Workers (Predictable Terms and Conditions) Bill

2nd reading
Friday 16th June 2023 Lords Chamber

Second Reading

14:02

Moved by

[Baroness Anderson of Stoke-on-Trent]

That the Bill be now read a second time.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, before I move on to the detail of the Bill, I put on record that today marks seven years since we lost Jo Cox, our friend in the other place. It is important to recognise that today. She celebrated that we have more in common than that which divides us. I hope this Bill demonstrates that to be the case. I thank Scott Benton MP, the Member for Blackpool South, for steering this Bill through its various stages in the other place.

Trade unionism is in my blood. Securing a better deal for working people is one of the reasons I joined the Labour Party and first ran for election. I come from a family of proud trade unionists. My great-grandfather was the founding member of his Yiddish branch of cabinet makers in the East End of London, my grandfather was a blacklisted steel worker who became a miner, my father was the first trade unionist to lead industrial action in the insurance sector—he was then also duly blacklisted—and my wonderful mother was the deputy general secretary of Amicus before her retirement. It should surprise no one that I followed in these footsteps and became a trade union officer too. This is why legislation giving more rights to people at work is so important to me and why I am proud to be able to promote this Bill today. It is another chapter, albeit a limited one, in the journey of empowering workers and rebalancing power in the workplace.

There is some technical detail to cover today, but I invite noble Lords at the back their minds to remember that there are over 3.7 million people working on insecure contracts and 1.1 million on zero-hours contracts. It is easy to get lost in the scale of those numbers, but behind the statistics are families struggling to make ends meet and working people in dire need, not knowing how much will be in their pay packet at the end of the month. In the 21st century in the UK, there is no excuse for our fellow citizens to be experiencing that level of fear and the onus is on us to help them.

The 2017 Taylor review of modern working practices found that workers on zero-hours contracts, agency workers and temporary workers struggle where flexibility is one-sided in the employer’s favour. We know that some employers misuse flexible working arrangements to create unpredictability, insecurity of income and a reluctance among some workers to assert basic employment rights—rights that many of us take for granted. This one-sided flexibility means that workers need to be available to their employer with no guarantee of work. Employers can also schedule or cancel shifts with very little notice, leading to insecurity of hours and income for workers or, in the case of temporary or agency workers, dismissal at short notice. Many individuals working unpredictable patterns experience an imbalance of power with their employers, which leaves them afraid to ask their employer for more fixed conditions for fear of being dismissed or denied future shifts.

To address the issue of one-sided flexibility, the Taylor review recommended a new right to request a contract with guaranteed hours for zero-hours contract workers. This, in part, is why we are here today. The successful passage of the Bill will create a new right for workers to request a more predictable working pattern. A qualifying worker will be able to make a request if their existing working pattern lacks predictability in the hours and times they work or if it is a fixed-term contract for less than 12 months.

Both workers and employers will be able to retain the benefits of atypical forms of work, if that is what works for them, such as zero-hours contracts, temporary contracts and agency work, as this is a right to request more predictable working, not an entitlement to it. That will have to be the next step.

We know that atypical employment suits some, not all, groups, such as those working around their studies or caring responsibilities. Workers who are content to work in these circumstances will be able to continue to do so and employers will be able to decline requests on specific, statutory business grounds. The Bill will begin to address the unfair imbalance of power which exists between some employers and workers, empowering workers to talk to their employer about their working pattern, safe in the knowledge that starting the conversation should not affect their standing in the workplace.

Where this legislation is embraced by employers as a force for good it will give workers additional predictability and security of both hours and income, at a time when we know that too many people with unpredictable or varying levels of income are struggling with the cost of living.

The powers outlined in this legislation, if embraced by employers, will work for everyone. Workers will be better able to secure employment which suits their individual circumstances, increasing job satisfaction and helping many with their work/life balance. Businesses which accept their workers’ requests will reap the benefits of improved retention, as workers will not have to look for a new role to secure a working pattern which meets their needs.

The four clauses of and one schedule to the Bill will both introduce this important new right and ensure that it can be properly enforced. The Bill sets out the eligibility criteria for the new right. To ensure that as many workers as possible who have an unpredictable working pattern can benefit from this new right, all workers and employees will be eligible after an expected period of 26 weeks, subject to the secondary legislation. Given that the Bill targets workers with unpredictable working patterns, they are not required to have worked for their employer continuously over that period.

Specific provisions are also made for the eligibility of agency workers, given the unique way in which their working relationships function. Agency workers who make applications directly to hirers will be required to have worked for their hirer for at least 12 weeks continuously during the proposed 26-week period. This replicates the provision in the Agency Workers Regulations 2010 which states that, after 12 weeks’ continuous service, an agency worker will gain entitlement to a set of employment rights which are the same as if they had been recruited directly.

Employers’ responsibilities are also prescribed to support employers when they receive a request and to ensure that workers know what they should expect from their employer. Employers must deal with the request in a reasonable manner and notify the worker of their decision within a month.

The Bill also details the grounds on which workers may make a complaint to an employment tribunal. This will protect workers effectively if, for example, their employer does not consider their request in a reasonable manner, wrongly treats the application as withdrawn, dismisses or treats a worker poorly because of their request, or rejects an application on the basis of incorrect facts.

Workers will be permitted to make two requests for predictable working per year, in recognition that workers’ and businesses’ circumstances can change over the course of a year. If we have learned anything over the last five years, we know that the world can change beyond all recognition, seemingly overnight. This will mirror the number of flexible working requests which will be allowed under the Employment Relations (Flexible Working) Bill, which has recently passed its Second Reading in this House. As a package, this Bill’s clauses create an important new right to request a more predictable working pattern, which will carefully balance the needs of workers in unpredictable work with the needs of their employers.

In conclusion, I thank the Minister for indulging me today, and thank his officials, who have been so incredibly helpful and supportive. I also thank the policy teams at UNISON, the TUC and the GMB for providing briefings on the Bill; I look forward to working with them in the years ahead to make sure that our employment legislation really does balance power in the workplace and help drive both economic growth and enhanced wages. I thank all noble Lords who plan to speak on this important matter today. I am sure I will see support from across the House for action to tackle the issue of one-sided inflexibility.

This Bill is a starter for 10. There are many tweaks we could make to make this legislation better for workers, but I do not believe in allowing the perfect to be the enemy of the good. I hope your Lordships’ House will embrace my pragmatism and support the Bill. I beg to move.

14:11

[Lord Davies of Brixton (Lab)]

My Lords, I support the Bill and thank my noble friend Lady Anderson of Stoke-on-Trent for bringing it to this House. I also thank her for her clear and comprehensive summary of what the legislation involves.

I said very similar words exactly four weeks ago, when I spoke at the Second Reading of the Employment Relations (Flexible Working) Bill, which was introduced by my noble friend Lady Taylor of Bolton. I am going to repeat much of what I said on that occasion.

I still think it is a shame that a series of measures affecting employment is being brought bit by bit through the legislative process, when the Government gave a commitment to a Bill on employment law. On the earlier occasion, I asked the Minister to say something about whether and when we are actually going to get this overall employment Bill. Although he did not answer, his answer was, in effect, never. The Government have effectively given up on the idea without saying so in as many words. Perhaps the Minister may wish to comment in his response. I would welcome even more a new Labour Government’s employment law, where we can address all of these issues coherently and effectively.

The employment relations Bill was about flexible working, whereas we are currently talking about predictable terms and conditions. Obviously, the two mesh together, pointing out the absurdity in the Government’s position. My particular interest in this area of the law is the effect it has on people’s pensions. Increasing attention has been given to the gap between the pensions that women tend to get and those received by men. One of the underlying reasons for that gap is that women face uncertain terms and conditions in employment more than men. We have to resolve one problem before we can resolve the other.

I emphasise that this is not about freedom and choice. Sometimes it is suggested that people want flexible conditions to fit in with their lifestyle. A poll recently undertaken by the TUC found that almost half of respondents said that zero-hours work was the only work that was available to them, and that was the reason they chose to accept it, not because it fitted in with their lifestyle. Some 16% said that it was a typical type of contract in their area of work, so they are stuck without a choice. Fewer than one in 10 people said that work/life balance was the most important reason for entering this type of work. It is also likely that it is the absence of good flexibility and more secure roles, rather than a preference for employment, that means this appeals to those with caring responsibilities, again because they are forced into it with no real choice.

I welcome this proposal. There is much that can be done to improve it, and it is worth highlighting just a few of the issues. Too much is being left to regulations. A request to consider is inherently weak; it does not take account of the disparities of power in the workplace, and requests are too easily rejected provided an employer follows the correct procedure. There are weaknesses. Even when we come to the remedies, they need to be more effective because of weaknesses in the industrial tribunal system currently. It can take up to two years to get a case heard, which is not an effective way of enforcing.

To repeat the conclusion I reached four weeks ago, the Bill, while limited in scope and with deficiencies, is still to be welcomed, and I thank my noble friend for bringing it to us. I thank the Government for their support for the Bill, in anticipation of the Minister’s response, but we still need a more comprehensive approach to employment and labour law.

14:16

[Lord Palmer of Childs Hill (LD)]

My Lords, we on these Benches welcome this Bill but it is flawed. As the noble Lord, Lord Davies, said, and as the mover said, it is a step on the way, with limited use. I thank the noble Baroness, Lady Anderson, for bringing it to this House for us to discuss.

The Bill establishes a new statutory right for more predictable working patterns, but the person has to have been with the same employer for a set amount of time. Can the Minister say what the Government understand to be the length of that time?

I would like to think that all sides of this House would agree that insecure work is deplorable, and the Bill is a small step towards alleviating that problem. Do the Government support it? It is a Private Member’s Bill which passed through the Commons, but what is the Government’s position on it now?

Can the Minister explain how the Bill affects flexible working? There was a consultation on workers’ rights to reasonable hours and what happens if shifts are cancelled. How is that affected by the Bill’s being passed in this House? As was said by other noble Lords, almost 4 million people are in insecure work: agency workers, casual workers and seasonal workers. Can the Minister say whether work has been done in identifying those paid less than the national living wage? Can he also say whether it is correct that over 1 million workers are on zero-hours contracts?

There are extensive grounds for employers to reject applications, even with the Bill we have before us: costs; not being able to satisfy customers; recruitment; harming business—the list goes on. The Bill is a veritable minefield for the employee who we are aiming to protect. It is a step on the way but it is a minefield. Is a complaint to a tribunal a feasible remedy? I recently spoke, as did the noble Lord, Lord Davies, on the flexible working Bill. Can the Minister say how the two Bills interact, because there are two Bills?

What is required is that people have secure jobs with proper rights and fair pay. This Bill is part, but only part, of that requirement. Changes in technology and the nature of employment have outgrown the existing system of employment rights and protections. The aim is to make work pay and ensure that there are good and well-paid jobs available for people to do. This is for the benefit of workers, employers and the wider community.

There is a need to establish an independent review to consult on how to get a genuine living wage across all sectors. This living wage should be paid in all central government departments and their agencies, while other sector employers are to be encouraged to do the same. We would establish a powerful new worker protection employment authority to protect those in precarious work and change the law so that flexible working, which we refer to again and again, is open to all from day one in the job, with employers required to advertise jobs accordingly, unless there are significant business reasons why that is not possible.

We need to modernise employment rights to make them fit for the age of the gig economy, so we would establish a new dependent contractor employment status, between employment and self-employment, with entitlements to basic rights, minimum earnings levels, sick pay and holiday entitlement. We also need to review the tax and national insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment, perhaps setting a 20% higher minimum wage for people on zero-hours contracts at times of normal demand to compensate them for the uncertainty of their fluctuating hours of work. Giving on request a fixed-hours contract to zero hours and agency workers after 12 months should not be unreasonably refused. We also need to shift the burden of proof in employment tribunals regarding employment status from the individual to the employer.

Although I welcome the Bill, as the noble Lord, Lord Davies, said before me, there are lots of gaps that need to be filled. We seem to be nibbling around the edges, with a Bill last week or the week before and now this Bill today. These are very welcome, but we need to hear some comprehensive reply from the Minister as to how workers are really going to be protected.

14:22

[Lord Leong (Lab)]

My Lords, I echo what my noble friend Lady Anderson of Stoke-on-Trent said about our friend Jo Cox. We remember her more so today than any other day. She was the best of us, and let us be the best of her.

I congratulate my noble friend Lady Anderson on bringing this proposal as a Private Member’s Bill and hope that it can swiftly pass through its remaining stages. I admit that I was more than a little shocked to discover that the provisions and protections of this Bill were needed. When it comes to zero-hour contracts, the default position has been to offer one-sided flexibility—an awful example of political double-speak, which attempts to disguise the unbalanced and exploitative relationships between employers and some of the most vulnerable people in our workforce.

In 2015, exclusivity clauses on zero-hour contracts were made unenforceable for many workers, but this right was not extended to those earning less than £123 per week until December of last year. Let us consider what this really means: workers in low-paid jobs, facing double-digit inflation and mostly impacted by food inflation in the high teens, have been entitled to non-exclusive zero-hour contracts only for the last six months. That is shameful. It pains me to think how many people may have been so desperate that they remained trapped into staying with an employer who could treat them as an afterthought, with little sense of the human being and their family depending on unpredictable wage packets, week after week.

My noble friend’s Bill improves their position a little further, supporting workers who have been employed in this way for some time, whether directly or through an agency, to request that it becomes formally recognised in their employment contract. This will add a much-needed layer of security for those teetering precariously on the very fringes of the world of work. It has been estimated that the net cost to businesses of this legislation will be only £16.9 million annually. As a businessperson and an investor in many SMEs, I recognise that some micro-businesses may find even the smallest additional costs challenging, especially with the current cost of living crisis. However, I was surprised that it was such a relatively low figure for the whole UK economy, given that it could make an enormous difference to thousands of our most vulnerable citizens. We should remember that many of the employers facing these costs will not be micro-businesses or SMEs—not at all. In a country where the average FTSE 100 CEO earns 103 times the average worker and more than 150 times a full-time worker on the minimum wage, this minimal cost that can be met.

We know that the cost of living crisis disproportionately impacts the lowest paid. Just last week, the publication of annual reports of some well-known British companies revealed that their CEOs received seven-figure bonuses, which more than doubled their enormous so-called basic salaries of around £1 million. I do not think it would break their business models to ensure that some of this money found its way to their lowest-paid employees, perhaps demonstrating some “other-sided” flexibility.

The potentially life-changing social and economic impact on the lives of the lowest-paid workers, who would be helped by the Bill, and the resultant benefits to the employer of a more engaged and stable workforce will, in my view, quickly repay the relatively small additional cost. I believe—indeed, the Labour Party was born out of this belief—that treating employees with dignity, providing them with the stability that comes with a regular wage, leads directly to improved self-esteem and loyalty, which in turn builds a more positive, productive and profitable business. Although investment in equipment and technology is important, investing in the workforce should always take account of the people behind the spreadsheets. People are the drivers of any business, and this will always be the case. As employers wrestle with artificial intelligence and the much discussed “rise of the machines”, we should be looking after our employees.

Although much more can still be done to improve workers’ employment rights, as my noble friend Lord Davies and the noble Lord, Lord Palmer, said, I have enormous respect for my noble friend’s efforts in bringing the Bill before us. It is definitely a step in the right direction, and I urge noble Lords to support it.

14:28

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

I thank the noble Baroness, Lady Anderson, for bringing this important Bill forward for debate today—it is a notable day. It is an honour to be here to confirm the Government’s ongoing support for it, and I thank all who spoke on this important matter. I also thank Scott Benton MP for initiating the process that has led to us debating this topic today. The Government are pleased to support this Private Member’s Bill, which will introduce a vital new right to request a predictable working pattern.

I watched the Bill’s progress through the other place with great interest, and I am pleased that it has arrived here for our consideration so swiftly. Its progress demonstrates just how much we can achieve through cross-party co-operation and the dedicated work of Bill sponsors across the political spectrum—in this case, Scott Benton MP and the noble Baroness, Lady Anderson. There is always an element of fragility in the parliamentary process for a Private Member’s Bill, but I am pleased that, so far, the Bill has met with consensus, and I hope that the same will be the case today.

Zero-hours contracts and other forms of atypical work are an important part of the UK’s flexible labour market, for both employers where there is not a constant demand for staff, and for individuals who need to balance work with other commitments such as childcare or study. However, as outlined by the noble Baroness, Lady Anderson, many workers experience the issue of one-sided flexibility, whereby workers have to be available to their employer with no guarantee of work. We recognise that receiving unpredictable and varying levels of income each month can make it difficult for some workers to pay their bills, especially during a time of cost of living challenges.

The Workers (Predictable Terms and Conditions) Bill will allow workers to request more predictable working arrangements, addressing this issue of one-sided flexibility, while also ensuring that workers are able to continue working on a zero-hours contract or another form of non-guaranteed hours or temporary contract if that is the type of contract which suits them. The Bill will allow individuals and businesses to strike the right balance between flexibility and predictability.

The Government fully appreciate that businesses are facing challenges, not least those associated with the rising cost of living, and it is vital that this new right does not place further burdens on our hard-working business owners. As the noble Baroness, Lady Anderson, explained, this new right will function in a similar way to the existing right to request flexible working. An employer will be able to refuse a request for a more predictable working pattern based on one of six specific statutory grounds, which are similar to those established for the right to request flexible working. These grounds build in vital flexibility for businesses, ensuring that they are not unfairly burdened by accepting requests which would, for example, generate burdensome additional costs or affect their ability to meet customer demand.

As the noble Baroness set out, the right will be available to workers who have been with their employer for a set period before they make their application. We will set this out in regulations and expect it to be 26 weeks. Given that this Bill targets workers with unpredictable working patterns, they will not have to have worked for their employer continuously during that period. This eligibility criterion ensures that as many workers with unpredictable working patterns as possible will be able to benefit from this new right.

Workers will be empowered and encouraged to start conversations with their employers about their working patterns, with the confidence that starting these conversations should not result in detriment to them. Businesses will benefit too from improved worker satisfaction, and therefore productivity. Accepting predictable working requests will allow businesses to retain valuable skilled staff. Facilitating high productivity, both through this measure and through the other five Private Members’ Bills we are supporting, will help to drive higher employment, better wages and economic growth—and hence, prosperity.

This House frequently adds much value and challenge through asking the right questions about the need for delegated powers in a Bill and their intended use. I am pleased to reiterate the assertion made by the noble Baroness, Lady Anderson, that the powers in this Bill are, as far as possible, in line with the delegated powers in existing legislation on the right to request flexible working. The powers contained in the Bill are also drawn as narrowly as possible.

The new right to request a more predictable working pattern is the latest in a series of measures that the Government have taken to support workers on zero-hours contracts and those on low pay. In 2015, the Government banned exclusivity clauses in zero-hours contracts, as the noble Lord mentioned, helping zero-hours contract workers to secure additional employment and boost their income. As of December 2022, this ban has been extended to exclusivity clauses in the contracts of workers with a guaranteed weekly income equivalent to or below the lower earnings limit of £123 per week. In April 2023, the Government increased the national living wage for workers aged 23 years and over by 9.7% to £10.42, the largest ever cash increase.

Further to these measures, the Government consulted on the right to request a more predictable contract in 2018, and the vast majority of respondents agreed with the creation of a right to request a more predictable working pattern. In response to this consultation, we committed to introduce a right to request a more predictable working pattern for all workers, including those on zero-hours contracts, agency workers and those on temporary contracts. This was followed by a commitment in the 2019 Conservative manifesto to introduce a new right to request a predictable working pattern. I am therefore delighted that the Bill reflects the Government’s previous commitments on this important issue.

The Bill forms part of a wider package of six government-supported Private Members’ Bills, which are delivering on our 2019 manifesto commitments on employment rights. Taken as a package, the Bills will enhance workers’ rights and support people to stay in work. They will help new parents, unpaid carers and hospitality workers. They will give all employees easier access to flexible working. I am delighted that four of the Bills have now gained Royal Assent and become law, and I look forward to seeing the predictable working Bill and flexible working Bill complete their parliamentary passages shortly.

I will address some points made by Members during this debate. While this is a Private Member’s Bill, I am pleased to explain the Government’s policy position on these points. On the question about employment law raised by the noble Lord, Lord Davies, the Queen’s Speech set out an ambitious legislative programme that includes a competitive set of Bills that enable us to deliver on priorities such as growing the economy, which will, in turn, help to address rising living costs and get people into good jobs. There is no employment Bill, but we are making good progress in bringing forward alternative legislation to deliver on our manifesto commitments on employment. I do not have the detail on the specific effects on pensions, so I will write to the noble Lord with the detail he requests.

On the issue raised by the noble Lord, Lord Palmer of Childs Hill, I believe that I have explained the length of time that needs to be applied, for both agency workers and other workers. On the question of flexible working and cancelled shifts, my understanding is that a consultation has been held and they are now waiting to respond in due course.

I mentioned the national living wage. While I take the point about zero-hours contracts, I believe that they now affect only 3% of the workforce—a very valuable part of the workforce, who are extremely useful for a lot of businesses with unpredictable work requirements. Some 75% of people on zero-hours contracts report that they work part-time, compared to only 24% of other people in employment, and 26% of people on zero-hours contracts are in full-time education, compared to only 3% of people in other employment, so they fulfil a valuable role.

On the point made by the noble Lord, Lord Leong, we entirely agree with the concept of an engaged and stable workforce. This involves a balance between workers’ rights and the need for employment; it always has, and, I imagine, always will. I completely understand the worry about the increasing pace of technology and the advance of AI, and what effect that may have on the employment numbers. The Government are looking at that most carefully.

Supporting the Bill is in line with the Government’s ongoing commitment to build a strong and flexible labour market that supports participation and economic growth. It has been encouraging to see that there is support from across the political spectrum in the House for this important measure, as is clear from today’s debate. I look forward to continuing to work with the noble Baroness, Lady Anderson, as the Bill progresses through this House.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I thank all noble Lords for their contributions today, especially my noble friend Lord Davies of Brixton, who highlighted how far we still have to go. I also thank the noble Lord, Lord Palmer, for his support, my noble friend Lord Leong for making it clear that this legislation is supported by my Front Bench and the Minister for signalling the Government’s ongoing and continued support for this and the other legislation that follows as part of Private Members’ Bills. This is a stepping stone in the long journey of securing comprehensive employment rights for all who work in the UK, but it is a vital one for those who find themselves in insecure employment. It might not be perfect but it is an important step forward and I therefore invite noble Lords to support the Second Reading of the Bill.

Bill read a second time and committed to a Committee of the Whole House.