not having the capacity to deal with new regulation. As has been said, they do not have HR departments or in-house legal services, and they cannot necessarily afford to hire them in if they are to continue producing their products or selling their services to the great British public, or wider than that. I urge the Minister to go back to the Department, focus on where the detail is lacking and put an offer to the House and the wider country. Our business community need not necessarily agree with it, but they should be comfortable that they can understand it and put in place the measures for their employees and businesses. To ensure their growth and success, they desperately require certainty.
Laurence Turner
I will not keep the Committee long. A lot has rightly been said about the need for certainty for business, but we should remember that the other side of the coin is the need for workers to have certainty. I was contacted recently by a constituent who works a zero-hours contract in the hospitality sector. He is unable to get a mortgage because the bank will not grant that facility to him due to the nature of his contract. At the level of the individual, this means economic activity and family planning being put on hold.
In parts of the economy, there are employment situations—we do not, of course, tar all employers with the same brush, but if there were no bad employers there would be no need for trade unions—in which people are turning up to work, sometimes in digital form, to find shifts being mediated through applications, not even through people. It is the 21st-century equivalent of a foreman standing at the factory gate and allocating shifts on an arbitrary basis. We have heard today about the potential, which is too often realised, for favouritism and abuse of that facility.
We have had good debate about a number of details regarding the changes in the Bill. The changes in clause 1 will be welcomed by people who work in the retail sector, including in my constituency, and in other sectors that have high rates of zero-hours contract working, including the care sector. I very much welcome the clause.
Sarah Gibson
Despite some of my concerns, I would like to lend my support to the clause, because the guarantees for workers are important. I caveat that by saying that the guidance for SMEs must be clear and must come out soon, so that there is less concern in the business community about taking on staff. Currently, I see an unintended consequence in SMEs, certainly in the near future, not taking on staff because of the fear of additional costs.
While I am on my feet, I would like to make a correction for the record in respect of this morning’s debate. In the debate on amendment 137, although the shadow Minister made a comment about this in his closing speech, it was not my intention to suggest that the Liberal Democrats wish to alter the current definition of SMEs from being 249 employees. I want to make sure that is clear.
Justin Madders
To pick up on the points made by my hon. Friend the Member for Birmingham Northfield, this is about who we are trying to help. This clause is primarily about low-income workers who do not currently have the security and certainty of regular hours. They are more likely to be young, female or from an ethnic minority background. We have heard about the real impact that can have and about the power imbalance when an employer holds all the cards. To use my hon. Friend’s imagery, it is effectively like pointing to people at the factory gate and deciding whether they get work that day or not. We must move on from the indignity of that arrangement.
I welcome the support from the Liberal Democrats. It is worth saying that there was general, albeit caveated, support from the witnesses we heard from in last week’s evidence sessions.
I will tackle head-on the shadow Minister’s criticism about the lack of clarity and the need for certainty. Of course we want to give business certainty. I am sure that after the last few years of Conservative Government, we are all crying out for certainty, and there will be certainty. We are at an early stage of the legislative process for this Bill. It will be taken through Committee and through the Lords, and then there will be further consultation, secondary regulations and codes of practices, after which the laws will be implemented. As the Liberal Democrat spokesperson, the hon. Member for Chippenham, said, there is anxiety out there for businesses, but we are a long way off introducing this legislation, because there is so much more to do, and it is important that we do it. We want to get it right, we want to get clarity and certainty, and we want to ensure that this is an effective piece of legislation.
Greg Smith
I beg to move amendment 145, in clause 2, page 13, line 25, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice of a requestor requirement to work a shift as 48 hours.
The Chair
With this it will be convenient to discuss the following:
Amendment 146, in clause 2, page 14, line 17, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 147, in clause 2, page 14, line 22, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 148, in clause 2, page 14, line 28, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Greg Smith
The amendments are intended to probe the Government’s thinking, as once again it is not clear to us in the Opposition whether they have done the necessary policy work to justify the approach taken in the Bill. The impact assessment clearly shows the administrative cost that the Bill will have in shift and workforce planning, with estimated costs of some staggering £320 million to business. I would like to ask the Minister what evidence there is for the late cancellation or alteration of shifts being a problem of such magnitude that it requires legislation. The Bill does not set out what would be a reasonable notice period for cancelling a shift, and the Government must be clear what they actually intend to do in that respect.
This is a serious point. The burdens that this provision would place on small business would undoubtedly be considerable. Some small businesses cannot always, in every circumstance, guarantee shifts; that is perfectly reasonable. For example, a small furniture-making business with two employees has issues with the supply chain. It cannot provide work until the materials have actually arrived, but the employer in those circumstances could have no idea how long it will take for those materials to materialise—perhaps they are specialist materials or something that has to come from abroad and is delayed in shipping channels. Attacks by Houthis on shipping have caused supply chain problems, for example. In those circumstances, those businesses find themselves in a very sticky place and it would be unreasonable to try to argue that they should absolutely guarantee those shifts to their workers.
Alex McIntyre
I understand the hon. Gentleman’s point about uncertainty in certain industries meaning that businesses may not be able to guarantee shifts.
I want to ask two questions. First, cannot certain industries take out insurance policies to account for some of those unforeseen circumstances, particularly when it comes to shipping? Secondly, what about the uncertainty for employees for whom losing a day’s work would mean a deduction of 20% on a five-day working week? If someone told the hon. Gentleman that his salary would be reduced by 20% next week, would he not find that difficult?
Greg Smith
I am grateful for the intervention. On the hon. Gentleman’s first point, yes, of course there are insurance policies that many businesses will take out. But the example I just gave is one I can see affecting many businesses in my own constituency; there is a strong furniture making heritage around Prince’s Risborough in Buckinghamshire. There are very small businesses that do an incredible job and make some fantastic furniture, but they are microbusinesses with only a couple of employees and they operate on tight margins. They would not necessarily be able to bake the additional cost of a very expensive insurance policy into their bottom line without significant pressure on their overall business.
I accept that I am not talking about every or possibly the majority of businesses; my point in the amendments is that some circumstances might need a more sympathetic ear. In such cases, it could be argued reasonably and sympathetically that businesses in such a sticky spot would be unable to meet the requirements that the Bill sets out. Supply chain problems are just one example.
I take on board the second point made by the hon. Member for Gloucester, although, as I said in one of the earlier debates, I was self-employed for 15 years before entering this place in 2019. Some clients varied every month their requirements of the services that I provided back then. It was frustrating: nobody wants to be in that position, but it is sometimes a business reality, particularly if the ultimate client is struggling for whatever reason—their supply chain or the fact that they are just not doing very well so they need to throttle service provision up and down. I know that my example is not the same as that of a direct employee, but sometimes business needs a sympathetic ear.
To come back to my earlier point, nobody wants people not to be in a secure employment environment. Sometimes, however, things happen in businesses. Businesses in the automotive sector have shed quite a lot of jobs in recent weeks—look at Stellantis and Ford. Sometimes these things happen. With greater flexibility, perhaps more jobs overall can be saved in the short, medium and long terms, rather than having in every circumstance rigid rules that do not allow businesses that flexibility. I suggest that most people would want jobs to be saved rather than lost through that level of rigidity.
I will continue with my questions to the Minister about these probing amendments. In the furniture company example that I gave, what notice would an employer have to give? What do the Government expect an employer in such circumstances to do? From the hefty number of amendments that the Government have tabled, it looks as though small businesses are going to have to pay those employees for hours not actually worked; and even this will be through no fault whatever of the actual business in question.
Given that the Regulatory Policy Committee has flagged the risk that employers, often in fluctuating demand sectors such as hospitality and retail, may respond by scheduling fewer shifts to avoid penalties for cancellations and the consequential lost output to the economy, I would be grateful for the Minister’s appraisal of whether the provisions on short notice cancellations will support or inhibit the Government’s aim of actually achieving economic growth.
Justin Madders
I am grateful for the shadow Minister’s amendment. If it is a probing amendment, he has asked a lot of reasonable questions. There are, of course, things that we will be hoping to address today and during the passage of the Bill—and, indeed, the subsequent regulations.
The first thing to say is that we do not believe that it is right at this stage to put the time into the Bill; we want to give ourselves flexibility to respond to how the issue works in practice and to changing circumstances by doing that in secondary legislation. However, the hon. Gentleman has asked a perfectly reasonable question: who are we trying to help? What is our purpose?
Our purpose is to try to help those people who simply do not have that security in their lives at the moment. Research from the Living Wage Foundation suggests that 25% of insecure workers have had their shifts cancelled unexpectedly, with 88% receiving less than full shift compensation. Many workers receive their shift schedules without reasonable notice, and that prevents them from being able to effectively plan their work, social lives and other responsibilities.
Living Wage Foundation data found that in quarter 2 of 2023, 78% of workers received less than two weeks’ advance notice of shifts, with 5% of workers receiving less than one week. That can disadvantage workers’ ability to effectively plan their future income, particularly when that relates to budgeting for regular outgoings when shifts are cancelled, moved or curtailed at short notice. The impact on workers can include an increased reliance on debt and an inability to forecast income or find substitute work, childcare expenses and, on some occasions, travel expenses. Such implications represent the sort of one-sided flexibility that we are trying to deal with.
Evidence suggests that the income insecurity premium could be worth as much as £160 million per year, but the issue is really going to be about that benefit targeting businesses in the right way. We believe that good management practice can deal with an awful lot of this without the need to resort to legislation.
Alison Hume (Scarborough and Whitby) (Lab)
Last week, we heard from companies that say they are good employers and offer security of shifts to their workers. Would the Minister agree that companies that offer their workers the right to payment for cancelled, moved or curtailed shifts are in fact good employers and therefore have nothing to fear from the Bill?
Justin Madders
I thank my hon. Friend for her intervention. That is indeed the overall message from every provision in the Bill: that good employers are doing lots of these things already. Those things represent the kind of practice that we want to encourage and even to legislate for, because there is plenty of evidence that good workforce planning and valuing employees increases business efficiency and improves productivity; those are, of course, secondary to the individual benefits to the workers. However, the policy is specifically targeted to benefit low income workers in particular—people who are more likely to be younger, female or from ethnic minority backgrounds.
There is also a wellbeing background. Extensive research has reported that the impact of on-call contracts, with short or no-notice cancellation of shifts adding to insecurity, leads to considerable increases in anxiety. There have been quite a lot of representations to the Low Pay Commission about that, with concerns about workers on flexible or variable contracts not being able to suitably assert their rights due to fears of repercussions, being zeroed down or having no additional dialogue with the employer.
Nick Timothy
I am sorry to test everyone’s patience. We have heard at different points during the proceedings that “Good employers do this already.” Undoubtedly, that is true, and where employers want to be able to offer certainty, they will. The full quote the Minister just read was “by and large”, because employers cannot do that in all circumstances, even those that set themselves up to be that thoughtful. Does the Minister recognise that where businesses do not do the things in the Bill, it is not necessarily because they are bad employers? Obviously, some employers may be bad. If he recognises that, does he therefore recognise that through standardisation and an increase in things such as compliance costs, the Bill is, in a cumulative sense, adding costs to businesses that are not bad employers?
Justin Madders
As the hon. Member will know, the total cost to businesses from the Bill, as set out in the impact assessment, is about 0.4% of total employer costs. We absolutely acknowledge that there are many good employers out there who do this already, and we hope that there are many employers who do not who will feel that it is a positive once the legislation comes in. We want to take them on that journey and inform them why this is a positive thing and a benefit for their workforce. Importantly, they will see that the playing field is levelled and hopefully be able to compete more ably with others who might in the past have undercut them. But part of that will be making sure that they have access to good advice, good support and a guiding hand to make sure that the clear policy outcomes we want to see from the Bill are actually delivered. On that note, Mr Stringer, I ask the shadow Minister to withdraw his amendment.
Greg Smith
I remain very concerned about some of the real-world applications. I accept that it will have a negative impact in a minority of cases. The purpose of our amendment, as I said, was to probe the Government, so I am happy to confirm that we will withdraw it.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Justin Madders
I beg to move amendment 24, in clause 2, page 13, line 42, leave out
“from what time on which day”
and insert
“when the shift is to start and end”.
This amendment requires notice of a shift to include when the shift is to end (as well as how many hours are to be worked and from when).
Justin Madders
I am afraid we are back into some of the more technical minor amendments, on which I will not detain the Committee too long.
Amendment 24 will ensure that employers have to give reasonable notice of not only when a shift starts and how many hours it will be worked, but also when it will end. The Government’s intention is to avoid a scenario whereby a worker is notified of the start time and total duration of a shift, but does not receive reasonable notice of whether those hours will be in a single block, or whether there may be a large break.
The current drafting would allow an employer to specify that a worker is required to work, for example, for three hours from 9 am on Friday, without specifying whether the shift will be from 9 to 12, or from 9 to 10 and then again from 12 to 2. In either scenario, the notice would meet the requirements to be a notice of the shift. The amendment closes this potential loophole. Some of my own children have gone into work and then been told to go and have a two-hour lunch break—unpaid. We clearly want to avoid that through this amendment.
I turn briefly to Government amendments 25 to 27, which will ensure that workers are entitled to reasonable notice where an employer cuts working hours from the middle of a shift as well as from the start or end. The current drafting would arguably allow employers to reduce the number of working hours in the middle of a shift without giving reasonable notice. The amendments close that loophole, ensuring that workers have to be given reasonable notice if an employer decides to change the hours of a shift by reducing the hours in the middle.
Greg Smith
I will be brief in my response to these Government amendments, which make the requirement for the right to reasonable notice of cancellation or changing of shifts more onerous. I spoke to these principles during our debate on the previous set of amendments in my name, but I ask the Minister gently now, why were these provisions not included in the Bill on introduction? Was it an oversight? Will there be a repeat of the line, “It was the intention but we just didn’t do it”, or is it something else? I would be grateful for clarification.
As I argued during the debate on the previous set of amendments—this point is relevant to this set too—why are these amendments so necessary? Does the Minister really think it a proportionate burden to place on businesses, particularly in those cases where there will be fair and reasonable grounds for a business not needing to provide notice of a change in shift to an employee? What assessment have the Government made of the cost to businesses, given that they will now essentially have to pay for work not done, without recourse to force majeure provisions or whatever it might be—where it is genuinely not their fault that they cannot provide the work to their workers for whatever reasons? Force majeure is a well-established principle in all sorts of sectors across the world.
I urge the Minister to consider carefully how he can ensure that out-of-control eventualities are looked after in the Bill; otherwise I fear it will create a scenario where particularly the smallest businesses—those one, two or three-employee businesses—are placed in a very difficult financial position. I cannot believe that the Government believe that is the just and right thing to do, and that they could not come up with some other safeguards to protect those microbusinesses—those small enterprises—that might find themselves in a sticky spot.
Anneliese Midgley (Knowsley) (Lab)
I refer Members to my declaration of interests. I am also a member of Unite and the GMB. It was said in an evidence session last week that in hospitality—a sector that we are very focused on improving in the Bill—
“employers bring in too many workers for shifts and say: ‘Sorry, we do not need you any more. Go home.’ They then cancel a shift without any compensation for the workers for their travel time”. ––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 76-77, Q71.]
As many of my hon. Friends have said, while we are considering the burden on business, we must also consider the burden on workers. We are trying to level the playing field and make a more equal way, where workers are considered.
Greg Smith
I do understand the hon. Lady’s point. Nobody wants to see people turned away as they turn up for work, with their employer saying, “Sorry, no work today.” That is not a position that we want anybody else to find themselves in, but I am trying to make another point.
Let us take the hospitality sector as an example, which has had a pretty rough time since covid. It is one of the sectors—be it pubs, restaurants or attractions—that is struggling the most to recover from the pandemic. There are certainly times when I turn up to a pub in my constituency, perhaps on a Tuesday night, and it is completely empty and has no bookings. That is not necessarily the pub’s fault, but it will be a problem if there is an absolute requirement for the pub still to pay its full staff rota because it was full the previous Tuesday night and needed all those staff. I think this is one of those real-world examples where there has to be a little bit of flexibility; businesses have to be able to say, “Sorry, we’ve got no bookings tonight.” Worse than that, there might be the nightmare scenario that the beer delivery has not arrived and there is not actually any beer to sell.
Michael Wheeler
Does the shadow Minister accept that it is not the fault of the worker either? In fact, the employer has more control over the situation, on balance. On his example of planning out work, especially bookings, employers would know that there were no bookings further in advance than on the day—there are comparable examples across other industries—so giving notice of that on the day is completely and utterly unacceptable. The cost, in terms of proportion of income, is disproportionately borne by the worker, not the business, and these measures we are discussing are a proportionate way to rectify the situation.
Greg Smith
Fundamentally, I agree that it is not the worker’s fault either—I am absolutely at one with that. I made it very clear that I do not want to see anyone turn up for work only to be turned away and told, “Sorry, no work today.” That is not a great place for anyone to be. I absolutely understand and accept the hardship that that will place on someone who will perhaps not get that day’s wages, but I think there should be greater flexibility in circumstances where it is not the business’s fault either; those situations may be few and far between, but they will happen in hospitality, and they may happen in some manufacturing sectors where supply chain problems have occurred, as we discussed earlier.
If we force businesses into a place where they have to shell out significant amounts of money for no gain—as we discussed earlier, the workers are the ones who produce the services, goods, products or whatever it might be that enables the business to have the money in order to pay people in the first place—and we push them into a place where their low margin is eroded even further by paying for things that are completely outside their control, then those businesses may well go bust.
We are talking about the hospitality sector—and we are seeing pubs close virtually every week. That is a very sad state of affairs, particularly in rural communities, where the pub is often the beating heart of a village, or certainly the social hub. It is not just a place for a pint; pubs do a lot of social good as well. We are seeing pubs close far too frequently for all sorts of reasons, often because of the low margins and other factors that have come in—I will resist the temptation to go too hard on the Budget. There is a cumulative impact, and this measure could well be the straw that brings the whole house down. I want the Minister and Government Members to reflect on where we could bake in other forms of safeguard and flexibility, so that the Government do not put a number of businesses on to that sticky wicket.
Anneliese Midgley
Can I clarify whether the shadow Minister believes that workers should shoulder all the burden, and that businesses should bear no responsibility?
Greg Smith
No, I do not accept that. It is not helpful to see this as either/or. As I explained, there is a symbiotic relationship between businesses and their workers—their employees. Neither succeeds without the other. It is therefore not the case that I, in any way, shape or form, want to put all the burden on one or the other; what I am arguing for, and what I hope Members in all parts of the Committee can reflect on and appreciate, is some of those real-life, lived-experience and real-world examples, where things just do not go very well and people find themselves—
Greg Smith
I am very happy to do so once I finish this train of thought—we are getting far more debate in Committee than we do in the main Chamber.
We have to find the balance, where we do not just point the finger at the business owner or the worker, but see them as a symbiotic being—because neither side can survive or thrive without the other.
Jon Pearce
I am grateful to the shadow Minister for giving way so often. I want to address a principle: the Working Time Regulations 1998 established that if an employee, or indeed an employer, wishes to take holiday, the statutory notice period will be twice as much as the holiday taken. That is the same principle in the Bill, in that it is perfectly reasonable for a worker who does not have guaranteed hours to be given notice when work is not available. That statutory principle has been in place since the last century, so this is not outwith what every worker should expect. It is perfectly reasonable that if a worker has been told that work is available, they should be given reasonable notice if it is not. The shadow Minister’s Government kept to that principle, and it is perfectly applicable to employees and workers in this situation as well.
Greg Smith
The hon. Gentleman is right about the principle of notice for holiday—that is quite clearcut. Holiday is pretty much always planned, although there are circumstances in which someone might need to take leave at very short notice—perhaps they have one of those dreaded phone calls that a relative is seriously ill, so they have to leave to be with them, or there might be some other pressing emergency. I think most employers will be flexible and compassionate about such emergency circumstances, ensuring that an employee can be with a relative who has been in an accident or is critically ill, for example.
Generally speaking, though, holiday is planned—just as, generally speaking, the availability of work is planned—but as with emergency situations when someone might need rapid time off, other emergency or out-of-control situations might affect a business. It would then put an intolerable pressure on that business suddenly to have to pay someone an amount of money that might be more than they would even have earned in that day—selling beer or cake in the hospitality sector, or producing a cabinet in furniture making, or whatever it might be.
I hope that the hon. Gentleman appreciates where I am coming from. We are not talking about the vast majority of cases or the bulk of the economy here; we are talking about the unexpected emergency scenarios that are out of anyone’s real ability to predict, which happen in the real world. I am therefore very concerned that the rigid provisions being proposed by the Government will put a number of businesses in a difficult place.
Several hon. Members rose—
Alex McIntyre
I want to drill down on an important point of principle that we should be considering. I do not want this to become a tale of woe from my previous career in hospitality, but I remember being docked three hours’ pay by my boss because there were no customers for those three hours, and there is a similar point of principle here. I understand that there will be times when a restaurant is empty, but someone turning up to work will expect to get paid for that shift. Then there is the cost to the employee of going to work. People might have to secure childcare—I have recently had to look at the cost of childcare and the astronomical prices that are being charged—or pay to travel into work, and they might have paid in advance and be unable to get a refund. Why does the shadow Minister believe that the burden on the employee is less important than the burden on the business?
Greg Smith
I can assure the hon. Gentleman that, with three children, I am acutely aware of the cost of childcare. The point I am making, to go back to the one I made earlier to his hon. Friends, is that this is not “all or nothing”. It is about recognising, to refer back to the answer I gave the hon. Member for High Peak, that at certain times, albeit not the majority of cases—in fact, far from the majority of cases—circumstances will arise that are beyond the business’s and the employee’s control, and they will push that business to the very edge. It is not a happy place or a good place to be, but there are some realities here that I think need much more careful reflection.
Chris Law
I have been both an employer and an employee in a number of situations, including in retail and hospitality, which we have been hearing about. The hon. Member talks about emergencies, and I understand that emergencies can happen—I have been an employer when we had an emergency situation. What usually happens in those circumstances is that people find other things to do. There is always stuff to do in a business—stuff that might otherwise get put to one side—so there will be an opportunity for employees to work with employers in emergency circumstances.
What I do not understand is this. At what point, in the hon. Member’s mind, do employers notify employees? When do they say, “Look, there’s a situation—it’s an emergency. There is no chance at this time that I can help you come in. Would you consider not taking hours in this instance?” The hon. Member has talked about lived experience; I have spent many years in hospitality—I trained as a chef, and I know exactly what it is like working in restaurants and hotels. Lots of things happen, including empty restaurants, but there is also an onus on the employer to make sure that the restaurant has enough people in of an evening. If they are not there, it is not the employee’s fault; it is the responsibility of the business. If the business is on its knees, then frankly that is in no way the fault of employee—unless, of course, they are not turning up for work or something. In truth, is it not the case that a business in that position is just not viable?
Greg Smith
I am grateful to the hon. Gentleman for his intervention. He is right that there may well be something else that can be done—perhaps a stocktake, or making a start on refurbishing the place, or whatever it might be—but that will not be the case in every circumstance. I can only repeat the point that I am not making this argument in respect of the majority of cases, or those that might affect a business that is already in distress; I am making it in respect of those few occasions that might take a business to that point or much closer to it. I cannot imagine that anybody on this Committee, or indeed any Member of this House, would want to see that unintended consequence.
Laurence Turner
I am grateful to the shadow Minister; I suspect he is setting some kind of record with the number of interventions he is taking. Earlier, he said that there may be alternative measures and protections to mitigate the problem that the Minister is seeking to address, whereby someone has been called to a shift but has arrived, incurring some cost, to be told that there is no work available. What alternative measures does the hon. Member have in mind?
Greg Smith
There are a number of options that could be looked at. The time set out in the regulations could be much more flexible. There could be safeguards for force majeure circumstances, which is common in a lot of contracts. There is no reason why that could not be in legislation. Or if the Government want to go down this path, albeit it is not something that Conservatives would propose, perhaps a more elegant way of going about it would be some sort of legislation on compulsory insurance against such eventualities that ensured that both sides were able to benefit—that the employee still got paid at least something, if not their full expected wage for the day, but the business was not directly out of pocket either. That would have to be tested in the insurance industry to see where premiums would come out, because they may well be unviable, but I gently suggest to the Government that it is a tyre worth kicking.
I conclude with a point I have made many times: this has to be about flexibility in real-world circumstances.
Sarah Gibson
The Minister made an extremely good point about the security that is required. It should not be an arbitrary 48 hours that is given. Specifying the time for each sector, presumably under guidance, would perhaps be the most appropriate thing.
I have talked many times to people in my constituency who work in the care sector and are employed to visit people in their own homes. They are given a start time for a shift and are quite often told that they will work a certain number of hours, but it is not clear until they turn up to the shift how much of a gap there will be between the times at which they are getting paid. That can leave them with shifts that last a considerable time but contain a gap of several hours, during which they might be miles from home and it might not be worthwhile going home for lunch, so they incur costs on their own time.
I welcome the attention to the lack of clarity about shift working specifically for home visits in the care industry. This is something that we need to look at. Perhaps there needs to be guidance on the time for each sector, because each sector has its own issues. That is certainly true when one looks at hospitality.
Anneliese Midgley
I am sorry for referring to the shadow Minister as “you” earlier, Mr Stringer; I was not suggesting that you needed to clarify whether you thought workers should shoulder all of the burden.
I want to remind hon. Members of some evidence that we were given last week in support of the right to reasonable notice of a shift. Matthew Percival from the CBI said that
“there are areas where the Bill can be a helpful step in the right direction. To give a few examples, we have previously supported the idea that it is wrong that you should turn up for work expecting an eight-hour shift, be sent home after two hours and only be paid for two hours. There should be a right for compensation there.”
Jane Gratton from the British Chambers of Commerce said:
“As Matthew said on the compensation of shifts, we certainly support that, and we would be very happy about the fair work agency to create a level playing field and measures around workplace equity.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 13, Q6.]
Allen Simpson from UKHospitality said:
“Again, reasonable notice is an important principle and there should be protections.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]
Justin Madders
The way the shadow Minister was intervened on made it feel like this was an Opposition amendment, but it is actually a Government amendment to deal with the issue of split shifts and the anti-avoidance measures. This is about rebalancing the level of risk faced by a worker and an employer. At the moment, the balance is shifted too far one way. We estimate in the impact assessment that the cost to businesses of this policy could be up to £320 million a year. Clearly, a lot of that will end up being transferred directly into workers’ pockets. We hope that, through better workforce planning, that figure will go down and we will see improvements to the lives of those who will benefit from the Bill.
I will make one further point. The shadow Minister referred several times to force majeure situations. There is provision in a later clause, which we will not get to today, for us to set out in regulations when there might be exceptions to this provision. There are lots of potential arguments about whether the provision should apply, and we intend to consult further before the final regulations are published and debated.
Justin Madders
I will not detain the Committee too long, because it feels like we have had the clause stand part debate already. I will briefly go through the provisions of clause 2, which creates the right to reasonable notice of shifts. As I set out when we discussed clause 1, we must tackle one-sided flexibility. Guaranteed hours is an important part of that, but we must also ensure that workers have reasonable notice of their shifts, so that they are enable to effectively plan their work and personal lives.
If someone’s shift is moved but their pay is less than the cost of the babysitter, that is obviously a negative. If someone is offered a last-minute shift but it is 60 minutes away by bus and they have no car, they should not be penalised or have a black mark put against them if they are not able to take it up. We can do better than this. We want to establish a more balanced partnership between workers and employers, and we hope to do that with clause 2. It will still allow employers to make changes to shifts, but it will also provide incentives for employers to meet the standard of the best employers, encouraging better planning and engagement with their workers. These provisions to introduce a right to reasonable notice of shifts and to changes in them are a small but important step towards making the lives of many shift workers and their families feel a little more secure.
Clause 2 creates several new sections in the Employment Rights Act 1996. New section 27BI outlines the duty that will be placed on employers to give reasonable notice of shifts. That duty will apply to workers on zero-hours contracts and arrangements, as well as workers on other contracts that will be specified in regulations but are likely to be low-hours contracts. New section 27BJ specifies that employers must also give reasonable notice of any moves or changes of shifts. New section 27BK notes that, as for other sections, agency workers are not covered by this measure—new section 27BV provides a delegated power to make corresponding or similar provision in relation to agency workers. In addition, section 27BK specifies that workers are not entitled to reasonable notice of shifts that they themselves suggested they work. For example, they would not be entitled to reasonable notice of overtime that they themselves had suggested. That right does, however, apply where the employer agrees to a suggested shift and then later changes or cancels the shift. Finally, the section contains a power to make regulations about how the notice should be given and when it is treated as being given.
New section 27BL explains that, where an employer is required to make a payment to a worker because the employer has cancelled, moved or curtailed a shift at short notice, the worker cannot get compensation for lack of reasonable notice for the same cancellation, movement or curtailment. New section 27BM enables workers to complain to employment tribunals that their employer has failed to comply with the duties to give reasonable notice. New section 27BN provides that tribunals must make a declaration where they find for a complainant and may award compensation they consider appropriate to compensate the worker for financial loss suffered as a result of the failure to give reasonable notice. This compensation will be capped in regulations and, in line with common law on recoverable damages, compensation will also take account of the duty on the claimant to mitigate their losses.
Greg Smith
I will not detain the Committee for much longer because, as the Minister said, it felt as though we had the debate on the whole clause during the debates on the amendments. I reiterate my concern about some of the provisions in the clause. Although I accept that the Minister said that, further on in the Bill, there is provision for force majeure measures to be introduced, there is a gaping hole for those emergency, unexpected, out-of-control circumstances, and this clause fails to fill it. However, we will almost certainly return to that on Report, so we will not press the clause to a Division.
Question put and agreed to.
Clause 2, as amended, accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Seventh sitting)
Thursday 5th December 2024
(2 weeks, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 December 2024 - (5 Dec 2024)
The Committee divided: - Ayes: 12 / Noes: 3 - Question accordingly agreed to.
The Chair
Will everyone please ensure that all electronic devices are turned off or switched to silent? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sitting is available in the room and on the parliamentary website. We now move on to clause 3. I remind all Members of the rules about declaration of interests, as set out in the code of conduct.
Clause 3
Right to payment for cancelled, moved and curtailed shifts
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move amendment 30, in clause 3, page 18, leave out lines 7 to 19 and insert—
“(b) in relation to the movement of a shift, or the movement and curtailment (at the same time) of a shift, notice given less than a specified amount of time before the earlier of—
(i) when the shift would have started (if the shift had not been moved, or moved and curtailed), and
(ii) when the shift is due to start (having been moved, or moved and curtailed);
(c) in relation to the curtailment of a shift where there is a change to when the shift is to start (but there is no movement of the shift), notice given less than a specified amount of time before the earlier of—
(i) when the shift would have started (if there had not been the change), and
(ii) when the shift is due to start (the change having been made);
(d) in relation to the curtailment of a shift where there is no change to when the shift is to start, notice given—”.
This amendment has the effect of clarifying what “short notice” means for the purposes of proposed Chapter 4 of Part 2A of the Employment Rights Act 1996 in cases where a shift is both moved and curtailed and makes associated drafting changes to the definition of “short notice”.
It is a pleasure, Mr Mundell, to see you in the Chair this morning. I start by referring to my entry in the register of interests and my membership of the GMB and Unite trade unions.
Government amendment 30, alongside Government amendments 31 and 32, will ensure that employers are clear about their responsibilities where a shift is both moved and curtailed at the same time. Under the Bill as introduced, it may not have been clear to employers or workers when the short notice period in these cases would run until. Under current drafting, the calculation of the short notice period for a moved and curtailed shift could be done based on the rules for either a moved shift or a curtailed shift. This could produce two different outcomes.
For example, if a shift were due to be worked from 2 o’clock until 6 o’clock, and it is moved and curtailed so that it must be worked from 4 o’clock to 7 o’clock, it is not clear whether the notice ends at 2 o’clock or 4 o’clock. The amendment clarifies that in cases where a shift is both moved and curtailed at the same time, the short notice will be the same as if the shift had been moved only. It will therefore run until the earlier of when the shift would have started before the change or when the shift is now due to start.
In terms of what payment a worker will be entitled to when their shift is both moved and curtailed at the same time, we are committed to consulting on what that amount should be and will, of course, specify that in the regulations. The maximum amount, however, cannot be higher than what the worker would have received from working hours that were changed, as is the case for shifts that are cancelled, just moved, or just curtailed.
We believe that compensation in these circumstances is only fair, given that the movement of a shift at short notice disadvantages a worker. It impacts their ability to plan their lives and can cause financial disadvantage such as excessive childcare costs. Our measures will ensure that workers do not bear all the financial risk of shift allocation and cancellation, and will compel employers to give reasonable notice. Through good leadership and planning, an employer is in a position to reduce the instances of short-notice shift changes, which the worker is unable to influence.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the Minister for his explanation of Government amendment 30, but I gently suggest to him that starting by saying that he wished to be clear, and then going on to say that the Government will be consulting on it, possibly does not give businesses the clarity that they are seeking from this clause of the Bill. I would be grateful, when the Minister sums up the debate on Government amendment 30, if he could actually clarify what he believes, in plain English, to be reasonable notice, and, while not necessarily when future regulations will be laid, the window in which they will be consulted on.
I posed a similar question about an amendment in our sitting on Tuesday. I cannot imagine that the Government will want to simply put out a blank piece of paper consultation—there will be a floor and a ceiling that is consulted on. It would be helpful for all Members, but more importantly real businesses out there in the country, to understand that as soon as possible, so that they can most fully share their thoughts formally when the consultation launches. Can the Minister give the Committee any clue about what employers will need to comply with, or was Allen Simpson, CEO of UKHospitality, right when he said that he understood that
“the Government are intending to leave it to case law and employment tribunal systems to figure out what ‘reasonable notice’ means”?––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]
We will shortly come on to debate Government amendment 31, which is relevant to this discussion.
Laurence Turner (Birmingham Northfield) (Lab)
Will the hon. Member give way?
Greg Smith
I will just finish this point. As the hon. Gentleman knows, I am not shy of taking interventions.
Government amendment 31 will cap the compensation an employee can receive if the employer does not give reasonable notice of cancellation or curtailment of a shift to the remuneration they would have gained if they had worked those hours.
Laurence Turner
I draw attention to my declaration in the register of members’ interests and my membership of the Unite and GMB trade unions.
We will of course see the consultation on the definition of reasonable notice in due course. Does the hon. Member accept that the meaning of reasonableness will be dependent on the circumstances of each case? What is reasonable in the case of, say, an early years setting might be quite different to that for an offshore oil rig.
Greg Smith
The hon. Gentleman makes a perfectly sensible point. We will come on to that issue shortly. The central point that I ask the Government to reflect on, before any consultation—post-legislation or during the passage of legislation—goes live, is that it is reasonable that those who are expected to put in meaningful and thoughtful contributions to that consultation on how the measures will affect them, will be applied in the real world and will need to be complied with, have as much notice as possible, so that they can put their thinking caps on and, if necessary, bring in professional advice where that is practicable or affordable.
In that way, when the Minister ultimately has the opportunity to read through every single consultation response with, I am sure, great attention to detail, before coming to a recommendation and drafting the necessary statutory instrument to bring about the exact regulations, the detail will be there. This should not be a rush job, but something to which the people out there in our country who actually run businesses, risk their capital and fundamentally create jobs and employ people are able to give as much thought as possible, so that the Government can come to a proper conclusion.
While I am glad that remuneration will be capped, I am still worried that the provisions in the Bill are not necessarily as proportionate as they could be for businesses. Sometimes an employer will have to cancel or curtail shifts through no fault of their own. We went through that issue at length on Tuesday, on a different point. I will not repeat the arguments now, other than to remind the Committee of force majeure. Events outside any employer’s control can happen; that is a reality of life.
It seems unfair in those instances that employers should have to bear the costs of not being able to complete the work on time, as well as having to remunerate employees for hours not worked. I stress, as I said on Tuesday, that that will be a minority of cases. It will be the exception, not the norm, but it is vital, when looking at this amendment and clause that there is an acceptance that those rare cases can and unfortunately will happen in the real world.
Alex McIntyre (Gloucester) (Lab)
I refer the Committee to my membership of the GMB and Community unions. We had a lot of back and forth on this point on Tuesday. I want to clarify what the shadow Minister said on Tuesday. In the extreme circumstances where employers are not able to continue with their work, the shadow Minister made the point that it was not fair on the employer to bear the cost. He also said that it was not necessarily fair for the employee to bear the cost, and that the cost should be shared. If the cost is not being borne by the employer, who does the shadow Minister expect to share that cost, other than it being placed solely on the employee?
Greg Smith
I do not want to repeat the whole debate that we had the other day as we might not hit the clause that the hon. Gentleman’s colleagues are trying to get to today. I fully accept his point that the situation is not fair on the employee, but equally it is not fair on the employer, given that those circumstances, events or eventualities are quite literally outside anybody’s control.
I urge the hon. Gentleman and his Front-Bench colleagues to reflect on how to put in place a better and more proportionate system to share the burden. I accept that nobody wants or plans for those eventualities. I refuse to believe that any employer ever wants to have to turn somebody away at the door as they turn up for work. They actually want to make those products, provide those services, ensure people have a good night out or whatever it might be. That is the core of their business. That is how they make money. That is how they grow and create more jobs in the first place. I refuse to believe that any business wants to turn someone away and say, “Sorry, that shift isn’t available,” or, “Only half that shift is available today.”
Uma Kumaran (Stratford and Bow) (Lab)
I refer Members to my entry in the Register of Members’ Financial Interests and my membership of the GMB trade union.
The hon. Gentleman makes a good point. The Association of Convenience Stores tells us:
“90% of colleagues in the convenience sector report that they have never had a shift cancelled with less than 48 hours’ notice, reflecting a strong track record of responsible scheduling. Furthermore, 86% of retailers state that they always offer alternative hours to employees if a shift is cancelled or reduced, demonstrating the sector’s commitment to fair treatment and employee support.”
It says that it
“can be confident that this will support existing provision by employers across the sector”,
and it welcomes amendment 30, which it says
“provides clarity in relation to short notice for when the shift is both moved and curtailed.”
It tell us that there is a counter-argument that the proposals may present challenges to convenience retailers and other small businesses, but that it has spoken to businesses and that
“these businesses tell us that they are already doing what the Bill makes provisions for.”
We are mindful of the impact on businesses, but there are a lot of businesses out there that are already doing what is proposed, and we have received representations from them welcoming the measures.
Greg Smith
I am grateful to the hon. Lady for that intervention, because she underlines the fundamental point that I am making: most businesses do not want to turn people away. Convenience stores are a great example of that, and are actually some of the most flexible employers out there. My constituency, which is spread across 336 square miles of rural Buckinghamshire, has a lot of small convenience stores, and they are exemplary employers. I cannot think of a problem I have ever encountered with any of them.
I come back to my central argument, which is that sometimes things happen. Nobody has planned for it, nobody wants it, and nobody is in any way happy in that situation, but sometimes these things happen. I fully accept the hon. Lady’s point that the vast majority of employers in this country are good employers. We should celebrate them, and not try to see them through the lens of some sort of Victorian novel. That is not what employers are in this country. They are responsible and want to look out for their workforce.
We had a debate the other day about the symbiotic relationship between the worker and the business owner, which are two sides of the same coin: no successful business could have one without the other. I am not saying that there are not rogue traders out there who seek to exploit their workforce—there are, and there must be proportionate, proper and robust measures in place to combat poor behaviour—but that does not undermine the central point that there must be flexibility that accounts for the realities of the real world.
Chris Law (Dundee Central) (SNP)
I am hearing this argument repeated again and again, but I am struggling. I need an example. Employers insure themselves against floods, fire and everything else. We talked on Tuesday about an empty restaurant giving notice if it was empty. So I am trying to find out what is the exceptional circumstance that the hon. Member is concerned about that he can see in real-life circumstances where the employee would have to lose out rather than the business.
Greg Smith
I can think of businesses in recent times in my own constituency that are particularly affected by shipping delays, some as a result of the covid pandemic, which I accept was an exceptional period in our history, where we saw shipping delays of parts that businesses were waiting for to put their products together. Buckinghamshire has a proud manufacturing base as well as other business sectors. Businesses simply did not have the bits, the parts, to be able to put their products together. I accept that some of those businesses are quite well established brands that will carry insurance and reserves or contingency funds for such eventualities, but some of them do not.
On Tuesday we talked about furniture manufacturers. Again, we are all creatures of our own experience. In my own constituency there are some very big furniture manufacturers such as Ercol and Hypnos and they face some great challenges. But I am also in regular contact with one, two or three-employee cabinet makers and kitchen fitters and other skilled trades businesses who would not be able to cope if they did not have the delivery to fulfil a particular order that has been placed. They are hard-working but very small businesses that might be working on one project at a time. They have to take one order on; if they cannot fulfil that, there is not the resilience to automatically just move on to the next.
Chris Law
I will just probe a little further. All those points are valid, but they are the responsibility of the business, not the employee—most notably because they have no shares in the business and will not benefit from any profit. Why should they have only the rough end where they end up without income? A company might have five shareholders in a small company. A cabinet-making firm is a good example—I have one in my constituency in Dundee where they all have a stake in it and can equally share the risks and the rewards. The problem with what the hon. Member is suggesting is that the employees are burdened with the risks without any of the rewards. I cannot see where there is a benefit at all. That in many respects insulates the employer and puts all the burden on the employee.
Greg Smith
I do accept the point that the hon. Gentleman is making. It is helpful to have this debate to tease out the core issues. The point I would put back to him is that those small microbusinesses faced with that eventuality almost certainly will not have the reserves or contingencies in place to be able to weather such a storm. A catastrophic event that delays perhaps their biggest order of the year by six months, a year or longer—some of the shipping delays in recent years have been undoubtedly severe—means they might go bust. If they go bust, there are no jobs at all. Although I am in no way, shape or form advocating a position where an unfairness is felt by employees, there can in the real world sometimes be an eventuality where it is undesirable—I will concede unfair—but a reality.
Greg Smith
I will finish this point and then give way —the hon. Lady knows that I am up for the debate.
There could be a pretty stark choice: go bust and no jobs, or some short-term undesirable pain that requires flexibility in order to get the business back on track to secure jobs. The last thing I want to see in this economy is businesses being forced to the wall and ending up shedding jobs, and overall employment numbers in this country going down. I want to see the economy growing. I want to see the number of jobs being created growing every single day. That is how we get ourselves to greater prosperity for everybody. I really worry that if flexibilities are taken away, it could go the other way.
Alison Hume
It is a pleasure to serve under your chairmanship, Mr Mundell. I refer to my entry in the Register of Members’ Financial Interests and my membership of Unison and of the Writers’ Guild of Great Britain.
The hon. Member talks about shipping companies and furniture companies, and I would like to talk about my constituency of Scarborough and Whitby. As of last year, 4,500 people there—11% of the workforce—were employed in retail, and 8,000—20% of the workforce—in hospitality. Those sectors employ a lot of women, and those women—I was one myself—rely on childcare, which is extremely expensive. Does he accept that when shifts are cut short or curtailed at short notice, those women still have to pay for their childcare and are therefore taking on board an expense? It is not force majeure for them; it is a day-to-day struggle to pay the childcare bills.
Greg Smith
I can assure the hon. Lady that I am intimately aware of the cost of childcare. It is something that challenges families—men and women, mums and dads, carers, grandparents and all sorts of people—on a daily basis. It is a very expensive reality of life. I do not want to get off topic, but the previous Government did a lot to increase the free childcare offer, and I fully acknowledge that the current Government are carrying through with that. We need more measures like that to ensure that people have the childcare arrangements in place to enable them to go to work.
I fully accept the hon. Lady’s argument: there is a cost to going to work. There is a cost of travel, as we all know as Members of Parliament travelling in from and getting around our constituencies. There are the costs of getting to work, of childcare or, perhaps, if someone is caring for a relative or someone else, of ensuring that alternative provision is there while they are at work. I fully accept that point and in no way wish to advocate for people to be left in that place. I do not want that for anybody in this country. But as I said to the hon. Member for Dundee Central, there are sometimes circumstances—very few, exceptional circumstances—where it could be a stark choice for the business and jobs could end up being lost altogether if there is not a little bit of flexibility. We are dancing on the head of a pin here, and it is about exceptional cases, but I do not want to see exceptional cases suddenly reducing the overall employment numbers in this country.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
In response to the hon. Member for Dundee Central, the shadow Minister struggled to come up with a concrete example of a business that might be in the situation he is describing, with very small margins and staff costs not meeting the demand. I can think of two examples from my experience before coming here and from my constituency. One is car washes, where we frequently see very low-paid employees being recruited on demand and very small margins. Another is nail bars, which we see on high streets across the country, where fluctuating demand requires small amounts of work to be done, so people are employed on very short contracts with hours cancelled at very short notice.
The shadow Minister will also have noticed last week that the net migration figures for the last year of the Conservative Government reached almost 1 million. The point I am making is that we need to think about not just the impact on individual workers and businesses, but the bigger, broader impact on society as a whole. The problem we have seen with small businesses such as car washes and nail bars is that there is a high supply of labour, generally from exploited migrant workers. It is not a coincidence that the two industries I have just described are also where we see the highest incidence of modern slavery. That is because workers in those industries have very few rights, so they can be treated as almost expendable by their employers, and have their hours cancelled at very short notice, and they have absolutely no recourse. So, it is not a coincidence that it is the most exploited workers, or the most vulnerable workers, who have ended up taking such jobs.
On high streets across the country we have seen the growth of multiple small car washes and small nail bars. The industries are not struggling, but the employers are deliberately working on incredibly small margins. The point is that the dynamic between employer and employee is unbalanced, which is what the Bill seeks to correct.
The Chair
We just have get the balance correct between a speech and an intervention, if we can.
Greg Smith
The hon. Gentleman makes a fundamentally good point about issues such as modern slavery. Actually, it was a former Conservative Prime Minister—I accept that we had a few in the last Government—my noble Friend Baroness May of Maidenhead, who did an enormous amount to tackle modern slavery in this country. Is it a case of job done? No, clearly not. However, we have made enormous strides and I encourage this Government to do all they can to continue the fight against modern slavery, which is a particularly evil crime that needs to be stamped out for good.
The hon. Gentleman asked for concrete examples. I felt that I gave one, with the example of the two-employee furniture maker. However, I will give another example of where force majeure may come in. Let us take the example of a small business. In fact, let us take a bathroom fitter, where there is perhaps one business owner who has, say, two employees who support him or her in fitting those bathrooms. They take on a big job in a hotel to refit all the bathrooms. Let us say that it is a 25-room hotel; I can think of a couple of those in Buckinghamshire. However, that hotel goes bust. It is not the fault of the company whose owner thought they had just taken on a really lucrative contract to refit 25 bathrooms. Clearly, it is the fault of the hotel that, sadly and for whatever reason, has ceased to trade, or perhaps it has been taken over as an asylum hotel. Obviously, that order to refit the bathrooms would have fallen.
What does that business do? It cannot suddenly magic up 25 bathrooms to fit in the space of a month, or a quarterly period, or whatever period it might be. However, it has probably already had to fork out for the parts, bathtubs, showers, toilet cisterns and everything else that goes into a bathroom. I gently suggest to the hon. Gentleman that that is a concrete example of where it is a lose-lose situation for the business owner and their employees, until they can get themselves back on track.
Nobody wants to see that type of thing happen, but it does happen. It is a reality of trading, not only in this country but worldwide, that sometimes bad things happen. So, there has to be flexibility around such events. That is notwithstanding the good points that the hon. Gentleman made about modern slavery and businesses exploiting those who perhaps are less able than other workers to stand up for themselves in workplaces in this country. However, I accept the broad sweep of the points the hon. Gentleman made in that regard.
I am conscious of how long I have been speaking about this amendment, but I am always up for a good debate. I will conclude by returning to the evidence that—
Greg Smith
I am tempted not to give way to the hon. Gentleman, since he seemed less than keen to take my interventions in the farming debate yesterday, but I will grant him an intervention today.
Jon Pearce
It is an honour to serve under your chairship, Mr Mundell. I refer to my entry in the Register of Members’ Financial Interests and to my membership of the GMB. I apologise to the shadow Minister for not taking his interventions yesterday. I did take two, if that assists.
I wanted to build on the point that the shadow Minister was making. I actually agreed with some of the examples he gave, in that there are emergency situations where things do not work out for a business. I am interested in whether the shadow Minister would apply the same principle when the employee has an emergency, which builds on the point made by my hon. Friend the Member for Scarborough and Whitby. For example, an emergency for the employee might be childcare, the illness of a family member, or the death of a family member—actually that may not be relevant because that would be a different type of leave. In those emergency situations, there is a right to dependant leave, but that dependant leave is unpaid. Would the shadow Minister accept the principle in those circumstances that the employer should equally bear the cost and pay the employee?
Greg Smith
I understand the point that the hon. Gentleman makes, and I fundamentally agree with his point about bereavement leave and dependant leave. As we heard in the evidence sessions, I have an enormous amount of sympathy for extending certain elements of bereavement leave, including to pregnancy loss before 24 weeks, which we will come on to later in the Bill. Those circumstances are arguably more about humanity than some of the practical realities of market failure, supply chain failure or whatever it might be. I think they should be kept in very distinct columns. One is a human response to tragedy and the facts of life with dependants, or people to whom individuals might have a caring responsibility, as opposed to the need for flexibilities to exist, such as with the example of the lost contract or supply chain problems. I accept that this is a slightly different point to being told, “No bookings today” in a hospitality setting, or whatever it might be. I accept the point made by the hon. Member for High Peak, but I see it as a distinct column as opposed to something that is all in the same category.
Jon Pearce
The principle is, though, that with dependant leave in those emergencies, whether that is childcare or anything else, there is no right to pay; that is the point I am trying to make. The shadow Minister is saying that if there is an emergency for the business they should bear no cost of it. If there is an emergency for the employee, that employee will, under the statutory provisions on dependant leave, bear the cost of it. In both scenarios, the shadow Minister appears to be asking the employee to bear the cost. Is that correct?
Greg Smith
I understand the point that the hon. Gentleman makes. Actually, at no point have I said there should be no cost to the employer; I have said there needs to be flexibility, as opposed to a hard and fast rule. On Tuesday I had an exchange with the hon. Member for Birmingham Northfield on the point around, “Okay, what else?” While I put that problem list back in the column for the Government to address, there are other safeguards; there are other things that the Government could look at so that the burden is more shared, as opposed to zero cost to the business. The key word here, which I have probably said 100 times this morning, is “flexibility”, as opposed to hard and fast rules.
I will get back to my conclusion. Allen Simpson from UKHospitality made some sensible points when giving evidence to the Committee last week, so I pose his questions to the Minister. I should be grateful for a response on each, as I imagine employers throughout the country would be. Could a different approach be taken to what constitutes “reasonable notice” for different employers in different sectors? That goes back to the point made by the Opposition earlier. Will shift swapping still be allowed, and if so, how will the regulations account for it? If shift swapping will not be allowed, why not? What will be considered “reasonable notice” within shift-swapping provisions? If an employee wants to change their shift at the last minute, are they allowed to do so, and in what circumstances? What would happen if an employer were to put out a message saying, “There is a shift available right now. Does anyone want it?” Does that constitute an offer of employment? Will there be a time after which employers will not be able to do that, because it does not constitute reasonable notice? Those were very sensible, thoughtful questions from UKHospitality, and as this legislation progresses through Committee it is only right that the Government and the Minister give a clear and full answer to them.
Justin Madders
Well done to the shadow Minister—he must have had his Weetabix this morning. He has clearly put in a great deal of time and we appreciate the way that he has engaged with the debate and some of the issues. He is taking a much broader look at the principles behind the legislation, rather than a quite narrow technical amendment about when shifts are moved or curtailed, but I am happy to address his points as far as I can.
I understand that the shadow Minister accepts the principle that we are trying to create some additional fairness in the workplace. That is welcome to hear, and I can assure him that this will not be a rush job. We do not anticipate these measures being implemented until 2026, and he will not be surprised to hear that the reason is that we intend to engage deeply with business and workers’ representatives on the details. There will be a consultation, following which we will set out in regulations what periods of notice should be presumed unreasonable; we will also set out factors for tribunals to take into account when considering whether notices are reasonable. That will go a long way towards addressing some of the concerns he mentions from Allen Simpson of UKHospitality. I think it is fair to say he generally welcomed the approach, but clearly some of the detail is to be worked on.
I do not think there will be any prohibition on workers swapping shifts, but if the employer, having been notified that worker B has taken the shift instead of worker A, then cancels the shift at short notice, we would intend that the regulations would then be engaged.
Greg Smith
So that we are absolutely clear on the shift-swapping provision—[Interruption.] I correct the Minister on the Weetabix; it was the Tea Room black pudding.
If worker A and worker B consensually decide that they wish to switch, worker B being the one who will take the shift and worker A the one whose shift is now displaced either to another time or not at all, and worker A being quite happy with that, will the employer be penalised?
Justin Madders
I am grateful for the details of the shadow Minister’s dietary exploits today.
We are looking in quite close detail at that situation, because there are a number of knock-on consequences, but we do not envisage that, in a situation where two workers agree of their own volition to swap shifts, the employer should in any way be penalised. We do not think that is in the spirit of what we are trying to achieve here.
I return to the points that my hon. Friend the Member for Edinburgh East and Musselburgh made about particular workplaces. The Director of Labour Market Enforcement has undertaken quite a lot of work in respect of those issues; considerable evidence is emerging about concerns in those sectors, and I encourage him to undertake some further reading on that.
There will be further consultation on what reasonable means. We all understand that there could be different factors applying, but what we want at the end of this process is for businesses to be clear about their obligations. That could mean a particular time period, but it could be different depending on the industry or the circumstances. It is right for us to take our time to consult and engage on that.
The shadow Minister referred to the force majeure issue; there is a power in the Bill for us to provide for exemptions for short-notice shift cancellation—that is always a tricky phrase to get out—but in some of the examples he gave where a huge contract was lost, a notice cancellation payment was probably the least of the employee’s and the employer’s problems in that situation; there may be bigger questions about whether there is enough work at all. Those are the kinds of things we will be looking at, as the power in the Bill gives us that opportunity.
Amendment 30 agreed to.
Justin Madders
I beg to move amendment 31, in clause 3, page 19, leave out lines 5 to 18 and insert—
“(a) where the shift is cancelled, the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the cancellation;
(b) where the shift is moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the amount of remuneration to which the worker would have been entitled had they worked the original shift;
(c) where the shift is moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the amount of remuneration to which the worker would have been entitled had they worked the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed;
(d) where the shift is—
(i) curtailed but not moved, or
(ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift,
the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the curtailment, or the movement and curtailment.”
This amendment has the effect of clarifying the maximum amount of a payment that can be specified in regulations under proposed section 27BO(1) of the Employment Rights Act 1996 in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision.
Justin Madders
These amendments should be considered alongside amendment 30, because they clarify what happens when a shift is both moved and curtailed at the same time. The Bill provides a power to specify the amount that must be paid by employers when they cancel, curtail or move shifts at short notice. It cannot be used to specify a payment amount in excess of what the worker would have earned from working the original hours.
However, the Bill was not clear whether the maximum payment due when a shift is both moved and curtailed at the same time should be calculated based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, the maximum payment could be based either on one or two hours of work, as the shift was moved by two hours but was curtailed by one hour.
Amendment 31 clarifies what happens in such cases. The maximum payment in this scenario would be what they would have earned from two hours’ work, reflecting the maximum they would have earned had they worked their original four-hour shift. That will ensure that workers are compensated appropriately, and it will also provide clarity for employers.
Amendment 32 clarifies for workers and employers how to calculate what amount of contractual payment can be offset against payments under clause 3 in cases where there is a combined short notice movement and curtailment of a shift. Again, the Bill is unclear whether the calculation should be based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, then after deducting the two hours in the shift that have stayed the same—4 o’clock to 6 o’clock—the remaining hours to be offset could be based on either one or two hours’ work.
The amendment clarifies that the hours to be offset should be for two hours’ work, as the worker should be entitled to the payment under proposed new section 27BO of the Employment Rights Act 1996 for two hours. That will ensure that it is clear that an employer is not doubly liable for some hours in such scenarios.
Although I appreciate that the amendments may appear complex, they will have the overall effect of simplifying the policy for employers and workers, so that it is very clear what happens when a shift is both curtailed and moved at the same time. They therefore prevent us from ending up with a whole load of litigation to decide what the correct outcome will be.
I reassure the shadow Minister that the changes will not be rushed: they will not be implemented before 2026, which will give us time to consult further and provide some more information on how the measures will work in practice so that employers understand what is expected of them. We will provide clear guidance throughout.
Many employers already guarantee hours, give reasonable notice of shifts, and make payments when they cancel shifts at short notice, so they will not need to alter their behaviour at all. In fact, data from the Chartered Institute of Personnel and Development suggests that around 33% of employers already pay some form of compensation for shifts cancelled with less than 24 hours’ notice.
Greg Smith
I am grateful to the Minister for his explanation of amendments 31 and 32. As he said, these amendments clarify the maximum amount of payment and the hours to which a payment relates in cases where there is a cancellation, movement or curtailment at short notice of a qualifying shift that the worker has agreed to work for the employer. Amendment 31 establishes that the payment should be for the hours that would have been worked.
The amendments make sense given the policy direction of the Bill but, once again, I gently suggest—as I will probably do multiple times during our discussions—that it is unclear why these provisions could not have been included in the Bill on its introduction. They seem like a fundamental part of the Bill. I would be grateful if the Minister could explain why it took so long to come to the conclusion that this was the way forward.
Justin Madders
I will address that point, which I am sure we will hear on numerous occasions from the shadow Minister. He will be aware that it was a manifesto commitment to introduce the Bill within 100 days, which we are very pleased to have been able to adhere to, but that meant that not every element of policy was ready. As we have continued to consult, engage and develop our thoughts in this area, it has become apparent that it is possible to add to the Bill at this stage, to close some loopholes and provide some clarity. That is why the amendment was tabled.
Amendment 31 agreed to.
Amendments made: 32, in clause 3, page 21, leave out lines 3 to 13 and insert—
“(a) where a shift has been cancelled, the hours that would have been worked if the shift had not been cancelled;
(b) where a shift has been moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the hours that would have been worked during the original shift;
(c) where a shift has been moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the hours that would have been worked during the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed;
(d) where a shift has been—
(i) curtailed but not moved, or
(ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift,
the hours that would have been worked if the shift had not been curtailed, or moved and curtailed.”
This amendment has the effect of clarifying the hours to which a payment under proposed section 27BO(1) of the Employment Rights Act 1996 relates in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision.
Amendment 33, in clause 3, page 21, line 26, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(a) of the Employment Rights Act 1996 from three months to six months.
Amendment 34, in clause 3, page 21, line 31, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(b) of the Employment Rights Act 1996 from three months to six months.
Amendment 35, in clause 3, page 21, line 36, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(c) of the Employment Rights Act 1996 from three months to six months.
Amendment 36, in clause 3, page 21, line 40, leave out “three” and insert “six”.—(Justin Madders.)
This amendment is consequential on amendments 33, 34 and 35.
Justin Madders
I beg to move amendment 37, in clause 3, page 22, line 11, after “must” insert “—
(a) make a declaration to that effect, and.
(b) ”.
This amendment and amendment 38 require an employment tribunal that finds a complaint under proposed section 27BS of the Employment Rights Act 1996 well-founded to make a declaration to that effect.
Justin Madders
Proposed new section 27BT of the 1996 Act makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that either was not given or was inadequate or untrue.
Amendment 37 will require the employment tribunal to additionally make a declaration in cases where the employer failed to make a payment for a qualifying shift, confirming that the worker’s rights have been violated. The declaration will be accessible not only to the directly affected worker but to others, including those working for the same employer. That will ensure that it is clear to other workers where and how such payments should apply if they have a shift cancelled, moved or curtailed in a similar way.
Amendment 38 will require the employment tribunal to additionally make a declaration where an exception applied and a notice was not given or where the notice was inadequate or untrue, confirming that the worker’s rights have been violated. Again, that will ensure that workers always receive a remedy in such cases, even where the tribunal decides that an award of compensation is not justified in the circumstances. That should ensure that it is clear to other workers where exceptions do and do not apply if they have a shift cancelled, curtailed or moved in similar circumstances.
Mandatory declarations of that nature are a common remedy across employment law. The amendments are in line with other similar provisions that concern complaints to the employment tribunal. Proposed new section 27BT also makes provision for the tribunal to order an employer to pay a worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.
Amendments 39 and 41 will allow an employment tribunal discretion to award an appropriate level of compensation in cases where an exception applied but the employer either failed to give notice or gave an inadequate or untrue notice. That will remove the need for a tribunal to take an all-or-nothing approach by awarding the full, maximum amount or nothing. The amendments will instruct an employment tribunal to consider the seriousness of the matter when determining what payment to award the worker, which might include, for example, considering whether the employer had acted in bad faith.
That is a more appropriate approach than under the previous drafting, and there may be cases where the maximum award is not reasonable. For example, if a worker has a shift curtailed by an hour and their employer relied on an exception but did not give notice of that, it would not be logical for their award to be greater than the amount that would have been owed for the curtailment of a single hour. The award itself is discretionary and it is appropriate that the payment amount should equally be discretionary up to a specified amount, which will allow employment tribunals to make awards that are just and equitable to all parties.
On amendment 40, proposed new section 27BT makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.
The amendment is minor and technical, correcting drafting so that the provisions do not make reference to a scenario that could never arise. An employer cannot be found both to have unreasonably failed to give a worker notice of an applicable exception in relation to a payment, yet also to have been liable to make that payment and have failed to do so: either no exception applies and payment is due, or an exception applies and a notice should be given as no payment is due. The amendment removes the potential confusion caused by the drafting as introduced. I apologise for that, but as the Committee will appreciate that we have been working to a very swift timetable. We hope that brings some clarity to the situation.
Greg Smith
The word “clarity” is doing quite a lot of heavy lifting there, so I will probe it a bit. Amendments 37 and 38 concern provisions in the Bill about how employees may make a claim to an employment tribunal where they have not been paid or received reasonable notice of shifts, or the employer had purported to give notice in compliance with the rules on right to reasonable notice, but in a way that was inadequate.
The amendments specify that if an employment tribunal finds claims to be well founded, it must make a statement to that effect. Why were these amendments, along with those increasing the time limit from three to six months, not included in the Bill when introduced? Those provisions do not seem like a loophole being closed or a minor technical drafting error; they seem fundamental to what the Government are trying to do here, so that was one of the bigger surprises. Why were they not locked into the Bill from day one?
I understand the point about political priorities and commitments to publish something in 100 days, because sometimes these things take a lot longer than 100 days to get right. Whether one agrees with the principle and practicality of the provisions or not, it is tough on those in the civil service and those who are drafting the Bill to be able to deliver something of this complexity in 100 days, but these seem to be fundamental provisions. I would also be grateful for clarity from the Minister about how much the Government estimate that the provisions in these amendments, as well as in the wider Bill, will increase employment tribunal claims.
On amendments 39 to 41, if an employee brings a claim to an employment tribunal for their employer breaching the duties imposed by the Bill, amendment 39 provides that the court can award compensation up to a cap to be set in regulations. We are back to our old friend: we do not know what those regulations are going to be. I have a set of what I hope will be straightforward questions for the Minister. What is the cap planned to be? I am sure that it will be open to consultation, but again, the Government must have a window in mind. That is a reasonable question that businesses up and down the land will be interested to know the answer to, so that they can start preparing their viewpoints and evidence base to present to the Minister for any future regulations.
In our oral evidence sessions, we heard witnesses ask several questions about how the provisions on the right to reasonable notice of cancelled, curtailed or moved shifts will work in practice, because there is precious little detail in the Bill. Can we now have that detail? Will the Minister provide a timeline by which the Government intend to provide some information not just to this House, but to businesses up and down the country, about how the measure will work?
When will we be able to see the draft regulations? It would be helpful if we could see them during the passage of the Bill, be it prior to Report, which would be the best case, or before it goes to the other place for consideration, so that the House of Lords can fully explore them, which would be better than nothing. Can the Minister explain why the clauses on award of cost are proportionate to the benefit that they may bring to employers?
The Chair
Government amendment 37—sorry, Minister, I should allow you the opportunity to respond.
Justin Madders
I am sure that the shadow Minister and the whole Committee are delighted that I have the opportunity to respond.
The shadow Minister asked some perfectly reasonable questions. On the first issue, it is a well-established principle that employment tribunals have the right to make declarations in a whole range of claims. Again, I can only refer him to my previous answers with regard to why that was not in the original Bill—we were up against a tight timetable. It is also worth bearing in mind that the Bill will not become law until it has passed through this House and received Royal Assent, so when it finally appears before the public, all those issues will be ironed out. I give him the same answer about regulations, because—as we are doing as we go along—the Bill can be amended here, on Report and in the other place.
It may be that the final Bill does not entirely reflect what we have before us, so it would be premature to draw up regulations at this stage. However, part of our ongoing dialogue with businesses, workers’ representatives and trade unions is about what regulations we will look at.
Greg Smith
I understand the Minister’s point, but this is a Government Bill; I accept that it is derived from their manifesto and from their political priority. Notwithstanding the Minister’s perfectly correct point that the Bill can be amended before it receives Royal Assent, does he at least accept the point that as this is a Government Bill, they should at least give a starting point on any consultation or proposal that people could then work around, as a test of reasonability for business owners and the wider public? People around the country, as well as Members of this House, could then let their views be known as they seek to challenge and amend the Bill.
Justin Madders
We are taking this approach because we want to be reasonable and engage with businesses and trade unions on what the shape looks like. That is why the full consultation, which will look at the broad range of issues, is not yet ready. It is not really in the spirit of that for us to nail down everything in the Bill. Most employment rights have their detail in secondary legislation.
There are some clear principles about the levels of compensation that we will set out. Clearly, a worker should not be compensated for more than the number of hours that he or she has lost. If other heads of loss occur, there are already principles about wages, for example, whereby ongoing losses have to be compensated for. That is the kind of thing where the detail ought to be put into secondary legislation and consulted on fully, which is what we intend to do.
Mr Peter Bedford (Mid Leicestershire) (Con)
The one thing that businesses do not like is uncertainty. Unfortunately, there are so many gaps that need filling in the Bill that it makes it very difficult for businesses to plan for the future—for example, about how many people they will employ, what risks they will take on, and how to budget. Does the Minister accept that the Bill is so full of gaps that it causes more uncertainty for businesses and makes it harder for them to plan?
Justin Madders
The hon. Member is trying to have it both ways. If we had set out too much detail in the Bill, he would no doubt have criticised us for not engaging and consulting, and for being too dogmatic in our approach. That is why we have taken the approach that we have. We want to engage, consult and get the detail absolutely right, because we are clear that the Bill will be effective only if it has buy-in from all concerned. That is why the detail will follow.
Amendment 37 agreed to.
Amendments made: 38, in clause 3, page 22, line 15, after “tribunal” insert “—
(a) must make a declaration to that effect, and
(b) ”.
See the explanatory statement for amendment 37.
Amendment 39, in clause 3, page 22, line 16, leave out
“of a specified amount to the worker”
and insert
“to the worker of such amount, not exceeding the specified amount, as the tribunal considers just and equitable in all the circumstances”.
This amendment has the effect of providing an employment tribunal with discretion, up to an amount to be specified in regulations, as to the size of a monetary award in respect of a complaint under proposed section 27BS(1)(b) or (c) of the Employment Rights Act 1996 (rather than there only being discretion as to whether a monetary award is made, but not the amount).
Amendment 40, in clause 3, page 22, leave out lines 18 to 20 and insert
“(2)(b) relating to a notice given in purported compliance with section 27BQ(2) if the tribunal makes an order under subsection (1)(b) relating to the same payment to which the notice related.”
This amendment has the effect of removing from proposed section 27BT(3) of the Employment Rights Act 1996 reference to a scenario that could not arise (because an employment tribunal could not make an order under both section 27BT(1) and (2) if no notice had been given).
Amendment 41, in clause 3, page 22, line 20, at end insert—
“(4) In determining—
(a) whether to make an order under subsection (2)(b), and
(b) if so, how much to order the employer to pay,
an employment tribunal must have regard, in particular, to the seriousness of the matter complained of.”—(Justin Madders.)
This amendment supplements amendment 39.
The Chair
I consider that the principles of the clause have been fully debated during discussion of the amendments, so if there is to be a clause stand part debate, it should be short.
Question proposed, That the clause, as amended, stand part of the Bill.
Justin Madders
Thank you, Mr Mundell. I am not sure whether that was directed at me, other members of the Committee, or maybe all of us.
Justin Madders
I am sure you always intend to be helpful, Mr Mundell.
I will briefly go through the provisions of clause 3. I appreciate that we have covered a lot of the issues already, but I think it is important to set out what the clause does in the round, because after discussions on quite a few amendments, we may not have followed exactly where we are.
It is obvious that predictability of income is a crucial part of a secure future. We need to address the scourge of insecurity at work. Equally, we understand that businesses want clarity about their obligations. The right to reasonable notice of shifts and of changes to them is important and will be enforceable at employment tribunals. While we regard the right to reasonable notice as appropriate, we also see a need for a rather speedier mechanism to provide some reimbursement to a worker when a shift is cancelled, moved or shortened at short notice. Of the 2.4 million people potentially eligible for these new rights, we estimate that around 600,000 have shifts cancelled at short notice. Clause 3 clearly sets out the obligations on both workers and employers, and I will go through the amendments that it will make to the Employment Rights Act 1996.
New section 27BO of the 1996 Act outlines the new duty that will be placed on employers to make a payment to workers if they cancel, move or curtail shifts at short notice. The duty will apply to workers on zero-hours contracts and arrangements, and workers on contracts to be specified in regulations. When workers have the timing of their usual shifts set out in their contract but are sometimes asked to work extra or longer shifts, the duty will also apply to the additional hours. The new section also provides the power to set what period constitutes short notice; what the payment amount should be; how quickly the payment should be made; when notice is treated as having been given; and the maximum delay of a shift, or bringing forward of a shift, for which payment is not due.
New section 27BP adds several supplementary details on the powers to make regulations provided in new section 27BO and therefore on the functioning of the right to payment. It restricts the period that can be set in regulations as “short notice” to no more than seven days, and it ensures that the payment due to a worker cannot be more than they would have been paid had they worked their original shift. It allows for regulations to vary the amount of the payment according to how short the notice of cancellation is. It also provides that the contracts in scope of the right to payment may be specified in regulations by setting an hours or pay cap.
New section 27BQ provides a delegated power to make exceptions to the right to payment, and states that where an exception applies, the employer must notify the worker of it and explain why it is considered to apply. The section enables regulations to specify how the notice of the applicable exception should be given and when it is deemed to be received.
New section 27BR ensures that a worker is not entitled to receive payment both under their contract and under new section 27BO in respect of the same hours. New section 27BS enables workers to complain to employment tribunals that their employer has failed to comply with the duties. New section 27BT establishes the remedies where a complaint to a tribunal is found to be well-founded.
I commend the clause to the Committee.
Greg Smith
Mindful of your comments, Mr Mundell, I will not speak at length to the clause, other than to underline the points that I and my hon. Friend the Member for Mid Leicestershire have made about certainty. I understand the political priorities of the Government, and I understand the principle of what they are trying to do. However, as my hon. Friend said, businesses need to be able to plan.
I accept that not all legislation can give detail on everything to the nth degree, but I think it is reasonable and proportionate for businesses small, medium and large in this country to expect to be given at least a hint of what is coming down the line. That way, they can begin the process of planning and putting their thoughts together, so that when the consultations come they can give as full and frank an account of their circumstances as they can, and describe what the proposals will mean for them and their employees, so that the Minister can come to a reasonable judgment before laying any regulations.
The Opposition are not opposed to the principle of the clause, but because of the holes in it, we cannot support it.
Question put, That the clause, as amended, stand part of the Bill.
Justin Madders
I beg to move amendment 42, in clause 4, page 23, leave out lines 34 to 39.
This amendment is consequential on NC11.
The Chair
With this it will be convenient to discuss Government new clause 11—Orders and regulations under Employment Rights Act 1996: procedure.
Justin Madders
Amendment 42 is another technical amendment that concerns not the function of the Bill but parliamentary procedure, so if we want another dry, technical debate, we certainly have the opportunity.
Clause 4 makes provision for new section 27BW to be inserted into the Employment Rights Act 1996. New section 27BW(3) would allow regulations made under part 2A of the 1996 Act, relating to the provisions concerning zero hours, that are subject to different or no parliamentary procedure to be included in regulations subject to the affirmative procedure. New clause 11 amends section 236 of the 1996 Act and makes the same provision to allow the combining of instruments, but applies to any orders and regulations made under that Act, rather than to only those made using powers in part 2A. This is a technical amendment intended to ensure that implementation can be undertaken as efficiently as possible.
On what instruments might need to be combined, we will be setting out further details required to implement zero-hours provisions through secondary legislation, but existing powers in the 1996 Act, such as the power in section 10 regarding pay statements, may play a part in supporting implementation. It may be that it would be appropriate to exercise that power to prescribe that pay statements must specify where payment has been made under proposed new section 27BO for the short-notice cancellation, movement or curtailment of a shift. Should that be the case, this provision would allow that amendment to be made in the same regulations as others to be made under new powers being inserted by this Bill that are—I am sure that the shadow Minister will be pleased to hear this—subject to the affirmative procedure. That will mean that provisions to be detailed in regulations that would have been subject to the negative procedure, or no procedure, receive greater scrutiny from Parliament before becoming law.
In the light of the amendment made to section 236, amendment 42 removes the provisions that apply only to part 2A of the 1996 Act, as they will be redundant.
Greg Smith
As the Minister says, this is a very technical amendment—and who doesn’t love a dry, technical debate? However, I am not sure that anyone seeking a dry, technical debate over some hours is going to be happy. I gently suggest that the Government should reflect on the procedural nature of these provisions and their intersection with the Employment Rights Act 1996, which is very complex to unpick and fully understand, not necessarily for those who sit in this House, or indeed in the other place, but certainly for businesses out there, which will require a lot of professional services and advice to navigate it.
On the particular, technical nature of the procedure, I heard what the Minister said about the affirmative procedure, but can he explain something to the Committee? This question could result in a very short answer or a very long one—I apologise for asking it if it prompts a longer one, although in some ways that would be better—but can he explain which powers in the new clause will not be subject to the affirmative procedure? Is there a list? And—it would be remiss of me not to throw this in—why could this not have been on the face of the Bill from day one?
Justin Madders
I am afraid that I will not be able to tell the shadow Minister what will not be subject to the affirmative procedure. I think that the intention is actually for the amendment to bring everything that is in scope of the clause under the affirmative procedure, but I will endeavour to confirm that and come back to him, if that is okay.
Amendment 42 agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
Justin Madders
I will not detain the Committee too long on clause 4. It contains amendments to the Employment Rights Act 1996 related to clauses 1 to 3, which we have just debated.
Proposed new section 27BU defines various terms used in clauses 1 to 3, and the rest of part 2A of the 1996 Act, relating to zero-hours workers and other similar workers. In particular, it copies across the definition of “zero hours contract” from section 27A of the 1996 Act. A zero-hours contract exists where the worker undertakes to work for the employer when the employer makes work available to them but there is no obligation on the employer to make work available. While that might be quite a lengthy explanation, I think that we all understand what we mean by that. New section 27BU also defines “zero hours arrangement” as an arrangement under which an individual works when the work is provided but
“the employer is not required to make any work available to the individual, nor the individual required to accept it”.
Greg Smith
I will not speak at length on this clause because, as the Minister said, it has a bit more clarity in it than many of the others. He has just outlined the new definitions, but perhaps I can put to him an example case showing how they would meet someone on what I believe he may describe as a zero-hours contract, but which also has some compensation for being a zero-hours contract. I will explain what I mean by that.
This is a live example of someone who explained their working relationship with their contracted employer to me the other day. He is required to be up, dressed and ready to go at 5 am every day—perish the thought—and he will receive a call by 5.30 am about whether there is a number of hours to be worked that day. He receives a payment for doing that. Each week, he receives a payment for being up at 5 am and being ready to go if required, but of course if he is not required he does not receive anything further for the shift or the full day of work.
There are probably not many such contracts in the economy, but that is a real-life one. I happened to be briefed on it by the individual involved the other day. The employee is happy. Not everybody is happy at 5 am, but he gets his payment for doing that. He accepts the quid pro quo that he may or may not get a full day’s work off the back of that. If he does not, he can go back to bed or do whatever he fancies with the rest of the day. How do the definitions in the Bill fit somebody who is quite happy with such an arrangement?
Justin Madders
At the all-party parliamentary beer group’s reception last night, the shadow Minister and I talked about pubs. His question sounds perfect for a pub quiz for retired employment lawyers: it is the sort of thing that might end up getting taken to a group of KCs to understand the precise relationship. My best guess is that it would be classed as a zero-hours arrangement and would therefore be covered by the legislation. However, I do not wish to set a precedent inadvertently, so I will take further advice and come back to the shadow Minister. I hope he has some more interesting teasers like that: I am sure the entire employment law community are furiously scrabbling through their books to find the answer to his conundrum.
Question put and agreed to.
Clause 4, as amended, accordingly ordered to stand part of the Bill.
Schedule 1
Consequential amendments relating to sections 1 to 3
Justin Madders
I beg to move amendment 43, in schedule 1, page 106, line 8, at end insert—
“In section 27 (meaning of ‘wages’ for purposes of Part 2 of the Act), in subsection (1)—
(a) after the paragraph (ce) inserted by the Neonatal Care (Leave and Pay) Act 2023 insert—
‘(cf) a payment under section 27BO(1) of this Act (payment for a cancelled, moved or curtailed shift),’;
(b) renumber the paragraph (ce) inserted by the Employment (Allocation of Tips) Act 2023 as paragraph (cg).”
This amendment provides for a payment under proposed section 27BO(1) of the Employment Rights Act 1996 in respect of a short-notice cancellation, movement or curtailment of a shift to be treated as “wages” for the purposes of the provision about protection of wages in Part 2 of that Act.
The right of a worker to bring a claim for unlawful deduction of wages is an important principle in employment law. It is right that payments for cancelled, moved and curtailed shifts are included in this provision. Although a worker can already claim through the employment tribunal that their employer has not made a payment for a cancelled, moved or curtailed shift, in some cases it may be more appropriate for workers to bring a claim under the unlawful deduction of wages provisions, for example if there are instances of non-payment covering a period of months or years; if they want to claim for financial loss as a result of non-payment, for instance because of bank charges; or if a claim covers non-payment of cancellation payments and other wages.
The amendment will provide workers with an alternative remedy for non-payment, in addition to the new provisions in proposed new sections 27BS and 27BT of the Employment Rights Act 1996. That is in line with other statutory rights to payment, such as remuneration during suspension of work on medical grounds. I hope that that is a clear explanation.
Greg Smith
I do not say so often in this Committee, but that was actually a helpful clarification. I can only come back to a point that I will make countless times in this Committee: why on earth could that not have been clearer at the start, when businesses up and down the land were submitting their written evidence, or indeed when they were providing us with oral evidence last week? I stress that it is helpful to have that clarity now. I take no issue at all with the Minister’s explanation, other than to gently repeat the point about certainty and planning going forward.
Justin Madders
I am grateful for the shadow Minister’s support for the amendment.
Amendment 43 agreed to.
Amendments made: 44, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BD(5A) or (5B)”.
This amendment is consequential on amendments 11 and 14.
Amendment 45, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BEA(1) or (2)”.—(Justin Madders.)
This amendment is consequential on amendment 13.
Justin Madders
I beg to move amendment 46, in schedule 1, page 107, line 16, at end insert—
“(4A) A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by the worker’s employer done on the ground that—
(a) the duty imposed by section 27BA(1) applies to the employer in relation to the worker and a particular reference period, or
(b) the employer believes that that duty so applies.”
This amendment ensures that a worker’s right not to be subjected to detriment includes a case of detriment on the ground that the worker is, or the employer believes the worker is, entitled to a guaranteed hours offer under proposed new section 27BA of the Employment Rights Act 1996.
Justin Madders
Amendment 46 will broaden the detriment provisions in respect of the right to guaranteed hours. It will ensure that a worker has a right not to be subjected to detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to an offer of guaranteed hours. The existing provisions protect workers from detriment only where a worker accepts or rejects an offer of guaranteed hours or proposes to do so; where the worker declines to work a shift, as they believe their employer has failed to comply with their obligation in relation to notice of shifts; or because the worker alleges the existence of such grounds to take a case to an employment tribunal.
Amendment 47 is a consequential amendment that clarifies the definition of “reference period” in amendment 46.
The amendments will extend the protections to ensure that detriment to the worker arising from the right to guaranteed hours can be addressed. The detriment experienced by the worker may include cases in which a worker’s contract is terminated. Whether a worker experiences a detriment on those new grounds will be a matter for the employment tribunal to determine in the usual manner.
Greg Smith
I am grateful for the Minister’s explanation. The Opposition can clearly see that amendment 46 will ensure that a worker’s right not to be subjected to detriment includes a case of detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to a guaranteed-hours offer under proposed new section 27BA of the Employment Rights Act 1996. The question—our old friend—is why that was not in the Bill in the first place.
I would be grateful if the Minister explained what sort of detriment the Government are concerned about and are trying to prevent with the amendments. It is another point of clarity: it is about giving businesses an early understanding of where the Government are trying to go. This is one of the areas in legislation that could be widely open to legal opinion, if I may put it that way: a sort of lawyers’ charter, whereby if a bunch of lawyers are put in a room they could easily come up with many different interpretations of detriment and of the scope of amendment 46.
We see uncertainty in legal opinion all the time on the legislation that passes through this House. Once the Bill, in some form, has become an Act—as undoubtedly it will, given the parliamentary arithmetic—and a case comes to court, it will be helpful for the judiciary to look back at the parliamentary debate and see the full meaning of this provision.
Justin Madders
I am grateful for the shadow Minister’s question. I recall on one or two desperate occasions quoting Hansard in an employment tribunal. I always felt, “If you’re explaining, you’re losing,” as the old phrase goes.
We are not actually creating a new category of detriment. Detriment is something that already applies across a whole range of employment rights, so we are not inventing something that is not already there. At the moment, there is quite a live academic debate about how far the extent of detriment reaches, which we may come to at a later point.
To answer the shadow Minister’s points, the amendment will not create a whole new area of litigation about understanding what detriment means in this circumstance. It will still be the same detriment that would apply in other employment-related claims.
Amendment 46 agreed to.
Amendment made: 47, in schedule 1, page 107, line 29, at end insert—
“(7) In this section ‘reference period’ has the same meaning as in Chapter 2 of Part 2A (see section 27BA(4)).”—(Justin Madders.)
This amendment is consequential on amendment 46.
Justin Madders
I beg to move amendment 48, in schedule 1, page 107, line 37, at end insert—
“(2A) In subsection (2), for ‘and (6)’ substitute ‘, (6), (7) and (7A)’.”
This amendment makes technical changes to section 49 of the Employment Rights Act 1996. The reference to subsection (7A) is consequential on amendment 49.
Justin Madders
The amendments will ensure that the provisions on the maximum compensation awarded by a tribunal for detriment cases will be workable for cases involving the termination of an arrangement that is not a worker’s contract. Where there is no worker’s contract in place, it may be very difficult to determine the individual’s termination date. Let me clarify what I mean by that, if I can do so in such a technical area.
A zero-hours contract is a contract in which the worker undertakes to work for the employer when the employer makes work available to them, but there is no obligation on the employer to make work available. It is a worker’s contract because it involves obligations on the worker to undertake work. A zero-hours arrangement is an arrangement under which the employer is not obliged to make work available, and the worker is under no obligation to accept work when offered. Zero-hours contracts are workers’ contracts because there is an undertaking to work, whereas zero-hours arrangements are not workers’ contracts because there is insufficient mutuality of obligation.
There are particular complexities in applying legislation that involves a particular effective date of termination to those on zero-hours arrangements. The worker’s exact termination date may be difficult to determine and the calculation of compensation will therefore be circumstance-specific, meaning that it is more appropriate for the employment tribunal to use its discretion in arriving at such sums.
The amendment will ensure that in such cases, the amount that a tribunal awards will be left to its discretion. While there will not be a set maximum compensation for an individual on a zero-hours arrangement, as opposed to an employee on a zero-hours or low-hours contract, that maximum will be left to the discretion of the employment tribunal, which has the expertise to draw from the existing thresholds in compensation and apply them specifically to these types of cases.
Greg Smith
I have two questions for the Minister—hopefully simple ones—about Government amendments 48 and 49, which relate to the maximum award for a detriment claim.
First, there does not seem to be a set limit for the maximum award. Can the Minister explain that? Can he give an indication whether a maximum award will be set further down the line, either via a consultation process or in regulations?
My second question is possibly less straightforward, but it will be important as we look at the practical application of the Bill once it receives Royal Assent and comes into force. How much does the Minister envisage that tribunals may award under amendment 49?
Justin Madders
I am grateful for the shadow Minister’s questions. They cannot be answered in the round, as all cases will be very fact-specific. The maximum that a tribunal awards will be down to the circumstances in which workers find themselves. With a zero-hours contract, there will be a whole range of issues relating to the kind of work that they would have expected if the detriment had not taken place. It is a well-established principle that a tribunal will award what is just and equitable in the circumstances. Tribunals are well versed in understanding the factors that they would need to take into account in making such awards. The shadow Minister tempts me to get into details, but as this is a Bill Committee and not an employment tribunal, I cannot give him the kind of detail that he is looking for.
Greg Smith
I am grateful to the Minister for that answer. I understand the broad principle that he outlines, but there could be a mechanism, without putting a pounds-and-pence limit on any award, to bake in some formula that would cap an award according to proportion of original pay, contracted hours, length of service or some other factor. For the clarity of the record, is the Minister saying that no such framework is envisaged and that it will be a totally open-ended question for any employment tribunal?
Justin Madders
The amendments relate to detriment claims only, whereas the shadow Minister’s question is a slightly broader one. The point about compensation in other situations would be far more detailed. As this is about people on irregular contracts who may have suffered a detriment that we cannot possibly predict in advance, it is normal to say at this stage that the usual principles of the just and equitable compensation that an employment tribunal would award will apply in those circumstances.
Laurence Turner
Does the Minister agree that if a cap of some sort were introduced, there would be a risk that, as we have seen in other cases, people who have been subject to a detriment may seek other routes, particularly under equalities legislation where damages are uncapped? That is an existing problem that has added to the strain in that part of the employment tribunal system.
Justin Madders
There is a danger that we will get too prescriptive about this. There will be a relatively small number of cases in which there is detriment, but they are all going to be very fact-sensitive. That is why we have framed the amendment in this way.
Mr Bedford
The hon. Member for Dundee Central referred to how a lot of businesses will have insurance for various eventualities. As a maximum is not specified, have the Government considered the unintended consequences of such provisions on businesses’ ability to insure against such instances?
Justin Madders
We are not talking about the general running of a business, with reference to shift notice and cancellations; we are talking about a very specific set of circumstances in which an employer’s act is considered to be detrimental to the employee and gives rise to an employment tribunal claim. I am sure that there are insurance products that cover all employment tribunal claims, but this is about individual acts of penalisation against employees or workers. This is not a departure from existing legal principles; it is well set out and understood by lawyers and HR practitioners. I do not envisage that this is a provision that will be greatly used, but it is an important principle to have in the Bill.
Amendment 48 agreed to.
Amendment made: 49, in schedule 1, page 107, line 39, leave out from beginning to end of line 11 on page 108 and insert—
“(7A) Where—
(a) the complaint is made under section 48(1BA),
(b) the detriment to which the worker is subjected is the termination of the worker’s contract, and
(c) that contract is not a contract of employment,
any compensation must not exceed the compensation that would be payable under Chapter 2 of Part 10 if the worker had been an employee and had been dismissed for a reason specified in section 104BA.”—(Justin Madders.)
This amendment relates to the maximum award of compensation by an employment tribunal in a detriment claim under section 48(1BA) of the Employment Rights Act 1996. The change achieved by the amendment is that the maximum award in cases involving the termination of an arrangement that is not a worker’s contract is at the tribunal’s discretion.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Eighth sitting)
Thursday 5th December 2024
(2 weeks, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 December 2024 - (5 Dec 2024)
The Committee divided: - Ayes: 12 / Noes: 3 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move amendment 50, in schedule 1, page 108, line 34, at end insert—
“or the employer believes that that duty so applies, and”.
This amendment extends proposed section 104BA(3) of the Employment Rights Act 1996 (dismissal is unfair if done to avoid giving a worker a guaranteed hours offer to which the worker is entitled under proposed section 27BA of that Act) to a case where an employer believes a worker is entitled to such an offer.
Justin Madders
It is a pleasure to see you in the Chair, Sir Christopher. As is now our custom, I will start by referring to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
Government amendment 50 will expand the existing protections for employees who are dismissed as a result of employers seeking to avoid the new duty to offer guaranteed hours. It will ensure that an employee who is dismissed because their employer believes that the right to guaranteed hours applies will benefit from unfair dismissal protections. As drafted, the provisions apply only if the duty to offer guaranteed hours actually applies. That could leave a loophole whereby an employee who is dismissed because their employer mistakenly believes that the obligation applies would have no protection from unfair dismissal. All employees deserve protection from unfair dismissal, whether or not they are eligible for guaranteed hours. The amendment will ensure that equal protection is in place.
Government amendment 51 is a small amendment that will remove wording in the Bill about when the termination of a worker must take effect in order for them to be regarded as unfairly dismissed for the purpose of proposed new section 104BA(3) of the Employment Rights Act 1996. The Government have concluded that there is no need to set out when the termination occurred. The amendment will make the Bill’s meaning clearer, as it is logical from its provisions that that would be during a reference period or the corresponding offer period. Remaining silent on the effective date of termination also follows the precedent set for other rights under the 1996 Act.
Government amendment 52 is consequential on Government amendment 51.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to see you in the Chair, Sir Christopher. I understand the Minister’s explanation of the amendment, which appears to be a logical consequence of the other provisions on guaranteed hours, although we have the old chestnut about why it was not in the Bill when it was first introduced. It seems a pretty straightforward measure that reflects where the Government have always said they are coming from, so it is peculiar that it is coming at this stage. I might go so far as to ask the Minister whether Government amendments 50 and 51 are in fact correcting mistakes, as opposed to adding to the original drafting of the Bill.
I have some specific questions about the amendments. How does the Minister envisage that it will be proven that an employer believes that a worker is entitled to an offer of guaranteed hours? Some clarification would be helpful, not just so that the Committee and the House can understand the scope of the amendment, but so that businesses can plan for what might be coming down the line.
May I also ask the Minister for clarity about what amendment 51 will mean for dismissal during the reference period? I am not sure that we have enough clarity on that point to satisfy the Committee. Given how the schedule and the amendments are drafted, there is a possibility of a legal opinion indicating that it is possible for employers to dismiss employees during the reference period. From everything else that the Minister has said, I would be surprised if that were the Government’s intent. When he sums up, it will be useful if he clarifies whether that is indeed his intent. Is that one of the many loopholes that he is seeking to shut down with the Government’s amendments, and does it need shutting down further? Or is it the Government’s intent that that should be possible for employers within the scope of the Bill?
Justin Madders
I am grateful for the shadow Minister’s questions. I feel that we are embarking on an employment law masterclass, although I am not sure that I consider myself a master.
The first point was about how an individual would demonstrate that an employer had believed that they were entitled to particular rights and therefore had reason for dismissal. It is akin to existing case law and legal precedents from other jurisdictions: a set of facts can be presented to the employment tribunal to determine its judgment. I accept that it is not the easiest thing to prove, but that is how the law is currently structured and there will be no departure from that.
On the second point, clearly we would not want this to have the unintended consequence of not relating to a dismissal during the reference period. Proposed new section 104BA(3) logically demonstrates that if there is a termination during the reference period, the same protections would still apply. I am happy to seek further advice, but my understanding is that the Bill, as drafted, covers that situation. Clearly we would not want a loophole of that nature. I hope that that deals with the shadow’s Minister’s questions.
Amendment 50 agreed to.
Amendments made: 51, in schedule 1, page 108, leave out lines 39 to 41.
This amendment removes a requirement about the timing of a dismissal from proposed section 104BA(3) of the Employment Rights Act 1996.
Amendment 52, in schedule 1, page 109, leave out line 1. —(Justin Madders.)
This amendment is consequential on amendment 51.
Justin Madders
I beg to move amendment 53, in schedule 1, page 109, line 30, leave out “last” and insert “latest”.
This amendment and amendment 54 concern the calculation of a week’s pay for the purposes of an award of compensation by an employment tribunal following a complaint under proposed section 27BF of the Employment Rights Act 1996. The amendments ensure that the rules work for all such complaints.
Justin Madders
Amendment 53 will ensure that the provisions in section 225 of the Employment Rights Act 1996 on the calculation date for the purposes of calculating a week’s pay will work in relation to the new right to guaranteed hours. It is a small amendment: it will replace the word “last” with “latest” to reflect the fact that the date of termination will not necessarily correspond with the final day of the reference period. It sits alongside Government amendment 54; combined, the amendments will ensure that there is clarity for employment tribunals on calculating a week’s pay for the purpose of determining compensation for a well-founded complaint brought under proposed new section 27BF. The maximum number of weeks’ pay that may be awarded by a tribunal for a claim brought under proposed new section 27BF is to be defined in regulations.
Greg Smith
This is a minor and technical amendment that brings, on this specific point, the clarity that we have been asking for on so many other clauses and Government amendments. It appears to be correcting defective drafting in the version of the Bill originally presented to the House.
The need for such amendments suggests that the arbitrary target to publish the Bill in 100 days has once again been found wanting. As I have said before, I understand the political imperative for the Government to have done so, but it brings little comfort to employers or employees, who need certainty and clarity on the Bill. At least with Government amendments 53 and 54, that certainty and clarity has now come. I urge the Government to apply the same rigour to their other amendments so that businesses planning for the future can do so—perhaps not with jubilant support for the Bill, but with an understanding of what the Government are legislating for.
Amendment 53 agreed to.
Amendment made: 54, in schedule 1, page 109, line 31, at end insert
“on which the worker was employed by the employer under a worker’s contract”.—(Justin Madders.)
See the explanatory statement for amendment 53.
Question proposed, That the schedule, as amended, be the First schedule to the Bill.
Justin Madders
Schedule 1 will make various amendments to the Employment Rights Act 1996 and the Employment Tribunals Act 1996. Among those amendments, which are consequential on clauses 1 to 3, I highlight the insertion of proposed new section 47H of the Employment Rights Act 1996, to make provision for a worker not to be subject to detriment on various grounds relating to the right to guaranteed hours. The employer cannot penalise the worker for accepting an offer of a guaranteed hours contract, for example, or for challenging an offer that is not in compliance with the obligations on the employer regarding guaranteed hours.
Amendments have been made to extend these detriment provisions to situations in which a worker brings a claim or alleges the existence of a claim in relation to a breach of the duties relating to information rights and notice requirements. The detriment provisions are also extended to situations in which a worker suffers a detriment because they qualify for the right to guaranteed hours or the employer believes that they do. Whether a detriment has occurred in such instances will of course be for an employment tribunal to determine. Likewise, the employer cannot penalise the worker for declining to work a shift that the worker reasonably believed was offered with unreasonable notice. This is an important right that helps to address the potential power imbalance between an employer and a worker who is seeking to enforce their statutory rights.
Schedule 1 will also insert proposed new section 104BA of the Employment Rights Act, which makes provision for an employee to be treated as unfairly dismissed if the reason—or principal reason—for the dismissal is that the employee accepted or rejected, or proposed to accept or reject, an offer of guaranteed hours. Likewise, an employee will be treated as unfairly dismissed if the employer was under a duty to offer guaranteed hours but the employer dismissed the employee during the reference period to avoid having to comply with that duty. Amendments have been made to ensure that unfair dismissal protections extend to cases where a worker is dismissed because the employer believes they have a duty to offer guaranteed hours, even if that belief is mistaken.
Greg Smith
My argument is similar to the arguments that we have had in substantive debates on previous groups of amendments to the schedule. With this Bill, we have consistently seen an approach of legislating first and consulting second. I understand why that might be appropriate in some circumstances, but certainly for many of the schedule 1 provisions that the Minister has outlined, businesses will find it inadequate. They will find it too difficult to start making their business plans, their plans for growth, their plans for new contracts or their plans to expand in the next financial year, the year after, or even the year after that. It is not unusual for businesses to engage in medium and long-term planning, but too many aspects of the schedule mean that they cannot. Real businesses in the real world are trying to scope out where their next capital investment, their next expansion or their next acquisition of another business is coming from.
Because of those holes, the Opposition are deeply concerned that the Bill, which was incredibly rushed to meet an arbitrary 100-day political rather than legislative objective, will bring too much uncertainty to the economy and to business. At the end of the day, judging from the evidence that we heard in last week’s four sittings, it is having the net effect that businesses will simply take a deep breath and draw back from employing more people. They will not take the risk of taking on new hires. Given our debates on Tuesday, I am thinking particularly of that all-important risk of giving a second chance in life to a marginal candidate.
Sometimes an employer is not entirely convinced that a candidate is the best fit for their workplace, for any of a number of reasons—they may be a rehabilitated former offender or they may have had a number of struggles in life—but is willing to give them a chance. We heard from witnesses that those employers who were going to give people in those circumstances that chance in life—that chance to better themselves—might not now do so. That would be an absolute tragedy for the individuals involved and a travesty of justice when it comes to employment numbers in this country.
Laurence Turner (Birmingham Northfield) (Lab)
Does the hon. Gentleman accept that if the Bill were to go back to the Department as he suggests, the period in which changes to employment legislation are considered by Parliament would be extended and the uncertainty of which he speaks would be prolonged? Does he further accept that one of the business community’s key requests was for ongoing consultation as the Bill makes its way through its parliamentary stages, and that if we were to take the action he suggests, the Government would be breaking that commitment to business that business has asked for?
Greg Smith
I understand the hon. Gentleman’s point, but I believe that it was the Deputy Prime Minister who, in the media over the weekend, could not name a single business that supports the Bill. I will gladly take another intervention from the hon. Gentleman if he can name a single business that supports the Bill. [Interruption.] Not an umbrella body, but an actual business.
Laurence Turner
We heard from the Co-op, in the evidence sessions that we all attended last week, that that support is there. Off the top of my head, I would add Octopus and Centrica, two examples of very significant businesses that have welcomed provisions in the Bill.
Greg Smith
I am grateful to the hon. Gentleman. There are clearly thousands of businesses in this country; I notice that he did not name a single business from his constituency. I actually know Northfield very well: my late grandmother worked in Walter Smith butchers in Northfield for many years, well into her 80s.
I fully understand the need for any Government to have ongoing dialogue with business, but I gently say to the hon. Gentleman and all Government Members that there is a big political cost when any Government legislate too swiftly without fully thinking things through and without clarity of thought and of objectives. Yes, there are principles—they are clearly Labour principles—running through the Bill, but there is not that clarity of thought as to many measures in schedule 1.
I say gently, perhaps from bitter experience in the four and a half years prior to the general election, that I know what happens when legislation is rushed. From the Nationality and Borders Act 2022 to the Illegal Migration Act 2023, there were multiple pieces of legislation, none of which hit the nail on the head. Perhaps they were a little bit too rushed. They failed to meet the objective that we, the previous Government, clearly set out to achieve of ending small boat crossings in the channel.
I raise that clearly very out-of-scope point only as a warning to the Government that if they insist on going too quickly and rushing the Bill through just to meet the headline of having published it in 100 days, it could turn out to be a very painful experience not just for them as a Government, but for the business community in this country. These are the businesses that will be the backbone of our economy and will actually create the jobs that I think the Government also want to see, but the Bill might have the unintended consequence of damping them down.
Justin Madders
My irony meter has reached overload. I think it is fair to say that in the last four years of chaos under the previous Government, uncertainty was brought to a new level. That was not about legislation; it was just about the way that the Government operated, or failed to operate, as the case may be.
Let me try to put the shadow Minister’s mind at ease about the process. We consulted extensively in opposition, we consulted in government before the Bill was published, and we are continuing to consult. The Bill will set out the broad powers that the Government wish to take in respect of employment rights. There will then be more detailed consultation as we get into the secondary legislation, where the detail—the real meat and veg of this law—will be dealt with. There is not going to be a rush for this provision to be enacted, because we understand that it is important to get the details right. Many of these measures will not come into force until 2026, because we want to get this right.
We want to make sure that we take businesses with us and listen to their concerns, to workers’ concerns and to trade unions’ representations. The impact assessment is clear that there is no expected impact on the number of jobs available.
Greg Smith
The Minister talks about further consultation. Can he give a commitment right here, on the record, to consultation on all the measures in schedule 1 and the rest of the Bill that go through to his 2026 deadline? First, can he commit that 2026 really is the deadline? Secondly, can he commit that consultation with trade unions and with business will have equal billing, and that one of the two will not outweigh the other?
Justin Madders
I think there was a suggestion there that we may favour one stakeholder group over another. I assure the shadow Minister that when we tot up the engagements that we have had so far, the number of businesses and business organisations is far in excess of the number of trade unions. Actually, we want to consult with everyone, broadly: we do not think that there should be an arbitrary limit on who we discuss this with.
On the time limits, the “Next Steps” document is very clear about the timetable. If it takes more time, it takes more time. We do not want to rush the Bill through and create unintended consequences of the type that the shadow Minister is rightly concerned about. We want to get it right. That is why we are committed to consulting as we go forward.
Nick Timothy (West Suffolk) (Con)
On the point about process: at the point at which the Bill came before the House for a Second Reading, how many of its clauses were already subject to revision within the Department?
Justin Madders
I was not privy to the drafting of individual clauses—the Office of the Parliamentary Counsel does that, and it is a separate organisation from the Department—but I can certainly write to the hon. Gentleman with details on which clauses we expected to be amended. It is fair to say that we expected a number of clauses to be amended when the Bill was published.
It is important that we get this right. The Bill is a Bill, not an Act, so it will continue to evolve; there will then be further detailed consultation on implementation and the regulations. That is why I believe that the shadow Minister’s concerns are ill-founded.
Question put, That the schedule, as amended, be the First schedule to the Bill.
Justin Madders
Clause 5 is the first of several clauses that will repeal previous legislation, although it may not be the most controversial of our repeals. The clause will repeal the previous Government’s Workers (Predictable Terms and Conditions) Act 2023, which if commenced would have brought in a right for workers to request a more predictable working pattern. Requests could still be turned down by the employer. That approach is clearly different from the right to guaranteed hours that we have set out in the Bill. We do not want to confuse employers and workers with two different models, so the Bill will repeal the 2023 Act entirely. Nevertheless, the work that was done to develop the 2023 Act has been useful in the drafting of our new measures and will continue to be taken into account as we evolve and develop our policies.
We want predictability and security to be the baseline in all jobs, creating an economy that works for all. We think responsibility for offering guaranteed hours should therefore rest with the employer. Without guaranteed hours, workers do not have any form of certainty as to their earnings, making it difficult for them to apply for credit or a mortgage, rent a flat, plan for major events such as weddings or holidays, or even manage day-to-day expenses.
In addition, when people have a better idea of how many hours they will be working, it is easier for them to organise their family and social life, plan time together and organise travel and childcare—all things that are just so important for the wider welfare of our society. These provisions of the Bill will apply to all employers, levelling the playing field so that best-practice employers are rewarded rather than placed at a competitive disadvantage against employers who want to place risk wholly on the worker.
Greg Smith
On the one hand, the Minister says that he wants certainty. On the other hand, he is repealing legislation that is but a year old. I fully appreciate that a new Government will want go through the legislation that the previous Government put on the statute book: it is vital in our democracy that we maintain the principle that no Parliament can bind a future Parliament, and I fully acknowledge and accept that the Government have a mandate to deliver their manifesto. However, I gently put it on the record—I direct this point towards the Minister—that certainty does not come from abolishing year-old legislation that businesses have only just started thinking about, let alone implemented.
Justin Madders
I think it is fair to say that we signalled our intention to repeal the 2023 Act shortly after taking office. It had not actually been implemented, so it is not a case of creating additional burdens. I am sure the shadow Minister will concede that if we had allowed it to take its course, it would have created a set of regulations, involving time and expense, that would only have been replaced in short order with another set of rules. The problem with the 2023 Act is that it would still create a huge power imbalance for the employer, as the Low Pay Commission recognised when it expressed its concerns.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Exclusivity terms in zero hours arrangements
Question proposed, That the clause stand part of the Bill.
Justin Madders
Clause 6 will amend section 27B of the Employment Rights Act 1996 to reflect the new definition of “zero hours arrangement” in clause 4, which will apply to the whole of part 2A. As has been discussed in relation to clause 4, the definition has been amended to ensure that it does not inadvertently exclude any zero-hours workers in cases where they have a contract with the employer but the contract does not, in itself, make them a worker. The definition of “zero hours arrangement” captures those who have an arrangement to work for their employer when work is provided but have no obligation to accept work, and the employer has no obligation to provide it. Such an arrangement between the employer and the individual could, however, include other obligations that amount to a contract, albeit that they are not a workers’ contract. The clause will ensure that individuals caught in that situation are also covered by the Bill.
On a technical point—I put this on the record for clarity—the definition of “non-contractual zero hours arrangements” in section 27B of the 1996 Act is amended by clause 6, but a new definition for the whole of part 2A will be inserted by clause 4. The definition of “non-contractual zero hours arrangements” in part 2A is being changed by clause 6, as well as being inserted by clause 4, which may well be commenced after clause 6 for the rest of the provisions. The changes in clause 6 will ensure that the definition in section 27B operates as intended before the commencement of other provisions on zero-hours arrangements. The definition in section 27B will then be repealed on commencement of the other provisions, as is provided for in schedule 1.
I hope that that was clear to everyone. I commend the clause to the Committee.
Greg Smith
I feel that we have gone over those details multiple times, particularly on Tuesday, so I will not take up a great deal of time. However, it is important to put on the record the Opposition’s concern about cases such as the one that I outlined in this morning’s sitting. The Minister conceded that it probably was a zero-hours contract, but it did have an element of certainty of pay as that individual was contracted to be up at a certain time of day to find out whether he had work that day, so there was payment for it but not necessarily guaranteed hours. Such cases still need an answer, whether from the Government’s legal counsel or within the Department. I take the Minister at his word: he said this morning that he would look into such cases and test how the Bill will apply. That is as relevant to clause 6 as it is to other clauses that we have discussed.
The worst-case scenario is that the Bill becomes too prescriptive and takes away arrangements that individuals enter into freely and want to enter into; perhaps it suits them to do so. I accept that that is probably not the majority of cases, but there will be people out there in the economy who perhaps do not need to work. Perhaps they do not need the money. There are such people, believe it or not—I am certainly not one of them. There are people who want to take on a zero-hours contract for something to do. I fully accept and place it on the record that that will be a very small number of people, but if they are completely wiped out by some of these prescriptions without flexibility, that will be a problem for the economy, much as it is if employers just take everybody on a zero-hours contract and offer them nothing further. That, equally, would be a tragedy.
I understand where the Government are coming from in clause 6. I understand the principles behind it. Again, however, I urge the Minister to double-kick the tyres and check that there will not be unintended consequences that have a negative impact on employment in this country.
Justin Madders
I am grateful for the shadow Minister’s comments. I have been reflecting on his scenario from this morning. Actually, the first thing I thought about over lunch was how the employer would be checking that the individual was up and dressed at 5 o’clock in the morning to make sure he had complied with the terms of his contract. However, the intention behind the Bill is to make sure that we do not get into lots of debates about whether someone is covered by this legislation or whether everyone who is in some sort of arrangement or contract is covered by it. Of course, if they do not wish to have an offer of guaranteed hours, they are entitled under the legislation not to accept it. I think that this clause will bring clarity and consistency across the board in that respect.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7
Right to request flexible working
Greg Smith
I beg to move amendment 136, in clause 7, page 25, line 5, at end insert—
“(1AZA) But where the employer is—
(a) the Security Service;
(b) the Secret Intelligence Service, or
(c) the Government Communication Headquarters,
the test of reasonableness in subsection (2)(b)(ii) does not apply, and the notification under subsection 1(aa) need not explain why the employer considers that it is reasonable to refuse the application on that ground or those grounds.”
This amendment would exclude the security services from the Bill’s provisions on flexible working.
Amendment 136 is essentially a probing amendment—I make that clear from the outset—but one that should go to the nub of exactly where the Government want to go with this measure, not least bearing in mind the Minister’s comments at the end of the last debate about ensuring that everybody falls under the same set of rules. There may be organisations where it is impractical for their employees to be under the same set of rules. The amendment seeks to probe the matter of exempting those working in the security services from clause 7. We define the security services as MI5, GCHQ and the Secret Intelligence Service.
The Regulatory Policy Committee has explained that the Government have not proved that the measures on flexible working are necessary or undertaken any proper assessment of the costs to business. We therefore want to probe the Government’s thinking on how the provisions might apply in practice. There may be certain occupations, such as the security services, where it is harder for the employer to agree requests for flexible working. I am sure that everyone can see the practical realities and the potential consequences for national security and the safety of everyone in our great United Kingdom if the security services were to suddenly have flexible working arrangements.
Has the Minister given any consideration to which sectors may find these provisions either more difficult or completely impractical to comply with? The amendment takes the example of the security services, where irregular hours are worked. I am sure that hon. Members can think of other occupations, such as policing—and perhaps ours, if I may be so bold, Sir Christopher—where irregular hours are more than commonplace.
We would like to understand how the provisions of the Bill will apply to the security services and to understand the Minister’s thinking as to why. That is the critical question in politics—my early mentor in politics, the late, great Eric Forth, was clear that it is the only question that matters in politics—so I put it to the Minister. We want to understand the balance between the right to request flexible working and public protection. Again, I do not believe that any Member of this House wants to undermine public protection and the safety of our nation. The first duty of Government is the defence of the realm and the security of its citizens.
The security services will not be the only profession that might find the requirements difficult to administer. Will the Minister let us know, when he responds to what I repeat is a probing amendment, where the Government stand? What is his assessment of those areas that simply will not be able to comply with the provisions of the Bill? What safeguards will the Government put in place for them? We seek to understand the practicalities of the requirements that the Government are seeking to impose.
Laurence Turner
It is a pleasure to serve under your exemplary chairmanship, Sir Christopher.
Before I get into the clause, may I say that I enjoyed my discussion with the shadow Minister about the Northfield constituency? I am half tempted to cite my great grandparents, who were confectioners and newsagents, to burnish my small business credentials, but some on the Labour Benches can do it better. I appreciate that he said that the amendment is probing and that he is taking a particularly unique case in order to test the limits of the Bill.
Focusing on the words of the amendment rather than on the wider issues, because it is the words that matter, it is important to look at the history of employment rights as they relate to the intelligence services, because this is an area that was tested in the 1980s and 1990s in particular. The consequences of not extending these rights to the intelligence services speak to the argument against making the amendment.
For those of us who come from a trade union background, there is an uncomfortable reminder of the ban on trade union activity at GCHQ in the 1980s, which led to a number of skilled professionals leaving the employment of that service. It is important to remember the 14 trade unionists who were sacked because they did not give up their trade union membership. Many of them were re-employed 13 years later, because they still had their skills, which were in high demand.
The shadow Minister talked about the unique nature of flexible working in the intelligence services. I suspect that employees of those services have flexible working arrangements that are hard for any of us on the Committee to imagine, but when employees of the intelligence services did not have recourse to most of the normal procedures of employment law, it was an acknowledged problem that dissatisfaction among employees of the services in itself became a security risk. Some hon. Members may recall that there were a number of very high-profile cases of dissatisfied members of those services who went on the public record in breach of the Official Secrets Act. In some cases, that was attributed to dissatisfaction with employment situations. I can do no better than quote from the Intelligence and Security Committee’s annual report of 1997-98. At that time, the Committee was chaired by Baron King of Bridgwater, the predecessor of one of the Conservative Members who tabled the amendment. It stated:
“The Committee also believes that everything possible should be done to ensure that employees of the Agencies have the same rights as employees elsewhere.”
Nick Timothy
The hon. Gentleman is making a powerful case for the universalism, or near-universalism, of employment rights and presumably, within that, trade union rights. The power to withdraw one’s labour is a very important part of modern employment practice. We are talking about the three security and intelligence agencies listed by my hon. Friend the Member for Mid Buckinghamshire, but I want to give the hon. Gentleman an opportunity to give his view about the universalism of these rights, including the right of the police, for example, to join a union and to strike.
Laurence Turner
I am grateful to the hon. Member for raising that point. It is a shame that our Liberal Democrat colleagues are not able to join us, because we could have an interesting discussion about the consequences of the 1919 police strike, and the promises that Lloyd George made and subsequently broke, which led to the creation of the Police Federation rather than an independent trade union, but I will not detain the Committee on that matter. I will just say that we are operating under the international framework for employment law, which sets out very clearly that there are exemptions to the normal right of freedom of association—let us call it what it is—and that includes industrial action. I do not think that the Bill is the right place to diverge from that international framework.
I had reached the end of my points. As I say, there are good national security reasons for rejecting the amendment.
Michael Wheeler (Worsley and Eccles) (Lab)
It is, as ever, a pleasure to serve under your chairmanship, Sir Christopher. As this is my first time speaking today, I draw everyone’s attention to my declaration in the Register of Members’ Financial Interests and my trade union memberships. I want to pick up very slightly on some of the points made by my hon. Friend the Member for Birmingham Northfield.
I fully appreciate that we are talking about a probing amendment. I will not revisit my use of the word “ridiculous” on Tuesday—we stayed in that territory for long enough—but the shadow Minister perhaps underestimates the ability of different sectors to accommodate flexible working and to overcome the challenges that he believes the flexible working measures in the Bill might present. In fact, GCHQ already operates a flexible working policy. On its website it is proud to point out that
“Work-life balance is important to us”
and that its
“flexible working patterns…are designed to help work fit… alongside…personal lives.”
If anything, exclusions for entire services sectors would be a retrograde step in places where flexible working provisions are already working perfectly well.
Moving on to the broader point, as demonstrated, I believe that sectors, businesses and employers can cope with this change. There are adequate measures for reasonableness in the Bill. Access to flexible working is an incredibly important right for workers in a modern, evolving workplace. Measures such as these gear the world of work for the future by enabling people to enter the workforce and to stay in it—something that the shadow Minister has expressed a concern about. Anything like this amendment that would exclude sectors, groups or organisations wholesale feels unnecessary, especially in the light of how the measures would work in practice.
Alex McIntyre (Gloucester) (Lab)
It is a pleasure to serve under your chairmanship, Sir Christopher. I want to refer to a couple of the comments made by my hon. Friend the Member for Birmingham Northfield. I appreciate that this is a probing amendment and that, as the MP for Gloucester, I perhaps have a vested interest, given that a number of my constituents work over the constituency border in Cheltenham.
Flexible working will not be available in every role, for some of the reasons listed in the Bill, but for many roles there would be the ability to start half an hour later and finish half an hour earlier, perhaps, or to work different hours over the course of a week. Those are results of flexible working requests. I think that, sometimes, there is a haste from the Conservative party to equate flexible working with working from home—and to put little notes on people’s desks saying that they are not working hard enough. It is really important that we look at flexible working as a whole.
In my experience as an employment solicitor, the Bill is welcome, because the “reasonable” test is important in making sure that we are encouraging employers to think properly about flexible working requests. This measure is also very business friendly, because there is a long list of exemptions that will allow an employer to say, “Because of x, y and z, flexible working is not appropriate.” There is no requirement to accept a request; there is only a requirement to think about it, and to think about those exemptions reasonably. In the context of what we are trying to do, and that balancing act between rights for employees and rights for businesses, I think this lands in about the right place.
The shadow Minister is right that this change will not apply evenly in every sector; it cannot in every business, because of the reasons listed in the exemptions. Each business will have different requirements regarding customer demands, performance and quality. It would be quite difficult for a dentist to work from home, I suggest, but it might be quite easy for them to come in at half-past 9 two days a week. Again, that is a flexible working request. The reasonableness test deals with the purpose of the shadow Minister’s amendment, which is to look at how different sectors might approach the change rather than having a one-size-fits-all approach.
Jon Pearce (High Peak) (Lab)
It is a pleasure to serve under your chairship, Sir Christopher. I refer Members to my declaration in the Register of Members’ Financial Interests, and my membership of GMB.
I will apologise now if I have an out-of-date amendment paper; the one that I have is dated Tuesday 3 December. Very early on in our discussions, we had the strange definition of a small or medium-sized businesses as one employing 500 people or more. I just want to check whether the proposed amendment is indeed accurate, because it refers to
“the test of reasonableness in subsection (2)(b)(ii)”.
I do not think that any such subsection exists—I think it should be (3)(b)(ii)—but I appreciate that that might be my misunderstanding.
The Minister for Equalities (Dame Nia Griffith)
I draw the Committee’s attention to my interests, and to my membership of the Union of Shop, Distributive and Allied Workers and the National Education Union.
The hon. Member for Mid Buckinghamshire seeks to amend clause 7 in order to commit the Government to exempting the security services from the requirement to refuse a flexible working request only when it is reasonable to do so against one of the eight reasons set out in legislation. His amendment would also exempt the security services from having to explain to an employee why their request for flexible working could not be met. My hon. Friends the Members for Birmingham Northfield, for Worsley and Eccles and for Gloucester have pointed out many good reasons why that is unnecessary, and I will explain why I think the same.
The grounds for refusing a flexible working request are intentionally broad, so that they capture all the business reasons that may make such a request unfeasible. That applies to the security services as it does to any other employer. I will not read out all eight reasons, but I will give some examples. The work may not be able to be reorganised among other staff, or quality or performance may be negatively affected. There may be a lack of work at a particular proposed time, or the business’s ability to meet the demand of customers—we have mentioned the Home Office—may be negatively affected. There is a huge range of reasons that could be used, and they would surely cover—
Nick Timothy
I would be grateful if the Minister could explain what conversations she has had with MI5, MI6 and GCHQ to understand whether, given their unusual, specific, specialist operations, there are any circumstances that might go beyond those already set out.
Dame Nia Griffith
If I may continue, the point is that there is significant leeway. Basically, the way the provision is worded takes into account the context of the particular type of business. There are many different types of roles in the security services, as has been pointed out, and different things will apply in different circumstances. There is plenty of opportunity there.
Nick Timothy
I think the answer to the question must be no. That may be fair enough, but can the Minister tell us whether she has had any conversations with her opposite numbers in the Home Office, which sponsors MI5, or the Foreign Office, which sponsors GCHQ and MI6?
Dame Nia Griffith
What really matters is that flexibility is in-built, and I am sure that colleagues in the Home Office will be able to use it.
The other point that the hon. Member for West Suffolk might like me to address is whether giving a reason could expose something that it would be undesirable to expose—in other words, whether any explanation given would incur a breach of security. In many cases—probably the majority—the reason for refusing a flexible working request will not involve matters of national security. It might be a matter of not being able to reorganise the work among existing staff to facilitate a requested working pattern, or there being insufficient work during the period someone has asked to work. Those reasons will be no different from what other employers are considering. In most cases, it will be possible for an employer to give reasons for their refusal without disclosing any sensitive information.
There will certainly be cases where matters of national security come into play, but there are already protections in place. The grounds for refusal given by the employer have to be made public only at the point at which legal proceedings are started. In the unlikely event that an employee makes a claim in the employment tribunal, the tribunal is able to conduct all or part of the proceedings in private, or to order a person not to disclose any document. I therefore invite the hon. Member for Mid Buckinghamshire to withdraw his amendment.
Greg Smith
I am grateful to the Minister for her responses. I highlight that this is a probing amendment designed to test the Government’s thinking. I appreciate the flexibilities that she has outlined, but as my hon. Friend the Member for West Suffolk set out, the security services are a particularly unique element within public service.
I can see a multitude of reasons why some of those flexibilities will not be good enough to ensure that those predominantly charged with our national security can comply with every measure in the Bill. I urge the Minister to have those conversations with relevant Ministers in the Foreign, Commonwealth and Development Office and the Home Office, who are responsible for our security services, to double-check that they are entirely comfortable with the provisions in the Bill, which I dare say has been through the write-around process. Sometimes minutiae and detail can be lost in that process, and it is vital for our national security that the Bill should be properly road-tested to the nth degree.
Greg Smith
I will finish the line, and then I will. I make that point just to highlight that there are sometimes circumstances in which the flexibilities that the Minister spoke of may not fully apply. I am sure a witticism is coming.
Alex McIntyre
Sadly, I am not very funny. Would M’s HR adviser not say, “That might have a detrimental impact on your performance, Mr Bond”? That flexible working request could therefore be reasonably denied.
Greg Smith
I think that has probably been a plot line already. The hon. Member for Gloucester understands the point that I am making here within certain elements of employment in this country. This was a probing amendment, and we will come back to the principle of this discussion—although maybe not the detail of the Bond example—later in the Bill’s passage. For the time being, I urge the Minister to have those conversations with colleagues in other parts of Government to double-check that they are fully appreciative of the measures in this Bill. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 26—Consultation and assessment on the right to request flexible working—
“(1) The Secretary of State must carry out an assessment of the likely impact of the right to request flexible working provided for in section 7 of this Act.
(2) As part of the assessment, the Secretary of State must carry out a consultation on the proposed right to request flexible working.
(3) The assessment must—
(a) include labour market and broader macroeconomic analysis,
(b) examine the impact of the measures in section 7 on employment, wages and economic output,
(c) consider the likelihood of the costs of flexible working measures being passed on to employees through lower wages, and
(d) examine the likely effect of the right to request flexible working on—
(i) productivity,
(ii) wage growth,
(iii) equality of opportunity,
(iv) job security,
(v) economic activity, and
(vi) employment.
(4) A report setting out the findings of the assessment must be laid before each House of Parliament no sooner than 18 weeks after the consultation has been initiated.”
This new clause requires the Secretary of State to assess the impact of the provisions of Clause 7.
Amendment 132, in clause 118, page 105, line 20, at end insert—
“(3A) But no regulations under subsection (3) may be made to bring into force section 7 of this Act until the findings of the report under section [Consultation and reporting on the right to request flexible working] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”
This amendment is linked to NC26.
Dame Nia Griffith
Flexible working is essential to helping people achieve a better work-life balance. It can lead to employees being happier, healthier and more productive. Having the ability to vary the time, hours and place of work is also key to the functioning of the UK’s flexible labour market. Improving access to flexible working is therefore good for employees and good for business. That is why we have committed to making flexible working the default, unless it is not reasonably feasible.
I reassure members of the Committee that my team has fully engaged with members of the Security Service, particularly on amendment 132 and not just the write-around, which is quite important. I am, of course, looking forward to this year’s Mid Buckinghamshire pantomime—I assume the hon. Member for Mid Buckinghamshire will play the role of a secret service special agent.
To return to the clause, the Government accept that employers must be allowed to make decisions about what is and is not reasonably feasible so that they can ensure that business operations are able to run effectively. We are therefore retaining the existing legal framework, which allows employers to reject flexible working requests on one of eight specified business grounds. The Bill makes it more likely that requests will be accepted and that flexible working will become the default. It contains the three following measures. First, it creates a new requirement that employers may refuse a flexible working request only if it is reasonable to do so on the basis of at least one of the eight specified business grounds.
Secondly, the Bill requires employers to state the ground or grounds for refusing requests and explain why they consider it reasonable to do so. Under the current framework, an employer must only notify the employee of the decision; there is no requirement for an employer to explain the basis of a decision, which can mean a lack of clarity and transparency for the employee if their application is refused. While these measures do not remove the employer’s ability to make a decision on whether a flexible working request is reasonable, they do require the employer to explain and justify that decision and, in turn, the measures open up that decision for scrutiny by an employment tribunal.
Finally, the current legislation is silent on how to meet the requirement to consult when rejecting a request. We think it is important to provide employers and employees with greater clarity around the process if the employer intends to reject a request, so we are inserting a new power for the Secretary of State to make regulations setting out the steps that employers must take when consulting with the employee before deciding to refuse a flexible working application. We do not want to create bureaucracy for the sake of it. To ensure we get the balance right, we will work with stakeholders and undertake a full public consultation in partnership with business, trade unions and third sector bodies. The consultation will consider what the process should be, and that will ensure we get the balance right before we lay regulations.
Taken together, these measures are designed to encourage the acceptance of more requests, to improve clarity on decisions, to encourage more careful consideration of requests and to encourage constructive dialogue between employers and employees. We believe that this will help to make flexible working the default in a sensible and pragmatic way.
There is strong evidence to support our approach. Research by the equal parenting project, for example, found that 75% of UK managers believe that flexible working increases productivity and that 62.5% believe that it boosts motivation. Yet, according to the flexible jobs index 2023, although nine in 10 people want to work flexibly, only six in 10 employees are currently working flexibly and only three in 10 jobs are advertised with flexible working.
Uma Kumaran (Stratford and Bow) (Lab)
I will stop with the Bond jokes for now, but “Never Say Never Again”—Members know that laughter is one of the best medicines, certainly for our mental health and for the mental health of workers. Research from the Centre for Mental Health cites strong evidence that Government policies to boost workplace rights, such as on flexible working and job security, can positively impact workers’ mental health.
Flexibility is crucial to the workplace participation of those with long-term chronic health conditions and those with mental health problems, and it is good for workers. In the oral evidence sessions, we heard that good employment conditions support productivity, employers and the economy, and that good flexible working policies generally go down very well with employees: it can help staff to feel engaged in their work and to feel valued by their managers. I am sure Opposition Members want to feel valued, but—
The Chair
Order. The hon. Lady is perfectly entitled to make a speech, but I thought this was going to be an intervention. She can make a speech later. I call the Minister.
Dame Nia Griffith
I thank my hon. Friend for her valuable contribution; she reminds us that flexible working can often be a real help in getting people into work.
The changes in the Bill will support employers and employees to agree solutions that work for both parties and increase the take-up of flexible working. The Opposition amendments, new clause 26 and amendment 132, proposed by the hon. Member for Mid Buckinghamshire, include a requirement for an assessment of the impact of the Bill’s provisions on flexible working to be produced before the provisions can be commenced. The Government resist those amendments. They have already produced a comprehensive set of impact assessments, which was published alongside Second Reading and based on the best available evidence on the potential impact of the Bill’s measures on business, workers and the wider economy.
Our proportionate assessment included labour market and broader macroeconomic analysis considering the impact of these changes on individuals and businesses. It also provided a breakdown of the impacts on employment tribunals, small business and individuals with protected characteristics. We intend to refine that analysis over time, working closely with businesses, trade unions, academics and think-tanks. The analysis published alongside the Bill describes the overall business impact as neutral. Businesses may see benefits in improved productivity, employee loyalty, worker satisfaction, staff retention and the ability to attract a wider range of employees. It is important to remember that businesses can still reject flexible working requests on eight valid business grounds, including the burden of costs.
As is standard practice, the Government will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the requirements of the better regulation framework. That will account for where the primary legislation in the Bill has been amended in its passage through Parliament in such a way as to change the impacts of the policy on business significantly. That impact assessment will be published alongside the enacted legislation. We will then publish further analysis alongside future consultations, ahead of secondary legislation to meet our better regulation requirements. I therefore ask Opposition Members to withdraw their amendments.
Greg Smith
New clause 26 and amendment 132 are about impact assessments of flexible working. Amid her speculation about the Mid Buckinghamshire pantomime, to which I trust she will be buying a ticket, the Minister talked about impact assessments that have already been made. But we know what the Regulatory Policy Committee has said about those impact assessments:
“there is little evidence presented that employers are rejecting requests”
for flexible working “unreasonably”.
We should remember that the previous Conservative Government, although they want to repeal it, introduced the right to request flexible working from the first day of employment through the Employment Relations (Flexible Working Act) 2023, which came into force in April. The RPC has said that the Government have not considered the effectiveness of the previous Bill—it might be difficult to do so given how recently it has come into force—and that it is therefore
“difficult to assess the justification for the additional measures”
in the Bill. The RPC also says that the Government have not considered the effectiveness of non-regulatory options such as raising awareness of the right to request flexible working. So the Government have not made the case for why this is necessary. I do not believe the Minister gave a clear explanation either. I am sure she will have a second chance to do so in summing up.
The RPC rebukes the Government for failing to take into account the costs this measure will impose on business, namely
“the costs to employers of engaging with more ET cases and hearings taking longer because they will now be considering wider and more subjective factors”
and that the Government’s own impact assessment
“assumes that there are no net costs to employers of accepting requests, on the basis that they would do so only if the benefits at least matched the costs. However, this does not necessarily hold as rational, risk averse employers will also factor in the increased cost/risk of rejecting requests under the proposal, seeking to avoid costly employment tribunals and, especially for SMBs”—
Alison Hume (Scarborough and Whitby) (Lab)
The hon. Member is talking about costs, but does he not agree that the lack of flexible work locks out far too many women? Some 40% of women who are not currently working say that access to flexible work would mean that they could take paid work. If we are talking about the cost to the economy, does he not agree that guaranteeing flexible working would boost the economy?
Greg Smith
The Opposition are not against flexible working; as I said, we actually legislated for it in the previous Parliament. We can see the benefits of it, as we discussed this morning, for anyone with childcare responsibilities—I count myself and my wife in that; I do not think it is quite a declarable interest—a caring responsibility or a need to have those flexible hours.
We fully recognise and accept the challenges around the nuts and bolts of the details proposed in this legislation, but I gently put it to the hon. Lady that it is our job, as His Majesty’s loyal Opposition, to road-test any legislation that the Government bring forward, which is what we are seeking to do. We are not against flexible working, but we are focused on the potential unintended consequences, the potential cost to business and the potential cost to jobs in the overall workforce, as I argued in a debate on an amendment this morning.
If employers do not have confidence—if they think that something will go wrong or that it will lead to countless days and months in employment tribunals—they may not make those hires in the first place, and then everyone and the whole economy will suffer. Opposition Members cannot stand by and not challenge or test that to ensure that the Government have got it right. To return to what I was saying before the intervention, for SMEs, the opportunity cost of their chief executive officer or another senior director spending time on employment tribunals is also considerable.
New clause 26 in my name and the name of my hon. Friends merely gives the Government an opportunity to do their homework and test whether the provision will work. We do not believe that they should casually pile more regulation on to business without knowing whether these specific measures—the detailed measures in the Bill—are actually needed to achieve their objectives.
We are asking the Government to consult on the impact of the measure and to report on it, and for the House of Commons to approve that report before the measure comes into force. Given the RPC’s verdict on the Bill’s impact assessments, business would find it reassuring if the impact assessment could be done and placed before the House so that we could study it and debate it, and so that Members on both sides of the House—Government Back Benchers and Opposition Back Benchers, as well as those in the smaller parties—can fully understand it. We believe that it is important for the Government to have to come back again for the approval of the House before the measure comes into effect.
Laurence Turner
The hon. Gentleman seems to be looking for statistical evidence about employers unreasonably refusing flexible working requests. I must say that it is a shame that the workplace employment relations study was last carried out in 2011. The Government at the time declined to repeat the exercise; had they not, we might have the information in front of us that he is looking for.
Does the hon. Gentleman accept that there are precedents—blacklisting, for example—in which there were widespread but anecdotal reports that the practice was occurring? It was difficult to prove, and on that basis, the regulations on blacklisting were not enacted. Then, lo and behold, it became apparent years later that the practice was not just widespread but had been carried out on an industrial scale. Had the measures been put in place at the time, many lives would have been left unbroken.
Greg Smith
I will take on the chin the hon. Gentleman’s point about the 2011 dataset, which was published under the coalition Government, led by my noble friend Lord Cameron. The current Government is seeking to make this legislation, however, so the onus is on them—right here, right now—to provide the datasets, evidence, proper analysis and impact assessments for the legislation that they are putting before the House of Commons and, later, the House of Lords in this Session of this Parliament. I hope the hon. Gentleman accepts the good will with which that comment is made—it is not a political attack. It is the duty of any Government at any time, as they seek to legislate on any matter, to provide the impact assessments, the real data and the real-world evidence of why it is necessary to put that legislation in place.
As I said earlier, it is simply a case of asking the Government to do their homework properly, and to provide, not just to Parliament but to businesses and employees up and down the land, the basis for which they are seeking to change our statute book.
Alex McIntyre
I will return briefly to a couple of the shadow Minister’s comments. I take some quantum of solace in the fact that he now seems to be accepting the principle of consultation. Over the past couple of weeks, we have often heard that he would prefer there to be certainty for business in some of the provisions, and now there is some certainty.
Greg Smith
I understand the hon. Gentleman’s point, but my argument throughout our debates on the amendments has been that it is normal practice to consult first, legislate second, but in many parts of the Bill the practice is to legislate first, consult second. That, I gently suggest to him, is probably the wrong way round.
Alex McIntyre
The “cake and eat it” argument is the point I was trying to make. I advised on flexible working requests regularly when in private practice, where individuals and, in particular, employers were asking what their rights were in respect of a request.
The hon. Gentleman raised two points, the first of which was about costs. Again, I point to the exemptions. The burden of additional costs is one of the exemptions by which an employer can say that it is not reasonable to accept a flexible working request. The balance between having rights for employees and making sure that they are not too much of a burden on business is important. The burden of additional costs is already explicitly covered in the legislation.
Secondly, in relation to tribunals, one of the issues with the current system is the lack of explanation provided. Employees often believe the worst, even if that is not always the case. They might make their request, with valid reasons, and if their employer tells them a flat no, with no further explanation, they often believe the worst and bring a tribunal claim.
Providing that explanation at the beginning requires the employer to think about the request. Not every employer is an excellent, flexible employer; some employers think that by offering flexible working, they will somehow lose productivity, whereas lots of studies have shown the opposite. Through that provision, employers will think about the request, engage with the process and the exemptions, think about what that means for their business, and provide a reasoned explanation.
That will not take as long as we might think, because there are only eight exemptions and people know their business very well. When they give that written explanation, it can be relatively short. It does not have to be “War and Peace”—I should have mentioned another James Bond novel—because it is just to give some background. We will then have an explanation that can be used in a tribunal. That will really assist tribunals in dealing with these cases, because there will be a written explanation of why the decision has been taken.
There are loads of cases in which people bring claims of discrimination because their flexible working requests have been rejected. Those can take up lots of time, when there has been just a misunderstanding between the employer and the employee. By introducing the requirement to provide an explanation, and for the employer to think through the reasonableness of it, there might hopefully be fewer claims in the employment tribunal.
Dame Nia Griffith
Let me make a couple of quick points to sum up. The Opposition are trying to say that most businesses already do this, but this is not about the principle of introducing flexible working; it is about making the process straightforward, clear and consistent across businesses. As my hon. Friend the Member for Gloucester said, by ensuring that clarity, it may well reduce the number of cases that get taken to tribunal.
If most businesses are already doing this, why do we want to legislate? Well, we do not want those businesses to be penalised for doing the right thing. We want everybody to be offered the opportunity of flexible working within the reasonableness of their working situation, and with the opportunity for employers to refuse on the eight specified grounds. That will spread best practice not only in it being offered in all places of employment, but in the way that any request for flexible working is dealt with. That is an explanation of the context.
As we have clearly said, our impact assessment has provided an initial analysis of the impacts that can follow, but we will update and define them as we further develop the policy. In fact, part of the clause is specifically about the Secretary of State having the power to provide further detail. We are confident that as most businesses already participate in this process, make the appropriate responses to their employees and understand the system, it will be not a huge new burden to them in any way. I remind Committee members yet again that dealing appropriately with requests for flexible working can considerably help recruitment and retention for businesses. On that note, we reject the amendments tabled by the Opposition.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8
Statutory sick pay: removal of waiting period
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss Government new clause 5—Statutory sick pay in Northern Ireland: removal of waiting period.
Justin Madders
Clause 8 provides for the removal of the waiting period from the statutory sick pay system, meaning that all eligible employees are able to access statutory sick pay from the first day of sickness absence. The current system of waiting until the fourth day of sickness before SSP is paid means that many people are forced to make the difficult choice between going into work when they are unwell or receiving no income. That is bad for individuals but also bad for business.
Removing the waiting period will support employees in taking the time off they need to recover from illness and reduce the spread of infection. Under the current rules, the system encourages workers to drag themselves into work when they are unwell. The TUC gave an example of workers in a mental health hospital in Blackpool who had to go on strike because they did not have access to day one sick pay and could not afford to take the day off. Those NHS workers felt that they were being forced to go into work. Obviously, they work in a clinical environment, so they were also putting patients at risk.
Greg Smith
I will not take long. I understand the principle that the Minister has outlined and accept his arguments about workplace sickness and the evidence that the Committee has heard, but I want to reflect for a moment on the challenge that he raised about the potential—I emphasise the word “potential”—for abuse of day one sick pay.
The Government need to put in place safeguards, rather than just saying, “It’s up to businesses to manage their own practices.” Of course it is up to businesses to manage their own practices for the vast majority of things, but if a clear and unambiguous case of abusing day one provisions is found, we need protections for businesses as they seek to deal with those staff members. I have no doubt that the vast majority will not seek to abuse them, but there is always that scope, as in any walk of life.
I will ask the Minister for some clarity about new clause 5. On one level, it is perfectly sensible to make sure that there is a united policy approach to this issue across the whole of our United Kingdom, but why has it taken a new clause in the Bill for the Government to remember that Northern Ireland is part of our country? I sense the hon. Member for Dundee Central potentially tingling at the mention of our United Kingdom, but I thought that one thing that could unite the Conservative and Labour parties was that we are both Unionist parties—we both believe in keeping the United Kingdom of Great Britain and Northern Ireland together.
I hope that the answer is that, like many other things in relation to this rushed, 100-day Bill, the reference to Northern Ireland was simply left out. I think the Committee needs an explanation, however, as to why, rather than a reference to Northern Ireland being put straightforwardly in the first version of the Bill, a new clause was needed to show that the Government remember that Northern Ireland is part of our great United Kingdom.
Alison Hume
It is a pleasure to serve under your chairship, Sir Christopher.
We in this place enjoy the employment rights that come with our job, which is to serve our constituents to the best of our ability. When we are unwell, we can take time off but we are still paid. Before I arrived here, I spent a considerable number of years working as a freelancer while bringing up my family; I believe that is now called being a worker in the gig economy. I understand all too well the pressure for people to work when they are unwell, as they juggle work around caring responsibilities, as I had to for my disabled son, and worry about money, as our family worried about how we would pay the rent and the other bills if I did not work.
At present, large numbers of workers either rely on statutory sick pay or receive nothing at all if they are absent from work due to illness. Those workers are more likely to be low paid than others. We also heard in the evidence sessions last week that women are currently more likely to miss out on statutory sick pay than men, because they do not earn enough to meet the threshold or have not been in their jobs for long enough. It is estimated that 1.1 million workers earn less than £123 a week and most of them are women who are not eligible for statutory sick pay at all.
In practice, as we heard in the evidence sessions last week and as Minister just referred to, that means that people drag themselves into work despite the fact that they are ill. As it stands, our sick pay system pushes far too many people to go to work when they are ill. Working while in poor health is more common among those from marginalised ethnic groups, people in lower-quality jobs and workers lacking formal qualifications.
Under the Bill, hundreds of thousands of people will qualify for sick pay from the first day that they are ill. That change and other changes will help to increase productivity, reduce prolonged illness due to exacerbating existing conditions, and lead to better public health outcomes. Lower-paid workers will no longer have to face the unpalatable choice between coming to work and risking spreading infection, or struggling to put food on the table and to pay bills. Those are very real concerns that, as I mentioned, I have faced.
In conclusion, I believe that the Bill will transform the world of work for millions of people across the country. If I may say so, it is a privilege to have played a small part in scrutinising it.
Chris Law (Dundee Central) (SNP)
It is good to see you in your place, Sir Christopher. I will speak to an amendment on this issue shortly, but I will briefly say that everyone in this room, at some point in their working life, will be ill. It is not something that we would choose or desire, and most of us want to get back to work as soon as possible. The problem is that it happens, and when we are off ill we still have bills to pay, families to keep and mortgages or rents to pay. The level of statutory sick pay is frankly woeful in this country—in fact, for those hon. Members who do not know, it is the worst in the developed world. We should all be ashamed of that and we need to really think about it.
I welcome the changes to ensure that everybody gets statutory sick pay, but I find it disgraceful that we have not even touched on its level: it is £116 a week, or £6,000 a year. At some point in our lives, all of us have worked in very low-paid jobs. We have all done that, particularly in the early years. We would never imagine that somebody could live on £6,000 a year. Not everybody is expected to be off for a year, but some are, due to prolonged illnesses.
I will talk about this issue more on my amendment, but before I go into it in detail, I really want to hear from the Minister what changes the Government look to make so that we are no longer the sickest country in the world for being unreasonable, unfair and unjust to employees, and to ensure that statutory sick pay, which is about 17% of the average income—it was 35% when it was introduced—will start to restore the proper justice required for employees.
Laurence Turner
The shadow Minister’s comments to the effect that he accepted in practice the arguments on the workplace and presenteeism were welcome. If, through this Committee, we can reach some degree of cross-party consensus on the issue, it would be a real advance and proof of the value of this process. I mean that sincerely.
I turn to the measures. The question of waiting days is as old as the national insurance system. Although many of the incremental changes made in the Bill are welcome, it is time to take a step forward. The case for that step was proven during the pandemic. The Minister quoted USDAW research, and I am obliged to quote GMB research, which found that 90% of care workers could not afford to take time off if they became ill. That meant that during the pandemic, many people were presenting at work either for the duration of their illness or for the waiting period, and we have very good evidence of that. I will quote one example. A study by Dr Laura Shallcross and other authors in The Lancet found that the odds of covid infection in care home residents and staff and of large outbreaks
“were significantly lower in LTCFs”—
long-term care facilities—
“that paid staff statutory sick pay compared with those that did not.”
That was one of the key determinants or predictors of where outbreaks might occur.
To perhaps quote a more human voice, a social worker and member of the GMB said:
“For me, being on a zero-hours contract, I don’t always get work. If I become ill, I don’t get paid. If I get a cold or flu-related illness, I am expected to stay at home without pay, because I may pass the illness on to our service users. It is a very, very stressful life.”
When the Chartered Institute of Payroll Professionals surveyed its members, 47% agreed with the abolition of the waiting days period, so there is support in this area among private sector practitioners. When the Fabian Society, of which I declare I am a member, looked at this question, it found that the cost to business of adopting that measure would be very low—somewhere in the region of £15 per year for each employee.
As matters of cost have been raised in Committee on several occasions, I shall finish by quoting from the 2010 Black review, commissioned by the then incoming Government, which I think is still the best evidence we have of the cost of the statutory sick pay regime. It said:
“Great Britain has a mixed approach to sickness absence. Although employers in theory bear the cost of Statutory Sick Pay (SSP), the cost itself is not very high. Barriers to dismissal are relatively low (although it should be noted that dismissing someone specifically to avoid paying SSP is illegal). Employers are therefore obliged to bear little cost or accountability for sickness absence, albeit many employers choose to pay more in occupational sick pay (OSP) than the statutory obligation.”
There are many cases where occupational sick pay is paid at a rate higher than the SSP rate. That is of course welcome, and accounts for the majority of employers. For those employers who are being brought into paying SSP earlier, as we have heard, the cost is low, but the changes could make a really significant difference to the lives of some of the lowest paid workers in the economy. This measure is extremely welcome.
Uma Kumaran
I would like to highlight a few examples in addition to those mentioned by my hon. Friend the Member for Birmingham Northfield.
According to the Nuffield Trust, these changes will greatly benefit social care workers and workers on zero-hours contracts who, as has been highlighted, have inconsistent access to statutory sick pay, let alone occupational sick pay schemes, to cover costs such as rent and bills. As we have heard, and we have seen in our constituencies, many of those workers worked through the pandemic, risking their own lives and risking infection, putting themselves in harm’s way, because they did not have a fallback—they did not have statutory sick pay.
A more generous system of statutory sick pay should be seen not only as a right for workers, but as part of our national defences, including against pandemics. In particular, the changes will benefit low and outsourced workers such as porters, cleaners and housekeepers. I recently visited Newham General hospital in my constituency, where I saw at first hand the impact that porters and cleaning staff are having. I heard from the hospital’s chief executive officer how the hospital is unable to function without those essential staff.
Health Equals found that 28% of employees are reliant on statutory sick pay, one in 10 workers get nothing at all if they are sick and 82% of workers reported that flexible working arrangements allowed them to maintain a good level of personal health and wellbeing. I spoke earlier about mental health provisions. Evidence from Mind has shown us that employees with mental health issues are reliant on SSP. Without access to it, they are forced into debt, increasing the strain on their mental health.
The Centre for Progressive Change highlighted a recent study that shows that the cost of presenteeism for the private sector for mental health alone is around £23 billion a year to our economy, which is more than the cost of absenteeism, which is around £5 billion a year. The Institute of Public Policy Research has shown that workers in the UK are among the least likely to take sick days and that the presenteeism culture costs our economy £25 billion annually, due to the impact on productivity. We are speaking about workers today, but highlighting the impact on business and our economy helps to demonstrate why these measures are so important.
I will finish with one final statistic. The Centre for Progressive Change highlighted modelling by WPI Economics that shows that the implementation of an increased SSP rate, alongside other changes put forward in the Bill, such as the removal of waiting days and lower earnings limits, would deliver substantial economic benefits to the UK, including net gains of up to £800 million for businesses. That is £1.7 billion for the Treasury and £2.1 billion for the wider economy. Those are not small sums of money. Those would have a huge impact on our economy, through measures that put workers at the heart.
Justin Madders
We have had a good debate. Most Members have spoken positively about the need for this change. Obviously, this was a measure brought in temporarily by the previous Government, during covid. They recognised the particular issue at the time.
Before I turn to the shadow Minister’s comments, I wish him the best of luck in the Mid-Buckinghamshire pantomime. I hope he does not become the George Lazenby of the Conservative party as a result. He raised two perfectly reasonable questions. The first was on Northern Ireland. I can assure him that it was not an oversight. It has been introduced as an amendment because, as this is a transferred power to Northern Ireland, we need their consent before it can be included. I think he will understand that putting it in without getting that agreement might have been counterproductive.
On the second point that the shadow Minister made, about abuse of the provision, of course employers already have the power to deal with employees whom they feel are falsely taking time off sick. Whether that is day four or day one, those powers are already there.
My hon. Friend the Member for Scarborough and Whitby made a very powerful speech to highlight the impact on particular groups. The evidence we heard from the Women’s Budget Group last week was particularly important in that respect. Other Members who spoke, my hon. Friends the Members for Birmingham Northfield and for Stratford and Bow, raised a whole plethora of examples with pieces of evidence in support of the policy. I think it is one that is generally supported.
To deal with the point made by the hon. Member for Dundee Central about the level of statutory sick pay, he may not have seen my opining on SSP at the evidence session last week, or the famous comments from the former Health Secretary about it not being enough to live on. I recognise that. Unfortunately, however, I have to give him the stock answer, which is that the actual level is set by the Department for Work and Pensions. He made a fair point about people on long-term sick, because there is a huge interplay between people on long-term sick and the benefits system, but it is in the Department’s gift to set the rate and to look at how it interplays with accessibility to other benefits, which of course depends on people’s individual circumstances.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9
Statutory sick pay: lower earnings limit etc
The Chair
With this it will be convenient to discuss amendment 159, in clause 9, page 26, line 19, leave out paragraph (b).
Chris Law
I have already touched on the impact that illness has in our lives. Some of us have family members who have been long-term sick. If they have been in employment, £6,000 a year as an annual amount is clearly not going to be enough. I am glad that the Minister has raised the issue and addressed it, and I hope that the DWP can consider those levels. We are still the sickest country in the developed world, and I hope that that will change under this Government.
I will leave my comments on that for the moment, apart from one, which is about the TUC. I am sure that those on the Government Benches will be well aware of this. Previously, the TUC campaigned for an increase in the weekly level of sick pay to at least £320 per week. That is something to consider. I advocate statutory sick pay being based on the national living wage in respect of each hour during which the worker would have worked, but for sickness.
My amendment, however, is small and one that I hope will get cross-party support, largely because it is so modest and seeks to protect the lowest paid workers. I therefore hope to get to a conclusion today. This is not about a hammer to crack a nut, but about a small change that would help the most vulnerable and low-paid workers in our societies.
According to the Centre for Progressive Change, the wording of the Bill will make up to 1.3 million employees worse off. The Bill’s wording specifies that employees should be paid either SSP or a prescribed percentage of their usual pay, whichever is lower. However, that creates a group of workers who will receive even less in sick pay under the new arrangements than they do now. After 14 years of austerity, I am sure that the new Government do not want that to get even worse.
That is because although that group of workers might be earning above their lower earnings limit, reducing their earnings in line with the prescribed percentage would result in a weekly sick pay amount that is lower than statutory sick pay. For example, an employee earning £125 a week will currently get sick pay of £116.75. However, they would only receive £100 for the prescribed percentage of 80% or, worse, £75 for a prescribed percentage of 60%. The lower the replacement rate, the more employees will be affected, with a quarter of a million employees losing out on the 80% rate and 1.3 million employees losing out at the 60% rate.
The amendment would allow for those earning less than statutory sick pay to have their full earnings replaced. Frankly, that is the bare minimum that this Government and this Bill should be doing. That should be a starting point for statutory sick pay, increasing to the point where it is in line with the national living wage.
Employees earning less than statutory sick pay are by definition low earners. The evidence is clear that households with low incomes spend the vast majority of their earnings on essentials, such as rent and food. Cutting the incomes of those employees, even by a small percentage, risks them being unable to afford essential costs, pushing working families into hardship and deepening poverty. The changes in income may be especially difficult to bear during times of ill health, when the ability of households to adapt to budget losses is inevitably reduced.
An example of modelling that has been mentioned already is by WPI Economics. It shows that the direct cost to businesses of providing full earnings replacement would be small, calculated at £125 million per year across the entire UK economy. That is equivalent to £15 per employee per year. Reducing the earnings replacement rate below 100% as proposed would save businesses a small fraction of that already small amount, providing trivial cost savings for businesses. Furthermore, modelling shows that full earnings replacement would generate economic gains to businesses, the Treasury and the wider economy. With direct business benefits expected to be £1.1 billion, businesses would see aggregate net gains of around £1 billion every year from providing 100% earnings replacement.
I reiterate that the amendment makes a small change that should be regarded as the bare minimum. Further reform and increases to the sick pay system need to be implemented. As was mentioned earlier, we learned during the covid pandemic that employees coming into work when unwell can have a detrimental impact on public health and the economy. Those who come into physical contact with many people at work are often the least able to afford to self-isolate without pay or to have access to employer-provided sick pay, and are more likely to engage in presenteeism.
The UK’s current sick pay system contributes to economic stagnation, exacerbates the spread of infectious disease, makes long-term sickness absence more likely and drives people out of the taxpaying workforce. Everything that the Committee has discussed so far, across all parties, is about getting people into the workplace. The increased ill health adds a significant extra cost to the NHS, adds many more patients to waiting lists and increases the UK benefits bill. Workers themselves face financial hardship. There is no upside to the current system.
A meaningful increase to statutory sick pay would immediately turn the situation around. SSP reform would enable people to more proactively manage their health conditions, remain linked to their employers and stay off benefits when they fall ill. Modelling by WPI Economics shows that implementation of an increased SSP rate alongside the other changes put forward in the Bill would deliver substantial economic benefits for the UK, including net gains of up to £800 million for businesses, £1.7 billion for the Treasury and £2.1 billion for the wider economy—all upsides.
The onus is therefore on the Government to either: substantially increase the basic rate of statutory sick pay—although I have heard already that it is the DWP that needs to consider that—benchmarking it to the national living wage rate for normal working hours; use the Bill to amend existing primary legislation to give the Secretary of State additional powers, via secondary legislation, to change how the statutory sick pay rate is calculated; or, at the least, hold a statutory consultation with a timeline to establish what the new benchmark rate for SSP should be.
In the meantime, 100% replacement of earnings for employees earning below statutory sick pay is an easily affordable policy. It brings substantial net benefits to UK businesses, the Treasury and the wider economy. At the same time, it would avoid making over 1 million employees even worse off than they are today when forced to take time off sick. It would reduce hardship among employees with the lowest pay.
Justin Madders
I am grateful to the hon. Member for that helpful run-through of some of the issues that we are actively considering. He will be aware that a consultation on the issue closed only yesterday, so I would not want to pre-empt the outcome by accepting the amendment today. We understand the various arguments he has advanced that the level should be higher. He will not be surprised to hear that contrary arguments are put forward by some groups around having an incentive to take sick days when they are not needed.
Some of the modelling figures that the hon. Gentleman has come up with do not quite fit with the ones we have on where people would lose out at certain rates, but that will be considered in the round when we formally respond to the consultation. We hope to do so early in the new year, because we wish to put this into the Bill before it finishes its progress. It is something we are actively considering at the moment. I should be grateful if he would withdraw the amendment, so that we can take full account of the consultation that we have just completed.
Chris Law
I have listened with great interest to the Minister. I thank him for his comments and for the consultation that concluded yesterday. It would be helpful to hear today what the conclusion of the consultation is. I have made it crystal clear that none of us present want to see those at the lowest end of earnings worse off than they currently are. The Bill has been brought forward in good faith and good will, I am sure, by the new incoming Government to improve the lives of everyone, most of all those at the most vulnerable end. I have spoken to employers and employees quite widely about this, and the feeling I hear constantly is that this is a no-brainer. Delaying would be very difficult.
Justin Madders
I understand the point the hon. Member is making, but he will understand that when a Government Department—in this case the Department for Work and Pensions—undertakes a formal consultation, it is obliged to consider all responses before coming to a conclusion. That is why it is premature to agree to his amendment.
Chris Law
I thank the Minister for his intervention, but this is not a DWP issue. We are not talking about the level of SSP. We are talking about a sentence in the Bill that puts in a threshold that will make people on the lowest incomes worse off. That is an issue for the Minister for Employment to address rather than DWP. The level of SSP more widely has been discussed, and that may be an issue for DWP to consider. I think there will be disagreement over what that level should be. I have already quoted the TUC’s £320 a week, and I have suggested the national living wage. I look forward to that consultation, but this amendment seeks to strike a sentence out, nothing more.
Justin Madders
The very issue that the hon. Member is putting forward in his amendment is the issue that the Department for Work and Pensions is consulting on at the moment, which is why it would be premature to make a decision at this stage.
Chris Law
I need to ask for your advice, Sir Christopher, because at this point I would press the amendment to a vote but I want to be charitable and open to understanding what we are expecting from this consultation and when we would be able to bring this issue back—perhaps even during this Committee.
The Chair
One of the options open to the hon. Gentleman is to withdraw the amendment today but with a view to coming back to it on Report. Whether he wishes to do that or put the matter to a vote today is a matter for him.
Chris Law
Thank you for that advice, Sir Christopher. Based on that, I would consider coming back to this on Report, given the fact that I have not seen the consultation and I would like to work in the spirit that we have done so far in this room to try to bring about the best for all. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government new clause 6—Statutory sick pay in Northern Ireland: lower earnings limit etc.
Government amendment 107.
Justin Madders
Clause 9 provides for the removal of the requirement for an employee to earn at or above the lower earnings limit to be eligible for SSP. This requirement means that currently up to 1.3 million people, primarily women, are not entitled to receive SSP from their employer. This group are some of the lowest-paid in society, meaning that they and their families are most at risk of financial hardship if they cannot work. The clause ensures that all eligible employees can access statutory sick pay and the peace of mind it brings when they need to take time off due to illness.
However, we do not want to create a situation where anyone is entitled to receive more through SSP than they would otherwise earn. The clause therefore provides that an employee will be entitled to a certain percentage of their average weekly earnings or the current flat rate of SSP, whichever is lower. The clause therefore includes a power for the Secretary of State to determine that percentage rate by secondary legislation. However, it is our intention that the percentage rate is enshrined in primary legislation. I hope that gives the hon. Member for Dundee Central some comfort. We therefore published a consultation, which closed on 4 December, asking respondents what that percentage rate should be. We will now take time to carefully consider the responses we have received, before tabling an amendment to the Bill.
The changes that we are bringing in through the Bill will mean that up to 1.3 million low-paid employees will now be entitled to statutory sick pay and all eligible employees will be paid from the first day of sickness absence irrespective of their income, which will of course benefit millions of employees.
It is important to highlight that many employers choose to go further and provide more financial support to their employees during a sickness absence, with around 60% of all eligible employees being entitled to contractual sick pay. Those who need additional financial support while off sick are able to claim additional benefits through the welfare system, depending on their individual circumstances.
New clause 6 extends to Northern Ireland the benefits of strengthening statutory sick pay by removing the requirement to earn at least the lower earnings limit and creating a new percentage rate. These measures will ensure that all eligible employees have access to statutory sick pay irrespective of their income level, with the peace of mind that this brings when they need to take time off work due to sickness. The clause includes a power for the Minister for Communities to determine that percentage rate by secondary legislation.
Statutory sick pay is, as we have discussed, a transferred matter in relation to Northern Ireland. However, Northern Ireland has historically maintained parity with Great Britain on social security matters, including statutory sick pay. The Minister for Communities, Gordon Lyons MLA, has agreed to ask Westminster to legislate on the Northern Ireland Assembly’s behalf and to seek a legislative consent motion for the proposed changes in order to maintain parity in relation to statutory sick pay.
Finally, amendment 107 is consequential on new clauses 5 and 6; it limits the extent of the new clauses to Northern Ireland only.
Greg Smith
I shall be brief. On the Northern Ireland issues, I accept the Minister’s earlier explanation.
I have one straightforward question. The Minister says he has consulted and will consider the responses around the percentage rate going forward, and has said he will seek to amend the Bill to lock the percentage rate into the face of the Bill. The question remains when that amendment is likely to come. I appreciate it takes time to go through responses; it is unlikely to be done overnight, and potentially with Christmas coming up that will get in the way of any chance of the matter’s being considered by this Bill Committee. Therefore, is the Minister envisaging such an amendment on Report? Does he anticipate that it may come forward when the legislation is in the House of Lords? At what point will we see the detail? I do welcome the Minister’s commitment to get it into primary legislation, because that is important and is consistent with some of the things that I have been arguing for in relation to other amendments, but in order for Parliament to take a considered decision, it is important that we know when the amendment is likely to come—later in Committee, on Report in the House of Commons, or in the other place.
Justin Madders
That is a reasonable question. It is another Department’s consultation so there are only so many levers I can pull, but I envisage that the amendment will be tabled at Report stage at the latest. I hope that is sufficiently clear.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Ninth sitting)
Tuesday 10th December 2024
(1 week, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 10 December 2024 - (10 Dec 2024)
The Chair
Would everyone please ensure that all electronic devices are turned off or switched to silent mode? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sitting is available in the room and on the parliamentary website. I remind Members about the rules on the declaration of interests, as set out in the code of conduct.
Clause 10
Policy about allocating tips etc: consultation and review
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair this morning, Mr Mundell. As is customary, I refer to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
As Members will be aware, clause 10 introduces new requirements on tipping, namely the requirements for employers to consult workers about the allocation of the tips they have earned, and to review their tipping policy. These new requirements will build on the measures introduced by the previous Government in the Employment (Allocation of Tips) Act 2023. The Act came fully into effect on 1 October this year and ensured that an estimated £200 million-worth of tips each year are no longer retained by employers.
The Act is accompanied by a statutory code of practice on the fair and transparent distribution of tips. Although the Act requires employers to allocate tips fairly to workers, the existing statutory code of practice only encourages consultation with workers in deciding that allocation. The Government were clear in their commitment to going further—indeed, I took part in a debate earlier this year in which I said that the legislation did not go far enough. We will therefore make it mandatory for employers to consult workers in developing or updating their tipping policies, including how tips are allocated.
The clause will support worker participation in the allocation and distribution of tips that they have earned, by mandating that employers consult workers during the development or revision of their written tipping policies. It will also mandate that employers review their tipping policy and maintain records of the consultation they have carried out, as well as giving workers the right to request and review records related to the tipping policy consultation. The consultation will be required to take place at the formative stage, before the policy is finalised or updated, and should be carried out, where possible, by engaging with representatives of recognised trade unions or other chosen representatives. If neither are available, the consultation will be required to be with workers likely to be affected.
We will continue to engage with unions and worker representatives in hospitality and other impacted industries to ensure that the measures in the Bill and in the statutory guidance deliver fully on our aims. Following Royal Assent, we will consult widely and properly with stakeholders to determine what changes should be made to the existing statutory code of practice. We are determined to ensure that guidance is as helpful as possible, ensuring that tips are allocated fairly and that worker consultation is carried out properly.
These measures will be enforced via the employment tribunal system. If an employer fails to consult their workers properly or to distribute tips in a fair and transparent manner, workers will be able to bring a claim to an employment tribunal. The tribunal will be able to order an employer to compensate workers up to £5,000 for financial loss. I think that Members can see what we are trying to achieve with the clause, and I therefore commend it to the Committee.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship once more, Mr Mundell. The Minister mentioned that the clause builds on private Member’s legislation passed in the last Parliament, and it would be remiss of me not to put on record that the transformation in some employers’ attitudes to their employees and to the retention and fair distribution of tips was in large part down to the former Conservative Member for Watford, Dean Russell, who piloted the original legislation through the House. There were one or two little bumps along the road as he came into ministerial office and then out again in—what was the number?—43 days, but many Conservative colleagues really pushed for the legislation. It is one of those great unfairnesses that, for years, incredibly hard-working people in the hospitality sector and others had an expectation that they would receive the generosity of their customers’ tips at the end of the meal, the round of drinks or whatever but, for various reasons, did not get their fair share. The legislation the Minister referred to righted that historic wrong, and clause 10, which seeks to strengthen that, is very welcome.
Where I gently suggest to the Minister that there needs to be a little more thought and clarity is settings where there is no union to consult. That might be a small business such as a restaurant or pub, where the people who work there are not affiliated with any union or body that could be consulted on their behalf. Will he say something about how those smaller businesses—smaller restaurant or pub settings—will get dialogue going with their employees so that the business has a fair and equitable, and clear and unambiguous policy to ensure that the tips reach those workers?
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Mundell. I just emphasise what the hon. Member for Mid Buckinghamshire stated in respect of smaller settings. In my constituency there are lots of restaurants and small hotels without the network of support for workers that a trade union would offer. It would be useful if Ministers were alive to the circumstances of those smaller settings. I also wonder whether the Minister is reflecting on what guidance he might issue on the question of what is equitable that could be reflected if people end up going to a tribunal.
Laurence Turner (Birmingham Northfield) (Lab)
I draw attention to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions. I noticed last week that the Prime Minister made a James Bond joke, and I wondered whether he was following the Committee’s proceedings in real time. There is a valid question here: when James Bond buys a vodka martini, what happens to the tips? Hopefully, thanks to this Bill and the legislation passed last year, we will have a more equitable solution.
I want quickly to raise two issues. The “Make Work Pay” document published earlier this year stated:
“Labour will strengthen the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.”
I would be interested in the Minister’s views on whether this measure meets that very welcome commitment. Whether tips that would have been received during shifts that are cancelled fall under the definition of reasonable compensation is presumably a question to be addressed in the future.
In respect of the points raised by the hon. Members for Torbay and for Mid Buckinghamshire about consultation with groups of workers who are not represented by a trade union, I suggest that the kinds of businesses they mentioned should have at least a degree of familiarity with the principles of that, since they are established and well understood in the context of redundancy situations and in other areas.
Justin Madders
First, I will acknowledge, as did the shadow Minister, the hon. Member for Mid Buckinghamshire, the work in this area by previous Members of this place, including the former Member for Ynys Môn. I think it was seven years after the announcement that there was to be legislation that we finally got action, but it is welcome. I note the shadow Minister’s comment that the legislation has transformed attitudes, and that is what we are trying to do with this Bill in general: transform the workplace so that workers have better security and a better voice.
The shadow Minister raised some important questions, as did the Liberal Democrat spokesperson, the hon. Member for Torbay, about what this measure means for smaller businesses where there may not be a trade union. Of course, that is an argument for greater organisation in the workplace so that employers can consult collectively with the workforce. Those smaller employers—the Great British café, for example—would not always have an easy route to consult with their workforce, but in that kind of informal setting, where there is only a handful of employees, it should be fairly straightforward. Everyone will know their role and what goes on, and the existing code of practice deals with the guidance for smaller employers in that sense.
My hon. Friend the Member for Birmingham Northfield asked whether this measure meets our commitments under “Make Work Pay”, and I believe it does. It is a significant step in continuing the welcome, transformational moves that we have seen on tips, and it gives workers an absolute right to be consulted, which I think is important. There is evidence, such as the research by the Chartered Institute of Personnel and Development, that certain sections of the workforce, including agency workers and people working in certain parts of a business, feel that they do not have a voice. This provision will give them that voice and the real teeth they need to ensure that tips are fairly distributed. As the shadow Minister said, this is all about them. It is about ensuring that everyone who contributes to the service that we all enjoy gets those tips, which the customer clearly wants to ensure are spread among the workforce. On that note, I commend the clause to the Committee.
The Chair
It is good to hear the Great British café will be covered by these provisions.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Parental leave: removal of qualifying period of employment
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 12 stand part.
New clause 16—Publication of information about parental leave policies: regulations—
“(1) The Secretary of State must make regulations to require any employer with more than 250 employees to publish information on the internet about the employer’s policies on parental leave and pay for parental leave.
(2) Regulations under subsection (1) must be published within one year of this Act being passed.
(3) Regulations under this section are subject to the affirmative regulation procedure.”
This new clause would require companies with more than 250 employees to publish information about their parental leave and pay policies.
New clause 17—Entitlement to paternity leave—
“(1) The Employment Rights Act 1996 is amended as follows.
(2) In section 80A (entitlement to paternity leave: birth)—
(a) in subsection (3), for ‘two’ substitute ‘six’,
(b) in subsection (4), for ‘56 days’ substitute ‘52 weeks’.
(3) In section 80B (entitlement to paternity leave: adoption)—
(a) in subsection (3), for ‘two’ substitute ‘six’,
(b) in subsection (4), for ‘56 days’ substitute ‘52 weeks’.”
This new clause sets out an entitlement to paternity leave.
The Minister for Equalities (Dame Nia Griffith)
Clauses 11 and 12 enable employed parents to give notice of their intention to take parental leave or paternity leave from their first day in a new job. Clause 11 does that for parental leave by amending section 76 of the Employment Rights Act 1996 to remove the power for the Secretary of State to make regulations relating to the duration for which an employee must be employed before being entitled to be absent from work on parental leave. Clause 12 works in a similar manner for paternity leave, amending sections 80A and 80B of the Employment Rights Act 1996 to remove the power for the Secretary to make regulations relating to the duration for which an employee must be employed before being entitled to take paternity leave.
Currently, parents must complete one year of continuous service to qualify for parental leave, and 26 weeks of continuous service to qualify for paternity leave. Clause 11 will make an additional 1.5 million parents each year eligible for parental leave, while clause 12 will bring an additional 32,300 fathers and partners a year into scope for paternity leave. Clauses 11 and 12 will make it easier for employees to move jobs, which may enable them to secure wage increases without losing their ability to take parental leave or paternity leave. Removing deterrents to changing jobs is important, because research by the Office for National Statistics and the Resolution Foundation shows that people who move jobs are likely to get wage increases.
There is also a benefit from our changes to employers, who will gain access to a larger pool of applicants for vacancies, as parents will be more likely to apply for new jobs because they will not lose their access to those leave entitlements. We have engaged with stakeholders who represent the interests of parents, and they have said that they welcome the removal of continuity of service for parental and paternity leave. Making those entitlements available from day one also brings parental and paternity leave into line with other entitlements, such as maternity and adoption leave, creating a clearer and fairer system.
New clause 16 would commit the Government to introducing regulations that require organisations employing more than 250 people to publish information about their parental leave and pay policies. The hon. Member for Torbay is right to highlight the significance of publishing parental leave policies. It is certainly true that parental leave and pay policies are not perks on a par with gym memberships; they are critical policies that allow people to manage their lives. As well as being hugely important at a personal level, parental leave and pay policies are critical for addressing wider social and economic issues.
The Bill already does a lot to support working families. It reforms the right to request flexible working to make it the default. It puts in place legislation that makes it unlawful to dismiss pregnant women, mothers on maternity leave and mothers who return to work for a six-month period after they return, except in very specific circumstances. It also requires large employers to produce equality action plans. That is why at this point we believe that not requiring publication of parental policies in the Bill is the correct approach. It strikes the right balance between doing more to help working families and being manageable for employers to respond and adapt to.
New clause 17 would increase the length of paternity leave from two weeks to six weeks and also seeks to introduce the ability to take paternity leave at any time in the first year following birth or adoption. The Government value the vital role that fathers and partners play in caring for children and supporting their partners. We recognise that parental leave and pay entitlements, such as paternity leave and pay, play a key role in their ability to do that. That is why we are taking the first step of making paternity and parental leave day one rights.
Recent changes to paternity leave and pay, which took effect on 6 April 2024, allow parents to take their leave and pay in two non-consecutive weeks; to take their leave and pay at any point in the first year after the birth or adoption of their child, rather than only within the first eight weeks; and to give shorter notice for each period of leave. That means that parents are now able to take their paternity leave at any point in the first year following their child’s birth or adoption. While I very much support the intent behind this element of the new clause tabled by the hon. Member for Torbay, it is already in place and so is not required.
If fathers or partners wish to take a longer period of leave and pay, shared parental leave and pay is an option they can consider. Up to 50 weeks of leave and up to 37 weeks of pay can be “created” for parents to share from maternity entitlements that the mother does not intend to use. Parents can use the scheme to take leave together for up to six months or to intersperse periods of leave with periods of work.
We know that more needs to be done to ensure that the parental leave system provides the best possible support for working families. That is why we have committed to a review of the parental leave system. The review will be conducted separately to the Bill and work is already under way across Government on planning for its delivery. I therefore commend clauses 11 and 12 to the Committee and invite the hon. Member for Torbay not to move new clauses 16 and 17.
The Chair
Before I call the shadow Minister, I should tell the Committee that there may be a fire alarm this morning. We will be advised on what to do if that happens.
Greg Smith
Planned fire alarms are always quite disturbing, but never mind. I will broadly address the subject we are debating, before making specific comments on the new clauses tabled by the Liberal Democrats. I do not have a direct interest to declare, but I have had paternity leave three times in my life. I value its provision and the importance of ensuring that fathers and partners are there to support mothers in the early days of a new child arriving in the world. Paternity leave is incredibly important, at any point when it arrives. For my second child, I had only been an MP for four weeks after the 2019 general election, when I disappeared for two weeks. That was vital to support my wife, who had valiantly gone through a general election with me while she was eight months pregnant. Of course, she was not pounding the streets in the way most of us were at that point, but I just wanted to give that personal reflection on how important paternity leave is.
Greg Smith
I will just finish this thought; the hon. Lady knows that I am not shy about taking interventions. Every business, even if it has only one or two employees, will know what the plan is if one of its employees comes to it and says that their wife, partner or whatever is pregnant and that they will require at some point in the near future two weeks of paternity leave. On the grounds that virtually every business that I know has that plan—has that understanding of what it will do in offering the statutory requirement for paternity leave and the way it will remunerate it or not, as the case may be—I am struggling to understand why it should be only those companies with more than 250 employees that are subject to the requirement.
Sarah Gibson
The reason for leaving it at 250 employees, despite a thought among Opposition Members that it should be extended to 500, is that, currently, small and medium-sized businesses are classified as having up to 249 employees. Larger businesses, which will undoubtedly have the infrastructure, should be able to publish the information. The new clause would prevent an onerous burden on very small businesses from having to publish the information. It does not imply that they would have lesser standards; it is merely that they would not be obliged to publish the information.
Greg Smith
I understand the point that the hon. Lady makes. I am the last person to want to put a greater burden or unnecessary burden on any form of business. All I gently suggest is that this probably is not that great a burden on a business, on the grounds that it will already know what it is going to do when an employee comes and asks for paternity leave, maternity leave or whatever. That is particularly the case given that much of the rules and regulations is already set in statute and, when this Bill undoubtedly achieves Royal Assent at some point, will be further enshrined in statute. There are many other regulations that businesses have to comply with when publishing on their website—I am thinking of privacy notices and various GDPR regulations and so on—just as all the members of this Committee and Members of this House have to do on our own websites. I do not think anyone would try to define any of us as large businesses or huge employers, and I do not think that there are any hon. or right hon. Members left who do not have a website. Perhaps one or two do not—
Greg Smith
He is a fine television superstar these days.
All of us will have published these statements on our websites, because that is straightforwardly set out in statute—straightforwardly set out in law. I am at a loss to understand why it would be a burden for a business of any size to do that, but I am mindful that we do not want to overburden businesses. I accept the explanation given by the hon. Member for Chippenham.
Turning to new clause 17, I would have loved to have six weeks of paternity leave when my three children were born. When my first child was born, I was still self-employed. It was before my election to this place, so the time I took off in 2016 was entirely unpaid because I just had to forgo client work, but it was important to do that.
I am slightly concerned that, as desirable as six weeks would be, it is too great a burden for businesses automatically to have to shoulder. Some good and generous employers may well find a way of offering it in one way or another, paid or otherwise. However, to go beyond the current entitlement of two weeks, which can be split up, as the Minister mentioned, seems to be too big an ask for some businesses, desirable though it may be for fathers to be able be there with their new child in the most precious early days of life to support the mother and the child. I gently invite Liberal Democrat Members to reflect on whether six weeks is realistic for every business.
Steve Darling
As a state, we need to reflect on what makes up our society. Often, it is family units. Whether that is the quintessential family of two parents and two children or something similar, supporting the family unit is absolutely essential. I suggest that the two new clauses are about supporting families. New clause 17 allows both partners to engage. Both my lads are now grown up. It is not just about the link with the child; it is about supporting the partnership of the couple—whatever form that couple happens to be—in bringing up the child. Extending leave entitlements would strengthen that bond. The impact of broken families on youngsters can be very profound, and we are strengthening families through these proposals. We will not push the new clauses to a vote, but we stand by them and believe in them wholeheartedly.
The Chair
Just for information, new clauses 16 and 17 would not be voted on at this point. That will come later in the consideration of the Bill.
Sir Ashley Fox (Bridgwater) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell. I would like to ask the Minister if he could—
Sir Ashley Fox
Sorry. I ask her whether she could advise on what analysis the Government have done on the likely cost to small businesses of making maternity-paternity shared parental leave a day one right. Although I agree that these are important rights for parents, I wonder what analysis has been done. I am concerned for small businesses, such as those with only one or two employees. If they were to take on a new employee, they could immediately find that they have to grant leave and pay, as well as find a substitute worker. I fully accept the importance of these rights, but is the Minister satisfied that it is appropriate to impose those burdens on small businesses, particularly given the other burdens in the Bill, the national insurance charges in the Budget and all other manner of taxes and impositions that the Government are introducing?
Dame Nia Griffith
Let me address that last point first. We have had engagement with stakeholders who represent families, such as Pregnant Then Screwed and Maternity Action, which has shown that they welcome the removal of continuity of service for paternity leave. We can all understand the benefits that that brings in terms of people being able to apply for new jobs and move to better-paid jobs. While the change will have a cost to businesses, it is estimated to be relatively small, at £6.2 million a year, and we believe that the positive impact on families will be much larger. This clause will make 10,000 more fathers and partners eligible for paternity leave, including those with low job security, who are most likely not to meet the current qualifying requirements. I remind the Committee that it is often those people in the most transitory jobs who have the most precarious financial positions and the least opportunity to spend time with their families.
I will address the comments made by the Liberal Democrat Front-Bench spokesman, the hon. Member for Torbay. We are making immediate changes to paternity leave through this Bill. We will make paternity leave available from day one in a new job and enable paternity leave to be taken after shared parental leave. The flexibility that this will give rise to will enable employees to move towards better-paid employment without the fear of losing their right to protected time away to be with their families. We have also committed to review the entire parental leave system to ensure that it best supports families. As I mentioned earlier, that is already in progress across the Government.
I will make a small technical point. The effect of new clause 17 is that fathers and partners who are eligible for paternity leave would be entitled to six weeks of leave, adding four weeks to the existing two weeks offered by the current paternity leave entitlement. The new clause would not affect the entitlement window in which fathers and partners need to take their paternity leave, as this was extended from 56 days to 52 weeks in April 2024. However, the change to enable paternity leave to be taken over 52 weeks was made in secondary legislation. The new clause would make this change in primary legislation, which would mean that it would not be possible to make any future changes to the period in which a parent could take parental leave in secondary legislation. On that note, I commend clauses 11 and 12 to the Committee.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12 ordered to stand part of the Bill.
Clause 13
Ability to take paternity leave following shared parental leave
Question proposed, That the clause stand part of the Bill.
Dame Nia Griffith
The point of clause 13 is to give employed fathers, partners and secondary adopters, including those who have their children through a surrogacy arrangement, the ability to take paternity leave and pay after taking shared parental leave and pay. The clause amends the Employment Rights Act 1996 by removing the limitation that prevents fathers and partners from taking paternity leave and pay after shared parental leave and pay. In April 2024, changes were made to paternity leave and pay, enabling it to be taken at any time in the first year following a child’s birth or adoption. Before then, parents had eight weeks to take their paternity leave and pay. That change means that parents are now more likely to take their paternity leave and pay after their shared parental leave and pay, as they now have more time to take their paternity leave and pay. Removing that restriction creates more flexibility for parents and means that parents who choose to take their shared parental leave and pay first will not then lose their ability to take their entitlement to paternity leave and pay.
Currently, if shared parental leave and pay is taken, parents lose any remaining paternity leave and pay entitlements they have not yet used. Removing that restriction creates a more supportive framework for families by allowing greater flexibility in how parents structure their leave, and ensures that they will not inadvertently lose access to the leave and pay they are entitled to.
Greg Smith
Certainly there is no objection from the Opposition to the principle of flexibility in ensuring people can have that choice and ability to dictate when leave is taken, particularly in the case of paternity leave. I can think of many examples, including colleagues from the previous Parliament. I acted as the proxy vote for one of them while they were on paternity leave. They pushed that back slightly—the obscurities of this place—to ensure that their paternity leave did not marry up with recess. However, there will be many other reasons and flexibilities that people require away from the eccentricities of working in this place.
I ask the Minister to reflect on whether, within that framework of flexibility, which in its own right is a good thing, there needs to be any secondary guidance or advice to businesses on what might turn out to be some very rare but foreseeable circumstances where employees or individuals push the boundaries a bit too far with their employers. and on what to do in those extreme cases. That is not to detract in any way, shape or form from the principle of flexibility, but I ask whether there is a requirement for guidance notes or Government advice, however it is formed, to give employers a bit of a safety net if, in one or two cases, those boundaries be pushed a bit too far.
Sarah Gibson
Given the Liberal Democrat new clauses we discussed earlier, it is clear that we welcome any flexibility that encourages paternity leave and allows parents to share the leave in an equal and welcoming way. Therefore, we welcome this clause.
Dame Nia Griffith
In response to the point made by the hon. Member for Mid Buckinghamshire, there are clearly defined time limits, and I am sure that most employers and employees will manage to work this out. I just point out gently that the impact assessment on these provisions received a green rating, so some work has been done on this. I remind Members that we are undertaking a wider review as well in respect of paternity and parental leave.
Question put and agreed to.
Clause 13 accordingly ordered to stand part of the Bill.
Clause 14
Bereavement leave
Question proposed, That the clause stand part of the Bill.
Dame Nia Griffith
Clause 14 establishes a new day one right to bereavement leave. The loss of a loved one is a deeply personal experience, and a sad reality that almost all of us will experience. When that happens, the grief that comes with a loss will impact us all in different ways. Some individuals may need time and space away from other demands, including work, to begin to process their loss. Others may prefer to keep working to maintain a sense of familiarity while adjusting to a new normal. Thankfully, for those who need it, the majority of employers respond compassionately to requests for time away from work, and recognise the key role they can play in supporting their employees during this time. In the absence, however, of a statutory right, not all employees may be afforded the time off they need to grieve. We estimate that this would benefit at least 900,000 workers each year. That is a significant proportion of the working population who will be able to access bereavement leave from day one of employment.
Currently, the only bereavement entitlement in legislation is parental bereavement leave, which provides two weeks of leave for parents who experience the devastating loss of their child, from 24 completed weeks of pregnancy until the child reaches the age of 18. That is set out in sections 80EA to 80EE of the Employment Rights Act 1996 and in the Parental Bereavement Leave Regulations 2020. Subsections (2) and (3) of clause 14 amend those sections of the 1996 Act, so that the duty on the Secretary of State to lay regulations establishing parental bereavement leave is widened to require regulations providing for bereavement leave for other loved ones as well.
The amendments in subsection (3) ensure that the regulations, in the case of the new bereavement entitlement, must set out the following: first, the eligibility of the new entitlement by definition of the employee’s relationship to the deceased; secondly, the length of leave, which must be a minimum of one week; thirdly, when the leave must be taken, which must be before the end of at least 56 days after the person’s death; and finally, how the leave is to be taken, such as in one block or two blocks, or whatever is appropriate.
Should an employee suffer multiple bereavements, the clause sets out that they are entitled to leave in respect of each person who has passed away. The approach to regulations mirrors that taken when establishing parental bereavement leave and allows similar provisions to be included in the new regulations. Due to the sensitive and personal nature of bereavement, we will consult stakeholders on the details to be set out in regulations to ensure that the entitlement is constructed with the needs of employees and employers at the forefront.
Subsections (4) to (11) make amendments to other provisions of the 1996 Act to enable the regulations to provide important protections for employees who take bereavement leave, such as protection against detriment, protection of contractual rights, and protection for treating a dismissal that takes place for a reason relating to bereavement leave as unfair.
Subsections (12) to (13) make consequential amendments to His Majesty’s Treasury legislation to provide for how persons on bereavement leave are to be taken into account when assessing an employee’s “committed time” or the number of employees for the purpose of certain initiatives or schemes, in the same way as other family-related entitlements. Subsection (14) makes consequential amendments to the Parental Bereavement (Leave and Pay) Act 2018 to remove provisions that no longer have any effect following the amendments made by clause 14 of this Bill.
Greg Smith
I am grateful to the Minister for her explanation of clause 14. It is quite clear on a purely human level that bereavement can strike any family and any individual, often with zero notice or ability to plan, and it is therefore a basic tenet of humanity that we would all expect employers to be sensitive, generous and sympathetic to any employee who finds themselves in that position. For the record, it is certainly my experience that the vast majority of businesses and employers show compassion, sensitivity and generosity to ensure that anybody who is bereaved has the time, space and freedom to be able to grieve, plan for things such as funerals and start the very hard process of not just saying goodbye to that loved one, but putting various affairs in order, such as registering the death. People have to go through a high burden of bureaucracy when they find themselves in that position.
The core principle of the proposals is fundamentally a good one, and does not warrant opposition. However, there is an area that I think needs a little more debate and potentially some refinement. The Minister spoke about the need to consult and to get these regulations right, and it is important that we do that. I do not in any way oppose the principle of the proposals, but I gently suggest that perhaps it would have been better to do the consultation first, so that this could have been clearer in the legislation as it goes forward. I repeat, however, that I say that not to distract from the good principle that sits underneath these regulations.
I ask the Minister to reflect further on the point from the evidence session about bereavement leave being available to parents who have lost their child after 24 weeks of pregnancy. There are many people who suffer the loss of a pregnancy before 24 weeks. That is one of the most heartbreaking things for mothers, fathers and wider families, and it happens every single day up and down the land. After all the joy, excitement and future planning that go into any mother’s, father’s and family’s life when they find out that they are expecting a child, the often very sudden news that that pregnancy has not made it comes as a huge shock, often with no notice.
There are things that a family, a mother, a father, will go through when they find out that that pregnancy has not been viable and has sadly ended under 24 weeks, including being taken to a small room and being asked the direct question—which, I assure the Committee makes the ears prick up and the reality of what has just happened come into sharp focus—about whether you wish to attend the burial of that failed pregnancy. That brings into sharp focus that you are actually being asked to say goodbye to your child. That can happen at any point in a pregnancy; it happened to my wife at about 14 weeks in 2018, and I remember vividly sitting in that room, having to fill out what seemed like the “Yellow Pages”-worth of forms, and reflecting that what should have been our second child was not going to be our second child. That takes some getting over, and it often involves surgery for the mother afterwards.
Although we have no formal amendment on this at this stage—I reserve the right to perhaps revisit it on Report—it is worth the Government reflecting on a genuine cross-party basis whether the 24-week period can be substantially reduced to give time to families who are saying goodbye. I do not want to get into the debates about when is a child a child, but it is devastating for families who go through that experience, and if the Government can find a way to ensure that families facing those circumstances can have some breathing space, so that we do not just have the “Back to work tomorrow, please” mentality that persists in this country, it would be a welcome and positive step. That might yet bring the whole House together and ensure that people have, as I say, space and time to reflect on what has just happened—to grieve, come back together again and then hopefully plan for the future.
Sarah Gibson
After that incredibly moving speech by the hon. Member for Mid Buckinghamshire, I cannot help but share the absolute concerns of friends of mine who have also lost children in pregnancy quite early on. I appreciate that that causes devastation, and I would be very happy to support any amendments that are suggested on Report. Perhaps an earlier date for bereavement would be appropriate.
Dame Nia Griffith
I, too, thank the hon. Member for Mid Buckinghamshire for sharing such a personal story with us today. As he says, the loss of a child or a baby at any stage is incredibly upsetting. Parents who suffer a stillbirth may be entitled to parental bereavement leave and pay. Although there is no statutory entitlement for miscarriage before 24 weeks, we expect employers to respond with compassion and understanding and encourage employees to discuss the support that they need with their employer. A woman is protected against discrimination in the workplace due to pregnancy, any illness related to pregnancy or absence of that illness. That includes any illness caused by miscarriage extending to two weeks after the end of the pregnancy. After that, the woman is still protected by the Equality Act 2010 sex discrimination protections if she is treated less favourably because she suffered a miscarriage.
Clause 20 will also allow for regulations to be made about dismissal during a protected period of pregnancy, and the enhanced dismissal protection policy will cover women during their pregnancy. I point out that at the moment the Women and Equalities Committee is looking into that and doing an inquiry. We will study the outcome of that very closely as we take our policies forward.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Employers to take all reasonable steps to prevent sexual harassment
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Amendment 130, in clause 16, page 30, line 24, at end insert—
“(1D) In exercising their duties under this section, an employer must have regard to protecting freedom of expression.
(1E) In subsection (1D), ‘freedom of expression’ is defined in accordance with Schedule 1 of the Human Rights Act 1998.”
This amendment would require employers to have regard to protecting freedom of expression when exercising the Bill’s duty not to permit harassment of their employees.
Amendment 131, in clause 16, page 30, line 24, at end insert—
“(1D) Subsection (1A) shall not apply to—
(a) higher education institutions, or
(b) providers of─
(i) hotels and similar accommodation;
(ii) holiday and other short-stay accommodation;
(iii) restaurants and mobile food service activities; and
(iv) beverage serving activities.”
This amendment would exclude higher education institutions and hospitality providers from the Bill’s duties for employers not to permit harassment of their employees.
Clauses 16 and 17 stand part.
New clause 29—Employer duties on harassment: impact assessment—
“(1) The Secretary of State must carry out an assessment of the likely impact of sections 15 to 18 of this Act on employers.
(2) The assessment must—
(a) report on the extent to which the prevalence of third-party harassment makes the case for the measures in sections 15 to 18;
(b) include an assessment of the impact of sections 15 to 18 on free speech;
(c) include an assessment of the likely costs to employers of sections 15 to 18;
(d) include—
(i) an assessment of which occupations might be at particular risk of third-party harassment through no fault of the employer, and
(ii) proposals for mitigations that can be put in place for employers employing people in such occupations.
(3) The Secretary of State must lay a report setting out the findings of the assessment before each House of Parliament.”
This new clause requires the Secretary of State to assess the impact of the provisions of Clauses 15 to 18.
New clause 39—Duty to prevent violence and harassment in the workplace—
“(1) Section 2 of the Health and Safety at Work etc. Act 1974 is amended as follows.
(2) After subsection (2)(e) insert—
‘(f) the adoption of proactive and preventative measures to protect all persons working in their workplace from violence and harassment, including—
(i) gender-based violence;
(ii) sexual harassment;
(iii) psychological and emotional abuse;
(iv) physical and sexual abuse;
(v) stalking and harassment, including online harassment;
(vi) threats of violence.’
(3) After subsection (3) insert—
‘(3A) It shall be the duty of every employer to prepare, and as often as may be appropriate revise, an assessment to identify potential risks of violence and harassment in the workplace and implement policies and procedures to eliminate these risks so far as is reasonably practicable.
(3B) It shall be the duty of every employer to provide training to all employees on recognising and preventing violence and harassment in the workplace, with a focus on gender-responsive approaches.
(3C) In subsection (3B) a “gender-responsive approach” means taking into account the various needs, interests, and experiences of people of different gender identities, including women and girls, when designing and implementing policies and procedures.
(3D) In this section, “persons working in the workplace” includes—
(a) employees;
(b) full-time, part-time, and temporary workers; and
(c) interns and apprentices.
(3E) In subsection (2)(f) and subsections (3A) and (3B), a reference to the workplace includes remote and hybrid work environments.’”
This new clause will amend the Health and Safety at Work etc. Act 1974 to place a duty on employers to protect all those working in their workplace from gender-based violence and harassment.
New clause 40—Expanded duties of the Health and Safety Executive—
“In the Health and Safety at Work etc. Act 1974, after section 11 (functions of the Executive) insert—
‘11ZA Duties of the Executive: health and safety framework on violence and harassment
(1) It shall be the duty of the Executive to develop, publish and as often as may be appropriate revise a health and safety framework on violence and harassment in the workplace.
(2) This framework shall include specific provisions relating to—
(a) the prevention of gender-based violence and harassment of those in the workplace including the prevention of physical, emotional, and psychological abuse;
(b) the duty of employers to create safe and inclusive workplaces and the preventative measures they must adopt; and
(c) the use of monitoring and enforcement mechanisms to ensure compliance with the duty of the employer in relation to violence and harassment (see section 2(2)(f)).
(3) The Executive shall work with other relevant bodies, including the Equality and Human Rights Commission and law enforcement agencies, to develop and revise this framework.
11ZB Duties of the Executive: guidance for employers
The Executive shall, in consultation with such other persons as it considers to be relevant, issue guidance for employers about the protection of those facing violence and harassment on the basis of gender in the workplace by—
(a) implementing workplace policies to prevent violence and harassment;
(b) establishing confidential reporting mechanisms to allow victims to report incidents;
(c) conducting risk assessments and ensuring compliance with the health and safety framework (see section 11ZA);
(d) reporting and addressing incidents of violence and harassment; and
(e) supporting victims of violence and harassment, including making accommodations in the workplace to support such victims.’”
This new clause will create a duty on the Health and Safety Executive to develop a health and safety framework on violence and harassment and to issue guidance for employers about the protection of those facing violence and harassment on the basis of gender in the workplace.
Amendment 135, in clause 118, page 105, line 20, at end insert—
“(3A) But no regulations under subsection (3) may be made to bring into force sections 15 to 18 of this Act until the findings set out in the report under section [employer duties on harassment: impact assessment] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”
This amendment is linked to NC29.
Dame Nia Griffith
If I may just correct the record, there was not an impact assessment on clause 13—I inadvertently said that there was—because the impact is so small. But there was on clauses 11 and 12, and they received a rating of green.
Dame Nia Griffith
I will now speak to clauses 15 to 17, new clauses 29, 39 and 40, and amendments 130, 131 and 135. Clause 15 will strengthen the new duty on employers to take reasonable steps to prevent sexual harassment of their employees, which came into force on 26 October 2024 under the Equality Act 2010. Clause 15 requires that employers must take all reasonable steps to prevent sexual harassment of their employees. Including “all” emphasises the thorough approach that employers must take to prevent that. At the same time, the requirement remains limited to steps that are “reasonable”. The amended duty will mirror the existing statutory defence for an employer regarding vicarious liability, which requires them to show that they have taken all reasonable steps to prevent harassment.
The concept of “all reasonable steps” has the advantage of being well established and familiar to employers and employment tribunals. This will therefore provide a consistent threshold and decrease uncertainty for all. The Government intend to provide businesses with clear guidance to ensure that they are fully supported in complying with the new legislation.
Clause 16 will introduce an obligation on employers not to permit the harassment of their employees by third parties under section 40 of the Equality Act. As well as employers taking action to prevent sexual harassment, workplaces and working conditions must be free from all forms of harassment. The clause therefore encompasses all three types of harassment set out under section 26 of the Equality Act. As well as sexual harassment, it covers harassment related to a protected characteristic that is covered by the existing harassment provision. It also covers treating someone less favourably because they have either submitted to or rejected sexual harassment, or harassment related to sex or to gender reassignment.
To avoid liability, employers will need to do what is reasonable. What constitutes “all reasonable steps” for third-party harassment will depend on the specific circumstances of the employer. Employers will need to consider the nature of any contact with third parties—for example, the type of third party, the frequency and the environment. In certain sectors, there may be more regular worker interaction with third-party contractors than in others. This amendment to the Equality Act will give much-needed clarity on the rights and responsibilities of employees and employers in these scenarios, and require employers to take action to prevent such harassment from occurring.
The burden of holding perpetrators and employers to account and of driving change is too great to be shouldered alone by employees who have experienced harassment. This measure therefore sends a clear signal to all employers that they must take steps against third-party harassment. That is the right thing to do because tackling misogyny and violence against women and girls is a societal issue in which employers can play a key role. This also means that victims can be confident that they are protected by the law if their employer has not taken all reasonable steps to protect them, and that they are able to take legal action if they so wish. This measure will therefore benefit all employees by making workplaces safer and ensuring that everyone has the same opportunity to succeed at work.
As I said earlier, oral evidence from the Fawcett Society shows that one in five women have been sexually assaulted in the workplace by third parties. These measures could have a positive effect on women, those with disabilities and ethnic minorities across the UK.
Clause 17 introduces a power to make regulations to specify steps that are reasonable for employers to take to prevent sexual harassment. That is to meet the requirements set out in the Equality Act 2010 that employers take all reasonable steps to prevent sexual harassment of their employees. Those are contained in section 40A, the general preventative duty; section 40, as amended by this Bill, to the extent it relates to sexual harassment by third parties; and section 109, employers’ vicarious liability, where that relates to a failure to prevent the sexual harassment. The provisions place broad requirements on employers, but it will be important to ensure that specific steps are taken where the evidence demonstrates that they are proportionate and needed to prevent sexual harassment. The regulations may also require an employer to have regard to specified matters when taking those steps.
The Government have already produced an extensive set of impact assessments, published on Second Reading and based on the best available evidence for the potential impact on business, workers and the wider economy. We intend to refine that analysis over time, working closely with businesses, trade unions, academics, think-tanks and the Regulatory Policy Committee. We will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the better regulation framework requirements. That will account for where primary legislation in the Bill has been amended in its passage through Parliament in such a way as to change significantly the impacts of the policy on business. That impact assessment will be published alongside the enacted legislation. In addition, we will publish further analysis alongside future consultations ahead of any secondary legislation, to meet our better regulation framework requirements.
No one should fear being sexually assaulted in the workplace, and the measures go further to protect employees. One in five women has been sexually assaulted in the workplace by someone outside their organisation. The measures could have a positive effect on women, those with disabilities, and ethnic minorities across the UK. The amendments and new clauses in this group would not add value, given the extensive impact assessment to which the Government have already committed.
On new clauses 39 and 40, I reassure the Committee that the Government entirely support the importance of ensuring that workers, including women and girls, are protected from workplace violence and harassment. We already have in place a strong and appropriate regulatory regime that provides protection to workers from violence and harassment. Through the Health and Safety at Work etc. Act 1974 and the statutory provisions made under it, employers already have a duty to protect their workers from health and safety risks, including workplace violence, and they must consider ways in which they can remove or reduce such risk. That legislation applies to everyone, irrespective of whether the victims have protected characteristics—it is a law to protect all workers.
The Health and Safety at Work etc. Act, along with associated legislation, requires employers to reduce the risks of workplace violence. As part of that, the Management of Health and Safety at Work Regulations 1999 require employers first to assess the risks in the workplace, including the potential for violence, and then to take appropriate action to reduce those risks. The Health and Safety Executive and local authorities, which are responsible for enforcing the 1974 Act, carry out proactive and reactive work to ensure that employers are complying with their duties under the Act to assess the risks and are implementing appropriate control measures to protect their workers, and others affected by their work, from workplace violence.
The Health and Safety Executive has also published a range of readily available guidance on its website to assist employers in complying with their legal obligations. The right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) has tabled new clause 40, asking the HSE to publish a health and safety framework on violence and harassment in the workplace, including violence against women and girls in the workplace, but employers already have such duties under the 1999 regulations, which require them to have suitable and sufficient arrangements in place to manage health and safety in the workplace, including violence and aggression.
Harassment in the workplace could be covered by the Health and Safety at Work etc. Act, but the HSE does not act where a more appropriate regulator has specific responsibility, or where there is more directly applicable legislation. Police already have powers to prosecute harassment offences under the Protection from Harassment Act 1997, and the Equality and Human Rights Commission can take action under the Equality Act 2010.
Greg Smith
There is quite a lot in this grouping, and I will try to go through it in a sensible order. I will start with new clause 29 and amendment 135. The Regulatory Policy Committee has said that the Government have not managed to demonstrate sufficiently the need for the clauses in the Bill that require employers to prevent harassment of their employees by third parties, nor that the measures are sensible—those are the RPC’s words, not mine—and it has rated the impact assessment on this as red.
I want to be absolutely crystal clear from the outset, across all the clauses, amendments and new clauses that we are debating, that harassment is wrong; that the sort of sexual harassment that the Minister spoke about is absolutely, categorically unacceptable; and that whatever it takes in the law, and from an enforcement perspective, to stamp harassment out must happen. Such harassment is simply unacceptable in our country and society. The comments that I am about to make are not in any way, shape or form critical of action against harassment, therefore; they are about trying to best understand how the Bill and the amendments that have been tabled would work, and the difference they would realistically make to people’s lives, including by protecting them from harassment or other unacceptable behaviour.
With those ground rules set, if I may put it in that manner, the Opposition are concerned, and have doubts about, the need for and the operability of the provisions in clauses 15 to 18. I repeat that that is not about the principle of stopping harassment, but about the operability of the proposals that we are considering. We must question whether the benefits of these clauses will be outweighed by the burden on employers and, in certain respects, by the chilling impact on free speech.
New clause 29 would require the Secretary of State to
“report on the extent to which the prevalence of third-party harassment makes the case for the measures in sections 15 to 18”.
Within that report, the Secretary of State must include
“an assessment of the impact of sections 15 to 18 on free speech…an assessment of the likely costs to employers…an assessment of which occupations might be at particular risk of third-party harassment through no fault of the employer, and…proposals for mitigations that can be put in place for employers employing people in such occupations.”
Amendment 135 quite reasonably provides that clauses 15 to 18 will not come into effect until—not never, but until—the House of Commons has approved the report required under new clause 29.
We then come to the two new clauses tabled by the right hon. Member for Dwyfor Meirionnydd, the leader of Plaid Cymru. I share the Minister’s concerns about the new clauses. I do not think they are necessary, I do not think that they particularly add to the spirit of what the Government are trying to achieve in the Bill and I do not think they pass the Opposition’s tests of operability. The official Opposition will therefore not be supporting them.
Amendment 130 would require employers to have regard to protecting freedom of expression when exercising the Bill’s duty not to permit harassment of their employees. I do not believe any business wants its employees to be harassed. No business owner that I know wants their staff, or any human being, to face harassment at all, in whatever setting. However, the amendment is designed to show the impossibility of the position in which the provisions on third-party harassment will put employers. It is a probing amendment, in the sense that we are not trying to create additional burdens for businesses by giving them another duty. It has been tabled so that we can talk about how unrealistic it is to expect employers to be able to enforce all the provisions in the Bill and, inherent to that, so that we can make the challenge that there may be more appropriate and operable pieces of legislation that already sit in statute or that may yet still need to be debated and passed through Parliament to prevent that.
The amendment is about how an employer can balance the right to free expression with the duties explicitly in the Bill. I do not believe that, in the moment, it will always be clear whether someone’s behaviour, say, in a pub falls on the right or wrong side of the line—it is a subjective test. Leaving that aside, there are situations where it will be frankly impossible for employers to abide by the law that the Government are seeking to make. I am interested in the Minister’s reflections on that.
Laurence Turner
The hon. Gentleman says that there will be situations where it is not just difficult, but impossible for an employer to abide by the Bill. Can he give some examples of the situations he has in mind?
Greg Smith
I am building up to my wider point. To skip ahead, there will be circumstances where, even within the reasonableness test—I understand that test—something so unexpected and unforeseeable happens that the employer could not in any way have planned a protection for their employees around that. Despite that, the employer might find themselves challenged in a tribunal or, worse, some form of criminal investigation about why they did not take reasonable steps against a totally unexpected and unplanned-for eventuality. I accept that, in most cases, there are practical steps that could be put in place to prevent harassment of any sort, but there will be times where that reasonableness test could fall over and someone could find themselves in a very tricky spot, unable to account for why they did not prepare for the totally unexpected.
Jon Pearce (High Peak) (Lab)
I refer the Committee to my entry in the Register of Members’ Financial Interests and my membership of the GMB. The hon. Gentleman is making the point that it would be impossible for an employer to reasonably avoid something so extreme and out of the ordinary, but that would actually fall directly in the test, because the tribunal would look at whether it was reasonable for the employer to have put in arrangements, procedures or preparations to avoid a likely, foreseeable scenario. His concerns are completely misplaced, because no employer could reasonably avoid a situation that was impossible to avoid.
To go back to the fundamentals, as the hon. Gentleman said, we and employers should be taking all appropriate and reasonable steps, because 40% of women in the workplace suffer sexual harassment. These measures are reasonable in and of themselves, so I put it to him that he is worrying about something that is covered by the test.
Greg Smith
In many respects it is my job to be worried, to properly kick the tyres and to understand the operability of what the Government are trying to achieve. I certainly take the hon. Gentleman’s point on sexual harassment, and there is very clear criminal law in place that is probably more appropriate to bring perpetrators of such heinous crimes properly to justice. My concerns about the reasonableness test are less about that which can and should be pursued through criminal legislation; they are more about other forms of very subjectively tested harassment, as well as some points that I hope to make about freedom of speech. Hopefully, the hon. Gentleman will reflect on and understand those concerns when I get to that point.
Michael Wheeler (Worsley and Eccles) (Lab)
I refer the Committee to my declaration in the Register of Members’ Financial Interests and my membership of trade unions. It seems that my thoughts align with those of my hon. Friend the Member for High Peak on the reasonableness of completely unforeseeable and unexpected things, but I would go a slight step further on what we are looking for from employers.
Even in circumstances in which something is so completely unexpected and unforeseeable that it might be reasonable for preparatory measures not to be in place, the duty would also address how employers respond. It is about having systems in place to react to incidents when they happen, rather than foreseeing every possible eventuality of the completely unexpected and unforeseeable. We can have supportive measures in place to prevent harassment from continuing or from happening again, and to support the individual.
Greg Smith
I understand the hon. Gentleman’s point. I broadly agree, but my challenge to him is that reasonableness can be interpreted in many different ways. There will always been an appeals process or something similar, but I worry that unless the legislation is clearer, some good-willed employers who are entirely honest and decent in how they try to protect their staff could, in some circumstances, be on a very sticky wicket trying to defend themselves against something that they never foresaw or dreamed of. They may have been a little too innocent, but they will find themselves in a difficult spot. That is where safeguards need to be locked into the legislation in respect of what is a very subjective test.
I was about to come on to an example. I will preface it by saying that absolutely nobody should be abused in the workplace and absolutely nobody should face any form of harassment in the workplace. However, let us think for a moment about how some of the Bill’s provisions would operate in an NHS accident and emergency department. In any A&E up and down the land, our wonderful doctors and nurses sometimes put themselves in harm’s way, particularly late at night. Perhaps they have a patient who is clearly inebriated but has injured themselves. I am not excusing it for one second, but it can and does happen. Let us say that an incredibly drunk patient, who may have fallen and broken their hand, verbally abuses—not sexually harasses—the doctor or nurse treating them. The doctor or nurse does not deserve that, and that behaviour should not be happening, but I would wager that it happens most Friday or Saturday nights somewhere. It is unacceptable, but it does happen. What should happen in that circumstance?
Greg Smith
Let me just finish this point. I am trying to deal with a real-life scenario that should not be happening, but does. What does the doctor or nurse do, under the Bill? Do they refuse to treat the patient? Some would argue that perhaps they should, but the reality is that that is not what they are there for. They are there to heal, treat and support that patient who has got into a stupid predicament.
Alison Hume (Scarborough and Whitby) (Lab)
Will the shadow Minister give way?
Greg Smith
I will just finish this point. Both hon. Ladies know that I will give way.
Where would the test come? What should the NHS, as the employer, have done to prevent that situation? What is the overall outcome in that scenario? Where does the reasonableness test fall? I repeat that I am not excusing the behaviour; I am putting it forward as a test to the provisions in the Bill, as a situation in which the employer—ultimately the national health service or perhaps the Health Secretary—would find themselves.
Sarah Gibson
I appreciate the shadow Minister’s giving way. I will make an effort not to intervene every time he stands up.
There is a very serious point here that anyone who has ever been in a situation in which they have felt intimidated will understand. An employee in higher education may be intimidated by students who are irritated, angry or frustrated about their results. In my case, they came to my office because they felt that they should not have failed. I have found myself in a small room—the kind of room in which this House would not allow MPs to hold a surgery—with no external access and no security guards on the door to intervene.
Such situations can be hugely difficult. Although the employer is not always in a position to pre-empt the situation, taking reasonable steps surely means providing an option for everybody to have an emergency phone number—that is what was available to me in my university job—or, at A&E, to have security staff intervene when somebody arrives quite clearly inebriated, in the same way that our security staff do at our surgeries. They will immediately foresee the problem and will make sure that the person is accompanied and is not left alone with a member of staff. Those are the sort of reasonable preparations that we would expect; I would be surprised if any employer were not happy to carry them out. I therefore see no reason why that should not be made clear in the legislation.
Greg Smith
I hope that the hon. Lady is right, but part of the test that the amendment sets for the Government is whether it will work. Is it clear? Will it put the protections in place that everybody wants to see? There is a question mark over whether they will work.
The NHS A&E environment is an example with which we are probably all familiar from our postbags. Constituents write to us about situations that they have witnessed or been in themselves, particularly on a busy Friday or Saturday night or in the Christmas season when there are lots of parties and lots of people probably having far too much to drink and sometimes getting themselves into unacceptable situations. There might not be the staff to double up; the patient might be abusive to all of them. It is unacceptable, horrible and wrong, but it is sometimes the reality. Where does that leave the senior doctor or nurse on duty, the chief executive of the trust, and ultimately the Secretary of State or the permanent secretary to the Department of Health and Social Care? Where does the test actually leave them, and what more can be done to make the legislation work?
The hon. Member for Scarborough and Whitby has been waiting patiently to come in.
Alison Hume
It is a pleasure to serve under your chairmanship, Mr Mundell. I thank the hon. Member for giving way. I refer the Committee to my declaration of interests and my membership of Unison and the Writers’ Guild of Great Britain.
The NHS has zero-tolerance policies, in common with the police service and any other service that deals with these difficult situations. They are good employers that have things in place. The shadow Minister spoke about employers not thinking about situations and being innocent. I draw his attention to their responsibility to employees who were innocent, but have lost their innocence as a result of unwanted sexual harassment or worse.
Greg Smith
I do not disagree with a word that the hon. Lady says. The NHS, like every employer, is right to take a zero-tolerance attitude to any form of harassment against its employees, customers, patients or whoever else happens to be on its premises at any time.
I accept the hon. Lady’s point about innocence. My A&E example was not so much about sexual harassment or worse criminality; it is all horrendous criminality, in my view, but there are other criminal laws that can and should be used to bring perpetrators to justice in that space. My example was more about abusive behaviour in the form of verbal harassment from a patient who is drunk or high on drugs. It is still horrible, it is still wrong and it still needs action, but what happens? The zero-tolerance policy, all of a sudden, becomes a poster on the wall rather than real, live action there and then, as that drunk patient makes unacceptable remarks of whatever nature to the nurse or doctor. The test is whether the words in the Bill before us—as opposed to other, potentially even more stringent or stronger legislation that is already on the statute book or that may yet need to be passed—will have a better effect.
Alison Hume
I think the Bill will do that, because it will strengthen the employers’ responsibility to take all reasonable steps.
Greg Smith
I hope that the hon. Lady is right. What my colleagues and I seek, through our amendment, is to test that. I do not think that anyone will criticise any Member of this House, on either side, for trying to properly road-test any legislation that comes before us and check whether it will have the effect that the Government seek.
Amendment 131 is topical, given the intervention that the hon. Member for Chippenham made about higher education. It would exclude higher education institutions and hospitality providers from some of the duties in the Bill, not around criminal behaviour—it would not exclude them from legislation that should rightly be used to challenge sexual harassment, for example—but around free speech. Employers may end up being overly cautious with respect to protecting free speech, as they will be worried about claims being brought under this legislation. That would lead to free speech debate and challenge being eroded. In the case of higher education, those are the very institutions at which free speech, challenge and rigorous and robust debate should frankly be taking place, and where wrong and unacceptable ideas can be knocked down robustly and firmly through the medium of intellectual debate.
Mr Peter Bedford (Mid Leicestershire) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell. On the point about the hospitality and pubs sector, on which I held a debate in Westminster Hall a few weeks ago, there is real concern about this part of legislation, in particular about freedom of expression and freedom of speech. Does my hon. Friend agree that one consequence of the legislation might be that industry take actions beyond those intended? For example, people might self-censor beyond what could be seen as an off-colour or offensive joke, because they are scared that they could be held liable later for not protecting their employees. My hon. Friend gave an example, but another one is a comedy club, which would be conscious of and concerned about who they invite to entertain because of the perception that some of their staff could be offended, and the reasonableness of how that could be interpreted in the context of harassment. Does my hon. Friend agree that this is a concerning unintended consequence of the legislation?
Greg Smith
My hon. Friend is right that there needs to be greater clarity about that which is already covered in criminal law—sexual harassment, direct racial abuse or abuse to someone on the basis of their sexuality, which clearly has to be actioned under criminal law and it must be ensured that the perpetrators are brought to justice—compared with satire or cutting jokes. Those are things that do not stray into the criminal, but perhaps some people might be offended by them, for whatever reason.
There are quite a lot of comedians openly talking about whether comedy is in fact becoming a thing of the past in this country. They are finding themselves unable to tell jokes that, while not going into the criminal, do risk offending some people. If that ends up shutting down comedy clubs or open-mic nights in pubs, it would be an unintended consequence that I cannot imagine the Government would want to bring about.
Alex McIntyre
I refer to my membership of the GMB union and the Community trade union. I shall come on to some of the nonsense we are hearing around free speech. I ask a direct question, seeing as we seem to be equating jokes with harassment: does the shadow Minister know the definition of harassment under the Equality Act and would he share that with the Committee so that we may understand what we are talking about here?
Greg Smith
What I am trying to test is the point at which the reasonability point would trigger. Is this the right Bill—the right set of clauses—to deal with the problems the hon. Member has outlined? There is a clear difference between that which should be treated under criminal law—and rightly stamped down on hard and forcibly—and the unintended consequence that will force sectors such as higher education or hospitality to become so risk averse that they shut down some of their activities. Yes, those activities, whether some form of comedy or whatever, could potentially be offensive to some people, but they are not criminal.
Alex McIntyre
I am afraid the shadow Minister does not know the definition under the Equality Act. If he did, he would know that the conduct is required to either violate someone’s dignity or create
“an intimidating, hostile, degrading, humiliating or offensive environment”.
That conduct has to be related to someone’s protected characteristic: sex, race, gender or their sexuality. We are talking about very serious circumstances. They fall short of the criminal definition of harassment, but they are within the Equality Act definition.
There is already a test within the current law to avoid some of the free speech arguments the shadow Minister is making. He is seeking to trivialise the experience of many people in those industries who face unacceptable harassment in the workplace.
Greg Smith
I must take issue with the hon. Gentleman. I am not trying to trivialise anything. I have been clear from the outset about how seriously we should take sexual harassment, racial abuse and abuse on the basis of someone’s sexuality, and that I believe the full force of the right laws should be used against any perpetrator of that hideous, evil and unacceptable behaviour. I take issue with his comment that I am trying to trivialise anything. I am trying to ensure that the provisions in the Bill will actually work, and will not have unintended consequences that some might call trivial—which some might be offended by but which do not cross what most people in society would deem some of those lines.
In the definition he just gave, the hon. Gentleman mentioned the issue of undermining someone’s dignity. I am reminded of the Society of Motor Manufacturers and Traders dinner a couple of weeks ago. I cannot remember whether the Minister was there, but the Secretary of State for Business and Trade was. Quite a famous comedian was on stage after the speeches, and their act was essentially to pick on people on various tables to find out which motor manufacturer they worked for and then, I would suggest, be quite brutal with them. He did perhaps undermine their dignity. It was not on the basis of sexuality, race or anything like that, but it was quite a brutal act. Everybody was laughing away, but what if someone in the audience was offended by that and took issue with it? Does that then put the organisers of the dinner—the chief executive of the SMMT—in the spotlight, under the provisions of the Bill? That is the point I think all members of this Committee and, ultimately, all Members of the House, have to be satisfied with before anybody allows this to become statute.
Alex McIntyre
I think the shadow Minister has already answered this question. What protected characteristic were any of those jokes related to? This is the point. It is not to stop people being comedians. If someone sits in the front row of a Ross Noble gig, they are bound to get picked on. If the joke relates to a protected characteristic, that is where it crosses the line into harassment. The example that the shadow Minister has just given is a good example of where this would not be triggered, because none of the jokes related to a protected characteristic.
Greg Smith
I hope that the hon. Gentleman is right, but that is not how the Bill is worded. The Bill allows the reasonability test to be applied over the top of the Equality Act definition he has brought to the attention of the Committee. I gently ask him to reflect on that point and just check, because I do not think he would want this unintended consequence to be followed through into legislation. It would undermine the very serious things we spoke about earlier and, dare I say, trivialise them.
Uma Kumaran (Stratford and Bow) (Lab)
I refer Members to my declaration of interests, and remind them that I am a member of the GMB. It is timely that we are discussing this, as today is Human Rights Day. In 1998, the Labour Government brought the Human Rights Act into domestic law. Freedom of speech is indeed a human right, but that does not mean someone has the freedom to incite hatred, discriminate or attack people with a protected characteristic. In this fictional comedy club we are talking about, what are the things that people are mentioning? Can the shadow Minister give us a specific example of a joke that he thinks the Bill would put in jeopardy of undermining or putting at risk the CEO of said organisation?
Greg Smith
I think I have been clear that every law available should be used—potentially, more could be passed—to properly prosecute, challenge, shut down and stop anyone inciting hatred on the basis of race, religion, sexuality or whatever it might be. I cannot find any better set of words to make my revulsion at those crimes clearer, and I show my absolute support for any enforcement agency or Government of any political persuasion that brings forward workable laws to clamp down on those unacceptable criminal behaviours, full stop.
Greg Smith
I will just finish this point, then I will be delighted to give way to my hon. Friend.
The point I am trying to make is that bits of legislation that we are asked to consider sometimes have unintended consequences, and that there is a risk of someone being offended by something that does not pass the reasonability test in this Bill. Outside the well-defined areas that go into the criminal, part of free speech is the right to offend on certain levels.
Greg Smith
I will give way in a second.
Many comedians—Jimmy Carr is an example—talk frequently at the moment about comedy being shut down. It is not criminal; it is not racial hatred or hatred on the basis of religion, sexuality or anything like that. It is beyond those points.
Uma Kumaran
We all enjoy comedy in this House, but this is a very serious subject. Article 10 of the Human Rights Act 1998, on the exercise of the freedoms that the shadow Minister is talking about, carries with it duties and responsibilities. It states that the freedoms
“may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of”
a number of things. In this fictional comedy club or this fictional speech, all the things that you are saying may—
Uma Kumaran
I apologise, Mr Mundell. All the things that the shadow Minister has referred to are already enshrined in various laws in this country, so what is the fictional scenario that he thinks this Bill jeopardises?
Greg Smith
The hon. Lady is right to bring the Committee’s attention to that which is already laid down in statute. I think that perhaps where the misunderstanding is coming in—the Opposition are trying to test this—is whether the new reasonability test will deliver perverse results in a tribunal. Probably nobody sitting in this room would expect that to happen, but it could supersede that which is already set down and create a new precedent.
Nick Timothy
I should probably make reference to my entry in the Register of Members’ Financial Interests: I am an unpaid trustee at the Index on Censorship, which may be relevant to this debate.
I do not think anybody here is a free speech absolutist. My hon. Friend is trying to test scenarios, but he is in no way talking about issues such as incitement of hatred, which are already criminal matters. We are talking about the codification of things that may be subjective in the light of the law of unintended consequences.
To bring some colour to the conversation, I thought I would make reference to a recent Independent Press Standards Organisation ruling. I cannot imagine that that was ever the kind of ruling that was intended at the time that IPSO was created. Gareth Roberts, who sometimes writes for The Spectator, was writing about a third party who had, in turn, written about issues relating to gender, and referred to them as
“a man who claims to be a woman”.
That person then complained to IPSO, which ruled that it was not wrong as a statement of fact, but still upheld the complaint on account of its being a prejudicial or pejorative reference to that person. I do not think that that is the kind of thing that was ever intended when IPSO was created, but it is the type of example that we may be talking about right now. I would love to know what my hon. Friend thinks about that.
Greg Smith
My hon. Friend highlights an issue that would come down to a subjective test, so “reasonableness” could mean something very different in different tribunal settings and to different individuals casting judgment on any such complaint. That goes to the absolute nub of what we are asking the Government to reflect on. Is the test strong enough? Is it workable? Is it operable? Will it actually produce perverse outcomes?
Alex McIntyre
Is the hon. Gentleman aware that, in the example that the hon. Member for West Suffolk just cited, IPSO found that there was no harassment, and therefore there was a finding under clause 12(i) of the editors’ code of practice, rather than clause 3?
Greg Smith
I am not certain that is quite the point that my hon. Friend the Member for West Suffolk was making. However, in the interest of fairness, I will commit to properly looking up that case, which I had not come across until my hon. Friend mentioned it a couple of moments ago.
Laurence Turner
We are back to talking about perverse outcomes and unintended consequences, which are important things to consider. However, is that not what we are looking at in amendment 131? In in my view, it confuses sectors with functions. The hon. Gentleman says that he and his colleagues have selected these particular cases or sectors because they relate to freedom of speech. However, if we take the example of universities and higher education, a higher education institution contracts services of all sorts, many of them not relating to freedom of speech—for example, security and refuse services—but if the amendment were made and if it failed to conduct even basic vetting on a contractor, it would be exempt from these provisions if an incident of sexual harassment occurred. However, if exactly the same circumstances were to be repeated by a community hall or a church that would fall under the scope of the legislation. Is there not a problem in the drafting of the amendment? On that basis alone, it should not be accepted.
Greg Smith
I understand the point the hon. Gentleman is making. However, in the examples he gave he has shown exactly why there is a need to ask the Government to doubly rethink the way in which the original Bill is drafted to ensure that some of those areas are covered off so that the reasonability test is clearer and people do not find themselves on that proverbial sticky wicket for innocent reasons. We tabled the amendment—we fully accept it does not cover everything and every eventuality—because it is our job as the Opposition to highlight cases which in turn highlight areas where the Bill may be deficient and where it needs a little surgery to ensure that it achieves what the Government are trying to achieve, rather than creating many loopholes and perverse outcomes. I have probably spoken for long enough on this group of amendments.
Nick Timothy
Will my hon. Friend give way just one more time? I have an excellent example that I would like to share.
Greg Smith
How can I say no to the offer of an excellent example from my hon. Friend?
Nick Timothy
It has just been drawn to my attention that the Health Secretary is the subject of an official complaint to the Labour party for his jokes about the former Transport Secretary at The Spectator party last week because his comments were considered “bullying and uncomradely” according to the complaint. That may be another example of this kind of subjective test.
Greg Smith
I thank my hon. Friend for that. It may well be such an example. I must admit I resisted the urge to attend The Spectator awards last week. I am told the Health Secretary did make what many considered a very funny speech. However, it is clear that some deem it uncomradely. Who knows? Had this legislation already been enacted the Labour party itself might have found itself on that sticky wicket. On that note, I ask the Minister to reflect on the provisions in this Bill in that regard and check that the Government really do have this right.
Ordered, That the debate be now adjourned.—(Anna McMorrin.)
Employment Rights Bill (Tenth sitting)
Tuesday 10th December 2024
(1 week, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 10 December 2024 - (10 Dec 2024)
The Committee divided: - Ayes: 4 / Noes: 14 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are considering the following:
Amendment 130, in clause 16, page 30, line 24, at end insert—
“(1D) In exercising their duties under this section, an employer must have regard to protecting freedom of expression.
(1E) In subsection (1D), ‘freedom of expression’ is defined in accordance with Schedule 1 of the Human Rights Act 1998.”
This amendment would require employers to have regard to protecting freedom of expression when exercising the Bill’s duty not to permit harassment of their employees.
Amendment 131, in clause 16, page 30, line 24, at end insert—
“(1D) Subsection (1A) shall not apply to—
(a) higher education institutions, or
(b) providers of─
(i) hotels and similar accommodation;
(ii) holiday and other short-stay accommodation;
(iii) restaurants and mobile food service activities; and
(iv) beverage serving activities.”
This amendment would exclude higher education institutions and hospitality providers from the Bill’s duties for employers not to permit harassment of their employees.
Clauses 16 and 17 stand part.
New clause 29—Employer duties on harassment: impact assessment—
“(1) The Secretary of State must carry out an assessment of the likely impact of sections 15 to 18 of this Act on employers.
(2) The assessment must—
(a) report on the extent to which the prevalence of third-party harassment makes the case for the measures in sections 15 to 18;
(b) include an assessment of the impact of sections 15 to 18 on free speech;
(c) include an assessment of the likely costs to employers of sections 15 to 18;
(d) include—
(i) an assessment of which occupations might be at particular risk of third-party harassment through no fault of the employer, and
(ii) proposals for mitigations that can be put in place for employers employing people in such occupations.
(3) The Secretary of State must lay a report setting out the findings of the assessment before each House of Parliament.”
This new clause requires the Secretary of State to assess the impact of the provisions of Clauses 15 to 18.
New clause 39—Duty to prevent violence and harassment in the workplace—
“(1) Section 2 of the Health and Safety at Work etc. Act 1974 is amended as follows.
(2) After subsection (2)(e) insert—
‘(f) the adoption of proactive and preventative measures to protect all persons working in their workplace from violence and harassment, including—
(i) gender-based violence;
(ii) sexual harassment;
(iii) psychological and emotional abuse;
(iv) physical and sexual abuse;
(v) stalking and harassment, including online harassment;
(vi) threats of violence.’
(3) After subsection (3) insert—
‘(3A) It shall be the duty of every employer to prepare, and as often as may be appropriate revise, an assessment to identify potential risks of violence and harassment in the workplace and implement policies and procedures to eliminate these risks so far as is reasonably practicable.
(3B) It shall be the duty of every employer to provide training to all employees on recognising and preventing violence and harassment in the workplace, with a focus on gender-responsive approaches.
(3C) In subsection (3B) a “gender-responsive approach” means taking into account the various needs, interests, and experiences of people of different gender identities, including women and girls, when designing and implementing policies and procedures.
(3D) In this section, “persons working in the workplace” includes—
(a) employees;
(b) full-time, part-time, and temporary workers; and
(c) interns and apprentices.
(3E) In subsection (2)(f) and subsections (3A) and (3B), a reference to the workplace includes remote and hybrid work environments.’”
This new clause will amend the Health and Safety at Work etc. Act 1974 to place a duty on employers to protect all those working in their workplace from gender-based violence and harassment.
New clause 40—Expanded duties of the Health and Safety Executive—
“In the Health and Safety at Work etc. Act 1974, after section 11 (functions of the Executive) insert—
‘11ZA Duties of the Executive: health and safety framework on violence and harassment
(1) It shall be the duty of the Executive to develop, publish and as often as may be appropriate revise a health and safety framework on violence and harassment in the workplace.
(2) This framework shall include specific provisions relating to—
(a) the prevention of gender-based violence and harassment of those in the workplace including the prevention of physical, emotional, and psychological abuse;
(b) the duty of employers to create safe and inclusive workplaces and the preventative measures they must adopt; and
(c) the use of monitoring and enforcement mechanisms to ensure compliance with the duty of the employer in relation to violence and harassment (see section 2(2)(f)).
(3) The Executive shall work with other relevant bodies, including the Equality and Human Rights Commission and law enforcement agencies, to develop and revise this framework.
11ZB Duties of the Executive: guidance for employers
The Executive shall, in consultation with such other persons as it considers to be relevant, issue guidance for employers about the protection of those facing violence and harassment on the basis of gender in the workplace by—
(a) implementing workplace policies to prevent violence and harassment;
(b) establishing confidential reporting mechanisms to allow victims to report incidents;
(c) conducting risk assessments and ensuring compliance with the health and safety framework (see section 11ZA);
(d) reporting and addressing incidents of violence and harassment; and
(e) supporting victims of violence and harassment, including making accommodations in the workplace to support such victims.’”
This new clause will create a duty on the Health and Safety Executive to develop a health and safety framework on violence and harassment and to issue guidance for employers about the protection of those facing violence and harassment on the basis of gender in the workplace.
Amendment 135, in clause 118, page 105, line 20, at end insert—
“(3A) But no regulations under subsection (3) may be made to bring into force sections 15 to 18 of this Act until the findings set out in the report under section [employer duties on harassment: impact assessment] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”
This amendment is linked to NC29.
Alex McIntyre (Gloucester) (Lab)
It is a pleasure to serve under your chairship this afternoon, Mr Stringer. I welcome the Bill, and this clause is a really important part of it. We are introducing the clause to improve the workplace treatment of individuals who suffer harassment. Before the lunch break, we heard an interesting interpretation of the legislation, but sadly, it was not correct in all places, and I would like to go through some points made by the shadow Minister, the hon. Member for Mid Buckinghamshire. As part of that, I will reflect from the beginning that the Fawcett Society has found that 40% of women have experienced workplace harassment, and women who are marginalised for other reasons, such as race or disability, face an increased risk of and different forms of harassment, including sexual harassment in the workplace.
This clause is a vital part of the legislation, because we know—we heard this in evidence a few weeks ago—that harassment does not always come from a fellow employee or an employer. Quite often, it can come from third parties, particularly in some of the sectors that the Opposition seek to exclude with their amendment. We heard particularly from UKHospitality about the impact of third-party harassment in the hospitality sector, and I have shared my experience of being harassed in the workplace while working in the hospitality sector as a 15-year-old. This is really important. My example was only one—frankly, there will be thousands of examples—and I know that my experience as a young man will be very different from the experiences of women working in hospitality up and down the country.
As we enter the Christmas party season, we will see a massive increase in workplace harassment—not just sexual harassment, but other forms of harassment. This is perhaps where we got into some confusion this morning. There are different types of harassment, and the type that we talked about in particular this morning was harassment under the Equality Act 2010. That has a very specific definition, which will not be changed by the proposed legislation, despite what the shadow Minister said. A different test will be applied to that definition in terms of when it might come into play, but the definition of harassment will not change. Therefore, for something to be harassment, it must be unwanted conduct relating to somebody’s protected characteristic and create an offensive environment, or one that degrades, humiliates or embarrasses individuals.
The hon. Member for West Suffolk tried to introduce a few examples around the free speech argument, but those did not support the argument that he tried to make. The Independent Press Standards Organisation found that there was no harassment in the Gareth Roberts case. It found that there was a lower form of conduct in relation to clause 12(i) of the IPSO code of practice, but there was no harassment.
Nick Timothy
I have absolutely no intention of correcting the record, because the record will be correct. I think the hon. Member misunderstands my point, which was not to say that in that case the conduct was an example of harassment; I am fully aware that the IPSO ruling said that it was not harassment. My point was about the laws of unintended consequences. When IPSO was established, I do not think anybody thought that there would be cases such as this, where a journalist would be penalised by IPSO for saying something that IPSO acknowledges was a statement of fact on the grounds that it may be offensive.
Alex McIntyre
I thank the hon. Member for his intervention, but the fact is that in these circumstances, the definition in the Equality Act is clear. There is already an abundance of case law on what constitutes harassment, particularly in relation to the Equality Act, the different types of protected characteristics and the actions required to reach that threshold. The threshold is not just that there is unwanted conduct or that it relates to a protected characteristic; it is about the environment that is created. There is an abundance of case law on that point.
The second example was about my right hon. Friend the Health Secretary, but again it missed the point entirely. We all enjoy comedy, which is a staple of our culture. Jokes are fine unless they start to become unwanted and are aimed at protected characteristics, such as someone’s gender, gender identity or sexual orientation. The other point that that example missed—we spoke at length about comedy clubs, and I hate to raise them again—is that the Bill is not about punters at a comedy club being offended by what they hear on stage; it is about protecting the employees. For somebody to trigger this legislation, the comedian would have to make a joke directed at one of the employee’s protected characteristics. If the club employs a member of bar staff who has a protected characteristic and the comedian on stage consistently and absolutely humiliates them because of it, one might expect the employer to take some reasonable steps, such as not booking that comedian again, so that the individual is not consistently humiliated on a regular basis because of one of their protected characteristics. That is what the Bill is intended to do.
We are not saying that employers are required to stop all harassment in the workplace; that would not be possible. As the shadow Minister rightly said, there will be cases when somebody comes into a bar during a Christmas party, inebriated, having enjoyed far too much free wine, and says something that is offensive and horrifically wrong, and with which we all across this House would disagree. The Bill requires employers to have policies in place to deal with that. We cannot legislate for the unknown. We cannot legislate for serious circumstances that we cannot predict or for every individual who walks into a bar, but we can have policies in place to deal with those things.
Sir Ashley Fox (Bridgwater) (Con)
Surely one of the unintended consequences of this proposal is that small businesses risk lawsuits from employees who perceive that they have been harassed, perhaps by a third party. The inevitable lawsuit then follows, and it is not so much the offence for the employer that is the problem; it is the legal fees, the time, the effort and the distraction. What I find most concerning about this proposal is that the Minister says that the impact assessment will follow. Our amendment says that this provision should not be introduced before an impact assessment has been carried out. Does the hon. Member for Gloucester not think, given the doubt and uncertainties about the effect of this Bill, that it would be more sensible to have the impact assessment first before exposing small businesses to unintended consequences?
Alex McIntyre
If the hon. Gentleman is inviting me to agree that there should be a two-tier system, whereby employees at small businesses are entitled to be harassed by third parties but employees at larger businesses are not, I have to disagree.
Alex McIntyre
Well, a great deal of things are protected under law. Employees who work for businesses of all sizes are entitled to protection from harassment under the law, and I do not think that we in this House disagree with that principle.
I come back to the reasonableness test. A small business can have a claim brought against it for a whole host of reasons under employment legislation. Claims can be brought for discrimination or for whistleblowing, and that comes at a cost to employers. There is a separate discussion to be had about how to ensure that employment tribunals work for businesses of all sizes, but the point that we are debating is about harassment in the workplace under the Equality Act.
One of the key points that we must keep coming back to is that it does not really matter to the victim whether they are harassed by a third party, a fellow employee or their employer; the impact on them is exactly the same. Disregarding people who work for small businesses and not giving them the protections that are afforded to everybody else is just not acceptable.
Sir Ashley Fox
It clearly does make a great deal of difference to both the employee and the employer where the harassment comes from. If an employer is harassing an employee, they are directly responsible for those actions and they should rightly be held accountable. If the harassment comes from a third party—the drunk person who comes into the pub or into A&E—there is surely a complete difference. The hon. Member is asking for the employer to be responsible for that unless they take all reasonable steps. This clause then exposes that businessman—that small employer—to legal action on something he cannot control.
Alex McIntyre
I thank the hon. Member for setting out the difference. The difference is the “all reasonable steps” test. If an employer harasses someone in the workplace, there is no “all reasonable steps” test that they can take; for a third party, there is.
In tribunals, “reasonable” takes into account, for example, the circumstances of the case, the size of the business, the sector it operates in, the policies it has in place and the training it provides for employees. These points of reasonableness are taken into consideration in tribunals every single day in other areas. For example, there is already a test in section 109 of the Equality Act that deals with a defence that employers have. They cannot be held liable for the actions of their employees if they have taken all reasonable steps to train their employees to avoid issues such as discrimination in the workplace.
Mr Peter Bedford (Mid Leicestershire) (Con)
The hon. Member mentions reasonable steps being taken by small businesses. Does he accept that an impact assessment on the consequences of bringing in this kind of legislation for these businesses should be conducted up front, so that businesses can at least understand how much time and money it will cost them and how much additional bureaucracy it will create for them?
Alex McIntyre
The Minister will answer about what the Government are doing on impact assessments, but the impact on small businesses is that they have to think a little bit about harassment in their industry. That will vary from business to business. Some small businesses are not public facing. The impact in a small café will be different from that in a small office, because of interactions with the general public, but I do not think it is unreasonable to ask a small café or a small bar to think about what they can put in place to deal with someone coming in and abusing or harassing staff.
Again, if somebody comes in and is abusive, these provisions will not necessarily be triggered, because the abuse and unwanted conduct has to be related to their protected characteristic. I know from closing up a number of Christmas parties when I worked in hospitality that people get a bit out of hand. That was not harassment under the Equality Act; it was because people were drunk and disorderly, which is a separate antisocial behaviour issue. There are different channels to deal with that. We are talking here about specific cases where there is abuse of people because of a protected characteristic. Those are very narrow circumstances where people have to think about what kind of policies they have in place.
The hon. Member for Chippenham spoke about how MPs would not operate in similar circumstances. We would not, for example, be alone with individuals in a private room. It is appropriate to have policies in place where we try to think about some of the circumstances.
This proposal does not use the word “requires”, and it does not say that every single step has to be taken—it mentions “all reasonable steps”. That is part of the tribunal, and there will be guidance to set out some examples of things that employers can do to take reasonable steps. It is really important that we do not create a two-tier system where we say that small employers do not have to deal with these issues, because actually it is often in small and medium-sized enterprises that some of this bad behaviour takes place.
I gave an example last week. I went to my boss and said, “I have just been groped by a midwife and was told, ‘I’m going to show you a thing or two’”. When I said that I was only 15 years old, my boss said I should enjoy it: “You are a bloke. Go back in there. Toughen up.” That is not acceptable. Actually, a reasonable step in those circumstances would be the manager saying, “Alex, why don’t you go and work in another part of the business for the rest of the week? Work on the bar this evening, rather than in the function.” It is about having a policy that deals with those kinds of incidents in the workplace. There are different steps that businesses can take.
Let me move on to the argument around free speech, which the Minister talked about at great length. I have set out how some of his arguments do not apply in this instance as this provision is about specific incidents of harassment under the Equality Act. A point that the shadow Minister might have raised that would perhaps have been more legitimate is cases where two protected characteristics are in play. A lot of the free speech cases that have made the press have engaged with two. For example, in some cases someone has expressed their religion, but that might be opposed to someone expressing their sexual orientation; or people have expressed protected views on gender-critical theory, but others have a protected characteristic of a different gender identity.
Those are difficult cases, which can go all the way to the Supreme Court. What is important to note, however—this is where the shadow Minister could have gone, to give us a stronger discussion—is that if we are at the stage where the Supreme Court has to give an opinion on these things, no tribunal in the land will say, “Well, an employer should reasonably have seen that and therefore taken reasonable steps to avoid such scenarios happening.” No, this is the exact example of where tribunals will take “reasonable steps” and say, “What is reasonable in these circumstances for these employers?”
Having represented the NHS for a number of years as an employment lawyer, I should point out that the A&E example that was given unfortunately did not make any sense. First, the NHS operates a zero-tolerance approach. In several instances, policies are in place where individuals can withdraw their support for someone if they are being abused in the workplace. Scenarios and planning are in place to make sure that everyone is looked after, without people being subjected to harassment in the workplace.
To sum up, “all reasonable steps” does not mean that an employer has a duty to stop something altogether. We have to be sensible. There is no point scaremongering so that individuals think this will have a broader impact, closing all comedy clubs and stopping people making jokes in the workplace. That is not the case. This is about specific examples of harassment under the Equality Act—that has to be unwanted conduct related to a protected characteristic, creating an offensive, hostile, degrading or humiliating environment. These are specific examples. It is important that we extend this to third parties, given all the evidence we have heard, and I encourage everyone in the Committee to support the legislation.
Steve Darling (Torbay) (LD)
It is a privilege to serve under you, Mr Stringer. Broadly, I welcome—[Interruption.]
Steve Darling
My reflection on the Opposition amendments is that on this occasion my colleagues may be in danger of throwing the champagne out with the cork. The reality is that the challenges for people who face harassment in the workplace are very serious. As Government Members have highlighted, the comedy club example is relatively bogus, as the Bill would actually affect protection for employees rather than for punters.
On Friday, I am due to visit Torquay Girls’ grammar school in my constituency. I invite the hon. Member for Mid Buckinghamshire to join me and hear directly from young women there about their experiences in the workplace. Strangely enough, apart from universities, the sectors that Opposition amendment 131 would exclude from clause 16 are almost all in the hospitality industry, in which those young women would be working. When I visited the school some time ago, one student shared with me how they dreaded a certain day of the week because they knew that a certain individual would be in, who would make them feel physically sick because of their approach to them, and the sexual harassment that occurred within the workplace.
Greg Smith (Mid Buckinghamshire) (Con)
As much as I would love to join the hon. Gentleman in Torbay and it sounds like a delightful day out, I have a pretty full diary. I was not making a point against trying to stop sexual harassment; I was very clear that we need to use every power, every law and every mechanism available to clamp down hard on anybody who engages in the sexual harassment of anybody. My point was about the unintended consequences, including to free speech. By no definition, in my world, does sexual harassment count as free speech; that is something totally different. I invite the hon. Gentleman to reflect on my arguments, which were not in any way, shape or form about trying to remove powers to deal with sexual harassment.
Steve Darling
I am afraid that the hon. Gentleman and I will have to agree to differ on that point. I am sure that the Government’s proposals will support those who are facing sexual harassment from third parties. As colleagues on the Committee have highlighted, the reality is that the legislation is about taking all reasonable steps. It is not saying that when somebody walks in and abuses an employee it is an immediate red line. The reality is that the employer needs to have taken all reasonable steps. I am very comfortable with the proposals. The Liberal Democrats will vote against the amendment.
Jon Pearce (High Peak) (Lab)
I promise to keep my comments brief. Clause 15 will amend section 40A of the Equality Act 2010 to provide that an employer must take all reasonable steps to prevent the sexual harassment of employees in the course of their employment.
The concept of “all reasonable steps” has been part of the Equality Act 2010 since its inception, as my hon. Friend the Member for Gloucester referred to. Section 109 of the Act provides a defence for the employer in respect of the discriminatory acts of the employee. It is about vicarious liability: in effect, if the employer can show that it has taken all reasonable steps, it will not be liable for the acts of the employee.
Exactly the same “all reasonable steps” test is being applied here. In my experience as an employment lawyer, employment tribunals are very well-versed in it and have a huge amount of experience with it. It would be a matter of fact for them to determine. It is important to understand that it will be, and always has been, a proportionate test that looks at the size and resources of the employer and the context of the employment situation.
There will inevitably be guidance from the Equality and Human Rights Commission on how employers should take all reasonable steps and what those steps might be, but it will be fact-specific. It may well include steps to mitigate, such as some form of risk assessment, policies, training or means by which an employee who is at risk of or has suffered third-party harassment can report it and action can be taken. All those things are fairly standard. They happen already as a result of the vicarious liability element of the Equality Act; the clause would just extend them to third parties.
All third-party harassment cases and issues arise from a case called Burton v. De Vere Hotels, in which Bernard Manning made racist comments to a waitress at a De Vere hotel and the waitress brought a claim. Both the original employment tribunal and the employment appeal tribunal held that it was harassment, but it was overturned on appeal because the right did not extend to protection from third-party harassment. That was the start of the process of trying to protect employees in such circumstances.
The employment tribunal and the employment appeal tribunal said that the employer knew what was likely to be in Bernard Manning’s act—we can all imagine what might be in Bernard Manning’s act—but did not take the necessary steps to protect the employee in the circumstances. These are exactly the scenarios that the shadow Minister raised, in which we would expect the employer to consider very carefully who was staffing the event, what policies should be in place and how any issues should be managed—including, for example, by warning Bernard Manning that he might not wish to make racist remarks to members of staff.
When we talk about risk assessments, we must remember that the biggest risk is that third-party harassment will continue. That is the most fundamental issue. I emphasise a point that the shadow Minister will find relevant: a 2023 Buckinghamshire healthcare NHS trust staff survey showed that there had been nearly 400 incidents of sexual harassment by third parties. Many of those incidents will have affected his constituents. It is vital that we make this legislation, because employee representatives at the trust have said that one thing that would help is a protection against third-party harassment. If we do not include this provision in the Bill, we will continue to leave his constituents exposed. I encourage the shadow Minister, who I genuinely believe cares about harassment, seriously to reconsider his opposition to the clause.
Chris Law (Dundee Central) (SNP)
It is a pleasure to see you in the Chair, Mr Stringer. I rise to speak in support of new clauses 39 and 40, which stand in the name of the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts).
The new clauses follow the publication of the Health and Safety at Work etc. Act 1974 (Amendment) Bill, a presentation Bill that the right hon. Member introduced in co-operation with the Suzy Lamplugh Trust and Rights of Women. They would address a critical gap in workplace safety by mandating proactive employer responsibilities to prevent all forms of violence and harassment, including gender-based violence.
The Health and Safety Executive does not currently accept domestic abuse within its remit. That might come as a surprise to some Members, but the reason is that domestic abuse and other forms of gender-based violence are not explicitly covered in the 1974 Act, even though the Domestic Abuse Act 2021 underlines the fact that employers owe their employees a duty of care that covers protection from domestic abuse.
Discrimination law inadequately protects workers from gender-based violence beyond sexual harassment, especially when such violence is not physical. The UK’s ratification in 2022 of the International Labour Organisation’s convention 190 means that the UK should take a comprehensive approach that addresses all forms and threats of gender-based violence in the workplace, psychological and emotional abuse, physical abuse and stalking, including with respect to people commuting to and from the workplace.
New clauses 39 and 40 would address those issues. They would go further than the Bill’s provisions on protection from harassment, because new clause 39 would introduce clear, actionable duties for employers to safeguard employees from gender-based harm through risk assessments, policy development and training. New clause 40 would mandate that the Health and Safety Executive create an enforceable framework that holds employers accountable and fosters inclusive, violence-free work environments for workers.
I understand that this may have been the Minister’s first opportunity to hear these points. I hope he will consider them, perhaps on Report.
Alison Hume (Scarborough and Whitby) (Lab)
Prior to entering this place, I spent 25 years working in the television production industry, both as a writer and as a producer. I co-own an independent production company—I refer the Committee to my declaration of interests—that has made children’s drama for the BBC, including the hit science fiction series “The Sparticle Mystery”, in which a cut-price British version of the large hadron collider at CERN sends all the adults into a parallel universe, a situation with which I have had some sympathy since arriving as a new Member. I mention that not to burnish my CV in the hope of a writing credit on the next James Bond film, but to make a point about clause 15.
The television industry is full of creative, inventive and hard-working people who wish to make the most of their talents and contribute to making the programmes with which the UK is a world leader and for which it is rightly admired. Unfortunately, the nature of a fast-moving and pressurised industry based on freelancers is that it is left open to abusive practices. Freelancers move between productions, often with no HR departments, with no formal recruitment processes and with a lack of the checks and balances that we all want to see in good workplaces. It is also an industry in which the talent is protected, which has led to a culture of exceptionalism in which appalling behaviour has been allowed to continue for years.
This is not just about sexual harassment and inappropriate behaviour. It is also about power, or rather the imbalance of it. When I was in the green room at the start of a production, someone came up to me—I was on my own with him—and put his arm around me. He said, “Make me a cup of coffee, love.” I said, “Make your own, and then start looking for a new job,” because I was the executive producer on the show. Unfortunately, far too many women endure sexually explicit comments, inappropriate touching and offensive jokes as part of their everyday experience at work.
A few years ago, a survey found that 39% of women working in film and television had been subjected to sexual harassment at work; freelancers, members of the LGBTQ+ community and disabled people are also most at risk. Women are too scared to speak out: they fear that if they do, they will simply not work in the industry again. It is hardly surprising that last year two thirds of women aged between 25 and 59 thought about leaving the industry.
I say to the shadow Minister that clauses 15 to 17 will mean that companies have to proactively take all reasonable steps to close the vacuum of responsibility that currently exists between senior and middle management. They will need to ensure that staff have the training to call out challenging behaviour, support colleagues and prevent future abuse rather than focusing solely on damage limitation, as sadly we have seen time and again.
Anneliese Midgley (Knowsley) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I refer the Committee to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite.
I want to bring this debate into reality—after all, the Bill seeks to affect real people’s lives and make their life at work better—and talk about my personal experience as a young woman. I was working a couple of jobs to get by, one of them as a silver service waitress on a zero-hours contract and minimum wage. The employer hired only young women, and we worked mostly at high-profile sporting events. To be sexually harassed was seen as normal. We were told to expect it, and we were told that we were expected to accept it—it was part of the job. The employer would also over-hire, so too many of us would turn up and many of us would be sent away, because it was decided that our face or figure did not fit the event that day. Those of us who got to the service were groped, propositioned, reprimanded if we talked back, and threatened with the sack. Travelling home from work together, we would feel completely humiliated and degraded, and we would exchange tales of what had happened to us that day. We took solace in the fact that we were not alone.
That behaviour is not something we should accept, but we know it still happens. That is why this part of the Bill is so important. No one should go to work dreading being harassed. As my hon. Friend the Member for Gloucester pointed out, the Fawcett Society has said that
“40% of women experience sexual harassment throughout their career.”
The Bill is intended to prevent workers from being subject to that vile behaviour, and it will ensure that people can get on with their jobs without being filled with fear, dread or humiliation, or feeling unsafe and degraded.
Michael Wheeler (Worsley and Eccles) (Lab)
I did so this morning, but I draw attention to my entry in the Register of Members’ Financial Interests as a member of the Union of Shop, Distributive and Allied Workers, as it pertains to some what I will say.
First, I want to take us right back to the beginning of the debate, if we can remember that long ago. The shadow Minister referenced the Regulatory Policy Committee’s assessment, in particular on the need for clauses 15 and 16. I strongly welcome what the Bill is doing in this space, in particular on third-party harassment. I do not profess to be an expert in the procedures and mechanisms of the RPC, but if we look broadly at society and at surveys and analysis of the state of work and what workers go through in this country, I think there is ample proper evidence of the need for these clauses.
I draw the Committee’s attention to this year’s “Freedom from Fear” survey released by USDAW, which surveyed retail workers in this country. It is an annual survey and the figures were released as part of Respect for Shopworkers Week in November. It featured responses from 4,000 participants, and the interim results showed that 69% of respondents—69% of a sample of 4,000 retail workers—had been verbally abused while at work, not by colleagues but by customers: a third party. Forty-five per cent had been threatened at work while simply going about their job. That is just one survey of one sample of one sector in our country that demonstrates the need for clauses 15 and 16.
On Opposition amendment 131, I must admit that I was slightly confused, but I was listening closely and I gathered that its thrust was primarily around free speech. We have talked a lot about unintended consequences in this Committee. I suggest that, whether it is intended or unintended, the consequence of the amendment, which would remove two entire sectors from the scope of the Bill, would be far too broad given the protections that are needed. That is particularly the case in the hospitality sector, and we have heard my hon Friends’ experiences of that sector. I question whether the amendment is at all proportionate, considering the overall aims of the Bill, as well as the experiences and evidence that we have heard from my hon. Friends and witnesses.
Sir Ashley Fox
Does the hon. Gentleman agree that the fact that the Government have not undertaken an impact assessment on these measures makes it very difficult to know whether the amendment is proportionate, and that in fact our amendment 135, which states that these provisions should not take effect until after the impact assessment has taken place, is an entirely sensible proposition?
If I may make a second point, Mr Stringer, on the issue of harassment at higher and further education colleges, one can quite imagine a situation where students put forward a point of view—perhaps on gender critical subjects, on which a lecturer or employee has particular strong views and students have other strong views—that could easily result in a charge of harassment by a third party. That is not what should be happening at our higher education establishments. We should encourage free speech. We should encourage students to express themselves forcefully but respectfully, and we should not see that resulting in what I would regard as spurious legal cases.
Michael Wheeler
As I said, I listened closely to the points that Opposition Members made. Like my hon. Friend the Member for Gloucester, I will allow the Minister to come back on the specifics of impact assessments. The point I am trying to make is that we are all looking at the same Bill and the same information. We might desire more information at this point, but we are exercising our judgment. Regardless of the specifics of any impact assessment, I think it is patently obvious that it is a disproportionate response to the concerns raised by Opposition Members to exclude entire sectors from the protections that we are discussing.
On hospitality, we heard in oral evidence from the trade union Unite—of which I am not a member—that it had surveyed its hospitality workers and found that 56% of them had considered leaving the sector entirely as a result of the sexual harassment they were experiencing. We have heard throughout the debate about the desire to support businesses. We heard from UKHospitality about struggles with retention and how measures in the Bill, outside of this one, will aid with that. I hope we can all agree that, beyond edge cases that might raise concerns, the significant protections for workers that we are discussing would be not only good for those workers, but fundamentally good for business.
The Minister for Equalities (Dame Nia Griffith)
We have had a full and thorough debate, and I thank my hon. Friends—in particular my learned hon. Friends the Members for High Peak and for Gloucester—for making many valuable arguments, and everybody for contributing their personal experiences.
I remind the Committee that clause 15 requires employers to take all reasonable steps to prevent sexual harassment of their employees. Including “all” emphasises the thorough approach that employers must take; at the same time, the requirement remains limited to steps that are “reasonable”. The concept of “all reasonable steps” has the advantage of being well established and familiar to employers and employment tribunals. That is a really important point, because the clause clarifies and makes things easier and more straightforward, rather than complicated and burdensome, which is the implication of some of the amendments.
I thank the hon. Member for Dundee Central for speaking to new clauses 39 and 40 tabled by the right hon. Member for Dwyfor Meirionnydd. I pay tribute to the right hon. Lady for her work on violence against women and on stalking, and indeed to the work of her predecessor on stalking. I reassure the hon. Gentleman and the right hon. Lady that the Government entirely support the importance of ensuring that workers, including women and girls, are protected from workplace violence and harassment. There is already in place a strong and appropriate regulatory regime that provides protection to workers from violence and harassment. If the hon. Gentleman so desires, I will ask the Health and Safety Executive to write to him on that point.
Dame Nia Griffith
I will ensure that that happens.
The hon. Member for Mid Buckinghamshire questioned the necessity of this new legislation, so let me explain again. Often, harassment legislation, including the criminal law, allows an individual to take legal action against a perpetrator. However, that does not go far enough in tackling the wider issues and root causes. The burden of holding perpetrators to account and driving change is too great to be shouldered purely by employees who have experienced harassment. This measure therefore sends a clear signal to all employers that they must take all reasonable steps to prevent sexual harassment.
I think the hon. Member is also concerned that the clauses that we are discussing risk being unworkable or burdensome. It is important to remember that they simply require employers to do what is reasonable for their specific circumstances. That means that employers will not be penalised for failing to take unworkable or impractical steps. The clauses will not require employers to foresee the wholly unforeseeable or to police all customers’ private conversations. On one hand, the hon. Member acknowledges that good businesses already accept the need to take all reasonable steps to prevent sexual harassment, but on the other, he wants to make exceptions for a large number of businesses.
Greg Smith
I would be very happy to discuss with the Minister and her colleagues in Government the specific points I made about sectors such as higher education and concerns about the no-platforming of perfectly moderate speakers such as Tony Blair. Would she be willing to engage in that dialogue on safeguards in higher education around no-platforming, so that free speech can be protected?
Dame Nia Griffith
Free speech is absolutely a cornerstone of British values, but I remind the hon. Member that harassment is not free speech. They are two different things. The Bill concerns employer liability for workplace harassment, which is a serious issue, not to be underplayed. As with all cases of harassment under the Equality Act 2010, courts and tribunals will continue to be required to balance rights on the facts of a particular case, including the right to freedom of expression. Harassment is a serious matter that involves being subjected to unwanted conduct of various types that, as set out in the Equality Act,
“has the purpose or effect of violating”
the employee’s
“dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment”
for the employee. Those who seek to harass people at work will not be tolerated.
The hon. Member raised a number of potential scenarios relating to potentially offensive or upsetting speech. It is important to note that in employment tribunal claims for harassment, if certain conduct has a humiliating or degrading effect on the recipient but that was not its intended purpose, the tribunal must consider whether it was reasonable for the conduct to have had that effect. It is not a purely subjective test based on the view of the recipient. The reasonableness and the facts of the individual situation must be considered. On that note, I ask the Committee to accept the clauses unamended.
Question put and agreed to.
Clause 15 accordingly ordered to stand part of the Bill.
Clause 16
Harassment by third parties
Sarah Gibson (Chippenham) (LD)
I beg to move amendment 163, in clause 18, page 31, line 24, at end insert—
“(4) In section 14K, in subsection (1), after paragraph (cb) insert—
‘(cc) works or worked as a self-employed contractor;
(cd) works or worked as a sub-postmaster;
(ce) is member of the judiciary, non-executive director or a trustee, including a pension trustee;
(cf) is a trade union representatives;
(cg) has applied for a vacant role as an external applicant and makes a protected disclosure about information obtained during the application process;’”.
This amendment extends protections for whistleblowers to other categories.
The Chair
With this it will be convenient to discuss new clause 41—Whistleblowers: protected disclosures—
“In Part X of the Employment Rights Act 1996, for section 103A, substitute―
‘Protected disclosure.
An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or one of the reasons) for the dismissal is that the employee made a protected disclosure.’”
This new clause would slightly extend the circumstances in which an employee is considered as unfairly dismissed after making a protected disclosure.
Sarah Gibson
It is a pleasure to serve under your chairmanship, Mr Stringer. Before I make my case, I must make a small correction: the reference to section 14K in the text of amendment 163 should be to section 43K. My apologies for the error.
The Liberal Democrats tabled amendment 163 because although we strongly welcome the Bill’s proposals on whistleblowing, we do not feel that it goes far enough to support all workers: it is not extended to additional workers. We feel that whistleblowing protections should be extended to all those in the workplace who may see wrongdoing and may suffer for raising public interests and concerns. After our long debate about harassment, we must all agree that harassment can often be brought to light only by whistleblowers, so this part of the legislation is incredibly important. As the definition of “worker” in section 43K of the Employment Rights Act 1996 is already slightly different for whistleblowers than for other areas of employment law, there is a sound public policy reason to extend it even further.
In our diverse and complex labour market, many people who wish to blow the whistle do not necessarily qualify as a worker and are therefore not protected either by the existing legislation or under the Bill. The Secretary of State already has the power to make these changes through secondary legislation, but until the Government act on that, we are pushing for Parliament to extend protections to workers such as contractors.
In the modern economy, the boundaries between a self-employed contractor and a worker have never been more blurred. Many people classified as self-employed workers are inside a company, yet do not enjoy whistleblowing rights. That is true in my constituency of Chippenham, where a large number of people working in the care industry are technically subcontracted to the employer for whom they are working. In a large part of Corsham, many people work for the Government in one form or another, through the military or Ministry of Defence, but they are often either self-employed or subcontracted and therefore not entitled to these protections.
This issue is part of a wider problem with our modern economy, particularly the gig economy. It is welcome that the Government have made fighting the insecurities created by bogus self-employment a core plank of their employment reforms, but adopting this amendment would immediately plug the gap in workplace rights and protections for those who are self-employed.
I want to highlight a few cases. If the sub-postmasters, who were effectively contractors, had been afforded whistleblower rights, they might have been able to raise their concerns about the Horizon IT system much faster, and some of the issues would have been resolved faster.
Non-executives and trustees are subject to duties and liabilities under laws such as the Companies Act 2006 and the Trustee Act 2000, but they are not covered by whistleblower legal protections. Not only is blowing the whistle without protection a risk to someone’s employment, but for trustees of charities it could cause reputational damage, yet the law on that is currently unclear.
I do not need to remind Labour Members that the role of trade unions in the workplace is recognised in the Bill. A whistleblower is likely to go to their trade union representative for advice on whistleblowing, but if I have understood correctly, when representatives raise that concern to the employer on behalf of a colleague, there is currently no protection. The amendment would be an important extension to the clause.
If someone is rejected for a job because they blew the whistle in a previous role, they are unlikely to have a remedy in an employment tribunal against a prospective employer for the loss of that job opportunity. That puts them at a significant disadvantage. It leads to whistleblowers being blacklisted and unable to work in the sector in which they have raised concerns. The law is inconsistent; job applicants must not be discriminated against under equality law, and job applicants in the NHS do have whistleblowing protections.
The amendment would ensure that job applicants receive the whistleblowing protections that they deserve, and that extend whistleblowing rights to people working in various other forms who are not strictly considered to be workers. I ask the Committee to support our amendment.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair, Mr Stringer. As always, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
I thank the hon. Member for Chippenham for raising these important issues, which we need to explore. She is coming from a good place. We all know that whistleblowers play an important role in shining a light on wrongdoing. The fear, and often the reality, of retaliation is a barrier to people coming forward with concerns.
Before I turn to the substance of amendment 163, I will recap the existing protections for whistleblowers. Workers have the right not to be subject to detriment on the grounds of making a protected disclosure and not to be dismissed for making a protected disclosure: that would be treated as an automatically unfair reason for dismissal. These are day one rights for workers and employees who have recourse to an employment tribunal. The standard employment law definition of “worker” has been extended in recent years to whistleblowing protections. It includes a range of employment relationships, such as agency workers, individuals undertaking training or work experience, certain self-employed staff in the NHS, police officers and student nurses and midwives.
Amendment 163, as the hon. Lady says, would extend the scope of whistleblowing protections to a huge range of other groups, including the self-employed, contractors, office holders including members of the judiciary, non-executive directors, trustees—including personal trustees—and trade union representatives and job applicants, as well as those who acquire information during a recruitment process.
I can see the hon. Lady’s intentions and what she is trying to achieve. However, there are questions that the amendment does not address, particularly given how our current employment law framework is structured, because a lot of the people it covers are not in an employment relationship or a worker relationship. The remedies are based on detrimental treatment and on dismissal, but a lot of those to whom she seeks to extend protection are people who by definition cannot be dismissed, because they are not employees or workers.
It is quite a job to understand exactly where to take the issue of people who acquire information during a recruitment process, which is the final limb of the amendment, paragraph (cg). That is potentially extremely broad in application. In legislation like this, it would be difficult to pin down exactly who it would apply to. Would it apply to someone casually undertaking a job search on the internet? Where do we draw the line?
On the point about job applicants, I take the point that blowing the whistle can have a huge impact on a person’s career prospects. I have represented many people who have found that to be an issue, and there are already blacklisting laws for certain types of protection. However, the tribunal can award compensation and take into account the difficulty that an individual might have in finding suitable employment at a similar level as a result of having blown the whistle. There is a wider question about how we treat people who blow the whistle, which is not necessarily going to be resolved by the amendment.
I agree that we should protect those who speak up and that we should ensure that our legal framework takes account of modern working relationships. I recognise that, particularly for trade unions, there is a benefit to having these groups within scope, and there are issues here that I think bear further scrutiny. Because of the plethora of unintended consequences and knock-on effects, some of which I have touched on, we cannot accept the amendment as drafted, but I assure the hon. Lady that I intend to meet Protect next month to discuss the issues on which it is campaigning. We are aware of the long-overdue requirement to look at whistleblowing law. The previous Government undertook a small exercise and we need to understand its findings, but we will be taking into account some of the issues that the hon. Lady has raised.
We cannot pretend that such an amendment would not bring very large numbers of additional people into scope, so we would want to work with stakeholders to understand what that would mean for them. It is also possible to imagine people becoming professional whistleblowers by having something that they could rely on in perpetuity; again, we have to balance that against the need to ensure that people are properly protected. I am happy to work with colleagues across the House to ensure that if we introduce any legislation in this area, we get it right and recognise modern relationships. The hon. Lady is also right to refer to worker status: we are keen to look at that in our “Next Steps” document, because we know that a whole range of issues arise.
Sarah Gibson
We are happy not to press either amendment 163 or new clause 41, but I ask the Minister to meet us before Report so that we can introduce some, if not all, of the measures in them, and particularly those in amendment 163. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Dame Nia Griffith
Clause 18 will strengthen the protections for whistleblowers by making it explicit that sexual harassment can be the basis for a protected whistleblowing disclosure. It will do so by amending part 4A of the Employment Rights Act 1996, adding sexual harassment to the list of relevant failures about which a worker can blow the whistle.
For context, to qualify for whistleblowing protection, a worker needs to have a reasonable belief that their disclosure tends to show one of the relevant failures and that the disclosure is in the public interest. A worker who blows the whistle by making a protected disclosure has the right not to suffer a detriment or, if they are an employee, not to be unfairly dismissed.
This measure will provide welcome clarity that sexual harassment can form the subject of a qualifying disclosure. This is because, as a result of the measure, a worker will not need to identify an existing legal obligation, criminal offence or breach of health and safety in order to make a qualifying disclosure about sexual harassment.
We anticipate that the measure will have wider benefits, including enabling more workers to use whistleblowing routes to speak up about sexual harassment, and sending a clear signal to employers that workers who make disclosures must be treated fairly. Workers will have legal recourse if their employer subjects them to detriment for speaking up.
This is one of the steps that we are taking to tackle sexual harassment at work. According to data from the Office for National Statistics, more than a quarter of those who have experienced sexual harassment in England and Wales said they had experienced it at their place of work. That must change. I commend the clause to the Committee.
Question put and agreed to.
Clause 18 accordingly ordered to stand part of the Bill.
Clause 19
Right not to be unfairly dismissed: removal of qualifying period, etc
Question proposed, That the clause stand part of the Bill.
Justin Madders
I will not speak for long on clause 19, because it is a fairly straightforward clause and there are more detailed clauses and amendments that may generate further debate. Clause 19 introduces schedule 2, which will repeal section 108 of the Employment Rights Act 1996, thereby removing the two-year qualifying period for protection against unfair dismissal.
An estimated 9 million employees have been working for their employer for less than two years and therefore have very limited protection against unfair dismissal. By removing the qualifying period, the Government will make basic protection against unfair dismissal a day one right for all employees, ensuring a baseline of security and predictability. It is about tackling insecurity. Unless there are automatically unfair grounds, an employer can lawfully sack a worker just by giving them their statutory or contractual notice pay and telling them not to come back to work. There is no entitlement to a fair process, nor even a right to a written statement explaining why they have been sacked.
Think about what you can do with two years in your life, Mr Stringer—well, maybe we should not think too much about it. Someone can make an awful lot of commitments, including financial commitments. They can get married, buy a house, start a family and take out loans of all descriptions, but they have no protection at work and nothing to stop them being arbitrarily dismissed in that two-year period. We think that that is wrong: it creates a great deal of insecurity in the workplace, and it has to change.
Our changes will not prevent fair dismissal. We will ensure that businesses can hire with confidence. We will ensure that employers can operate contractual probation periods, which are separate from the new statutory probationary periods. During the statutory probationary periods, employers will have a lighter-touch standard to meet when they need to dismiss an employee who is not suitable for the job.
Our changes will ensure that newly hired workers are not arbitrarily dismissed. We believe that that will help to drive up standards in the workplace. It will ensure that there is greater fairness and greater understanding between employees and businesses. It will drive up standards, quality and security—all things that we believe will improve our economy. We do not intend to bring in these measures in until autumn 2026 at the earliest. I commend the clause to the Committee.
Greg Smith
It is a pleasure to serve under your chairmanship, Mr Stringer. I accept the Minister’s point that clause 19 essentially just introduces schedule 2. Several amendments in my name and in the name of my hon. Friends will explore schedule 2 in detail over the coming days and potentially even weeks.
However, as we discuss clause 19, I think it is important gently to challenge what is actually quite a big leap, from two years down to day one. It is incumbent on the Government to come up with a rationale and a reason for such a considerable change. This is not a taper or a gradual decrease from two years to a year or six months; we can have a debate about what the right number is.
It is clear that the Government wish to move down from two years, but what we heard in our public evidence sessions shows the very real risk that introducing these day one rights for all employees will mean that employers are reticent, are more risk-averse and do not hire as readily, freely or easily as we might want in order to create jobs in our economy. I remind the Minister what Jane Gratton of the British Chambers of Commerce said about her members:
“Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights”.––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 8, Q2.]
She went on to argue for a nine-month probationary period—a period to which it would potentially be feasible to reduce this timeframe.
Whenever a new law comes in and makes a significant change, be it to business, regulation or whatever sector, I gently ask the Minister to reflect on the time period. Is it really necessary to make such a giant leap in one go? Even if in years to come the Government get what they want in terms of day one rights, would it not be better to face this now, listen to industry, listen to the evidence that this very Committee heard a couple of weeks ago and be more measured, proportionate and risk-averse as to what these measures might end up doing to the overall jobs market in the United Kingdom of Great Britain and Northern Ireland? If the Government did that, it would help with some of the stark and staggering business confidence numbers in the economy at the moment. Businesses are worried about where the future lies, and real people out there looking for work are worried that jobs might not be as readily available after the Bill comes into effect.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
I declare an interest as a member of a trade union. We have seen a change in the labour market over recent decades. Previously, people used to stay in work for much longer; currently, the average tenure is 4.5 years—there has been a slight increase, because it has been bang on four years for the past five or six years. That means that people nowadays spend half their time in a job without any rights, because of the two-year threshold. The proposals in this legislation are updating the labour market to the realities of today’s jobs. People spending half their time without rights leads to a lack of confidence and security. The way to address business confidence and worker security is by bringing these rights in from day one, as this legislation proposes; sticking with the status quo is what leaves people more insecure.
The Chair
Order. I remind hon. Members that they can catch my eye to make significant points in the debate. Interventions should be short and to the point.
Greg Smith
Thank you, Mr. Stringer. I am grateful to the hon. Gentleman for his points. He is right that the labour market has changed significantly in recent decades. In fact, it is constantly evolving and has been since time immemorial, and certainly since the industrial revolution, although I suspect I will be trying the Committee’s patience if we go through all that history—the hon. Member for Birmingham Northfield might be keen to do so, but that is perhaps one for the bar some time, rather than the Committee.
Michael Wheeler
I thank the shadow Minister for giving way, and I will keep my intervention short, Mr Stringer. We are hearing a lot of grandiose threats when it comes to the economy, and I would like to drag us back to the specifics. This measure is not a ban on dismissal; it is not even a protection from dismissal. It is a protection from unfair dismissal, so it is quite narrow. It still allows for dismissal, disciplinary procedures and all of that. Does the shadow Minister have a timeframe in which he thinks it would be acceptable for workers to be unfairly dismissed?
Greg Smith
The hon. Gentleman is right about the unfair dismissal point. Nobody wants to see anybody unfairly dismissed, but it is impossible to see each measure in the Bill in its own silo or its own column; each is part of the cumulative impact of many measures reverting to day one rights. So, too, is the measure before us, and the Committee has heard direct evidence from representatives of real businesses out there that it could have a damaging effect.
I am not arguing against the principle of what the Government are trying to do here—to protect workers against unfair dismissal. I am trying to test the waters on the operability of the Bill, and on the unintended consequence that it may have in terms of overall numbers in the job market and the rate at which companies out there make new hires, or indeed choose not to. It is a worthwhile exercise for the Committee to really test these things to see how this measure will work out in practice.
Laurence Turner (Birmingham Northfield) (Lab)
Throughout these proceedings, we have talked a lot about evidence bases and the likely impact of particular measures on business. The clause might be short and to the point—I do take the points made by the shadow Minister that we will come on to more detailed discussions, and it is right to debate the general principles here—but it does have precedents. In terms of the dilemma or decision over whether the qualifying period should be two years, one year or, as in the Bill, day one—but with that important provision for a probationary period—the issue has been road-tested.
The period was set at two years for many years. Then it was reduced to one year in the late 1990s, and economic growth continued. When the qualifying period was raised from one year to two years in 2012, the impact analysis that the then Government produced said that one year was easily sufficient in the overwhelming number of cases. On this aspect of the Bill, the businesses I have spoken to in my constituency and in the general Birmingham area have told me that, in almost all roles, employers are not still talking about whether someone is suitable for the job 12 months in; it is usually apparent within weeks. That circumstance is still covered by the initial period of employment provided for in the Bill.
According to the impact assessment, the estimated saving to business across the entire the economy, after the familiarisation cost period, was relatively small—I believe it was around £2 million to £3 million in 2011 prices, so probably somewhere around double that today. I think my hon. Friend the Member for Worsley and Eccles used the word “grandiose”. We are really not talking about that, but about a relatively small number of cases that could fall under that initial period of employment provision.
Let me return to an argument that has been made previously in the Committee, but that is relevant here. One undesirable effect of that change in the qualifying period was that because a worker who faced detriment and unfair treatment in the workplace had no recourse to an unfair dismissal claim through the employment tribunal system until they reached their two years, they found themselves relying on equalities arguments instead—a day one right in law as it stands. The effect—another perverse outcome—has been to overload that part of the employment tribunal system.
This change is sensible. It will help with the undesirable effects in the court system as it stands. The Chartered Management Institute, which we heard evidence from, surveyed its members and found that 83% of managers agreed that improvements in family-friendly policies and day one rights, including in respect of unfair dismissal, would positively impact workplace productivity.
In some of the related provisions in the Bill, particularly around the initial period of employment, there is promise that we will see a light-touch regime, and we are all looking to see what the details will be. I know that the Government are due to come back on that.
Chris Murray
I promise that I will make a short intervention this time, Mr Stringer. The statistics show that one in 10 workers never spend more than a year in a job, so they are particularly affected by the lack of provision on day one. At any one time, one in five workers are within the first two years of their employment. Does my hon. Friend agree that we are talking about a group of people who need the security of these rights to improve their productivity, but who are currently completely excluded from them?
Laurence Turner
My hon. Friend makes an important and relevant point. The people who are most adversely affected are those who have the least and who are on the lowest incomes in the economy, and the social care sector is a good example of that. In the city of Birmingham, the average turnover rate for care workers is around 30% every year. An enormous number of people are concentrated in particular sectors. One of the difficulties in Committee is that we use overall, aggregate numbers when weighing the impact of policies, but they are felt particularly in certain sectors—that is a common point of agreement among Members on both sides. If we get this change right, the benefits will be felt most keenly in the parts of the economy, and by the people, that need these protections most.
Again, it is worth reflecting on what we heard in the evidence sessions. We heard from Professor Bogg, from the University of Bristol, that
“if you look at the OECD countries, we are the fifth least regulated on dismissal protection out of 38 countries, and we are the third least regulated on hiring on temporary contracts”,
and that the change
“just pushes the UK back into the mainstream of other…OECD countries with employment regulation that works effectively.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 143, Q147.]
There can be a lot of sound and fury about the individual measures that we are debating, but I want to reinforce the point that all the evidence we have had, whether that is written evidence from interested parties, evidence the Committee has heard or historical evidence—maybe not going quite back to the industrial revolution, but at least over the past 30 years of changes in the qualifying period—shows that the effect on the overall economy will be sensible and limited. However, it will be the lowest-income workers, whose living standards, rights and dignity of work we all want to improve, who will benefit most. The clause is extremely welcome, and I commend it to the Committee.
Sir Ashley Fox
It is a pleasure to see you in the Chair, Mr Stringer. I do not believe that unfair dismissal should be a day one right. I think this is a fundamental error by the Government. It is interesting that during the previous Labour Governments, under Tony Blair and Gordon Brown, the qualifying period was one year. There was a reason for that: by reducing it—by making it a day one right—we introduce an aspect of procedural unfairness to all small businesses. Small businesses might decide after a week that they do not want to keep someone in employment. They might not follow the letter of the law, and it might be procedurally unfair because not every t was crossed and not every i was dotted, and that will lead to an unfair dismissal case.
Sir Ashley Fox
Let me just make this point. My hon. Friend the Member for Mid Buckinghamshire asked what the rationale was behind the day one qualifying period. I think the answer is that it is a demand from the trade unions; it is one of a long list of demands from the trade unions. This Bill is payback for the trade unions’ support for the Labour party. Those demands continue to come in, and we know that because the Bill is not even properly written. It is half-written—
Sir Ashley Fox
No. It is half-written and, with each week that goes by, we have more amendments as more demands come in.
My concern is that small businesses are less likely to employ people, because of these costs. Take a look at the Government’s impact assessment: table A7 says that these day one unfair dismissal rights will cost businesses £372 million. That will fall disproportionately on small businesses. They will be afraid of legal action; they will be wary of the costs. It will make them less likely to take people on—to employ that marginal employee. The cumulative effect of this proposal, taken with the many other proposals in the Bill, is to make our labour market less flexible, which is precisely what the trade unions want. They do not want a flexible labour market. This measure will make our economy more like France’s and will, in the long term, lead to higher unemployment. I think that is a great pity.
We are told that there will be a probationary period, but that it will be set out in regulations. This is another reason to think that the Bill is half-baked: the Government have not decided what should be a reasonable period. I suggest that two years is reasonable; if not, then the one year under Blair and Brown certainly seemed to work. However, the Government will find that introducing more and more day one rights will lead to higher unemployment. We all know that every period of Labour government ends with unemployment higher than when it began, and I suspect that this Bill will help to maintain that record.
Jon Pearce
It is a pleasure to serve under your chairmanship, Mr Stringer. Protection from unfair dismissal is already a day one right in respect of certain carve-outs from the two-year qualifying period, including for dismissal relating to a protected disclosure—whistleblowing—refusal to allow somebody to undertake jury service, or refusal to allow somebody to take family leave. That protection, and the principle of unfair dismissal, is already in statute as a day one right.
Let us look at other day one rights, which are worth exploring a bit further. As my hon. Friend the Member for Birmingham Northfield said, employees have a whole raft of day one rights, including most of the discrimination acts under the Equality Act and protections for whistleblowing. I want to continue my hon. Friend’s argument in order to try to give employees reassurance, which I think will come with guidance and the statutory probation period.
Certainty on this issue would help many employers. What I found in practice was that there would be a probation period in the contractual relationship, but smaller employers that I advised often did not have a policy; they just had a shortened notice period—often a month, rather than the three months after the probation period. There would be no structure in place. All too often, I found that many of those employers got themselves into difficulty because they believed that they did not have to follow any process whatsoever, due to the two-year qualifying period.
More often than not, those employers were dismissing people for reasons of capability: the employee had not got up to the necessary standard, and there was an issue with their work. In those circumstances, the employer often did not have much of a structure or procedure in place, and would eventually get to the point at which it would, in effect, give up and decide that the employee was never going to get to the standard that it wanted within the probationary period. The employer would dismiss people without any process or meeting—even without speaking to the employee at all—and without taking any evidence.
All too often in the cases that I dealt with, it would come to light that there was a reason for an employee’s lack of capability, which related to an impairment. Many of those impairments were protected under the Equality Act, and those employees had protections against discrimination on the basis of disability. They had a right to reasonable adjustments that the employer had not considered because it did not ask the question, and which had not been implemented. In those circumstances, the employer is exposed to uncapped discrimination claims, which are very serious and very difficult to respond to, because no process has been followed.
It is really important that we seek to reassure small, medium and large employers that having a light-touch, clear structure will mean that no employer falls into that trap again, and that we will save a lot of employers unnecessary litigation.
Laurence Turner
Does my hon. Friend agree that, in those cases where someone has ended up taking the equalities route because that is the only route available to them, it can be particularly reputationally damaging to the employer? Does he also agree that, because by the nature of those claims—particularly where they relate to disability discrimination—the system requires the claimants to stress an impairment of some kind, that process is also distressing for the claimant in a way that is wholly unnecessary? Making these changes would at least avoid those circumstances for both employer and employee.
Jon Pearce
I absolutely agree. Often, in those circumstances, it is extremely distressing for the employee, who, had the reasonable adjustment been in place to assist them with disability or to enable them to get to the required standard, would still be employed. They have to face the extra hurdle of declaring their particular impairment to the world.
Reputationally, these claims can often be hugely damaging for employers that had never intended to discriminate and would never have discriminated against an employee, but for the lack of process. As I say, there is nothing new in day one rights—protection from unfair dismissal is already, in certain circumstances, a day one right; Equality Act claims are a day one right; whistleblowing is a day one right—but the Bill will help employers not to fall foul of those day one rights that already exist and give a far clearer structure to the employment sphere. With those reassurances and with guidance, there is nothing for employers to fear from this legislation.
Anneliese Midgley
It is a pleasure to serve under your chairmanship, Mr Stringer. About a year ago, one of my constituents in Knowsley was told that she needed IVF. She went to her employer to let them know that she was going to start treatment, and a few days later she was sacked. She was a few weeks short of having worked two years for her employer. She had previously passed probation and had no previous complaints or warnings on her work. Hon. Members will be happy to know that she did get pregnant and she had that baby a month ago, but while trying to get pregnant and in the early stages of her pregnancy she could not find another steady job. No employer wanted to take her on and being unemployed obviously caused immense stress.
My constituent did not qualify for maternity pay. She has worked hard all her life; she has studied and has a doctorate. She is now with a small baby on a statutory maternity allowance of £184 and is still not in a job. One in nine women are forced out of the labour market every year due to pregnancy and maternity discrimination. The two-year period in which someone can be dismissed was used unfairly against my constituent. The Bill will protect women across the UK, allowing them the right to a secure job and a family. I am sure we can all agree that the current situation for workers is unacceptable.
Alex McIntyre
I start by aligning myself with the very good arguments that my hon. Friend the Member for High Peak made from his professional experience. I saw many of the same circumstances in my professional career.
There are a couple of points that I want to add. To the extent that there are people who want to bring claims in bad faith, there are already avenues for them to do so. If they wanted to bring a claim against their employer vexatiously they could, as my hon. Friend said, bring a claim under the Equality Act or on the basis of whistleblowing. Part of the concern here is some of the—quite frankly—scaremongering going on about what some of these processes might entail. If the hon. Member for Bridgwater would like to intervene and say exactly which part of the capability process he thinks small businesses will be concerned by, and would be disproportionate for a small business to undertake, I will happily take that intervention.
Most employers—and nearly every MP in this room is a new employer, although there are some returning colleagues—get an idea pretty quickly whether someone is going to be a fit or not. If there are concerns about their performance, there is a very straightforward process that can be followed. It is not particularly onerous. There is often a disproportionate concern about what that process might look like. Part of the issue, as my hon. Friend the Member for High Peak said, is that, by not following a simple process, employers end up tying themselves in more knots and potentially discriminating against individuals because they have not followed what could have been a fair process from the start. That is the point that the Bill seeks to address.
The Bill will not prevent individuals from being dismissed for fair reasons, which include capability, performance and redundancy. We are saying that a fair process should be followed. We have already made provision for the fact that there will be a slightly different process, and rightly so, for individuals in their probation period. It is important that we recognise that and do not scaremonger, because that will put businesses off employing, when there is a simple procedure that they can follow.
Justin Madders
We seem to have lost a few colleagues during the votes; hopefully, they are coming back. It seems a while since they were made, but I will pick up on comments and questions of—[Interruption.]
Justin Madders
Let me sum up the debate. The shadow Minister asked some questions, and there were other contributions to the debate, which I hope to come on to. I think that the shadow Minister’s general position was that he accepted that there should be a reduction in the qualifying period. I am not entirely clear whether that was the case, but certainly his colleague, the hon. Member for Bridgwater, threw out a number of proposals. The question that the shadow Minister asked was, “Why day one?” I will come to that shortly, but I think the other main thrust of his argument was that we are not listening to businesses. Of course we are, and that is why we came up with the concept of a statutory probationary period.
For the information of the Committee, about 140 stakeholders have engaged with us about the Bill since we came into office in July. One of the many issues that have come up is the question of day one rights, and how we balance the risk for employers—giving them the confidence to hire but ensuring that we deliver our policy aim of giving people more certainty and security at work. That is where the statutory probationary period comes in. We believe that that will help businesses focus on their hiring practices, but it should also increase the dialogue between employer and employee in those early days of the employment relationship.
My hon. Friend the Member for Gloucester said that an employer can work out pretty quickly whether someone will be suitable for the workplace. At this point, I quote Professor Dominic Regan, an eminent professor of employment law, who used to quip somewhat tongue in cheek that he could decide whether he liked someone within 10 minutes of meeting them on a train. That was his way of arguing that the two-year time limit for unfair dismissal was set far too high. It is certainly a sentiment that I agree with, although we will not be going as far as to introduce a 10-minutes-on-a-train test.
We are seeking to give employees the security of knowing that they will not be arbitrarily dismissed in the early days of their employment, but to give employers the confidence to hire and the opportunity to use a light-touch process to deal with issues of performance and capability. We believe that will be a positive for employees. Research quoted in the impact assessment suggests that having a job is significant to physical health and personal relationships, as a determinant of one’s wellbeing. The quality of that job and how secure it is are clearly a key part of that.
The point made by my hon. Friend the Member for Birmingham Northfield, and by my hon. Friends the Members for High Peak and for Gloucester, about employees who get dismissed before the qualifying period sometimes looking for a protected characteristic to base a claim on is an interesting one. I do not think that is something that we can model, because we do not know exactly how many claims would have continued anyway, but it is a fair point that when people are dismissed before two years, without any discussion or explanation, they seek answers, and sometimes they might seek those answers by hanging their hat on a statutory peg that may not always fit the case. My hon. Friends all spoke eloquently about how that can be counterproductive not just for the businesses, but for the employees’ general wellbeing.
Business in the Community surveyed 4,000 employees, of whom 66% said that their mental health and wellbeing was affected by their personal job insecurity. In written evidence presented to the Committee, USDAW noted that
“Being dismissed on spurious…grounds, without a fair investigation can have devastating consequences for an employee”
in terms of morale, confidence and living standards. Having worked for employers that had quite a gung-ho approach to employment rights, I welcomed the security of a qualifying period for unfair dismissal. Before that, it really did feel that you were one wrong conversation away from seeing your job go.
Of course, there is significant evidence to suggest that there are advantages for the wider economy. I think there is an acceptance that job insecurity can have a cooling effect on job mobility. The Resolution Foundation noted that the job mobility rate in 2019 was 25% lower than in 2000. As my hon. Friend the Member for Birmingham Northfield said, there is an international context to this: the UK is the fifth least regulated of the 38 OECD countries in terms of the dismissal of individual workers. We should look to correct that, and the Bill will go a long way towards doing so.
The shadow Minister asked about the risk to jobs. The impact assessment states:
“There is limited evidence to suggest that protecting employees from unfair dismissal is associated with lower employment rates.”
Evidence from our OECD counterparts across Europe supports that. The Resolution Foundation gave evidence to the effect that the measure is unlikely to have an impact on employment rates. Professor Deakin’s historical context was important. He said that, over the sweep of history in the past 50 years, increased employment protections have not led to increased unemployment. Of course, all Members will be aware of the messages of doom that we heard during the national minimum wage debate about what implementing that measure would mean for employment rates.
History demonstrates that there is nothing to fear in this legislation, and nothing to fear in giving people greater job security from day one. By providing for a statutory probationary period, we are getting the balance right between security at work and giving employers the opportunity to take a chance on new hires. I commend the clause to the Committee.
Question put and agreed to.
Clause 19 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Eleventh sitting)
Thursday 12th December 2024
(1 week, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 12 December 2024 - (12 Dec 2024)
The Chair
Welcome back. Will everyone please ensure that all electronic devices are turned off or switched to silent mode? We will continue line-by-line consideration of the Bill. The grouping and selection list for today’s sittings is available in the room and on the parliamentary website. I remind Members about the rules on declarations of interests as set out in the code of conduct.
Schedule 2
Right not to be unfairly dismissed: removal of qualifying period, etc
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 156, in schedule 2, page 112, line 19, after (b) insert “, (c)”.
This amendment makes the reason that the employee was redundant a reason in relation to the dismissal of an employee during the initial period of employment.
The Chair
With this it will be convenient to discuss amendment 157, in schedule 2, page 112, leave out lines 32 to 34.
This amendment removes the provision that may be made by regulations that the dismissal of an employee is to be treated as fair only if the employer has taken any steps specified in the regulations.
Greg Smith
It is a pleasure to serve under your chairmanship, Ms Vaz. This pair of amendments on unfair dismissal stand in my name and those of my hon. Friends from the official Opposition.
Amendment 156 would make the fact that the employee was made redundant a reason in relation to the dismissal of an employee during the initial period of employment. The Bill stipulates that the modified protections against unfair dismissal in relation to the initial period of employment mean that an employee can be dismissed for the reasons listed in section 98(2) of the Employment Rights Act 1996, which include
“the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do…the conduct of the employee”
or
“that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.”
The 1996 Act also includes a fourth reason,
“that the employee was redundant”,
which is not replicated in the Bill. This is a probing amendment—we do not intend to press it to a Division—to try to tease out from the Government a little more detail and to establish why that fourth reason is omitted from the Bill.
Amendment 157 is also a probing amendment. We want to understand what steps will be specified in regulations that an employer must follow in order for the dismissal of an employee to be treated as fair. That will come back to the test of subjective reasoning rather than specific guidelines or regulations in the Bill. It is only right that the Committee and businesses out there in the real world can fully understand the scope with which the Government are defining “fair” or “unfair”. Inherent to that is the question, why is it not in the Bill? Why is it not as clear as day in the words printed in this quite substantial tome? I know that the Government want to table more amendments, so perhaps those could be a little more specific. Critical to amendment 157 is the question how burdensome the Government intend this measure to be and how proportionate that burden will be on businesses in relation to the problem that the Minister thinks the Bill in its current form—its current vagueness—will solve.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair, Ms Vaz. I refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
The shadow Minister has posed some questions that underlie amendment 156, which seeks to include redundancy as one of the reasons for dismissal to which the lighter-touch standards will apply during the statutory probationary period. As he has rightly identified, the Bill sets out that the reasons for dismissal to which the lighter-touch standards may apply are the statutory grounds of capability, conduct, illegality and some other substantial reason.
It is important to note that those four areas relate to the individual employee, which is why redundancy is not included. Redundancy can affect entire workforces, whereas the other areas are included because of the overlap between the potentially fair reasons for dismissal in the legislation, particularly suitability for work, and the sorts of issues that might come up in a probationary period. A redundancy situation would not ordinarily come up within a probationary period, because it would be about the wider business condition rather than the individual employee’s performance or suitability for the job. I hope that explains why redundancy has not been included.
I turn to the shadow Minister’s more general points. We are trying to strike a fair balance between strengthening employee protections against unfair dismissal and maintaining businesses’ ability to hire, assess and dismiss new employees. The Government are committed to ensuring that businesses retain the confidence to do so. We do not wish the new procedures to undermine existing fair dismissal processes for redundancy, which already provide a robust, straightforward and fair process for employees facing redundancy.
We will work closely with ACAS, in consultation with businesses and trade unions, to ensure that there is clear, straightforward and easy-to-follow guidance on how to carry out a redundancy process under the new measures. It will be an easily accessible process. One of our concerns about including redundancy is that if an employer decided to make a significant number of their workforce redundant, it would be an additional administrative job for them to identify which employees they did not need to include within a redundancy process because they were part of a statutory probationary period, and which would be subject to the wider process. That would lead to unintended consequences and possibly risk of discrimination claims.
Sir Ashley Fox (Bridgwater) (Con)
Can the Minister give me an assurance on how microbusinesses will be affected by the change? A very small business might choose to take on one person, and there might be nothing wrong with that person, but within a couple of months the business might realise that it is not working from an economic point of view. The employee would then be effectively redundant, because that small business cannot sustain their employment. Can the Minister assure me that if that small business cannot dismiss that person for the reason of redundancy during the probationary period, there will not be a separate, complex redundancy process to follow?
Justin Madders
The hon. Member may be conflating two slightly different issues. I say to him very clearly that existing laws on redundancy will not be changed as a result of the Bill. We expect employers to follow the same processes, regardless of the length of service of the employee. In that situation, I do not imagine that there would be a particularly lengthy process if it involved only one individual and a small employer. There would not need to be a pool for selection, for example, or selection criteria. We would expect the employer to comply with the law in those circumstances.
Amendment 157 questions whether regulations should be able to set steps that an employer must follow for a dismissal to be considered fair when prescribing lighter-touch standards to apply during the statutory probationary period. We have set out clearly our intention to have a light-touch process, and we know that around 9 million employees will benefit from that. The intention behind setting out those steps in regulations is to ensure that we take account of further consultation, which we will undertake not just with employers but with trade unions and civil society, to ensure that we have the right balance of process and fairness in a statutory probationary period. We will be developing that in due course. As is often the case with the ACAS code of practice on disciplinary and grievance procedures, there are already lots of examples of really practical guidance out there, which we intend to replicate. I invite the shadow Minister to withdraw the amendment.
Greg Smith
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 155, in schedule 2, page 112, line 23, after “period” insert
“of no less than six months”.
This amendment makes the initial period of employment at least six months in length.
The Chair
With this it will be convenient to discuss amendment 5, in schedule 2, page 112, line 23, leave out from “period” to the end of line 24 and insert
“of not less than 3 months and not more than 9 months from the day on which the employee starts work.”.
This amendment will ensure that the initial period of employment is between 3 and 9 months.
Greg Smith
Amendment 155 would make the initial period of employment six months, to align with a standard probationary period. The Government have admitted that they do not have robust data on instances of dismissal for those under two years of employment; in other words, we do not know if there is even a problem with unfair dismissal that the Bill is seeking to solve. Without knowing the problem, how can the Government identify a solution or even know that one is necessary? This is a flimsy basis for enacting a measure that the Government estimate will cost businesses in excess of £40 million a year overall.
Laurence Turner (Birmingham Northfield) (Lab)
It is a pleasure to serve under your chairship, Ms Vaz. I draw attention to my declarations in the Register of Members’ Financial Interests and to my membership of the GMB and Unite trade unions.
Before we move past the hon. Gentleman’s point about information, which we have talked about a lot, is the core problem not that there is a wider issue with UK labour market statistics? We heard during the evidence sessions from the Resolution Foundation, which said:
“The Office for National Statistics’ labour force survey is in the doldrums”.––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 119, Q125.]
This is not a party political point. The ONS’s collection methods, which broadly worked until the pandemic, have not worked subsequently. The statistics body is going through a period of transforming the labour force survey, but the criticisms that the hon. Gentleman makes of the information available to this Government would have held true for the Government between 2020 and 2024. This is a much wider issue. We could look at that problem and say, “We didn’t even really know what the UK unemployment rate was for some time,” and if that was an absolute barrier, all employment legislation would be on hold. It is important that those practical challenges are acknowledged.
Greg Smith
I do not disagree with what the hon. Gentleman says, but where we do disagree is on the conclusions that we draw from that. I would strongly argue that to introduce primary legislation without an adequate evidence base is foolish, whereas he seems to be arguing that it is fine to do that.
I fundamentally agree with the hon. Gentleman that there is often a problem with data collection, particularly on complex things such as overall employment numbers, the number of people in multiple jobs or whatever. He certainly hit the nail on the head about the post-pandemic understanding of the labour market. The pandemic brought about almost a fundamental reset in a lot of working patterns; nobody seems to work quite in the same way as they did before the pandemic. I acknowledge his point, but I suggest that this was actually the time to take a bit of a pause and a step back to think through new measures more carefully, rather than to rush ahead with a Bill in order to publish it within 100 days of the Government’s taking office.
I return to my questions to the Minister. What estimate has he made of the additional cost to business, including salary costs during performance management or disputes, retention costs from tribunal risk aversion, and increased settlements offered to avoid legal claims? Are those costs worth it for a problem that, as we have just discussed, nobody can actually prove exists in the UK market right now?
Sarah Gibson (Chippenham) (LD)
It is a pleasure to serve under your chairmanship, Ms Vaz. I will speak principally to our amendment 5, but Opposition amendment 155 is also relevant.
We broadly welcome the Government’s intention to clarify some issues around probation. However, we feel that these measures will make it too difficult for small businesses, which we all know are the backbone of our economy, to take staff on. If we are not careful, the Bill, albeit not by design, could be catastrophic for some small businesses.
I would like the Minister to assure me that small and medium-sized enterprises can be confident that they will not be unduly penalised if they need to give notice during a probation period. Our amendment would put a number on the period, albeit that it allows a range. Both amendments aim to find out whether the Government have an idea of the timescale for the probation period.
When I speak to some of my small innovative businesses, especially those in renewable energy, one thing that concerns me is that they are taking staff on who do not have experience in the field. There simply are not enough people with experience, so businesses are taking people on speculatively who they hope to encourage, teach and train on the job. If they realise early on that that is not possible and that the employee is not suitable for the sector, they need to be able to start again and try again without feeling penalised. There is no way they can do this over a 10-minute coffee, as one Government Member suggests, because these people have no experience in the field. They are on a learning curve as much as the employer is. This probation period is vital for both sides to understand whether the sector, which is new to many people, is appropriate.
I am very concerned that the period, which is the only thing we know about, is not defined as a set amount of time to give small businesses confidence that they can continue to take on staff about whom they are concerned. If the timescale cannot be set out in the Bill, I would like some idea from the Minister of when we might hear it.
Steve Darling (Torbay) (LD)
It is a privilege to serve under your chairmanship, Ms Vaz. I want to unpick another issue on which I would welcome some reassurances from the Minister.
I have spoken to a gentleman from the Torbay Business Forum who supports a charity that works across Devon, particularly by supporting people with learning disabilities into employment. One often finds that it can take a bit longer for people with learning disabilities to find the right place and get a firm contract. What safeguards are there for charitable organisations and not-for-profit companies working in that sector to prevent them from ending up in the difficult position of having people on their books who, sadly, over an extended period of time, they realise are not fit for purpose because of challenges in their lives? There will no longer be the opportunity to offer extended flexibility.
Like my hon. Friend the Member for Chippenham, I broadly welcome the Bill’s direction of travel, but I would like to see some of the rough edges knocked into shape for Torbay residents.
Justin Madders
I am grateful to Opposition Members for tabling their amendments and asking a series of questions.
The hon. Member for Chippenham seeks to set the boundaries for the statutory probation period at three and nine months. The hon. Member for Torbay seemed to argue for a lengthier period; I do not know whether he was asking for nine months or beyond, but I take his point. The hon. Member for Mid Buckinghamshire asked us to put six months on the face of the Bill, so there is quite a range of options. We have decided that the best thing to do is work with businesses and consult with them on the detail of the proposal as we move forward. We have expressed a preference for nine months as a result of the engagement that we have undertaken.
As the hon. Member for Mid Buckinghamshire indicated, businesses have said that generally six months is about the right period, but in some circumstances they may need a bit longer to ensure that the person is the right fit. That is why we alighted on the proposal for nine months, but we do not want to tie our hands by putting it on the face of the Bill; we want to continue to work with businesses and trade unions to understand whether that is the right figure. Putting a number in the Bill would be premature, because we will have further conversations. As we develop the light-touch process in our deliberations, that may help people to firm up their views about whether nine months is indeed the right amount of time.
The hon. Member for Mid Buckinghamshire questioned the evidence base. Of course there can be no evidence base for people being unfairly dismissed under two years’ employment, because there is no right protecting them from unfair dismissal before then, except for those who may seek to hang their hat on an automatically unfair dismissal. As we have discussed at length, people sometimes do that because they have a sense of grievance about the way they have been treated, and they may well have a legitimate claim.
Hon. Members generally accepted that the labour force survey statistics are not particularly helpful, but there is quite a lot of evidence about the impact of job insecurity more generally and the fact that the two-year qualification period creates uncertainty for individuals. Business in the Community surveyed 4,000 employees, of whom 66% say that their mental health and wellbeing is affected by their personal job insecurity. In written evidence to this Committee, the Union of Shop, Distributive and Allied Workers notes:
“Being dismissed on spurious conduct or capability grounds, without a fair investigation”—
as can happen at the moment under two years of employment—
“can have devastating consequences for an employee. It can destroy the individual’s morale and confidence and…living standards”.
This is happening to people already, and it is having an impact.
There is also evidence to suggest that there are further advantages for the wider economy. The Resolution Foundation has done some research on the cooling effect of people not moving jobs because they do not have job security. Someone who is considering moving from one job to another may be more likely to take the leap if they have that window of protection, so it is important for individuals as well.
Greg Smith
Where does the Minister think the cost to businesses will be borne? Will it mean lower wages for employees, no Christmas bonuses or perhaps pay rises that are not as great as employees might be expecting? Or will it ultimately get passed on to customers, consumers and purchasers of the services that those businesses provide? Where will the cost actually be borne?
Justin Madders
I thank the shadow Minister for his questions. Those are exactly the same arguments that we had about the minimum wage, and they did not bear examination in the end. Indeed, the Conservative party eventually decided to support the minimum wage too.
The shadow Minister quoted from the evidence of Jane Gratton of the British Chamber of Commerce. She has actually said that she would favour a nine-month probationary period being set out in regulations, which I think is reflective of comments that I have made. It seems a little odd for her evidence to be used in support of an amendment that seeks a six-month period.
We are committed to working with businesses and trade unions to finalise the period in regulations. Setting it out in the Bill would tie our hands somewhat. It would also go against the spirit of what we are trying to achieve, which is working in a tripartite manner. The shadow Minister has sometimes criticised me for rushing a little bit, so he will appreciate that we are taking our time with this measure because we want to get it right. I urge him and the Liberal Democrat spokesperson not to press their amendments.
Greg Smith
As I hope I made clear in my opening remarks, amendment 155 is a probing amendment. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Justin Madders
I beg to move amendment 55, in schedule 2, page 112, line 36, at end insert—
“3A In section 15 of the Enterprise and Regulatory Reform Act 2013 (power by order to increase or decrease limit of compensatory award), after subsection (5) insert—
‘(5A) The power conferred by subsection (1) includes power to provide that, in the case of the dismissal of an employee that meets the conditions in section 98ZZA(2) and (3) of the Employment Rights Act 1996 (dismissal during initial period of employment), the limit imposed for the time being by subsection (1) of section 124 of that Act is a different amount from that otherwise imposed by that subsection.
(5B) Subsections (3), (4)(a) and (5) do not apply for the purposes of specifying the amount of the limit in such a case.’”
This amendment would enable the Secretary of State to specify the maximum amount of the compensatory award available where an employment tribunal finds that an employee has been unfairly dismissed during the initial period of employment provided for by new section 98ZZA of the Employment Rights Act 1996.
Justin Madders
Amendment 55 will expand an existing delegated power to enable the Secretary of State to specify a different maximum compensatory award where an employment tribunal finds that an employee has been unfairly dismissed under the new light-touch standards during the statutory probation period. Amendments 56 and 57 will make consequential changes to the provisions for uprating maximum awards for inflation.
In the event of any successful unfair dismissal claim, an employment tribunal will consider compensation as a remedy. Compensation will usually consist of a basic award and a compensatory award. The tribunal will determine the compensatory award by considering what it thinks is just and equitable, having regard to the financial loss suffered by the claimant that has been caused by the employer’s actions. This will include reference to salary and benefits, including pension, until the claimant finds alternative employment. The maximum compensatory award is currently the lower of 52 weeks’ pay or £115,115.
The Government have listened to concerns that changes to unfair dismissal law could lead to an increase in unfair dismissal claims, even where there is no merit, and to an increased burden on businesses and tribunals in having to deal with those claims. We have heard that uncertainty of outcome makes it hard for businesses to judge how much to invest in either defending or settling a claim. The introduction of a lighter-touch standard for fair dismissal during the statutory probationary period aims to reduce burdens on businesses and to create certainty, but it will not apply to all dismissals during the statutory probation period.
Having listened to those concerns, the Government committed in our “Next Steps to Make Work Pay” document to consulting on what a compensation regime for successful unfair dismissal claims during the statutory probation period should be. Although we want employers to pause and make considered decisions about dismissing employees during probation, the Government do not think that employers should face the full potential liabilities of unfair dismissal remedies when dismissing an employee for reasons related to performance or suitability for the role during the statutory probation period.
To have the option of implementing reform once we have consulted, it is necessary to introduce this delegated power. The power is limited to making changes to the compensatory award for unfair dismissal claims during the statutory probation period only, and only where the new lighter-touch standards apply. The Government recognise the importance of employers being able to assess new hires. We are committed to introducing a statutory probationary period in which there will be lighter-touch standards for an employer to meet in order to dismiss an employee fairly if they are not suitable for the job.
The power will not enable the Secretary of State to make changes to the level of compensation for other day one unfair dismissal rights, such as automatically unfair reasons including maternity-related dismissals, or for “ordinary” unfair dismissals such as redundancy. The power will not enable the Secretary of State to make changes to reinstatement or re-engagement as a remedy available to tribunals for unfair dismissal during statutory probationary periods, nor will it allow changes to be made to the additional compensatory award where an employer does not comply with an order of reinstatement or re-engagement by the tribunal. There may be some concerns that the power could be used to undermine enforcement of the day one right to unfair dismissal, but I assure the Committee that this is not the intention.
The Government are making basic protections against unfair dismissal a day one right for employees. They will be able to enforce their rights and take a claim to the tribunal if they have been unfairly dismissed. It is important, however, that employers are able to assess new hires and see whether they are suitable for the job without facing the full potential liabilities of unfair dismissal remedies during this period.
Greg Smith
I have a straightforward question. We are back once more with our old friend of not having full clarity and having consultation after legislation. The Minister gave a figure, but it is not clear exactly what the Secretary of State might consider specifying as the maximum compensation that can be awarded under this measure.
I acknowledge that there is a consultation to come, but the reason that we need greater clarity relates to the point about business confidence in making new hires, putting new job adverts out, seeing who applies and trying to recruit. If there is a risk that the figure will be disproportionately high, it will make businesses more risk-averse about growing their businesses and thereby growing the economy and creating more jobs in our country. My only substantive question is “Where is the ceiling going to be?”
Sarah Gibson
I share some of the shadow Minister’s concerns. Consultation to find out what most concerns businesses is obviously commendable, but if a large amount of the Bill is left to secondary legislation, a lot of it will not come back before the whole House for scrutiny. Can we be assured that decisions that are not taken before the Bill is passed can at least be considered by a Committee when they are finally made?
Justin Madders
I take on board the comments that the Opposition spokespersons have made, but if we put something in the Bill now, we would be pre-empting the consultation. It is very important to get this right, acknowledging the balance that needs to be struck and the points that have been made. It is worth bearing in mind that this measure will not be implemented until autumn 2026 at the earliest, which is still a considerable time off. The reason we want to take the time between now and then to engage and consult with businesses is to ensure that we get that figure to a spot that gives justice to individuals and certainty to businesses about the potential liability they may face.
Greg Smith
I am grateful to the Minister for that clarification. I understand the point about autumn 2026, but would he acknowledge that the vast majority of businesses are probably already working on their 2026 business plans? They are not just planning for tomorrow, next week and January; they are making medium and long-term plans. Those decisions about creating a new role, filling a vacancy or whatever it might be will already be baked into business planning for 2026, 2027 and maybe through to 2030, so it is not good enough to say, “It’s not coming in until 2026, so don’t worry.” Businesses are already in that planning space.
Justin Madders
I take the shadow Minister’s point, but that presupposes that businesses bake into their business plans compensation for unfairly dismissing their staff, and I do not think any business would want to proceed on that basis. This is about a potential liability that might come in at a future point.
Of course, we all want employers to retain their staff and have a productive working relationship, but if they do not, we want them to comply with the law and dismiss employees fairly. There will be a small number of cases where that does not happen, but I would not expect a business to be able to anticipate what might happen in two or three years’ time with an individual employee and whether a process was followed or not. That is probably not on a business’s desk at this point.
Amendment 55 agreed to.
Amendments made: 56, in schedule 2, page 114, line 20, at beginning insert—
“(1) The Employment Relations Act 1999 is amended as follows.”
See the explanatory statement for amendment 57.
Amendment 57, in schedule 2, page 114, line 23, at end insert—
“(3) In section 34 (indexation of amounts, etc)—
(a) in subsection (1)(c), for “124(1)” substitute “124”;
(b) omit subsection (4);
(c) in subsection (4A), for “124(1)” substitute “124”;
(d) in subsection (4B)—
(i) for “124(1)” substitute “124”;
(ii) after “1996” insert “in relation to cases of any description”;
(iii) for the words from “such a sum” to “that date” substitute “, with effect from a day within 12 months before that date, a sum specified in that section in relation to cases of that description”.”—(Justin Madders.)
This amendment and amendment 56 are consequential on amendment 55.
Question proposed, That the schedule, as amended, be the Second schedule to the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 28—Unfair dismissal: impact assessment—
“(1) The Secretary of State must carry out an assessment of the likely impact of section 19 and Schedule 2 of this Act on—
(a) employers, and
(b) the economy.
(2) The assessment must –
(a) include labour market and broader macroeconomic analysis,
(b) examine the impact of the measures in section 19 and Schedule 2 of this Act on employment, wages and economic output,
(c) consider the likelihood the dismissal measures leading to lower employment, and greater use of temporary contracts, and
(d) examine the likely effect of section 19 and Schedule 2 of this Act on—
(i) productivity,
(ii) wage growth,
(iii) equality of opportunity,
(iv) job security,
(v) economic activity, and
(vi) employment.
(3) The Secretary of State must lay a report setting out the findings of the assessment before each House of Parliament.”
This new clause requires the Secretary of State to assess the impact of the provisions of Clause 19 and Schedule 2.
Amendment 134, in clause 118, page 105, line 20, at end insert—
“(3A) But no regulations under subsection (3) may be made to bring into force section 19 or Schedule 2 of this Act until the findings set out in the report under section [unfair dismissal: impact assessment] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”
This amendment is linked to NC28.
Justin Madders
Schedule 2 amends the Employment Rights Act 1996, including the introduction of a statutory probation period. It also removes the qualifying period for the right to written reasons, replacing it with a requirement for the dismissal to have occurred after the statutory probation period ends. By removing the qualifying period, schedule 2 makes basic protection against unfair dismissal a day one right for all employees, ensuring that employees receive a baseline of security and predictability.
By introducing a statutory probation period in legislation, the schedule ensures that employers can continue to assess new hires. It allows the duration of the statutory probation period to be set out in regulation by the Secretary of State, which will follow public consultation.
I will take Members briefly through the elements of schedule 2. Paragraph 1 repeals the two-year qualifying period. Paragraph 2 makes it clear that the right to be unfairly dismissed does not apply to those who have not yet started employment. Paragraph 3 makes provision about dismissal during the initial period of employment, which we have already discussed. It will ensure that the “potentially fair” reasons in section 98 of the Employment Rights Act 1996 will be subject to the light-touch regime where they relate to the employee with the exception of redundancy.
As we have already discussed, the Government intend to consult on the standards, and the schedule repeals the two-year qualifying period. A Government amendment has been made to schedule 2 to include a delegated power to change the maximum compensatory award available during the statutory probation period where the lighter-touch standards apply, as we have just discussed. We will consult on that.
Greg Smith
The Minister tempts me, but I will set out our rationale for new clause 28 and amendment 134. I acknowledge that he has published a series of impact assessments, but the Regulatory Policy Committee has not exactly given the Bill a glowing bill of health, and there are a significant number of red ratings in its assessment. I gently push back and suggest to the Minister that the impact assessments need to be looked at again across the piece, so that we can be absolutely certain that the Bill will do what the Government want it to do.
As the Minister rightly said, new clause 28 would require the Government to report on the impact of the Bill’s provisions on unfair dismissal on employers and the economy. That goes beyond the impact assessments that the Government have already conducted, in the sense that the assessment we are calling for must
“include labour market and broader macroeconomic analysis… examine the impact of the measures in section 19 and Schedule 2 …on employment, wages and economic output…consider the likelihood the dismissal measures leading to lower employment, and greater use of temporary contracts, and…examine the likely effect of section 19 and Schedule 2…on productivity…wage growth…equality of opportunity…job security…economic activity, and”—
last but not least—“employment.”
All that work should have been done before the Government proposed this legislation, so the Opposition think it is only right to try to ensure that the Government present the House with the necessary information before the changes to unfair dismissal come into effect. That is the bedrock of a democracy, and it is only right that all Members of this House and, indeed, the other place can see that information before they permit the Bill to complete its passage and gain Royal Assent.
We heard from several witnesses that the provisions will tip the balance of risk for employers, who will choose to not hire people, rather than take a chance on whether a new hire will work out. We also heard that people on the edge of the labour market represent a riskier proposition for employers and are most likely to be disadvantaged by the changes. I do not believe that any Member of this House—of whatever political party or none—wants to see people on the edge of our labour market denied a second or third chance. They deserve the ability to get on in life if, for whatever reason, they have not been able to get on the job ladder and into gainful employment.
All the evidence indicates that the Bill’s provisions on unfair dismissal will have a chilling effect on business growth. How will the Bill support the Government’s first mission of economic growth, when all the evidence—written and oral—and the reports in the press and from other bodies point to the contrary? Even the Government’s own impact assessment cannot provide reassurance that the measures in the Bill will lead to growth. The new clause would introduce safeguards and provide the clarity and detail that all Members no doubt want on whether clause 19 is even necessary for the intent of schedule 2.
Justin Madders
I will try to put the shadow Minister’s mind at ease. I point out that not just is there an overall impact assessment for the Bill, but there are 24 separate impact assessments for different measures. That shows the amount of work that has been put in. The RPC has approved two thirds of those assessments, and it was looking only at the evidence base, not the policies themselves.
The impact assessment for day one rights covers everything we would expect an impact assessment to look at: the business environment, the wider economic impact, trade implications, wages, labour mobility, productivity, and sectoral and regional impacts. As the evidence base is firmed up, we will continue to refine and develop it. It deals comprehensively with many of the shadow Minister’s concerns, and I invite him not to press his amendments to a vote.
Question put and agreed to.
Schedule 2, as amended, accordingly agreed to.
Clause 20
Dismissal during pregnancy
Question proposed, That the clause stand part of the Bill.
The Minister for Equalities (Dame Nia Griffith)
Clause 20 amends an existing power in section 49D of the Employment Rights Act 1996, which allows the Secretary of State to make regulations
“about redundancy during, or after, a protected period of pregnancy.”
Regulations made under that power took effect in April, bolstering the protections against redundancy for pregnant women. However, redundancy is just one of five reasons for which an employee can be fairly dismissed. The changes delivered by clause 20 are required so that regulations can be made in regard to dismissal more broadly beyond redundancy, both during and after pregnancy.
The existing provisions for redundancy allow regulations to set out three things. The first is how the protected period of pregnancy is to be calculated. The regulations can provide that the protected period begins after a pregnancy has ended, which means that protection can be extended to a woman who has miscarried but has not yet told her employer that she is pregnant. The second is that employers must offer alternative employment to pregnant women at risk of redundancy. The last is the consequences of a failure to comply with any protections, including stipulating that this will result in the dismissal being treated as unfair. Those provisions for redundancy will all be extended, and therefore made available for dismissals for reasons other than redundancy, through this clause. This approach is necessary to then deliver enhanced dismissal protections in the regulations for pregnant women.
A 2016 Equality and Human Rights Commission survey found that 1% of mothers were dismissed following their pregnancy each year. Analysis by the Department for Business and Trade estimates that that equates to around 4,100 mothers—that is how many women could benefit from the new dismissal protections annually. Using secondary legislation to set out the policy detail is a standard approach in this area of employment law and supports working with stakeholders to further shape the policy before confirming the final approach in the regulations.
Clause 21 amends existing powers that allow the Secretary of State to make regulations concerning dismissal during several kinds of family-related statutory leave. The amended powers will continue to allow for regulation of dismissal during the period when an employee is away from work on maternity leave, adoption leave, shared parental leave, neonatal care leave or bereaved partners paternity leave. The amended powers will also apply to a period after the employee has returned from one of those types of leave.
Additionally, clause 21(5)(b) clarifies that parents looking to take bereaved partners paternity leave who have adopted from overseas or had their children via a surrogacy arrangement can be included in regulations creating protections against redundancy, as well as the new protections against dismissal for other reasons. It also makes it clear that the cohort of parents taking bereaved partners paternity leave can be included in the regulations allowing access to keeping-in-touch days, which allow an employee on statutory leave to be able to do some work for their employer without that leave coming to an end.
Our primary focus with the enhanced dismissal protections is supporting pregnant women and new mothers during and after maternity leave. However, as is the case with clause 20, we want to consult and work closely with stakeholders on whether new parents more generally should be covered by the enhanced dismissal protections. The final policy design will then be reflected in the regulations, as is typical in this area of employment law.
Before I commend the clause to the Committee, I put on record my entry in the Register of Members’ Financial Interests, including my membership of USDAW and the National Education Union.
Greg Smith
I think this is one of the least contentious parts of the Bill, and we do not seek to oppose in any way the important protections for pregnant women and new mothers. I note that what the Government are really doing with these clauses is building on the regulations that, as the Minister rightly said, came into force in April off the back of legislation brought forward by the hon. Member for Barnsley North (Dan Jarvis) and my noble Friend Baroness Bertin in the other place.
Again, we have the challenge of consultation after legislation. It is important that the Government move quickly to ensure that the protections for pregnant women and new mothers are not left to drag out as part of that consultation. Although consultation is important, the objective that the Government are trying to meet is quite clear. The desire to build on existing legislation should make it less controversial, and it should make getting it right quickly less of an open-ended question. That will enable pregnant women and people who are trying to conceive and start a family—or to have a second, third or fourth child, or whatever it may be—to plan with the confidence that those protections will be in place. I am not in any way speaking in opposition to this measure; I am just urging the Government not to let the consultation drag on.
Alison Hume (Scarborough and Whitby) (Lab)
It is an honour to serve under your chairship again, Ms Vaz. I draw the Committee’s attention to my declaration of interests and my membership of Unison and the Writers’ Guild of Great Britain. I associate myself with the shadow Minister’s comments about the positive results that the legislation will have when it comes into force.
I will speak briefly about the importance of clauses 20 and 21, which will afford considerable extra protections to women who are pushed out of their jobs from the point at which they get pregnant, while they are pregnant, while they are taking maternity leave or just after they return. We heard at our evidence sessions that under the coalition Government, a report was done by the Equality and Human Rights Commission, which found that it was possible that 54,000 women a year lose their jobs in this way. That report was published in 2016. We also heard the Fawcett Society call for a new report because the data is so out of date. I refer to the comments made by my hon. Friend the Member for Birmingham Northfield and the shadow Minister about the lack of data.
Nobody can argue with the fact that so many women suffer maternity discrimination, however. From January to September 2023, 832 complaints were brought to employment tribunal for detriment or unfair dismissal as a result of pregnancy, and we know that that is the tip of the iceberg. Back in 2022, there was a high-profile example when Morrisons was told to pay a mother £60,000 for discriminating against her when she returned from maternity leave. Donna Patterson, who returned to work after having her second child, was asked to fulfil the responsibilities of a full-time job, despite only being contracted to work part-time hours.
Ms Patterson was supported by the charity Pregnant Then Screwed, the founder of which, Joeli Brearley, told us that
“the dial has not moved very much”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 84, Q79.]
in 10 years, so this Bill will mark a significant step forward. When women suffer maternity discrimination, not only does it take them a long time to recover personally, but it damages their careers and their mental health, and it is a big contributor to the gender pay gap. These clauses will tackle maternity and pregnancy discrimination, and it is necessary to do that to avoid having more women leave the workplace.
Dame Nia Griffith
Let me pick up on the point about the consultation. We very much recognise the urgency, so the consultation is expected to take place in 2025—this coming year—after which we will introduce secondary legislation. It has been noted that clauses 20 and 21 build on previous measures that received cross-party support, and I commend them to the Committee.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.
Clause 21 ordered to stand part of the Bill.
Clause 22
Dismissal for failing to agree to variation of contract, etc
Chris Law (Dundee Central) (SNP)
I beg to move amendment 160, in clause 22, page 33, leave out lines 11 to 2.
The Chair
With this it will be convenient to discuss amendment 161, in clause 22, page 33, leave out lines 22 to 40.
Chris Law
It is a pleasure to see you in the Chair, Ms Vaz. Fire and rehire is one of the most contentious issues that we have heard about over the last years, and I will speak to it in some depth.
First, I want to welcome the measures within this Bill, specifically those in clause 22, that tackle fire and rehire by considering a situation to be an unfair dismissal where an employee is dismissed for refusing to accept contractual variation, or where they have been dismissed to enable the employer to employ another employee, or to re-engage a dismissed employee on inferior terms. Over recent years, there have been several egregious examples of fire and rehire from large and very successful companies in the UK. In January 2021, the TUC found that
“nearly 1 in 10 workers…had been told to re-apply for their jobs on worse terms and conditions since the first lockdown in March”—
that is, March 2020. That is 10% of the working population. Notably, almost twice as many black workers faced fire and rehire as white workers.
The SNP completely opposes fire and rehire, which is an appalling and abusive practice, and I am sure that most members of the Committee feel the very same. It must be outlawed. We have long campaigned to ban fire and rehire tactics and ensure that workers are not the victim of bosses looking to cut costs. I pay tribute to my former colleague, Gavin Newlands, who twice brought forward Bills in previous Parliaments to outlaw the practice, which had the support of over 100 MPs and the backing of all major trade unions, including Unite, the British Airline Pilots’ Association and GMB Scotland. I also commend the work of Chris Stephens who, on a regular basis, stood up for workers against the previous Tory Government and called for an immediate end to fire and rehire.
However, there appears to be a loophole, and amendments 160 and 161 seek to remove it. Amendment 160 would delete subsection (4) to proposed new section 104I, which provides an opportunity for fire and rehire to continue where
“the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, and…in all the circumstances the employer could not reasonably have avoided the need to make the variation.”
Along with many others, I have reservations about that. If employers can point to their likelihood of financial difficulty, they will deploy fire and rehire tactics.
Let me ask some questions. Does the Minister agree with Martyn Gray, who gave evidence to this Committee just a couple of weeks ago? He is the director of organising at Nautilus International, and he made it clear to the Committee how high the bar should be set when he said:
“Quite simply, if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option…I would set a really high threshold and then allow for scrutiny from the relevant bodies.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 65, Q61.]
Employers’ unions have encountered those who have threatened or implemented fire and rehire to reduce workers’ pay and/or conditions, including companies such as British Airways, Heathrow Airport, Argos, Weetabix, Tesco, Asda and British Gas. All members of the Committee know all those names and are very familiar with them. In fact, more than half of those are in my constituency of Dundee and employ a large number of people.
I want to give an idea of the scale of the profits that those companies have made just this year. Asda made £1.1 billion—we are right in the middle of a cost of living crisis, and that is over £1 billion profit for a retail store. Tesco made £2.3 billion profit, and British Gas’s parent company has said that its profits have fallen to a humble £2.8 billion. Those are just three examples and the others—Heathrow Airport, Argos and Weetabix—are also all in profit. One simple cereal company made £368.8 million. Those are hardly companies in dire financial straits. Can the Minister explain how many of the high-profile fire and rehire cases known since 2010 would fall foul of the requirements within the Bill, and how many would be exempted under this loophole?
I think we all know that although the Bill is well-intended—and we fully support it—if it is not revised, it will fail under that loophole. As Andy Prendergast, the national secretary of GMB, explained in his evidence to this Committee:
“We have seen lots of financial engineering. We see inter-company debt. I think there is a concern long term that we may find cases where companies have engineered a financial position that allows them to do something they otherwise would not. That will have to be dealt with on a case-by-case basis.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 131, Q135.]
That is twice this Committee has heard evidence that should make us really think about the purpose of the Bill, which I totally agree with on fire and rehire, to ensure that it is watertight.
Can the Minister outline what changes the Government will make to the Bill and what regulatory regime will be put in place to prevent the provision from being exploited in the manner described? For example, will employers have to evidence the financial difficulties before making any decisions on firing and rehiring, or will they need to be evidenced only if an unfair dismissal claim is brought forward? We can clearly see now who holds all the cards. If it is the latter, and claims of financial difficulties are discovered at a tribunal to be unfounded, will employees who have been affected be reinstated on their original terms? These are important questions we need to ask.
In the absence of the detail and guarantees sought, the amendment seeks to remove the loophole altogether. We cannot allow this aspect of the Bill to pass without cast-iron protections against fire and rehire. We cannot wait and see how it plays out in reality, with people’s jobs and lives at stake.
If the provision is to remain—I can clearly see and many others so far have seen that it is a loophole—it is important that further amendments are proposed, not just to clarify definitions of financial difficulties and processes on establishing their veracity, but to ensure that there are further protections to strengthen an employee’s position in relation to any consultations and negotiations that take place when the employer is in financial difficulty. Does the Minister agree that the employer should take all reasonable steps prior to cutting workers’ wages and altering other terms and conditions? Does he agree that all material information should be provided to each union and that as much time as possible must be made available to consult? Does he agree that the employer must comply with any procedural requirements for varying contracts of employment or collective agreement?
Critically, does the Minister agree that the employer should have reduced the remuneration of partners, directors and managers at least to the extent equivalent to that which applies to the workers subject to variation of contract? After all, if an employer is struggling with his company, we cannot have the managerial class carrying on as if it is not affecting them while others have their contracts reduced and their terms and conditions worsened. Does he agree that the employer should have stopped paying dividends to shareholders, buying back shares, or making loans to partners, directors or shareholders, as soon as the financial difficulties became apparent, and renegotiated, to the greatest extent practicable, loans to third parties?
If the Minister does agree, will he give assurances that he will support such amendments being made to the Bill?
Greg Smith
I will speak briefly to amendments 160 and 161, standing in the name of the hon. Member for Dundee Central and the Scottish National party. These amendments seek to make the fire and rehire provisions more restrictive, saying that employers cannot vary contracts or re-engage staff on different contracts
“to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business,”
and remove the ability for the employer to do so if in the circumstances
“the employer could not reasonably have avoided the need to make the variation.”
I appreciate that it is quite a convoluted position, but it is clear to me that the SNP is siding with the trade union position that Martyn Gray set out, which is that
“if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 65, Q61.]
But we heard from almost every witness—
Chris Law
I will re-declare that I have been an employer in the past, as well as an employee, and have employed staff; this is not just a union position. I have talked about companies. I can appreciate small businesses and even microbusinesses being really concerned about such issues, because they would impact them directly.
Typically, small businesses keep a very keen eye on where things are going in the future. If people want a good team in their employ, they make sure that their employees know very well what is going on with such issues. We had this debate earlier. I will list again, just to remind people, the relevant companies: Asda, Tesco, British Gas, Argos, Weetabix and Heathrow Airport. They are big companies, with billion-pound profits, that are taking advantage of the current situation. They have already taken advantage up until now—why will this loophole mean that they will not do it in the future?
Greg Smith
I understand the hon. Gentleman’s point. He likes to point to the profit lines of many of those businesses. Just because a business is making a substantial profit does not necessarily mean that it does not have to go through significant change in businesses practices in meeting market demands, manufacturing processes as technology moves on, or whatever it might be. I am really not seeking to advocate for anybody to be abused in the way he talks about. I am trying to acknowledge that things change in lots of businesses all the time. No one should be unfairly treated as part of that process, but sometimes, even for the very largest companies, significant change happens—as I say, to manufacturing processes or whatever—that requires a fundamental shift in job descriptions.
I am sure that most of those businesses want to keep their workforces on, but if the contract under which the employee was originally employed talks specifically about processes or ways of manufacturing, or uses of particular bits of equipment, that just do not exist anymore because technology has moved on, there is a requirement for contracts to change. Ideally, that will always be done in a consensual, negotiated manner, but the amendments put forward by the hon. Gentleman and the SNP go too far in shutting down that restriction. I agree with his point about small and microbusinesses, which really will struggle, in an ever-changing world with technological advancement and so on, to meet the conditions he is putting down.
Chris Law
We are not talking about technological changes, though, are we? We are not talking about advances that would mean changes to the structure of a business. We are talking about the language that is being used about the likeliness of financial difficulties. To any lawyer, the word “likely”—how long is a piece of string? Someone could argue the case that “likely” means this, while someone else could argue it means that. The language is lax, which is part of the issue.
In terms of financial difficulties, what is a financial difficulty? Does it mean, “We can’t afford the loo roll in the staff toilets so we will fire and rehire,” or something more structural? What I seek from the Minister is assurances that the purpose of the Bill on fire and rehire is very specific: we want to end fire and rehire. Given the current loophole, we have already heard not just from trade unions, by the way, but from businesses—
Greg Smith
Of course there will always be some who look for loopholes, but I gently suggest that the vast majority do not. They are good employers who care for their workforce, because, as we have discussed many times over, no business is anything at all without both parts—the workforce and those who risk their capital and so on to make those jobs happen, and to produce the products and sell the services in the first place.
The intervention from the hon. Member for Dundee Central neatly leads on to where I was going anyway. The Committee heard from almost every witness who was an employer or who represented employers that the dismissal and re-engagement provisions in the Bill were already too restrictive and would lead to staff being laid off. The SNP amendments make those even more restrictive, so it is not hard to work out where those witnesses would have gone on this front. Given that risk of lower employment and higher unemployment, I gently ask the hon. Gentleman to consider how the SNP would actually answer that challenge were the amendment to go through.
Michael Wheeler (Worsley and Eccles) (Lab)
As ever, it is an absolute pleasure to serve under your chairmanship, Ms Vaz. As usual, I draw the Committee’s attention to my declaration in the Register of Members’ Financial Interests, and particularly to my membership of the USDAW and GMB trade unions.
I am sure it will not surprise the hon. Member for Dundee Central to hear that I share some of his concerns about the practice of fire and rehire, and I welcome the significant steps taken in the Bill to outlaw the practice. However, I disagree with his amendment 160. What might be seen by some as a loophole is actually an important safeguard against the perverse potential for the law to mandate redundancy when there might have been other options on the table. I am sure that none of us would want to be party to including that in the Bill.
As I said, I share some of the hon. Gentleman’s concerns, and I hope the Minister will look closely at proposed new section 104I(4) of the 1996 Act, because the words
“likely in the immediate future”
are doing some precariously heavy lifting. However, if the amendment were accepted, the focus on a business being a going concern, which is the most important part of that subsection, would be removed completely. When we are passing legislation that protects jobs and promotes good employment, we absolutely cannot allow the unintended consequence of mandating redundancy when there are other options.
I look forward to the Minister’s comments. I understand the concerns of the hon. Member for Dundee Central, but this is a sledgehammer of an amendment to crack a nut of a possible loophole, with significant potential consequences.
Laurence Turner
Like my hon. Friend, I have intense sympathy with many of the arguments put forward by the hon. Member for Dundee Central, but the “Make Work Pay” document published earlier this year, which was subsequently endorsed in the Labour manifesto, stated:
“It is important that businesses can restructure to remain viable, to preserve their workforce and the company when there is genuinely no alternative, but this must follow a proper process based on dialogue and common understanding between employers and workers.”
We all want to see both parts of that carried through, and I look forward to the Minister’s comments on that. If amendment 160 were accepted, would it not have the effect of invalidating that part of the Government’s manifesto commitment?
Michael Wheeler
It will come as no surprise to my hon. Friend that I agree with him. It is important that we keep our focus on the reality of work and the need to provide workers with protections and good-quality employment. The Bill has been brought forward in the context of “Make Work Pay” and the “Next Steps” document, and I look forward to what I am sure will be illuminating comments from the Minister.
Sarah Gibson
I thank the hon. Member for Dundee Central for tabling the amendment, which has drawn out a potential loophole that I hope the Government will look at carefully. We so often see legislation introduced with good intentions, and then 90% of businesses—especially smaller businesses—comply with it to the letter, because they think that is the right thing to do, but the larger corporations find a way around it.
Justin Madders
I am grateful for the contributions in this debate, which deals with one of the central issues we have been grappling with. On this side of the Committee we certainly want to see fire and rehire consigned to the history books. Equally, we do not, as my hon. Friend the Member for Worsley and Eccles said, want to see businesses feel they have no option but to make people redundant because they do not feel they can take any other course of action. It is about trying to ensure that that is still available without opening a loophole, as it has been described, for abusive fire and rehire tactics to continue. There is an awful lot in the Bill as it stands that will make it a very high threshold indeed for any employer to want to take that step. There will, of course, be further guidance in regulations, where we will home in on the kinds of concerns that have been raised.
Chris Law
I appreciate that there is a lot in the Bill, and I appreciate that some Government Members on the Committee think this is a nut to crack. I have asked questions—I hope to hear some of the answers to them—and I want to add another. I raised the issue of “likely”, which is the language used. Will the Minister remark on whether the Department intends to advise on how the word “likely” should be determined? Will he consider whether that will reflect what was set out in the Trade Union and Labour Relations (Consolidation) Act 1992 and a subsequent tribunal judgment, which came to define “likely” as a need to show
“a significantly higher degree of likelihood than just more likely than not”?
Justin Madders
I am not familiar with the particular case law the hon. Gentleman refers to, but I will take that away.
It is fair to say that employment tribunals currently do not have the kind of inquiries into a business’s finances and general condition that we are trying to achieve with this legislation. At the moment, there is a fairly broadbrush approach, particularly in terms of redundancies, to inquiries about the business reasons. It is important to draw the hon. Member for Dundee Central’s attention to the words after “likely” in the Bill. It is about an
“employer’s ability to carry on the business as a going concern”.
That means the alternative is insolvency or redundancies, which is the eventuality that I am sure we all want to avoid. It will ultimately be a question of fact for an employment tribunal to determine whether it genuinely was the only option available to the employer, which is what the Bill will require the employer to demonstrate.
There are a legion of examples of trade unions working constructively with businesses to avoid those kinds of insolvency situations, as a result of which terms and conditions have changed. The hon. Member for Dundee Central quoted Andy Prendergast who, in respect of what happened in the 2008 financial crisis, said in an evidence session:
“It was heartbreaking, but we had to do it because it was the right thing to do.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 131, Q135.]
He was talking about changing terms and conditions in agreement with employers to avoid redundancies and potential insolvencies.
The hon. Gentleman’s amendment would take out all of subsection (5) of proposed new section 104I, which is the requirement for the employer to engage with trade unions and have the dialogue that we think is so important in industrial relations. It would say, “That does not matter any more.” The dialogue we are seeking to develop—the tripartite approach—and the move to make the arbitrary take-it-or-leave-it approach that some employers have adopted in fire and rehire a thing of the past, would not matter.
The hon. Gentleman has asked some important questions about what we would expect of employers; I think subsection (5) answers many of them. Further regulations and codes of practice will also deal with them, because we want to make sure we have a situation in which the bar for passing this test is extremely high, but in addition to that—in addition to there being no alternative but insolvency—the employer has to then demonstrate that they have carried out a full consultation with the trade union. That will involve a full explanation of the financial situation. As we develop the regulations and codes of practice, we will flesh that out in some more detail.
Chris Law
I am listening carefully to the words the Minister is using. When does the employer carry out that process? Ultimately, they have two options. They can carry it out well in advance to ensure that employees are kept up to speed early on. Some employees may wish to leave under those circumstances and find employment elsewhere. But often, in past cases of fire and rehire, employees have heard at a very late stage or not at all. There is currently no provision in the Bill to say what the timetable should be. I would like to get an indication of the Minister’s thoughts about potential future amendments relating to that subject.
Justin Madders
I hear what the hon. Gentleman is saying, but subsection (5) does set out the requirements on an employer to consult. It would be normal for further detail about consultation to be considered to be in good time when proposals are at a formative stage, as has traditionally always been the case. I see no reason why it would not also take the same form in that instance.
What we are really talking about is a situation in which there is a sudden change in a company’s financial circumstances and it has to act quickly. In that situation, we do not want to force it to go insolvent or make people redundant, if there is an opportunity to save jobs. That is why subsection (5) is so important: because it will encourage and compel the dialogue that we are seeking to achieve. I accept that there is more to be done in terms of honing some of the detail, but I urge the hon. Gentleman to withdraw his amendment because it would, I am afraid, have unintended consequences.
Chris Law
I thank the Minister for his comments. It is helpful to know that there will be further consultation and, potentially, amendments—which may even come from his own side—to tighten up this bit of the legislation. It is critical to the wider Bill and the SNP understands its importance; we just want to see it made tighter—not to put employers in impossible situations in which they cannot negotiate, but so that it is not exploited as a loophole. As it currently stands, employers are already discussing that.
I appreciate the Minister’s response. In that context, so long as it is something that can be further considered and, particularly, brought forward on Report, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Twelfth sitting)
Thursday 12th December 2024
(1 week, 2 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 12 December 2024 - (12 Dec 2024)
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 127, in clause 22, page 33, line 12, leave out from “that” to end of line 21 and insert—
“the reason for the variation was to provide for improved employment practices and to update and reform outdated working practices, in order to allow for the more effective running of a business or organisation.”
This amendment would provide an exemption to unfair dismissal for failure to agree to a variation of contract.
It is a pleasure to see you back in the Chair for the afternoon sitting, Ms Vaz. The amendment, in my name and those of my hon. Friends, is a probing one—I want to be clear about that from the outset—that would provide an exception to unfair dismissal for failure to agree a variation of contract.
The premise underpinning the Bill’s provisions on fire and rehire is that the only reason for an employer to want to re-engage employees on varied terms is to exploit them by giving them worse terms and conditions. I am in no way, shape or form suggesting that that does not occasionally happen, but I come at this debate from the other direction, presuming that most employers are good employers who care about their workforce and want to see a happy staff getting on, being productive and doing the things they do to make the business a success, be that making things, giving advice or providing a service.
The Bill basically says that a business needs to be going bust for the process of varying a contract to be justified. Again, I am not certain that that is the right starting point. What if there were a legitimate reason for wanting to vary certain terms and conditions? We touched on this in our debate on SNP amendments 160 and 161 before the break, and I gave some examples thinking about the pace of change in a business. Let us say a manufacturing business moves from a very manual process for putting a product together—be it a car, a piece of furniture or some smaller product—to invest in robotics or something.
I can think of a farm in my constituency that was a traditional dairy farm but, thanks to a not insubstantial grant from the previous Government, has built a robotic dairy. That means that the people who work on that farm are doing a fundamentally different job. They no longer have to get up at 4 am to manually hook the cows up to the milking machines; believe it or not, the cows now form an orderly queue for the milking robots. I am not joking, Ms Vaz. I invite anyone to come and see it with their own eyes. There is a vending machine where people can buy the milk direct. The point at which staff intervention is needed is if an alarm indicates that a machine has clogged or broken, the pasteurisation room has hit the wrong temperature, or whatever. It is a fundamentally different job. Sometimes, that happens in a workplace where the employer wants to keep the staff—they do not want to let anyone go and they do not want the robots to replace them—but it involves different terms, different conditions and a different physical thing to do on a daily basis. I offer that as a practical example of how businesses change.
Alex McIntyre (Gloucester) (Lab)
I refer the Committee to my membership of the GMB and Community unions. I have two short questions for the shadow Minister. First, if the changes are so positive for employees, can they not simply accept a change to their terms and conditions? Secondly, let us take the scenario that he describes, where there is a change in processes, and put that in a business-to-business context. Say a business moves from wooden cogs and to metal cogs, and it has a contract with the wooden cog supplier. Is he aware of any circumstances in which that business would be able simply to break that contract without any notice or legal recompense to the other business?
Greg Smith
I understand the point that the hon. Gentleman makes. He is right that the businesses in the situation he describes would have to go through a legal process, probably involving very expensive contract lawyers, to alter such a contract. I do not think it is helpful to directly compare those supply chain contracts with employment contracts, because on one level we are dealing with human beings and on the other we are dealing with the flow of parts, services or whatever.
The hon. Gentleman is also right that a change in terms and conditions can sometimes be very positive for the employee. Perhaps it involves fewer hours for more money—that sometimes happens—or longer holidays. Of course, if something better is being offered, employees should have the flexibility to accept that, having exercised due diligence and looked it over properly—dotted the i’s, crossed the t’s and all that. What I am trying to get at is where the business model, and the day-to-day operation of the job, has fundamentally changed, through robotics or whatever.
Laurence Turner (Birmingham Northfield) (Lab)
I want to continue on the shadow Minister’s theme of milk. It used to be common in factories where there were particulates in the air to include a clause in someone’s contract that said they were entitled to a glass of milk during the day, because it was believed at the time that a glass of milk would remove those particulates from someone’s airway. It was completely misguided, but those contracts still exist, and I have been in situations where I have looked over similar, very outdated terms and conditions. If it is raining on a site, someone might be entitled to a 2p payment, for example. Such contract conditions are very easy to remove; it can be done by agreement.
Does the shadow Minister accept that if a contract is worded appropriately, such variations can be made by an employer—the key factor is whether there has been genuine consultation—and that the circumstances that clause 22 will remedy are really quite separate? It is for those extreme examples that Grant Shapps, the Conservative Business Secretary at the time, spoke out against.
Greg Smith
I am grateful to the hon. Gentleman, although he was possibly milking it with the length of that intervention—[Hon. Members: “Oh!”] It is nearly Christmas.
I accept the hon. Gentleman’s points about some of those very outdated provisions. I really hope that my children do not find a job out there that involves free milk, because they might jump at it a little too quickly. This probing amendment seeks simply to understand a little further where the flexibilities lie, and to get underneath some of the detail around when a variation of contract might be a good thing on both sides, or when things have just changed and there needs to be a variation in order for the jobs to be saved. I would hope that Members on both sides of the Committee would come at this from the perspective of the real world and wanting to save jobs, create more jobs, grow the economy and grow employment.
There may be legitimate reasons for wanting to vary terms and conditions, such as to provide for improved employment practices, or to update and reform outdated working practices—as the hon. Member for Birmingham Northfield referenced—in order to allow for the more effective running of a business or organisation. The amendment seeks to understand the Government’s position should such a situation arise, and to understand why they are legislating to prevent businesses from acting in such a way.
Michael Wheeler (Worsley and Eccles) (Lab)
On a point of clarity, is it the purpose of the amendment or an unintended consequence of the drafting that it would completely delete the subsection, rather than adding to it? If the purpose is to completely delete the subsection it is amending, are Opposition Members trying to remove the protections for those going concerns?
Greg Smith
The hon. Gentleman asks a perfectly legitimate question. I repeat that this is a probing amendment: we are not going to press it to a vote or try to put it in the Bill. The purpose behind it is to get the evidence base, the justification and some clarity of thought from the Government about why the clause is necessary and proportionate. Sometimes we have to suggest getting rid of something to get a good example or a good justification for going there, doing it and putting it in primary legislation.
The Opposition certainly do not want to see exploitative fire and rehire in any workplace. From talking to businesses, and from the evidence we have heard, we know that there needs to be solid grounding and an evidence base to show that the wording in the Bill is justifiable and does not justify shutting down many businesses that are growing, adapting and changing—hopefully, for the better, so they are more successful. They should be able to keep and grow their staff, rather than go down the redundancy route or other scenarios whereby jobs are lost.
Matthew Percival from the CBI said:
“In the fire and rehire proposals, there is a risk that we might be making it easier to make people redundant than to change contracts”.––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 7, Q1.]
That is the absolute nub of the matter. It would be nothing short of a total disaster if the unintended consequence of the exact wording of the clause or the Bill perversely incentivises companies to make people redundant, so people lose their jobs and have to go home and have that difficult conversation with their loved ones and say that they need to find a new job, with the devastation that that brings to real people’s lives. I cannot imagine that the Government want that to happen. With this probing amendment, we are seeking to kick the tyres. We want an explanation, or at least to encourage the Minister and the wider Business and Trade team to find a better way that does not have that unintended consequence.
A recurring theme of our debates in recent days, and from the Bill Committee witnesses—other than trade union representatives—is that the measures in the Bill on dismissal and re-engagement will be too restrictive for employers. I gently ask the Minister to reflect on that and think about whether the measures will actually work and will not have unintended consequences, so that people’s jobs are protected and saved. We do not want people to be unintentionally forced down the route of job losses.
Michael Wheeler
I agree with the comments of my hon. Friend the Member for Gloucester. I appreciate that this is a probing amendment, but I want to talk to its specifics. It appears to me that there are plenty of consensual mechanisms for achieving most of what the shadow Minister is suggesting about the variation of contracts to reflect working practices. If anything, they are inherently better than anything that is imposed. Quite often, when working practices, organisations and business practices are modernised, communication between those doing the work and the managers and owners leads to a much better outcome.
I suggest that we need to remember that we are talking about fire and rehire, which is inherently quite extreme. The amendment seems to refer to the particulars of normal working practices, looking at updating mechanisms to account for modern technology and suchlike, that are much better handled by the existing consensual mechanisms. While I appreciate that it is a probing amendment, it seems entirely unnecessary and does not necessarily speak to the heart of what the clause is about: ending the extreme practice of fire and rehire.
Sir Ashley Fox (Bridgwater) (Con)
It is a pleasure to see you in the Chair again, Ms Vaz. My hon. Friend the Member for Mid Buckinghamshire has explained that this is a probing amendment to find out the Government’s intentions, but I put it to the Minister and Labour Members that each of the Government’s proposals seems to be based on the premise that we need to legislate against the worst possible outcome.
The hon. Member for Worsley and Eccles referred to P&O, and that was in fact a scandal. But the problem with this approach, of course, is that a regulatory burden is imposed on each and every other employer, and the labour market is made less flexible and employing people is made more expensive. Therefore, every time the Government see a problem with one employer and say, “We have to regulate for everyone,” the whole labour market is made more expensive and less attractive to foreign investors—less like Britain and more like France. As we look across the channel, we see a country with a similar-sized economy, but an unemployment rate approximately double our own.
Combine that, for example, with the proposal on unfair dismissal, and employers could be less likely to employ that marginal worker. In this case, as Matthew Percival from the CBI said, it becomes more attractive, perhaps, for employers to make their workers redundant than to try to renegotiate terms and conditions.
I ask the Minister to consider the cumulative effect of each and every one of his proposals. It is easy for him to stand up and say, “This proposal on its own is modest and reasonable and good,” but the whole Bill will add £5 billion of costs to industry, and the majority of that falls on small and medium-sized enterprises. My fear is that the Minister, through the very best of intentions, will end up with unemployment higher at the end of this Parliament than when he started.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair this afternoon, Ms Vaz. For the benefit of the Committee, I again refer to my entry in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.
It has been an interesting debate. I think we are on the opposite end of the spectrum from where we were in the earlier debate about where the balance lies with our measures to end fire and rehire. I think that the fact that we have two arguments from other ends of the spectrum suggests that we are in about the right place—but if the shadow Minister expects us to believe that cows queue up to be milked in the morning, I just say to him: pull the other one!
Justin Madders
Yes, they do get worse—it is Thursday afternoon.
The shadow Minister did raise some important points, though. He gave the example of a dairy and its changing practices. Of course, a change in job function does not necessarily mean that terms and conditions have to change or indeed become worse. History is full of examples where technology has come in and made jobs different. As we look forward to the advent of automation and AI in our economy, I hope that people find new jobs and new roles and that those jobs are more fulfilling as a result of technological development.
I will say a few words about the comments from the hon. Member for Bridgwater. We are talking about overall impacts in this Bill of 0.4% of employers’ total costs—a very small price to pay for a comprehensive set of reforms that really are needed for workers. It is about rooting out bad practices and making sure that those bad employers, who we all rightly condemn, are not able to exploit existing loopholes. It is about stopping the race to the bottom. It is about creating a level playing field. One reason why P&O said that it took the action that it did was that its competitors were undercutting it. We do not want to see that race to the bottom continue. We want to see good employers rewarded for respecting and rewarding their employees well by being able to compete on a level playing field.
The general thrust of the shadow Minister’s remarks was interesting. There is nothing to stop an employee agreeing to changes to terms and conditions. Indeed, proposed new section 104I(2)(b) of the Employment Rights Act 1996 makes it clear that these provisions will not apply if the employee agrees to the changes. Changes and discussions happen every day of the week in industry—that is called negotiation, and that is what good industrial relations looks like. That is the sort of thing that we want to encourage.
We are trying to stop a situation that we have seen far too often, where an employer might just say, “Well, here are your new terms and conditions. If you don’t like it, there’s the door.” That, I am afraid, has become far too prevalent in our country. We have heard plenty of evidence about how many employers have been doing that. It is about recognising that there is a loophole in the law. This may be a probing amendment, but it would certainly make this clause ineffective, and arguably, it would make the situation worse than the status quo, because it would effectively legitimise some of those actions by employers. They could point to this legislation and say, “Well, the law says that we are able to do it.”
The way the amendment worded is quite broad. There is a reference to “outdated” terms and conditions. My hon. Friend the Member for Birmingham Northfield gave a good example of where reasonable dialogue between the trade union and the employer would see that change. The shadow Minister’s old colleague, Jacob Rees-Mogg, might have a different view about what “outdated” means. He might think anything after 1874 could be considered modern—[Interruption.] He probably does, yes. There would be very broad latitude for an employer to say that something was outdated. That is why I am concerned that the amendment would make things worse than they are now.
The Bill as drafted makes it very clear what the obligations of a responsible employer are. They are the sort of things that responsible employers do already. We recognise that there will be unfortunate situations in which an employer has no alternative but to change terms and conditions, but the Bill makes sure that, if there is a positive for the employees—there often is from a change in terms of conditions; that is what negotiations often involve—there is a way for that to continue. We are not going to stop that. If employees consent to changes, they will be able to be made under this Bill. I urge the shadow Minister not to press the amendment to a vote.
Greg Smith
I understand the argument that the Minister has set out, and I appreciate that this particular probing amendment was at the extremer end of the spectrum in trying to probe that response from him. I accept that there are many mechanisms whereby employees can consensually work with their employer to change contracts, and that is clear. I am still a little nervous—the proof of the pudding will be in the eating, as the Bill progresses and no doubt becomes legislation—about the nightmare scenario of businesses simply saying, “Rather than trying to engage in this process, as we were warned by the CBI, we will just make everyone redundant instead.”
There needs to be a clear, previously set out mechanism from the Government so that, if that disaster-zone eventuality comes to pass—I hope I am wrong; I do not want to see people being made redundant—there is a quick snapback or sort of provision to allow secondary legislation to throttle those measures down, or to fix them in some other way that still stops the exploitative practices without tying businesses’ hands behind their backs, because the net result will be job losses. I would be incredibly disappointed and sad if these issues, which both the Opposition and businesses have warned about throughout the passage of the Bill so far, became a job killer. The Government need to be ready, if they have got it wrong, to have a process that will give businesses the confidence again to properly engage in negotiations, such as those good industrial relations that the Minister spoke of, and not just make people redundant. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Justin Madders
We are back on fire and rehire again; I should probably count up how many times I have spoken in debates on this issue in the last few years. It has taken a lot of parliamentary time, and rightly so. We all remember the obloquy directed towards P&O when it took those actions, several years ago, and I am afraid that fire and rehire has become far more prevalent in our economy than anyone would want to see.
Investigations by the Trades Union Congress found that around 38,000 employers were using fire and rehire as a tactic. Research from the Chartered Institute for Personnel and Development found that, between August 2021 and 2023, the proportion of firms that had used fire and rehire had almost doubled. The impact assessment estimates that there are around 178,000 workers facing the threat of fire and rehire at this very moment, so the problem is not going away—indeed, because of the way that P&O has been allowed to get away with it, employers see it as a golden opportunity to take a sword to hard-fought terms and conditions.
Other Members have spoken about the household names that have attempted to do that, and USDAW’s written evidence included some notable household names. Once upon a time, fire and rehire was a seldom-used part of the employment law and industrial relations landscape but, as part of the wider pattern of insecurity at work, it has become a much more common tool. I am afraid, as we have seen, it is far too often an act of first—rather than last—resort, and the Government are committed to ending that practice.
The solution to dealing with many of the concerns raised by the shadow Minister and others is to point to what good and bad industrial relations look like, and to say, “This is what bad employer practice looks like.” Good employers and industrial relations will take workers with them. Again I refer to USDAW’s written evidence, which noted occasions where negotiations had begun with fire and rehire on the table almost from the start. That is not a healthy place to have sometimes very difficult discussions about changes to terms and conditions. The impact assessment notes that the power asymmetry can provide incentives for the more powerful party, in this case the employer, to act in a strategic manner to suppress wages and conditions. Such tactics are why we have seen such a slump in wage growth over recent years.
Greg Smith
Most of my concerns have been outlined in the amendments to the clause, but I want to ensure that it is placed on the record that the Opposition want to see employers engage in good faith and believe that most employers do. I accept the Minister’s point about the scandal of P&O Ferries—I was on the Transport Committee at the time, so possibly looked into it in more detail than most colleagues from the previous Parliament.
Where we perhaps still have a difference is that taking that unacceptable, scandalous situation at P&O and legislating for everybody on the back of it is not necessarily the best starting place. As I said in the previous debate, working on the presumption that all businesses are trying to exploit their workforces is not healthy or, I would suggest, reflective of the real world. Although there have to be measures to shut down things like what happened at P&O so that it does not happen again, there must equally be flexibility and understanding so that, when employers have engaged in good faith and really are trying to save the business—to save the jobs in the first place—we do not find ourselves in that nightmare scenario of people saying, “It’s too difficult—we’ll just have to make everyone redundant.”
I fully accept that this clause will pass in a few moments, but perhaps the Minister could consider, before we come to Report, some additional safeguards on that so that we do not end up with job losses and employers slamming their heads down on the desk, unable to find another way to save the jobs and the workforce. That would keep giving people the living they need to get on and prosper as part of our country, part of the business they are engaged in and part of our vibrant UK economy.
Laurence Turner
I will not speak for long, because most of the points have been made in the debate, but I want to come back to the point made by the shadow Minister and the hon. Member for Bridgwater. There is perhaps a legitimate difference in principle between the two sides: when there are extreme examples, should there or should there not be legislation in response? It is important to respond to that, because we have seen extreme examples of abuse across different parts of the labour market. To go back to the example of blacklisting, I suggest that that was a failure of successive Parliaments to tackle a practice that had been thought to be relatively rare, but proved to have been carried out on an industrial scale. It was right for Parliament to enact the blacklisting regulations.
I go back, too, to the Grunwick dispute, the ancestor of the statutory recognition regime. At the time, it was thought that the abusive patterns of employment behaviour on full display in that particular employer would be unlikely to recur. The Government of the day commissioned a public inquiry under Lord Scarman in the belief that, if the inquiry concluded that there should be trade union recognition, it was inconceivable that any employer would not abide by that—but that is exactly what happened.
Where we see those extreme abuses, other employers—by no means the majority, or even a substantial minority, but enough to have a seriously deleterious effect on the lives of many workers—will follow. Since P&O, we have seen other examples; hon. Members have referred to particular employers and sectors, and I could add parts of the retail, utilities and even the public sector, where such tactics have become more common. The previous Government made strong statements—I could quote some—about the practice, but I suggest that the action that was subsequently taken, the code of practice, was not sufficiently strong. In the case of P&O, where the employer made it clear at the time that it intended to ignore the existing legislation, it did not prove sufficient remedy.
We do need stronger action. The measures in the Bill will only ever affect a tiny minority of employers. It is important to stress that, but it is necessary to put this action into the Bill. P&O will always loom large in discussions of this topic, but the practice is by no means confined to that particular employer, and it is right to take the action that was not taken in the previous Parliament.
Steve Darling (Torbay) (LD)
Fire and rehire is an absolute scourge to those people who are impacted by it. Whether in significant numbers or a minority, it is utterly shameful. My Liberal Democrat colleagues broadly welcome the amendments, and we look forward to supporting the clause.
Justin Madders
It is good to hear that we have the support of the Liberal Democrats. Most of the country supports this measure; fire and rehire is rightly seen as a practice that should see its end. I quote the former right hon. Member for Welwyn Hatfield, Grant Shapps, who said at the time, when P&O first started on that course, that
“we will not allow this to happen again: that where new laws are needed, we will create them, that where legal loopholes are cynically exploited, we will close them, and that where employment rights are too weak, we will strengthen them.”—[Official Report, 30 March 2022; Vol. 711, c. 840.]
I have news for the Committee: I am afraid that only this week several Members of this place have told me about fire and rehire tactics going on in their constituency. A fire and rehire situation is taking place right now in Wrexham. The loopholes have not been closed. That is why we need to act.
To put the shadow Minister’s mind at rest, I believe that proposed new subsection (5) gives employers a real guideline as to how they need to deal with this. Furthermore, as was common to much of the evidence we heard, responsible and good employers do all those things anyway, so they will not be penalised or face any additional burdens, but rather will be able to operate on a level playing field.
To refer to the evidence given by DFDS about this particular matter, or to someone working in an area very relevant to it, they said that they were pleased that fire and rehire was going to be dealt with, because as an operator, they are
“simply looking for a fair and level playing field.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 56, Q54.]
That is why we need to act today.
I also refer to the support of the Institute of Directors; approximately two thirds of its members who were polled supported this action, too. I think it will come to be seen as a watershed moment in industrial relations in this country, where we finally got rid of one of the most obnoxious and outdated practices that this country has ever seen.
Question put and agreed to.
Clause 22 accordingly ordered to stand part of the Bill.
Clause 23
Collective redundancy: extended application of requirements
Justin Madders
I beg to move amendment 58, in clause 23, page 34, line 27, at end insert—
“(3A) In section 197 (power to vary provisions), in subsection (1)—
(a) in paragraph (a), for “188(2)” substitute “188(1A)”;
(b) in the words after paragraph (b), for “188(2)” substitute “188(1A)”.”
This amendment would correct incorrect cross-references in section 197 of the Trade Union and Labour Relations (Consolidation) Act 1992.
This is a purely technical amendment to fix an incorrect cross-reference in section 197(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992. Section 197(1)(a) provides that the Secretary of State may make secondary legislation to amend the minimum time period for collective consultations in section 188(2) of the same Act. However, as I am sure the shadow Minister had already noticed, that reference is incorrect: “section 188(2)” should read “section 188(1A)”. A consequential amendment was missed when section 188 was amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995. That instrument renumbered section 188(2) as section 188(1A). Of course, it should have also made a consequential amendment to section 197(1)(a), but did not.
The amendment will not change the law, which can already be interpreted to refer to the correct cross-reference by way of the Interpretation Act 1978. The 1978 Act provides that where an instrument repeals and re-enacts a provision then, unless the contrary intention appears, any reference in any other enactment to the repealed provision is to be read as a reference to the re-enacted provision. The amendment will improve the clarity and accessibility of the law, which I am sure we will all be relieved to hear.
Greg Smith
I can be very brief on this amendment, Ms Vaz; in fact, I will channel the questioning style of my right hon. Friend the Member for New Forest West (Sir Desmond Swayne). This is what happens when a Bill gets rushed to meet an arbitrary political deadline, is it not?
Justin Madders
The shadow Minister will be pleased to hear that we have picked the error up at this stage, so that when the Bill is enacted it will of course be absolutely correct.
Amendment 58 agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
Justin Madders
Employers are currently obliged to collectively consult when they propose to make 20 or more employees redundant at one establishment. Collective consultations are an important part of ensuring fairness and transparency between employers and employees.
In the year to November 2024, approximately 3,500 employers in Great Britain gave notification that they were initiating a collective redundancy process at a single establishment. The benefits of consultation are felt by both employees and employers. Consultation ensures that affected employees can input into the process with a view to avoiding or mitigating redundancies wherever possible, and it helps employers to retain skilled workers and reduce the risk of disputes.
That is why the Government intend to strengthen the collective redundancy framework. The clause will amend the framework to ensure that employers must fulfil collective consultation obligations whenever they are proposing 20 or more redundancies, regardless of whether the redundancies take place at one establishment or not. This will ensure that more employees—many of them in vulnerable positions—will now benefit from redundancy consultation, and that affected employees can participate meaningfully in the redundancy process, regardless of how they might be dispersed across an employer’s business. The clause will also make it easier for employers to understand when they have to comply with these obligations.
I know that businesses have raised some concerns about the practical implications of the clause and I will take this opportunity to clarify its scope. First, the clause does not mean that employers will need to consult with the entire workforce in their organisation whenever they propose 20 or more redundancies. As is currently the case, they must consult only the relevant trade union or employee representatives of employees being proposed to be made redundant, or those who may be affected by measures implemented as a result of the proposed redundancies, such as relevant line managers.
Secondly, when an employer is required to undertake collective consultation with employees across different establishments, they have the flexibility to tailor the process to suit each location. For example, they are not required to undertake a single, uniform consultation across affected locations, but can hold separate consultation activities with each group of affected employees to ensure that discussions are both localised and meaningful.
Greg Smith
I have a couple of brief questions. I am grateful for the Minister’s clarification that the clause does not provide for a consultation of the whole workforce. That was a legitimate concern for many as they looked at the drafting of the Bill. The clarification will be welcome.
My bigger question is about the practicalities where an organisation has in excess of 20 employees. For example, a small chain of five or six pubs could easily have that volume of employees across bar and kitchen staff—chefs—cleaners and perhaps security, but in that sort of setting it is very rare for staff to be unionised, or even organised among themselves. In that scenario, where a smaller business employs that number of people across multiple sites, how does the Minister expect the requirement for the involvement of a trade union or employee organisation that does not exist to be engaged with? What is the mechanism for that? I appreciate that many Government Members would quite like everybody to be in a trade union—
Greg Smith
Indeed, we know from their declarations of interest that they all are. I hope the Minister takes the question with the good intent with which it is asked. Not everybody is in a trade union and not everybody organises in that way, so how would the mechanics of the measure work in those circumstances?
That leads to the wider question, “Why 20?” Why not 19, 18 or 15? Why not 25? It seems like an arbitrary number. I accept that a number needs to be put down. In some ways, in specifying a number, this clause is more detailed than most in the Bill, and it gives certainty, but I would like to understand why it is 20. It seems like a number picked from thin air. It could negatively impact an organisation if it led the employer to decide, “Well, we’ll just get rid of 19 of them, and we won’t have to comply.” That seems at odds with the other provisions in the Bill, where the Government seem to want to move all rights back to day one, yet they do not seem to want to apply that to organisations where, for whatever reason, 20 people are, sadly, being consulted on being made redundant. I would like clarity on that point.
Michael Wheeler
I will keep my contribution relatively short, but I did not want to let the clause pass without warmly welcoming its inclusion in the Bill. In a previous life, I worked to represent shop and retail workers. While P&O and the scandal of fire and rehire entered the collective consciousness, the Woolworths redundancy situation was burned into the consciousness of the workers I represented at that time. That is exactly the loophole that this measure is trying to close. Thousands of workers affected by the Woolworths redundancy missed out on the compensation they deserved as part of the lack of consultation because they worked in individual establishments that were small and fell below the threshold. The interpretation of the law at that point meant they were isolated, divided and not included as part of what was clearly, to everyone—
Greg Smith
Perhaps I can test the hon. Gentleman a little bit on that. I remember many happy hours as a child in Woolworths in the town where I grew up. They were fantastic stores, and they are greatly missed. Given where he is coming from, is he content with the number being set at 20? While Woolworths was a substantial business, I can think of smaller businesses with separate sites, retail outlets, pubs, restaurants or whatever that might employ 19 or 15 people.
Michael Wheeler
The hon. Gentleman invites to me to say whether I am content. I draw his attention to the fact that the clause removes the single establishment loophole while leaving in place the thresholds that are already part of the law around consultation and the time period. I have not examined and, despite the invitation, I will not speculate on where those thresholds should be, but I warmly welcome the removal of the single establishment loophole, so that where the numbers in a redundancy cross those thresholds—legitimately and apparently to everyone looking at it—there are not legalistic mechanisms for those workers to be left out.
Having warmly welcomed the removal of the loophole, let me reassure the shadow Minister. In a previous, previous life I was in a different job—we have all had many jobs—where trade unions were not recognised. I speak for myself alone when I say that I would love for every worker in this country to have the benefit of trade union representation. I confirm for the shadow Minister that I would love to see that, because I think it has genuine benefits.
Michael Wheeler
I am sure it is not. I worked in a retail establishment that did not benefit from trade union representation and that went through consultation, not on redundancy but on a variation of contracts, so it is relevant to what we were talking about before. It was actually a relatively smooth and easy process for employee representatives to be appointed and elected from among our number, despite the lack of an existing structure, and to engage with the company in those consultation exercises. While I would love there to be a trade union fighting the corner for every worker, when it is absent it is not a burdensome process to have employee engagement in these processes.
Justin Madders
I recognise that the shadow Minister welcomed the clarification I provided. No doubt there will be debate to come, as is often the case with legal issues, but the Government are fairly clear and confident that the clause will not have the unintended consequences we heard raised in evidence.
The shadow Minister asked, “Why 20?” He will pleased to know that that was a product of EU regulation. It is in existing law as part of the Trade Union and Labour Relations (Consolidation) Act 1992, which has been amended many times, so I could not say exactly when it came into force, but—
Greg Smith
The Minister can of course look back in history at when these measures were put in, but the Bill seeks to change all sorts of things across all sorts of sectors. We are free from the European Union! He could change it if he wished.
Justin Madders
I will remember that next time the shadow Minister tells me that we are trying to do too much in this Bill. With the Retained EU Law (Revocation and Reform) Act 2023, the Bill Committee for which I had the great pleasure of serving on, his Government could have done something about this before they left office.
The figure of 20 is long established, and we have no current plans to change it, but we are keen to ensure that the scenario my hon. Friend the Member for Worsley and Eccles described cannot continue. As he said, Woolworths made 27,000 people redundant, and about 3,000 of those were completely exempt from collective redundancy consultations because of this issue. There has been a number of high-profile retail redundancies where people have missed out on collective redundancy obligations because of this law, which we are pleased to be able to change.
On the question of smaller employers where there may not be trade union representation readily available, the regulations already provide for employee representatives to be engaged and elected in those circumstances, so there is no change to the law in that respect. There is already provision to deal with that situation.
Question put and agreed to.
Clause 23, as amended, accordingly ordered to stand part of the Bill.
Clause 24
Collective redundancy notifications: ships’ crew
Question proposed, That the clause stand part of the Bill.
Justin Madders
The clause will address the loophole that allowed P&O Ferries to avoid prosecution when it dismissed 786 seafarers without notice in March 2022. It will require operators of frequent services to British ports to notify the UK Government when making 20 or more redundancies even if those affected work aboard ships registered in another state. The clause means that if an operator of frequent services to a British port chooses to copy P&O Ferries and make collective redundancies without providing notice to the Government, it could face prosecution under the Trade Union and Labour Relations (Consolidation) Act 1992 and ultimately be liable for an unlimited fine.
The clause will apply to services calling between Great Britain and another place in the UK. It will also apply to any services entering Great Britain from a place outside the UK on at least 120 occasions in a 12-month period before the redundancy notification, or to new services that have been operating for less than 12 months and have called 10 times or more per month while they have been operating. We estimate the number of operators in scope of the measure to be around 2,000. The cost to businesses will be minimal; it is estimated to be around £20 per notification. We hope that the prospect of an unlimited fine will deter operators from making mass redundancies without the appropriate notification.
While this measure may not prevent redundancies from being made, it will mean that the Government and any employee representatives must be notified before any dismissals take effect. It will prevent the sort of disruption seen following the P&O Ferries dismissals and will mean that the Government will be able to provide valuable support to seafarers facing redundancy. I therefore commend the clause to the Committee.
Greg Smith
I understand where the Minister is coming from, particularly on the expansion of the requirement to notify the flag state. I spoke earlier about my time on the Transport Committee watching the P&O scandal unfold; we held some pretty tough evidence sessions as part of that. I understand that the clause is very specifically to protect seafarers from that sort of engagement. I very much hope that it works to protect those seafarers, and we will not oppose it.
Justin Madders
I am pleased to see that we have support all round.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.
Clause 25
Public sector outsourcing: protection of workers
Justin Madders
I beg to move amendment 59, in clause 25, page 36, line 14, leave out subsection (2) and insert—
“(2) After Part 5 insert—
‘Part 5A
Outsourcing: protection of workers
83A Application of this Part
(1) This Part provides for a Minister of the Crown, the Scottish Ministers and the Welsh Ministers to make provision for the protection of workers in relation to relevant outsourcing contracts (see section 83B).
(2) Accordingly, in this Part, “appropriate authority”—
(a) means—
(i) a Minister of the Crown,
(ii) the Scottish Ministers, or
(iii) the Welsh Ministers, and
(b) does not include a Northern Ireland department.
(3) In addition to the restrictions in section 113, a Minister of the Crown—
(a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a reserved procurement arrangement;
(b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement.
(4) The Scottish Ministers—
(a) may only exercise a power under this Part for the purpose of regulating—
(i) devolved Scottish authorities, or
(ii) procurement under a devolved Scottish procurement arrangement;
(b) may not exercise a power under this Part for the purpose of regulating—
(i) joint or centralised procurement under a reserved procurement arrangement, or
(ii) joint or centralised procurement under a devolved Welsh procurement arrangement.
(5) In addition to the restrictions in section 111, the Welsh Ministers—
(a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a devolved Welsh procurement arrangement;
(b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement.
(6) This Part does not apply in relation to—
(a) a private utility;
(b) a person referred to in regulation 4(1)(b) of the Utilities Contracts (Scotland) Regulations 2016 (S.S.I. 2016/49);
(c) a devolved Welsh authority listed in Schedule 1 of the Social Partnership and Public Procurement (Wales) Act 2023 (asc 1);
(d) procurement under a transferred Northern Ireland procurement arrangement, except to the extent that the procurement—
(i) is carried out by a devolved Scottish authority, and
(ii) is not joint or centralised;
(e) a transferred Northern Ireland authority, except in relation to—
(i) procurement under a reserved procurement arrangement,
(ii) procurement under a devolved Scottish procurement arrangement, or
(iii) procurement under a devolved Welsh procurement arrangement.
(7) For the purposes of this section, procurement under a procurement arrangement is “joint or centralised” if as part of that procurement arrangement a contract is to be awarded following a procedure or other selection process carried out—
(a) jointly by a devolved Scottish authority and another contracting authority which is not a devolved Scottish authority, or
(b) by a centralised procurement authority or equivalent body.
83B Relevant outsourcing contracts
(1) In this Part, “relevant outsourcing contract” means a contract in relation to which conditions A to C are met.
(2) Condition A is met where the contract—
(a) is a public contract under this Act, or
(b) is a contract regulated by Scottish procurement legislation.
(3) Condition B is met where the contract—
(a) is a contract for the supply of services that include the performance of functions that are or have previously been performed by the contracting authority, or
(b) is—
(i) in the case of a public contract, a framework for the future award of a contract referred to in paragraph (a), or
(ii) in the case of a contract regulated by Scottish procurement legislation, a framework agreement the purpose of which is to establish the terms governing a contract referred to in paragraph (a).
(4) Condition C is met where the functions referred to in subsection (3)(a) are, or are expected to be, performed by individuals (“transferring workers”) who—
(a) in performing the functions, are employed by the supplier or a sub-contractor under a worker’s contract, and
(b) were employed by the contracting authority under a worker’s contract in performing functions of the same kind.
(5) For the purposes of this Part—
(a) “contract regulated by Scottish procurement legislation” means a contract the procurement of which by a devolved Scottish authority is regulated by Scottish procurement legislation;
(b) in relation to a contract regulated by Scottish procurement legislation—
(i) “contracting authority” means a devolved Scottish authority that is a contracting authority within the meaning of the relevant Scottish procurement legislation;
(ii) “framework agreement” has the same meaning as in the relevant Scottish procurement legislation;
(iii) “supplier” means an economic operator within the meaning of the relevant Scottish procurement legislation;
(iv) “the relevant Scottish procurement legislation” means the Scottish procurement legislation regulating the procurement of the contract.
83C Power to specify provision for inclusion in relevant outsourcing contracts
(1) An appropriate authority may by regulations specify provision to be included in a relevant outsourcing contract for the purpose of ensuring that—
(a) transferring workers of a specified description are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and
(b) workers of the supplier or a sub-contractor who are not transferring workers and are of a specified description are treated no less favourably than those transferring workers.
(2) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must—
(a) take all reasonable steps to ensure that provision specified under subsection (1) is included in the contract;
(b) where provision specified under subsection (1) is included in the contract, take all reasonable steps to secure that such provision is complied with.
(3) Subsection (2) does not apply—
(a) where the contracting authority or the relevant outsourcing contract is of a specified description, or
(b) in specified circumstances.
(4) In this section, “specified” means specified in regulations made by an appropriate authority.
83D Code of practice on relevant outsourcing contracts
(1) An appropriate authority must prepare and publish a code of practice containing guidance to contracting authorities for the purpose of ensuring that, where a contracting authority carries out the procurement of a relevant outsourcing contract—
(a) transferring workers of a description specified in the code are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and
(b) workers of the supplier or a sub-contractor who are not transferring workers and are of a description specified in the code are treated no less favourably than those transferring workers.
(2) An appropriate authority—
(a) may amend or replace a code published by it under subsection (1), and
(b) must publish any amended or replacement code.
(3) A code published under subsection (1) or (2) must—
(a) in the case of a code published by a Minister of the Crown, be laid before Parliament;
(b) in the case of a code published by the Scottish Ministers, be laid before the Scottish Parliament;
(c) in the case of a code published by the Welsh Ministers, be laid before Senedd Cymru.
(4) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must have regard to the code of practice for the time being published under subsection (1) or (2).
(5) This section does not require an appropriate authority to do anything which the authority does not have power to do (see section 83A and Part 11).
83E Interpretation of this Part
(1) In this Part—
“appropriate authority” has the meaning given in section 83A(2);
“contract regulated by Scottish procurement legislation” has the meaning given in section 83B(5)(a);
“relevant outsourcing contract” has the meaning given in section 83B;
“transferring worker”, in relation to a relevant outsourcing contract, has the meaning given in section 83B(4);
“worker” and “worker’s contract” have the same meaning as in the Employment Rights Act 1996 (see section 230 of that Act).
(2) For the purposes of this Part, in relation to a contract regulated by Scottish procurement legislation, “contracting authority”, “framework agreement”, “supplier” and “the relevant Scottish procurement legislation” have the meaning given in section 83B(5)(b).
83F Power of Scottish Ministers to amend this Part
The Scottish Ministers may by regulations modify section 83A, 83B or 83E in consequence of a modification of Scottish procurement legislation.’”
This amendment would restructure the new provisions to be inserted into the Procurement Act 2023 so that the powers and duties extend to the Scottish Ministers and Welsh Ministers and devolved Scottish and Welsh authorities. The amendment also clarifies that the duty to publish a code of practice does not depend on the making of the regulations.
Justin Madders
Amendment 59 will expand and restructure the provisions in clause 25, which amends the Procurement Act 2023, to reinstate and strengthen the two-tier code for relevant outsourced contracts for public services so that the powers and duties in clause 25 extend to Scottish and Welsh Ministers. Amendments 60 to 64 make changes that are consequential on those made by amendment 59, including by updating various definitions in the Procurement Act 2023 and by providing that regulations made by Scottish and Welsh Ministers must be made using the affirmative procedure of the Scottish Parliament and the Senedd.
We are making the amendments at the request of the Scottish and Welsh Governments. They are necessary because to get the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts, it is essential that a reinstated two-tier code applies throughout the UK.
We continue to engage with our counterparts in Northern Ireland about whether the powers should also extend to Ministers there. The regulations and code of practice created in our provisions will apply to reserved Northern Irish authorities. I commend the amendments to the Committee.
Greg Smith
I am reminded of the old chestnut about rushing out a Bill in 100 days and forgetting about the devolved settlements as part of the process. Given that devolution was largely the product of the previous Labour Government, I am slightly surprised that the current one would forget about Holyrood and Cardiff Bay. However, it is good that we now have clarity. We will of course want to test how things are actually going to work. Indeed, the question of Northern Ireland—which is just as important a part of our country as England, Scotland and Wales—really should be resolved sooner rather than later, so that there can be clarity that the Government are seeking to legislate for the whole of our United Kingdom of Great Britain and Northern Ireland, and not doing it in a piecemeal fashion.
Justin Madders
I gently correct the shadow Minister: we did not forget to engage with the Scottish and Welsh Governments. We were making sure that we had agreement before we tabled amendments, which is why they have appeared as they have today.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
Does the Minister agree that this is actually an example of the Government keeping not only their manifesto promise to deliver a new deal for working people, but the manifesto promise that I certainly made many times during the election campaign, which was that the new Government would show the utmost respect for the Scottish Parliament and Government, and for all the devolved institutions? I reassure the Minister that the Scottish Parliament was not forgotten during the drafting of the Bill, because there was extensive engagement with the Scottish Government, some of which I saw myself.
Justin Madders
I could not agree more with my hon. Friend. On that note, I commend the amendments to the Committee. “appropriate authority (except in Part 5A) section 123 appropriate authority (in Part 5A) section 83A”
Amendment 59 agreed to.
Amendments made: 60, in clause 25, page 37, line 33, at end insert—
“(2A) In section 2 (contracting authorities), after subsection (1) insert—
‘(1A) But see also section 83B(5)(b)(i) (which provides for “contracting authority” to have an extended meaning in relation to certain contracts regulated under Part 5A (outsourcing: protection of workers)).’”
See the explanatory statement to amendment 59.
Amendment 61, in clause 25, page 37, line 34, leave out subsection (3).
See the explanatory statement to amendment 59 - because the new provisions are now being inserted as a new Part of the Procurement Act 2023, there is no longer any need to amend section 100 of that Act.
Amendment 62, in clause 25, page 38, line 3, leave out subsection (4) and insert—
“(4) In section 122 (regulations)—
(a) in subsection (4) (regulations by Ministers of the Crown subject to affirmative procedure), after paragraph (i) insert—
‘(ia) section 83C (provision for inclusion in relevant outsourcing contracts);’
(b) in subsection (10) (regulations by Welsh Ministers subject to affirmative procedure), after paragraph (g) insert—
‘(ga) section 83C (provision for inclusion in relevant outsourcing contracts);’
(c) in subsection (14) (regulations by Scottish Ministers subject to affirmative procedure), before paragraph (a) insert—
‘(za) section 83C (provision to be included in relevant outsourcing contracts);
(zb) section 83F (power to amend section 83A, 83B or 83E);’”.
See the explanatory statement to amendment 59.
Amendment 63, in clause 25, page 38, line 6, at end insert—
“(4A) In section 123 (interpretation), in subsection (1), in the definition of ‘appropriate authority’, at the end insert—
‘(but see section 83A(2) for a different meaning of “appropriate authority” in Part 5A (outsourcing: protection of workers));’.
(4B) In section 124 (index of defined expressions), for the entry for ‘appropriate authority’ substitute—
See the explanatory statement to amendment 59.
Amendment 64, in clause 25, page 38, leave out lines 9 to 11 and insert—
“Part 5A (outsourcing: protection of workers)”.—(Justin Madders.)
See the explanatory statement to amendment 59.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Thirteenth sitting)
Tuesday 17th December 2024
(4 days, 18 hours ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 December 2024 - (17 Dec 2024)
The Committee divided: - Ayes: 15 / Noes: 4 - Question accordingly agreed to.
The Chair
Will everyone please ensure that all electronic devices are turned off or switched to silent mode? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sittings is available in the room and on the parliamentary website. I remind Members about the rules on declarations of interests, as set out in the code of conduct.
Clause 25
Public sector outsourcing: protection of workers
Question proposed, That the clause, as amended, stand part of the Bill.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Good morning, Mr Mundell; it is a pleasure to see you in the Chair. As is customary, I refer to my entry in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.
The clause will empower Ministers to reinstate and strengthen the two-tier code on workforce matters where contracts for public services have been outsourced to the private sector. It will ensure fair and equitable employment conditions for public sector workers who have been transferred into the private sector, and private sector workers who work alongside them on public service contracts, while maintaining a high quality of service for the public. It therefore directly supports the Government’s manifesto commitment to make work pay and will tackle the issue of unfair two-tiered workforces where staff working alongside one another to deliver the same contract do not have comparable terms and conditions of employment.
The powers are constrained so that the provisions of the regulations and the code, when developed, will apply only to new contracts entered into once the Bill comes into force, but can and will apply to re-procurements of services already outsourced where the re-procurement leads to a further transfer of workers. Ministers will have the power to make regulations specifying provisions to be included in relevant outsourcing contracts. The provisions may, for example, set out model contract terms that, where incorporated into contracts, will impose obligations on suppliers. Authorities will be required to take all reasonable steps to include those provisions in all relevant outsourced contracts.
The regulations made under the clause will, first, have the purpose of ensuring that transferring workers are treated no less favourably as workers of the supplier than when they worked for the public sector contracting authority and, secondly, have the objective of ensuring that workers of the supplier who are not transferred from the public sector but recruited by the supplier to work on the contract are treated no less favourably than those transferring workers. Alongside that, Ministers of the UK, Scottish and Welsh Governments will be subject to a duty to publish a code of practice addressing similar matters to which contracting authorities will need to have regard.
To ensure that the code is effectively enforced, there will be several forms of redress. Contracting authorities will be required to take all reasonable steps to ensure that suppliers meet their contractual obligations, as set out in the regulations. In addition, the procurement review unit, which will be established under our new Procurement Act 2023, due to commence in 2025, will be able to investigate whether a contracting authority has had regard to the code and taken appropriate steps in relation to provisions specified in the regulations.
These powers are being extended through amendments to the clause, which we discussed last week, to the devolved Governments of Scotland and Wales so that the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts can be spread throughout the UK. Fair and equitable working conditions are the right of all employees working alongside one other on the same outsourced contracts, and these measures will help to tackle that issue head on.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship once more, Mr Mundell.
Clause 25 has got me thinking about many moons ago, in 2006, when I was part of the team that won Hammersmith and Fulham council for the Conservatives for the first time since 1968. One of our first acts was quite literally to take the red flag down from the roof of the town hall. Part of the symbolism of that, which is why I mention it, was that the council, in 2006, was one of the last to outsource anything at all. Competitive tendering simply had not happened in that London borough. Everything was still a direct service run by the local authority, and we set about contracting out waste, grounds maintenance and many other services. Why? Because we wanted to deliver better value for taxpayers—indeed, we cut council tax by 20% over the eight years that we ran the council—and to improve service standards.
One of the things I learned in that process, and the reason my point is relevant to the clause, is that the first iteration of any contracting out—that first contract, be it for refuse collection, street cleansing, grounds maintenance or whatever—does not tend to result in economies and improvements. It is often in the second or third contract iteration where the cost savings and improvements in service standards start to be seen. That is partly because of the TUPE provisions that rightly exist to ensure that those staff who are being transferred from whatever part of the public sector we might be talking about—in this case, local government—transfer with the same rights, terms and conditions, and pay that they had at the point that they ceased to be direct employees of the council, or whatever other public service, and became employees of whoever won the contract.
The rub comes in the real-world application. In such cases, the staff members who transferred are on favourable terms and conditions, and probably better pay, than some of the staff that the contractor brings into the team. If it is immediately locked in that everybody new has to be on the same terms and conditions and pay scales, we will never achieve value for money for taxpayers, and we will never enable the contractor, be that a refuse collection company or whatever, to find efficiencies and savings at the same time as increasing service standards in the way that we all want to see. It might as well never be done in the first place. That makes me question whether that is in fact the ideological position that the Government want to take. I can see the Minister grinning; perhaps I have hit upon something.
I gently remind the Committee of the time when every refuse service and local government service was provided directly, in house, before competitive tendering and the revolution of the 1980s and the Thatcher Government. We can all remember what delivery of those services looked like in the 1970s: the rubbish piled up on the streets with no one collecting it.
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Mundell. I just reflect that when I was a unitary authority leader, we were effectively a hostage client of the private sector, since the previous Conservative authority had set up a joint venture with it. That was far from the land of milk and honey. Well, it was the land of milk and honey for the private sector, whereas local taxpayers had to suffer under a system that was set up to benefit the private sector. The reality is that often it is more appropriate for local authorities to run these services so that they are run in the interests of local communities rather than the profits of the private sector.
Greg Smith
The hon. Gentleman is clearly not of the orange book wing of the Liberal Democrats.
Greg Smith
My hon. Friend indicates that perhaps there are not any left. I fundamentally disagree with the point made by the hon. Member for Torbay. It is not about profits for the private sector, although the profit motive is an important element in driving up service standards and ensuring that if a company wants to keep a contract, it has to deliver on it.
Some councils have failed on this front by failing to set the specification of a contract correctly and failing, as the client, to enforce against the contract. That is where we see failure on so many fronts; it has little to do with terms and conditions or the points covered by the clause. Often, an ill-equipped council, be it the members or the officers—I have seen this from both sides—fails to properly specify in the first place, when it goes to market, and then fails to deliver proper contract management. That is where we see gremlins creep into the system and unintended consequences come about.
I gently point out to the hon. Member for Torbay that when I was in local government, we saw many benefits from competitive tendering over multiple iterations of the contract. I can ensure him that in the cabinet portfolios that I held in that local authority, where I was directly overseeing the waste, street cleansing and grounds maintenance contracts, I was pretty tough on those contractors in ensuring that they did drive up standards. But sometimes it is not the right step. The Labour council we took over from had outsourced housing, which we as a Conservative council brought back in house. We ended the arm’s length management organisation to bring it back within direct council control to deliver a better service for the tenants of those properties. So if it is not done properly in the first place, that model does not always work.
The measures in clause 25 are once more a sledgehammer to crack a nut. They do not recognise the practical realities of how competitive tendering has worked, excepting the flaws that I raised about how well contracts are specified and enforced against. If we want to ensure that we are delivering the best possible value for money for taxpayers—the people who pay for public services—at the same time as increasing the standard of services delivered, which I expect is a universal aim that all of us hold, there have to be flexibilities to ensure that efficiencies can be found, and that the fat is taken out of all systems, processes and ways of doing business. If we lock contractors into absolutely having to match every term and condition, with every pay scale being exactly the same, we are never going to deliver that.
Sarah Gibson (Chippenham) (LD)
It is a pleasure to serve under your chairmanship, Mr Mundell. I really welcome the clause. Despite the fact that their uniforms, pensions and contracts said “NHS”, staff at a community hospital in my constituency only realised that they had been effectively TUPE-ed over to a private business when they failed to receive the £1,000 bonus that all their colleagues in the main hospitals got. One may say, “How naive of them; they should have read their contracts better,” but most of them had been NHS workers for 25 years, so they were completely unaware that this had happened to them and that they were no longer entitled. I must thank the then contractor, a charity, for lobbying hard to make sure that eventually they got some kind of bonus, but to be suddenly without those conditions was quite frightening for them. So I welcome these measures.
I take some issue with what the hon. Member for Mid Buckinghamshire said. For many years, I served as part of Wiltshire council, which is a Conservative-led council. It was locked into a service contract for maintenance that was poor and used to lower wages, producing a system where we had very little maintenance. Our town councils are now having to pick up the bill for repairing grounds and play areas because the company, although it had the contract and was paid by the local authority, was not carrying out the works. Therefore, I welcome this measure and I am pleased to support it.
Laurence Turner (Birmingham Northfield) (Lab)
It is a pleasure to serve under your chairmanship, Mr Mundell. Merry Christmas, everyone. In that spirit of glad tidings, I draw the Committee’s attention to my declarations in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.
Clause 25 enables the reinstatement of one of two bodies that are to be reinstated by the Bill—the other is the school support staff negotiating body, which I hope we will come to today. The clause stands in a long and proud tradition in this Parliament, and at its heart is a simple question: what duty does the state owe to people who perform services on its behalf? The phrase “two tier” has become highly charged in recent years, but I hope that we can channel some of that spirit of protest towards the iniquity of two-tier workforces.
The injustice is easy to describe—in fact, the shadow Minister, the hon. Member for Mid Buckinghamshire, described it. When a public service is outsourced, the original workers’ pay and terms and conditions are protected to a certain extent by TUPE, but those of the workers who are subsequently employed on that contract are not. Even when they carry out exactly the same duties, they will normally be paid inferior rates.
That is understandably a cause of tension and resentment at many sites where services continue to be performed on behalf of the public sector. The original workers who are TUPE-ed over can be singled out for victimisation and adverse treatment on the part of their new employer. We know from the labour force survey, in the days when that instrument was in better health, that many such workers continue to regard themselves as part of the public sector and are motivated by public service. The workers who tend to find themselves in this position are more likely to be women, on lower earnings and from non-white backgrounds.
The case for parity of treatment was made powerfully in the last Parliament by the Defence Committee, which at the time had a Conservative Chair. The Committee’s report on the treatment of contracted staff for ancillary services states:
“In general, the terms and conditions of outsourced employees are worse than those of their directly employed counterparts, with reduced wages and benefits…The Ministry of Defence should do more to ensure that contracted staff receive comparable employment contracts to staff directly employed by the MoD.”
That is precisely what the reinstated and strengthened two-tier code, enabled by this clause, will accomplish.
Two-tier workforces are not just unfair on workers; they represent a failure of public policy. When margins are tight, bidders can end up competing not on efficiency or innovation, but on a squeezing of wages. We need only look at Carillion for a prominent example of what can go wrong, and of the wider liability for taxpayers when a contractor loses sight of its wider operations. The direct cost to the public sector has been estimated at some £150 million, the wider debts to the private sector were in the region of £2 billion, and the National Audit Office has warned that we will not know the true cost for many years to come.
The shadow Minister referred to the sepia-tinted days—perhaps we should say the blue-rinse days— of 2006, but I was grateful for the contributions from the hon. Members for Chippenham and for Torbay, because there is a long-standing and cross-party record on this matter. We can go back to 1891, when the radical Liberal politician Sydney Buxton moved the fair wages resolution, a resolution of this House, which was carried unanimously—at that time, Parliament had a Conservative majority. He said:
“The Government is far the greatest letter-out of contracts in the country, and Government contracts are the most popular for three reasons. In the first place, the contractor makes no bad debts; secondly, he has quick returns; and, thirdly, a Government contract forms a good advertisement. The consequence is, that there is great competition, and tenders are cut down very much at the expense of the labour market. Such a state of things is unfair to the good employer…and injurious to the community. The fair employer is placed at a very great disadvantage as compared with the unfair.”—[Official Report, 13 February 1891; Vol. 350, c. 618.]
Those arguments hold true today. That fair wages resolution was adapted and improved down the years, and took its final form under the Attlee Government in 1946. It has subsequently been exported around the world, in the form of International Labour Organisation convention No. 94. Indeed, those great British protections, developed in this Parliament, apply now in Italy, Spain and such far-flung places as Brazil, but because of decisions taken in the 1980s, they do not apply to contracted-out workers in this country. I very much welcome the opportunity to put that right.
The two-tier code existed previously, between 2005 and 2006. It grew out of an earlier iteration in local government, and it has been in force subsequently in Wales, where the sky has not fallen in in terms of service provision. [Interruption.] If the shadow Minister wants to intervene, he is welcome to.
Greg Smith
How does the hon. Gentleman feel that the NHS in Wales is doing—better or worse than in England?
Laurence Turner
I would say better, having had some experience. The hon. Gentleman might want to return to that point.
On the substance of the clause, there were some concerns about the original incarnation of the two-tier code. It was purely voluntary and did not contain meaningful provisions for redress where an employer who had signed up to uphold the standards of the code did not follow through. I hope that that deficiency will be remedied when the associated regulations appear.
It is legitimate to have differences on points of principle. After the current Lord Maude abolished the two-tier code, the Secretary of State—now Baron Pickles—said that the Government of the time had
“Abolished the…two-tier code that…hindered the voluntary and independent sector from delivering better value for money.”—[Official Report, 26 March 2015; Vol. 594, c. 166WS.]
The shadow Minister has made much the same point. This was explicitly about driving down wages for the large number of people who are contracted out to deliver public services. I very much welcome the fact that this Government have a policy objective of making work pay. For a large number of people in the labour market who have been overlooked by politicians for too long, the clause represents an important step forward for remedying that deficiency.
Justin Madders
We have had a broad debate—very broad from my hon. Friend the Member for Birmingham Northfield, who took us on a canter through the history. He was right that it was the coalition Government who abolished the two-tier code, which is why it is welcome that the Liberal Democrats have realised the error of their ways; I welcome their support on this. Their spokesperson, the hon. Member for Chippenham, made the important point that the inherent unfairness of people doing exactly the same job for the same employer finding out that they are on different terms and conditions and are earning less is a big morale sapper. It is also a big issue in terms of workforce retention—one problem that we often see with outsourced contracts.
I will turn to the shadow Minister’s misty-eyed days at Hammersmith and Fulham, and I will raise him Ellesmere Port and Neston borough council, which was a great believer in direct provision of services; we certainly felt that was the best way to deliver value for the taxpayer and good-quality services. In his contribution, the shadow Minister alighted on the illusion of outsourcing—the fact that consultants can demonstrate that savings can be made, but when you drill into the detail, those savings are always off the back of the workforce. They are not some magical way of doing things differently. It is about cutting terms and conditions and it is about a race to the bottom, which we are determined to end.
Greg Smith
I do understand the ideological difference between the two sides on this point, but I take issue with the Minister that this is about a race to the bottom and cutting terms and conditions; it really is not. From my experience, it was not a matter of consultants, but of properly probing contracts, setting the right specification to deliver for the residents in the place that the council served, and requiring the flexibility to ensure that some people would be doing very different jobs in a different way from before in order to deliver that. It was not about wanting to cut anyone’s pay or terms and conditions; it was about service delivery and value.
Justin Madders
I take the shadow Minister’s point. I am not familiar with the machinations of Hammersmith and Fulham council in the 2010s, and it may well be that savings were made by doing things differently. But there is absolutely no reason why that cannot be done directly from a public body: if it is well led, if it is able to have constructive dialogue with its work force, savings can be made.
The difficulty with the shadow Minister’s analysis is that, while he may have been able to find savings for the taxpayer through those kinds of measures, too often the savings are made by cutting terms and conditions for new workers. That is why, as he said in his original contribution, the second or third outsourcing is usually where the savings happen, because it is when those new workers come in on lower terms and conditions that the savings begin to emerge. That is why the whole outsourcing trick is a con, because it is how those savings tend to be made.
When we add in the contract monitoring costs and the profit motivations for the outsourced company to make a living from these things, we can quickly see why it becomes a bad deal for the taxpayer. I certainly make no apologies for putting forward this proposal, because we think it is the right thing to do, to respect and value those who work in public service and ensure that they are paid the same as their colleagues for doing the same work. I therefore commend—
Laurence Turner
I thank the Minister for giving way at the death. Does he also recognise that one example of a council that tried to go down the wholesale outsourcing route was Northamptonshire? We all know how that story ended, and Eddie Martin, the Conservative former leader of Cumbria county council, stated that the then Government
“says that outsourcing is everything, but while it might get you an initial cheaper price, that price simply doesn’t last, you lose flexibility, and it causes a great deal of unrest.”
Justin Madders
I think that is the kindest thing that has been said about me this year, Mr Mundell. I thank my hon. Friend for his intervention; I think we can all see the difficulties. I know, from dealing with public bodies in my area, that sometimes when there is more than one person responsible for a service—the public body and then the contracting body—we find duplication, differing priorities and often a poorer service as a result, because there are competing ambitions in those bodies. That is one of the main reasons why we want to see a much more holistic approach to our public services. I commend clause 25 to the Committee.
Question put and agreed to.
Clause 25, as amended, accordingly ordered to stand part of the Bill.
Clause 26
Equality action plans
Sarah Gibson
I beg to move amendment 112, in clause 26, page 38, line 35, at end insert―
“(c) supporting employees with menstrual problems and menstrual disorders.”
This amendment would add menstrual problems and menstrual disorders to “matters related to gender equality”, in relation to any regulations made under the Bill to require employers to produce equality action plans.
I am very pleased to move this amendment. First, as the Bill stands, there are provisions for businesses to report on the impact of menopause on women in the workplace as part of the equalities impact assessments. I think the hon. Member for Sheffield Brightside and Hillsborough (Gill Furniss) is right to table this amendment and to remind us all that menstrual problems can hinder women at any point in their working life, not just as they enter menopause. She is the chair of the all-party parliamentary group on women’s health and an officer on the APPG on endometriosis; I feel confident that she has tabled this amendment with the best intentions. It seems an omission that this issue was not included in the original Bill.
Several constituents have contacted me about endometriosis, and specifically its impact on them at work. Endometriosis costs the UK economy £8 billion a year in treatment, loss of work and healthcare costs, and it takes an average of eight years to get a diagnosis. One in six workers with endometriosis leaves the workforce due to their condition—an issue that the Government and employers cannot afford to ignore. Those people could go back to work and stay in work if there was additional flexibility for them.
As one of my constituents told me—she does not wish to be named for these reasons—many employees with endometriosis find that their employers do not believe them about their symptoms, that their flexible working requests are refused and that they are subject to discriminatory automated absence procedures that penalise short but intermittent time off work. The amendment seeks to address that injustice. I want to be very clear that I support it, and I hope that the rest of the Committee will see its importance.
Greg Smith
I hear very clearly what the hon. Lady and the hon. Member for Sheffield Brightside and Hillsborough have said. I do not take issue with anything that has just been said. The endometriosis point is a clear one, and well made. Where I challenge the hon. Member for Chippenham, and indeed the Minister, is that that women’s health issue is not exclusive; there are many health concerns that only women face, and indeed some that only men face. Given that the clause explicitly refers to gender equality, would it not be better, from a pure legislative drafting perspective, to say that gender equality will be the catch-all that encompasses all that?
Is there not a danger that by listing one or two medical concerns, we will lock out other health problems faced exclusively by women, or exclusively by men? Naming one or two things in legislation often creates a problem in the interpretation of the rule. Courts may look back at this debate, or at any other debate on the Bill, and understand that this gender equality provision is intended to be a general catch-all for anything that any man or woman may face. If we name one or two things in legislation, however, it could become dangerous for when a man or a woman presents with something that is not named.
Sarah Gibson
I cannot help agreeing that naming a few conditions in the Bill might well be a concern, and when I first looked at the amendment on its own without looking at where it would fit into the Bill, it did seem slightly incongruous to suddenly mention one aspect. But if we look at where it would be inserted into the Bill, following a direct reference to menopause, it seems far more appropriate to make the point that menopause is not the only ongoing issue that women face. Many women are quite relieved to go into menopause, because it has been so onerous for them to have periods that keep them off work or in bed for several days a month. If we are going to mention menopause, mentioning menstruation makes perfect sense. The amendment makes sense only in the context of the Bill.
Greg Smith
I am grateful to the hon. Lady for that clarification. There is a danger that we will end up dancing on the head of a pin, but I am always concerned about naming individual things in a catch-all provision. If amendment 112 were to be accepted, it might create an interpretive problem for the courts at a later date. Indeed, it might create a problem for employers in navigating whether they have to abide by legislation that mentions one condition but not another.
I would be grateful if the Minister, in his response to the amendment, gave the Government’s interpretation—[Interruption.] With two Ministers on this Bill, it is confusing to work out which one will be responding. I would be grateful if, in her response, the Minister gave clarity on the Government’s interpretation and the legal advice that they have received.
Steve Darling
I echo the comments from my hon. Friend the Member for Chippenham about the impact of endometriosis on younger women’s lives. It can be extremely incapacitating. A constituent of mine in Torbay shared how her daughter had to give up work because of the impact and the length of time that it was taking her to go through the NHS system to get the treatment that she deserved. Action to resolve that and get her in the right place was months and months away.
To me, the Bill needs a couple of touch points that test the employer and challenge them to reflect on certain areas of their workforce. That will result in a culture change among employers, so that they reflect on these matters and see the broader picture. It is extremely important to drive that culture change by adding this amendment, because throughout the United Kingdom, including in my Torbay constituency, there are significant issues related to finding enough people to fill workplaces. If we have the appropriate culture through this proposal and other changes in the Bill, we can make sure that the pool of people who can step up and work and contribute to our economy is enhanced.
The Minister for Equalities (Dame Nia Griffith)
Amendment 112 would add menstrual problems and menstrual disorders to matters related to gender equality in clause 26. Prioritising women’s health is a positive step that the Government are taking, and the hon. Member for Chippenham is absolutely right to highlight the terrible impact that many different conditions related to menstruation can have on whether a women can perform to the best of her ability. Physical symptoms can be further compounded by the taboo that often surrounds conversations about women’s reproductive health, and I thank her for bringing that to the Committee’s attention.
Clause 26 does not provide an exhaustive list of matters related to gender equality, as the hon. Member for Mid Buckinghamshire referenced. As the hon. Member for Torbay said, this is about culture change in a place of employment. In creating equality action plans, we are reflecting the fact that many actions will be beneficial for people in lots of different circumstances. For example, the improved provision of flexible working can be valuable for an employee balancing childcare, as well as someone managing a health condition.
In the same way, ensuring that employers support staff going through the menopause will necessitate them taking steps that are positive for supporting women’s health in the workplace more broadly. For example, menopause best practice includes greater discussion around women’s health and awareness of potential workplace adjustments—things that have a much wider potential benefit. I therefore ask the hon. Member for Chippenham to withdraw the amendment.
Sarah Gibson
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Steve Darling
I beg to move amendment 162, in clause 26, page 38, line 35, at end insert—
“(c) supporting employees who provide or arrange care for a dependant with a long-term care need, as defined by the Carer’s Leave Act 2023.”
This amendment adds caring to the list of “matters related to gender equality”, on which regulations will require employers to produce an equality action plan.
This amendment relates to research showing that by the age of 46, 50% of women have taken on caring responsibilities, whereas the equivalent age for men is 57. Clearly, the impact of caring happens much sooner for women, and that is why it is appropriate to take carers into account under the equality action plan.
There are approximately 10.5 million carers in the United Kingdom, 2.6 million of whom work. That shows that a significant number of carers do not work. In an earlier debate I made the point about the pool of workers for whom there are opportunities in our workforce yet who are not able to access longer-term employment. I strongly contend that the amendment is a way to enhance the pool of opportunity by driving the culture change that I was delighted to hear the Minister say a lot of the Bill is all about.
Carers will often stay in lower-paid jobs or refuse promotion because of caring commitments. It is extremely important to include caring as part of the consideration and clearly flag that to people who consider the action plans, because it is not an obvious matter for an employer to take into consideration, but it affects such a large number of people in the United Kingdom that it would be an error in judgment not to include it in the Bill.
Greg Smith
I rise to address the technicalities of how the amendment would work in legislation and with the Bill’s gender equality provisions. I entirely accept the hon. Gentleman’s point about the disparity between the average age by which a woman might take on caring responsibilities compared with the average for a man, but those are averages and there will be outliers and exceptions across all age ranges and all genders.
I say clearly that the Opposition welcome the contribution of all carers and salute them as the heroes they are, but I am concerned that the amendment would shoehorn a very worthy and important matter into a provision on gender equality. I do not see how it fully fits; it would have been more sensible to have created provisions for the support and recognition of those with caring responsibilities in a new clause or in another part of the Bill. I worry that, like amendment 112, amendment 162 could confuse the Bill’s interpretation as it goes down the line and, potentially, is challenged in court at some point.
I accept the core argument about support for those with caring responsibilities, but it is dangerous to shoehorn provisions into clauses where that is not the primary intent. It is important that the gender equality points remain focused on gender equality issues, on which I think the Government have good intent. If the Bill gets changed too much by us bringing in things that—although clearly in scope, given that they have been selected—are on the edge of scope, that could cause an interpretative challenge later. Provisions on support for those with caring responsibilities would be far better in a new clause or a different part of the Bill, where they might fit more neatly and enable us to avoid judicial challenge.
Dame Nia Griffith
If I may, Mr Mundell, I will draw attention to my registered interests, including my membership of the Union of Shop, Distributive and Allied Workers and the National Education Union.
Amendment 162 would add caring to the matters related to gender equality listed in clause 26. The hon. Member for Torbay is absolutely right to highlight the impact of caring responsibilities on women in the workplace, and we recognise that carers might need extra protection and support. I reassure him that many people with caring responsibilities are likely already to be afforded protections under the Equality Act 2010, through the provisions relating to age and disability discrimination.
The Equality Act protects people from direct discrimination by association. That means that individuals with caring responsibilities for someone who is, for example, elderly or disabled are likely to have protection from unlawful discrimination because of their association with someone with a protected characteristic. The Government frequently receive requests for the creation of new protected characteristics. Unfortunately, merely creating new characteristics within the Act will not necessarily lead to a change in the behaviour of service providers and employers. We can see that from the number of court cases that continue to be brought under the existing characteristics.
Clause 26 does not provide an exhaustive list of matters related to gender equality. Instead, we are reflecting the fact that many actions will be beneficial for people in lots of different circumstances. For example, improved provision of flexible working can be valuable to someone who is managing a health condition as well as to an employee who is balancing care. Equality action plans will increase awareness of the need for a wide range of potential workplace adjustments for all who would benefit from them, delivering a much wider potential impact. I therefore ask the hon. Member to withdraw the amendment.
Steve Darling
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Dame Nia Griffith
The clause is the first step towards introducing equality action plans, and it provides the power to do so in subsequent regulations. Women are a crucial part of securing economic growth and improving productivity, but the national gender pay gap remains at 13.1% and eight in 10 menopausal women say that their workplace has no basic support in place. This lack of support adds up to a significant loss of talent and skills. Menopause affects 51% of the population, with one external estimate showing that the UK is losing about 14 million work days every year because of menopause symptoms.
Large employers have been obliged to publish gender pay gap data since 2017, with action plans being encouraged, but voluntary. Analysis in 2019 found that only around half of employers that reported data went on to voluntarily produce a plan saying how they would act to improve the figures. That demonstrates that only making it mandatory will push employers to act. The best employers already recognise that providing women with the conditions to thrive is good for their employees and good for business. In taking this step towards introducing mandatory action plans, we are making sure that all large employers in scope of this clause follow their lead.
We are using a delegated power, mirroring the approach taken for gender pay gap reporting. Just as with that requirement, we want to give employers as much detail as possible in legislation—more than would commonly be in a Bill. The use of regulations allows us to do that while maintaining flexibility. When drafting this power, we reflected on what we have learned from gender pay gap reporting and from the hundreds of employers we have engaged with as a result. Most organisations think about equality in the round. They have one diversity and inclusion strategy, recognising what is borne out by the evidence: the most effective employer actions have benefits for more than one group or identity. That is why this clause proposes that employers produce one plan that covers both the gender pay gap and the menopause, reflecting the way they already work, reducing the burden of duplication and ensuring that they can get on with putting the plan into action. I commend clause 26 to the Committee.
Greg Smith
We covered many of the issues relating to this clause when we discussed amendments 112 and 162. I am grateful to the Minister for citing the 2017 changes, which were brought about by the previous Conservative Government. It is morally right to completely close the gender pay gap. That will undoubtedly take some time, but every step taken to close it completely is a welcome one. It is important to make sure that employers are taking proper and serious account of the issue and action on ensuring gender equality in the workplace.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
It is a pleasure to serve under you, Mr Mundell. I have fought to break down barriers to equal justice, opportunity and dignity without discrimination for women and disabled people at every stage of my personal, professional and political life. I know that our Labour Government’s work on our missions for 10 years of national renewal has the purpose of changing lives across our country. This clause will be an important part of achieving that change for women in the workplace, ensuring that no matter what their background or where they live, women can thrive in the workplace. I am standing here because of the difference that world-class public services made to my life chances. This Bill creates a culture for world-class employers to break down barriers for women employees. The requirement to develop and publish equality action plans showing the steps that employers will need to take in relation to gender equality will be a significant move forward to improve equality, alongside collecting and publishing figures on the gender pay gap.
In an evidence session for the Bill Committee, Jemima Olchawski from the Fawcett Society said:
“We have a gender pay gap of just under 14%. On average, women take home just over £630 a month less than men. It also has a detrimental impact on our economy, because it is a marker of the ways in which women are not fully participating or contributing to the economy at their full potential. Estimates indicate that that means we are missing out on tens of billions of pounds of GDP.
We strongly support the measures as an important step towards redressing that balance. In particular, we are pleased to see the inclusion of equalities action plans as an important way to get employers to drive forward progress on the gender pay gap.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 81, Q76.]
This is helpful. The clause makes an important contribution to advancing gender equality by including the requirement to develop and publish equality action plans, which address the gender pay gap and support employees going through the menopause. I am pleased to be a member of the Committee seeing this go through today.
Alison Hume (Scarborough and Whitby) (Lab)
It is a pleasure to serve under your chairmanship once again, Mr Mundell. I draw the Committee’s attention to my declaration of interests and my membership of Unison and the Writers’ Guild of Great Britain.
I associate myself with the contribution made by my hon. Friend the Member for Penistone and Stocksbridge on the gender pay gap. I particularly welcome the focus on menopause support, which will be provided by the equality action plans proposed in clause 26. The TUC has reported that research from Bupa estimated that 1 million women have been forced out of their jobs because of discrimination and a lack of support for them while experiencing the perimenopause or menopause. I have lost count of the many talented women whom I count as friends and who have left jobs and careers that they loved, simply because they were not given support by their employers to manage their symptoms while at work. I am pleased that we have moved on from an era in which women going through the menopause had to suffer in silence, but we have a long way to go. That is why the mandatory equality plans are so necessary. They will help employers to provide the best workplace experiences.
USDAW research involving women members who are going through the menopause has found that one in five women take time off because of menopause-related symptoms. Given that women between the ages of 45 and 54 make up 11% of all women in employment— 3.5 million women—it is vital that employers consider the needs and experiences of women during this period and ensure that support is in place, that women can keep working and earning, and that their talents are not lost to the workforce.
Dame Nia Griffith
I thank my hon. Friends the Members for Penistone and Stocksbridge and for Scarborough and Whitby for their powerful contributions.
I cannot stress enough to the hon. Member for Mid Buckinghamshire how important our continuing consultation will be. We are keen to engage with stakeholders to ensure that we get this right and lay the appropriate regulations before the House in the appropriate way. On that note, I commend the clause to the Committee.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 27
Provision of information relating to outsourced workers
Question proposed, That the clause stand part of the Bill.
Dame Nia Griffith
This clause is the first step towards requiring employers that already report gender pay gap data also to provide information about where they receive outsourced support from.
A 2019 YouGov survey found that seven out of 10 employer respondents had used third parties to provide key services. We know that the success of a business is down to everyone who contributes, including those who do some of the most demanding jobs but whose pay may be overlooked because they are employed by outsourced service organisations.
By getting large employers to disclose who they have outsourcing relationships with, we are building on what we have learned from gender pay gap reporting. Public accountability is an effective motivator for organisations. Instead of trying to get organisations to share employee data, which risks data relating to outsourced workers getting lost in the wider data, our approach will put those outsourcing relationships front and centre. That will act as a prompt for employers, and so achieve our original aim: getting employers to work throughout their networks and be invested in the pay decisions of those from whom they receive outsourced services.
We are taking a delegated power, mirroring the approach taken for gender pay gap reporting. That will enable us to provide as much detail as possible to employers in legislation, including the definitions and parameters of what will need to be reported. We recognise that outsourcing is not clearly defined and that we will need to work with employers to ensure that the measure works. The use of regulations will allow us to engage on an ongoing basis with experts in the area, provide as much clarity as possible in legislation and still maintain flexibility.
This measure is a step towards valuing and supporting some of the lowest-paid workers; it is a step towards businesses working together, rather than engaging in a race to the bottom; and it is a step in the right direction. I therefore commend the clause to the Committee.
Greg Smith
The clause builds on the gender pay gap reporting introduced by the last Government. Of course, in 2017 we were on the second of four female Conservative leaders, while the Labour party is still yet to show its commitment to gender equality in its leadership. Perhaps the Minister might be the first female leader of the Labour party—who knows? I gently and slightly naughtily make that point; it is the Conservative party that has shown a clear commitment to gender equality, particularly with the changes to gender pay gap reporting.
Expanding reporting to outsourced service providers does not seem a controversial move, but I urge the Minister to ensure that the provisions that the Government introduce do not create loopholes or miss anyone out; I can imagine various scenarios in which someone might argue that something is not outsourced, even though it is contracted. I urge her to double check that the specific language used does not create something that anyone can exploit or legally challenge. That is to ensure that the provisions build in spirit on the previous Government’s 2017 changes and do not create loopholes.
Laurence Turner
I will pick up the point just made about the changes made in 2017. Some of the opposition at that time came from the august institution of the Institute of Economic Affairs, which said that, if the regulations were introduced,
“they may encourage outsourcing of lower-paid jobs which happen to be taken by women (to avoid inclusion in a firm’s own return).”
That point has also been made by other organisations. King’s College London published a study on this matter three years ago, which said that
“focusing on the pay gap headline number can risk organisations seeking to window-dress their figures by outsourcing lower-paid jobs, which in turn worsens overall gender segregation within the labour market.”
Therefore, this extension of gender pay gap reporting to outsourced workers really does close that loophole and remove that perverse incentive—one example of many that we have heard about in this Committee.
We also heard from the Women’s Budget Group; Dr Mary-Ann Stephenson, giving evidence, said:
“We welcome the move to include outsourced workers in gender pay gap reporting…We are very conscious that you will quite often see that the lowest paid workers, particularly in the public sector, are now outsourced.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 163, Q176.]
The measures as proposed would effectively link the outsourced employer’s reporting to the reporting of the primary contracting authority. I hope that, when the regulations are drafted, they will shed some light on the extent of outsourcing across the economy; these workers are often invisible in official statistics, which is a wider problem for our understanding of the labour market. However, this move within the Bill is welcome.
I will just come back on one point; the shadow Minister referred to elected leaders of the Labour party. He is quite right to point out that the Labour party has not elected a woman leader—I very much hope that that will happen—but, for completeness, under the Labour party rulebook there is no role of “acting” or “interim” leader. It is therefore important to say, for the record, that in the eyes of the rulebook the noble Baronesses Beckett and Harman were as much leaders of the Labour party as any men who have fulfilled that role, and they served with distinction.
Sarah Gibson
I am not sure that highlighting quite how quickly the Conservatives go through leaders is helpful, but we do have to recognise that they have had the highest number of female leaders of any of our parties here, which is to be commended.
On a serious note, I welcome the intentions of clause 27. It is incredibly important that we start to shine a light on outsourcing, especially in the public sector, which I have seen myself, as I highlighted earlier, regarding the Chippenham hospital. To a certain extent, it seems to be a way of hiding some of the less clear and sensible ways we employ people, especially when it comes to low-paid, often female workers. I will therefore be supporting this clause and I am very pleased to do so.
Dame Nia Griffith
I think I had better start by putting on the record that I am not intending to stage some sort of leadership coup—[Hon. Members: “Shame!”]
Dame Nia Griffith
Well, I shall leave Members to interpret my words in Hansard as they choose. On that note, may I just make sure that I have not inadvertently made a mistake? I was referring to the 2019 YouGov survey, and I may have inadvertently said 2020, so I would like to just correct that on the record.
Turning now to the clause itself, I thank my hon. Friend the Member for Birmingham Northfield for making some powerful points, as did the hon. Member for Chippenham. On the burden and the detail required, I say to the hon. Member for Mid Buckinghamshire that we are absolutely committed to ongoing stakeholder engagement in this matter.
Question put and agreed to.
Clause 27 accordingly ordered to stand part of the Bill.
Clause 28
Pay and conditions of school support staff in England
Question proposed, That the clause stand part of the Bill.
Justin Madders
Clause 28 introduces schedule 3, which inserts proposed new part 8A into the Education Act 2002. Paragraph 1 of schedule 3 contains proposed new sections 148A to 148R of the 2002 Act and will be discussed separately.
The reinstatement of the school support staff negotiating body will give school support staff the recognition they deserve for the crucial role they play in children’s education and development. Establishing the SSSNB through the Bill will help ensure that schools can recruit and retain the staff needed to deliver high-quality, inclusive education and support the Government’s work to drive high and rising standards in schools, so every child has the best life chances.
The body will bring together representatives of school support staff employers, representatives of support staff, an independent chairperson and a representative of the Secretary of State. The SSSNB will consider the remuneration, terms and conditions of employment, training and career progression opportunities for school support staff. Its remit will lead to the creation of a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.
Most school support staff are currently employed on National Joint Council for local government services pay and conditions. The NJC is a negotiating body made up of representatives from trade unions and local government employers. Existing NJC arrangements are not statutory or school specific. Moving to a school-specific body where pay rates and pay awards for support staff are negotiated by school support staff employer and employee representatives and ratified by the Secretary of State will both help to ensure fair pay rates for school support staff and allow central Government to have a strategic view of pay across the school workforce.
It is essential for the SSSNB to have a statutory remit so that all prospective and current support staff in state schools nationally benefit from a transparent, guaranteed core pay and conditions offer. The Bill re-establishes the SSSNB as an unincorporated body on a similar footing to the previous body from 2009 that was abolished by the coalition Government in 2010.
As education is a devolved matter, the extent of these measures is therefore England and Wales and the measures will apply to England only. This is consistent and in line with the remit of the School Teachers Review Body being England only.
The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Roughly half of schools are now academies, compared with around 200 in 2009 when the body was previously established. Support staff employed by academy trusts are now included within the SSSNB’s remit. It is crucial that the body has a remit for all state-funded schools in England in order to achieve greater national consistency, irrespective of which type of school support staff work in. That is a point that we may come on to debate in due course.
Greg Smith
The Opposition have tabled a number of amendments that probe what is introduced by clause 28 and schedule 3, which we will come on to in subsequent debates today. I will reserve the bulk of my remarks for those debates, although, as clause 28 introduces schedule 3, I will preview those debates now by noting our strong opposition to these provisions. There was a very good, solid and rational reason that the former Secretary of State for Education during the coalition years—now editor of His Majesty’s Spectator magazine—abolished SSSNBs, which was to give that flexibility and freedom to the quite right and good, educational standards-raising revolution in education that came through the creation of the academies by the last Labour Government and in particular the creation of free schools by the last Conservative Government, including in the coalition years. Clause 28 and schedule 3, which we will come on to shortly, seek to undo a lot of that. For the reasons I will outline when speaking on those amendments, I think this part of the Bill requires a rethink.
Dr Tidball
I draw your attention to my declaration of interests, Mr Mundell. I am a member of the Community union, Unison and GMB.
I found it difficult to hear, in anything the shadow Minister just said, any rationale for getting rid of this body all those years ago. I missed three years of school as a child because of the surgeries I needed. Incredible classroom teaching assistants helped me to build my confidence and learn to mix with other children again when I returned—making education and learning an escape, a way to express myself, to overcome people’s assumptions about my disability and to feel free.
I stood in my constituency because I wanted to use my skills and experiences to give back to the communities that gave me so much. To know that, because of this Bill and the clause before us now, teaching assistants and other school support staff like the ones who made school a less daunting place for me will once again have a collective bargaining system for pay and conditions—which will ensure that those staff are finally valued and recognised for their vital work—is a very great privilege indeed.
The reinstatement of the school support staff negotiating body in England, previously scrapped by the coalition Government for reasons that still remain unclear, will be key to providing professional recognition for a group of staff who have been overlooked for far too long. As Unison, of which I am proudly a member, has highlighted, the proposals in this clause
“demonstrate that the Employment Rights Bill isn’t just tackling worker’s rights—it holds the key to tackling long standing public policy failures that have been ignored because they affect workers and service users whose voices are too often neglected by decision makers. Tackling this neglect and allowing trade unions to engage in constructive social partnership and better represent their members is long overdue”.
This clause therefore empowers that group of working people, who have been so long overlooked by the Government, to have a better life at work. It will help trade unions to raise standards and pay across the labour market.
Laurence Turner
In addition to the interest to which I drew attention earlier, my partner is a trustee of a multi-academy trust.
The reinstatement of the school support staff negotiating body is a hugely welcome measure and long overdue. It is a real shame to hear that there will be cross-party division on this question, because the consequences of the decision to abolish the SSSNB are negative, they are serious and they are now plain to see. We will come on to detailed discussion of the schedule and the amendments, but it is worth reflecting on the rationale that the then Government gave back in 2010 for abolishing the SSSNB. The Secretary of State at the time said—and he never went much beyond this—that the Government had
“concluded that the SSSNB does not fit well with the Government’s priorities for greater deregulation of the pay and conditions arrangement for the school workforce.”
What has been the consequence of that decision? We saw it last year, when the Low Pay Commission, for the first time, reclassified school support staff roles as low-paying occupations. That should be a mark of shame on the Governments that oversaw that unhappy outcome—which, as I said, was a consequence of the decision to abolish that body.
Sarah Gibson
I completely agree with the hon. Gentleman; I must make a declaration that my parents were a state headmaster and headmistress before their retirement. One issue that I strongly feel needs to be taken into consideration—though perhaps it is not relevant to this Committee—is that funding for education in general has driven down the pay of these roles. If there were good funding for the education sector in general, these roles would not need so much protection. While we are considering giving more bargaining power, we also need to ensure that there is enough funding for education so that those roles can be paid, otherwise there will merely be fewer of them. I think that is something we need to take into consideration, do you not?
Laurence Turner
I thank the hon. Member for Chippenham for her intervention. I agree with her up to a point. Teaching assistants’ wages have increased by about 24% on average over the period that we are talking about, while the consumer prices index has increased by 40% over the same period, so there has been an erosion in wages. We could talk about funding at great length. However, as she said, it is beyond the scope of the Bill and the clauses that we are discussing.
The matter goes beyond funding and pay, as important and relevant as those two issues are, because it is also about contracts and about terms and conditions. There are real problems, which we will discuss, involving the construction of term-time only contracts as they currently exist. We saw in the Harpur Trust v. Brazel decision the liabilities created for employers, as well as for workers, by existing contracts inherited from negotiating arrangements that are not fit for purpose. There is a strong rationale for extending and separating the negotiation over terms and conditions, as well as over pay. That point has been recognised for a long time. Given the complaints that we have heard from the Opposition about what they see as the expeditious drafting of policies and clauses in the legislation, I hope they welcome having this matter before us, which has precedent and is the result of more than 20 years of policy development.
It was recognised as far back as the 2005 schools White Paper that an early challenge for the school workforce agreement at that time—signed, I think, in 2003—would be ensuring fair pay and rewards for support staff. We want to ensure that that is supported by a more coherent approach to union recognition at school level, clearer career paths and skills escalators, and a more standardised and benchmarked approach to grading, job descriptions, contract awards, deployments and school support staff training and development. Those are exactly the issues that we are talking about. It is sad to look back at those complaints from 20 years ago and to realise just how little progress has been made.
The decision to increase the number of school support staff workers, which was carried forward by Governments of all parties, was taken because at the time the workload of teachers was far too high. There were serious problems of classroom management and teachers found themselves undertaking a huge number of administrative duties, rather than teaching. Those complaints are current today, but it was worse then, and that was remedied by the introduction of more school support staff workers.
My hon. Friend the Member for Penistone and Stocksbridge spoke about her own experience. I can also speak from direct experience, having been a special educational needs and disabilities kid during that time, about the value to me of school support staff workers. I do not think I would be here in this Committee without them. However, for too long we collectively have not recognised their contribution.
The Minister made the point that the National Joint Council for local government services is not adequate for school support staff workers. The Green Book was never designed to accommodate those roles, and it is an anachronism that school support staff workers continue to fall under the Green Book. Indeed, while the Confederation of School Trusts has some wider concerns—I think one of the Opposition’s amendments is modelled on the submission that the CST made to the Committee—it has said that it agrees that the time is right to take school support staff negotiations out of the local government umbrella.
I know from representing school support staff workers in the past that they are some of the lowest paid workers in the public sector. I have represented some—primarily women—who have been forced to resort to food banks and payday loans to make ends meet, but they often still dip into their own pockets to provide educational essentials to children who do not have enough to get by. That record has led school support staff to be reclassified as being in low-paying occupations, which should really be a badge of shame for us. The logic of live and let be, and of deregulating and letting a thousand flowers bloom across schools, has not worked, and I would be interested to hear what the Opposition have to say on that.
Sir Ashley Fox (Bridgwater) (Con)
The hon. Gentleman says that the great educational experiment has not worked, but would he not acknowledge the significant improvement in our children’s ability to read, write and do mathematics over the past 14 years? Scores in the programme for international student assessment show that standards of reading, writing and mathematics have improved enormously in England—although they have regrettably fallen in Scotland, for reasons we can imagine. I am really proud of the achievements of the coalition and later Conservative Governments in improving educational standards. The freedom granted to academies—the freedom to innovate and to employ staff on the terms and conditions that they wish—has been critical in that, but the Government are rolling back those freedoms. Does the hon. Gentleman acknowledge the educational achievements of the past 14 years?
Laurence Turner
That was quite a generous amount of time for an intervention. The hon. Member may wish to go back to the record, because the point I made was that the experiment over pay and terms and conditions has failed. The challenge to the Opposition was: do they recognise that there is a serious problem with school support staff remuneration and contracts? If they do, what are their proposals to fix it? I would be willing to take a second intervention on that point.
Greg Smith
Much as the hon. Member for Chippenham said, this is about political choices. If this new Labour Government, six months in, wish to make a political choice to fund schools to pay support staff more, why do they not make that political choice and make that money available? We all want people to earn more, to get more in their pay packet and to be richer.
Laurence Turner
I think we have it there: the Opposition do not see this as a political priority. They chose not to take steps or to put forward meaningful proposals to raise the employment standards of school support staff. My challenge was: do they have any proposals for this group of workers, particularly in light of the Low Pay Commission decision? We have not heard an answer.
Greg Smith
I am glad the festive spirit is alive and well, but I remind the hon. Gentleman—there is no sugar coating it for Opposition Members—that the Labour party had a thumping victory in July. There is no general election on the horizon, and there is little chance of any change of Government before 2029, so it is on the Labour party to make political choices for the next four and a half years. Will the hon. Gentleman do that, or is he just going to deflect back to the Opposition?
Laurence Turner
I doubt I am going to do it personally; as with all these things, it is a collective endeavour. The hon. Member asked whether the Government are going to do this, but they are doing this—it is in the Bill. I ask again: what is the Opposition’s alternative? We are yet to hear it.
It is worth reflecting on the nature of these review bodies—not that this is a pay review body; it is a negotiation body—and the way in which we establish new agreements, because these things do not happen quickly. I think that the establishment of “Agenda for Change” in the NHS took seven years from initiation to completion. That exercise took a long time, but I do not think anyone would seriously argue for going back to the plethora of terms and conditions, and the mismatch between different grades of workers, that existed before, which created serious equal pay liabilities. That is the situation that we inherit in respect of school support staff.
These things do take time. If the shadow Minister goes back to the record of the original school support staff negotiating body—from 2009 to 2010—the progress made in that relatively short time was not on establishing the new pay system, but on drawing up model role profiles and moving towards a national handbook for terms and conditions. Those measures would be hugely welcome today. In fact, the Conservative Government acknowledged that some the school support staff negotiating body had done some important work during that time. They were on record as saying that there was a clear case for carrying forward some of it, but that never happened, and we have been left with an absence in that area of policy for almost 15 years. The changes to pay will be hugely welcome when they come. It will be a negotiation, so the outcomes will be a matter for the parties represented on the negotiating body, including the Department for Education.
We must go back to the problem: schools are finding it increasingly difficult to recruit and retain skilled school support staff. A number of private sector employers, including supermarkets, are increasingly offering term-time only contracts, with the intention of attracting people out of schools and into alternative roles. Freedom of information requests show that, where data is held, teaching assistant vacancy rates run at around 10%. That is having a real impact on the ability of schools to deliver inclusive education, which is a shame.
Nick Timothy
On schools’ ability to deliver, my hon. Friend the Member for Bridgwater asked the hon. Gentleman a moment ago to acknowledge the significant rise in the performance of English schools in the PISA rankings and other international comparative studies. Will he clearly say whether he acknowledges or denies that rise?
Laurence Turner
That is a direct question. We could talk about the way the PISA rankings are constructed.
The Chair
Order. We are not going to talk about that; we are going to talk about the Bill.
Laurence Turner
That is fine—I think that applies to both the intervention and the response. A direct question had been put about whether there is an alternative proposition on pay and terms and conditions, which is the matter we are considering today. I hope we will have an opportunity to talk in much more detail about the matters the hon. Member for Bridgwater raised, but the Opposition could not answer that direct question.
It is a shame that there is not more agreement on what is a very real policy problem. We have a serious—dare I say it—road-tested proposal in the Bill to reinstate the school support staff negotiating body. I am none the wiser about what measures the Opposition propose, but it is important that the clause be part of the Bill.
The Chair
Order. Obviously, education matters are relevant to the context of the discussion, but this is not a debate about education policy as such.
Uma Kumaran (Stratford and Bow) (Lab)
It is a pleasure to serve under your chairship, Mr Mundell. I refer Members to my entry in the Register of Members’ Financial Interests and to my membership of GMB union. I note the comments that you have made, but if I may I will just respond to the shadow Minister, who talked about the previous Conservative Government’s record. I draw his attention to an article published by the London School of Economics that said that England was an outlier among OECD countries, having both lower numeracy and literacy levels among school pupils.
Nick Timothy
Does the hon. Lady accept that it is not just the PISA rankings that show great advances in achievement in English schools, but the TIMSS—trends in international mathematics and science study—report published last week? That report said exactly the same thing: English schools are ahead of any comparable western country.
The Chair
Order. I am sure you did not wish to do it, Mr Timothy, but we are going down exactly the opposite route to the one I suggested. Let us stick to the Bill.
Uma Kumaran
The school support staff negotiating body—to stick to the Bill—is an important part of the Bill and will help to ensure standardised fair pay and employment terms across the board, addressing not only local but regional disparities.
School support staff make a massive contribution to the running of our schools. Just last Friday, I visited the Odessa school in Forest Gate in my constituency, which has an above-average intake of SEND pupils, and I saw at first hand the contribution the support staff made. That is why the Bill, and this clause, are so important—because those staff, too, deserve to have their contributions properly recognised through a negotiating body. At present, their job profiles are out of date, opportunities for professional development are poor and the work they do often goes largely unrecognised or unnoticed. The SSSNB can play a major part in tackling the recruitment and retention crisis across our schools.
I do not think anyone could look at our current approach to school staff and say it is a functioning system—that is certainly not what I hear from teachers when I visit local schools. Local support staff have told me the hardships they are under, and the TUC has shared a report with us showing that one in eight workers use food banks, a quarter take second jobs and half are actively looking to leave their role because they cannot make ends meet.
The attitude—which some may call neglectful—that we have had towards school support workers due to the approach taken by the last Government has sent a clear message that they simply are not valued. By re-establishing the school support staff negotiating body, the Bill will change that. I therefore commend the clause to the Committee.
Sir Ashley Fox
It is a pleasure to serve under your chairmanship, Mr Mundell. We are discussing clause 28 and schedule 3, and the hon. Member for Birmingham Northfield asked what the Opposition’s proposal would be. Well, nothing needs changing—the clause and schedule are completely unnecessary. I say that because it is my belief that the way the education system in England is delivered—mostly by academies—is a successful model. The Government’s proposals will harm our education system because they will take freedom away from schools and academies. There is a fixed amount to be spent on education, and the governors of schools and academies are best able to decide where those resources are allocated.
The hon. Member for Birmingham Northfield told us it was unfair that some teaching assistants have lower pay than others and that their terms and conditions are not identical. He also said it was difficult to retain and recruit teaching assistants. If that is the case, the governors of a school or the leaders of an academy can pay more to recruit the staff they need.
What we see from the Government is a belief that Whitehall knows best. They intend to centralise terms and conditions and will try to specify how much each teaching assistant in each school will work, because that suits their political agenda and the agenda of the trade unions that pay for their election campaigns.
Laurence Turner
Why does the hon. Gentleman’s argument against central direction-setting not apply to teachers? Is he arguing for the abolition of the School Teachers Review Body?
Sir Ashley Fox
Teachers are different because teaching is a profession that should certainly agree not to strike on pay and conditions, in return for the provision of the pay review bodies, which should play an integral part in ensuring that children’s education is not disrupted by industrial action. I would be happy to grant academies the freedom to pay a little more or less for scales, although perhaps that is not currently possible. I want the maximum freedom granted to academies and schools because, fundamentally, I believe they are best able to allocate the limited resources.
As my hon. Friend the Member for Mid Buckinghamshire said, if the Government really wanted to raise pay and improve conditions for teaching assistants, it is in their power to increase substantially the amount of money available for schools. They choose not to do that, but instead say that schools must stick to certain parameters on pay and conditions that will not enable schools to deliver the best education for children.
It is important that I talk briefly about the enormous improvement in educational standards for our children, which has been enabled by the freedom that academies have been granted. Clause 28 and schedule 3 start to roll back those freedoms. My fear is that this is the start of a process in which we will see educational standards in England deteriorate.
Laurence Turner
I thank the hon. Gentleman for giving way a second time. He describes a picture of extraordinary success. Classroom-based support staff spend the majority of their time supporting SEND learners. Does he regard the SEND system as a success?
Sir Ashley Fox
I am trying to think of how clause 28 and schedule 3 relate to SEND education, and I am struggling. I do not believe that the SEND system is a success, and I do not think that more central control is the way to solve that. In fact, one of the problems is that every time there is a problem, we in Parliament and Whitehall think, “The solution is a directive from above. That will sort out the problem.” That is precisely the model that the Government are adopting in clause 28 and schedule 3: “There’s a problem with low pay, so we will set up a process in London that will help matters.” That is not true at all.
I hope we can all agree that the purpose of spending money on education is to improve the life chances of our children. How are resources allocated? Are they best managed on a school basis or an academy basis? Or are they best decided in London? I argue that they are best decided on a school or an academy level. As I say, I fear that clause 28 and schedule 3 are the beginning of a process in which we will see more and more central control exerted over schools, and that that will lead to worse outcomes for our children.
Justin Madders
I will respond in the strict terms that you have directed, Mr Mundell. I also point out to Members that an education Bill will be presented today. So there will be an opportunity for the wider debate that Members are keen to have, when that Bill gets its Second Reading in due course.
Nick Timothy
I will avoid the temptation to start to read out the PISA statistics. It is important that the Bill that is published today is seen alongside this Bill, because together they chip away quite substantially at the academy freedoms that have been behind school reform. It would be good to hear the Minister acknowledge that fact.
Justin Madders
Of course, the Bill has not been published yet, so we cannot stray into that. We may be able to get on to it this afternoon, but we are trying to help some of the most poorly paid people in our society, who do such an important job. My hon. Friends the Members for Penistone and Stocksbridge, for Birmingham Northfield and for Stratford and Bow all talked about how important teaching assistants are, particularly in supporting those with special educational needs. My hon. Friend the Member for Birmingham Northfield was right that it is shameful that the Low Pay Commission has now deemed teaching assistants to be part of the low pay environment. We are determined to address that, which is why the reinstatement of the SSSNB is an important step.
Let us reflect on some of the evidence that we have had—for example, the GMB evidence. Andy Prendergast said:
“we see increasingly more pupils with special educational needs go into mainstream education, and they need that additional support.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 132, Q136.]
Some of those staff do detailed things such as phonics, supporting pupils with special educational needs and disabilities, and help to deliver classes.
I take the point that has been made about the NJC being an inappropriate way of evaluating and assessing job value. It is clear—indeed a number of other pieces of written evidence have supported our assertion—that the NJC is not the right vehicle for assessing teaching assistants’ pay. We believe that the SSSNB is the way ahead.
The hon. Member for Bridgwater talked about this being a centralising move. Of course, the SSSNB will comprise mainly employers and employee representatives. It will not be a Whitehall-dominated machine.
Sir Ashley Fox
But to the extent that the SSSNB will decide the terms and conditions of assistants in Bridgwater, Mid Buckinghamshire and Birmingham Northfield, and those conditions will apply to all teaching assistants, regardless of the school’s or academy’s view on the subject, it is a centralising measure, does the Minister not agree?
Justin Madders
It is a necessary measure because, as we have seen, teaching assistants and school support staff have suffered in recent years. The point that the hon. Member for Chippenham and several other Members made about funding is correct. It will, of course, be incumbent on future Governments to ensure that any proposals that come forward are affordable. It should be noted that the recent Budget put some additional funds into special educational needs.
Let us look at why this measure is needed. We know that there is a chronic issue of low pay, a lack of career progression and damaged recruitment and retention among school support staff. A survey of teaching assistants found that 27% were considering leaving education altogether—surely we need them to stay—while 60% cited low pay as a reason for leaving, and 40% said that lack of opportunities for progression was. Eighty-nine per cent of schools said they found recruitment difficult, particularly in respect of teaching assistants, and 78% said they found that group hard to retain. There were similar figures in terms of the difficulties with the recruitment and retention of teaching assistants with SEND specialisms.
We are setting up this body to recognise that these people do a critical job in our education system and that they are not properly represented at the moment. They do not have a proper voice, and they do not have a proper mechanism to ensure that the valuable work they do is properly measured, remunerated and recognised. That is why the SSSNB is so important.
Question put, That the clause stand part of the Bill.
Employment Rights Bill (Fourteenth sitting)
Tuesday 17th December 2024
(4 days, 18 hours ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 December 2024 - (17 Dec 2024)
The Committee divided: - Ayes: 3 / Noes: 12 - Question accordingly negatived.
The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 168, in schedule 3, page 115, leave out from the beginning of line 15 to the end of line 31 and insert—
“(1) In the case of staff employed under subsection (3)(b) of section 148C, matters within the SSSNB’s remit are limited to the establishment of a framework to which employers of school support staff must have regard when discharging their functions.
(2) A framework under subsection (1) must include information on—
(a) the remuneration of school support staff;
(b) the terms and conditions of employment of school support staff;
(c) the training of school support staff;
(d) career progression for school support staff; and
(e) related matters.
(3) When taking any action related to the matters in subsection (2), an employer may disregard the framework only in exceptional circumstances.
(4) For the purposes of subsection (3), the definition of ‘exceptional circumstances’ shall be set out in regulations.
(5) In the case of staff employed under subsection (3)(a) of section 148C, the matters within the SSSNB’s remit are matters relating to the following—
(a) the remuneration of school support staff;
(b) terms and conditions of employment of school support staff;
(c) the training of school support staff;
(d) career progression for school support staff.
(6) The Secretary of State may by regulations provide that, for the purposes of subsection 5—
(a) a payment or entitlement of a prescribed kind is, or is not, to be treated as remuneration;
(b) a prescribed matter is, or is not, to be treated as relating to terms and conditions of employment of school support staff;
(c) a prescribed matter is, or is not, to be treated as relating to the training of school support staff;
(d) a prescribed matter is, or is not, to be treated as relating to 30 career progression for school support staff.”
This amendment would change the matters within the SSSNB’s remit in relation to academy staff, limiting it to the creation of a framework to which academy employers must have regard in all but exceptional circumstances.
It is a pleasure to serve under your chairmanship, Ms Vaz, at the Committee’s last sitting before Christmas—let us make it a memorable one. [Laughter.]
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
They are all memorable.
Greg Smith
Some are definitely more memorable than others.
Amendment 168, tabled in my name and that of my hon. Friends on the Conservative Benches, would change the matters that are within the remit of the school support staff negotiating body in relation to academy staff, limiting it to the creation of a framework to which academy employers must have regard in all but “exceptional circumstances”. I am sure that Government Members will agree to a moderate amendment in the spirit of what they seek to do.
As I said in the debate on clause 28, which introduces schedule 3, in 2010 the then Conservative Secretary of State for Education, Michael Gove, rightly abolished the school support staff negotiating body. The Conservative Government had a clear and principled reason for that: employers should have the flexibility to set pay and conditions locally, rather than having a top-down, centralised framework imposed on them. Instead of giving employers the flexibility to do what works best for them, this Government are establishing a national terms and conditions handbook on training, career progression routes and fair pay rates for school support staff.
These things can sometimes get taken out of context, so I want to be clear: we are not advocating for a race to the bottom on pay and conditions for school support staff, but we believe that the current arrangements are working well and have allowed for innovation that is beneficial for pupils—real children up and down the land receiving their education. Our worries about the re-establishment of the school support staff negotiating body are principally that we believe that school employers must retain a degree of freedom and flexibility to recruit, develop, remunerate and deploy their staff for the benefit of the children in their community—their setting—to achieve their particular aims from a school improvement and inclusion perspective.
Children with special educational needs and disabilities rely on schools’ ability to deploy staff to meet their individual needs, and stifling innovation in staffing to meet those needs would be the greatest barrier to reforming the SEND system. In particular, ensuring that mainstream provision can meet the needs of SEND children requires, in its very essence, an innovative use of support staff resource.
As I have said in previous debates, I salute all support staff, whether they support children with SEND or other- wise. They are great assets to every school who do an enormous amount of good work for every child they work with on a daily basis—I am thinking of the example given earlier by the hon. Member for Birmingham Northfield, and the way in which they interact with and support my own children in their schools in Buckinghamshire. They are hugely important, but this is about ensuring local decision making, local flexibility and the local ability to shape what is right for children’s education, development and future life prospects.
For those reasons, we believe that the statist approach created by the Bill is fundamentally misguided, and that children, particularly those with additional needs, could be worse off because of it. All school employers operate in a competitive market to attract and retain staff. I accept that in the education world it is currently particularly difficult to recruit teachers and support staff—there is no doubt that that has been a challenge for a considerable number of years—but, particularly in relation to support staff, schools compete with other local establishments, including in the private sector, and employers in local markets. Incentives to attract and retain staff are needed.
Our concerns with the re-establishment of the school support staff negotiating body do not end there. Academy trusts sign a funding agreement with the Secretary of State that gives them certain freedoms, among which is the ability to set pay and conditions for staff. What the Government are trying to do with the Bill is therefore to unpick a clear, established and positive freedom that academy trusts have. To take that away from them would be a retrograde step. The Bill explicitly overrides that contract. As for school support staff, it states:
“Where the person is employed by the proprietor of an Academy, any provision of the Academy arrangements relating to the Academy has no effect to the extent that it makes provision that is prohibited by, or is otherwise inconsistent with, the agreement.”
His Majesty’s loyal Opposition worry that this is just the start of the Government’s longer-term mission to unwind academy freedoms, and that it shows that they fail to understand how to support educational excellence.
The data on key stage 4 performance recently released by the Department for Education shows that academies and free schools tend to perform better than other types of school. We therefore believe that it would be counterproductive to unwind one of the key tenets that has led them to where they are today. There is always room for improvement, but when things are travelling in the right direction it is foolish to put barriers up. Our amendment would change the SSSNB’s remit so as to create a framework that academies must have regard to but are not compelled to follow. That seems a reasonable compromise, and I ask the Government to consider it carefully.
In this context—we are all creatures of our own experience—I think particularly of examples from my constituency of Mid Buckinghamshire and the county of Buckinghamshire more widely. I think I brought up this example in relation to other sectors in earlier Committee sittings. Because the county of Buckinghamshire borders London boroughs, rigid pay scales make recruitment an even greater challenge, because of the London weighting issue. Many teaching assistants, school support staff and, frankly, staff in any sector—we will come to adult social care later in the Bill, and care workers are equally affected—who live in Buckinghamshire and perhaps want to work there feel compelled to go and get the extra money that the London weighting would bring by applying for a job in, say, the London boroughs of Hillingdon or Harrow. Nobody can blame them for doing that, but it creates a recruitment challenge for Buckinghamshire, Hertfordshire, Essex, Kent, Surrey and other London-bordering counties.
The amendment seeks to correct for what the Government are trying to do with schedule 3, and so to maintain the freedom that allows academies in Buckinghamshire and those other counties to dynamically adapt their pay and offering for school support staff and counter those challenges. It would mean that schools in Buckinghamshire that want to employ people who want to work in Buckinghamshire can get them on board, rather than there being a false incentive that forces people to take jobs in one of the London boroughs and secure the London weighting that goes with them. That is one practical example of why I believe that academies, and free schools for that matter, should have that core freedom and flexibility to get it right for their children.
Laurence Turner (Birmingham Northfield) (Lab)
It is a pleasure to serve under your chairship, Ms Vaz.
I think I am correct in saying that Buckinghamshire is one area that has opted out of the National Joint Council, so I recognise that the shadow Minister brings a particular perspective to the debate, but the final line of the amendment states that
“a prescribed matter is, or is not, to be treated as relating to 30 career progression”.
I assume that is just a typographical error, but it would be good to have that point clarified.
More widely, I do not think the amendment is necessary. In some ways, it is quite loosely worded. It seeks to put in the Bill a reference to a framework, but a framework is not defined and that would not be clarified through later regulations. Therefore, I am not sure that the wording before us would necessarily resolve the Opposition’s aim, and the meaning of “framework” is probably not something that we would want to have out in the courts.
On the wider issues, the shadow Minister said that the proposals in the Bill would overwrite the funding agreements, but part of those agreements is a requirement for academy employers to have regard to the academies handbook, which is altered as part of the normal course of public policy, so such variations are not especially new. As I say, I do not think that what is in front of us would achieve the Opposition’s aim. The reinstatement of the school support staff negotiating body was a manifesto commitment. It would be problematic to say that a manifesto commitment could not be implemented because funding agreements were already in place. It is quite proper for the Government of the day to pursue their public policy objectives in this manner.
I would like to correct the record. In the morning sitting I said that freedom of information requests had established that, where data was held, the vacancy rate for teaching assistants was 10%. The actual figure is 18%. I just wanted to put that higher number on the record.
Nick Timothy (West Suffolk) (Con)
I should warn the Committee that I have a frog in my throat and a bit of a cough, but I think it is known that I used to work for the former Prime Minister, Baroness May, and I have seen how to get through a speech with a cough.
The amendment is important because it seeks to protect one of the academy freedoms that have made English schools the best in the west. I say English and not British schools advisedly, because education is devolved and, in Scotland and Wales, standards have gone not forward but backward. In Wales, the average pupil reaches about the same level of attainment as the average disadvantaged pupil in England, yet it is the Welsh model that the Government seem to be intent to follow. So the amendment is all about seeking to protect the academy freedoms behind the success of the school reforms of which the Conservatives are rightly proud.
According to the programme for international student assessment—or PISA—rankings, English primary school- children are the best readers in the west. On 15-year- olds, they say that schools in England are 11th in the world in maths, up from 27th in 2009; 13th in science, up from 16th; and 13th in reading, up from 25th. That is an unqualified success story. Yet I am afraid the Education Secretary and Ministers in the current Government repeatedly claimed that standards fell under the Conservatives.
Laurence Turner
The hon. Member is making an interesting argument. I am keen to tease out the evidence for the assertion that there is a relationship between the decentralisation of pay and terms and conditions, and performance. Can he explain why, then, the overwhelming majority of academies subscribe to the National Joint Council green book terms and conditions? Is that not, in fact, an argument for collective bargaining as a handmaiden to academic success?
Nick Timothy
I am doing my best to remain in scope, Ms Vaz.
If I may say so, the hon. Member asks a characteristically precise and intelligent question. I suggest that members of the Labour party who want to move away from academy freedoms look first at what Labour figures such as Tony Blair and Lord Adonis say about why those freedoms matter.
It is a bit like with the Bill overall: just because some employers choose to hit certain standards, that does not necessarily mean that those standards must then be imposed in a uniform manner through legislation. The point about academy freedoms is that, a little like labour market flexibilities, they are cumulative. If we look at the list of academy freedoms—whether in respect of the terms and conditions that schools are able to employ staff on, the relationship with councils and how admissions are decided, or the policy of having to respond to school failure through academisation—we see that they are all being picked away at, partly through this Bill and partly through the Children’s Wellbeing and Schools Bill, which we discussed briefly earlier and is being introduced today. While that Bill has not been published, as the Minister corrected me earlier, there is a description on gov.uk of the measures in that Bill, and it is quite clearly a reversal of policy when it comes to academisation. The reason that school reform has worked over this time is not just because of particular measures about things such as the promotion of a knowledge-rich curriculum, or didactic teacher-led instruction, or anything like that. Those are the means by which lots of schools have chosen to use their academy freedoms in order to improve standards—
The Chair
Order. This is the Employment Rights Bill, not an education Bill. I do not know how long you are going to continue, but could we move to a possible wind-up, Mr Timothy?
Nick Timothy
Perhaps we could, but I am trying to make the argument that, in the end, when we are talking about employment in the public sector—when we are talking about terms and conditions and things like that—yes, these things are obviously of huge importance to the employees themselves, but they are also important regarding the way in which employers set themselves up. The purpose of a school is obviously to educate our children, and the ultimate objective is to drive up those academic standards. That is the context in which we are discussing these particular academy freedoms and what this Bill therefore does.
It is the case that free school and academy founders have been in the vanguard of reform, precisely because they have been able to use their freedoms from local council control—freedoms to develop the curriculum in their own way, to set things such as the school day and term dates, and to decide the pay and conditions for their staff themselves. We can see that in the data that is published: it is not just about things such the PISA rankings; it is also about things such as the trends in international mathematics and science study, an international comparative study, which was published a couple of weeks ago and showed that, despite the pandemic, English schools have actually improved and have outperformed almost all western countries.
It is also the case that the progress data that the Government have published demonstrates that the best schools in the country have benefited from exactly those kinds of freedoms. The best school in the country, looking at performance data, is Michaela, which is a free school. Free schools and academies far outperform normal maintained schools when it comes to that data, and that is because of the freedoms that we are talking about trying to defend through our amendment.
I know that this is a debate for another time, but I am very disappointed that the Government have cancelled the next wave of free schools, that they have weakened things such as Ofsted and its inspection framework, and that they want to water down discipline policies and so on. I am very disappointed as well that, through measures such as this, the Government are watering down the academy freedoms that have done so much to make our schools the best in the world.
Sarah Gibson (Chippenham) (LD)
It is a pleasure to serve under your chairship this afternoon, Ms Vaz. I share the passion of the hon. Member for West Suffolk for education—as I stated earlier, both my parents became headteachers before retirement—so I appreciate that he is very concerned about the state of education in our country. However, I am very concerned that this amendment is in danger of creating a slightly two-tiered system between maintained schools and academies, whereby maintained schools would have a certain level of protection for their staff that would not be there in academies.
If this change is so important for the academies, my question to the hon. Members for Mid Buckinghamshire and for West Suffolk would be that, if this is good for academies, surely it is good for maintained schools? In that case, why are we not arguing that this whole Bill should be changed, and that this whole clause should be taken out and the change therefore applied to all schools?
I am also concerned about the separation of requirements for one school and not for the other.
Greg Smith
Does the point the hon. Lady is trying to argue go to the very reason for having different types of school in the system? Academies were set up by the last Labour Government for a reason, which was to have additional freedoms such as those the amendment defends. Free schools were set up by the coalition Government, of which the Liberal Democrats were part, to have a different set of freedoms—in that sense, parental and governing body freedoms that are over and above everyone else. If we were to make all schools the same, surely that is an argument for one style of school alone.
Sarah Gibson
I appreciate the clarification. The point of free schools and academies was to have a diversity of education. A diversity of employment rights, which is what we are discussing, is a different element. If we end up with a situation where I, as a member of support staff, am looking at two jobs in my region, and one is with a maintained school and one is with an academy, and there is protection for one, I can only see that as detrimental to our academies. I am unable to support a provision that separates those two types of school.
Greg Smith
I am grateful to the hon. Lady for giving way once more. She is presuming that the academy would be offering a lower rate, but in fact, it might be the case that, in order to attract staff, the academy offers something much higher.
Sarah Gibson
I appreciate the point, and the shadow Minister is quite right: I was assuming that without support there might be such a situation. However, that does not detract from the fact that in most situations, having a body that someone can go to that is independent from their employer has to be a supporting situation. Nobody would go to that body for support if they were being paid above the average in their area.
Laurence Turner
Is it the case—perhaps this gets to the heart of the matter—that the proposed way that the SSSNB would work is that a matter would be referred to a body, an agreement would be reached, and it would be passed back to the Secretary of State to write it into regulations? Nowhere in the Bill does it say that that would be a ceiling. If it was something that was negotiated between the parties, it would be a floor that could be improved on. There is nothing in the Bill to stop that happening.
Sarah Gibson
I appreciate the clarification. That makes perfect sense—it would be unlikely that a body representing employees would create a ceiling, so I cannot help feeling that that issue is not likely to come up. With that in mind, I am unable to support the amendment.
Justin Madders
It is a pleasure to see you in the Chair this afternoon, Ms Vaz, and as always I refer to my entry in the Register of Members’ Financial Interests, and my membership of the GMB and Unite trade unions.
The shadow Minister will not be surprised to hear that we are not going to accept the amendment, as it would drive a coach and horses through what we are trying to achieve. The remit in the Bill gives the negotiating body the scope necessary to negotiate and reach agreements on pay and conditions, and advise on training and career progression for all school support staff. The Secretary of State may then incorporate agreements reached in support staff contracts through secondary legislation. As has been pointed out, that would be a floor. It will be possible for schools to innovate above that, and the detail will be worked out in due course. This is about creating a baseline for terms and conditions, not a ceiling.
As the shadow Minister knows, as roughly half of the 24,000 state-funded schools are academies the amendment would seriously undermine the policy intention of the SSSNB. We believe that about 800,000 employees would be positively impacted by the Bill, but the amendment would mean that school support staff in academies would have no voice, and no opportunity to raise their concerns about pay, career progression and training prospects, which we know are real issues, particularly in the SEN sectors. There would no vehicle for them, because they would not be part of this body. Of course their employers would have to have regard to what the SSSNB decided, but there would be no legal requirement for those terms to be incorporated into individual contracts. I think that misses the point of what we are trying to achieve here. I do not accept that there is a connection between good educational outcomes and low pay for teaching assistants, which seems to be the thrust of the argument from the Opposition. As my hon. Friend the Member for Birmingham Northfield said, the references in the amendment to a framework are not particularly helpful, as it is not defined and would create more confusion. We should say that it is not just academies that can demonstrate excellence in innovation. All schools have the ability to do that, and there will be room for all schools to continue to innovate under the legislation and meet their local recruitment needs.
Greg Smith
I listened very carefully to what the Minister and the hon. Member for Birmingham Northfield said about amendment 168. I was open to dialogue on it to see if we can make it stronger and improved. Its proposed new subsection (2) sets out all the information we would expect to see in such a framework. There are five parts including the remuneration of school support staff; the terms and conditions of employment of school support staff; the training of school support staff; career progression for school support staff; and—the lovely catch-all phrase that drafters love to put in—all related matters. I would say that it is pretty clear what we have laid out.
To get to the nub of the argument, this is not about some sort of race to the bottom. It is not about, as the Minister asserted, arguing for low pay. That is not what we are doing at all. This is a point of principle about support for the academy system, which was brought in by a former Labour Government, and support for free schools, which was brought in by a coalition of the Conservatives and Liberal Democrats. The three main parties in this House on that basis are broadly aligned, unless anyone has radically changed their mind—perhaps they have, and 2015 probably did focus some minds.
This is a point of principle of diversity in the education system, and central to the diversification of offer is that those establishments, in this case academies, have the freedoms to decide things themselves, locally. In this case, it is on pay and terms and conditions but, wary of the fact that I do not want to go out of scope, it can be on other things as well. To take that away would be the retrograde step that I spoke about. It would undermine academies, and it would undermine the very point of having choice and the diversity of offer in the education system for parents.
Justin Madders
The shadow Minister is talking about choice, but the Bill does not remove any academies from the current system. Will he confirm that?
Greg Smith
No, of course it does not remove academies from the system, but it does take away a freedom and power that all those wonderful academies, many in my own constituency and I am sure some in the Minister’s, currently enjoy to be able to set their educational offer, including the power of who they recruit and on what basis they recruit them. I come back to the point I made when I intervened on the hon. Member for Chippenham; if we are going to just make everything the same again, there needs to be an honesty about actually advocating that from the Government, from the Liberal Democrats or from whoever it might be. I value and welcome the choice that we have in our education system, and this is one of those freedoms that makes that choice possible.
Michael Wheeler (Worsley and Eccles) (Lab)
Will the hon. Gentleman give way?
Sarah Gibson
I could not agree more with the hon. Gentleman about the importance of diversity of education. One of the things that academies and free schools have done very well is cater for children with learning difficulties, whether they are dyslexic or autistic, or doing all the other things that probably many of us in this room have benefited from. However, basic rights as an employee of an institution and the right to protection and a body to go to if somebody feels that they are being unfairly treated have little to do with diversity of education. I cannot help feeling that we are conflating the two issues of employment rights and educational standards, which do not necessarily go hand in hand. Paying staff well does not stop an institution having a diverse and fantastic form of education.
Greg Smith
I think the hon. Lady has potentially misinterpreted my remarks. I am not directly conflating the pay of staff with the educational outcome: I am saying that there are academies that may well be able to structure their own affairs in the way they recruit, pay and set terms and conditions so that that is actually more favourable. That is one of those fundamental freedoms that make academies—and free schools, for that matter—different and able to offer the diversity that we both seem to celebrate, particularly in supporting those children who need additional support to whatever degree in that setting. Someone else was waving at me a minute ago.
Michael Wheeler
I am more than happy to wave in a friendly manner in this festive sitting. As usual, I draw attention to my declaration in the Register of Members’ Financial Interests of my membership of the GMB and USDAW. We have heard the phrase “academy freedoms”, with a lot of emphasis put on freedoms. We have also heard the Minister confirm that diversity is not being lost in terms of educational choice. We have heard that teaching assistants, according to the Low Pay Commission, have unfortunately been defined as low-paid workers. Does the hon. Gentleman accept that the only “freedom” —I use inverted commas there, for the sake of the record—being lost is the ability of academies and free schools to pay poorly?
Greg Smith
I understand the point that the hon. Gentleman makes, but I caution him against this presumption that those academies want to pay poorly, somehow mistreat their staff or set pay rates so low that most of us would think that it was an absurdity. I am not sure that they do; I am not sure that anybody wants to pay their staff as low as they can get away with. Those academies often advertise and appeal for staff, be they teaching assistants, teachers, ancillary staff or whoever, in a manner that actually makes them more attractive than the other offerings. That is part of the freedom to set up the school in the way that they wish and to ultimately deliver the best possible outcome for the children they are teaching and preparing for their future lives.
I come back to the point that if we start stripping away the freedoms and rights of those establishments to have local control, in this case around employment, I do not see any other natural conclusion than trying to bring our entire educational establishment back into being one single style of education. There may be some on the left—I say “the left” broadly; I am not just looking at the Labour party—who would welcome going back to simply having the secondary modern or whatever it might be. To be fair to her, the hon. Member for Chippenham agreed with me on the point of diversity and choice in education. It is a huge strength and a benefit to all children in this country that we have that level of different offering and choice in our educational establishment, and it has made our country fundamentally better. For total fairness, I repeat the fact that it was the last Labour Government who introduced academies.
Nick Timothy
I reassure my hon. Friend that the danger he is talking about is not just hypothetical. Special advisers in the Department for Education have briefed the newspapers, calling free schools a “Tory vanity project”. I find that absolutely appalling, as somebody who believes—
Nick Timothy
Yes, and free schools have the academy freedoms that we are talking about undermining with this and other legislation. I just wanted to draw that example to my hon. Friend’s attention.
Greg Smith
I am grateful to my hon. Friend; he is always reassuring. He raised an important point. Given that, as he highlighted, free schools enjoy the same freedoms —they are specifically referred to in amendment 168—as academies, I am worried that the Government’s attitude to free schools indicates that they are rowing back on support for them.
Justin Madders
The shadow Minister keeps referring to freedoms, but does he accept that the only freedom that would be given to academies by virtue of this amendment would be the freedom to pay their staff—I am not saying that they would—lower than the national terms and conditions?
Greg Smith
I come back to this point of principle: either we have autonomous bodies that can make their own decisions or we do not. If the Government’s answer is that we do not, I certainly understand why they do not want this amendment, but I do not understand why they persist with their support for that which they created in the first place—the academisation of so many schools—and resist making the more straightforward argument for a one-size-fits-all education policy. I hope they do not adopt such a policy, because of the progress that the Labour party made through academisation in the first place. However, that is the natural conclusion of what the Minister is saying.
Alex McIntyre (Gloucester) (Lab)
I refer to my membership of the Community and GMB unions. In the break, the shadow Minister challenged me, saying that I had been very quiet this morning—I was feeling festive, but perhaps I am feeling less festive now. Let us take the analogy about choice that he is trying to set out and put it in a slightly different context. Private limited companies are often seen as the drivers of growth, and we have heard lots about that from the Opposition. Those companies have lots of freedoms to make decisions and to invest where they want, but they are all subject to the national minimum wage. Is the shadow Minister suggesting that a national set of terms and conditions will remove academies’ freedom to make entrepreneurial decisions? I am interested to hear whether the Conservative party’s position is now that the national minimum wage should also be abolished.
Greg Smith
No. I did challenge the hon. Gentleman on his quietness in the morning sitting, and he has not disappointed this afternoon, but of course that is not the position of the official Opposition. The last Labour Government brought in the national minimum wage, but the last Conservative Government brought in the national living wage. We are absolutely committed to that, but it is a rule that applies equally and evenly across every sector in the economy. In schedule 3 and amendment 168, we are talking about a specific carve-out of an existing position for one specific sector.
Justin Madders
I beg to move amendment 65, in schedule 3, page 116, line 6, leave out “education”.
This amendment, and amendments 66, 67, 69, 70 and 71, make a minor drafting correction.
Justin Madders
Amendments 66 and 67, and 69 to 71, make minor drafting corrections to the clauses to remove the word “education” when referring to local authorities. This is necessary because of an error in terminology used in the Bill on introduction.
I will also speak to amendment 68. We know that academy trusts use a range of innovative practices to support staff in a range of roles. The sector and the workforce have evolved since the previous negotiating body for school support staff existed in 2009. That is why we intend to consult on the definition of support staff in scope and appropriate protections for staff in transitioning to the new arrangements. The consultation may bring to our attention staff in academy trusts who are not captured by the existing definition of support staff, working wholly at one or more academies, but who we think should be. Having the ability to broaden the scope, as well as to exclude staff types in secondary legislation, would give us more flexibility to respond to the consultation.
Greg Smith
As the Minister said, amendment 68 extends the definition of school support staff in the Bill to include people who do not work in an academy, but who are employed by the proprietor of an academy to carry out particular kinds of work, to be specified in regulations—it is our old friend, waiting for future regulations to be laid before the House—for the purposes of one or more academies. The other amendments in this grouping are minor drafting corrections, and we accept that. I merely want to put on record once more that had this Bill not been so rushed to meet the arbitrary political 100-day deadline, we might not be in this place, and we might have had greater clarity from the get-go. We accept, however, that these are fundamentally minor amendments that really should have been included at introduction.
Justin Madders
The shadow Minister’s comments are noted, and I commend the amendments to the Committee.
Amendment 65 agreed to.
Amendments made: 66, in schedule 3, page 116, line 8, leave out “education”.
See the explanatory statement for amendment 65.
Amendment 67, in schedule 3, page 116, line 10, leave out “education”.
See the explanatory statement for amendment 65.
Amendment 68, in schedule 3, page 116, line 13, leave out from “employment” to end of line 14 and insert “which—
(i) provides for the person to work wholly at one or more Academies, or
(ii) provides for the person to carry out work of a prescribed description for the purposes of one or more Academies.”
This amendment extends the definition of “school support staff” in new Part 8A of the Education Act 2002 to include people who do not work at an Academy but are employed by the proprietor of an Academy to carry out particular kinds of work (to be specified in regulations) for the purposes of one or more Academies.
Amendment 69, in schedule 3, page 123, line 31, leave out “education”.
See the explanatory statement for amendment 65.
Amendment 70, in schedule 3, page 123, line 33, leave out “education”.
See the explanatory statement for amendment 65.
Amendment 71, in schedule 3, page 124, line 13, leave out “education”.—(Justin Madders.)
See the explanatory statement for amendment 65.
Greg Smith
I beg to move amendment 123, in schedule 3, page 124, line 39, at end insert—
“(2A) Before making or revising arrangements under sub-paragraph (1), the Secretary of State must publish and lay before Parliament an impact assessment of the costs on the education sector of any proposed arrangements.”
This amendment makes a requirement from the Secretary of State to undertake an impact assessment of the costs on the education sector before making or changing arrangements related to the School Support Staff Negotiating Body.
The Chair
With this it will be convenient to discuss amendment 124, in schedule 3, page 126, line 9, at end insert—
“(1A) The report must include an assessment of the increased costs to the education sector of any pay and conditions agreements made in that reporting year.”
This amendment requires the annual reports of the School Support Staff Negotiating Body to include the cost of pay and conditions agreements.
Greg Smith
Amendment 123 requires the Secretary of State to undertake an impact assessment of the costs to the education sector before making or changing arrangements related to the school support staff negotiating body. I have already spoken, probably at greater length than anybody particularly wished me to, about our reservations over the re-establishment of the body—in particular the way that it will override the traditional academy freedoms that seem to trigger Government Members so much.
I am interested in what assessment the Secretary of State has undertaken about the current arrangements for pay and conditions for support staff, and in whether the Minister can provide concrete evidence about the shortcomings and how those would be rectified by re-establishing the school support staff negotiating body. In other words, is the policy driven by evidence or by ideology? The amendment asks for the Secretary of State to come clean about the costs of the proposed arrangements, not just to the schools budget but to pupils in schools.
We had some back-and-forth earlier about how, if they are to work, the changes made by the Bill need to marry up with the real-life pay settlements and budgets made available by the Treasury. Otherwise, the net result will be that schools will have to obey the rules as set out in the Bill without getting any additional money to pay for doing so. Who will suffer if the school is asked to do that? It will be the children and pupils, because of the number of textbooks, laptops, iPads or interactive screens and boards—all the things that are used in education—that the school can buy.
Laurence Turner
I am trying to understand what the shadow Minister means by cost to the education sector. Does he mean the running cost of the body itself or the cost of an agreement? If he means the latter, how could that possibly be accounted for when, as we have heard, any new pay scale is likely to be some years away and would be subject to negotiation?
Greg Smith
The answer is, of course, both. There will be a cost to the body and a cost to the individual education establishments—the academies, free schools and so on—that still fundamentally rely on a funding settlement. One pot of money can only go so far. I accept that the body itself will be separately funded, but the pay awards that individual schools would have to make will not. If schools are being asked to swallow the cost, they will have to find it within their budgets.
I am sure that I am not alone in having visited schools—other hon. and right hon. Members will have done so in their own constituencies—where headteachers say that they have to have this debate when setting their budget every year. Over the decades, Governments of all political persuasions have given them things to deliver and rules to follow but only one pot of money, so something has to give. If they are to follow the rules, the ones who suffer are children, through the equipment and books that the school is able to purchase.
The amendment is a reasonable one. It requires one of those impact assessments, so that we can all be absolutely clear. When we vote, in whichever way, on this Bill as it passes through Committee, Report and Third Reading, as well as ping-pong with the other place, we can be really clear about what these provisions mean on the ground for real schools and real children going through their education. As I think we all accept, that is so important to their future lives.
Amendment 124 requires the annual reports of the school support staff negotiating body to include the cost of pay and conditions agreements. We believe it is important that there is transparency over the additional costs and burdens that this new body will impose on school employers. What might those costs be? Will the Department for Education appropriately compensate school employers for them? I will not repeat the arguments that I made on amendment 123, but the point is fundamentally the same. The amendments are designed to probe the Government properly on what the measure will mean in the real world.
Laurence Turner
I want to come back on some of the points that the shadow Minister raised. I appreciate his clarification about exactly what information the Opposition are trying to tease out with amendment 124. I hope he does not mind me saying that the cost of any future settlement agreement is speculative in nature. We heard from the Minister earlier that part of the remit that Ministers will give the body will be about affordability and the funding available at the time. It will probably be several years in the future when that new pay scale comes into force, albeit that there is some good work that the SSSNB could be getting on with in the interim that would have very low costs for the sector.
We have some information about how much the body itself would cost. An answer to a written parliamentary question in 2011 put the estimated cost saving of abolishing the SSSNB at £1.4 million over the spending review period. That was about £350,000 a year. In today’s prices, we are looking at close to half a million. That is a very small fraction of a percentage of the Department’s budget, and it is probably an overestimate given that civil service wages have not kept pace with inflation over that time. The former education spokesperson for the Labour party, Andy Burnham, who was involved in the setting up of the original SSSNB, described it as a “low-cost panel”. That is exactly what we are talking about here. I hope that that provides some reassurance that amendment 124 is not necessary.
The SSSNB produced annual reports, which were published by the Government in the normal way. The Department for Education tracks the costs of school support staff pay increases. That information is made available, including to sector representatives, through the schools and academies funding group. I hear what the shadow Minister says, but I do not think these amendments are necessary because the information is unknowable or already available, or it will be made available in the normal course of business.
Sarah Gibson
For similar reasons as I was concerned about previous amendments, I feel that I cannot support this amendment. I think it is unnecessary to add more complications to the system on things that are probably already covered in other areas.
Justin Madders
I thank the shadow Minister for tabling amendment 123 and 124 and for raising these issues. The Department will assess the cost implications of the constitutional arrangements of the SSSNB prior to constituting it, but it would be disproportionate to require an impact assessment. My hon. Friend the Member for Birmingham Northfield referred to some costs; those costs have not necessarily been pinned down at this stage, but they are clearly below the level at which a formal impact assessment would normally be required. It is envisaged that the costs of the body will be limited to administrative expenses and fees, so we do not think that amendment 124 is necessary.
The Bill requires the constitutional arrangements for the SSSNB to provide for it to prepare annual reports; it allows the Secretary of State to specify the manner in which reports are published. Assessing the impact on the education sector of agreements reached will be important, prior to the Secretary of State’s ratification of any agreements. We anticipate that the Department for Education will undertake an assessment of affordability and impact, as it will be better placed to do so than the SSSNB itself. It is important to note that there will be employers on the SSSNB who will be part of the body making those recommendations, so they will have those considerations at the forefront of their mind.
Considerations of cost and affordability will be an important part of any discussions and negotiations that take place in the SSSNB. Annual reports are likely to set out the work undertaken by the body, but the exact detail of what will be in the annual reports will be agreed at a later date; I do not think that it would be appropriate to specify that in the Bill.
Greg Smith
I cannot remember a single time in the last Parliament when the then Opposition would have made the case that there was no need for an impact assessment. I put that to the Minister very gently as a point of principle that is specific to amendments 123 and 124. However, I understand the argument that he is making.
The Opposition still think that the Bill’s approach is flawed as to diversity across our educational establishments. We will not press our amendments to a Division now, but we reserve the right to revisit the matter when we come up for air on Report, once the Minister has had time to reflect on the implications of his policy. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the schedule, as amended, be the Third schedule to the Bill.
Justin Madders
As the Committee has discussed, clause 28 introduces schedule 3, which provides for the establishment, remit and functioning of the school support staff negotiating body. Paragraph 1 of schedule 3 will insert into the Education Act 2002 a new part 8A, which contains proposed new sections 148A to 148R.
New section 148A will reinstate the SSSNB as an unincorporated body. Reinstating the SSSNB will give school support staff the voice and recognition that they deserve as a crucial part of the school workforce. It will help to address the recruitment and retention challenges facing schools and will drive standards in schools to ensure that we give every child the best possible chance in life.
New section 148B sets out the remit of the SSSNB for remuneration, terms and conditions of employment, training and career progression of school support staff, and the powers of the Secretary of State to define what is or is not to be treated as falling within those categories within the regulations. This ensures clarity over the remit of the SSSNB and what can and cannot be referred to it by the Secretary of State. The remit will lead to a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.
New section 148C defines school support staff in relation to who they are employed by and their role. Support staff are defined as all staff, other than qualified teachers, who are employed by local authorities, governing bodies and academy trusts to work wholly at schools in England. The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Support staff employed by academy trusts are now included in the SSSNB’s remit, despite the shadow Minister’s attempts to persuade us otherwise.
It is crucial that the body have a remit for all state-funded schools in England to achieve greater national consistency, irrespective of the type of school in which support staff work. Roughly half of the 24,453 schools in England are now academies, compared with approximately 200 in 2009 when the body was previously established. New section 148B gives the Secretary of State a power to prescribe in regulations those who will not fall within the SSSNB’s remit.
Amendment 68 will allow the Secretary of State to include, through secondary legislation, those who do not work wholly at academies within the SSSNB’s remit, by reference to the type of work that they do. The Department currently holds limited information about the roles in which support staff are employed in academies or the terms and conditions under which they work. It intends to consult on which roles should and should not be within scope of these provisions. These powers will provide the necessary flexibility to respond to that consultation and amend the remit of the SSSNB as necessary.
New section 148D sets out the power of the Secretary of State to refer matters to the SSSNB that are within its remit, namely those matters relating to remuneration, terms and conditions of employment and training and career progression of school support staff. Referrals by the Secretary of State to the negotiating body will mean that those representing employers and employees can agree and advise on suitable outcomes for school support staff within the parameters set out by the Secretary of State in relation to wider Government priorities and context.
New sections 148E and 148F set out the powers of the Secretary of State when referring matters relating to remuneration, terms and conditions of employment and training and career progression to the SSSNB. The Secretary of State may specify factors that the SSSNB must consider and a timescale for their consideration. The new sections set out the steps that the SSSNB must take, depending on whether it has or has not reached agreement on matters relating to terms and conditions. Where the Secretary of State refers a matter relating to the training and career progression of school support staff to the SSSNB, the SSSNB is required to provide a report on the matter to the Secretary of State, rather than reaching agreement.
New section 148G will give the SSSNB the power to consider matters within its remit that have not been referred to it, with the Secretary of State’s agreement. This will give the SSSNB the ability to raise alternative matters that it wishes to negotiate or advise on. Agreement from the Secretary of State is required from the outset to ensure that no work is undertaken on a matter that could be considered to be outside the SSSNB’s remit. It will also ensure that the body has sufficient capacity to consider referred matters within the required timescale, alongside any additional matters that the SSSNB wishes to consider.
New section 148H sets out the Secretary of State’s powers in relation to agreements submitted by the SSSNB. The Secretary of State may ratify an agreement in secondary legislation in full or in part—if in part, the part not ratified falls away—or refer the agreement back to the SSSNB to reconsider it under new section 148I. This power is necessary to ensure that any agreements are practicable—for example, that they are affordable—before being incorporated into contracts. The ability for the Secretary of State to ratify agreements in part is a pragmatic approach to allow matters with agreement to progress and to avoid delays if there is an element of an agreement that the Secretary of State is not content to agree.
New section 148I sets out what happens where the Secretary of State refers a matter back to the body for reconsideration. The Secretary of State may specify factors to which the body must have regard in reconsidering the agreement and by when it must revert.
New section 148J will apply where the SSSNB has submitted an agreement to the Secretary of State after reconsideration. The Secretary of State has powers to ratify the agreement in full or in part in regulations; to refer the agreement back to the SSSNB for reconsideration; to make regulations requiring prescribed people to have regard to the agreement in exercising prescribed functions; or to make regulations that make alternative provision in relation to the same matter. The new section gives the Secretary of State a range of powers to determine the best course of action based on the agreements from the SSSNB to ensure that the desired outcomes for school support staff are met and are practicable.
New section 148K sets out the process if an agreement cannot be reached by the SSSNB on a matter relating to school support staff remuneration and terms and conditions referred to it by the Secretary of State. The Secretary of State may specify a later date by which agreement must be reached or may make regulations in relation to the matter referred to the SSSNB if there is an urgent need to do so, but the Secretary of State must consult the SSSNB before making those regulations. This will ensure that the Secretary of State is able to regulate as necessary in the event that agreement cannot be reached, for instance on a pay award for school support staff.
New section 148L sets out the Secretary of State’s powers if the SSSNB fails to submit a report on a matter relating to the training and career progression of school support staff by the deadline set by the Secretary of State. The Secretary of State can specify a later date for the SSSNB to report or issue guidance on the matter. This ensures that the Secretary of State can still issue guidance on training and career progression to support recruitment and retention in the absence of a report from the body.
New section 148M sets out the effect of regulations made by the Secretary of State that ratify agreements reached by the SSSNB in full or in part. The terms of the agreement are imposed in a person’s contract of employment so that a member of school support staff must be paid and treated in accordance with those conditions. Any inconsistent terms in contracts of employment or academy funding agreements have no effect. That allows the Secretary of State to make changes to the pay and terms and conditions of school support staff as agreed by the SSSNB, in order to ensure fairer pay rates and greater national consistency, boost recruitment and retention in those roles, and drive improved standards in schools.
New section 148N sets out the effect of regulations made by the Secretary of State where she decides not to ratify agreements reached by the SSSNB or where the SSSNB fails to reach agreement on a matter. Where the Secretary of State decides to make regulations imposing terms and conditions into school support staff contracts, for example because there is an urgent need to make changes to terms and conditions and the SSSNB has failed to reach agreement on them, school support staff must be paid and treated in accordance with those terms and conditions. It is important that the Secretary of State has the ability to legislate to provide fair terms and conditions for school support staff in the event that the SSSNB fails to reach an agreement.
New section 148O will allow regulations made under part 8A to have retrospective effect, subject to their not subjecting anyone to a detriment in respect of a period that falls before the date on which the regulations are made. This will allow the Secretary of State to backdate pay awards agreed after the start of an annual pay period to ensure that school support staff may benefit from them for the entirety of the period.
New section 148P sets out how and when the Secretary of State and the SSSNB can issue guidance on matters within the SSSNB’s remit. The SSSNB, with the Secretary of State’s approval, can issue guidance on pay and terms and conditions, as can the Secretary of State. Only the Secretary of State can issue guidance on training and career progression. Local authorities, governing bodies and academy trusts are required to have regard to guidance issued. This will allow the Secretary of State and the SSSNB to support employers in the implementation of new terms and conditions and the promotion of training and career progression opportunities for school support staff.
New section 148Q will provide a carve-out for the SSSNB framework from the collective bargaining provisions in the Trade Union and Labour Relations (Consolidation) Act 1992. The new section is necessary to ensure that agreements reached by the SSSNB can be imposed in contracts only through ratification by the Secretary of State.
Paragraph 2 of schedule 3 will insert a new schedule 12A into the Education Act 2002. New schedule 12A includes provision for the SSSNB to be constituted in accordance with arrangements made by the Secretary of State. School support staff and employer representative organisations on the SSSNB will be set out in secondary legislation; the Secretary of State will be required to consult the TUC before prescribing which organisations represent school support staff.
The membership of the SSSNB will include support staff, employee and employer representatives, an independent chair and a representative of the Secretary of State. It may also include members who do not represent school support staff or their employers. However, only school support staff and employer representatives will have voting rights. The new schedule also provides for administrative support to be provided to the SSSNB, including for the Secretary of State to pay expenses for the chair and for administrative costs incurred by the SSSNB. The SSSNB is required to provide a report for each 12-month period.
I commend schedule 3, as amended, to the Committee.
Greg Smith
After that lengthy oration from the Minister, I can only conclude that when it takes that long to explain something, a bureaucracy is coming that probably nobody wants. As we rehearsed during our debates on amendments to the schedule, it challenges in many respects the freedoms that some of our education establishments enjoy.
As the Bill leaves Committee at some point in January and heads back to the main Chamber for Report, I urge the Minister to reach out to educational establishments—and perhaps to the Department for Education, but real-world schools are probably better—and reflect on the impact that this new bureaucracy will have on them. Is it as streamlined as it can humanly be? The Minister was on his feet for seven or eight minutes trying to explain that bureaucracy. In fairness, he did a commendable job of it, but that does not necessarily make it right. Whether we are in opposition or in government proposing things, we too rarely ask ourselves in the House: have we collectively got this right?
The Opposition believe that this new body—which we in government, along with the Liberal Democrats, removed—should not be brought back in. There is a better way of achieving some of the noble aims that the Government have in this regard and avoiding some of the potential catastrophes that we spoke about earlier. We therefore cannot support the schedule remaining in the Bill.
Sarah Gibson
I support the schedule. Over the past 10 years, we have seen how difficult it has been to retain and employ support staff in our schools, partly because they do not see a career progression and do not see themselves valued. I hope that this body will help to support those staff and will allow them to feel that they are very much part of the education authority and so have that support.
Laurence Turner
We have covered a huge amount of ground in this debate, so I will restrict my remarks to a few matters that have been raised. I say to the shadow Minister that if he thought that the Minister’s summary was bureaucratic and difficult to follow, he should sit through some meetings of the National Joint Council for Local Government Services, which is the dominant mode through which pay and terms and conditions are set.
It is worth reflecting briefly on some of the practical issues in schools that can be remedied through this new approach. It is a well-known problem that schoolteachers’ and school support staff’s pay award dates are misaligned. For schoolteachers, it is September; for school support staff, it is April, with the financial year. That can be a nightmare for bursars, school business managers and large employers, who have to plan their budgets with that significant difference.
In a previous life, I sat through a working group convened by the Local Government Association through the NJC on a vexed issue: how can school support staff’s work out of term-time be calculated on a term-time-only contract, because they are accumulating annual leave but cannot take all of it during term? It was a bit like a version of this Committee that reached no conclusions and never ended. These are real problems that result from the ossification of the NJC system. It is not appropriate for school support staff workers. As we all know, when a pay and grading system becomes ossified, legal danger lurks for employers in the inconsistencies that emerge.
There is no justification for saying that TA level 2 means something completely different in neighbouring authorities. That can become a block on people’s progression and ambitions to relocate. Multi-academy trusts and other academy employers overwhelmingly remain subscribed to the NJC, because this system of pay and grading, which has grown up over decades, is labyrinthine and difficult to follow, and most academy trusts do not have the HR and payroll functions to put something new in place.
We can put some figures on this. The school workforce census carried out by the Department for Education collects data on NJC coverage compared with other pay gradings. For local authority maintained schools, 80% of school support staff are paid on NJC grades, when non-responses are excluded. For academies, the figure is 77%, so there is no huge difference between the two sectors. Even among the remainder, some staff are employed under separate agreements with Soulbury terms, so are quite separate, and a high proportion—possibly even the majority—are paid on NJC-like terms and conditions, although there might be some local improvements to those pay gradings. That is the issue that the Confederation of School Trusts raised in its written evidence, and I think it has been addressed through this Committee. We are seeking to establish a floor, not a ceiling, so local improvements can still be made where employers and trade unions agree them.
The clause takes a lot from the lessons that were learned from the previous iteration of the SSSNB, which is welcome. The clauses on the adult social care negotiating body contain a general provision that any specified matter relating to employment could be referred to that body. Proposed new section 148J is drafted a bit more tightly for the SSSNB—at least, that is my reading of it—so I wonder whether there is a case for aligning the wording for the two bodies.
Let me go back to why we are doing this. School support staff are the hidden professionals in the education system. I did not just represent school support staff; I was once a school governor in a specialist SEND setting, and there were school support staff and teaching assistants. It is important to remember that the term covers site staff, cleaners, caterers and all sorts of other workers, who often do not get talked about. Those workers make lifesaving interventions—they may have to administer medicine or perform a medical intervention that literally keeps a child alive—but they are paid about £14,000 a year. That represents a failure of central Government to account for the pay, conditions and wellbeing of all the people who work in schools. The measures we are discussing are hugely important and welcome, and it is very welcome that the Bill has been brought forward this early in the Parliament.
Justin Madders
I am grateful for Members’ contributions. The shadow Minister gently joshed me about the technical detail but, as my hon. Friend the Member for Birmingham Northfield pointed out, that is the nature of the beast: it is important that all eventualities are covered. We have not reinvented the wheel here; we have lifted much of what was already in place for the previous iteration of this body, and we have taken some further learnings from that.
On my hon. Friend’s points, we have not needed to take the broader powers of the adult social care body, which we will discuss shortly, because the clauses relating to the SSSNB give it a remit to negotiate terms and conditions, as well as advise on training and career progression. That is broader than its 2009 remit, and we think it covers the areas that are recognised as those that need to be included, in addition to the powers the body had in 2009. Of course, the Bill has to be detailed—it has to be right—because it will affect 800,000 people, and a lot of people in that workforce are on low pay, have poor career prospects and are frustrated at the lack of progression in their job. When setting up such a body, it is important to cover all eventualities.
This is not a novel concept, but it is an important step forward in our industrial relations in this country, and in tackling low pay and insecurity. I am proud that we are able to discuss it today.
Question put, That the schedule, as amended, be the Third schedule to the Bill.
Greg Smith
I beg to move amendment 121, in clause 29, page 41, line 34, at end insert—
“(5A) No regulations may be made under this section before the Secretary of State has published and laid before Parliament an impact assessment of the costs on the social care sector of any proposed Adult Social Care Negotiating Body.”.
This amendment makes a requirement from the Secretary of State to undertake an impact assessment of the costs on the social care sector of any newly proposed Negotiating Body.
The Chair
With this it will be convenient to discuss amendment 122, in clause 29, page 41, line 34, at end insert—
“(5A) Regulations under this section must, for any Negotiating Body established under subsection (1), include a requirement for annual reports to be published and laid before Parliament.
(5B) Annual reports, required under subsection (5A) must include an assessment of the increased costs to the social care sector of any pay and conditions agreements made in that reporting year.”.
This amendment would require any Negotiating Body established under these regulations to publish annual reports setting out the cost of pay and conditions agreements.
Greg Smith
Amendment 121 would require the Secretary of State to undertake an impact assessment of the costs on the social care sector of any newly proposed negotiating body. Amendments 121 and 122 mirror those tabled in relation to the school support staff negotiating body that we have just spent the best part of an hour and a half debating. That is because our concern is essentially identical: that this is ideologically driven policy, not evidence-based policy.
Can the Minister provide the Committee with the evidence that the adult social care negotiating body is necessary? Has the Department of Health and Social Care made any assessment of the additional costs that may be incurred by the sector? Given that social care is provided across multiple platforms—to use a generic term—from the NHS to local government to many private sector providers, this measure will cross a number of sectors responsible for providing social care, and it is important that there is a cross-governmental impact assessment alongside it that provides a clear understanding of the costs involved to all parties, particularly local government, which is facing extraordinary pressures at the moment.
We have seen what has happened with councils such as Birmingham, which reached the point of bankruptcy, and with other councils that are under considerable financial pressure. When I speak to my council in Buckinghamshire, I hear that much of that pressure is driven by social care. It is a good problem to have; medical advances and technologies are ensuring that people have longer lives, but there is then the requirement for adult social care for far longer than was previously the case. The burden of that is falling disproportionately on local government budgets at the moment, and the Deputy Prime Minister and her Department need a clear understanding of the impact on the local government cost base.
Sarah Gibson
I rise to speak to the amendment, but I note that the whole clause is relevant. As the shadow Minister stated, this debate is fairly similar to the discussion we had about the SSSNB. Our hope for the adult social care negotiating body, similar to that for the SSSNB, is that having a uniform body can help to negotiate and address some of the issues that he highlighted, such as the poor pay and terms and conditions that a lot of adult social care workers suffer.
Social care providers in my constituency, many of which are not for profit, have welcomed the fact that the adult social care negotiating body will include providers, and that they will be able to discuss this issue together. I feel that that is an important point when discussing some of the issues that hon. Members might be concerned about. There is a suggestion that the Government might consider that some of those not-for-profit providers should be included in the negotiating body so that they have a voice.
However, several of the providers in my constituency that I have spoken to have said that, as employers who take their employees seriously and pay them properly throughout the day, they welcome the body on the grounds that it will give them a level playing field against the many employers who do not do that, since they feel that they are commercially disadvantaged against those employers. That is the predominant response that I have heard from employers in my constituency. With that in mind, I will not support the amendment and I do support the clause.
Justin Madders
The shadow Minister will not be surprised to learn that we do not support his amendments. Amendment 121 seeks to require an assessment of the impact of the new negotiating body on the adult social care sector. The Government have already produced a comprehensive set of impact assessments for the Bill, including one on the fair pay agreement for adult social care. That was published on Second Reading and was based on the best available evidence regarding the potential impact on businesses, workers and the wider economy.
The adult social care fair pay agreement will be subject to sector-wide collective bargaining and negotiation. At this stage, our impact assessment provides an illustrative analysis of its potential impact, including the magnitude of the cost to businesses, as well as the benefits for up to 1.6 million social care workers. We intend to refine that analysis over time, working closely with businesses, trade unions, academics and, of course, the Department of Health and Social Care.
As is standard practice, we will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the better regulation framework requirements. That will account for where the Bill has been amended in its passage through Parliament in such a way as to significantly change its impacts on business. That impact assessment will be published alongside the enacted legislation. In addition, the Government will produce an impact assessment to accompany regulations connected to the establishment of the negotiating body.
The Minister asked why the body is needed—what is the evidence base? He will be aware of the evidence given to the Committee, both orally and in writing, about its importance. The hon. Member for Chippenham spoke of the need for a level playing field, which is certainly a big part of what we are looking at here, because many of us will know from our experiences in our constituencies—never mind the evidence before the Committee—that, fundamentally, the adult social care sector is in desperate need of help. We have known that for a very long time, and if Members care to look at the Low Pay Commission’s recent reports, they will see that it has dedicated a considerable amount of space in them to the challenges in the sector. Trade unions, of course, have also been calling for action in this area for many years.
It is also well known that there are huge recruitment and retention challenges in the adult social care workforce. It is a very large sector, employing about 1.6 million workers, which is about 5% of all people in adult employment, and it plays an important role. The people in those roles are predominantly women and, as was noted during the evidence sessions—and backed up by the analysis in the impact assessment—there are about 130,000 vacancies at the moment. It was also noted that filled posts have reduced by 4% recently, and that the shortfall since 2022 has been plugged primarily by overseas workers, which we know is a topic of great interest.
The turnover rate in the sector is incredibly high: it has been higher than 25% since 2016 and was consistently over 30% between 2017-18 and 2022-23. There were some improvements last year, but that was largely driven by international recruitment, and the turnover rate is generally much higher than the UK average. The impact assessment notes that, while some movement is healthy, the higher rates witnessed can be disruptive and impact not only productivity, but the quality of service, with recipients of care not getting continuity. I think we can all recognise the situation in which a person in receipt of care has a different person turning up every day and how disruptive that can be. It is important to note that recipients of care, and not just the workers, will benefit from the Bill.
We know that low pay is rife, as has been identified by the Low Pay Commission. In December 2023, the average wage was £11, and nearly 70% of workers were paid within £1 of the minimum wage. In the last two reports by the Low Pay Commission, space has been dedicated to underpayment in the sector. In its latest report, the Low Pay Commission said:
“In the social care sector, non-compliance appears persistent”.
The shadow Minister asked a wider point about travel costs. He will no doubt welcome the announcement in the Budget that we are freezing fuel duty, but the cost of travel is a much broader issue than the point he raised. Clause 30 will allow broader questions of terms and conditions to be considered. Clause 39 is also important, because it deals with record keeping. We know from research by Unison that about one quarter of domiciliary care workers are repaid only for travel time, and only 18% of them have the travel time listed on their payslips. Given that these people often earn close to the minimum wage, this is an absolute scandal that needs to be addressed. The shadow Minister made an important point about travel, but we hope that the fundamentals of ensuring that people are paid for that travel time will be addressed by the negotiating body.
Let me turn to amendment 122. The Government are committed to engaging with the adult social care sector on the design of a fair pay agreement, including how the negotiating body will be set up, how it should operate and how negotiations will run. The powers under clause 29 allow for the Secretary of State to create the adult social care negotiating body by regulations and to provide for the smooth and efficient running of that body. The regulations will confirm the type of body being created. The power also allows for reporting requirements to be imposed on the negotiating body, such as producing reports. Engagement with the sector will ultimately influence the type of body that the negotiating body actually becomes. All public bodies have specific reporting requirements to meet transparency standards.
I can confirm that the Department of Health and Social Care has committed to publishing an impact assessment on establishing fair pay agreements in the adult social care sector to accompany the secondary legislation required to establish the negotiating body. It is intended that the assessment will include an analysis of the potential costs and benefits that will arise from a fair pay agreement. On that basis, I invite the shadow Minister to withdraw his amendment.
Greg Smith
I am grateful to the Minister for his remarks, and not least for acknowledging the importance of the points about just travel time and about compensation for using one’s own vehicle and having to purchase the petrol, diesel, electricity, hydrogen or whatever to get around—in a brave new world, who knows what it might be? I invite him to ensure that that can be locked into, whatever the negotiating body has the power to do. I say that not least for rural communities such as mine, where it is not unusual for someone to have to travel for half an hour between many of the villages, and from one person they are caring for to another. That adds up very quickly in terms of not just time, but the cost of the fuel to get them there and the wear and tear on the vehicle’s brakes, tyres and so on.
We will not press these amendments to a Division. However, as the Minister reflects on this issue, I urge him to again ensure that the way in which this new body will inevitably be set up accounts for the multiple different platforms of provision across local government, the private sector and the not-for-profit sector, which the hon. Member for Chippenham talked about. This is a much more complex arena than that of schools, which is much more heavily defined—we spoke about that earlier. I urge the Minister to reflect on that as he potentially brings forward Government amendments or minor surgery to the Bill ahead of Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Justin Madders
As Committee members will have noticed, this is a significant group of clauses, which relate to the establishment of a negotiating body for the adult social care sector, a key element of the Government’s plan to make work pay. The body aims to address the long-term issues of low pay and poor retention in the adult social care sector.
The adult social care sector is large, with 1.59 million people working for it in England in 2023-24, which as I have already said is equivalent to 5% of all adults in employment. Poor terms and conditions are associated with higher staff turnover. For example, the Skills for Care annual report states that care workers were less likely to leave their posts if their employers paid above the 3% auto-enrolment rate for pensions, or paid more than statutory sick pay if care workers could not work due to illness. This is a key element of the Bill.
I will speak to each clause in turn. Clause 29 gives the Secretary of State the power to create the adult social care negotiating body by regulations, with the aim of negotiating a fair pay agreement within the adult social care sector. Giving specific powers to the Secretary of State in relation to the body is key to ensuring that the Government have the necessary powers to set up and design this body, and that will take place after engagement with the sector.
The clause ensures that the Secretary of State has the power to create a body that is appropriately made up of members including representatives from relevant trade unions and employers. It also enables regulations to provide for the smooth and efficient running of the body, and for it to be subject to reporting requirements. The Secretary of State will have the power to set out the body’s decision-making process and to make provision for any staff and facilities and for payment of fees and expenses.
Clause 30 defines the matters within the negotiating body’s remit—namely, the remuneration and other terms and conditions of employment of social care workers. The clause enables the body to cover not only pay, but wider terms and conditions of employment of adult social care workers.
We know that the adult social care sector is diverse, so the clause also allows the Secretary of State to add further matters to the remit of the body, provided they relate to a social care worker’s employment. The remit of the body can also be narrowed by the Secretary of State, who has the power to specify in regulations the types of social care worker that fall within the remit of the body.
Members will see that clause 31 defines “social care worker” as including those who work in, or are employed in connection with the provision of, adult social care. The clause specifically excludes from the definition of adult social care anything provided by an establishment or agency regulated by His Majesty’s chief inspector of education, children’s services and skills, to ensure that children’s services are not captured. The clause provides an essential definition of adult social care worker, which the other clauses refer to throughout. Without it, the remit of the body and the scope of the clauses would not be sufficiently defined.
Clause 32 sets out the power of the Secretary of State to make provision in regulations about the consideration by the negotiating body of matters within its remit. In accordance with regulations made under the clause, the Secretary of State will be able to specify conditions that any agreement must meet, such as on funding. It also allows regulations to provide that the body may consider only matters referred to it by the Secretary of State, such as specific terms and conditions for certain types of social care worker, and must take into account specified factors when coming to an agreement.
The regulations that can be made under clause 32 can impose information-sharing duties on the body’s members to enable efficient negotiation and require the body to submit any agreement to the Secretary of State for consideration. They also allow for the body to be allocated clear deadlines for discussion, so as not to delay this important process.
Clause 33 enables regulations to provide that the Secretary of State can refer agreements back to the negotiating body for reconsideration. Making provision for reconsideration of an agreement ensures that any agreement can be refined following review by the Secretary of State and that the Government are not forced to reject an agreement they are unable to implement. It also provides the Secretary of State with an appropriate safeguard to ensure that further work can be done, where necessary, to ensure that a suitable agreement is reached. The Secretary of State can also make regulations that provide for the same matters listed in clause 32.
Clause 34 allows the Secretary of State to make provision in regulations for circumstances where the negotiating body is unable to reach an agreement. Providing a clear process for the body to resolve roadblocks in reaching an agreement is key to ensuring that the body arrives at a conclusion that is agreeable to all parties. In regulations made under this clause, the Secretary of State will have the power to appoint someone to resolve the barriers to an agreement and confer the relevant dispute resolution powers on them.
Clause 35 allows the Secretary of State to ratify an agreement made by the negotiating body and thereby give it legal effect. That is essential to successful implementation and ensures that any agreement provides the maximum protection for affected workers. It allows for sufficient flexibility, because the Secretary of State can ratify part of an agreement, such as implementing some aspects through employment contracts, while leaving others that would be more appropriately implemented through codes of practice.
The regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the date on which regulations are made.
Clause 36 explains that the effect of ratifying an agreement under clause 35 is to change the employment contracts of adult social care workers included in the scope of the agreement. The ratification regulations can change both the remuneration and the terms and conditions of employment contracts, depending on the content of the fair pay agreement. They also give precedence to the terms in ratified agreements over inconsistent terms in existing employment contracts. For example, if an agreement sets a new minimum hourly rate, that will take precedence over employment contracts that set out a lower rate, and so ensure that the employee enjoys the rate set out in the ratified agreement. The clause is essential to ensuring that any ratified agreement will be on a statutory footing and therefore legally implemented.
Clause 37 gives the Secretary of State the power to make provision in regulations when the body has notified the Secretary of State that it has been unable to reach an agreement. The Secretary of State’s powers under this clause are limited to those matters on which the body has failed to reach an agreement. The powers under the clause are similar to those in clause 35, and enable regulations to override the pay and other terms and conditions set out in social care workers’ contracts.
As under clause 35, the regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the day on which regulations are made.
Clause 38 gives the Secretary of State the power to make regulations about the creation of guidance or codes of practice in relation to the agreements reached by the body. The clause also enables regulations to impose duties on specific persons in relation to provision in guidance or a code of practice, and makes provision around the consequences of failing to comply with those duties, including increased financial awards in any later court or tribunal proceedings. That will ensure that any pieces of guidance or codes of practice are appropriately followed, with appropriate consequences for parties that fail to comply.
Clause 39 gives the Secretary of State the power to make regulations imposing record-keeping obligations on employers. Similar provisions already exist for enforcing other aspects of employment law, such as the national minimum wage and the working time regulations. The clause therefore gives the power to apply the provisions under the National Minimum Wage Act 1998, to give social care workers a right of access to records. There may be new requirements under a ratified agreement that are not covered by existing record-keeping obligations, and without this clause the employer may not be able to provide evidence to enforcement authorities that the new requirements are being followed. We expect the fair work agency, upon its creation, to take on responsibility for the enforcement of the national minimum wage, including those record-keeping requirements.
Clause 40 will give the Secretary of State the power to make regulations about the enforcement of remuneration terms in ratified fair pay agreements. These regulations can apply enforcement mechanisms used under the National Minimum Wage Act 1998, notably the notices of underpayment regime, and the clause lists specific sections of that Act in relation to enforcement. We do not intend to introduce any criminal sanctions to enforce the fair pay agreement framework. That will ensure that any pay terms can be appropriately enforced by the state, ensuring that employees are effectively paid under the conditions of a ratified agreement. The clause also prevents double recovery of remuneration, ensuring that enforcement cannot take place twice—once for the national minimum wage and again for a ratified fair pay agreement—in respect of the same work.
Clause 41 gives the Secretary of State the power to create regulations under clauses 35 and 37 that have retrospective effect. As we have set out previously, that is to ensure that provision in terms of pay and conditions that falls after an agreement is reached and before the day on which regulations are made can have retrospective effect. That is necessary to enable regulations to appropriately fill any gap between the body reaching agreement and subsequent regulations being passed to ratify that agreement. Subsections (3) and (4) ensure transparency, creating an obligation to publish documents, such as the ratified agreement, that are referred to in the regulations.
Clause 42 makes further provision about the regulations that can be made under the powers in this chapter. These provisions are non-controversial, and they include the option for regulations to confer discretion on a person. That may be needed, for example, to give the chair of the body discretion to deal with a matter during the negotiation process or to give a third party discretion to resolve a dispute in accordance with the regulations under clause 34. Subsections (2) and (3) provide that ratification regulations will be subject to the negative resolution procedure, and any other regulations made under this chapter will be subject to the affirmative resolution procedure. That is because ratification relates to an agreement that has been reached by the negotiating body and assessed by the Secretary of State as being appropriate for ratification, and it would not be necessary to subject the ratification regulations to detailed parliamentary scrutiny.
Clause 43 simply allows regulations to provide that any actions or agreement by the body would not constitute collective bargaining or a collective agreement as defined in the Trade Union and Labour Relations (Consolidation) Act 1992. The Government have taken that approach because these clauses, and the regulations made under them, will create a new, separate legal framework under which fair pay agreements in the adult social care sector will be negotiated. For example, the clauses provide for a fair pay agreement to apply across the entire sector and to be legally binding when it is ratified in regulations.
That goes further than the 1992 Act, which sets different requirements for collective agreements to be legally binding and envisages that collective bargaining will be on a much smaller scale between one or more recognised trade unions and one or more employers or employer associations. The Government’s intention is very much for the negotiating body’s activities to be a form of collective bargaining, as a concept. It is simply that we cannot have two different legal frameworks to the same process.
Clause 44 is uncontroversial. It simply provides definitions for the terms used in this chapter and ensures that the definition of worker’s contract can cover agency workers who might not have a contract with their agent or the person they have been supplied to work for. That ensures that an agreement can be ratified for agency workers who do not have a contract with the agent or principal. The clause clarifies that references to a ratified agreement may also include references to parts of an agreement that have been ratified.
I am confident of the Government’s ability to deliver this flagship policy, supported by the Health Foundation, which indicated the strong case for improving pay and conditions in the social care sector in its written evidence to the Committee. Indeed, the same thing was noted in much of the evidence that we have heard in support of these measures. I commend clauses 29 to 44 to the Committee.
Greg Smith
As we prepare to begin the 12 days of Christmas, we have the 16 clauses of the adult social care negotiating body. I am not sure which has the better ring to it, but I think only one ends with a partridge in a pear tree.
I have a few questions for the Minister after his impressive run-through of the 16 clauses. I might not have agreed with every word he said, but we have to acknowledge a powerful performance, and he went through such technical detail with such speed. In clause 29, yet again we have the powers to set up a body but only after engaging the sector. There is nothing wrong with engaging the sector, and we encourage regular engagement with any and every sector, but this is yet another example in the Bill of legislate first, consult second. That is always a concern whenever it comes up, and not least on clause 41, where the Minister repeatedly referred to certain retrospective powers.
Alison Hume (Scarborough and Whitby) (Lab)
It is a pleasure to serve with you in the Chair once again, Ms Vaz. I remind the Committee about my membership of Unison.
We all want to live in a place we can call home, with people and things we love, in communities where we look out for one another and do the things that matter to us. Adult social carers support millions of people every day in that. The shadow Minister rightly spoke about the vital contribution made by social work carers who go to support people in their own homes, but there are other carers who support people who have highly complex needs to live in specialised settings. One of those people is my adult son, who has been in supported living for the last six years. It took a while to find him the right setting, but he is now living in a specialised service that accommodates people who have a diagnosis of autism spectrum disorder, and I am pleased to say that he is thriving.
Members of the Committee may be aware that one of the defining characteristics of ASD is how neurodivergent people relate to, and connect with, the people who care for them. My son sees his carers as being part of an extended circle of trust—not family, but close. After all, why shouldn’t he? They support him with all his daily living needs. They plan his meals, accompany him to the shops to buy food, help him to cook it and keep him company while he eats it. They help him to do all the chores that any 26-year-old young man would rather not do at all. But far more importantly, the staff who care for my son help him in all aspects of his life so that he can achieve the best he can, whether through volunteering to build up his confidence or through educational opportunities to improve his prospects of work.
Many of these staff are highly skilled. I cannot speak highly enough of the work they do. They have worked in adult social care for many years and are dedicated to the people they care for, like my son, but others are new in the job and do not stay long. That is not as a result of not wanting to do the job, but of not being able to afford to stay in the job. In fact, some carers live in poverty. For young adults like my son, the turnover and lack of consistency in staff, which is no fault of the organisation that employs them, means that his extended circles of trust are continually broken down. That leads to a lack of engagement, which affects his mental health and wellbeing.
I wanted to talk about my lived experience to shed light on why the adult social care negotiating body and the whole Bill are so important, because we so need a step change in our attitude to social care. We must respect the work that social care workers do and value it more highly. Three quarters of those who work in the industry are women, and they earn around only 68% of the median salary for all UK employees. It is just not good enough. I welcome the negotiating body, which I believe will be a game changer in addressing low pay and insecure employment. It will send a powerful message to the 1.59 million social care workers in England to say, “You are valued, you are respected and you are part of a profession that I am proud to say the new Government are committed to supporting in the long term.”
Sarah Gibson
I start by thanking the hon. Member for Scarborough and Whitby for that very personal story. I imagine it has been extremely difficult. She must be very relieved to have finally found somewhere where her son is happy. I have several friends with children in similar situations. I know that it can be extremely stressful.
We are all in agreement that people working in social care have been undervalued for a long time. These provisions are incredibly helpful in bringing them to the fore and in trying to make their conditions of work considerably better. Members on both sides of the Committee have made that point very clearly.
I have one specific concern, which is on clause 41, where it talks about
“provision that has retrospective effect.”
Like the hon. Member for Mid Buckinghamshire, I find the word retrospective in any legislation extremely worrying. My background is in the building industry, and that retrospective element has been introduced many times in the 20 years that I have been in the building industry, to the detriment of many of the hard-working professionals involved.
This clause concerns me because many of our care-provider employers are small businesses, and they are also not-for-profit small businesses. Those small businesses will be in no position whatsoever to provide any retrospective increase in salary if they are asked to do so, because they simply do not have any profits—because they are not for profit—to draw on to pay any increase. I am very concerned that if subsequent legislation were to introduce a retrospective pay increase that these firms do not have provision for, that would detrimentally affect some of these hard-working and useful not-for-profit care providers. As it stands, I will not be able to support that clause.
Justin Madders
I will deal with the point raised by the Liberal Democrat spokesperson and the shadow Minister first. This measure is about the practicality of negotiations. Clause 41 is not trying to say that the body will reach back in time to change workers’ terms and conditions; it is about the fair pay body agreeing terms and conditions, and the period between that agreement being reached and it then being ratified and passed in regulations by the Secretary of State.
For example, if the body said that from 1 April 2028, for argument’s sake, there would be an uplift of whatever pence or pounds an hour to everyone’s pay, and if the regulations enacting that were not passed until July of that year, the retrospectivity would be from July 2028 back to 1 April, so that pay can be included. That is normal in pay negotiations. That is all it is; it is not about trying to unpick previous agreements; it is about the way that anything agreed is implemented.
The shadow Minister said that we legislate first and consult second. As he will be aware, introducing a fair pay agreement in such a huge area of employment in this country is a novel and groundbreaking introduction to our legal system, so we need to put the legislative framework in place, which is what the Bill does. The detail and how it will work in practice is what the consultation and the secondary legislation will deal with. That is the proper way to do this, and that is how we will get this right. The Government are absolutely committed to getting this right. We absolutely recognise the terrible pay and conditions that lots of people in the adult social care sector face and the need for this kind of body to try and drive out those poor practices.
The shadow Minister asked about clause 33 and the ability of the Secretary of State to refer matters back to the negotiating body. He will of course understand that as the Bill is currently drafted the Secretary of State will need to pass regulations in order to enact many of the recommendations from the body. Some will be guidance, but that will still need the Secretary of State’s involvement. It simply would not be tenable for the Secretary of State to be compelled to pass legislation with which they did not agree, so I am sure that the shadow Minister will appreciate why that is in the Bill. We hope that that does not come to pass—it would clearly not be in the spirit of what we are trying to achieve—but we have no way of knowing what the future holds in that respect. It is therefore important for the Secretary of State, who is the person responsible for this system, to have the final say on such matters.
Greg Smith
I took careful notes, and we can check Hansard later, but I am pretty certain that the Minister himself used the word sufficient in his remarks.
Justin Madders
We may have to write to the hon. Member on that. Having furiously double-checked clause 32 during the other hon. Members’ speeches, I cannot find the word sufficient.
My final point relates to the powerful contribution from my hon. Friend the Member for Scarborough and Whitby about her personal circumstances and how important it is that we get this right. It is people such as her son who have benefited from good support in social care, and at the end of the day, they are the people who will benefit from stability and security in the workforce and better retention rates. This is about the workforce, but it is also about the people who receive the care, and it is about time that we gave them more priority. That is why these clauses are so important, and I therefore commend them to the Committee.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Clauses 30 to 44 ordered to stand part of the Bill.
The Chair
Before I call the Whip to move the Adjournment, I wish everybody a very happy Christmas and a happy new year.
Justin Madders
On a point of order, Ms Vaz. I thank all those who have worked behind the scenes—the Clerks and other staff—to ensure that the Committee has run smoothly. We have had some very interesting debates and made good progress with the Bill. I wish everyone involved a very merry Christmas and a happy new year. No doubt we will see many of them in January.
Greg Smith
Further to that point of order, Ms Vaz. I seek your guidance on how we might put it on the record that we wish a very merry Christmas to everyone involved in this Bill Committee. I might not agree with every word of the Bill, but I appreciate all the work that the civil servants put into supporting the Minister and the Government—and, likewise, for the Opposition, the hard work of all the Clerks, as well as Hansard, the Doorkeepers and security. I wish Members of all parties a very merry Christmas.
The Chair
Thank you, and thank you to all hon. and right hon. Members, the officials and the Clerks, who have been very supportive.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)