Employers: Fire and Rehire

Thursday 3rd November 2022 Lords Chamber

Question

11:18

Asked by

[Lord Woodley]

To ask His Majesty’s Government what assessment they have made of the frequency of the use of ‘fire and rehire’ practices by employers as (1) a negotiating tactic, (2) a cost-cutting measure to increase profits, and (3) a cost-cutting measure to prevent insolvency.

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

My Lords, the Government have been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic. We have asked the Advisory, Conciliation and Arbitration Service to conduct an evidence-gathering exercise to learn more about the use of dismissal and re- engagement practices, and its report is available on its website. The Government are now going further; we will bring forward a statutory code of practice and publish a draft for consultation in due course.

[Lord Woodley (Lab)]

I thank the noble Lord for his update. Members across this House share my belief that fire and rehire is immoral, but this obnoxious behaviour is still happening today. We know that and the Minister knows that. It is disappointing that, in spite of the kind words and efforts that have just been spoken about, the Government are not doing enough to eradicate this practice even though opinion polls show that 70% of Tory voters believe that this should be banned. Can the Minister therefore confirm that the new Government will be supporting my Private Member’s Bill? I emphasise that it protects companies which are at risk of going under and at the same time protects workers from the exploitation of opportunistic employers?

[Lord Callanan (Con)]

I am sure the noble Lord will not be surprised to know that we will not be supporting his Private Member’s Bill. Let me say that dismissal and re-engagement should only be considered as an absolute last resort if changes to employment contracts are critical and voluntary agreement is not possible. We do not want to encourage the practice but do not think that banning it would be right because, in some limited circumstances, it is the only way to save businesses and protect the jobs within them.

[Lord Addington (LD)]

My Lords, will the Minister give us an assurance that any firm using this practice inappropriately will lose any government contracts? That would be a very clear indicator that the Government disapprove.

[Lord Callanan (Con)]

We do disapprove of these practices, which is why, as I said to the noble Lord, Lord Woodley, we are producing a statutory code and will consult on it shortly.

[Lord Young of Cookham (Con)]

My Lords, is it not the case that the Government themselves have been guilty of firing and rehiring Ministers?

[Lord Callanan (Con)]

In his excellent way, the noble Lord makes a good point. I am sure it will give all of us, including the Prime Minister, cause for reflection.

[Lord Anderson of Swansea (Lab)]

In the proposed code of practice, what sanctions do the Government propose?

[Lord Callanan (Con)]

The noble Lord will have to await the details in the code of practice. One option will be to allow employment tribunals to take into account if the statutory code has not been followed and award uplifts in compensation as a result.

[Lord Fox (LD)]

My Lords, many across this House joined together to condemn P&O Ferries for its appalling behaviour towards its employees. Does the Minister agree that, in the long run, it seems to have got away with it and that this indicates the weakness of employment law?

[Lord Callanan (Con)]

As the noble Lord will be aware, the Government are bringing forward legislation to stop those kinds of practices and extend minimum wage provisions to seafarers. The DfT is progressing that.

[Lord Hendy (Lab)]

My Lords, when will the long-promised employment Bill be presented to the House? On previous occasions the Minister has said “when parliamentary time allows”. We notice that parliamentary time has allowed legislation to further restrict the right to strike and proposals to create a bonfire of workers’ rights derived from EU directives. Could the Minister not find a little bit of time for the employment Bill promised in 2019?

[Lord Callanan (Con)]

The noble Lord has answered his own question. The position remains that we will bring forward an employment rights Bill when parliamentary time allows. I point out that the Government are supporting numerous Private Member’s Bills which have been introduced, particularly in the other place, such as the Neonatal Care (Leave and Pay) Bill, Employment (Allocation of Tips) Bill, Protection from Redundancy (Pregnancy and Family Leave) Bill and the Carer’s Leave Bill. Many of these provisions are being taken forward.

[Lord McNicol of West Kilbride (Lab)]

My Lords, everyone deserves to be treated with dignity and respect at work, even government Ministers. Being rehired on worse terms and conditions is just plain wrong. It has been over seven months since the Government announced the new statutory code on fire and rehire, which I think the TUC called baby steps that would not deal with rogue employers. Can I push the Minster a little more? He said, “in due course”, but can he give any more detail on the timescale for the start of the consultation? Regarding the last question from the noble Lord, Lord Fox, I do not think P&O carried out fire and rehire, but just fired staff.

[Lord Callanan (Con)]

I answered the question from the noble Lord, Lord Fox. I cannot be absolutely precise on a timescale with the noble Lord; he will understand that. But we want to bring it forward in the near future.

[The Lord Bishop of London]

My Lords, having access to secure work is key to health, not just of individuals but the community. It means sufficient wages and reliable hours. London has the highest share of care workers paid below the real living wage of any English region. What are the Government doing to encourage care providers to be living wage employers to ensure that the workers who look after us have access to secure work?

[Lord Callanan (Con)]

The right reverend Prelate is correct. The best workers’ right is the right to a secure, well-paid job, which is why I am delighted that we have delivered record low levels of unemployment in this country and that the labour market is performing well. We also have one of the highest minimum wages in the developed world which this Government have increased significantly.

[Baroness Donaghy (Lab)]

My Lords, I am looking forward to hearing from both the noble Baroness, Lady Penn, and the noble Lord, Lord Parkinson of Whitley Bay, later in Question Time. I had nicknamed them the “Fire and rehire two”, but it is very good to see them back on the Front Bench. My question is about the use of employment tribunals and the reference the noble Lord made earlier. He will know the unsatisfactory situation and the length of time it takes for people to take cases to tribunals. Many cannot afford to because they are still scratching around for a new job. Is the Minister satisfied that our employment tribunal system is adequate for today’s needs?

[Lord Callanan (Con)]

The noble Baroness has queued up my noble friend Lord Parkinson for his return; we are all looking forward to his contribution. There are difficulties in the employment tribunal system—many of which are a result of the pandemic—as there are across the whole of the judicial system. Colleagues in the Ministry of Justice and others are working hard to resolve those problems.

[Lord Alton of Liverpool (CB)]

My Lords, can the Minister give further thought to and reflect on the suggestion made to him about the importance of looking at products produced by companies that fire and rehire? Would it be possible to amend the Procurement Bill—the noble Baroness, Lady Neville-Rolfe, is sitting alongside him and now has responsibility for overseeing that legislation—to prevent companies using these practices from selling their products into the Government’s supply chains?

[Lord Callanan (Con)]

I am sure my noble friend Lady Neville-Rolfe has heard what the noble Lord said. I am not going to give any commitments on her behalf. It is important to point out that only a very tiny minority of employers resort to these practices. The vast majority of employers look after their employees well and responsibly. As I said, we do not encourage these practices.

[Baroness Chakrabarti (Lab)]

My Lords, I am grateful to the Minister for his answers so far, but can I probe him just a little further on his suggestion that there are certain circumstances in which fire and rehire would be appropriate or necessary? It is well-established in employment law that a company facing challenges can make lawful redundancies, so why on earth should they be able to get into practices of firing and rehiring? Is he really seeking to establish high levels of insecure and zero-hours employment?

[Lord Callanan (Con)]

No, of course I am not. That is why we have one of the best employment law frameworks in the world. We have one of the lowest levels of unemployment. We have one of the highest minimum wages in the developed world and an excellent record on employment law. The point I am making is that in some very limited circumstances—which is not to be encouraged—if the alternative is the company closing and everybody losing their jobs, then it might be appropriate for a company to engage in this kind of restructuring because 90% of a wage is better than no wage.