Employment Rights Bill (Third sitting)
Thursday 28th November 2024
(1 day, 18 hours ago)
Public Bill CommitteesEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 28 November 2024 - (28 Nov 2024)
The Chair
We are now sitting in public and the proceedings are being broadcast. In line with the sittings on Tuesday, for each panel of witnesses I propose to call the shadow Minister to ask the first question, followed by the Minister and the Liberal Democrat spokesman. I will attempt to alternate between Opposition and Government Members. That will not always be possible, because sometimes three people from one side want to speak and nobody from the other, but I will aim to balance it up. We have to stick to the cut-off time specified in the programme order, and I will interrupt questioning if necessary.
Can I remind Members that they must declare any relevant interests when asking questions? Before we start hearing from witnesses, do any Members wish to make a declaration of interest that they have not already declared in connection with the Bill? Members should ensure that interests are declared before speaking or tabling amendments. If there are no questions or declarations, I will move to the first set of witnesses.
Examination of Witnesses
Claire Costello, Helen Dickinson OBE and James Lowman gave evidence.
The Chair
We will hear oral evidence from Claire Costello, chief people officer at the Co-op, Helen Dickinson, chief executive of the British Retail Consortium, and James Lowman, chief executive of the Association of Convenience Stores. We have until 12.10 pm for this panel. Would the witnesses be good enough to introduce themselves for the record—very briefly, as we are pressed for time?
Claire Costello: I am Claire Costello, chief people and inclusion officer for the Co-op. For those who do not know the Co-op, we are a retailer, funeral care provider, insurance provider and legal services provider. We employ 55,000 people. I am very happy to be part of this process.
Helen Dickinson: I am Helen Dickinson, chief executive of the BRC. The BRC is the lead trade body for the retail industry. Our members cover larger businesses like the Co-op and many others, down to smaller businesses. We also have in our membership some trade associations that represent independent retailers.
James Lowman: I am James Lowman, chief executive of the Association of Convenience Stores. Our members are the people who operate local shops in villages, estates and high streets up and down the country. There are about 50,000 of them in the UK.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Claire Costello: We are very supportive of the opportunity provided by the Bill. As a co-operative, and a very old co-operative at that, the health and wellbeing of our colleagues is incredibly important to us. We are very supportive of the principles of what we are looking to drive for here, but the challenge around the detail needs to be looked at.
For example, what does it mean to have a probationary period that enables a colleague to join you and ensures, first, that you give them the right opportunities to develop and grow and, secondly, that, if they are not suitable, you have the opportunity to enable them to leave the business? I will give you a couple of stats. Of our leavers last year, 75% had been with us for less than two years, and 36% of the people we asked to leave the business had been with us for less than three months. That is a really good example that shows that it just does not work out sometimes.
Could the probationary period be a barrier with unintended consequences? Yes. Are there things you can do around that to minimise it? I would say so, but again, we need to make sure the detail of the Bill does not drive unintended consequences. It must leave enough flexibility for employers within the broader groups represented on the panel and for us. We want to support people from disadvantaged backgrounds and bring ex-offenders into the organisation. We are working very hard to support them across a number of areas, so we do not want that to be an issue. We would work really hard to make sure that it is not an issue at the Co-op, but ultimately, on a broader footprint, it is something to be mindful of.
Greg Smith
Q
Claire Costello: I think it is more about the fact that the Bill will drive more tribunals if people feel that they have a route to do that, so that might make people a bit reticent. There is also the timescale. We have a three-month probationary period, so nine months is fine, but there is a point about day one rights to leave. That does not stop you supporting a new starter into the business and, if it does not work out, being able to manage that exit, but it is about doing it without incurring significant costs at every single level. That does not mean just the formalised cost of going through an employment tribunal, but the time it takes to hear a case within the business. Good organisations make sure it is heard at different levels, and then a grievance is raised and you have an appeal. It is very time consuming to do it in the right way, but that is what we want to do. Again, it sucks up time, resource and cost within an organisation, when what you want is to spend the time enabling people to be successful, and driving productivity and driving the benefit for the business you work in.
Greg Smith
Q
Claire Costello: Not yet, because there is not enough detail for us to do that. We are really keen to see what the more detailed asks look like.
Greg Smith
Q
Claire Costello: Yes, there will be on-costs from the Bill. Do I think it is the right thing overall? Again, we are broadly supportive of where it is heading, but there will be on-costs in there.
Greg Smith
Q
Helen Dickinson: Thank you very much for this opportunity. We are probably going to end up violently agreeing with each other, but let us see how we go.
There is real alignment on the objectives of the Bill: to improve working practices, have the right culture between employees and businesses, and weed unscrupulous employers out of the system by targeting them. It is great to have the opportunity to talk to you. I am sure that, from a Co-op and a wider retail industry point of view, many responsible businesses are already undertaking some of the processes in lots of parts of the Bill—things like the right to flexible working—and I think everybody is supportive of and aligned on proposals like a single enforcement body.
Building on Claire’s comments, the challenge comes in certain areas where the devil is in the detail. Claire mentioned probation periods; what does the guidance and the framework for a fair dismissal process look like? I have a list: guaranteed hours, union recognition and collective consultation. In all those areas, there is some detail that we can delve into to see where the challenges might sit. It is about making sure that the implementation does not end up in the scenario where too much cost is added, or too much process is put in place that disincentivises employing people from a disadvantaged background or in the entry-level jobs that the industry is so good at providing. Part of that is in the Bill, but a lot relating to how some of these things will get implemented will be done through the consultation process that comes after. Shall I dip into guaranteed hours, as an example?
Greg Smith
Please do.
Helen Dickinson: A reference period is conceptually a good idea—the question is whether it is too short. I know that some people who appeared in front of the Committee earlier this week suggested that it should be slightly longer. I think requiring a business to offer the hours of that reference period in every single circumstance does not really take into account the peaks and troughs, the flexibility that retail businesses need or that lots of people who work in retail already have, and how the actual implementation could be framed to give people the opportunity to opt out or to have the right to request, as opposed to the right to have.
That is an example of where the implementation could be very onerous, very expensive and disincentivising, or, if it is implemented in a way that actually works for businesses and employees—because a lot of people value that flexibility—can create the win-win that the framework and the objectives of the Bill are seeking.
James Lowman: I agree with much of what Claire and Helen said, so in the interests of time, I will not repeat that. To give a bit more flavour on convenience stores, we see ourselves as an exemplar of flexible, local, secure working—98% of colleagues have a contract, and zero-hours contracts are used very little. More than a third of our colleagues walk to work. We are the ultimate local, flexible employer. Most requests for flexible working, whether in the formal, legislative framework or not, are agreed to, because if you have good people, you want to keep them in the business and you want to accommodate what are usually other responsibilities, which are often about care for children or older relatives.
Specifically on probationary periods and early rights, 84% of people who work in our sector have been there for more than one year. Most people who have been there for that period of time stay on. Half of people working in our sector have been there for more than five years, so we have a longevity of employment, but there is a spike of people who move on quite quickly because it is not right for them. Seasonality, of course, could cause that. There is a particular challenge when we are talking about encouraging our members, as we do, to look at bringing in people from typically underutilised backgrounds, whether that is care-experienced people, ex-forces or ex-offenders. We produced a document with the Retail Sector Council last year looking at opportunities for those people.
For everyone starting a business, there is always a chance that it just does not work out. It just does not transpire that it is the job for them. Sensible probationary periods—they do not have to be too long—will allow that to play out without undue risk to the employer.
The final point I would make is that in an independent business—we represent some large businesses, but 71% of convenience stores are independently operated—the person running the business is the finance director, the buying director, the marketing director, the operations director and the HR director. No specialist resource is being called on, so additional processes to manage someone leaving the business are particularly burdensome for smaller organisations who do not always have people like Claire and her colleagues to help them through that.
Greg Smith
Q
James Lowman: There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.
There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.
I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Q
Claire Costello: As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.
Helen Dickinson: I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.
At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.
James Lowman: I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.
It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.
Helen Dickinson: So does sickness.
James Lowman: And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.
Justin Madders
Q
Claire Costello: All of the above. We pride ourselves on being as forward thinking as we can be. There is always an affordability in there, but we tend to listen very clearly to our colleagues. We work closely with our unions as well. We have focused on areas that our colleagues have told us are important to them. If I look at the bereavement policy in the Bill, for example, we built that in. We worked with Cruse, a charity that is significant in that sector, and have done something pretty unique in terms of support.
The Bill is a great development for industry. There are things that we have done, which were already quite different, in there. We do not insist that it is within the first 50 days; we ask for them to use it flexibly, because it could be a significant birthday or date. We also do not limit it to direct family members because, in today’s modern family and society, it is not always your parents who are the closest to you. We have made it based on the relationship that you have with the person that has passed, and therefore what bereavement means to you may be different.
You might want to take a week off at the beginning. It may be that you want a couple of days, and then four or five weeks later you need a couple of days, or even a year later you need to take time off because it is an anniversary and you need to support people. Things like that are where we have written policies and worked with our colleagues to do something that works for them. It is to drive retention. It is to drive engagement. It does mean that we have, hopefully, a happy group of people who want to work with us. As a member-based organisation, that is important to us.
Another good example on the bereavement policy is that I noticed that it did not cover pregnancy loss. Again, that is a policy that we have worked really hard on and I think that is an opportunity to put something slightly different into the Bill, because bereavement is bereavement. How do we make sure that it covers all aspects of it in the right way?
Justin Madders
Q
Helen Dickinson: No, the overarching point is exactly as has been said. The most successful retail businesses are ones that have highly engaged workforces that are aligned to the objectives of the business and feel part of the success of a company. People who feel like that are going to work harder and the business is going to be more successful. It is all part of a reinforcing system. If it is done well, from an individual company point of view, the exemplars are the more successful businesses. It comes back to ensuring that the Bill targets those at the bottom of the pile, those that are not engaging in the right way in having forums for employee engagement or having a two-way dialogue on flexible working or whatever it might be. It should be a win-win, but I think the risk is big in terms of making sure that we do not end up with those unintended consequences.
James Lowman: Retail is based on respect for colleagues and customers. That is how businesses work, and I think that the Bill and the principles here are very much in line with that.
Steve Darling (Torbay) (LD)
Q
Helen Dickinson: That would help. I am jumping straight in, because I feel quite strongly about this one. I do not want to rerun some of the challenges of the Budget, but the pace of additional costs that have come in for every business—particularly for retail, because of the nature of flexible work, with a lot of part-time contracts and the changing of the threshold—means that every single retailer in the country needs to look very hard at their investment plans and workforce plans, and everything that sits around that.
I think that everybody sort of breathed a sigh of relief with the clarity that the timetable was for 2026, but even now, looking at the scale of the proposals, it would be great to have more visibility over the sequencing of the different consultations, so that the industry can gear up in the right way to be able to respond effectively to them, and to make sure that we have longer than six-week periods to respond, with four consultations all going on at the same time, because that all makes it quite a challenge.
Coming back to the direct point of your question, in terms of implementation, if there are changes that need to be made in companies, I think that a run-in, or an implementation period that is workable and that gives those companies the chance to make any changes to processes, is a necessity for ensuring that the Bill lands in the right way and that we do not again end up with some of those unintended consequences. I think the Budget has unfortunately made the backdrop that much more challenging, just because of the things that people already need to deal with now and over the next six months.
Claire Costello: I will add to the piece around implementation timing: it is really easy to think of this as, “Oh, it’s straightforward; it’s about writing a policy, then, once you are in a business, sharing that with your colleagues, making sure that your line managers know what is expected of them, and landing it.” Much of what we are talking about here will require businesses, certainly larger businesses, to think about how their systems are set up as well. It changes your payroll system; it changes your workforce management system. All that is doable, but it is at the same time as other changes that organisations will be working on in the background as well. That is what we need to factor in.
On top of that, where we then have colleagues who are themselves impacted by the changes, it is about making sure that you have time to make sure that they understand that and what it means to them. It is about that run-in. It is about more than the cost; it is quite significant from the point of view of process, understanding and implementation. That is the ask, really—it is the detail and the time.
Helen Dickinson: I am sure that James will have points from a sort of one-establishment type business, but, for multi-site businesses, you could be talking about 10, 100 or 1,000 stores and distribution centres up and down the country, so we should not underestimate the significance of the need for up-front visibility of the changes.
James Lowman: The other change that has happened with the Budget and those additional significant costs on businesses is about how retail businesses respond to them. In maybe a medium-sized business—among our medium-sized members—they might have had to take out layers of management. That might include, for example, HR functions and things like that, and losing that support. In an individual store, with an independent retailer, that retailer is probably working more shifts behind the counter and in the store themselves, rather than working on the business and managing the business. That will be a consequence.
Decisions are being made to cut back shifts to compensate for those significant additional costs, so the ability and the time available for businesses of all sizes—particularly some of the smaller and medium-sized ones —to implement these changes is less than it was before the Budget, or before April. That is the reality of it.
Again, yes, it is partly about timing—that is very important and I align myself with what Helen and Claire have said about that—but that also makes it even more important that the guidance and regulations are absolutely right, so that those already increasingly and additionally stretched businesses are not spending more time in employment tribunals and having to deal with complex interpretations with their colleagues, or struggling to fill shifts and therefore having to work more hours themselves.
Steve Darling
Q
James Lowman: We need absolute clarity on what “reasonable steps” means. Those reasonable steps should not be onerous, given the reality of 15 million people coming to the store every day, whose behaviour we unfortunately cannot control—believe me, if we could, we would. Having clarity and reasonableness in all reasonable steps is the thing to do, and there is an opportunity to build on that; the ShopKind campaign, for example, has been very successful. That is one way we could channel those steps to promote good behaviour among customers.
Alex McIntyre (Gloucester) (Lab)
Q
You also mention an increase in employment tribunal claims. We would hope that most employers would follow the new legislation and therefore avoid those claims, but we both know that there are a small number of bad-faith actors who will always try to find a claim. There are already claims that individuals can bring from day one, but do you think you will see a big increase in bad-faith claims, or do you think they are already there in the system?
Claire Costello: I will take the point about unions first. The strong relationship we have with the union means that we can work in a very collaboratively challenging way together—do not get me wrong; it is not without having difficult conversations, but that is the point. A healthy relationship is like a healthy marriage. You do not just give up on each other. You have those difficult conversations with each other and face into issues and look for solutions. The key for me is looking for solutions. Having very progressive relationships means that you can talk about the direction of the business and what you need to do, and work together on finding solutions. That is what we have found with our relationships. It is not always easy, but it is absolutely the better way of going forward.
In terms of employment tribunals, I think you are right. The reason we think it would go up is that, as with all things, when something becomes more available, by virtue of that fact there will be more people who want to use it. We do not have the absolute evidence to say it, because it is not there today, but the reality will be that if you can take their employer to court, why would you not? There will be more individuals who would wish to do so. We have said before that it is about having clarity and making sure that we understand what reasonable looks like and what the steps are that would be expected. It is more about the onus of extra work that this will bring to each of the areas. As I said, we follow all of the processes very strictly, and we try to make sure that we have a very fair and open conversation with all of our colleagues. The challenge will always be that you cannot make everybody happy all the time.
Mr Peter Bedford (Mid Leicestershire) (Con)
Q
Claire Costello: Gosh, that is a good question. I do not see why it would make a difference to productivity itself, because at the end of the day you are still bringing someone new into the organisation. I think it would be a longer-term impact. If we did start to see more people raising a grievance because they want to leave or because we have said, “Actually, this is not the right role for you.”, it would be the time perspective that would be drawn on. That is more your line managers, store managers and leaders around the organisation that would draw on to that resource. I kind of see it as more of a longer play in terms of productivity.
Mr Bedford
Q
Claire Costello: Absolutely, and I think that was what James was referring to as well, when you think about the smaller stores within the convenience sector. But for us, it absolutely is about the time that it takes for line managers and regional managers. Do not forget that we are not just a retail provider, so it would be within our funeral homes, when we should be out looking after clients at the most difficult times in their lives, and our insurance organisations, as well as legal services. It is across the whole organisation for us.
But yes, it is the line management time that goes into following these processes, doing them well and making sure that everybody is having the right hearings that they should be having. It is a time-consuming process. It is right because, absolutely, we want to make sure that everybody has a fair hearing and that the right decisions are being made for the right reasons. However, it is time-consuming and that is the concern.
Alison Hume (Scarborough and Whitby) (Lab)
Q
James Lowman: By and large, we set out shifts; we have clear shifts that are worked to. It would be rare that a shift got cancelled at short notice. With convenience stores, fundamentally we are open for those hours; we need to fill those hours. It would have to be something pretty extraordinary that would lead to a cancellation, for example a massive disruption to delivery. We would be bringing in extra colleagues to deal with a delivery, which then gets cancelled, so that work is not there for them to do. However, even that is relatively rare, so we provide consistency of hours.
It is more common that the challenge is dealing with sick leave and then having to fill shifts, and additional shifts coming in. That is when you might get some later changes and later notice, because someone has phoned in sick that morning, so you need to fill the shift that morning; you need to have a person in the store, or—worst case—the store could not open. Again, however, a lot of that is done colleague to colleague, in terms of filling those shifts.
Regarding the impact, there are a whole range of people working in our stores, for some of whom it is a second income in their household. But for many, it is the first income in their household, so it is very important that we provide that local, flexible and secure work to people. In many ways, this Bill is enshrining and codifying things that are already common practice in our sector.
Sarah Gibson (Chippenham) (LD)
Q
James Lowman: We probably do not support the idea of exemptions. We think the rights should apply whoever you work for, and we do not want small businesses to be cast as being less good employers, with fewer protections for their colleagues.
However, the guidance needs to be applicable to and usable by businesses of all sizes. The guidance and regulations cannot be drafted from the perspective of, “What is your HR director going to do? What is the machine of the business going to do?”, when that is not the reality. For the vast majority of businesses in this country, the process will be much more driven by individuals having conversations, in order to encourage not only that flexibility and clarity, but practicality.
With good guidance and regulations, there should not be a need for exemptions. As I say, we do not want small businesses to be viewed in any way as being worse employers; in many ways, they often have advantages that allow them to be better employers.
The Chair
I call Michael Wheeler to ask a very brief question, which should receive a brief answer.
Michael Wheeler (Worsley and Eccles) (Lab)
Q
I will just circle back to guaranteed hours. Although I appreciate that flexibility is of value in the sector, if the hours are there in the business and regularly being worked, would you not agree that that demonstrates there is a need for those hours in the business to be worked, and therefore, in the interests of fairness and financial security for workers, should those hours not be guaranteed for them?
Helen Dickinson: Again, it comes back to how. A lot of people who work flexibly want to vary their hours because they have other commitments, either family commitments or caring commitments. From an employee perspective, they should absolutely have the right to request flexibility, or to be able to have future hours that reflect something that they have over whatever reference period it is, whether it is 12 weeks or longer. If the regulations end up requiring that reference period—and, by definition, requiring employer to offer whatever that period is to the employee, just by process—peaks and troughs around peak trading periods and employees’ other commitments will cause the company to end up in a continual process of changing people’s hourly patterns, all the time and for a lot of people. When a company has multiple locations, and tens of thousands or hundreds of thousands of employees, it could be quite difficult.
I think we are absolutely agreed on the principle. The question is how you implement it, and whether there is a way to implement it that gives the employee the right to request, rather than putting the onus on the company to put in a whole load of process that actually, at the end of the day, might not be what the employee wants.
The Chair
Order. I have to bring this session to an end. We have run out of the allotted time, and sadly, there are some Members of the Committee who did not get the opportunity to ask the questions that they wanted to ask. However, I thank the witnesses for the time they have spent with the Committee.
Examination of Witnesses
Joanne Cairns and Liron Velleman gave evidence.
The Chair
We will now hear oral evidence from Joanne Cairns, head of research and policy at the Union of Shop, Distributive and Allied Workers, and Liron Velleman, head of politics at Community. This session can continue until 12.40 pm.
Greg Smith
Q
The Chair
I should have asked you to very briefly—in a sentence—introduce yourselves. Will you do so at the start of your answers? Thank you.
Joanne Cairns: I am Joanne Cairns. I am the head of research and policy at USDAW, which represents over 360,000 members, mainly in the retail sector, but we also have members in distribution, food manufacturing, pharmaceuticals and a number of other sectors.
We do not share the concerns about the impact assessments. We think that the impact assessments demonstrate the impact of the Bill. There are obviously areas that need further clarification, which will be looked at through consultation. In terms of the impact on our members, we believe that it will be extremely positive, particularly for low-paid workers and women workers. The TUC analysis estimates that the reforms in the Bill will benefit the wider economy by over £13 billion a year, which it considers to be a conservative estimate.
Greg Smith
Sorry, £30 million?
Joanne Cairns: No, £13 billion. That was one of the more conservative estimates in the range that it looked at. That would be through reducing workplace stress, improving staff wellbeing, resolving disputes, reducing workplace conflict and increasing labour market participation.
Liron Velleman: My name is Liron Velleman. I work at Community union as the head of politics. We represent about 45,000 members across the economy, from steels, metals and manufacturing to the justice sector, education and early years, and the self-employed. Of course, we would always welcome any more evidence to show why the Bill would impact our members positively. Our members have been crying out for this change for the last 14 years, and even longer than that. It is important that we continue to make sure that the Bill does what it says on the tin, which is to make work pay but also to make our members’ and their families’ lives better.
Greg Smith
Q
Liron Velleman: At Community, we are confident that the Bill would represent a positive step for our existing members and would allow for greater coverage of trade union membership across the sectors we work in. For example, in the third sector or in education and early years—especially in early years, where, in some of the private provision of nurseries and early years settings, there is not currently as much trade union coverage—the Bill would make it easier for people to join a trade union and see the benefits of membership. On whether it would bring full unionisation of the economy, I am not sure it would necessarily go that far, but some of the onus is on trade unions to make sure that we are delivering, in a modern way, the best way for working people in this country to understand the benefits that they could receive by joining one of our unions.
Joanne Cairns: I agree with Liron. We have good relationships with a number of major employers where we are recognised. You heard earlier from the Co-op. We are recognised there and by a number of other major employers. However, across the retail sector, trade union membership is currently at around only 12%, which is a similar level to the rest of the private sector. Very often, the reason people have not joined a union is simply that they have not had the opportunity to find out about what a union does—nobody has ever asked them to join a trade union. We think that the rights that the Bill will bring in around access to workplaces will be particularly important. The Bill will also simplify the statutory framework around recognition, which is currently extremely burdensome and makes it very difficult for trade unions to gain statutory recognition, particularly with larger employers.
Justin Madders
Q
Joanne Cairns: Across the whole economy, precarious employment is a major issue. There is clearly a need for policy intervention in the labour market. The TUC estimates that one in eight people are in precarious employment, and that has risen by 1 million people since 2011. It has risen nearly three times faster than secure employment. That is certainly backed up by what we see with our members. Living standards have fallen quite significantly, and the impact of insecure work on our members is significant.
Of our members, 40% tell us that they have missed meals to pay their bills, 73% cannot afford to take time off work when they are ill, 15% struggle to pay their bills every month, and more than half have told us that financial worries are having an impact on their mental health. The level of statutory sick pay and the three waiting days for it is an issue of major concern for our members, as is having contracts that do not reflect the hours that they normally work. We welcome the Government taking action in those areas.
Steve Darling
Q
Liron Velleman: The Bill should have a positive impact on productivity. Following on from Joanne’s previous answer, when people are in insecure work, they are worried about whether they are going to lose their job tomorrow, whether they will lose some of their benefits or pay, and whether they will have the security of knowing what shifts they will be working. Tightening up lots of parts of employment legislation currently on the statute book should give workers extra confidence, so that they will be able to be happy at work and work more flexibly, representing the current state of the economy rather than keeping to how things were. That should, in totality, result in greater productivity for businesses as well as for individual workers.
Laurence Turner (Birmingham Northfield) (Lab)
Q
The Bill covers part of the “Make Work Pay” agenda. Are there other measures in the “Make Work Pay” document published earlier this year that should be included in the Bill?
Liron Velleman: The Bill clearly represents a great step forward in improving workers’ rights. For some of our members, it is in some ways a Bill for employees’ rights, rather than an employment rights Bill. Our members in the self-employed sector are looking for rights and protections to reflect the nature of the work that they do. In the “Next Steps to Make Work Pay” document, there are clear suggestions that there will be greater rights and protections for self-employed members, but that is a priority that we would like to see as part of the Bill, to fully grasp the current employment landscape in this country.
There is also a point around the consultation on new surveillance technology in the workplace. Clearly, technology in the workplace is one of the biggest benefits to lots of our members and to businesses, but it is also one of the biggest challenges when we think about the new world of work. Making sure that workers understand and are trained on, and can get to grips with, technology in the workplace, surveillance or otherwise, is vital to ensuring that they have the best rights and protections at work. Those two things would be our strong priorities for the Bill.
Joanne Cairns: For us, one of the key areas is statutory sick pay. The removal of the three waiting days and the lower earnings limit is extremely important and will make a massive difference to a lot of low-paid workers. However, the Government committed to strengthening SSP, and we would like the level of SSP to be looked at. It is well documented that the current level of SSP is below what people can afford to live on. If you earn the national living wage, you earn only around a quarter of your salary when receiving SSP, which has a significant impact on low-paid workers. That said, the removal of the three waiting days is extremely important and will make a big difference.
In respect of the right to guaranteed hours, which we warmly welcome, it is very important that the way it is implemented covers as many workers as possible. The commitment from the Government was that everyone would have the right to a contract that reflects the hours they normally work. We are concerned about the inclusion of the term “low hours” in the “Next Steps” document, which we feel could have the unintended consequences of making the right apply less widely than it should, and potentially undermining its effectiveness.
Chris Law (Dundee Central) (SNP)
Q
Joanne Cairns: We welcome the Government’s commitment to tackling fire and rehire. It is an issue not only when fire and rehire tactics are used, but when they are used by employers in negotiations as a form of threat to try to force unions or individuals to accept terms that they may not be happy with. Around a third of our members have been asked to change their contracted hours to support business need in the last 12 months, and one in five of them said that they felt forced into agreeing to the change, having been threatened with fire and rehire. It is a major issue. You referenced our legal case against Tesco, which demonstrates that this issue affects members in all sorts of workplaces.
Our preference would be for an outright ban on fire and rehire, and we would prefer the provision to be removed. If that provision stays in the Bill, our concern would be about the use of the word “likely”. We would like either for the word “likely” to be removed in reference to financial problems, or, at the very least, for there to be stringent guidance and a high bar set for the definition of “likely”.
Liron Velleman: At Community we had a similar case on fire and rehire back in 2021 with Clarks shoes. Our members at a distribution centre in Street in Somerset were threatened with a huge reduction in their hourly wage and the removal of their sick pay and coffee breaks. After a long campaign from our members in the union, and solidarity from across the UK, we managed to force the company to reverse its decision through ACAS mediation, but it clearly should not have been allowed to happen in that way at all. Our general secretary said at the time that, until fire and rehire is outlawed, no worker is safe from the harms that it can cause.
We hugely welcome the Government’s efforts to end fire and rehire, but we have similar concerns to USDAW about how the language about “likely” financial distress will be used in reality, given that it is rarely good-faith employers that use tactics such as fire and rehire in their workplaces. We do understand that there might be absolutely exceptional circumstances where the business would otherwise close. The question is whether the word “likely” will cast the net too wide and allow bad-faith employers to continue fire and rehire, even if the stated intention is for that not to happen.
Anneliese Midgley (Knowsley) (Lab)
Q
Liron Velleman: We rarely deal with collective redundancy on multiple establishments, other than for a few establishments, but it is important for the Committee to understand that collective redundancy is not always a huge battle between employers and unions. It gets into the news that this employer and that union are fighting to the death over something, but usually collective redundancy is an opportunity for employers and unions to sit around the table and try to minimise the impact on the workforce. Even with employers that unions might have a difficult relationship with, collective redundancy is usually an opportunity to do that.
It is very well known that Tata Steel recently announced collective redundancies at its steelworks in Port Talbot in south Wales. The original stated redundancy figure was around 2,500, but after work between the unions and the employer, that number has been heavily reduced through cross-matching and through finding training opportunities. Unions are not there just to say, “We are going to keep our members’ jobs for the sake of it,” and scream from the rooftops. Collective redundancy is an opportunity to allow mitigations to protect workers. Any improvements to rules around collective redundancy—whether that is reducing the number of employees needed to start a collective redundancy scheme, increasing the timeframe for that to happen, or looking at the establishment rule—are hugely welcome.
Joanne Cairns: On the establishment rule, we are very pleased that the loophole is now being removed. We took a significant legal case on behalf of our members who were employed in Woolworths, where 27,000 employees were made redundant in a single redundancy exercise when the company went into administration. In 200 stores with fewer than 20 employees each, there were 3,000 employees who were not entitled to any protective award even though collective consultation had not taken place. That was purely because they were employed in establishments with fewer than 20 people, even though the decisions were being made far above that level and affected 27,000 employees. It is just common sense that that is now being corrected.
We are aware that the issue of scope has been raised in this Committee. We went back and looked at the Trade Union and Labour Relations (Consolidation) Act 1992. Clause 23 of the Bill would not alter what section 188 of the 1992 Act says about
“the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”
It would not mean that workers are being consulted over redundancies that do not affect them; it would just mean that workers who are affected by the redundancies, or their representatives, would be consulted regardless of the size of the establishment that they are working at. We do not see people being involved in consultation exercises that do not affect them; that will not be a result of the Bill.
Nick Timothy (West Suffolk) (Con)
Q
You are obviously pleased with the legislation, and I know you think it could go further; I just want to ask a little about how you would characterise your engagement with the Department. Was it very welcoming? How many meetings did you have with Ministers and officials? Were draft clauses shared with you? How constructive was it?
Liron Velleman: Community has a productive relationship with the Department for Business and Trade. We have had productive relationships with parts of the Department for a number of years, but unfortunately not on a political level for the last 14 years. It is welcome that this Government have seen a sea change in how they want to do relationships with trade unions.
Nick Timothy
But could you answer specifically my questions about how many meetings you have had with Ministers and officials and whether clauses were shared with you?
Liron Velleman: I believe that meetings between Ministers and whoever they meet with will be on the public record, so I am sure you would be able to find that.
Nick Timothy
But you are not answering my question. I am asking you a question; I would like you to answer it.
Liron Velleman: I am not sure how many meetings we have had with Ministers related to this Bill.
Nick Timothy
Okay. Joanne Cairns?
Joanne Cairns: We have been involved in a number of roundtable meetings with DBT, which have been very helpful in understanding what the Government’s intentions are on a number of aspects of the Bill. I do not know exactly how many meetings we have been involved in, but the engagement of DBT with unions has been good, as it appears to have been with business as well.
Uma Kumaran (Stratford and Bow) (Lab)
Q
Joanne Cairns: Many of our members are juggling paid jobs with caring responsibilities, whether that is childcare or looking after disabled partners and relatives. The majority of our members are women; the burden of care continues to fall disproportionately on women, so we really welcome a number of the measures in the Bill that will help workers with caring responsibilities, including the right to parental leave and paternity leave being from day one of employment. We welcome the shift in the burden to employers to justify why they have refused a request for flexible working, and the new right to bereavement leave, which widens the current provision entitling bereaved parents to statutory parental bereavement leave.
We think that there are some areas in which those rights could be strengthened. We welcome the Government’s commitment to review parental leave more widely outside the Bill; we will be engaging with that review. We think we need to look at the length of paid maternity and paternity leave, the provision of paid carer’s leave and the wider support that is needed to make sure that those rights work effectively for working families.
On flexible working, the shift to employers having to justify their refusal is welcome, but there are still eight business grounds on which employers can refuse a request. It is still very difficult for employees to ask for flexible working; they are often concerned about what the repercussions of making a request might be. We recently surveyed our members with caring responsibilities and found that only just over half were even aware of the right to request flexible working. Of those who were aware, only half had used it. We would like a more robust framework for making requests for flexible working. For example, we could abolish the restriction on the number of applications that can be made in a 12-month period; extend the right to all workers, not just employees; and ensure that there is a right to appeal if a request is refused.
However, I would say that there has been some really important progress through the Bill and, we hope, through the review of parental leave to support working families.
Liron Velleman: I do not want to repeat what Joanne has said, but I have a small point to make. The day one right to request flexible working is so important. So many people start a new job and then work out, “Okay, how am I going to balance this with my caring responsibilities?” If they cannot make that request for the first six months and they really struggle to make sure their kids are picked up from school or to deal with their elderly parents, they might find a not great way of dealing with it. It is then quite difficult to turn around to their employer and make the request six months down the line. It is so much better to be able to say, as a day one right, “This is what I want to give to this new employment that I have just received, but this is the world I exist in and these are the other responsibilities I have—how can we best make that work?” We know that our members will see a huge benefit from that, especially if they move to a new workplace.
The Chair
As there are no further questions, let me thank our two witnesses for attending.
Examination of Witness
Nye Cominetti gave evidence.
The Chair
We will now hear oral evidence from Nye Cominetti. We have until 1 pm for this panel. Could you briefly introduce yourself, Nye?
Nye Cominetti: Hello, everyone. Thanks for inviting me along today. I am principal economist at the Resolution Foundation, a think-tank based just down the road. Our mission is to improve living standards for families on low to middle incomes. As part of that, we research and write about the labour market, along with various other issues. We have been interested in the employment reforms since they have been under way.
Greg Smith
Q
Nye Cominetti: Sorry, is the question whether the impact assessment is fit for purpose or whether the regulations themselves are fit for purpose?
Greg Smith
Well, the Regulatory Policy Committee has said that eight of the impact assessments for this Bill—the separate columns—are not fit for purpose. Do you think the Bill had its tyres kicked hard enough before it went into Second Reading and Public Bill Committee?
Nye Cominetti: It is very hard to assess the impact of the Bill, as many of the details are yet to be determined. The Government said that they wanted to do this within their first 100 days, and they managed to do so, but that meant that they had to leave many “fill in the blank later” bits in the Bill, so I do not particularly blame the civil servants in the Department for Business and Trade for having struggled to come up with clear numbers on the costings and the potential impact.
For example, on the right to a regular contract, the impact on business will depend on how “low” is defined, in terms of the qualifying threshold that workers will have to reach. It will depend on how businesses have to go about making the offer to workers. It will depend on how regularly those offers have to be made, which relates to the reference period. In the light of all those unknowns, it would be very difficult for the Department to have come up with firm numbers. I think in the end they said £5 billion, but it is hard to know whether that is a good or a bad number.
I would not be so negative as to say that they have failed in any sense; I just think that they were given a very difficult job. As more detail becomes available, it would be great if the civil servants who have already put a lot of thought into the process could come back and say, “Now that we know a bit more about what is actually going to be happening, here is our updated view on what the impact of the regulations might be.”
Greg Smith
Q
Nye Cominetti: No. I can describe in general terms how we might think about the potential impact, but I think any researcher or economist who tried to put a number on it would be misleadingly specific or misleadingly accurate. Not only do we not know what the direction of the impact might be—it could be that there are small positive or negative impacts on the size of GDP—but it is very hard to get a sense of the scale of the impacts. If you want some kind of judgment, the impact on economic growth will probably be very low—very close to zero. My expectation is that it will possibly be negative, but that is an incredibly hard judgment to reach, because you can point to impacts in both directions.
It is very uncertain, but the important point to make is that that does not mean that we should not be going ahead with these reforms. We should not be pursuing only those reforms where we can say, “The impact on GDP will be x,” even if not very confidently. One of the first things that this Bill should do is improve working lives for workers. It may be that we cannot put a monetary value on that, or that there is no associated impact on GDP, but to me that is the main and the first reason why many of these reforms should be undertaken.
Greg Smith
Q
Nye Cominetti: The same number, would be my best guess.
Greg Smith
What do you base that on?
Nye Cominetti: Internationally, we can draw scatter plots of the employment level in a country and the extent of employment regulation, and basically those lines come out flat. You have some countries with very high employment and very high levels of regulation, and some countries with lower employment and high regulation, so there is no clear relationship with the employment levels across countries. That is confirmed by the OECD, which has done lots of detailed work looking into the impact of periods when countries have either rowed back on reforms or expanded them.
What we do see in the employment data is that when you beef up the reforms around dismissals for individual or collective workers, you tend to see lower hiring rates. So the rate at which workers move around the economy will probably slow down if you make it significantly harder for employers to fire workers, and that gives rise to potential implications for productivity growth. Now, I still think those effects will be small. When the Office for Budget Responsibility, in one or two years’ time, starts putting the numbers into its forecasts, I expect them to be very small indeed. My expectation is that the employment level will be very, very narrowly lower if anything.
To give you some sense of scale, the OBR said it thinks that the employer national insurance contributions bill will be about £25 billion, and that that would lower the employment level in this country by 0.2%. The DBT said that it thinks the direct costs of the measures, including sick pay, are in the order of magnitude of £5 billion. If you compare those numbers, that starts to give you a sense of the scale of potential employment effects that we are talking about. I am sorry not to give you a more exciting answer, but my best guess is that the impact on employment levels will be small.
Justin Madders
Q
Nye Cominetti: It is a good question. One of the ways that I like to think about this package of reforms is that it extends to low-paid workers the kind of everyday flexibilities and dignities at work that people in professional jobs such as me and you take for granted. It is not the case that all low-paid workers hate their job or face the risk of losing their job every week, but it is the case that they experience a higher level of insecurity than higher-paid workers do.
You can look at that in various ways. In recessions, low-paid workers are more likely to lose their job, so they face a higher risk of losing their job in downturns. They are also more likely to rely on statutory sick pay if they fall ill, so for many low-paid workers, falling ill comes with an income shock. That is not the case for someone like me: if I fall ill, I go home and pick up an online meeting or two if I can, but if I cannot, I will get paid as normal. That is not the case for many low-paid workers, so that is a real insecurity.
Obviously, there are zero-hours contracts as well. For low-paid workers, I think roughly one in 10 is on a zero-hours contract. For higher-paid workers—the top fifth in the hourly pay distribution—it is a vanishingly small number and very uncommon indeed. I am sure that you have heard plenty of evidence about the kind of impact on security that zero-hours contracts can bring to some—not all—workers.
The most illuminating statistic is probably that 2 million workers say that they are fairly or very anxious about unexpected changes to their hours of work. You might think that that is because that comes with not just an impact on their life—“I do not know which days I’m going to be working next week, and I have to make it work alongside childcare”—but a potential income risk as well. In many respects, the working lives of low-paid workers are less secure than those of higher-paid workers. My hope is that some of these measures will go some way to redressing that balance.
Justin Madders
Q
Nye Cominetti: I would not want to try. It is not quite the same, but the closest that some studies have tried to get is saying to workers, “Would you consider this alternative job, which would improve your terms and conditions in these respects, but offer you lower pay?” That tries to get at the question of how much pay people would be willing to trade off for those other benefits, such as a more stable income or a better relationship with management.
It does not directly answer your question, but there was a study in America of Walmart workers which found that they would accept a 7% pay cut in exchange for being treated with better dignity by their managers, including things such as better advance notice of their shifts and not getting messed around late in the day to come in and pick up extra hours. I definitely cannot quantify it, but more ambitious researchers might be able to.
Steve Darling
Q
Nye Cominetti: Well, I have a few caveats. First, overall employment rates are lower in high-deprivation areas, so we need to remember that all these measures will have an effect on workers, rather than those who are not working. If you want to improve income levels, this is not the place to do it. As I was just saying, however, we know that low-paid workers experience those issues of insecurity at higher rates than high-paid workers.
You also need to remember that there is not a one-for-one overlap between high pay and high income and low pay and low income. Some low-income households will have higher-paid individuals in them, but because of having a large family or having only one earner rather than two, they will still end up in that low-income category. That caveat aside, it is still the case that any measures that improve working lives for low-paid workers will have the biggest impact on lower-income households.
There are questions about what the knock-on effects are going to be. If you were really optimistic, you might say that some of these measures to improve job quality could even have a positive labour supply effect. We know that, in the 2010s, that was a big driver of improved income at the bottom and massively increased employment among low-income households. So an optimistic take on these measures might be that you could trigger some of those kinds of effects, but that is much more uncertain.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
Q
Nye Cominetti: That is a tricky question. If measures to tackle zero-hours contracts are put in place effectively, I think that they will mainly smooth the income of those individuals rather than necessarily raise their level of pay. There might be a knock-on impact on the level of pay if workers have better outside options and can more readily bargain for pay increases or shop around for jobs, but the first effect that you would hope to achieve through these measures is smoothing pay—taking away the volatility from week to week. There is plenty of evidence that that is the element of those jobs that households struggle with most, not the level of hourly pay.
We know that, through minimum wage action, we have massively improved earnings for the lowest-paid workers, but it is the volatility that is most difficult to deal with, as I think anyone sitting here would readily agree. If someone is thinking, “Next week, my pay might go down by 20% or 50%, or maybe my hours will be zeroed down entirely,” it does not take much for us to imagine the impact of that not just on their wellbeing and psychology, but on their spending decisions. They might think, “I can’t afford to commit to that spending now, given that I’m uncertain about what my pay is going to be next week.”
If these measures are done well and genuinely smooth the incomes of those experiencing the worst volatility, I would expect improvements in individuals’ wellbeing. Potentially—again, more optimistically—you might see knock-on positive effects on the economy more broadly, if people feel more comfortable spending because they know what their pay is going to be in future. But as I have said a few times, that is definitely much more uncertain.
Sarah Gibson
Q
Nye Cominetti: The bit of the Bill that most obviously addresses that is the right to request flexible work, which is being strengthened, as I am sure you know—employers now have to give a justification for saying no. When you look at surveys of workers with disabilities or elderly workers, flexibility is very often mentioned as something that might have helped them to stay in work.
If you will allow me to make a second point, surrounding all these measures and, in fact, our employment framework more generally, are questions of enforcement and worker power—they are sitting at the side, but they are absolutely crucial. There are many existing rights that workers have on paper, but because our enforcement systems are fairly weak, especially compared with other countries where the state does more of the job of enforcing these rights, people do not necessarily experience in reality the entitlements that the law says they should have.
Even in a world where workers gain that strengthened right to flexible work, that means little if they, for example, look at the employment tribunal system delays and think, “Well, that’s an impossibility. There’s no point fighting my employer over this. I’m never going to win that,” or, “I can’t spend the next two years waiting to win that.” So the answer is yes, but only if we also resolve some of the existing problems about people’s ability to enforce their own entitlements.
Laurence Turner
Q
Nye Cominetti: You are right: labour market statistics are not currently in a good place. The Office for National Statistics’ labour force survey is in the doldrums in terms of response rates; so if you wanted to increase the resources going into that, I would welcome that, as a researcher. Realistically, many of these knock-on benefits are incredibly hard to estimate. Personally, I think we have to accept a world where we say, we know that workers will benefit in terms of wellbeing from some of these measures. I do not think you need to put a monetary value on that to say it is worth doing, personally, but I know that is not necessarily the way that Government Departments think about these things.
In terms of the costs—businesses will be saying, “If you do this measure, I will have to reduce hiring by this much”—I think we could be moving from relying on what businesses say. I know that many businesses will be engaging with these processes in good faith, but the history, for example with the minimum wage, is for businesses to say, “If you raise this cost there will be dire consequences: job losses will look like x and y,” and in the end that does not turn out to happen because businesses find ways to adapt. That does not mean that will happen this time—there is no guarantee that you can keep pulling off the same trick of raising labour costs and not triggering an impact on employment—but looking for evidence on what has actually happened in response to similar changes in the past or in other countries, rather than relying on what businesses say, might be a better guide. But that might be controversial.
Chris Law
Q
Nye Cominetti: Thank you for the question. I was hoping to get the chance to talk about sick pay specifically. That is one area where the Government have gone halfway to addressing an area of insecurity. Removing the lower earnings limit is great; the lowest earners, mainly women working few hours, all have access to SSP now, which is excellent.
Removing waiting days is an important change as well. It will no longer be the case that you have to wait four days to receive anything and, as you know, for most people who are off sick for a few days with a cold, that is a one or two-day situation, not a week. Those measures are good, but what they do is extend a very low level of coverage to more workers. As you say, we have not resolved the fundamental problem that if SSP is what you rely on, as is the case for a majority of low-paid workers, you will still face a very serious income shock if that is what your employer ends up paying you when you do that.
Raising the level of SSP comes with a much bigger cost. First, it would be employers that would pay it, and then the Government would face a decision about whether to reimburse, perhaps, smaller employers facing the largest cost, as has happened in the past. It is a more costly measure, which is why the Government have not done it, but I hope that they have it on their list to address it soon because, as you say, it remains the case that for our low-paid workers, falling sick means earning less and facing an income shock. I do not think that is right.
You can either look at high-paid workers who do not experience that shock, or you can look at the vast majority of rich countries who have set in place a statutory minimum much higher than we have in the UK. That is not the case in the US, but almost all European countries—not just the Scandinavian countries that we look to as the far end of the scale in terms of welfare state provision, but the vast majority of countries across Europe—have a sick pay system that is much more generous and offers much more protection to workers than does the system in the UK. So yes, I would agree that that remains a glaring unaddressed problem.
The Chair
I am afraid that brings us to the end of the time allotted for the Committee to ask questions of this witness, and for this sitting. I thank you very much for coming along this afternoon and answering the Committee’s questions.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)