Employment Rights Bill (Fifth sitting)
Tuesday 3rd December 2024
(2 days, 1 hour ago)
Public Bill CommitteesRead Full debate Employment 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 3 December 2024 - (3 Dec 2024)
The Committee divided: - Ayes: 4 / Noes: 14 - Question accordingly negatived.
The Chair
Good morning, everyone. Will everyone please switch their electronic devices off or to silent mode?
We now begin line-by-line consideration of the Bill. The selection list for today’s sittings is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped for debate. The purpose of grouping is to limit, in so far as is possible, the repetition of the same points in debate. The amendments appear in the amendment paper in the order in which they relate to the Bill.
A Member who has put their name to the lead amendment in a group is called first; in the case of a stand part debate, the Minister will be called first. Other Members are then free to indicate by bobbing that they wish to speak in the debate. At the end of a debate on a group of amendments, new clauses or new schedules, I shall again call the Member who moved the lead amendment or new clause. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or new clause, or to seek a decision. If any Member wishes to press any other amendments in a group to a vote—including grouped new clauses and new schedules—they will need to let me know. I shall use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on relevant amendments. I hope that explanation is helpful.
I remind Members about the rules on declarations of interests, as set out in the code of conduct. We will not go around the room now, but if you want to speak, you should declare your interest at that time.
Clause 1
Right to guaranteed hours
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 137, in clause 1, page 2, line 6, at end insert—
“27ABA Reference to an employer
(1) For the purposes of Chapters 2 to 4 of this Part, references to an ‘employer’ do not apply to an employer defined as a small and medium sized enterprise under subsection (2).
(2) For the purposes of this section, a ‘small and medium sized enterprise’ means an organisation or person employing 500 or fewer employees.”
This amendment would exclude small and medium sized enterprises from the Bill’s provisions on zero hours contracts.
The Chair
With this it will be convenient to discuss the following:
Amendment 138, in clause 7, page 24, line 33, leave out subsections (3) to (5) and insert—
“(3) In paragraph (b) of subsection (1), after ‘shall’, insert ‘, in the case of an employer with fewer than 500 employees,’
(3B) In subsection (1), after paragraph (b), insert—
‘(c) may, in the case of an employer with 500 or more employees, refuse the application only if—
(i) the employer considers that the application should be refused on a ground or grounds listed in subsection (1ZA), and
(ii) it is reasonable for the employer to refuse the application on that ground or those grounds.
(1ZA) The grounds mentioned in subsection (1)(b) are—
(a) the burden of additional costs;
(b) detrimental effect on ability to meet customer demand;
(c) inability to re-organise work among existing staff;
(d) inability to recruit additional staff;
(e) detrimental impact on quality;
(f) detrimental impact on performance;
(g) insufficiency of work during the periods the employee proposes to work;
(h) planned structural changes;
(i) any other grounds specified by the Secretary of State in regulations.’
(4) After subsection (1ZA) insert—
‘(1ZB) If an employer with 500 employees or more refuses an application under section 80F, the notification under subsection (1)(aa) must—
(a) state the ground or grounds for refusing the application, and
(b) explain why the employer considers that it is reasonable to refuse the application on that ground or those grounds.’
(5) After subsection (1D) insert—
(1E) The steps which an employer with 500 employees or more must take in order to comply with subsection (1)(aza) include, among others, any steps specified in regulations made by the Secretary of State.”
This amendment would exclude small and medium sized enterprises—here defined as employers with fewer than 500 employees—from the Bill’s provisions on flexible working requests.
Amendment 139, in clause 16, page 30, line 24, at end insert—
“(1D) For the purposes of subsection (1A), an ‘employer’ means an organisation or person employing 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from the Bill’s duty for employers to prevent harassment.
Amendment 141, in schedule 2, page 110, leave out paragraph 1 and insert—
“1 In section 108 of the Employment Rights Act, for subsection (1), substitute—
(1) In the case of an employer with 500 or more employees, section 94 does not apply to the dismissal of an employee unless the employee has been continuously employed for a period of not less than two years ending with the effective date of termination.”
This amendment would exclude employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed.
Amendment 142, in schedule 2, page 112, line 5, at end insert—
“(1A) Regulations under subsection (1) shall apply only to employers with 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from regulations relating to removing the qualifying period for the right not to be unfairly dismissed.
Amendment 140, in clause 22, page 33, line 44, at end insert—
“(aa) ‘employer’ means a person employing 500 or more employees.”
This amendment would exclude employers with fewer than 500 employees from the Bill’s provisions on dismissal for failing to agree a variation of contract.
Greg Smith
It is a pleasure to serve under your chairmanship, Ms Vaz, on this bright and breezy December morning. It will be the new year by the time we finish our consideration of the Bill—let us see whether we are all as fresh after Christmas as we are today.
I shall briefly talk through the Opposition’s rationale for each of the grouped amendments. The lead amendment, amendment 137, seeks to exclude small and medium-sized enterprises from the Bill’s provisions on zero-hours contracts. The amendment is part of a set of amendments in my name intended to ameliorate the burden of the Bill for small and medium-sized businesses, defined as those with 500 or fewer employees.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Will the shadow Minister give way?
Justin Madders
I refer to my registered interests and my trade union membership.
The shadow Minister might well have anticipated my question. Obviously, we acknowledge that the Bill is being brought through at good pace, which means that sometimes mistakes occur. I cannot help but notice that the amendment on today’s paper is slightly different from the one that appeared in previous weeks, which excluded businesses with 500 or more employees, rather than 500 or fewer. Will he clarify whether he is seeking to cosy up to big business or that was indeed an error?
Greg Smith
I am almost grateful for the Minister’s intervention. He was very perceptive to note the minor clerical error in the amendment that was previously submitted. That has now been corrected. Of course, the Conservative party stands with all business, but particularly with small and medium-sized enterprises, which, I can clarify for the record, we define as those with 500 or fewer employees.
The Regulatory Policy Committee has rated as red the identification of options and the choice of the policy in the Bill on zero-hours contracts and guaranteed hours. That means, in effect, that the Government have not justified the provisions in the Bill, the problem they are trying to solve, why they are needed or why they would work. The provisions on zero-hours contracts will create additional burdens on all businesses. The Opposition are particularly concerned about smaller businesses, which have less resource and resilience to cope with the measures: they do not have large HR or legal departments to help them navigate the additional requirements that will be placed on them. The Institute of Directors told us in its evidence that
“crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 11, Q4.]
I am confident that the Minister will try to refute these points and somehow paint the amendment as creating a two-tier workforce, which it would not. I urge the Government to recognise the bureaucracy burden and risk that the zero-hours contract provisions will create for smaller businesses in particular. Providing for guaranteed offers of hours after 12 weeks would create a lot of additional administration for our small and medium-sized enterprises. I gently ask the Minister how credible he thinks it is that employees will reject offers made and that the process will have to start all over again.
Amendment 138 is similar to amendment 137 in what it seeks to do, but excludes small and medium-sized enterprises—again, defined as those with fewer than 500 employees—from the Bill’s provisions on flexible working requests. The RPC has said that the Government have presented “little evidence” that employers are refusing requests for flexible working unreasonably. When I talk to businesses in my constituency, I do not come across any complaints that flexible working is being refused unreasonably; I find many businesses that have, certainly in the post-covid era, made huge offers to their employees of working from home, mixed hours and working around the school run, or whatever it might be. It does not seem to me to be a particular problem in most businesses that I speak to. I want to give the Minister the opportunity to present some of his evidence for the necessity of these provisions. What led to the decision that these flexible working clauses are needed? If they are not, I urge the Government to accept our amendment to exempt SMEs from them.
Jon Pearce (High Peak) (Lab)
The amendments may create a two-tier workforce, as the shadow Minister suggested. Does he know how many employees in the UK would not have the benefit of these rights if we made the amendments he is suggesting?
Greg Smith
I understand the point the hon. Gentleman is trying to make, but the Opposition’s concern is that the burdens that the Bill’s provisions—including this one—place on many businesses will actually result in fewer jobs in the overall labour market in the United Kingdom. I cannot for one second accept that anybody in this House wants there to be fewer jobs in the economy as a whole. If small businesses are placed under the burdens that are addressed by the amendments, and do not make additional hires or take the risk on individuals for jobs, we will be in a very bad place. If small businesses—the backbone of our economy—are not hiring, not growing and not going on to become medium-sized and large businesses, the people who pay for that are workers and people looking for a job or to progress their careers.
Alex McIntyre (Gloucester) (Lab)
I refer the Committee to my membership of GMB and Community, and to my former membership of the Employment Lawyers Association.
I am somewhat confused by the shadow Minister’s comments. On the one hand, he says that every business in his constituency offers flexible working already and therefore there is no requirement for this legislation; on the other hand, he says it is such a burden to businesses that it will stop them employing people. If everyone is doing it already and we are still employing people, what is the problem?
Greg Smith
I did not say that every business is offering flexible working. I said that, having visited businesses in my constituency, I am yet to find a problem around any business’s offering flexible working, or any employee or constituent with a complaint about an inability to get flexible working—quite the opposite, in fact.
If we consider the cumulative impact of all the measures in the Bill, they will certainly place a burden on business. The Opposition are trying to ensure that we take only those measures that will work—only those that will have a direct positive impact and will not be a burden on the HR department. Well, most small businesses do not have an HR department; often, it is the director or another member of the team who has to take on that additional job and understand the burden of regulation, on top of whatever their main contract has them doing. If we get rid of the measures that are simply not necessary, that will mean less of a burden on businesses, notwithstanding the point, which the hon. Member for Gloucester rightly highlighted, that the majority of businesses that I speak to do not have a problem offering flexible working—perhaps some businesses in other Members’ constituencies do.
The point of going through the Bill line by line in Committee is to metaphorically kick the tyres to ensure that its provisions are not a burden on business and will not have unintended consequences. As I said earlier, I cannot for one second believe that anybody in this House wants to see fewer jobs in the overall economy.
Sarah Gibson (Chippenham) (LD)
I draw the Committee’s attention to my declaration of interests. I have run a small business for the last 20 years. It would probably even be considered a microbusiness, because a lot of professional services are. In the south-west, acquiring and retaining professional staff is extremely difficult for small businesses—certainly, retaining them is. Does the shadow Minister not think that if we create a two-tier system, where someone working for a larger business has better rights than someone working for a small business, it will be even more difficult for small businesses to hire and retain staff?
Greg Smith
The point we have to look at, across the six amendments that we are considering in this group, is the reality of small and medium-sized businesses. I congratulate the hon. Lady on running her own business. I was self-employed for 15 years before I was a Member of this House, so I understand the challenges. Small and medium-sized businesses are the backbone of our economy but, by definition, because they are small or medium sized, they struggle—as she rightly says—not just to employ across the piece, but to obtain the legal advice, HR advice and professional services to help them navigate the panoply of regulations, rules and laws that this place has passed over the generations, as the current Government are seeking to do again through this Bill.
The way I look at politics, the best way to govern is to ensure as light a touch as possible on business and to limit the necessity of sourcing additional HR and professional services and so on that small businesses just cannot afford. If they are forced down the route of sourcing expensive professional services, that will have a knock-on effect on the real wages that they can pay to their staff and on the ultimate cost to the consumer of whatever service or product they are providing—that is a basic law of economics.
Although I would never advocate a two-tier approach in principle, there is a real difference between businesses in our economy that can simply have massive HR and legal services departments, without having to outsource them or bring them in at expensive rates, and businesses that cannot. If we accept that reality, perhaps we can look at the burden of additional regulations that might be necessary to help real people and real businesses to grow the economy, so that small businesses can become medium and then large businesses, and can be successful.
The Opposition tabled amendment 138 to exempt small businesses from the flexible working provisions. As I said, small businesses are being clobbered by the Government. Retail, hospitality and leisure relief has been cut, which has led to increased business rates bills, and employer national insurance contributions are going up, which Bloomberg economists estimate will cost 130,000 jobs. I cannot see the justification for putting those provisions in the Bill. We would be grateful if the Minister could provide a full and frank rationale for them—or, if not, support our amendment.
Amendment 139 would exclude businesses with fewer than 500 employees from the Bill’s duty on employers to prevent third-party—I stress third-party—harassment. Of course, harassment in any form is totally, deeply and completely unacceptable in our country, and I am in no way trying to say otherwise, but the RPC has said that the Government have not provided “sufficient evidence” of the prevalence of third-party harassment or its impact to justify the approach taken in the Bill. I genuinely believe that every hon. Member wants to ensure that nobody in this country is harassed in any way, but, through that lens, we need to understand the evidence for the necessity of this particular provision about third-party harassment.
Alison Hume (Scarborough and Whitby) (Lab)
I draw the Committee’s attention to my declaration of interests and my membership of the trade unions Unison and the Writers’ Guild of Great Britain.
I am pleased that the Bill will increase protection from sexual harassment, being one of those middle-class women of a certain age—the Government’s commitment to holding workplace offenders to account cannot come soon enough. Last week, we heard that there is strong evidence that the majority of sexual harassment in the workplace, particularly in retail and hospitality, comes from third parties—a client, customer or patient. Surely, the hon. Member would agree that it is essential that employers can take reasonable steps to prevent harassment by third parties, because the net effect on the victim is the same whether that behaviour comes from a direct co-employee or a third party.
Greg Smith
I am grateful to the hon. Lady, who makes an accurate and fair point. I repeat that harassment of any form, sexual or whatever, is deeply and totally unacceptable and wrong, and must be stamped out. The point that the Opposition are probing in amendment 139 is the proportionality of the impact on businesses—particularly small businesses—given the control that they have over third parties, and whether other laws that are already on the statute book should be used to fully ensure that anybody guilty of any form of harassment is brought to justice under the law. We are trying to understand how the particular measure in clause 1 would work, and its proportionality.
Laurence Turner (Birmingham Northfield) (Lab)
I again draw attention to my declarations in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.
Does the shadow Minister recognise that the prominent case of the Presidents Club harassment, which was exposed by the Financial Times some years ago, did apply to an employer that employed fewer than 500 people? That was specifically in respect of sexual harassment. The House has accepted the principle that measures should be put in place to prevent third-party sexual harassment; it did so last year, through the private Member’s Bill process—including for the SMEs that the shadow Minister refers to. The most famous case on third-party harassment was the Bernard Manning case in 1996, which covered racial harassment; and recent tribunal judgments, including in 2019, have exposed gaps in the law. So does the shadow Minister recognise that there are important proven cases of third-party harassment that go beyond the current legal framework, that would be remedied by the provisions in the Bill?
Greg Smith
I am grateful to the hon. Gentleman. I will not seek to mislead the Committee by saying that I am across the Presidents Club case, but I am aware of the Manning case. Undoubtedly there are holes in the law, because harassment does take place in workplaces and outside workplaces up and down the land. Conservative Members categorically want that stamped out and want those guilty of those offences to face justice. However, as we go through the Bill line by line, we need to ask ourselves, “Does this proposal work, or are there other laws—criminal laws if necessary—to ensure that the authorities have the absolute ability to bring such prosecutions and ensure that those guilty of these horrible crimes are brought to justice?”
Amendments 141 and 142 are part of the set of amendments around ensuring that SMEs are not given undue burdens. These are about excluding employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed. RPC, which has had a lot to say about the Bill, has said that the day one unfair dismissal rights are estimated to cost businesses around £43.2 million per year.
Justin Madders
The shadow Minister may be familiar with this line of questioning, because it is basically the same issue as earlier. I may have misinterpreted the way that amendment 141 interplays with the Employment Rights Act 1996, but the amendment refers to
“an employer with 500 or more employees,”
although the explanatory note then says 500 or fewer. Will the shadow Minister clarify what the intention is?
Greg Smith
I am clear that it should be 500 or fewer. I will not pretend to guess how some of the misdrafting may have occurred; it happens to all parties when they are in government and in opposition. I can remember a couple of errors in Bill Committees when I was sat on the Back Benches on the opposite side from the then Opposition. I apologise to the Committee for any errors. For the clarity of the record, we mean 500 or fewer employees when we are defining an SME.
To be asked to give Government the power to make regulations with no idea what the regulations imposed on businesses will be, is clearly not a position we want to be in. The Government admit that the day one unfair dismissal rights could have negative impacts on employment and hiring, which could include incentivising employers to turn to temporary or fixed-term workers. The day one unfair dismissal rights could make it more difficult for those unemployed or economically inactive to access jobs, through overall negative impacts on employment and/or a strengthening of insider power. Alex Hall-Chen from the Institute of Directors warned the Committee that
“under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 8, Q2.]
There are important questions about what that means for people on the fringes of the labour market, especially as they are precisely the people the Government say that they need to get back into work to meet their 80% employment rate target.
We should all reflect on this point from the evidence that we heard last week: very many people in our society deserve a second chance in life. They might have made mistakes before, or be on a path to rehabilitation from offending or something else—whatever it might be—and I would hate it if people who found themselves in that position were not able to get a second chance. Employers that are willing to give second or even third chances should have the best empowerment to do so, to get people who find themselves in that position into work and on to the path to a better life.
I fear that the unintended consequence of the legislation will be to shut many people who find themselves in that position out of the ability to get a job, to improve their lives and to get themselves on to a better path. SMEs will feel the burden of the new regulations particularly acutely without large HR and legal teams, as I have said.
Mr Peter Bedford (Mid Leicestershire) (Con)
The Bill as drafted seems to skew a competitive advantage in favour of large businesses. Earlier, my hon. Friend mentioned that small and medium-sized businesses are the key to economic growth in our country. These amendments will enable them to compete evenly because, as he says, they do not have large HR functions, or the support mechanisms that large businesses have. The amendments will redress the unfairness in the Bill.
Greg Smith
I am grateful to my hon. Friend for that input. He is absolutely right, and his argument hits the nail on the head. The point we are trying to get across through the amendments in my name and that of my hon. Friends in Committee is that small businesses sometimes just do not have the resource to go through the heavy, burdensome regulations that big businesses can navigate. Mega-businesses probably have more employees in their HR or legal department than most small businesses have altogether.
Laurence Turner
I am grateful to the shadow Minister for giving way; he has been generous with his time. On the point about perverse incentives, does he accept that if this group of amendments were in force, it would create a perverse incentive for the creation of umbrella companies and other forms of employment law evasion? If we are to enforce the provisions that we seek to pass in the Bill, instead of introducing a new dimension to employment law through the exemptions that he proposes, the only way to do that is to have a consistent approach across employers.
Greg Smith
I understand the hon. Gentleman’s point about umbrella companies. He almost tempts me to get on to one of my hobby horses, which is IR35, but that would be way out of scope, so I promise not to go there.
My principal point is that there are always unintended consequences. And yes, in some respects, while acknowledging the reality of the contribution that small businesses make to our economy and their ability to meet a heavy regulatory demand, there may have to be other steps around that to prevent the further perverse incentives that the hon. Gentleman mentions. But I come back to my central argument: if we clobber small businesses down, there will be fewer jobs, and small businesses will not be growing, which means that the whole UK economy is not growing. His Government purport to want to see the economy grow. The Budget flew in the face of that, but, if we take as read the desire of all Members to see a growing economy in the United Kingdom, we cannot have that without small business, medium-sized enterprises or, frankly, the self-employed.
Let us not forget that, as we came out of the 2008 crash and through the coalition years, a huge part of economic growth came from the growth of self-employment, which led to those self-employed registering as companies, growing and—many of them—being a huge success story. If the Bill has the unintended consequence of reducing the incentive for entrepreneurs to set up on their own, start a business and employ people, that is a very unhappy place to be.
Michael Wheeler (Worsley and Eccles) (Lab)
I refer the Committee to my declaration in the Register of Members’ Financial Interests and my trade union memberships. When the shadow Minister listed the groups upon whom growth depends, he seemed to miss a rather large group—the workers. Does he accept that the purpose of the Bill is to create good employment and valued workforces? As we heard in evidence, good employment and valued workforces lead to increased productivity. Opposition Members are often keen to refer to the cumulative burden. As we are now on their fourth or fifth amendment, all in the same vein—about excluding millions of workers in this country from the benefits of the Bill—does he accept that the cumulative effect is to create a set of wrecking amendments that will remove the benefits of this Bill from millions of people in this country?
Greg Smith
The hon. Gentleman makes his point well, but I fundamentally disagree that these are in any way, shape or form wrecking amendments. Where we have common ground and where we do agree is that, of course, no business is anything without its employees—the people who actually do the work. However, where I think he and I may disagree, and I do not want to put words into his mouth, so I invite him to intervene on me again if I get this wrong, is about the person who has risked their capital—who has either borrowed money or risked money to have to start that business— who runs that business, who is the director of that business, being as much a working person as everybody else within it. Businesses only exist because of human beings—before our AI overlords come in and take over everything, way into the future. Of course, workers are at the hub of that, but the people who run the businesses are as much working people as everybody else.
To come back to the central point, there will be no workers, or fewer workers, if there are not people to actually employ them in the first place. If the Bill’s unintended consequences are that SMEs—and perhaps larger businesses, but to be frank, it is more likely to be SMEs—are disincentivised from taking people on, disincentivised from growing their workforce, I do not think anybody will be happy.
Michael Wheeler
The shadow Minister invited clarification and an intervention. I do not think that anyone is disputing some of what he says, though we will dispute much. In the context of the Bill, he talks much about, as he put it, the mounting burden, but with little evidence—though he seems to quite like evidence when referencing the RPC. Does he accept, though, that the fundamental principle of the Bill is a rebalancing within the economy between workers and their employers, that nothing in it goes beyond that, and that some rebalancing is actually needed within that relationship for growth across the whole economy?
Greg Smith
I understand the hon. Gentleman’s point. Of course, it is no surprise that a Labour Government would seek to bring in such a Bill. We knew it was coming; it was in their manifesto. We will come to the question of whether they really needed to rush this out in 100 days, given the number of Government amendments that we will consider later. It is, by definition, a rebalancing, and I hesitate to say this for perhaps the fourth, fifth or sixth time, but this process is about kicking the tyres.
I welcome our debate in Committee. The point of a Bill Committee is to go through provisions in far more detail than we can on Second Reading in the main Chamber, or even on Report or Third Reading further down the line. Even if Conservative Members would not have gone about making changes in this way, we need to be certain that the Government of the day succeed in their aims. The Labour party has a mandate to govern the country and we want to be a constructive Opposition. Although we might not agree with everything that the Government do—or maybe nothing that they do—it is in the country’s interest that they succeed. Therefore, kicking the tyres on the Bill and ensuring that unintended consequences are ironed out in Committee is a good debate to have and a fundamental purpose behind why we will all will spend our Tuesdays and Thursdays together through to the end of January.
Nick Timothy (West Suffolk) (Con)
On the cumulative effect of the pressures that are building on business, during our evidence sessions last week with various witnesses, the compelling point was made that we should not look at the Bill in isolation. The impact assessment states that the costs are a minimum £5 billion a year for business. Some witnesses thought that that was actually an underestimate, and that the true figure will be higher and will grow when more details emerge as we go through this process. We should also look at the Bill alongside decisions such as the equalisation of the national living wage for young people, the increase in employer’s national insurance contributions and other business taxes that were in the Budget. I thought my hon. Friend might want to say something about the cumulative effects of all those decisions.
Greg Smith
My hon. Friend is right. The cumulative impact of other measures should be considered in the round. I might gently push back by saying that some of those matters are perhaps not fully in scope of the amendments that we are discussing. However, he is absolutely right that the Bill has to be considered in the light of other factors relating to other decisions in Government, be that fiscal events or other legislation. That goes to the nub of this set of amendments. This is about whether some of the measures are proportionate given the Government’s original intent in the Bill, and whether some of the original intent in the Bill, from which these amendments seek to exclude SMEs, will be the metaphorical straw that breaks the camel’s back.
Amendment 140 excludes employers with fewer than 500 employees from the Bill’s provisions on dismissal for failing to agree a variation of contact—this is also part of our set of amendments. We have questions about the wisdom of clause 22, or at least we seek reassurance from the Minister that it will not prevent employers from improving working conditions or working practices. I would like to remove yet another burden on small and medium-sized business unless and until the Government can prove that that measure is needed and proportionate, and that, critically, the benefits will outweigh the costs.
Alex McIntyre
My experience in business goes way back. My parents ran a small business and, although I would not say I was a worker at it, I helped out from the age of nine. I got my first job at a small business when I was 12, and I worked in the hospitality trade throughout my school and university years, all at small and medium-sized enterprises. I spoke last week about the fact that I was on a zero-hours contract for the most part while I was there. I then became an employment lawyer advising businesses, from start-ups to FTSE 100 companies and global conglomerates. So I have some experience in these matters, and I am very grateful to be on the Committee.
Let me go back to my experience on a zero-hours contract. We are talking about amendments that would take out SMEs from many of these provisions, and I want to draw on two of my experiences and say why I think this issue is important. I mentioned the first last week: when I was on a zero-hours contract at the hotel that I worked at in my later teens, everybody in that business was on a zero-hours contract. As a 15-year-old, I was quite happy to be on a zero-hours contract. I had to balance it with playing rugby and my studies, but in the summer I could flex up and work longer hours. However, for many of my colleagues, that was their full-time job; it was the job that paid their rent or mortgage—if they had been lucky enough to buy a house—looked after their kids and provided the heating each winter. But when it came to it, it was open to abuse, and the manager I had would vary hours based not on demand, but on whether she liked the individual or not.
I remember vividly that one week a colleague refused—quite rightly, I would say—to take the manager’s personal shopping up to her fourth-floor flat, because he was really busy behind the bar; he was the only barman on shift. He usually worked between 50 and 60 hours a week; for the next month, he was given five hours a week. He had two children, and rent to pay. I just do not agree with the amendment suggesting that that is fine and that that abuse of someone’s rights could continue indefinitely.
Mr Bedford
The example the hon. Gentleman has just given would be covered anyway by employment law. If an individual is being discriminated against, they could take that to a tribunal under current employment law. The amendment would not in any way dilute the rights that currently exist in that respect.
Alex McIntyre
Well, the individual would be able to raise a grievance, but discrimination requires it to be related to a protected characteristic, and there is no protected characteristic saying that just because someone disagrees with a manager, he would be able to bring a claim under the Equality Act 2010 for discrimination. He might be able to raise a grievance about that, but that requires an employer to have a fair grievance process and to actually follow through. Is that individual, who is already on very low pay and struggling to pay his rent and feed his kids, going to take that grievance through a tribunal system that the previous Government allowed to really suffer? Eighteen to 24 months is the standard waiting time to get any form of justice, so I do not think it is appropriate to say that he would be able just to go to a tribunal. What he really needed was guaranteed hours and small businesses being prevented from abusing people by saying that they can continue to work 60 hours but not offering them a regular-hours contract.
My second point is on sexual harassment or harassment by third parties. When I was 15 years old, I worked at a Christmas party for midwives at that same hotel, and during that party I was sexually assaulted in the workplace. I was groped by the midwives and told that because I was only 15, they would be able to teach me a thing or two. When I approached my manager about it, he said I should enjoy that kind of attention because I was a man. I am really conscious that female colleagues suffered way worse than I did. Just because businesses are smaller, that does not mean that the impact on victims and people working there is any less.
However, the wording of the Bill is “all reasonable steps”, and the “reasonable” test is taken into account when tribunals consider such matters and what reasonable steps need to be taken by businesses. The size of a business is often something that tribunals will take into account when they look at what “all reasonable steps” would mean. In my example, there were reasonable steps that could have been taken, but I was told that I had to get back in there and carry on working with that party. Excluding small businesses would prevent them from having the duty to look after their employees when they are suffering harassment in the workplace.
To come back to the point made by the hon. Member for Mid Leicestershire about competing evenly, my hon. Friend the Member for Birmingham Northfield has already talked about some of the perverse outcomes that the amendment might lead to. Unscrupulous employers who want to get around the legislation in whatever way they can might end up setting up umbrella companies in order to do that if this amendment were passed. A two-tier employment system would be a barrier to growth for companies, because it would say, “If you grow your company and continue to do well, you are going to put additional regulation on to the company.” There would be a perverse incentive for businesses to grow to 499 employees and stop there.
Sir Ashley Fox (Bridgwater) (Con)
On the hon. Gentleman’s point about employers wanting to set up separate entities to keep below a limit, he will be aware that in the Budget the Chancellor increased the employment allowance, to protect small businesses from her otherwise devastating increase in national insurance charges, and there is no indication that the Exchequer is incapable of managing that. Equally, with small business rate relief, there is no indication that local councils cannot distinguish between employers that are setting up different business and those that are taking advantage of that. Why does the hon. Gentleman think that employers would be able to exploit what he describes as a loophole—but what we would say is there to protect small businesses—and yet the Government are perfectly happy to have similar allowances for national insurance and through rate relief?
Alex McIntyre
If we are looking at the numbers, I am glad that somebody on the Opposition Benches is finally acknowledging that we have massively increased employment allowance, taking many small businesses out of paying national insurance contributions altogether. It is nice to finally have some recognition of some of the good stuff this Government are doing for small businesses.
To return to the point, though, there is a big difference between having four employees, which would allow somebody to employ people on the national living wage, and having 500 employees. It would be much easier for a large business to exploit the kind of loopholes that are being suggested by reorganising itself into blocks of 499 employees than it would be for a business of a couple of thousand employees to be split into organisations of four employees or fewer, so I think that that is what is much more likely to happen.
I will not name names, but I have been in the trade for a long time, and whenever there is employment legislation, businesses will be considering how best to deal with it, and some are more aggressive than others. In this case, aggressive employers would potentially exploit that loophole, as my hon. Friend the Member for Birmingham Northfield suggested. We are creating a level playing field, which is an important part of this Bill. We heard in evidence last week that many employers are already doing so many of the good things in this Bill. This is a levelling of the playing field, to stop people undercutting good employers with what are, quite frankly, shoddy employment practices.
To sum up, I fully support the Bill, and I do not support the amendment. We should not create a two-tier employment system, where instances such as those that I and my colleagues suffered, like others working on zero-hours contracts in small and medium-sized enterprises, are allowed to go unchecked. We should continue to create a level playing field, as the Minister has suggested. It is important that we encourage all small and medium-sized enterprises to be good employers because, as the hon. Member for Chippenham said, staff retention in small and medium-sized enterprise is difficult. Being good employers—offering flexible working and ensuring that people have regular hours, if that is what they are working—can only benefit small and medium-sized enterprises, as they grow and expand their businesses.
Sarah Gibson
As I have stated, I am concerned for small businesses and have spoken to many across my constituency of Chippenham that are extremely concerned about the cumulative effects of these measures on businesses without an HR department and about the huge cost they will impose. However, although I welcome the amendment, I am seriously concerned that if we create a system in which the rights of those who work for small businesses are curtailed, that will affect their ability to take on extra staff.
I feel as though I could have supported the amendment if it had been drafted for seriously small businesses, rather than SMEs of up to 500 employees. I struggle to think of a firm in my constituency with that many employees that does not have an HR department, because they would be struggling as a single employer—I used to struggle as the HR department of my own business with 15 employees. If the number of employees in the amendment could be brought down to around 20, it would be much more acceptable to those kinds of small businesses, but as it is, I would find it difficult to support.
Laurence Turner
I rise to make two brief points that have not been made in this debate. The first, which is narrow, is that we already have a legal definition of SMEs under the Companies Acts 2006, which defines the upper limit as 249 employees. I acknowledge that the previous Government’s position was to extend to new regulations the higher thresholds that those on the shadow Front Bench are seeking to put forward through these amendments. I am happy to be corrected, but I do not believe that any legislation incorporating that position was subsequently carried. There is a serious point here. These may be probing amendments—we will find out shortly—but this process is not the right point to introduce a new legal definition.
Sir Ashley Fox
The hon. Gentleman makes a serious point that 250 employees is the current legal definition. If the Opposition were to show flexibility in accepting that 250 definition, would he and the Labour party accept the amendments for small and medium-sized businesses with up to 250 employees?
Laurence Turner
My personal view is that they should not be accepted, but the hon. Gentleman surely knows that he should not seek an opinion on the party position from a Back-Bench MP.
My second point is on the sectors that would be affected by the amendments. My hon. Friend the Member for Gloucester made an incredibly powerful contribution, which we all thank him for having the courage to make, about his experience in the hospitality industry. I want to talk about the social care sector, and it is important to remember that one in three workers on a zero-hours contract in England works in adult social care.
In a former life, I spent many hours going through the corporate structures of social care employers, and their accounts and other filings. It is commonplace for an individual care home to be constituted as an individual employer, even though they ultimately all share a common ownership structure, so what appears to be a small business is often not one. During the pandemic, there was a complex interaction between care workers on zero-hours contracts and a lack of access to statutory sick pay, and there was a direct link between SSP coverage and high rates of infection, and indeed deaths, in those homes among both workers and residents.
The measures in the Bill will make real progress. Going back to points that have been covered already, I fear that this group of amendments will have serious unintended and perverse consequences, and I encourage Members to vote against it.
Justin Madders
I congratulate the shadow Minister on tabling the amendments and on the measured way in which he presented them. However, it will not come as any surprise to him to hear that we will not be able to support any of them.
The intention of amendment 137—or amended amendment 137—is to exclude SMEs from the provisions in clauses 1, 2 and 3. As we understand it, the additional amendments would commit the Government to exempting employers with fewer than 500 employees from measures designed to improve access to flexible working, from their obligations not to permit the harassment of their employees by third parties, from unfair dismissal provisions and from the measure designed to stop unscrupulous fire and rehire practices.
I understand that the general thrust of the shadow Minister’s argument was about the impact on SMEs and the lack of an evidence base for some of the policies. The general response has to be that we will not accept a two-tier system of employment rights in this country. We believe that everyone should have the same rights and protections in the workplace, and that is fundamental to our principles.
I will address some of the specific points. The shadow Minister mentioned the RPC’s criticism of our proposals on zero-hours contracts. There is legion evidence about the impact of those contracts on individuals. I am grateful to my hon. Friend the Member for Gloucester, who spoke movingly about his own personal experience, including of third-party harassment. His example of the individual who was, effectively, punished when they refused to take a bag of shopping upstairs was telling, and it showed the risks of the power balance in zero-hours relationships. I think that that individual, having already been punished for refusing to take shopping upstairs, would have received similar retribution had he raised a grievance. That goes to show some of the challenges of the power balance for people working on zero-hours contracts.
There is considerable evidence on the impact of the zero-hours contracts. According to the Chartered Institute of Personnel and Development, 22% of workers on zero-hours contracts do not believe that their contractual arrangements suit their life, and the previous Government’s Taylor review in 2017 found that many workers on zero-hours contracts struggled with that one-sided flexibility and power imbalance, where employers often require employees to be available.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I thank the Minister for his speech so far. We heard a lot from the Opposition about the cumulative impact on business, and I wonder whether he might say something about the cumulative benefit for workers. We know that 2 million zero-hours workers may benefit from the changes in the Bill, and we also heard evidence last week from a number of small businesses, or those who work with them, that they do not want a two-tier system. They said there are benefits in these provisions that will lead to not only better quality rights for those currently on zero-hours contracts but happier businesses with a more productive workforce.
Justin Madders
On a very fundamental level, if an employee has less money coming than in the previous week, they face a challenge in paying their bills, whether that is their mortgage, their rent or whatever costs they face. That is a very clear challenge to individuals on zero-hours contracts. A great number of studies show that people in insecure work have lower levels of job satisfaction and poorer physical and mental health, and there are also issues linked to lower levels of work productivity. As my hon. Friend mentioned, there is evidence that proper workforce planning is good for businesses, as well as individual workers. I am afraid that any exceptions creating a two-tier labour market would just exacerbate some of the challenges we see in that area. That would create a downward pressure, distort competitiveness at the expense of larger businesses and, as we have heard, create a disincentive for smaller businesses to grow.
Chris Law (Dundee Central) (SNP)
I have heard the Minister reference two-tier rights in employment law several times. I want to raise a fundamental issue in this Bill: zero-hours contracts and the different legal categories of a worker. It is a general principle that labour law should be universal in its application, and our labour rights should apply to everyone who works for others. I just wanted some clarification, as without clarification on the legal status of all those who work, the rights in the Bill are allocated piecemeal.
I will give some examples: some rights are given to employees with contracts of employment; some rights are given to limb (b) workers, such as Deliveroo riders in Independent Workers Union of Great Britain v. Central Arbitration Committee and Deliveroo last year, or gig workers who are denied the status of employees; and some rights are given to other new ad hoc definitions of workers, such as workers on non-contractual zero-hours arrangements. The situation of the false self-employed, including those employed by umbrella companies or personal service companies, as well as anomalous workers such as foster carers, is not otherwise dealt with, and their rights are left opaque. Fundamentally, I am asking whether a new clause is required to ensure that all rights contained within the Bill apply to workers defined as
“any individual who is engaged by another to provide labour and is not, in the provision of that labour, genuinely operating a business on his or her own account”.
Justin Madders
I understand the point that the hon. Member is making. I think it would not need a new clause but a new Bill, because there is a whole range of very complicated issues about worker status. It is something that we are committed to looking at in our “Next Steps” document, and there is a whole range of issues in that sector. The hon. Member referred to foster carers—I should clarify for the record that I am a foster carer. Personally, I would not consider that to be employment, but I know there are others who believe that it is. He also mentioned various arrangements within the gig economy, and the shadow Minister mentioned IR35. We can very quickly get into a very detailed argument about who would be classed as a worker and who would not, and that needs a much more considered and lengthy examination. That is why, as much as we would have liked to, we were not able to get it in the Bill in the time allowed, but I absolutely understand the point the hon. Member is making.
On the amendments before us, the disincentive for an employer to grow would, unfortunately, be an unintended consequence of their provisions. There could even be a scenario where there would be an argument in an employment tribunal about how big an employer actually was. My hon. Friend the Member for Birmingham Northfield talked about some of the complicated structures that we see, and we know that some employers deliberately structure themselves to avoid particular laws. That would go against the policy objectives, which are to create a level playing field across the board, avoid undercutting and ensure that best practice is spread throughout.
We must not create a two-tier system. That is not consistent with what we are trying to achieve. It would harm not just workers, but small businesses, and, as the hon. Member for Chippenham said, would create an incentive for workers at smaller employers to leave. If someone does not get any protection for two years working for one employer, they will go and work for someone who will give them that protection. That applies to lots of the other rights as well.
On the unfair dismissal amendment, there was a brief period in the 1980s where there was a slightly different employer size qualification for unfair dismissal. I think it was 21—some way below the number that the shadow Minister is proposing—but even the Thatcher Government decided that was not a tenable situation and removed that in the end. I gently point out to the shadow Minister that the amendment as drafted would not have the effect that he hopes. I hope he will not push it to a vote.
On the issues about the impact on small employers, that is why we have legislated to include a statutory probationary period to ensure that there is not an undue burden on businesses.
Jon Pearce
I should refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB.
The shadow Minister talks about employment rights from day one and the extra burden, when the reality is that cases of discrimination and whistleblowing can be brought on day one. Giving some structure to the probationary period will actually assist many employers. In my experience in private practice advising businesses, many of them found themselves subject to claims of discrimination because they failed to go through a proper process. The Bill will assist businesses in giving a greater structure and could potentially lessen the burden on employers with regard to the threat of litigation.
Justin Madders
I think I understand the point my hon. Friend is making: sometimes, an individual who is aggrieved about their treatment will find a legal claim to pursue the employer even if it does not necessarily fit their circumstances. Giving a much clearer structure for employers will hopefully allow closure—I think that is probably the right word—for both sides.
The shadow Minister asked about the evidence on flexible working. I refer him to a Flexible Jobs Index survey in 2023 which found that nine in 10 people wanted to work flexibly, but only six in 10 were able to do so. There is clear evidence, and we heard plenty in the evidence sessions about that.
I will briefly touch on the issue of third-party harassment. My hon. Friend the Member for Birmingham Northfield gave a scholarly run-through of some of the issues, but for the benefit of the Committee, third-party harassment was actually unlawful for the five years between 2008 and 2013, and I am certainly not aware of businesses claiming that that was an undue burden. That was repealed in 2013 because, at the time, it was considered that there were broader protections available regarding third-party harassment. However, that interpretation was challenged in the Nailard judgment in 2018, which found that employees were not in fact protected against third-party harassment. One of the intentions behind the Bill is to close that gap. We think it is absolutely fundamental that, if someone is being harassed at work, it should not matter how big their employer is. Harassment is unacceptable in all its forms, whoever someone works for and however big their employer is, and we intend to close that gap.
Greg Smith
I think that we have had a good—possibly lengthy for a Bill Committee—debate on this group of six amendments. My fundamental concern and argument is around the cumulative impact and the risk of the unintended consequence—I do not think we have got the reassurance we require on that—that these measures could actually dissuade SMEs. I accept that we can debate how to precisely define SMEs, from the Liberal Democrats’ quite low-ball position of around 20, to the 249 mark, or to the 500 mark in our own amendments but, if the net result—the unintended consequence—is fewer jobs overall in the economy, nobody wins.
I certainly want to reassure the Committee, on the point about third-party harassment, that the Opposition absolutely want all forms of harassment stamped out, for sure. I thank the hon. Member for Gloucester for sharing his personal story with the Committee; clearly what happened to him was wholly unacceptable, and I am very sorry that he had to endure it, as many other people do around the country. The question that we are posing is whether this the right law to do it, or are there other laws required to be as firm as humanly possible to stamp down on those unacceptable behaviours? Our point stands—that concern stands—that this measure could, in the words of the hon. Member for Birmingham Northfield, actually create a “perverse incentive” for employers not to give people that chance in life, not to grow their workforce, and not to take that risk or that gamble that, in turn, would grow the economy, which I think we all want them to do.
As we are mindful of the need to probe this measure a little bit further and to get some of those definitions right, we reserve the right to revisit this on Report but, for the time being, we will not be pushing any of those six amendments to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 149, in clause 1, page 2, line 29, leave out
“a number of hours (‘the minimum number of hours’) not exceeding a specified number of hours”
and insert
“two hours or fewer per week (‘the minimum number of hours’)”.
This amendment defines the number of hours that would constitute a “low hours” contract.
Hopefully we can have a little bit more speed with this debate. In amendment 149, we seek to define a low-hours contract to mean that fewer than two hours’ work is made available during the week. I want to be clear with the Committee that this is a probing amendment, because we are not saying that two hours should constitute a low-hours contract. The Opposition want to know how the Government would define a low-hours contract. The probing amendment will hopefully enable us to understand the Government’s intent fully.
The Government have sadly failed both to consult widely with business and to conduct proper policy development work, and they have thereby introduced a Bill without giving Members across the House a clue as to the actual objective of the definition of a low-hours contract. This is a simple and straightforward probing amendment. I would be grateful to the Minister for some clarity on the Government’s definition of a low-hours contract and on what that definition will be used for.
Michael Wheeler
I appreciate that the shadow Minister has said that it is a probing amendment. I wish it was not quite so ridiculous, in all honesty—it is an utter low ball—but I will speak to it and to the clause it seeks to amend.
Greg Smith
I know the hon. Gentleman is new to the House, but sometimes one has to be a bit ridiculous to prove a point and to get answers. Does he agree?
Michael Wheeler
Well, I agree on my newness, and maybe as I gain more experience, I will encounter more ridiculousness in this place than I already have—in fact, I am sure I will. I wish to speak to the amendment, despite its probing nature. In my view, and I hope the Minister would agree, the clause is designed to promote stability and financial security for those who currently lack it because of the number of hours that are baked into their contracts. To set the bar as low as two hours would run counter to that purpose.
The measure has been widely trailed and debated in the run-up to the election and in this Committee. I highlight a few things that I hope the Minister will speak to with a view to that purpose. I hope that we would all agree that tackling the insecurity that millions of people in our economy face is a worthy aim, and that that is not limited just to those on zero-hours contracts but includes those on low-hours contracts who regularly work more than their set hours.
I spoke of a rebalancing earlier, and that is about fairness and the quality of employment. As part of that, it is only right that, where need is demonstrated, employees are offered—not given; there is still an element of choice—the opportunity to have those hours baked into their contracts, as is set out in the Bill. That would improve their financial security, their work-life balance, the predictability of their hours, and their ability to live their lives, to which their income is incredibly important.
I am looking forward to hearing the Minister roundly reject this amendment, but I also want him to address some other parts of the clause, specifically the inverse of the amendment, the phrase,
“not exceeding a specified number of hours”.
I hope we would want to see this measure apply to as many workers—
Sir Ashley Fox
The hon. Gentleman spoke of the need for employees to have stability and security, but would he not agree that the Bill causes great instability and insecurity for many small business owners precisely because it is so vaguely and badly drafted? The Government have submitted 109 amendments of their own. There are two new schedules and large parts of the Bill that have been left to be amended by future regulations. The Minister spoke earlier about the probation period, but we do not know how long that will be. What is a low-hours contract? It has taken the Opposition to say, “How about two?”—a ridiculous number, we admit—to show that there are enormous parts of the Bill that are not properly drafted. Would it not be better for the Government to just take this Bill away and start again?
Michael Wheeler
I would not agree, which will not surprise the hon. Member. I gently suggest that the number of Government amendments will possibly provide the clarity that he asks for—they will be baked in, and will provide that clarity. This is part of the process of getting the provisions right for all involved. I would suggest that it reflects exactly the opposite of what the hon. Member suggests.
I return to the point about stability and instability. If the basis of the provision is to have hours regularly worked included in contracts, having that contractual term would provide not only stability for the employee, but predictability and stability for the employer. I am sure we can agree that stability all round is beneficial.
However, I come on to possible unintended consequences. The term,
“not exceeding a specified number of hours”,
could do with some clarity, in order to provide that stability and to ensure that the measure applies to the widest number of people within our workforce, to fulfil the intended aim. There is also the phrase “regularity”. Will the Minister consider how to clarify that term to provide the clarity that we would all welcome? Finally, I come on to the term, “excluded worker”. As I have said, we want to see as many people as possible covered by the Bill, so that they feel the benefits of it. The provisions are measured, for both workers and employers. I would welcome the Minister’s commitment to consider those points, as well as his roundly rejecting the ridiculous premise on which the amendment is based.
Justin Madders
I am grateful to the shadow Minister for clarifying that this is a probing amendment, and possibly also that it is a ridiculous amendment, although I am not sure that that is the best way to persuade us to accept it. He will not be surprised to hear that we will not accept it.
An important point has been raised, and my hon. Friend the Member for Worsley and Eccles has asked a number of questions about what the amendment is trying to achieve. As I understand it, the amendment would mean that only workers on zero-hours contracts or arrangements, and those with two hours or fewer guaranteed per week, would be covered by the regulations. It would also remove the power to make regulations setting the maximum number of hours for those low-hours contracts to be in scope of the provisions.
The low-hours concept will be crucial in determining how many workers end up in scope of the right to guaranteed hours. That is partly intended as an anti-avoidance measure, to prevent employers from avoiding the duty to offer guaranteed hours by moving a worker on to a contract guaranteeing a very small number of hours. I think we can all see that, if the shadow Minister’s amendment were accepted, we would soon be talking in the lexicon about two-hours contracts, rather than zero-hours contract, and that would not deal with the questions of stability and security that we are trying to address.
We will consult on what we mean by low hours. We think it is very important to get this point absolutely right, and we understand that pitching it at a level that works for both the business and the worker will be absolutely critical. We are committed to working in partnership.
We are looking to clarify the provision in regulations. We understand that there are arguments about the detail being in the Bill, but the counter-argument is that putting the details in regulations gives us more flexibility to review the provisions as we move along. It is fair to say that we do not expect the number to end up being two hours. I do not think there has been any evidence put forward for that.
Greg Smith
As I said to the hon. Member for Worsley and Eccles, sometimes something a little obscure is needed in order to get noticed and to get an answer.
There is a serious question on what constitutes a low-hours contract. The Minister has just said he will consult, but presumably he will consult on a range—the consultation document will not be a blank piece of paper inviting people to say exactly what they think. What is the range in which the Government believe a low-hours contract should be defined, which will be within that consultation he has promised?
Justin Madders
The shadow Minister tempts me to pre-empt what we will put in the consultation. I have had a number of conversations with my hon. Friend the Member for Worsley and Eccles over many years, because he has great experience of the retail sector, where there is a great deal of insecurity of work. People who work in that sector can be on guaranteed hours of 16 hours a week but still face insecurity. Equally, a lot of the people that we are trying to help here have no guaranteed hours at all. There is an argument that anyone below full-time hours—again, there is a debate about what that means—could be within scope.
That is why we are holding a consultation, to enable us to understand exactly who will be affected—whether we are trying to catch everyone or target the people who suffer the greatest insecurity of work. That is the purpose of the consultation. I know the shadow Minister will probably want to get some figures out of me today, but I am afraid I will not be able to oblige.
Chris Law
I am sorry to stop the Minister in his tracks, but it is quite an important point. There is in the Bill what I would consider to be a loophole, which enables employers to offer a guaranteed-hours contract where there is work of a short-term nature. There are some issues with that. I would like to know the justifications for it, and whether it is going to consultation. Does it mean that people engaged on such terms will be engaged on a zero-hours basis, or will they be employed on a guaranteed-hours basis? It is not clear in the Bill. If the former, why is it not possible for such workers to have a guaranteed-hours contract if they otherwise meet the proposed statutory criteria? What safeguards will there be to ensure that the power is not abused, in order to avoid a guaranteed-hours contract? I am sure that, in the spirit of the Bill, we want to ensure that that is tightened. There is nothing in the Bill for that, either.
What is the difference between a short-term contract and a fixed-term contract? Will there be a legal status for someone engaged on a short-term contract? Are they an employee, a limb (b) worker, or neither? Lastly, will non-renewal of a short-term contract be a dismissal for the purposes of unfair dismissal in the case of workers who are employees? That is a lot of questions, but I want to know whether there will be further consultation that may result in amendments to the Bill.
Justin Madders
The hon. Gentleman asked so many questions that I did not have a chance to make a note of them. A lot of the issues he raised will be dealt with by amendments that we will debate today or later in the Bill’s passage, but I take his points. We are trying to legislate in a way that prevents unintended consequences and loopholes. I would say to the shadow Minister, “Watch this space,” and encourage him to take part in the consultation, but we cannot accept his amendment.
Greg Smith
It is no surprise that the Government are unwilling to accept the amendment; it is a probing amendment, so we would probably have been quite upset if they had. The fundamental point I still want to get at, while making clear the probing nature of the amendment and that we will withdraw it, is that while I am half reassured by the consultation, it is critical that there is clarity and definition for businesses out there that want to understand what is coming down the line in this piece of legislation. Everyone knows the parliamentary arithmetic at the moment; this will become law at some point during this Session.
While it is never an ideal scenario to legislate first and consult second—it is far better to do it the other way round—we need greater clarity, as soon as is humanly possible, on how the Government intend to define low-hours contracts as they go to consultation. I cannot accept that there will not be some floor and ceiling within the range that the Government seek to consult on, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 152, in clause 1, page 3, line 2, after “not” insert
“on a fixed-term contract or”.
This amendment will exempt a worker on fixed-term contracts from being categorised as a “qualifying worker”.
This too will hopefully be a relatively straightforward debate. The amendment seeks to exempt workers on fixed-term contracts from being categorised as qualifying workers. This is a probing amendment in my name, on behalf of the official Opposition. We would like to understand why it is proportionate, particularly for small and medium-sized enterprises, for the provisions on guaranteed hours to apply to workers on fixed-term contracts, given that we still do not know the length of the reference period. Is it proportionate for a business to have to make an offer of guaranteed hours to a worker whose contract will in any event come to an end just after the reference period? In last week’s evidence sessions, some witnesses talked about workers who are perhaps on a very specific construction project with a definite end point—when the railway station is built, there is nothing left to build on that project—so it is not possible to escape the fixed-term nature of some contracts. Without knowing the length of the Government’s proposed reference period, it is impossible to make a judgment on the effect of extending guaranteed hours to workers on those fixed-term contracts. I should be grateful if the Minister would provide clarity on that, so that this probing amendment can be put to bed, or further questions can be asked down the road.
Justin Madders
The shadow Minister will not be surprised to hear that we will resist the amendment. First, it is important to note that the Bill does not ban the use of fixed-term contracts, or seek to force employers to make workers on fixed-term contracts permanent. That is not our intention. We recognise that in some cases, a fixed-term contract will be the most appropriate one for both worker and employer. For example, under the Bill’s provisions, it would be reasonable to enter into a limited-term contract where the contract is entered into for the worker to perform a specific task, and the contract will end once that task is completed. Many fixed-term contracts also already have clearly stated guaranteed hours within them.
However, where a fixed-term contract is used, we think it is important that within that fixed-term period, workers have the same right to guaranteed hours as those on permanent contracts. For eligible workers, if the fixed-term contract does not guarantee more hours than what are considered to be low hours as set out in the regulations—which we will come to in due course—and is longer than the anticipated reference period of 12 weeks, which we will continue to work on, then employers will be required to offer a guaranteed-hours contract for the remainder of the contract, reflecting the hours worked regularly over the reference period. The amendment would create a serious loophole in the legislation, allowing employers to use fixed-term contracts to evade the purposes of the legislation entirely. There would be no mechanism to prevent the use of a fixed-term contract for 12 weeks or longer, so eligible workers would not have certainty of their hours. We would open up a serious loophole, which I am afraid unscrupulous employers would exploit. I therefore ask the hon. Member to withdraw the amendment.
Greg Smith
I accept the points made by the Minister, but I still think there is a relative concern. We in no way, shape or form want to create loopholes—certainly not for any unscrupulous employer, and I want that to be very clear and on the record—but we do totally accept that there are some very legitimate fixed-term contracts out there, such as certain construction projects.
Greg Smith
I hope, from the nodding coming from the Government Front Bench, that Ministers agree with this. We will withdraw the amendment, but this point needs considerably more debate as the Bill progresses to ensure that while no loopholes for the unscrupulous are created, and that protections are there for employers around fixed-term contracts.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Greg Smith
I beg to move amendment 151, in clause 1, page 3, line 2, after “worker” leave out
“(but see section 27BV for power to make provision about agency workers)”.
This amendment is consequential on the amendment that removes the ability of the Secretary of State to make regulations to make provision for agency workers to have similar provision to the right to guaranteed hours.
The Chair
With this it will be convenient to discuss amendment 150, in clause 4, page 23, line 24, leave out “2,”.
This amendment removes the ability of the Secretary of State to make regulations to make provision for agency workers to have similar provision to the right to guaranteed hours.
Greg Smith
There are just a couple more Opposition amendments to go before we get to some Government ones. Amendments 150 and 151 propose to exclude agency workers from the provisions on the right to guaranteed hours. The provisions in the Bill relating to agency workers are another example of the Government’s not having done proper policy work before introducing the Bill. I fully understand their desire to get it out within 100 days, but sometimes, if a Government have a mandate for five years, 100 days can seem quite quick.
The Bill specifies that the right to guaranteed hours with reasonable notice of the cancellation of a shift does not apply to agency workers, but it includes a Henry VIII power to extend those provisions to agency workers at a later date. I therefore ask the Minister the following questions. Why is it not straightforwardly on the face of the Bill that those provisions apply to agency workers? Why the Henry VIII power? What is the policy decision? In the Government’s mind, are agency workers included in the principle, as well as the letter, of this legislation? We have concerns about these provisions, which could be extended to agency workers. How would the employment relationship then work? Who would dictate the hours? If it is the end user rather than the agency, surely they become the employer? It all becomes rather confusing.
Is this measure an attempt to ban agency working by the back door? I think everyone would accept that agency workers are sometimes some of the biggest heroes in our economy, as they fill gaps when full-time workers on contracts are unable to get to work that day, for whatever reason—be it sickness or anything else—particularly in key professions such as nursing, healthcare and teaching.
Until the Government can explain their intention, the Opposition do not believe it is responsible for the House to give them the powers to entirely change at a later date the policy position set out on the face of the Bill. We need clarity right now, so that this Committee, and the whole House later in the Bill’s progress, can come to a proper, informed decision.
Justin Madders
I am grateful to the shadow Minister for tabling these amendments. He will again be unsurprised to learn that we will not be accepting them.
The Bill fulfils our pledge to end exploitative zero-hours contracts. We are introducing a right to guaranteed hours to eligible workers on zero and low-hours contracts, to give them the greater security and stability that all workers deserve. Although workers may choose agency work because they value flexibility, they can also experience the one-sided flexibility and insecurity that we have talked about already. If we do not include a power to include agency workers, there is a risk that employers wishing to evade the Bill will simply shift their workforce on to agency work to avoid giving them rights.
Sir Ashley Fox
What is more important in relation to this amendment is that the Government are granting themselves a Henry VIII power to amend their own Bill. The Minister really should say whether agency workers are intended be within its scope. He must not just say, “We will make this up at a later date.” We need clarity on that point. In previous Parliaments, the Labour party rightly criticised Conservative Governments for introducing Henry VIII clauses, but it is doing precisely the same thing because it has not actually made a decision. Will the Minister please answer this question: does he intend agency workers to be covered or not?
Justin Madders
I am grateful for the hon. Member’s question. It is our intention to include agency workers, which is why we have been consulting. The consultation finished yesterday on how best to apply the Bill to agency workers, because we understand it is a different relationship. There are a range of considerations, which is why the power has been taken in this way. I am sure that the hon. Member would criticise me if we had set out the scope of the Bill without having taken that consultation first. We are concerned about ensuring that there is a level playing field and not creating another loophole. We will now engage with the responses that we have had to the consultation.
Laurence Turner
The Minister spoke about the insecurity that can hang over agency workers, and said that their employment situation does not always represent genuine flexibility. As someone who has been an agency worker, I can certainly identify with what he says. On the point around regulations, does he agree that this is a long-standing precedent in employment law, dating all the way back to the Employment Agencies Act 1973, under which the current agency workers regulations are made? In terms of powers, this is nothing new.
Justin Madders
I am grateful to my hon. Friend for his intervention. Much employment law, particularly in relation to agency workers, is dealt with by regulations; that is appropriate because of the detail required. It is not a break with the past, albeit I accept the criticisms that we may be seen to be taking part for ourselves; I think it is entirely consistent with the way this has operated previously. It is something that we shall now consider in terms of the responses to the consultation. For those reasons, I think the hon. Member for Mid Buckinghamshire should withdraw his amendment.
Greg Smith
I accept many of the Minister’s points about the consultation, but as my hon. Friend the Member for Bridgwater has made clear, there is a Henry VIII power here. When legislation as wide as this is proposed, it is a big problem to have such a lack of clarity about where it will lead for agency workers, who are such a critical part of our economy and our workforce across many sectors. Given the Henry VIII element, we seek a Division.
Question put, That the amendment be made.
Greg Smith
I beg to move amendment 143, in clause 1, page 3, line 17, leave out “with the specified day” and insert
“18 months after the day on which the period began”.
This amendment defines each initial reference period as being 18 months long.
The Chair
With this it will be convenient to discuss amendment 144, in clause 1, page 3, line 19, leave out “with the specified days” and insert
“18 months after the day on which the period began”.
This amendment defines each subsequent reference period as being 18 months long.
Greg Smith
This is the last group of Opposition amendments for a little while. Amendments 143 and 144 would specify the length of the reference period as 18 months. The RPC, which was widely referenced in the first set of amendments, has said that the Government have not justified why they are pursuing—
Michael Wheeler
It is a quick intervention: I am just wondering whether the amendment’s reference to 18 months is another example of the ridiculousness that we were talking about.
Greg Smith
It is certainly probing. Like earlier amendments, it is intended to spark debate so that we can understand where the Government sit on the issue, what is coming down the line and what businesses can expect in the real world once the Bill receives Royal Assent at some point next year.
The last Conservative Government removed exclusivity clauses in zero-hours contracts, tackling those contracts that were potentially exploitative. The clause that the amendment seeks to amend is based on the flawed assumption that employers will exploit their employees and that all the power in the relationship lies with the employer. There is no doubt that some do, but the Opposition do not hold the presumption that all will. Those that do should be challenged, but the vast majority do not seek to exploit their employees.
The London School of Economics has found that zero-hours contract jobs have 25% more applicants than permanent positions in the same role. That flexibility is clearly sought after by employees. The author of the study said:
“Policymakers should be cautious with how heavily the use of zero-hours contracts is regulated.”
The RPC has asked the Government to clarify the likelihood that the Bill’s provisions on zero-hours contracts will increase unemployment and worklessness, and how far that risk is mitigated by zero-hours contracts remaining potentially available. I would be grateful if the Minister clarified the extent to which they will remain available. What is his view on the impact that the policy will have on workers who might like to work fewer than the guaranteed number of hours a day? Some people may desire that.
We believe the legislation should include the exact length of the reference period. I accept Government Members’ point about the 18-month figure, but as I said to the hon. Member for Worsley and Eccles, it is about triggering a debate, kicking the tyres and getting to a reasonable but considered position on what the reference period should be. The Opposition’s point is that we should know what it is. It is not just politicians in this House and the other place who need to know, but the real businesses, entrepreneurs and drivers of our economy who employ real people. They need to understand what the legislation is going to specify and what the rules are by which they are going to have to play the game.
Laurence Turner
The Workers (Predictable Terms and Conditions) Act 2023 sets the reference period at 12 weeks. The hon. Gentleman says that 18 months is probably an artificially high number. Does he think that the 12-week reference period, which the previous Government supported just 12 months ago, is in about the right place?
Greg Smith
The hon. Gentleman is absolutely right that the previous Government set the reference period at 12 weeks. What we do not have clarity on is whether the Bill will change that. Will the new Government shorten it or lengthen it? It is about clarity. This is a rushed Bill, published in 100 days. We do not have the answers or the hard data that we need for debate and that individual Members need so that they can go to businesses in their constituency and take a view before they vote on Report or on Third Reading.
We heard from several witnesses that the length of the reference period needs to account for seasonal work. UKHospitality has put 26 weeks forward as a sensible length. That is not necessarily the Opposition’s position, but we would be foolish to ignore the evidence that the hospitality sector presented to us last week.
The amendment is intended to test what the Minister is planning and—ever the most critical question in politics—why. How will we ensure that the length will not be overly burdensome and that it will take account of the different needs of so many sectors?
Sarah Gibson
Like previous amendments, the amendment highlights a serious concern among quite a lot of local businesses to which I have spoken, especially SMEs, which is that a considerable amount of detail has not been included in the Bill and is being left to secondary legislation. Although consultation is highly welcome, it needs to happen as fast as possible, because the interim period between seeing the Bill and getting the detail is causing a huge amount of stress and uncertainty for businesses working in ever more complicated conditions.
Sir Ashley Fox
I want to talk about the reference period in relation to the hospitality and tourism industry, which is particularly important to my constituency of Bridgwater and to many other constituencies in the south-west of England. Clearly a lot of seasonal workers are employed, and although I would prefer there to be no reference period, the Government have a mandate to introduce one. Any reference period of less than 26 weeks will cause great difficulty for businesses that may start engaging people just before Easter and are looking for employment to end in September or October, according to their business need. The fact that that detail is left to secondary legislation causes concern to those businesses.
Alex McIntyre
Does the hon. Member not agree that most businesses in hospitality know their seasons very well? They come every year and they tend to operate on a relatively regular basis—that is how seasons work. As has been highlighted, businesses could use fixed-term contracts to ensure that they have appropriate staffing for the season. Those contracts would end at the appropriate time, negating the need for a longer reference period.
Sir Ashley Fox
I am grateful to the hon. Member for making that point, but in Burnham-on-Sea in my constituency there are many very small businesses, with perhaps two or three employees, that take on an extra person or two during the summer season. This summer has been particularly bad because there has been an awful lot of rain. Business needs change. The danger is that if there were a short reference period and we were fortunate enough to have a very hot and sunny April, May and June but a very wet July, August and September, businesses would be employing more staff because they had to, rather than because it was justified by the business conditions.
This is just not necessary. It is Government regulation for the sake of it, and it will make life more difficult for small business owners. Every time Government Members have risen to speak, they have declared that they are a member of one union or another, but very few have actually run a small business. I did run a small business. I was self-employed before I came to this place. It is challenging, because you are on your own: you take the decision whether to employ someone or not. Dare I say it, there are too few Government Members who have set up small businesses and who have actually employed people and experienced that challenge. That is part of why they do not understand how difficult this regulation would make life for some very small businesses.
Justin Madders
The amendment tabled by the hon. Member for Mid Buckinghamshire seeks to amend clause 1 to specify in the Bill that the initial and subsequent reference periods for the right to guaranteed hours will be 18 months long. I do not think he is prepared to concede that it is a ridiculous amendment, but shall we say that it was ambitious? Can we agree on that?
Greg Smith
Of course it is on the absurd end of the spectrum, but as I said to the hon. Member for Worsley and Eccles, that is to highlight the issue. Sometimes, when we have a total lack of clarity and of the information that real businesses need, as the hon. Member for Chippenham highlighted, we throw in a stone to try to get a proper answer. That is what the Opposition seek, and I will be incredibly grateful if the Minister now tells us what he wants the reference period to be.
Justin Madders
I am grateful to the shadow Minister for intervening, but there is not a total lack of clarity. We have been clear all along, including when we were in opposition, that the reference period should be 12 weeks. However, we want to continue dialogue with businesses to ensure that we get the right answer to the question of how long the reference period should be for guaranteed hours. As we heard, it is an established period that has been used in the previous Government’s legislation, in the workers’ predictable terms and conditions provisions and under the Agency Workers Regulations 2010. It is an established principle in law that 12 weeks is about right for a reference period. Nevertheless, we will continue to consult and engage with businesses, trade unions and all employers’ organisations about whether it is right.
At the moment, our considered view is that 12 weeks is the right period; we certainly do not believe that 18 months is. [Interruption.] I think the shadow Minister is nodding. We do not think that 18 months is a realistic proposition. I understand the point about seasonal work, but 18 months would take us through half a dozen seasons. He will probably accept that that would not necessarily work.
As for why this measure is needed, the shadow Minister said that the Opposition do not presume that all employers set out to exploit their workforce. I make it clear that the Government do not presume that either; we believe that good businesses are good for their workers and good for the wider economy. We heard plenty of witnesses give evidence last week about the good industrial relations that they practise and the benefits for their workers. The point of the Bill, however, is that we know that not everyone is a good employer. We need to weed out bad practice, because we believe that all workers deserve the same protections in the economy.
The shadow Minister asked whether zero-hours contracts will still be available for those who might not want to work guaranteed hours. He will be aware that the legislation does not compel an individual to accept an offer of guaranteed hours; it has been set up in that way for the individual. There are examples of people—possibly including my hon. Friend the Member for Gloucester in his earlier years—whom zero-hours contracts suit better. If that is what he genuinely wants to continue working on, he is entitled to do so.
The hon. Member for Chippenham asked about the speed at which we are operating. I think she wants us to go faster, so she might need a word with the shadow Minister, who wants us to go a little slower. We are clear that we will take our time before we introduce a lot of the provisions, because we want to get the detail right and we want to engage with businesses. An awful lot of the press coverage is understandably raising anxiety levels, but a lot of it is based on speculation rather than on the law, because the law has not yet been set: the Bill has not been passed, and the regulations and the codes of practice that will follow have not been produced. It is important that we take our time, because we want to work with businesses as we produce information going forward.
The hon. Member for Bridgwater made a point about seasonal work that we heard on various occasions during our evidence sessions, but I think my hon. Friend the Member for Gloucester has answered it: if an employer knows that they will be busy for particular parts of the year, a fixed-term contract is the answer.
On the question of business experience, I can claim to have set up my own business when I was 17—I am not saying that it was a FTSE 100-listed effort or anything—and before I was elected I worked in the private sector for 20 years.
We do not think that the shadow Minister’s amendment would deliver the policy outcome that we seek. I suspect he recognises that, too, so I invite him to withdraw it.
Greg Smith
Of course we will withdraw the amendment, but the critical question is why the Minister has referred to 12 weeks, but it is not in the legislation. As he considers tabling amendments of his own in Committee or on Report, I urge him to lock that in, so that certainty for business is on the face of the Bill, rather than things being left open.
Justin Madders
If we put 12 weeks on the face of the Bill, would the Opposition support it?
Greg Smith
Our own legislation last year cited 12 weeks. There is clearly a lot in the Bill that we oppose because we just do not think it works in the interests of British business or workers, but 12 weeks would at least give us some certainty that would be consistent with the previous Government. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Sixth sitting)
Tuesday 3rd December 2024
(2 days, 1 hour ago)
Public Bill CommitteesRead Full debate Employment 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 3 December 2024 - (3 Dec 2024)
The Committee divided: - Ayes: 16 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move amendment 6, in clause 1, page 7, line 7, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Justin Madders
It is a pleasure to see you in the Chair, Mr Stringer. I apologise in advance to the Committee because amendment 10 is rather technical, as several amendments are this afternoon. The amendment is required to clarify wording and intent. It clarifies which worker’s contract or arrangement needs to be considered, in cases where a worker has worked under multiple contracts or arrangements during a relevant period, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply, or a guaranteed hours offer that has been made is to be treated as withdrawn.
Amendment 10 effectively means that once there is a relevant termination in such cases, the provision is not treated as meaning that the duty ceases to apply where the worker goes on to be offered further limited-term contracts from the employer. It is essentially a clarification and an anti-avoidance measure. Given that there are rather a lot of those today, I will not detain the Committee any longer.
Amendment 6 agreed to.
Amendments made: 7, in clause 1, page 7, line 10, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 8, in clause 1, page 7, line 16, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 9, in clause 1, page 7, line 19, leave out
“(or has most recently been working)”.
This amendment is consequential on amendment 10.
Amendment 10, in clause 1, page 7, line 20, at end insert—
“(2A) Where a qualifying worker works for an employer under more than one worker’s contract, or in accordance with the terms of more than one arrangement, during—
(a) the relevant reference period,
(b) the offer period, or
(c) the response period,
the references in subsections (1) and (2) to the worker’s contract or (as the case may be) the arrangement are to the worker’s contract under which, or (as the case may be) the arrangement in accordance with the terms of which, the qualifying worker last worked for the employer before the end of the period in question.”—(Justin Madders.)
This amendment clarifies which worker’s contract or arrangement needs to be considered, in multiple contract/arrangement cases, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.
Justin Madders
I beg to move amendment 11, in clause 1, page 8, line 7, at end insert—
“(5A) Where, by virtue of subsection (2), a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn, the employer must, by no later than the end of the response period, give a notice to the qualifying worker stating this to be the case.
(5B) Where, by virtue of regulations under subsection (5)—
(a) an employer who would otherwise have been subject to the duty imposed by section 27BA(1) in relation to a qualifying worker and a particular reference period is not required to make a guaranteed hours offer to the qualifying worker, or
(b) a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn,
the employer must give a notice to the qualifying worker that states which provision of the regulations has produced the effect referred to in paragraph (a) or (b) (as the case may be).
(5C) A notice under subsection (5B) must be given by an employer to a qualifying worker—
(a) where it is required to be given by virtue of paragraph (a) of that subsection, by no later than the end of the offer period;
(b) where it is required to be given by virtue of paragraph (b) of that subsection, by no later than the end of the response period.
(5D) The Secretary of State may by regulations make provision about—
(a) the form and manner in which a notice under subsection (5A) or (5B) must be given;
(b) when a notice under subsection (5A) or (5B) is to be treated as having been given.”
This amendment requires an employer to give a notice to a qualifying worker where the employer’s duty to make a guaranteed hours offer to the worker does not apply, or an offer already made is treated as having been withdrawn, as a result of proposed section 27BD(2), or regulations made under proposed section 27BD(5), of the Employment Rights Act 1996.
The Chair
With this it will be convenient to discuss Government amendments 13 to 15, 19, 20, 23, 44 and 45.
Justin Madders
Amendment 11 will introduce a duty on employers to inform workers when an exemption applies and the employer is exempt from their obligation to offer a worker a guaranteed hours contract. Any exemptions to the duty to offer guaranteed hours will be defined in regulations.
Amendment 11 will also introduce a duty on employers to inform workers where an offer of guaranteed hours already given is to be treated as withdrawn because a relevant termination has taken place. That will ensure that workers are aware of when they are not receiving a guaranteed hours offer because an exemption applies. It will allow workers to check that the exemption is applicable to them, and then enable them to enforce their right to guaranteed hours where an exemption is not applicable.
Associated consequential amendments 14, 19 and 44 will ensure that workers will be able to take a complaint to an employment tribunal if the worker is not provided with a notice of exemption or a notice of the withdrawal of an offer already made. That will also be the case where a notice has been provided but should not have been, or where a notice has been provided but cites the wrong exemption.
Amendment 13 will introduce a new duty on employers that will ensure that workers who would likely qualify for a guaranteed hours offer are aware of certain information about the right to guaranteed hours. That will help to ensure that workers are informed about the new right and can therefore take decisions about their working hours during their reference period based on the information they receive about their possible right to a guaranteed hours offer.
Further consequential amendments 15, 23 and 45 have been made to ensure that a worker may enforce their right to be informed about the right to a guaranteed hours offer by taking a complaint to an employment tribunal. A consequential amendment 20 has been made to define the period within which a complaint of this nature may be taken to a tribunal. I think we might get to that later in relation to the general application of extended time limits.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. As a precursor to my comments on these specific amendments, I note that the sheer volume of Government amendments that we are considering really goes to show that the Bill might have met a political objective in being published in 100 days, but that it was not ready to be published in those 100 days. At worst, that is a discourtesy to the House and, at best, it shows that the legislation simply has not been drafted properly. These changes simply would not have been necessary had due diligence been done on the Bill before it was published.
I would like to focus on amendment 13 from this group of amendments. That amendment requires employers to give their employees access to certain information to be specified in regulations—we are back to our old friend of regulations to come. Let me ask the Minister the following: what information will amendment 13 require employers to make available? Why? And what further burden will be imposed later down the line by regulations, thanks to the power taken in the clauses? Employees will be able to take their employer to a tribunal for not providing this information, as provided for in amendment 15, so I suggest to the Committee and the Minister that it is vital that we can understand the requirements that the clause will place on employers.
Justin Madders
I am grateful for the shadow Minister’s questions. No doubt during the passage of the Bill we will come back on several occasions to that point about the number of amendments. I just place on record my gratitude to the civil service and the Office of the Parliamentary Counsel for their work in getting the Bill published to the parliamentary deadline that was politically set. Of course, lots of Bills have amendments as they progress. As is consistent with our wish to engage thoughtfully, we may still have further amendments.
As for the shadow Minister’s questions, it is entirely usual to put that sort of detailed information in regulation, and we would not normally specify it in a Bill. We are trying to ensure that workers who are captured by the zero-hours legislation are aware that they are captured by it and are entitled to certain rights, such as the offer of a guaranteed hours contract. This is about making sure that some of the most vulnerable people in society, who are often exploited by zero-hours contracts, are at least given the information to ensure that their rights are enforced. We will work with businesses and employers, and representatives and trade unions on the precise detail of the information to be provided, but this is about making sure that all parties are aware of their legal obligations. I hope that the shadow Minister understands that this is an important part of the legislation.
Amendment 11 agreed to.
Justin Madders
I beg to move amendment 12, in clause 1, page 8, leave out lines 8 and 9 and insert—
“(6) For the purposes of subsection (3)(c) (and subsection (4)(b), which applies subsection (3)(c))—
(a) subsection (8) of section 27BB (when it is reasonable for a worker’s contract to be entered into as a limited-term contract) applies as it applies for the purposes of that section;
(b) it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—
(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
This amendment adds a rebuttable presumption to the existing provision made by proposed section 27BD(6) of the Employment Rights Act 1996. The presumption will apply when determining whether there has been a relevant termination for the purposes of that section such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.
The amendment will close a potential loophole that could mean that workers might not be entitled to a guaranteed hours offer if they are employed on a series of limited-term contracts to undertake the same or similar work. It will do that by adding a rebuttal presumption, that it will not be considered reasonable to have entered into a limited-term contract where a worker undertook work that was the same or similar in more than one contract during the relevant period. That means that the relevant termination provisions would not apply and the employer would not be excepted from its duty to offer guaranteed hours. An employer would have to offer guaranteed hours to the worker, even if that worker’s last contract was terminated at the end of the relevant period, unless it was reasonable for the employer to have entered into a limited-term contract with the worker and the presumption is rebutted, which could then lead to a relevant termination.
Under proposed new section 27BB(8) of the Employment Rights Act 1996—as referred to in the amendment—it is “reasonable” for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract will end when it is performed; if the worker is needed only until some event occurs and the contract will then end; or if the worker is needed only for some other temporary need to be specified in regulations.
To be clear, whether it is “reasonable” for the employer to enter into a limited-term contract during the relevant periods affects only whether the right to guaranteed hours applies. If such a contract is not “reasonable”, it is still a lawful contract and may, of course, be an acceptable means of conducting business. As such, the presumption introduced by the amendment would apply only to determine whether there was a relevant termination of a limited-term contract, where a worker is engaged on a series of limited-term contracts doing the same or similar work. The presumption will not prevent an employer from engaging a worker on a series of fixed-term contracts, but it will act as an anti-avoidance measure to ensure that an employer cannot get around its duty to offer guaranteed hours by engaging the worker on a series of limited-term contracts even though they are actually doing the same work.
Greg Smith
Amendment 12 states that it is to be presumed by tribunals
“that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract”
if the work done
“was of the same or a similar nature”
as the work undertaken by other employees, with the following conditions:
“(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
I have stressed the wording of the amendment because I would be grateful if the Minister could clarify what protection the clause is designed to give employees. The vast majority of businesses reading that could easily be forgiven for getting slightly confused. Why is that wording necessary, particularly on this measure, to create the protections that I think I understand the Government want to achieve? The amendment might result in confusion from most businesses.
Alex McIntyre (Gloucester) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the Minister for introducing this amendment. It makes a lot of sense to make sure that we avoid the opportunity for unscrupulous employers to try to get around the legislation by entering into a series of short-term/fixed-term contracts so that they do not have to make anybody an offer.
We spoke at length this morning about making sure that responsible employers are encouraged, but ensuring that the loopholes are closed is equally important. Although Government Members are seeking to comment on the number of amendments, this is an example where the amendments are excellent and very well thought through. It makes an awful lot of sense to take into account the responses from experts and the consultation responses that the Department is receiving to make sure that the legislation works not only for businesses, but for employers. The amendment is very sensible, and I encourage everyone to vote in favour of it.
Sarah Gibson (Chippenham) (LD)
As I am sure the Minister knows, the Liberal Democrats as a group are convinced that a lot of elements of this Bill go a long way towards strengthening workers’ rights. There is no doubt about that. However, when I see these amendments and listen to the comments of Opposition colleagues, I am constantly concerned about what I am beginning to see as the plight of small and medium-sized businesses that are not being taken into consideration. This amendment alone is hugely complicated to understand. I have visions of contractors and small businesses in the construction industry in my constituency, who quite often are the employer, coming home after a long day’s work to do the admin side of their business and trying to unravel this. I highlight the construction industry because fixed-term contracts for employees are not only common, but incredibly useful. Building projects—like this one, with the works we are doing here—do actually come to a finite conclusion, and a fixed-term contract is therefore appropriate. I express my continuing concerns about this matter and some of the other amendments in connection with small businesses.
Michael Wheeler (Worsley and Eccles) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I will speak to these Government amendments collectively, because although they are incredibly technical, we must not lose sight of their purpose, which is to promote good employment. If there are loopholes and readily available routes by which employers can avoid the measures laid out in this Bill, we will see good employers undercut and workers not feeling the benefits. I welcome this as part of the Government doing their job to strengthen the legislation by introducing well thought out amendments to close loopholes and ensure that it is as strong as it can be. I commend this and the other amendments as being not simply technical—although they are—but part of what really gives the Bill teeth in achieving its purposes.
Sir Ashley Fox (Bridgwater) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. I would like the Minister to deal with these points when he concludes, because I am concerned about the effect of an amendment that is as complicated as Government amendment 12 is on the small businesses that make up the bulk of business in my constituency. They will not have the benefit of an employment lawyer, such as the hon. Member for Gloucester, and they will not have an HR department. I ask the Minister to glance at the wording of the amendment and imagine that you do not spend your day job in a solicitor’s office, or a trade union office, or perhaps in the Palace of Westminster. You are wondering whether to employ someone and then you read that
“it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—
(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
There are all sorts of technical legal terms used. The point is that you want this to apply to all small businesses, no matter how small—whether they have one, or two, or three employees. This point applies generally to the Bill. When the assessment of the Bill put the costs at £5 billion, the majority of which would fall on small businesses, I think it had exactly this sort of legal gobbledegook in mind. Very small businesses are going to have to deal with this, and they will probably not be able to understand it.
Alex McIntyre
I am grateful to the hon. Gentleman for touting out my services as a legal adviser, but I have committed to not taking any second jobs, and certainly none that involves legal services in the Cayman Islands. What I will say is that all of us here, as individuals, are governed by laws in our day-to-day lives. I doubt that many Members will be familiar with, on a detailed basis, the provisions of the Consumer Rights Act 2015, for example, but there are guidance documents and the Money Saving Expert is fantastic. If you ever have an issue with one of your financial products, there is always a guide that can be provided. I am sure that alongside the Bill there will be updated guidance—from ACAS, for example. Does the hon. Member for Bridgwater agree that although small businesses may not be able to take legal advice, there will be guidance documents? They are not expected to read the whole Bill line by line. There will be guidance, on websites such as that of ACAS, that is readily available to all employers, in which they will be able to get an explanation of some of these provisions.
The Chair
Order. There are just two points I wish to make, as lightly as I can. First, if hon. Members refer to “you”, they are referring to me. We use the normal debating protocols that apply in the Chamber. Secondly, if hon. Members wish to do so and catch my eye, they can speak more than once in a debate, so interventions should be kept as precise and short as possible.
Sir Ashley Fox
I am grateful for your guidance, Mr Stringer. To answer the intervention from the hon. Member for Gloucester, I am sure that small businesses will receive guidance from Money Saving Expert, ACAS and Citizens Advice, but the problem is that if they get it wrong, they will be sued and it will cost them money. That will be a real fear in their minds. Then a small businessman, faced with this sort of gobbledegook, asks himself, “Are you going to take the risk of employing that extra person, faced as you are with the fact that they get their rights from day one?” It all adds up to the cumulative effect of small businesses being less likely to employ people. It adds to the cost and the burden. It is a great shame that the Government are bringing in such vast amounts of detailed amendments and expecting small business owners to make sense of them.
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Stringer. I would like to amplify the issues raised from the Opposition side of the room. There are serious concerns, and we need to ensure that the regulations are as simple as possible and easy for employers to understand. I fear that this is a charter for HR consultants and lawyers, rather than driving the agenda that I am sure most people in the room genuinely wish to see being driven forward. I ask the Minister whether, before we reach the end of this Bill stage, further simplification could be brought forward.
Jon Pearce (High Peak) (Lab)
It is a pleasure to serve under your chairship, Mr Stringer. The Agency Workers Regulations 2010 came into force in October 2011, under the leadership of David Cameron and the coalition, and there is similar wording in the agency worker regs. Regulation 9(4)(a) states that
“the most likely explanation for the structure of the assignment, or assignments, mentioned in paragraph (3) is that H, or the temporary work agency supplying the agency worker to H, or, where applicable, H and one or more hirers connected to H, intended to prevent the agency worker from being entitled to, or from continuing to be entitled to, the rights conferred by regulation 5”.
The legislation that we are considering is not out of the ordinary in its complexity. This is just necessary—
Sir Ashley Fox
Would the hon. Gentleman accept that this legislation will be imposed on businesses with perhaps one employee? There will be no exemption for any minimum size.
Jon Pearce
Yes, I would, and it is entirely right that it should be. We have to have a level playing field within the UK; otherwise, we see all the perverse incentives that hon. Members, including the shadow Minister, the hon. Member for Mid Buckinghamshire, are keen to avoid. We cannot have a two-tier workforce.
Returning to my original point, law is often complex in the way it is written, but that does not mean it will be complex in its application. It will only be complex where there are attempts to avoid it. It is absolutely right that the law is tight on this so that we do not have huge amounts of avoidance within the business sector from unscrupulous employers. Most employers, as we know, do not exploit zero-hours contracts, for example, so it is entirely right that we make sure that those who wish to exploit them cannot.
Sarah Gibson
The hon. Member for High Peak quotes an equally incomprehensible piece of legislation. It occurs to me that some time ago, the banking industry was accused of a similar problem when it spoke to its clients and was obliged to improve its conversation and make sure that it was intelligible. Surely this is an opportunity for us to be able to do the same. If we are going to apply legislation to sole practitioners, effectively, who are taking on one or two employees, is it so much to ask that we do not have one single sentence that lasts an entire paragraph?
Sarah Gibson
I will not for a second, but will afterwards, if that is okay. I have spent the last 20 years deciphering the Town and Country Planning Act 1990, and recently had the pleasure of teaching two postgraduate students the Fire Safety Act 2021. Neither of those two pieces of legislation are easily understandable, and it does not help the industry that I know so well, which is employers who come straight out of school and into industry. They do a fantastic job, but they do not need added complication. I believe that the hon. Member for Bridgwater makes a good point in saying that it is not beyond us to make legislation slightly easier to read. Sorry, I was going to give way.
Justin Madders
We have had a good debate on this amendment. It is fair to say that my reaction when I first saw the amendment was similar—that it is quite wordy. However, that is the way our legislation is crafted in this country, and it is not unusual. We will make sure that when we drill down into the practical applicability of the Bill, we produce regulations. There will be guidance on gov.uk. ACAS will get involved.
The amendment is intended to deal with a particular situation. I do not believe most employers will behave in that way, but we know that some might, and that some will deliberately avoid their obligations to give a right to a guaranteed-hours contract. It may be, in the words of the hon. Member for Bridgwater, “gobbledegook”, but I can assure him that ACAS documents and Government guidance on employment rights are not gobbledegook; they are easily accessible. We are committed to making sure that when the Bill is passed, the legislation is easily accessible, because it will not work otherwise. That is clearly part of our aim.
It is pretty clear what section 27BB(8) actually means in terms of when it will be reasonable not to offer guaranteed hours, but I appreciate that that is very easy for us sat in this room to say, having indulged in the niceties of the legislation. It is not what will end up on businesses’ doorsteps. We will not give them a copy of the Bill through the post and say, “Knock yourselves out.” They will get proper support and guidance because that is how we want our employment relations to work. We want them to be practical; we want them to be effective; we want people to be able to understand what their rights and obligations are. On that note, I commend the amendment to the Committee.
Amendment 12 agreed to.
Amendments made: 13, in clause 1, page 10, line 11, at end insert—
“Information
27BEA Information about rights conferred by Chapter 2
(1) An employer who employs a worker who it is reasonable to consider might become a qualifying worker of the employer in relation to a reference period (whether the initial reference period, or a subsequent reference period, as defined in section 27BA) must take reasonable steps, within the initial information period, to ensure that the worker is aware of specified information relating to the rights conferred on workers by this Chapter.
(2) An employer who is subject to the duty in subsection (1) in relation to a worker must take reasonable steps to ensure that, after the end of the initial information period, the worker continues to have access to the specified information referred to in that subsection at all times when—
(a) the worker is employed by the employer, and
(b) it is reasonable to consider that the worker might become (or might again become) a qualifying worker of the employer in relation to a reference period.
(3) “The initial information period”, in relation to a worker and the worker’s employer, means the period of two weeks beginning with—
(a) where the worker is employed by the employer on the day on which section 27BA(1) comes into force (“the commencement day”), the commencement day, or
(b) where the worker is not so employed, the first day after the commencement day on which the worker is employed by the employer.
(4) But where, on the day referred to in subsection (3)(a) or (b), it was not reasonable to consider that the worker might become a qualifying worker of the employer in relation to any reference period, subsection (3) is to be read as if it provided for the “initial information period” to mean the period of two weeks beginning with the day on which it becomes reasonable so to consider.
Enforcement”.
This amendment imposes a duty on employers to ensure workers who have the potential to qualify for a guaranteed hours offer are aware of, and continue to have access to, certain information (to be specified in regulations).
Amendment 14, in clause 1, page 11, line 11, at end insert—
“(4A) A worker may present a complaint to an employment tribunal that the worker’s employer—
(a) has failed to give to the worker a notice under section 27BD(5A) or (5B);
(b) has given to the worker a notice under section 27BD(5A) or (5B)(b) in circumstances in which the employer should not have done so;
(c) has given to the worker a notice in purported compliance with section 27BD(5B) that does not refer to any provision of the regulations or refers to the wrong provision.”
This amendment is consequential on amendment 11.
Amendment 15, in clause 1, page 11, line 11, at end insert—
“(4B) A worker may present a complaint to an employment tribunal that the worker’s employer has failed to comply with—
(a) the duty imposed by section 27BEA(1);
(b) the duty imposed by section 27BEA(2).”—(Justin Madders.)
This amendment is consequential on amendment 13.
Justin Madders
I beg to move amendment 16, in clause 1, page 11, line 18, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(1) of the Employment Rights Act 1996 from three months to six months.
The Chair
With this it will be convenient to discuss the following:
Government amendments 17, 18, 21, 22, 28, 29, 33 to 36 and 83.
Government new clause 10—Increase in time limits for making claims.
Government new schedule 2—Increase in time limits for making claims.
Government amendments 108 and 109.
Justin Madders
This group of amendments is not quite as daunting as it sounds, because they all deal with the same point, which is the extension of time limits for making claims.
New schedule 2 amends time limits for making claims in employment tribunals from three months to six months. In recent years, as we know, demand has increased sharply. Increasing the time limit from three to six months will help to reduce pressure on the employment tribunal system, allowing parties to try to resolve their differences before resorting to formal litigation. The amendments apply to time limits for the majority of employment tribunal claims, including claims under the Employment Rights Act 1996, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Equality Act 2010. If Members are interested, the full list of claims is set out in the new schedule.
Government amendments 16 to 18, 22, 28, 29, 33 to 36 and 83 ensure that the change is reflected for cases relating to rights that will be introduced by the Bill. Amendments 16 to 18 and 22 will increase the time limit for taking a claim to an employment tribunal that relates to the right to guaranteed hours from three months to six months. Amendments 28 and 29 will increase the time limit for taking a claim that relates to the right to reasonable notice of shifts from three months to six months. Amendments 33 to 36 will increase the time limit for taking a claim that relates to the right to payment for a cancelled, moved or curtailed shift from three months to six months. Amendment 83 will increase the time limit for taking a claim that relates to whether a worker, or a former worker, believes they have been subject to a detriment by an employer on grounds of industrial action.
Finally, Government amendment 21 is a small technical amendment, which will correct an incorrect section reference. The words “this section” currently refer to section 27BG, which relates to time limits for bringing a complaint, but they should—as I am sure everyone noticed—refer to section 27BF, the correct section under which a complaint may be brought to an employment tribunal.
On a more general note, Members may be aware that a number of years ago, the Law Commission recommended that the time limit for bringing employment tribunal claims should be increased from three months to six months. This set of amendments simply seeks to implement that recommendation.
Greg Smith
Quite a list of amendments and edits to the 100-day-old Bill.
I will start where the Minister left off. The amendments extend the time for employees to bring a case to the employment tribunal from three to six months if they believe their employer has breached the duties imposed by the Bill. That includes the provisions around zero-hours contracts and the right to reasonable notice. In that light, a reasonable question would be: why were the provisions not included in the Bill on introduction? What changed? Was that an oversight, or something never originally intended to be included in the Bill? What is the rationale? Furthermore, what is the rationale for increasing the period from three to six months? That is not a modest change—not a matter of a couple of days, a fortnight or something that most people might deem reasonable; that is a substantial shift. It is only right and proper that the Minister, when he responds, gives a full explanation for such a huge change from the original provisions in the Bill.
Data from His Majesty’s Courts and Tribunals Service shows the backlog in employment tribunals, with outstanding cases increasing 18% on last year. To add in additional burdens will add to the overall burden on the service, so as part of the consideration of the Bill and of the amendments it is crucial to understand what the Government will do not just to clear that backlog, but to create the capacity in the service to deal with the increase in demand that the Bill will undoubtedly bring about. I shall be grateful if the Minister will comment on his discussions with the Ministry of Justice to deliver on that.
Businesses, especially small and medium-sized enterprises, rely on the tribunals service being able to process claims quickly so, if the Government are to bring about such a huge and significant change to demand on the service, they should put in place the relevant steps. Have the Government undertaken any assessment of the impact that such an extension will have on employment tribunals, or the likely number of claims? It would help to know what, under the amendments, the Government’s assumptions are—will the level of increase that the Opposition fear come about?
Is there a model—I fully accept that such models are rarely 100% accurate, but they give the country and the service planners an important ballpark figure to be working around, going into the future—and, off the back of that, what is the impact on businesses, particularly small and medium-sized enterprises? If there is no such modelling—if there is no ballpark figure that the Government are working to—why not?
My final question on this group of amendments is: why does the Minister believe that it is proportionate or sensible to double the window in which an employee can bring a claim? Surely the three-month window is sufficient. As I said, the Opposition would like to understand why that doubling is so necessary.
Alex McIntyre
Apologies, Mr Stringer, if I inadvertently used “you” in my previous intervention. That was a mistake; I apologise.
I am grateful to the Minister for tabling these amendments. This is an important set of suggestions to extend time limits for bringing lots of tribunal claims. In my previous professional experience, the change will benefit businesses up and down the country, because one of the biggest issues for anyone involved in advising employers on employment law is the rush to bring employment tribunal proceedings, owing to the three-month time limit. It often stops negotiations from progressing fully, preventing an out-of-court agreement being reached at an early stage. In a commercial setting, most businesses are given six years to bring claims under contract against other businesses. It is only really in employment law that we have such a narrow window for people to bring their claims.
I am interested in the shadow Minister’s comments on employment tribunals—they are broken, but the responsibility for breaking the employment tribunals sits firmly on Opposition Members. We had years of under-investment in our courts and tribunals, and we have really long backlogs. The issue there for employers is that, given the actions of the previous Government, they are spending far too much money on people like me, as such proceedings take a significant amount of time.
Greg Smith
I understand why, in our combative political system, the hon. Gentleman wants to bring up the previous Government’s record. I gently suggest that the covid pandemic had a big impact on all court backlogs, be it tribunals or otherwise, and I ask him to reflect on the fact that the Bill will add to the pressure on the tribunal service. How much does he think it will add? Given that the Labour party is in government and in charge, rather than just pointing the finger at the previous Government, can he tell us what will materially happen to increase capacity in the tribunal service?
Alex McIntyre
The Committee received a submission from Lewis Silkin, a leading legal expert in the field of employment law. It says that some of the Government’s proposals will lead to a reduction in claims, and certainly in complex claims such as those that many employees with less than two years’ service may make under the Equality Act 2010 because they do not qualify for unfair dismissal rights.
The tribunal deals with unfair dismissal claims very quickly. Such claims tend to receive one, two or three days of consideration by a tribunal, at the most, whereas Equality Act claims are often listed for longer than a week. Giving people unfair dismissal rights from day one will reduce the number of people who have to bring Equality Act or whistleblowing claims to try to fit their circumstances, and that will mean a reduction in the number of tribunal sitting days.
I will not step on the Minister’s toes when it comes to the Department’s modelling for tribunals, but it is important to remember that as a result of the measure, more people will be able to negotiate and negotiations will be more sensible. Let us think about the anatomy of an employment tribunal claim. Day one starts when something happens to an individual. In the case of being sacked or being discriminated against, that thing is quite traumatic, so in the first week or so, employees are not generally thinking about their legal options. That is one week gone already. Then people have to look at getting legal advice, contact their trade union and look at the options available, all of which take time. By the time they are in a position to think, “Perhaps I will negotiate with the employer,” they are already two months down the line.
If an employee rushes through an employment tribunal claim, the practical implications are that the claim is really complex, the employee does not quite understand their legal claims and an awful lot of tribunal time and business time is spent on trying to clarify things. If we give employees longer, we will find that more claims are sensibly put. Employees will have obtained legal advice or sought support from their trade unions, and they will have had time to negotiate with employers about potential out-of-court settlements.
This is important and, most significantly, it is about access to justice: many people who are timed out of bringing a claim did not even realise that they had one in the first place. Not everyone has immediate access to the knowledge that they have rights at work and that employment tribunals exist, so it is important that we try to level the playing field to ensure that employees have time to bring claims in the best possible way. Not everyone is a lawyer. Individual employees, like many small businesses, do not have the benefit of being able to call up their local employment lawyer to get advice on potential claims. Preparing a claim takes time, and the measure means that employees will be able to make more sensible claims.
It is a very positive change, and I am glad that it is being made. The Law Commission recommended several years ago that the time limit should be extended from three to six months, so this is not an arbitrary time that has been plucked out of nowhere; it is based on Law Commission suggestions, as I understand it. I encourage all hon. Members to vote in favour of the measure.
Steve Darling
The hon. Member for Gloucester has ably made the legal case for why this measure is a worthwhile way to support our communities. I am aware, from my 30 years of supporting people in Torbay, that quite often those who are less legally literate face real challenges in getting themselves organised within the three-month period. The measure will support those who would otherwise fall by the wayside. It is a real opportunity for employers to make sure that tribunal applications are appropriate and to support those in greater need in our communities. I truly welcome it, and I am sure that my hon. Friend the Member for Chippenham does as well.
Laurence Turner (Birmingham Northfield) (Lab)
I follow my hon. Friend the Member for Gloucester and the hon. Member for Torbay, who both made very able speeches.
The shadow Minister, the hon. Member for Mid Buckinghamshire, asked about the justification for extending the current time limit from three to six months. One argument is set out in the Law Commission’s 2020 report, which argues that some of the current problems that employment tribunals experience are linked to late applications and the onerous requirement for applications, particularly in equalities cases, to demonstrate that there was a clear justification or inability regarding not submitting a claim in time. Those edge cases are adding to the current backlog and creating the incentive, which has been discussed already in this Committee, for people to bring cases under the Equality Act 2010, which is putting severe pressure on the limited number of specialist employment tribunal judges who deal with equalities matters.
Another argument is that there is an inconsistency in the law, because the time limit for equal pay cases is six months. The effect of these measures would be to equalise the time limit for other unfair dismissal and discrimination claims with that of equal pay.
In the previous Government’s 2021 response to the Law Commission’s report, they said—I hope this is taken in the constructive spirit with which it is intended—that the recommendations were welcome, but that it was not the right time to make such changes. I am therefore keen to hear the shadow Minister’s position on this extension, because the last Government’s position seemed a little like St Augustine’s prayer—“Let us equalise access to justice, but not yet!” I very much welcome the fact that these measures have been brought forward and that we now have a chance to equalise that time limit.
Last week, we heard from one of the witnesses, Joeli Brearley, that:
“I was pushed out of my job the day after I informed my employer that I was pregnant, and it was the tribunal time limit that prevented me from taking action against my employer.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 84, Q79.]
There are many such cases where, because of someone’s particular circumstances, they are not able to bring a case, or the burden of bringing a case within three months is too onerous. The requirement in equalities cases for a claimant to prove that an extension was just and equitable, or that it had not been reasonably practicable to bring a case in time, is adding to that burden on the tribunal system.
The Law Commission’s report was published in 2020, so the then Government had four years to model the impact of the changes that they were considering. If Conservative Members know of any impact analyses undertaken under the previous Government, I would very much like to hear about them.
Dr Marie Tidball (Penistone and Stocksbridge) (Lab)
I thank my hon. Friends the Members for Birmingham Northfield and for Gloucester for their ably made speeches outlining the very good and pragmatic reasons for the measure. They made points about ensuring that there is a good preliminary process to prevent litigation and laid out all the evidence with regard to the Law Commission.
The shadow Minister asked the Minister about principle, which my hon. Friends the Members for Birmingham Northfield and for Gloucester also touched on. It is clear that, after 14 years of Conservative Members not considering principle when it comes to access to justice, we are making these changes particularly for disabled employees and women who often have very complex lives. Disability is not static—it is dynamic, and health conditions fluctuate—so three months is a very short time period for people to put a case together if they have complex and fluctuating health conditions. It is right that the measure brings that time period up to the level of other equalities cases.
It is also fair to say that many working people have a huge amount to juggle in their day-to-day lives. For me, it is a point of great principle that this Government want to make it easier for them to access their rights and to access justice by giving them more time, being cognisant, as we are, of the many challenges that they might face just to keep a roof over their heads and to keep their family in a stable and supported situation.
The need to strengthen access to justice in such circumstances is important. We heard a great deal in the evidence presented to us about the many barriers for various groups and about the effect of the measure on women. It will give women an opportunity to have a longer period of time at the most challenging and complex moments of their life, such as during pregnancy and post birth, which seems to be eminently sensible and principled.
Uma Kumaran (Stratford and Bow) (Lab)
It is a pleasure to once again serve under your chairship, Mr Stringer. I refer the Committee to my declaration in the Register of Members’ Financial Interests and I am a member of the GMB. My hon. Friend the Member for Penistone and Stocksbridge spoke powerfully—
Uma Kumaran
Thank you, Mr Stringer. I am glad Members got some steps in and I hope they have come back reinvigorated.
Members across the Committee have spoken eloquently today about why they support the bold measures in the Bill, which is the best upgrade to worker’s rights that we have seen in a generation. I pay particular tribute to my hon. Friend the Member for Gloucester for sharing his personal story. That is why we are here; it is about the people behind those stories. The Bill is about making a difference to people’s lives.
We started this month by marking World AIDS Day. The National AIDS Trust supports the amendments to increase the time limit for claims from three months to six, to bring the Bill in line with the Law Commission’s 2020 recommendation. With a diagnosis such as HIV/AIDS, three months is nothing. When a person is diagnosed, they have to go to their doctor, assess the impact the diagnosis will have on their life, and in some cases discuss how to break it to their family, friends and employers. Adding a ticking time limit of three months for their job and their livelihood can be so distressing. That is why I remind Members to remember the people behind the stories—the people we seek to serve and to help.
This is not just about the people; it also impacts business, as we have heard from Opposition Members. We have seen inclusive employers standing with the National AIDS Trust, not just in the UK but around the world, to support the asks that were brought forward to mark World AIDS Day. That is why I urge Members to support the amendments to increase the time limit from three months to six.
Sir Ashley Fox
There is one point that I would like the Minister to clarify. Some of his colleagues have said that, by extending the limit from three months to six, we will avoid a large number of claims, as there will be more time to negotiate and they will be concluded in good time. Other colleagues have said that this is an access to justice point, since lots of claims are being missed out because the time limit is too short. Can the Minister clarify, for the benefit of small businesses, whether they will face more or fewer claims? It seems to me that the Government have not decided whether this is a reform to reduce the number of claims that small businesses will face, or whether it will significantly increase the number of claims. Whatever the justice of each individual claim, small business owners will have to deal with its legal consequences and devote time to it. I think they would appreciate knowing whether there will be more or fewer claims.
Uma Kumaran
Statistically, less than 1% of women who have been subject to pregnancy or maternity discrimination pursue a claim in an employment tribunal. While making the case for business, it is important to realise that we are talking about a very small percentage of people. As we heard from my hon. Friend the Member for Penistone and Stocksbridge, these things can make a huge difference to people’s lives, and we are talking about very specific amendments that will make a real difference to the lives of working people.
Nick Timothy (West Suffolk) (Con)
I want to add a couple of thoughts, not so much about the principle of the amendments, but about what they say about the process. I note what the hon. Member for Birmingham Northfield said about the history and about the Law Commission having made its proposals in 2020. That rather adds to our confusion about why the amendments are being introduced in Committee and why they were not part of the Bill on Second Reading. I would be grateful if the Minister could tell us a little about the preparation of the Bill and what his officials said at the time of Second Reading about how many more amendments would be necessary in Committee and about its readiness. Will he also tell us more about the precise impact of the amendments, and what they mean for the Bill’s impact assessment?
Justin Madders
We have had a pretty wide-ranging debate. Generally, there has been support for the amendments. I welcome the Liberal Democrats’ support and hope they carry on in the same spirit for the rest of the Bill—we will see about that.
On the principle of what we are trying to achieve, let me take the Committee back to a time before the advent of the employment lawyer, when we had a thing called industrial tribunals. Industrial tribunals were about having a speedy and informal way to resolve industrial disputes where there was an individual issue. As time has passed, employment law has grown and industrial tribunals have become employment tribunals, and the original time limits have not been able to keep pace with the range of developments.
A number of examples have been given for why some people will not be able to enforce their rights, because of the strict time limits. Equally, there is evidence that enabling a longer period between a claim being discovered and a tribunal deadline being set means that there is more opportunity for parties to try to resolve their differences. On maternity leave in particular, I recall many occasions when a woman has returned to work and tried to crack on with things but been discriminated against all the time, yet because of the understandable pressures and her eagerness to try to get on, she has not acted as quickly as she should have done.
I will give a recent practical example of a constituent who came into my surgery. He had been involved in a road traffic accident while he was working, and he had been dismissed for that. He was not a member of a trade union and had taken no legal advice on his situation. Clearly, I am not in a position to give him legal advice, because I am not insured to do so, but I pointed out to him that he might want to think about talking to someone about his rights with respect to unfair dismissal. The point I am trying to make is that I was having that conversation two months after he was dismissed, which does not give him—or, indeed, the employer—much time to try to resolve things. It would be preferable for that individual to have the opportunity to have a dialogue with his employer, possibly get a process done correctly, and be reinstated. Because the time limits are so pressured, though, if he did go away and take legal advice, he will probably have been told that the only realistic avenue for him was to put a claim in as soon as possible.
There will be real benefits to the amendments, not just for making sure that people are able to enforce their rights, but in giving people more opportunity and time to resolve their differences before proceeding to litigation. For that reason, the impact assessment has not really been able to pin down a particular figure for the impact of these measures. It is probably fair to say that there are a number of other measures in the Bill that may impact tribunal claims, not least the introduction of the fair work agency. The possibility for that agency to enforce holiday pay claims and wages claims, for example, could take a significant burden off the tribunal.
Let me return to the original point of the amendments. They are about removing anomalies and giving people more time to resolve their differences. It has been an anomaly in the law for many years that equal pay claims and redundancy pay claims can be brought up to six months after the termination of employment, but most other claims cannot. Indeed, there are some claims that, depending on where they are progressed, can take even longer, such as certain types of employment-related claims that go through county court. This is about ensuring consistency.
Justin Madders
He is shaking his head—that is good. I certainly do not envisage that to be the case, but we recognise there is a backlog in the employment tribunals. Like many public services, they are under pressure, and there is a plan to recruit more judges in the new year.
Jon Pearce
I want to pick up a point that the shadow Minister made about the effect of the pandemic on the backlog of employment tribunal claims. When the last Labour Government left office, the time between a claim being brought and the first hearing was about 30 weeks. By 2019—pre-pandemic—it had increased to 38 weeks. We are now at about 55 weeks. We have seen a huge increase in that time, but it was already rising significantly pre-pandemic.
Justin Madders
There are a whole range of Government performance indicators where trends were already going in the wrong direction before covid hit, and that is just another of them. We recognise that there is more to be done to deal with the backlog, which is why we intend to recruit more judges in the new year. We hope that the Bill will not increase demand on the tribunal service, and that the extra time we are giving and the other powers we are giving the fair work agency will encourage people to resolve their disputes without going to litigation. We understand that it is a tremendous expense to go to employment tribunal, and of course, by that point, the employment relationship is already fractured beyond repair. This is the right thing to do, it is consistent with the Law Commission’s recommendations, and we think it will improve access to justice.
Amendment 16 agreed to.
Amendments made: 17, in clause 1, page 11, line 22, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(2) of the Employment Rights Act 1996 from three months to six months.
Amendment 18, in clause 1, page 11, line 26, leave out “three” and insert “six”.
This amendment would increase the time limit for bringing proceedings under the new section 27BF(3) of the Employment Rights Act 1996 from three months to six months.
Amendment 19, in clause 1, page 11, line 28, at end insert—
“(3A) An employment tribunal must not consider a complaint under section 27BF(4A)(a) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on or before which the notice should have been given (see section 27BD(5A) and (5C)).
(3B) An employment tribunal must not consider a complaint under section 27BF(4A)(b) or (c) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on which the notice is given.”
This amendment is consequential on amendment 14.
Amendment 20, in clause 1, page 11, line 28, at end insert—
“(3C) An employment tribunal must not consider a complaint under section 27BF(4B)(a)unless it is presented before the end of the period of six months beginning with the day after the last day of the initial information period (see section 27BEA(3) and (4)).
(3D) An employment tribunal must not consider a complaint under section 27BF(4B)(b) unless it is presented before the end of the period of six months beginning with the day on which the worker first becomes aware of the failure to which the complaint relates.”
This amendment is consequential on amendment 15.
Amendment 21, in clause 1, page 11, line 30, leave out “this section” and insert “section 27BF”.
This amendment corrects an incorrect section reference.
Amendment 22, in clause 1, page 11, line 31, leave out “three” and insert “six”.
This amendment is consequential on amendments 16, 17 and 18.
Amendment 23, in clause 1, page 11, line 36, leave out “(3)” and insert “(3D)”.—(Justin Madders.)
This amendment is consequential on amendment 20.
Question proposed, That the clause, as amended, stand part of the Bill.
Justin Madders
Here we are, three and a bit hours in, and we are on the stand part debate for clause 1. I hope we can make swifter progress, but I am sure Members will appreciate that we have debated a number of amendments to this clause, from both sides of the Committee.
I will talk a little about clause 1, because it is central to our aim to improve working relations in this country. It introduces a new right to guaranteed hours, which, alongside some of the other measures in the Bill, will address the issue of one-sided flexibility by ensuring that those who are in scope of the Bill receive a baseline of security and predictability that has been sadly lacking to date.
Our ability to care for loved ones, provide essentials, look after our health and deal with life and its challenges all relies on an element of predictability in our circumstances and finances. We know that a stable base makes us more resilient and more able to deal with challenges that come our way. Raising children, supporting family and our communities, making mortgage and rent payments, effective budgeting, and regular exercise are all good for the individual and for our society, and none combines easily with the unpredictability that some people face in their working lives.
The proposed provisions on guaranteed hours and on notice regarding shifts, which we will come to in due course, will go some way to helping the many workers who work regularly—often for the same employer, and some of them for years—but who do not have the security of knowing there will be a pay packet next week or next month. These proposals, which are the result of engagement with employers and social partners, will introduce fair and proportionate duties. Many of these have already been adopted by our most forward-looking employers. The duties are rightly ambitious but also, if we continue to work collaboratively, workable and achievable.
I will now explain the effects of each new section inserted into the Employment Rights Act 1996 by clause 1—this is effectively a series of new clauses inserted into our favourite, the 1996 Act. The first is new section 27BA, which outlines a new duty that will be placed on employers to offer qualifying workers guaranteed hours based on those hours worked during the reference period. While I hear and am considering the calls for the reference period to be put on the face of the Bill, at the moment the intention is for it to be specified in regulations. It is expected to be 12 weeks. The reason why consideration is being given to putting the initial and subsequent reference periods in regulations rather than in the Bill is that that will allow changes to be made to those periods. This is a novel right and we want to consider the emerging evidence on how it works in practice and, indeed, how it is evaded. However, I hear the calls about the need for certainty, and I will continue to engage with all relevant parties on whether this is something that we should put on the face of the Bill.
New section 27BA outlines the qualifying criteria for this new right, which will be targeted at workers who are on zero-hours contracts or zero-hours arrangements, or have some guaranteed hours—up to a maximum number that will be defined in regulations—but work in excess of those hours, and whose hours over the reference period meet the conditions for regularity or number. Agency workers are not in the scope of the new section, but separate provisions may be made for them using the power in new section 27BV. We recently closed a consultation on applying the rights to guaranteed hours, notice of shifts and payment for cancelled shifts to agency workers. We will now analyse the responses to that consultation and consider whether to seek to amend the Bill later during its passage.
The conditions for regularity and number of hours worked that must be satisfied during the initial reference period, as well as conditions for subsequent reference periods, will be set out in regulations following consultation. That will enable us to ensure that the measure is appropriately targeted at those workers who work regularly and in excess of their contracted hours. Although our intention is to minimise exemptions, regulations may be made to exclude categories of workers from the provisions, providing us with the flexibility to adjust the scope of this new right over time to respond to emerging practices. I have to say that at this stage I am not able to conceive of any particular exemptions that would apply, but I think it is important that we keep that power in the Bill.
New section 27BB sets out the requirements that a guaranteed hours offer must meet. It allows a guaranteed hours offer to take the form of either a variation of terms and conditions or a new contract, depending on the circumstances. A guaranteed hours offer may take the form of an offer to vary terms and conditions only if the worker worked under a single worker’s contract from the beginning of the relevant reference period until the day after an offer is made or later. That would allow all other terms of the contract, other than hours and length of employment, to be kept the same.
Where a worker has been engaged on more than one worker’s contract between the beginning of the reference period and the making of a guaranteed hours offer, that offer should take the form of an offer to enter into a new worker’s contract. Where a new contract is proposed, it must propose terms and conditions that, taken as a whole, are no less favourable than the terms and conditions relating to matters other than working hours and length of employment that the qualifying worker had when working for the employer during the relevant reference period.
New section 27BB also allows regulations to set out details on how it is to be determined whether the hours offered in the guaranteed hours offer reflect those worked during a reference period. It also makes provisions around the use of limited-term contracts by employers offering guaranteed hours. “Limited-term contracts” means fixed-term contracts and those that are to end by virtue of a limiting event. That ensures that employers can continue to use limited-term contracts where it is reasonable to do so.
The new section provides that, where the guaranteed hours offer takes the form of an offer to vary terms and conditions, the contract should usually become permanent. That should be done by removing the provision stipulating the termination of the contract by virtue of a limiting event, unless it can be said on the day after the offer is made that it would be reasonable for that contract to be entered into for a limited term.
The use of a limited-term contract will be regarded as reasonable where the worker is needed only to perform a specific task and the contract ends after it is completed, or likewise for a particular event, or in other circumstances where the employer considers there is a temporary need, as set out in the regulations. For example, if would be reasonable for a contract to be of a limited term where a worker is providing cover for a colleague on parental leave.
New section 27BC sets out requirements for a guaranteed hours offer where that offer takes the form of an offer to enter into a new worker’s contract and a worker has had more than one set of terms and conditions during the reference period. Its provisions will protect workers from being moved on to the worst of all the terms and conditions that they worked under during the reference period. Where an employer makes an offer of guaranteed hours with less favourable terms than the best the worker worked under the during the reference period, new section 27BC introduces a duty on employers to give the worker a notice explaining how the proposed terms and conditions constitute a
“proportionate means of achieving a legitimate aim.”
This will help to protect workers against being given less favourable terms and conditions in contravention of the aims of the Bill.
New section 27BD provides for exceptions to the duty to offer guaranteed hours, including circumstances in which an offer already made should be treated as having been withdrawn. Exceptions will apply if the worker’s contract or arrangement is terminated during the reference period or offer period and it is a “relevant termination”. Similarly, where an offer of guaranteed hours has been made and there is a relevant termination of that worker’s contract during the response period, the offer will be treated as having been withdrawn.
A relevant termination takes place where the worker decides to terminate the worker’s contract through no fault of the employer; the employer had a qualifying reason for terminating the contract and acted reasonably in treating that reason as sufficient to terminate the contract; or a worker’s limited-term contract ends by virtue of a limiting event and it was reasonable for that contract to have been entered into for a limited term. A qualifying reason is a reason that, when an employer is dismissing an employer, can be a fair reason for dismissal under section 98 of the Employment Rights Act 1996.
New section 27BD also allows regulations to be made to specify circumstances in which the duty to offer guaranteed offers does not apply, and it is that section that sets out offer and response periods. The response period, during which a worker must respond to an offer, will begin on the day after an offer is made and its duration will be set out in regulations.
We have made amendments to new section 27BD that will require employers to inform a worker when circumstances exist that exempt them from their duty to offer guaranteed hours, and similarly where a guaranteed hours offer is treated as having been withdrawn as a result of an exemption applying. That will ensure that workers are aware of which exemption applies, and that their employer has not merely failed to offer guaranteed hours. Any exemptions will of course be defined in regulations. Similarly, a further amendment requires that a notice is given where a guaranteed hours offer is treated as having been withdrawn as a result of a relevant termination. We have made further amendments to the new section, designed to close a potential loophole.
As previously drafted, the provisions could have meant that in situations where an employer employs a worker on a series of short-term contracts and the last contract of the period terminates with a limiting event, that could have been treated as a relevant termination. As a result, an employer might not have been required to offer the worker guaranteed hours. The amendment has added a rebuttable presumption, which presumes that it is unreasonable for an employer to engage a worker on a series of limited-term contracts to undertake the same work, and that would therefore not be a relevant termination excepting the employer from their duty to offer guaranteed hours. If the employer fails to rebut that presumption, no exception will apply and the employer will still be required to offer guaranteed hours.
New section 27BE sets out how the worker accepts or rejects an offer, and when the new contract or varied terms and conditions are deemed to take effect. It provides that a worker who does not respond to an offer will be treated as having rejected it, because we would not wish workers to be moved on to guaranteed hours if they had not specifically agreed to them. It provides for regulations to set the form and manner in which the worker must respond to the employer’s offer, and when the response is taken as having been given.
Chris Law (Dundee Central) (SNP)
On new section 27BE, there is a lack of formality relating to the worker’s right to refuse an offer of a regular-hours contract. Indeed, the risk is that workers could be coerced into rejecting an offer if it is clear that the employer would prefer the existing arrangements to continue. There are similar arrangements in respect of the working time regulations on workers’ right to opt out of the 48-hour working week; by contrast with the Bill’s provisions on zero-hours contracts, the working time regulations do not apply to all workers, and those who opt-out may revoke their decision to do so, although there are arguably no adequate safeguards there either.
The Secretary of State will have the power to make regulations about the form and manner of the notice under proposed new section 27BE, and reference is made to a response time that is undefined, but the question is whether it would be appropriate for Parliament to give the Minister stronger guidance by requiring that the response period should be at least one week; that the worker has a right to seek advice from an independent trade union before making a decision; that the worker has a right to be accompanied by a trade union official under section 10 of the Employment Relations Act 1999 in any meeting to discuss an offer; and that the worker may revoke a rejection of an offer at any time on giving one week’s notice to the employer. Does the Minister agree that those safeguards need to be incorporated into the Bill so that an employee is not coerced by their employer into rejecting a contract that is not in their best interest?
Justin Madders
A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.
Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.
New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.
To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.
New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.
Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.
Greg Smith
I am grateful to the Minister for that comprehensive outline of clause 1 but, as I reflect on our debate over today’s two sittings on the amendments to clause 1—the Government amendments that now form part of clause 1 and the Opposition’s substantive amendments, which were not accepted, and our probing amendments, which did not produce the answers we were looking for—I remain concerned that, putting aside some of the noble intentions beneath the Bill, there is still the lack of clarity we have spoken about regarding so many areas of clause 1.
The Minister himself admitted earlier that some things are still to be consulted on and that others are yet to be brought forward through secondary legislation. I am afraid that just does not cut it for businesses up and down the country that are still struggling with the aftermath of covid, the invasion of Ukraine and so many other factors. They need certainty. They need to know, if the rules of the game are changing, exactly what they are changing to—not some ballpark or some in-principle movement towards, but precisely the rules that they are being asked to play by.
Businesses will, of course, comply with any legislation passed by this House and this Parliament, but this provision is an unreasonable ask of them, whether in respect of what would constitute a low-hours contract, fixed-term contracts for qualifying workers or agency workers, or the exact definition of the reference period. It is simply an unacceptable proposition to those who run businesses, particularly, as multiple parties have said today, small businesses, be they microbusinesses or medium-sized enterprises—I fully accept that we can debate the exact number of employees that constitutes a small or medium-sized enterprise.
I recognise many of the good points the Minister made in his speech, and there are many things that we in the Opposition can get behind—at least in principle, if not in the precise lettering of the detail—but the lack of clarity, the Henry VIII powers in some parts and the “still to consult” parts in others make it very difficult for the Opposition to support clause 1 as it currently stands.
As I said earlier, we want to be a constructive Opposition. We might not agree with the Government’s standpoint on many things, but it is important for the United Kingdom that they succeed in their endeavours and that they do not provide an environment in which there will be fewer jobs, not more, with businesses being more reticent to take on new members of staff. That goes particularly to the points around how people who are deserving of a second chance in life, no matter what has happened to them before, may not get that opportunity because it is too big a risk for small businesses that are struggling to get around all the new regulations, rules and laws.
I particularly highlight again the point about small businesses just not having the capacity to deal with new regulation. As has been said, they do not have HR departments or in-house legal services, and they cannot necessarily afford to hire them in if they are to continue producing their products or selling their services to the great British public, or wider than that. I urge the Minister to go back to the Department, focus on where the detail is lacking and put an offer to the House and the wider country. Our business community need not necessarily agree with it, but they should be comfortable that they can understand it and put in place the measures for their employees and businesses. To ensure their growth and success, they desperately require certainty.
Laurence Turner
I will not keep the Committee long. A lot has rightly been said about the need for certainty for business, but we should remember that the other side of the coin is the need for workers to have certainty. I was contacted recently by a constituent who works a zero-hours contract in the hospitality sector. He is unable to get a mortgage because the bank will not grant that facility to him due to the nature of his contract. At the level of the individual, this means economic activity and family planning being put on hold.
In parts of the economy, there are employment situations—we do not, of course, tar all employers with the same brush, but if there were no bad employers there would be no need for trade unions—in which people are turning up to work, sometimes in digital form, to find shifts being mediated through applications, not even through people. It is the 21st-century equivalent of a foreman standing at the factory gate and allocating shifts on an arbitrary basis. We have heard today about the potential, which is too often realised, for favouritism and abuse of that facility.
We have had good debate about a number of details regarding the changes in the Bill. The changes in clause 1 will be welcomed by people who work in the retail sector, including in my constituency, and in other sectors that have high rates of zero-hours contract working, including the care sector. I very much welcome the clause.
Sarah Gibson
Despite some of my concerns, I would like to lend my support to the clause, because the guarantees for workers are important. I caveat that by saying that the guidance for SMEs must be clear and must come out soon, so that there is less concern in the business community about taking on staff. Currently, I see an unintended consequence in SMEs, certainly in the near future, not taking on staff because of the fear of additional costs.
While I am on my feet, I would like to make a correction for the record in respect of this morning’s debate. In the debate on amendment 137, although the shadow Minister made a comment about this in his closing speech, it was not my intention to suggest that the Liberal Democrats wish to alter the current definition of SMEs from being 249 employees. I want to make sure that is clear.
Justin Madders
To pick up on the points made by my hon. Friend the Member for Birmingham Northfield, this is about who we are trying to help. This clause is primarily about low-income workers who do not currently have the security and certainty of regular hours. They are more likely to be young, female or from an ethnic minority background. We have heard about the real impact that can have and about the power imbalance when an employer holds all the cards. To use my hon. Friend’s imagery, it is effectively like pointing to people at the factory gate and deciding whether they get work that day or not. We must move on from the indignity of that arrangement.
I welcome the support from the Liberal Democrats. It is worth saying that there was general, albeit caveated, support from the witnesses we heard from in last week’s evidence sessions.
I will tackle head-on the shadow Minister’s criticism about the lack of clarity and the need for certainty. Of course we want to give business certainty. I am sure that after the last few years of Conservative Government, we are all crying out for certainty, and there will be certainty. We are at an early stage of the legislative process for this Bill. It will be taken through Committee and through the Lords, and then there will be further consultation, secondary regulations and codes of practices, after which the laws will be implemented. As the Liberal Democrat spokesperson, the hon. Member for Chippenham, said, there is anxiety out there for businesses, but we are a long way off introducing this legislation, because there is so much more to do, and it is important that we do it. We want to get it right, we want to get clarity and certainty, and we want to ensure that this is an effective piece of legislation.
Greg Smith
I beg to move amendment 145, in clause 2, page 13, line 25, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice of a requestor requirement to work a shift as 48 hours.
The Chair
With this it will be convenient to discuss the following:
Amendment 146, in clause 2, page 14, line 17, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 147, in clause 2, page 14, line 22, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 148, in clause 2, page 14, line 28, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Greg Smith
The amendments are intended to probe the Government’s thinking, as once again it is not clear to us in the Opposition whether they have done the necessary policy work to justify the approach taken in the Bill. The impact assessment clearly shows the administrative cost that the Bill will have in shift and workforce planning, with estimated costs of some staggering £320 million to business. I would like to ask the Minister what evidence there is for the late cancellation or alteration of shifts being a problem of such magnitude that it requires legislation. The Bill does not set out what would be a reasonable notice period for cancelling a shift, and the Government must be clear what they actually intend to do in that respect.
This is a serious point. The burdens that this provision would place on small business would undoubtedly be considerable. Some small businesses cannot always, in every circumstance, guarantee shifts; that is perfectly reasonable. For example, a small furniture-making business with two employees has issues with the supply chain. It cannot provide work until the materials have actually arrived, but the employer in those circumstances could have no idea how long it will take for those materials to materialise—perhaps they are specialist materials or something that has to come from abroad and is delayed in shipping channels. Attacks by Houthis on shipping have caused supply chain problems, for example. In those circumstances, those businesses find themselves in a very sticky place and it would be unreasonable to try to argue that they should absolutely guarantee those shifts to their workers.
Alex McIntyre
I understand the hon. Gentleman’s point about uncertainty in certain industries meaning that businesses may not be able to guarantee shifts.
I want to ask two questions. First, cannot certain industries take out insurance policies to account for some of those unforeseen circumstances, particularly when it comes to shipping? Secondly, what about the uncertainty for employees for whom losing a day’s work would mean a deduction of 20% on a five-day working week? If someone told the hon. Gentleman that his salary would be reduced by 20% next week, would he not find that difficult?
Greg Smith
I am grateful for the intervention. On the hon. Gentleman’s first point, yes, of course there are insurance policies that many businesses will take out. But the example I just gave is one I can see affecting many businesses in my own constituency; there is a strong furniture making heritage around Prince’s Risborough in Buckinghamshire. There are very small businesses that do an incredible job and make some fantastic furniture, but they are microbusinesses with only a couple of employees and they operate on tight margins. They would not necessarily be able to bake the additional cost of a very expensive insurance policy into their bottom line without significant pressure on their overall business.
I accept that I am not talking about every or possibly the majority of businesses; my point in the amendments is that some circumstances might need a more sympathetic ear. In such cases, it could be argued reasonably and sympathetically that businesses in such a sticky spot would be unable to meet the requirements that the Bill sets out. Supply chain problems are just one example.
I take on board the second point made by the hon. Member for Gloucester, although, as I said in one of the earlier debates, I was self-employed for 15 years before entering this place in 2019. Some clients varied every month their requirements of the services that I provided back then. It was frustrating: nobody wants to be in that position, but it is sometimes a business reality, particularly if the ultimate client is struggling for whatever reason—their supply chain or the fact that they are just not doing very well so they need to throttle service provision up and down. I know that my example is not the same as that of a direct employee, but sometimes business needs a sympathetic ear.
To come back to my earlier point, nobody wants people not to be in a secure employment environment. Sometimes, however, things happen in businesses. Businesses in the automotive sector have shed quite a lot of jobs in recent weeks—look at Stellantis and Ford. Sometimes these things happen. With greater flexibility, perhaps more jobs overall can be saved in the short, medium and long terms, rather than having in every circumstance rigid rules that do not allow businesses that flexibility. I suggest that most people would want jobs to be saved rather than lost through that level of rigidity.
I will continue with my questions to the Minister about these probing amendments. In the furniture company example that I gave, what notice would an employer have to give? What do the Government expect an employer in such circumstances to do? From the hefty number of amendments that the Government have tabled, it looks as though small businesses are going to have to pay those employees for hours not actually worked; and even this will be through no fault whatever of the actual business in question.
Given that the Regulatory Policy Committee has flagged the risk that employers, often in fluctuating demand sectors such as hospitality and retail, may respond by scheduling fewer shifts to avoid penalties for cancellations and the consequential lost output to the economy, I would be grateful for the Minister’s appraisal of whether the provisions on short notice cancellations will support or inhibit the Government’s aim of actually achieving economic growth.
Justin Madders
I am grateful for the shadow Minister’s amendment. If it is a probing amendment, he has asked a lot of reasonable questions. There are, of course, things that we will be hoping to address today and during the passage of the Bill—and, indeed, the subsequent regulations.
The first thing to say is that we do not believe that it is right at this stage to put the time into the Bill; we want to give ourselves flexibility to respond to how the issue works in practice and to changing circumstances by doing that in secondary legislation. However, the hon. Gentleman has asked a perfectly reasonable question: who are we trying to help? What is our purpose?
Our purpose is to try to help those people who simply do not have that security in their lives at the moment. Research from the Living Wage Foundation suggests that 25% of insecure workers have had their shifts cancelled unexpectedly, with 88% receiving less than full shift compensation. Many workers receive their shift schedules without reasonable notice, and that prevents them from being able to effectively plan their work, social lives and other responsibilities.
Living Wage Foundation data found that in quarter 2 of 2023, 78% of workers received less than two weeks’ advance notice of shifts, with 5% of workers receiving less than one week. That can disadvantage workers’ ability to effectively plan their future income, particularly when that relates to budgeting for regular outgoings when shifts are cancelled, moved or curtailed at short notice. The impact on workers can include an increased reliance on debt and an inability to forecast income or find substitute work, childcare expenses and, on some occasions, travel expenses. Such implications represent the sort of one-sided flexibility that we are trying to deal with.
Evidence suggests that the income insecurity premium could be worth as much as £160 million per year, but the issue is really going to be about that benefit targeting businesses in the right way. We believe that good management practice can deal with an awful lot of this without the need to resort to legislation.
Alison Hume (Scarborough and Whitby) (Lab)
Last week, we heard from companies that say they are good employers and offer security of shifts to their workers. Would the Minister agree that companies that offer their workers the right to payment for cancelled, moved or curtailed shifts are in fact good employers and therefore have nothing to fear from the Bill?
Justin Madders
I thank my hon. Friend for her intervention. That is indeed the overall message from every provision in the Bill: that good employers are doing lots of these things already. Those things represent the kind of practice that we want to encourage and even to legislate for, because there is plenty of evidence that good workforce planning and valuing employees increases business efficiency and improves productivity; those are, of course, secondary to the individual benefits to the workers. However, the policy is specifically targeted to benefit low income workers in particular—people who are more likely to be younger, female or from ethnic minority backgrounds.
There is also a wellbeing background. Extensive research has reported that the impact of on-call contracts, with short or no-notice cancellation of shifts adding to insecurity, leads to considerable increases in anxiety. There have been quite a lot of representations to the Low Pay Commission about that, with concerns about workers on flexible or variable contracts not being able to suitably assert their rights due to fears of repercussions, being zeroed down or having no additional dialogue with the employer.
Nick Timothy
I am sorry to test everyone’s patience. We have heard at different points during the proceedings that “Good employers do this already.” Undoubtedly, that is true, and where employers want to be able to offer certainty, they will. The full quote the Minister just read was “by and large”, because employers cannot do that in all circumstances, even those that set themselves up to be that thoughtful. Does the Minister recognise that where businesses do not do the things in the Bill, it is not necessarily because they are bad employers? Obviously, some employers may be bad. If he recognises that, does he therefore recognise that through standardisation and an increase in things such as compliance costs, the Bill is, in a cumulative sense, adding costs to businesses that are not bad employers?
Justin Madders
As the hon. Member will know, the total cost to businesses from the Bill, as set out in the impact assessment, is about 0.4% of total employer costs. We absolutely acknowledge that there are many good employers out there who do this already, and we hope that there are many employers who do not who will feel that it is a positive once the legislation comes in. We want to take them on that journey and inform them why this is a positive thing and a benefit for their workforce. Importantly, they will see that the playing field is levelled and hopefully be able to compete more ably with others who might in the past have undercut them. But part of that will be making sure that they have access to good advice, good support and a guiding hand to make sure that the clear policy outcomes we want to see from the Bill are actually delivered. On that note, Mr Stringer, I ask the shadow Minister to withdraw his amendment.
Greg Smith
I remain very concerned about some of the real-world applications. I accept that it will have a negative impact in a minority of cases. The purpose of our amendment, as I said, was to probe the Government, so I am happy to confirm that we will withdraw it.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Justin Madders
I beg to move amendment 24, in clause 2, page 13, line 42, leave out
“from what time on which day”
and insert
“when the shift is to start and end”.
This amendment requires notice of a shift to include when the shift is to end (as well as how many hours are to be worked and from when).
Justin Madders
I am afraid we are back into some of the more technical minor amendments, on which I will not detain the Committee too long.
Amendment 24 will ensure that employers have to give reasonable notice of not only when a shift starts and how many hours it will be worked, but also when it will end. The Government’s intention is to avoid a scenario whereby a worker is notified of the start time and total duration of a shift, but does not receive reasonable notice of whether those hours will be in a single block, or whether there may be a large break.
The current drafting would allow an employer to specify that a worker is required to work, for example, for three hours from 9 am on Friday, without specifying whether the shift will be from 9 to 12, or from 9 to 10 and then again from 12 to 2. In either scenario, the notice would meet the requirements to be a notice of the shift. The amendment closes this potential loophole. Some of my own children have gone into work and then been told to go and have a two-hour lunch break—unpaid. We clearly want to avoid that through this amendment.
I turn briefly to Government amendments 25 to 27, which will ensure that workers are entitled to reasonable notice where an employer cuts working hours from the middle of a shift as well as from the start or end. The current drafting would arguably allow employers to reduce the number of working hours in the middle of a shift without giving reasonable notice. The amendments close that loophole, ensuring that workers have to be given reasonable notice if an employer decides to change the hours of a shift by reducing the hours in the middle.
Greg Smith
I will be brief in my response to these Government amendments, which make the requirement for the right to reasonable notice of cancellation or changing of shifts more onerous. I spoke to these principles during our debate on the previous set of amendments in my name, but I ask the Minister gently now, why were these provisions not included in the Bill on introduction? Was it an oversight? Will there be a repeat of the line, “It was the intention but we just didn’t do it”, or is it something else? I would be grateful for clarification.
As I argued during the debate on the previous set of amendments—this point is relevant to this set too—why are these amendments so necessary? Does the Minister really think it a proportionate burden to place on businesses, particularly in those cases where there will be fair and reasonable grounds for a business not needing to provide notice of a change in shift to an employee? What assessment have the Government made of the cost to businesses, given that they will now essentially have to pay for work not done, without recourse to force majeure provisions or whatever it might be—where it is genuinely not their fault that they cannot provide the work to their workers for whatever reasons? Force majeure is a well-established principle in all sorts of sectors across the world.
I urge the Minister to consider carefully how he can ensure that out-of-control eventualities are looked after in the Bill; otherwise I fear it will create a scenario where particularly the smallest businesses—those one, two or three-employee businesses—are placed in a very difficult financial position. I cannot believe that the Government believe that is the just and right thing to do, and that they could not come up with some other safeguards to protect those microbusinesses—those small enterprises—that might find themselves in a sticky spot.
Anneliese Midgley (Knowsley) (Lab)
I refer Members to my declaration of interests. I am also a member of Unite and the GMB. It was said in an evidence session last week that in hospitality—a sector that we are very focused on improving in the Bill—
“employers bring in too many workers for shifts and say: ‘Sorry, we do not need you any more. Go home.’ They then cancel a shift without any compensation for the workers for their travel time”. ––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 76-77, Q71.]
As many of my hon. Friends have said, while we are considering the burden on business, we must also consider the burden on workers. We are trying to level the playing field and make a more equal way, where workers are considered.
Greg Smith
I do understand the hon. Lady’s point. Nobody wants to see people turned away as they turn up for work, with their employer saying, “Sorry, no work today.” That is not a position that we want anybody else to find themselves in, but I am trying to make another point.
Let us take the hospitality sector as an example, which has had a pretty rough time since covid. It is one of the sectors—be it pubs, restaurants or attractions—that is struggling the most to recover from the pandemic. There are certainly times when I turn up to a pub in my constituency, perhaps on a Tuesday night, and it is completely empty and has no bookings. That is not necessarily the pub’s fault, but it will be a problem if there is an absolute requirement for the pub still to pay its full staff rota because it was full the previous Tuesday night and needed all those staff. I think this is one of those real-world examples where there has to be a little bit of flexibility; businesses have to be able to say, “Sorry, we’ve got no bookings tonight.” Worse than that, there might be the nightmare scenario that the beer delivery has not arrived and there is not actually any beer to sell.
Michael Wheeler
Does the shadow Minister accept that it is not the fault of the worker either? In fact, the employer has more control over the situation, on balance. On his example of planning out work, especially bookings, employers would know that there were no bookings further in advance than on the day—there are comparable examples across other industries—so giving notice of that on the day is completely and utterly unacceptable. The cost, in terms of proportion of income, is disproportionately borne by the worker, not the business, and these measures we are discussing are a proportionate way to rectify the situation.
Greg Smith
Fundamentally, I agree that it is not the worker’s fault either—I am absolutely at one with that. I made it very clear that I do not want to see anyone turn up for work only to be turned away and told, “Sorry, no work today.” That is not a great place for anyone to be. I absolutely understand and accept the hardship that that will place on someone who will perhaps not get that day’s wages, but I think there should be greater flexibility in circumstances where it is not the business’s fault either; those situations may be few and far between, but they will happen in hospitality, and they may happen in some manufacturing sectors where supply chain problems have occurred, as we discussed earlier.
If we force businesses into a place where they have to shell out significant amounts of money for no gain—as we discussed earlier, the workers are the ones who produce the services, goods, products or whatever it might be that enables the business to have the money in order to pay people in the first place—and we push them into a place where their low margin is eroded even further by paying for things that are completely outside their control, then those businesses may well go bust.
We are talking about the hospitality sector—and we are seeing pubs close virtually every week. That is a very sad state of affairs, particularly in rural communities, where the pub is often the beating heart of a village, or certainly the social hub. It is not just a place for a pint; pubs do a lot of social good as well. We are seeing pubs close far too frequently for all sorts of reasons, often because of the low margins and other factors that have come in—I will resist the temptation to go too hard on the Budget. There is a cumulative impact, and this measure could well be the straw that brings the whole house down. I want the Minister and Government Members to reflect on where we could bake in other forms of safeguard and flexibility, so that the Government do not put a number of businesses on to that sticky wicket.
Anneliese Midgley
Can I clarify whether the shadow Minister believes that workers should shoulder all the burden, and that businesses should bear no responsibility?
Greg Smith
No, I do not accept that. It is not helpful to see this as either/or. As I explained, there is a symbiotic relationship between businesses and their workers—their employees. Neither succeeds without the other. It is therefore not the case that I, in any way, shape or form, want to put all the burden on one or the other; what I am arguing for, and what I hope Members in all parts of the Committee can reflect on and appreciate, is some of those real-life, lived-experience and real-world examples, where things just do not go very well and people find themselves—
Greg Smith
I am very happy to do so once I finish this train of thought—we are getting far more debate in Committee than we do in the main Chamber.
We have to find the balance, where we do not just point the finger at the business owner or the worker, but see them as a symbiotic being—because neither side can survive or thrive without the other.
Jon Pearce
I am grateful to the shadow Minister for giving way so often. I want to address a principle: the Working Time Regulations 1998 established that if an employee, or indeed an employer, wishes to take holiday, the statutory notice period will be twice as much as the holiday taken. That is the same principle in the Bill, in that it is perfectly reasonable for a worker who does not have guaranteed hours to be given notice when work is not available. That statutory principle has been in place since the last century, so this is not outwith what every worker should expect. It is perfectly reasonable that if a worker has been told that work is available, they should be given reasonable notice if it is not. The shadow Minister’s Government kept to that principle, and it is perfectly applicable to employees and workers in this situation as well.
Greg Smith
The hon. Gentleman is right about the principle of notice for holiday—that is quite clearcut. Holiday is pretty much always planned, although there are circumstances in which someone might need to take leave at very short notice—perhaps they have one of those dreaded phone calls that a relative is seriously ill, so they have to leave to be with them, or there might be some other pressing emergency. I think most employers will be flexible and compassionate about such emergency circumstances, ensuring that an employee can be with a relative who has been in an accident or is critically ill, for example.
Generally speaking, though, holiday is planned—just as, generally speaking, the availability of work is planned—but as with emergency situations when someone might need rapid time off, other emergency or out-of-control situations might affect a business. It would then put an intolerable pressure on that business suddenly to have to pay someone an amount of money that might be more than they would even have earned in that day—selling beer or cake in the hospitality sector, or producing a cabinet in furniture making, or whatever it might be.
I hope that the hon. Gentleman appreciates where I am coming from. We are not talking about the vast majority of cases or the bulk of the economy here; we are talking about the unexpected emergency scenarios that are out of anyone’s real ability to predict, which happen in the real world. I am therefore very concerned that the rigid provisions being proposed by the Government will put a number of businesses in a difficult place.
Several hon. Members rose—
Alex McIntyre
I want to drill down on an important point of principle that we should be considering. I do not want this to become a tale of woe from my previous career in hospitality, but I remember being docked three hours’ pay by my boss because there were no customers for those three hours, and there is a similar point of principle here. I understand that there will be times when a restaurant is empty, but someone turning up to work will expect to get paid for that shift. Then there is the cost to the employee of going to work. People might have to secure childcare—I have recently had to look at the cost of childcare and the astronomical prices that are being charged—or pay to travel into work, and they might have paid in advance and be unable to get a refund. Why does the shadow Minister believe that the burden on the employee is less important than the burden on the business?
Greg Smith
I can assure the hon. Gentleman that, with three children, I am acutely aware of the cost of childcare. The point I am making, to go back to the one I made earlier to his hon. Friends, is that this is not “all or nothing”. It is about recognising, to refer back to the answer I gave the hon. Member for High Peak, that at certain times, albeit not the majority of cases—in fact, far from the majority of cases—circumstances will arise that are beyond the business’s and the employee’s control, and they will push that business to the very edge. It is not a happy place or a good place to be, but there are some realities here that I think need much more careful reflection.
Chris Law
I have been both an employer and an employee in a number of situations, including in retail and hospitality, which we have been hearing about. The hon. Member talks about emergencies, and I understand that emergencies can happen—I have been an employer when we had an emergency situation. What usually happens in those circumstances is that people find other things to do. There is always stuff to do in a business—stuff that might otherwise get put to one side—so there will be an opportunity for employees to work with employers in emergency circumstances.
What I do not understand is this. At what point, in the hon. Member’s mind, do employers notify employees? When do they say, “Look, there’s a situation—it’s an emergency. There is no chance at this time that I can help you come in. Would you consider not taking hours in this instance?” The hon. Member has talked about lived experience; I have spent many years in hospitality—I trained as a chef, and I know exactly what it is like working in restaurants and hotels. Lots of things happen, including empty restaurants, but there is also an onus on the employer to make sure that the restaurant has enough people in of an evening. If they are not there, it is not the employee’s fault; it is the responsibility of the business. If the business is on its knees, then frankly that is in no way the fault of employee—unless, of course, they are not turning up for work or something. In truth, is it not the case that a business in that position is just not viable?
Greg Smith
I am grateful to the hon. Gentleman for his intervention. He is right that there may well be something else that can be done—perhaps a stocktake, or making a start on refurbishing the place, or whatever it might be—but that will not be the case in every circumstance. I can only repeat the point that I am not making this argument in respect of the majority of cases, or those that might affect a business that is already in distress; I am making it in respect of those few occasions that might take a business to that point or much closer to it. I cannot imagine that anybody on this Committee, or indeed any Member of this House, would want to see that unintended consequence.
Laurence Turner
I am grateful to the shadow Minister; I suspect he is setting some kind of record with the number of interventions he is taking. Earlier, he said that there may be alternative measures and protections to mitigate the problem that the Minister is seeking to address, whereby someone has been called to a shift but has arrived, incurring some cost, to be told that there is no work available. What alternative measures does the hon. Member have in mind?
Greg Smith
There are a number of options that could be looked at. The time set out in the regulations could be much more flexible. There could be safeguards for force majeure circumstances, which is common in a lot of contracts. There is no reason why that could not be in legislation. Or if the Government want to go down this path, albeit it is not something that Conservatives would propose, perhaps a more elegant way of going about it would be some sort of legislation on compulsory insurance against such eventualities that ensured that both sides were able to benefit—that the employee still got paid at least something, if not their full expected wage for the day, but the business was not directly out of pocket either. That would have to be tested in the insurance industry to see where premiums would come out, because they may well be unviable, but I gently suggest to the Government that it is a tyre worth kicking.
I conclude with a point I have made many times: this has to be about flexibility in real-world circumstances.
Sarah Gibson
The Minister made an extremely good point about the security that is required. It should not be an arbitrary 48 hours that is given. Specifying the time for each sector, presumably under guidance, would perhaps be the most appropriate thing.
I have talked many times to people in my constituency who work in the care sector and are employed to visit people in their own homes. They are given a start time for a shift and are quite often told that they will work a certain number of hours, but it is not clear until they turn up to the shift how much of a gap there will be between the times at which they are getting paid. That can leave them with shifts that last a considerable time but contain a gap of several hours, during which they might be miles from home and it might not be worthwhile going home for lunch, so they incur costs on their own time.
I welcome the attention to the lack of clarity about shift working specifically for home visits in the care industry. This is something that we need to look at. Perhaps there needs to be guidance on the time for each sector, because each sector has its own issues. That is certainly true when one looks at hospitality.
Anneliese Midgley
I am sorry for referring to the shadow Minister as “you” earlier, Mr Stringer; I was not suggesting that you needed to clarify whether you thought workers should shoulder all of the burden.
I want to remind hon. Members of some evidence that we were given last week in support of the right to reasonable notice of a shift. Matthew Percival from the CBI said that
“there are areas where the Bill can be a helpful step in the right direction. To give a few examples, we have previously supported the idea that it is wrong that you should turn up for work expecting an eight-hour shift, be sent home after two hours and only be paid for two hours. There should be a right for compensation there.”
Jane Gratton from the British Chambers of Commerce said:
“As Matthew said on the compensation of shifts, we certainly support that, and we would be very happy about the fair work agency to create a level playing field and measures around workplace equity.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 13, Q6.]
Allen Simpson from UKHospitality said:
“Again, reasonable notice is an important principle and there should be protections.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]
Justin Madders
The way the shadow Minister was intervened on made it feel like this was an Opposition amendment, but it is actually a Government amendment to deal with the issue of split shifts and the anti-avoidance measures. This is about rebalancing the level of risk faced by a worker and an employer. At the moment, the balance is shifted too far one way. We estimate in the impact assessment that the cost to businesses of this policy could be up to £320 million a year. Clearly, a lot of that will end up being transferred directly into workers’ pockets. We hope that, through better workforce planning, that figure will go down and we will see improvements to the lives of those who will benefit from the Bill.
I will make one further point. The shadow Minister referred several times to force majeure situations. There is provision in a later clause, which we will not get to today, for us to set out in regulations when there might be exceptions to this provision. There are lots of potential arguments about whether the provision should apply, and we intend to consult further before the final regulations are published and debated.
Justin Madders
I will not detain the Committee too long, because it feels like we have had the clause stand part debate already. I will briefly go through the provisions of clause 2, which creates the right to reasonable notice of shifts. As I set out when we discussed clause 1, we must tackle one-sided flexibility. Guaranteed hours is an important part of that, but we must also ensure that workers have reasonable notice of their shifts, so that they are enable to effectively plan their work and personal lives.
If someone’s shift is moved but their pay is less than the cost of the babysitter, that is obviously a negative. If someone is offered a last-minute shift but it is 60 minutes away by bus and they have no car, they should not be penalised or have a black mark put against them if they are not able to take it up. We can do better than this. We want to establish a more balanced partnership between workers and employers, and we hope to do that with clause 2. It will still allow employers to make changes to shifts, but it will also provide incentives for employers to meet the standard of the best employers, encouraging better planning and engagement with their workers. These provisions to introduce a right to reasonable notice of shifts and to changes in them are a small but important step towards making the lives of many shift workers and their families feel a little more secure.
Clause 2 creates several new sections in the Employment Rights Act 1996. New section 27BI outlines the duty that will be placed on employers to give reasonable notice of shifts. That duty will apply to workers on zero-hours contracts and arrangements, as well as workers on other contracts that will be specified in regulations but are likely to be low-hours contracts. New section 27BJ specifies that employers must also give reasonable notice of any moves or changes of shifts. New section 27BK notes that, as for other sections, agency workers are not covered by this measure—new section 27BV provides a delegated power to make corresponding or similar provision in relation to agency workers. In addition, section 27BK specifies that workers are not entitled to reasonable notice of shifts that they themselves suggested they work. For example, they would not be entitled to reasonable notice of overtime that they themselves had suggested. That right does, however, apply where the employer agrees to a suggested shift and then later changes or cancels the shift. Finally, the section contains a power to make regulations about how the notice should be given and when it is treated as being given.
New section 27BL explains that, where an employer is required to make a payment to a worker because the employer has cancelled, moved or curtailed a shift at short notice, the worker cannot get compensation for lack of reasonable notice for the same cancellation, movement or curtailment. New section 27BM enables workers to complain to employment tribunals that their employer has failed to comply with the duties to give reasonable notice. New section 27BN provides that tribunals must make a declaration where they find for a complainant and may award compensation they consider appropriate to compensate the worker for financial loss suffered as a result of the failure to give reasonable notice. This compensation will be capped in regulations and, in line with common law on recoverable damages, compensation will also take account of the duty on the claimant to mitigate their losses.
Greg Smith
I will not detain the Committee for much longer because, as the Minister said, it felt as though we had the debate on the whole clause during the debates on the amendments. I reiterate my concern about some of the provisions in the clause. Although I accept that the Minister said that, further on in the Bill, there is provision for force majeure measures to be introduced, there is a gaping hole for those emergency, unexpected, out-of-control circumstances, and this clause fails to fill it. However, we will almost certainly return to that on Report, so we will not press the clause to a Division.
Question put and agreed to.
Clause 2, as amended, accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)