Draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024
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The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move,
That the Committee has considered the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024.
It is a pleasure to see you in the Chair, Mr Mundell. This order was laid in draft before the House on 17 October 2024. I start by referring to my entry in the Register of Members’ Financial Interests. This straightforward instrument relates to protective awards, which can be made by an employment tribunal when an employer does not meet its collective consultation obligations. Those obligations currently apply when an employer is proposing to dismiss 20 or more employees within any 90-day period at a single establishment.
Schedule A2 to the Trade Union and Labour Relations (Consolidation) Act 1992 sets out the list of claims for which an employment tribunal can make a 25% adjustment to compensation if one of the parties has unreasonably failed to comply with a relevant code of practice. Collective consultation requirements apply, among other things, to dismissal and re-engagement scenarios involving 20 or more employees. The code of practice on dismissal and re-engagement will be a relevant code of practice in such cases.
The change will mean that when an employment tribunal is making a protective award in a case where the code applies, and it appears to the tribunal that the employer has unreasonably failed to comply with the code, the tribunal may increase that award by up to 25%, increasing the deterrent effect of the code. In other words, if an employer dismisses and re-engages employees but does not meet its collective consultation obligations and unreasonably fails to comply with the code, it will be liable for a greater payout. The order will therefore give the tribunal greater discretion to take individual behaviours into account when making an award. It will add a key potential claim in dismissal and re-engagement scenarios to the list of awards that can attract a 25% adjustment for non-compliance with the code.
As Committee members may be aware, a version of this order was debated and approved in the House earlier this year; however, because the election was called and Parliament was dissolved, it was not debated in the other place. That is why we are here debating it again. If the order is approved in both Houses, it will come into force in January 2025.
The Government are committed to going much further than is set out in the code. We have brought forward the Employment Rights Bill within our first 100 days of government, as we promised; that will end the unscrupulous fire and rehire practices that we believe have no place in a modern employment market. In the meantime, before the Bill completes its passage and comes into force, we have decided to continue with the previous Government’s code of practice, which came into force earlier in the summer. Although we recognise that it is inadequate on its own, it does offer some additional protections to working people.
The code sets out employers’ responsibilities when seeking to change contractual terms and conditions of employment. As I said, the order will mean that there could be a 25% uplift in the award if an employer has unreasonably failed to comply with the code. But we will go further by ending the unscrupulous use of fire and rehire. We are consulting on reforming the law to provide effective remedies against abuse and will replace the statutory code with a strengthened code of practice. We have launched a consultation to gain views on increasing the cap on the protective award for scenarios where employers have not complied with collective redundancy rules; and on adding interim relief to collective redundancy and fire and rehire scenarios. Increasing the protective award would mean that the small proportion of companies that flout existing rules could end up paying significantly more per employee. The consultation also seeks views on whether interim relief should be available to employees who bring claims for unfair dismissal in fire and rehire scenarios and for breaches of collective consultation requirements.
I will not say any more about this straightforward regulation. I conclude by highlighting the Government’s ambitions on the “Make Work Pay” plan, which sets out an ambitious agenda that will strengthen the rights of workers, address the fragmented labour market and support workers in balancing responsibilities outside work. In so doing, “Make Work Pay” will help people stay in work, make work more secure and family-friendly, and improve living standards, putting more money in working people’s pockets.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell.
As the Minister said, this draft statutory instrument was largely consulted on and prepared by the previous Conservative Government, so clearly the Opposition will not divide the Committee this afternoon. I congratulate the Department for Business and Trade, however, on managing to update the explanatory memorandum, unlike a Department for Transport statutory instrument that I responded to the other week, which still listed Guy Opperman, a Minister in the previous Government, as having signed off the declaration.
The measures in the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 build on legislation passed under the previous Government. The memorandum that accompanies this statutory instrument directly references historical concerns about fire and rehire tactics, which—I put it to the Committee—the last Conservative Government addressed through the establishment of a statutory code of practice. I gently suggest to the Minister that that should be reflected in the Bill that comes to Committee next week.
In government, we were clear with employers that they must not use threats of dismissal to pressurise employees into accepting new terms, and that they should have honest and open-minded discussions with their employees and representatives. In accordance with the code of practice, businesses must consult with employees in a fair and transparent way when proposing changes to their employment terms.
The Conservatives took the initiative to uphold and secure employment rights. Meanwhile, the Government—this is where some contention sneaks in—seem content with their disastrous national insurance jobs tax on employers and employees, the latter shouldering 76% of the cost according to the Office for Budget Responsibility, and to see businesses struggle and in many cases risk failure all together. There cannot be employee protections without employees in the first place.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
It is a delight to see you in the Chair, Mr Mundell. I had wondered whether it was necessary to speak, but given some of the comments I have just heard, I feel compelled to do so.
I congratulate my hon. Friend the Minister on the Employment Rights Bill, on the back of the “New Deal for Working People”. The Bill will be the single and foremost change to working people’s terms and conditions in this country for more than a generation. It is long overdue. When I first saw this order, however, I got quite a shock. I thought, “Is this it?”, although I suppose a 25% uplift is better than nowt. But of course it has not come from our Front Bench, thank goodness; it is something we have inherited.
I want to look at this draft measure through the prism of fire and rehire—actually, not fire and rehire, but fire and replace—that we came up against in P&O Ferries and Peter Hebblethwaite. I was a member of the Business and Trade Committee that heard evidence from that chief executive. He made it abundantly clear that he was quite prepared to break the law of the land on consultation periods and to price it into the compensation, the pay-off, of his workforce.
All we got from the then Government was a wringing of hands, a condemnation and very little else. The draft order seems to be the sum total of their response to that travesty. I have to tell the Committee that the 25% uplift would be a doddle to the likes of P&O. It would not be impacted one jot. I am delighted that the Minister mentioned interim relief; when we go forward with our excellent Employment Rights Bill, I am sure we will discuss what that will look like.
I gently say that if we are going to be able to stop another P&O, we will need injunctive relief because trying to bring out interim relief after the horse has bolted will be no good whatever. I also gently suggest that the sorts of financial penalties that need to be imposed on the egregious behaviours of the likes of P&O will have to be significantly higher. There was discussion about unlimited fines being visited on those who had deliberately prepared to break the law for their own ends. We have to look at those issues very carefully.
In addition, now that we have the opportunity we have to reflect on the appalling record of enforcement across the piece. The number of tribunal awards that are not paid out by employers is legion, and the ability of people to then pursue their enforcement is sadly lacking. It is critically important that we should have rights and protections for our workforce and the powers to have those enforced. I will close with that; I just express my relief that we did not bring the measure forward—
Graham Stuart (Beverley and Holderness) (Con)
You are bringing it forward—that’s what we are doing here!
Andy McDonald
I get the right hon. Gentleman’s point, but the legislation did not originate from the Government side. We are taking this first step, but I put the Opposition on notice that it is simply a first step.
Justin Madders
I welcome the Opposition spokesperson, the hon. Member for Mid Buckinghamshire, to his place. I fear we will be seeing a lot more of each other. No doubt we can pick up some of the wider points he made during our consideration of the Employment Rights Bill, which we will be debating over a number of weeks.
In response to the hon. Gentleman’s critique, I gently point out to him that this is a significant step forward. However, as my hon. Friend the Member for Middlesbrough and Thornaby East said, even the Advisory, Conciliation and Arbitration Service, when asked to respond to the measure, said that it might not always present a significant deterrent when calculated against the financial costs and risks of an alternative approach. So even ACAS, whose job it is to reduce employment disputes, does not believe that it goes far enough. The Government are clear that we do not believe it goes far enough, which is why we are consulting on measures such as removing or doubling the cap for protective awards, and possibly introducing interim relief. All Members are invited to respond to the ongoing open consultation.
I am pleased that we have agreement across the board about the measure. It is a small step forward—an interim step—but it is not the final destination. The Government are clear that we want to ensure that the likes of what happened at P&O can never happen again. I commend the measure to the House.
Question put and agreed to.