Status of Workers Bill [HL]

(Limited Text - Ministerial Extracts only)

2nd reading
Friday 10th September 2021 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I congratulate the noble Lord, Lord Hendy, on securing a Second Reading for his Private Member’s Bill. I thank all noble Lords who have contributed. We had contributions from all sides of the House, except, surprisingly, from the Liberal Democrats. We had no contributions from the Liberal Democrat Front Bench or Back Benches. Perhaps it is a subject that they think is not so important.

Let me begin by recapping how our current employment status framework operates. Individuals’ employment rights are determined by their employment status. Employment status is based on the nature of the relationship between an individual and the person for whom services are provided. In the UK, there are three employment statuses. Is “statuses” a word? I think it is. Employees are entitled to all rights, subject to qualifying periods, and have responsibilities towards their employer. Limb (b) workers—which I realise is an unusual term but is how they are defined in legislation—are entitled to only some rights but have increased flexibility with more freedom over when, how much and where they work. Self-employed individuals generally have no employment rights but have complete flexibility in their work since they are in business for themselves. Agency workers can have any of the employment statuses I have described, but they benefit from additional protections under separate legislation.

I agree with many of the points made by my noble friend Lord Moylan and believe that our three-tiered employment status framework provides the right balance for the UK labour market by allowing flexibility, for both employers and individuals, while ensuring workers have fundamental protections, such as entitlement to a national minimum wage and the right to holiday pay.

Turning to the contents of the Bill, I understand that the noble Lord, Lord Hendy, introduces this Bill to ensure that vulnerable workers are protected from exploitative practices. The Government share his concerns, which were also expressed by a number of other Peers including the right reverend Prelate the Bishop of St Albans, and it is clear that everyone deserves to be treated fairly at work and rewarded for their contribution to the economy, in terms of both fair pay and fair working conditions. However, the Government do not believe that this Bill is the best way to achieve this goal. I believe that creating a single worker status would inevitably stifle the flexibility and dynamism of the UK labour market when it is most needed to help the economy recover from the pandemic.

As the noble Baroness, Lady Greengross, observed, the world of work is changing. Recent case law, such as the Uber Supreme Court judgment—I listened with great interest to the excellent contribution to the debate by the noble and learned Lord, Lord Etherton—has acknowledged that those who work in less conventional ways, including gig workers, can work flexibly and have fewer responsibilities to their employers and still be entitled to a number of important rights.

I believe that, rather than protecting vulnerable workers—here I disagree with the noble Lord, Lord Hendy—removing the limb (b) worker status may create a bigger cliff-edge between a single worker status and self-employed status. It could introduce a stronger incentive for businesses to opt for self-employment models, potentially even leading to a number of current limb (b) workers losing entitlement to employment rights rather than gaining more, and I am sure that that was not the noble Lord’s intention.

However, the Government recognise that it can be difficult to determine the employment status of some individuals with less traditional employment relationships, including in the gig economy. As the noble Baroness, Lady Donaghy, said, individuals need to understand their rights. We will continue to consider options to improve clarity around employment status, engaging externally with interested parliamentarians and across government on how best to address those issues in a post-Covid scenario.

Finally, I remind noble Lords—in particular my noble friend Lord Blencathra, who asked about this—of the number and range of actions the Government have taken, and are committed to take, to protect vulnerable workers while maintaining the flexibility of the labour market. Our comprehensive economic response to the pandemic has protected something like 14 million jobs and people through the furlough and self-employed schemes at a cost of £88.5 billion.

We took action to make sure that workers on zero-hours contracts have not been stopped from looking for or accepting work from another employer, and banned the use of exclusivity clauses in zero-hours contracts to give workers more flexibility. When parliamentary time allows, the Government will also bring forward a measure to request a more predictable contract to give qualifying workers greater certainty around their hours and income.

We will extend the permissible break in continuous service for employees from one week to one month. This measure will make it easier for those who have intermittent or flexible working patterns to access employment rights and will deter businesses from engineering breaks in employment to deny individuals important employment rights.

I will respond directly to the point from my noble friend Lord Holmes of Richmond about unpaid interns. The existing legislation and enforcement are sufficiently robust to ensure that workers undertaking work experience or internships should get the national minimum wage. If anyone thinks they should be getting the national minimum wage and are not receiving what they are entitled to, they can complain to HMRC or call the ACAS helpline; complaints are anonymous. I hope that deals with the point made by my noble friend.

In conclusion, I thank the noble Lord, Lord Hendy, for bringing the Bill to the House and enabling this debate. I have not been convinced that the Bill is the right solution to further protect those in insecure work, but the Government will continue to take steps to protect vulnerable workers where needed, including through the forthcoming Employment Bill.