Fire and Rehire Tactics

(Limited Text - Ministerial Extracts only)

Wednesday 15th June 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

It is a pleasure to serve under your chairmanship, Ms McVey.

First of all, I congratulate the hon. Member for Slough (Mr Dhesi) on securing this debate on the use of fire and rehire tactics. It is an important issue, and we have heard today how worrying and unsettling it is for people when their employer wants to change their contract or puts them at risk of redundancy, especially when workers are already worrying about how they will pay their bills.

I speak to businesses every day and know that most employers try to do the right thing by their staff, and that decisions to change terms and conditions are not taken lightly. Let me be clear, as I have said many times, that we expect companies to treat their employees fairly and to do right by them. There are legal obligations and procedures that employers must abide by. We expect employers to act with fairness and compassion and to comply with the rules.

The Government have always been clear that the threat of dismissal and re-engagement on reduced terms—so-called fire and rehire—should not be used as a negotiation tactic. We expect employers to engage properly and meaningfully with their workforce and representatives, and to consider alternative options. Dismissal and re-engagement should be considered only as an option of absolute last resort, if agreement cannot be reached.

The UK has a strong labour market and its success is underpinned by balancing flexibility and workers’ protections. It is vital that we continue to strike that balance, while clamping down on the poor practices of some unscrupulous employers, some of which we heard about earlier. Our response to fire and rehire has been carefully considered, reflecting the seriousness of the issue and the importance of avoiding inadvertently creating a situation where employers have no choice but to make their staff redundant.

When the pandemic led to cases of firing and rehiring, we asked ACAS to conduct an evidence-gathering exercise to help us better understand the issue, so as to get behind the headlines and work out a quantitative and qualitative understanding. The Government then went further and asked ACAS to produce new guidance, to ensure that employers were clear on their responsibilities. That guidance was published in 2021 and clearly sets out the employer’s responsibilities when considering making changes to employment contracts.

The guidance is clear that fire and rehire should be used only as the option of last resort. I urge all employers to make themselves familiar with that. ACAS stands ready to help mediate disputes, should either party seek its services. ACAS has also published guidance for employers and employees.

The Government are going further still. As has been mentioned, on 29 March, I announced that we would introduce a statutory code of practice on dismissal and re-engagement.

[Chris Stephens]

Can I say gently to the Minister that there is some confusion in his position? He says that it is the Government’s view that fire and rehire should not be a negotiating tactic. Surely, the problem is how employers can go into negotiations if they can legally dismiss and re-engage. Is he saying that if an employer, or a representative, in a negotiation says, “We can dismiss and re-engage and we may very well do that,” they are in breach of the code that he has just outlined?

[Paul Scully]

I will come to the statutory code in a second and explain how that works. Even the hon. Member for Brent North (Barry Gardiner), who talked of banning fire and rehire and ran a campaign that involved many Members here, actually explained in the debate in the Chamber that his Bill would not ban fire and rehire. It would limit it but not ban it. Even he understood that, in certain circumstances, there needs to be that flexibility.

The statutory code includes practical steps that employers should follow if they are considering changes to terms and conditions and there is the prospect of dismissal and re-engagement. A court or employment tribunal will take the code into account when considering relevant cases, including those related to unfair dismissal. The tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.

Most employers do their best to comply with the law, but the code will clarify best practice standards and deter those employers who try to cut corners, pushing the bar even higher for employers who seek to do the wrong thing. We will hold a public consultation soon, to seek views from across employers, individuals, unions and beyond.

[Jim Shannon]

I know that the Minister genuinely wishes to see betterment, as we all do. We gave some examples. Three or four Members referred to P&O Ferries. The Minister and the Government condemned the chief executive of P&O Ferries for his tactics, and they were right to do so. British Gas is another example of doing it totally the wrong way and disregarding the workers. I note that 20% of my constituents in Northern Ireland found that fire and rehire tactics were wrong. What will the Minister and the Government do to protect workers where, as the Minister and the Prime Minister have said, companies have done wrong?

[Paul Scully]

I will come to P&O Ferries now before I address the other points that Members have raised. The Government have been clear that the dismissal by P&O Ferries of 800 loyal seafarers without any notification or consultation was absolutely unacceptable. I was sat behind the chief executive—literally, not figuratively—during the Select Committee hearing. Like everyone else, I was appalled when I heard him say that he would do the same thing again. That was absolutely horrific to hear.

[Justin Madders]

As I asked in my speech, can the Minister provide an update on the criminal prosecutions?

[Paul Scully]

I will develop that in a second.

As I was saying, the chief executive of P&O Ferries admitted to breaking employment law. He demonstrated—not only in his actions on that weekend, but in the Select Committee hearing—absolute contempt for workers who had given years of service to his company. That was not just a case of fire and rehire, which is the subject of the debate; in the main, it was just fire, because the vast majority of those workers had no prospect of re- engagement. We have urged P&O to reconsider, but those calls have fallen on deaf ears.

[David Linden]

The Minister has probably made this point better than the rest of us: P&O’s acceptance that it was breaking the law very much makes the case for an employment Bill to strengthen workers’ rights. Anecdotally, the number of cases of fire and rehire is on the increase, partly because companies see others getting away with it. Do the Government hold any data on how often fire and rehire is happening, and if so, will they publish it? If they do not have that data, why not?

[Paul Scully]

I will talk a little about that in answering the question from the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), about what the Insolvency Service is doing in relation to P&O Ferries.

We engaged ACAS to better understand exactly what fire and rehire actually is. A lot of the reports in various media are not strictly about fire and rehire, because it is never quite as binary as it appears. However, there are some egregious examples, and I think we can all agree that we want to eliminate them, or at least push the bar so high that it is just not viable for employers to take that sort of action. As a result of the inability of P&O Ferries to hear not just what this House was saying but what the country was saying, my right hon. Friend the Secretary of State for Transport set out the nine steps that we are taking to force it to rethink its decision and to prevent such cases from happening again in the maritime industry.

To come to the shadow Minister’s point, the Insolvency Service is now pursuing its own inquiries. It has commenced formal criminal and civil investigations into the circumstances around the redundancies. Those investigations are ongoing, so I am not in a position to comment any further on them for the time being, but I wish the Insolvency Service every speed in its efforts, as we all want a result that holds P&O Ferries to the highest account.

[Mr Dhesi]

I thank the Minister for outlining the statutory code and the Government guidance on improving working practices. To improve modern working practices, when will the Government finally legislate on the 51 recommendations that they accepted from the 2017 Taylor review?

[Paul Scully]

I will come to that in a moment.

I mentioned that ACAS has been helping us on both quantitative and qualitative data. We have moved to guidance, and are moving towards a statutory code, and my colleagues can see that action is taking place. Members have asked where my colleagues are. A number of them are in the main Chamber, tackling the issue of the rail strikes; if they go ahead, there is a distinct possibility that they will affect smaller businesses and workers. My colleagues are paying attention to that immediate risk to people up and down the country.

We have discussed fire and rehire on a number of occasions, and will continue to discuss it. As I have said, we want to eliminate the most egregious instances of its use. There has been a lot of conversation about the employment Bill. I must correct the hon. Member for Glasgow East (David Linden): our manifesto commitment was not to bringing forward an employment Bill, but to bringing forward measures that might be put in it. I bore all my officials and civil servants with my talk of the difference between output and outcome. I doubt any worker with a rogue employer is thinking, “I wish there was an employment Bill.” They are probably thinking, “I need carer’s leave,” “I need neonatal leave,” or, “I need flexible working.” Those are the things that affect people up and down the country; it is not that they need a single piece of legislation, tied up with a bow. That would be neat, clearly, but it is the measures to which we are committed, and that we will deliver.

[Chris Stephens]

Frankly, I think that implementing the 51 recommendations of the Taylor review does require a Bill. On 25 January, the Minister said that such a Bill would be in the Queen’s Speech. Why was it not?

[Paul Scully]

I will look back at my words, because I am not sure that I have ever pre-empted what Her Majesty was going to say. I will certainly look back at exactly what I said.

[Chris Stephens]

The Minister is being very generous in giving way. Let me quote Hansard for his benefit. He said, in a Committee chaired by the hon. Member for Shipley (Philip Davies):

“Clearly, the employment Bill, as the hon. Member for Glasgow South West knows, is primary legislation. It will be announced, when it comes forward in parliamentary time, in the Queen’s Speech.”—[Official Report, Third Delegated Legislation Committee, 25 January 2022; c. 24.]

Why was the Bill not in the Queen’s Speech?

--- Later in debate ---

[Paul Scully]

I said, “in parliamentary time.” It will be when parliamentary time allows. We have a manifesto commitment to delivering these measures in this Parliament. The Queen’s Speech relates to this Session, not this Parliament. Clearly, it would be neat to have the measures in a single legislative vehicle, but I think we would all find that workers up and down the country are interested in the net result—what happens to them in their daily life. We are task-focused, rather than process-focused.

[Christian Wakeford]

There is a bit of a debate now about whether there will be an employment Bill or an improvement to employment rights. The main question is: when will it be delivered?

[Paul Scully]

As I say, our manifesto commitments remain. The hon. Gentleman will see employment measures come forward both in this Session and before the end of the Parliament, because we want to act. We have pledged to do many things, and we absolutely want to stick to those pledges.

The hon. Member for Glasgow East talked about productivity. I will not comment on individual workers, but there is no doubt that companies in the UK are less productive than companies elsewhere in the G7, so we need to work on our productivity as a nation, and as businesses. That involves a whole raft of things, including working practices, the relationship between employers and employees, and infrastructure. If we raised our productivity to German levels, it is estimated that we could add £100 billion to our economy. Those are pretty substantial gains, if we can get there.

[David Linden]

I caution the Minister against making too many comparisons with Germany, which has much higher statutory sick pay. If he wants to make international like-for-like comparisons, let us look at the whole package, and the wider picture.

[Paul Scully]

I am going wider than workers’ rights and productivity. That is why we are rolling out the Help to Grow management scheme for smaller businesses, and other things. This is huge. We need better transport connections. That is part of the levelling-up agenda. There are lots of things within that, and I do not underestimate what the hon. Gentleman is saying. Our employment landscape is very different from that in Germany. In Germany, they tend to ask permission—it is courts first there, whereas we tend to be tribunal led. There are big differences.

One of the key things I want to raise about productivity relates to what the hon. Member for Llanelli (Dame Nia Griffith) said. She was absolutely right to say that job security leads to a better, more productive, happier and more loyal workforce. That allows workers and employees to plan and it results in better mental wellbeing. That is why, by setting statutory minimums in legislation, guidance and codes, we want employers to go further. Frankly, it makes business sense for employers to go further, rather than follow the egregious example of P&O. What is the point of taking people on and training them, which involves costs, time and resources, only to then cast them aside and have to do the same thing again?

[Dame Nia Griffith]

Will the Minister give way?

--- Later in debate ---

[Paul Scully]

I will give way, but I will then need to make progress so that I allow time for the hon. Member for Slough to respond to the debate.

[Dame Nia Griffith]

The Minister says that rational and good businesses would not do this, but the fact of the matter is that hundreds of businesses are being undermined because some businesses are using fire and rehire. It is being used repeatedly and in many different sectors. It is no good saying that it does not make logical sense; we need the legislation to back that up. That is what we want the Minister to bring forward.

[Paul Scully]

The hon. Member for Strangford (Jim Shannon) talked about parliamentary staff. Before becoming a Member, I worked in this place for a little while. I was an avuncular figure because I was about 20 years older than everybody else. People would come to my office in tears because former colleagues—they are not in this place any more—did not know how to employ people. The way in which they treated some of their staff was absolutely appalling. I have seen it at first hand.

The hon. Member for Llanelli rightly mentions the behaviour of some employers, and we have heard a number of examples today. Almost a year ago, The Independent reported that one employer was making a third of its workforce redundant and then taking on other people on less secure contracts. The Labour party claimed that by doing so it was putting itself on a firmer and fairer footing ahead of a general election, when it was telling people to use their own laptops, anti-virus software and firewalls, and to work from home. That is what I mean about outcomes and outputs. We can have great words, but if an organisation is not acting on them, that is no good to the employees who trust it. People want something that is flexible and that works to protect jobs but that also gets the best out of workers. It is really important that we work for that.

Let me leave the House in no doubt that this Government will continue to stand behind workers and stamp out unscrupulous practices where they occur. We will provide further updates regarding the consultation on the statutory code in due course, and we will inform the House and keep Members up to date on what we are doing on fire and rehire.