Corporate Insolvency and Governance Bill

Lord Hendy Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Lord Hendy (Lab) [V]]

My Lords, preserving companies in financial difficulties as going concerns is laudable. The workers of such companies will welcome measures that keep at bay corporate predators intent on stripping a company’s assets, thus destroying jobs. But the Bill does not eliminate the dangers to workers. Indeed, it contains no specific provisions to protect workers. Let me amplify some omissions which have been touched on by my noble friend Lord Stevenson and others.

Most fundamental is the absence of any obligation that workers and their representatives be involved in proposals for a moratorium or a restructuring—proposals likely to affect them profoundly. The Companies Act 2006 requires directors to take into account the interests of the workers, but they are not obliged to ask the workers for their views. We know that directors commonly ignore workers’ interests when a company is in financial difficulty. Often, the workers first learn that the company has gone bust on TV—well after all key decisions have been taken. The 1992 trade union Act requires consultation before redundancy, but we know that too often that does not happen, even where administrators have been appointed. It is cheaper to pay compensation than to keep the company going while consultation takes place. In the Woolworths administration, £67.8 million was paid out in compensation for failure to consult; at Comet, it was £26 million.

Another point is that those payments were not made by the companies, the directors or the administrators. They were made by the taxpayer, under legislation that requires the National Insurance Fund to pay some awards, unpaid wages and pension contributions. The burden is shifted to the taxpayer because the workers’ claims are insufficiently protected by insolvency law. It is true that the Insolvency Act 1986 confers preferred creditor status on employees in respect of some unpaid awards, wages and pension contributions. Preferred creditor status sounds good, but it ranks behind all secured creditors, including, often, the shareholders themselves, where private equity is invested by way of secured loans rather than share purchase. After the secured creditors have been paid out, often there is not enough to go around the preferred creditors. In the case of Bernard Matthews, the pension fund recovered next to nothing, while the secured creditors were paid in full. Debts owed to workers outside preferred creditor status rank at the bottom, with all other unsecured creditors. Since the company is, by definition, in financial difficulty, usually there is not enough for them. What is required is to make the benefits of this Bill contingent on the company fulfilling its obligations to their workers first. Noble friends and I will table amendments to achieve this if the Government do not.

Covid-19: Businesses and the Private Sector

Lord Hendy Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I thank the noble Lord, Lord Dobbs, for tabling this debate. It provides an opportunity for the Government, through the noble Lord the Minister, to show their appreciation not just to private companies but to their workers and those in the public sector. Some 33 million of them form the tsunami of unemployment which is following the medical crisis. These are the people who provide the goods and services on which we all rely; who actually produce the wealth of this country; who have been keeping the country going, many of them risking their health to do so.

Perhaps the Minister will follow my noble friend Lord Liddle in crediting the 100,000 trade union workplace safety representatives who are working tirelessly to try to minimise the risk. Their unions have been working flat out to support the millions who are facing loss of income, loss of jobs, loss of health and, tragically, death. The Government were right to listen to the TUC’s proposal for a job retention scheme and they ought now to heed its call for a tripartite national recovery council that would give a role to private companies, public employers, government and workforce representatives. This is surely the way to solve the massive problems, particularly unemployment, which have been thrown up by this crisis, and to plan a new and better future based on dialogue.

Covid-19: Business

Lord Hendy Excerpts

Wednesday 13th May 2020 Lords Chamber

[Lord Callanan]

My Lords, as the virus of course does not respect borders or boundaries, we will continue to work very closely with all the devolved Administrations, including the Northern Ireland Executive, to support consistency for employers and a four-nation approach to kick-starting the UK economy. As I set out in previous answers, we have announced a range of unprecedented measures to support the UK economy.

[Lord Hendy (Lab)]

My Lords, each of the eight guidance notes published on Monday advises:

“Workplaces should not encourage the precautionary use of … PPE to protect against COVID-19 outside clinical settings”.


That advice is surely contrary to the clear statutory duty set out in the Personal Protective Equipment at Work Regulations 1992 to provide PPE to any employee in respect of whom risk has not been eliminated by other measures. The importance of this duty is magnified in the light of the Office for National Statistics report to which my noble friend Lord Stevenson referred, which identifies various occupations at an increased risk of death from Covid-19. Will the Minister indicate whether the guidance might be reconsidered in each of these eight notes?

[Lord Callanan]

Where workers already wear PPE for protection against non-Covid risks such as dust, they should of course continue to wear this. In relation to Covid-19 specifically, we have worked very closely with the medical community to develop this guidance and we will of course be guided by the science so that we do not put lives at risk in future.

Covid-19: Employment Support

Lord Hendy Excerpts

Thursday 19th March 2020 Lords Chamber

[Lord Callanan]

I think, again, the noble Lord makes a very good point. We have of course already announced extensions to statutory sick pay and the qualifying period. His points are well made and echo the points made earlier about freelancers. All the different sectors of the economy need to be looked at. We will do whatever it takes. We will put in place a comprehensive package and will announce details of that as soon as we are able to.

[Lord Hendy (Lab)]

My Lords, all legal categories of worker will need income protection in this crisis, but can the Minister say whether the income protection proposals will cover, in the mind of the Government, five particular situations? First, there are those who will be off sick with coronavirus: clearly, they will be entitled to statutory sick pay, even though it is a pittance at £94.25 a week—a figure that will have to be increased. Secondly, there are those who are self-isolating and are not sick—at least not yet—and will not be entitled to statutory sick pay because they are not sick. Thirdly, there will be those who are off work to care for others, including children shut out of school, who will never be entitled to statutory sick pay but who do need income protection. Fourthly, there will be those who lose their jobs because of the loss of trade by reason of Covid-19 or following advice from Public Health England or the Government. I remind the Minister that the Financial Times this morning said that over 200,000 people in restaurants and catering have already lost their jobs—have been laid off—since mid-February. I noted that the figure did not include air transport or the holiday trade; I saw in the newspaper yesterday that British Airways had served an HR1, and it has 30,000 employees. Income protection must cover those who have lost or may yet lose their jobs. Fifthly, will it cover those who are redeployed from existing work to do emergency work, social care work or other work, not just volunteers?

[Lord Callanan]

I thank the noble Lord for his question, which illustrates the complexity of the problem, all the different factors that need to be taken into consideration, and how there needs to be a cross-government response, across a number of departments and obviously backed by the Treasury with comprehensive financing. The answer to his question is: yes, all these matters are being looked at. We are looking at various international options and proposals and we will hopefully have something to announce very soon.

Parental Bereavement Leave Regulations 2020

Lord Hendy Excerpts

Tuesday 3rd March 2020 Grand Committee

[Baroness Brinton (LD)]

I thank the Minister for introducing these regulations. I pay tribute to Lucy Herd, who as we have heard has been campaigning for nearly a decade. When I first learned of the campaign, I knew that it would take a while because the issue is not one that affects many families. Not many families or their wider circle of friends will know somebody who has lost a child or are aware of a stillbirth. I give credit not just to Lucy but to the noble Lord, Lord Knight, Will Quince and Kevin Hollinrake for all the work they have done to ensure that this never lost the eye of Ministers. We may all collectively have been a thorn in their flesh, including myself over the past four or five years, but I am delighted that we have now got to the point where these regulations are coming into play.

I note particularly that account has been taken of the definition of “parent”. I was an informal foster parent. I was not a kinship carer but I had parental responsibility for two children after their mother died, so I am very grateful for that. It is because of such funny modern-day family situations that we need a regulation broad enough to recognise that when people are personally involved and have a responsibility, no employer or state system should say that they do not have the right to receive parental bereavement leave.

I am also grateful to the noble Lord, Lord Callanan, who kindly gave me an in to the issue that I want to raise, which I appreciate is not within the remit of BEIS. However, I raised this repeatedly during the passage of the Bill and I want to do so again.

I understand why the decision was made that self-employed parents will not be in receipt of this benefit because they are not in receipt of many other benefits. However, there is a serious inequity for parents, especially those who have stopped working, often for many years, because of the serious medical difficulty that their child has had. They have done so knowing that their child will die. The fact is that under our current system, the day after the child dies, they lose their disability benefit and carer benefit and, shockingly, they have to apply immediately for benefits. I remind the Grand Committee, because I raised this on the Bill, of the words of one parent who wrote:

“The day after, I applied for jobseeker’s allowance, wanting to buy myself a little extra time to grieve before returning to some sort of work, only to be told that because I hadn’t worked in 10 years, I was ineligible, despite the fact that in those 10 years I had worked harder and for many more hours than the average person. The fact that I had saved the Government and the NHS hundreds of thousands of pounds by providing my son with hourly complex medical care counted for nothing. You are told to man up, move on, get a job, pay the bills. Provide for your remaining family.”


That inequity still remains. The noble Lord, Lord Callanan, referred to unemployed parents not being covered but said that the DWP will keep this under review. It will do more than that because the campaign for these parents starts today.

[Lord Hendy (Lab)]

My Lords, I thank the Minister for introducing the regulations, the noble Lord, Lord Knight, and all those he mentioned for introducing the Parental Bereavement (Leave and Pay) Act 2018 which gives the power to make the regulations we are considering today. I shall raise three short points. The first is one that the Minister referred to in his speech, which is that these benefits are available only to employees. This raises a critical issue in labour law and indeed it is one that has beset labour law for centuries: different legal statuses are attached to different kinds of worker. The consequence of having a different status is that one is entitled to different employment rights. This issue will perhaps be dealt with in the forthcoming Employment Bill which I understand will deal with the Matthew Taylor report and contain some measures in relation to that.

The issue is that employees are entitled to more rights than other categories of worker. At one end of the spectrum one has the employee while at the other end one has the genuinely self-employed in business on his or her own account. In between, we have what lawyers call the limb (b) worker; that is to say, a worker under Section 230(3)(b) of the Employment Rights Act 1996, which is a worker under a contract that is not a contract of employment and not working for a client or a customer of a business of that worker. In effect, it is a kind of employee but not quite an employee. The consequence of being a limb (b) worker is that one does not have the same array of employment rights as an employee. There is a fourth category which is what lawyers call the false self-employed, which is somebody who appears to be self-employed because that is how the employer has designated him or her, but in reality and on examination in the courts or tribunals turns out to be an employee or indeed a limb (b) worker.

The point I make to the Minister is that there is really no justification for confining the right to bereavement leave or pay to those who are employees and not extending it to limb (b) workers. I appreciate that these regulations could not confer the benefit on limb (b) workers because the Act itself confines those benefits to employees, but when the Employment Bill comes to be drafted, this is something that could be addressed. There can be no doubt that limb (b) workers will suffer just as much grief and tragedy over the loss of a child as an employee. In his speech, the Minister suggested that the justification for this might be that all parental leave under the Employment Rights Act is confined to employees, but that is not really a justification for excluding limb (b) workers from the benefit of parental bereavement leave or pay.