Code of Practice on Dismissal and Re-Engagement

Lord Hendy Excerpts

Monday 25th March 2024 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, I am confident that the Minister will have read the Second Reading debate of my noble friend Lord Woodley’s Employment and Trade Union Rights (Dismissal and Re-engagement) Bill. I too do not intend to repeat the speech I made then, but I make no apology for repeating the most important points, because they were designed to expose whether the code will be the deterrent that the Government think it will be. I am personally extremely sceptical about that, for two very clear reasons, which I will repeat by way of explanation.

First, while this debate is ostensibly concerned with this somewhat anaemic code of practice, it engages much larger questions of access to justice, the balance of power between employers and workers, and, fundamentally, whether the code does what it purports to do and will shield workers from manifest injustice. Given that the introduction of this code was announced in response to P&O Ferries instituting mass redundancies in March 2022, I think it is legitimate to look back at what the Government said then. The then BEIS Minister, Paul Scully, explained the Government’s new commitment to introduce a statutory code of conduct. He did so in highly emotive and, one might say, colourful language. He described the practice of firing and rehiring as “deceitful” and “disgraceful”, labelled the actions of P&O “appalling” and “unscrupulous”, and vowed that the Government would “stand up for workers” against the flagrant disregard shown by companies that use sudden mass dismissal as a negotiating tactic.

Having raised these expectations, it is no wonder that there is manifest disappointment with the glacial emergence, over two years, of a code of practice that will impinge upon employers only at the point a case reaches tribunal. Testing whether or not that will be a deterrent is what I want to draw the Minister’s attention to. I did this in my contribution to the Second Reading debate, drawing attention to the issues of delay and the coming imposition of fees for tribunals. The Minister who responded to that debate, the noble Lord, Lord Johnson of Lainston, was unable to pick up on those points in his winding up of the debate and offered to write—and, true to his word, he did write. I thank him for attempting to ease my anxieties but I confess that his letter was not wholly successful. Indeed, it was the opposite: it raised the temperature of my anxieties.

The letter began by admitting that there remains a backlog of 32,000 cases in the tribunal system, asserting that reducing outstanding caseload is the key to bringing down wait times, before revealing that:

“Employment Tribunal timeliness data has not been published for some time due to the Employment Tribunal changing their case management system in 2021”.


That was three years ago. We have an assertion that bringing down wait times is essential, followed by a confession that, owing to a change in the case management system three years ago, we are today unable to gauge whether or not wait times are falling.

The viability of this code of practice is entirely contingent on a tribunal system that is effective and can prove timely redress. The fact that we currently, by the Government’s own admission, have no access to the data that would tell us whether it delivers timely redress is absurd, if the Government are to rely upon that as being the ultimate deterrent against this behaviour by the people they described with those very colourful adjectives.

The letter also engaged the question of the Government’s consultation on reintroducing fees at this time, of all times, for those who wish to bring a case before an employment tribunal. I thank the Minister for outlining, in his letter, the details of the help with fees remission scheme, but I remind your Lordships’ House that I raised the case of R (UNISON) v the Lord Chancellor in my speech on Second Reading. It is not mentioned at all in the letter, and I can understand why, because the judgment in this case was unambiguous. It concluded that levying fees was unlawful. It cited the Leggatt report, which specifically identified the absence of fees as one of the three key elements that made tribunals successful, and concluded that fees, however modest, have the effect of preventing access to justice. That was the principal point that I raised in that aspect of my speech, and it was just ignored in the letter I got back from the Government.

I understand the fees coming under consideration are appreciably lower than they were previously, but they will certainly not encourage victims of fire and rehire to have recourse to the tribunal system and may well act as a further discouragement. This is yet another case of the Government telling us that they understand the existence of an injustice, assuring us that their heart is in the right place and they are seeking to right a wrong, but then again balking at doing the needful. We are all familiar with the cases of Tesco, Jacobs Douwe Egberts and Carnival and the other cases that seem to be appearing by the day, some of which the noble Lord, Lord Woodley, referred to, and the way in which employers and others weaponise the power advantage they have and exploit their workers. Rather than institute a non-legally binding code of practice that tells employers what they already know, I believe a more fitting course of action would be to enshrine good practice into law and offer clear redress to workers when they are victims of injustice.

[Lord Hendy (Lab)]

My Lords, I share the regrets expressed by my noble friends. I intend to address the second element in the regret amendment put down by my noble friend Lord Woodley, and that relates to the International Labour Organization, which your Lordships will recall is a tripartite body, consisting of Governments, employers and workers. The United Kingdom was a founding member in 1919; it was the first signatory of the fundamental convention on freedom of association—convention 87—in 1949; it is a member of the governing body; and it is represented on the Committee on Freedom of Association.

The relevance of that is that, on 8 November last year, the governing body approved the 404th report of the Committee on Freedom of Association, which reported on the P&O Ferries saga of St Patrick’s Day 2022. Your Lordships will recall that 786 seafarers were dismissed on that date and only 100 were subsequently reinstated. The other jobs were given to agency staff. The Committee on Freedom of Association, as approved by the governing body, made three substantive recommendations, none of which, so far as I can see, is reflected in the code of practice.

The first recommendation related to collective bargaining. The committee said that it

“urges the Government, with the social partners, to ensure mutual respect for the commitment undertaken in collective agreements, which is an important element of the right to bargain collectively and should be upheld in order to establish labour relations on stable and firm ground”.

In many of the instances of fire and rehire mentioned by my noble friend Lord Woodley, there have been established collective agreements and established collective bargaining. That was the case with P&O Ferries, where collective agreements stretching back nearly 100 years were flouted.

Employment and Trade Union Rights (Dismissal and Re-engagement) Bill [HL]

Lord Hendy Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Hendy (Lab)]

My Lords, it is a pleasure to follow my noble friend Lady O’Grady. I too compliment my noble friend Lord Woodley on securing the Bill. I declare my trade union interests as in the register.

Fire and rehire is widespread, as my noble friends Lady O’Grady and Lord Woodley and the noble Lord, Lord Balfe, have demonstrated. It places workers in an awful dilemma: they must accept a cut to their standard of living or face unemployment. The anguish of that horrible choice needs little elaboration at a time when real wages have been stagnant since 2007.

The Office for National Statistics reports that median regular pay in November 2023 was as low as £27,588 per annum, which means that half the working population —16 million workers—earn less. Indeed, a quarter of the UK’s workers earn less than £16,068 per annum. No wonder the Joseph Rowntree Foundation, in its report UK Poverty 2024, estimates that 14.4 million people were in poverty in 2021-22 and nearly 3.8 million people experienced destitution,

“an extraordinary 148% increase over just five years”.

That is significant, because TUC research shows that fire and rehire is used predominantly against the lower paid, and disproportionally represented among the lower paid are, naturally, women, ethnic minorities and those with a disability.

The use of the tactic is not just bad for the workers on whom it is inflicted; it is bad for the economy. According to the ONS, the UK’s economy grew by 0.1% last year and has declined since. Reducing the spending power of workers shrinks the economy still further. That is a powerful reason to address this obnoxious practice.

Currently the tactic is lawful so long as the employer gives the employees the minimum notice of dismissal—contractual or statutory, whichever is the longer. The risk of a successful unfair dismissal claim is minimal for the employer that can show an economic need to reduce labour costs—what the legislation calls “some other substantial reason” for the dismissal. Even if that defence fails, the employer can argue that the offer of reduced terms was reasonable in the circumstances, and that dismissal for rejecting it was not unfair. So in effect the potential 25% uplift on compensation under the proposed code of practice is useless, as my noble friend Lord Woodley said and as the P&O Ferries scandal to which my noble friend Lady O’Grady referred shows, in relation to statutory capped compensation.

Fire and rehire is currently lawful because the law allows both the employer and the employee to give notice to terminate the contract of employment. For that fundamental reason, it is impossible to ban the practice, yet the tactic is plainly unacceptable where it is deployed simply to exploit managerial power in circumstances where the business faces no existential threat.

Its use may at least be understandable, if still not acceptable, in the rare situation where a business faces a dire and sudden crisis. The Bill allows for that so, as my noble friend Lord Woodley has pointed out, it does not ban fire and rehire. Instead, it imposes modest procedural obligations on employers seeking to reduce labour costs in this way. It applies only to establishments with 50 or more employees. It applies only where there is shown to be a real threat to continued employment or to contractual changes likely to affect 15 or more employees. In those circumstances the Bill imposes two obligations on employers. The first is to consult with a view to reaching agreement to avoid dismissals or contractual changes. Those consultations will be, as elsewhere in the legislation, with representatives of recognised unions or elected representatives. The second obligation is to disclose the information necessary to have meaningful negotiations and as required for good industrial relations.

There is an exception for information whose disclosure would seriously harm the undertaking or be contrary to the interests of national security. Any disputes over disclosure can be referred to the industrial relations expertise of the Central Arbitration Committee. Likewise, a dispute over whether there is proper consultation or proper disclosure can be referred to the CAC, which can then either refer the complaint to ACAS for conciliation or determine the complaint itself and make an order. In the case of non-compliance with a CAC order, a worker’s representative can seek a court injunction to compel compliance or to render void any dismissals or contractual changes in breach of the order.

Alternatively, a worker offered re-engagement on different terms may obtain an employment tribunal declaration if the tribunal concludes that the employer breached the Bill’s requirements of consultation and disclosure. In that case, “just and equitable” compensation may be ordered in respect of losses attributable to the dismissal or contractual changes. An employment tribunal may also declare that any “less favourable” variation of a contract of employment is void if brought about by the threat of dismissal where the consultation and disclosure obligations have been breached.

Where an employee is dismissed for refusing a contractual variation, “some other substantial reason” will no longer serve as a justifiable defence; and the two-year qualifying period for unfair dismissal protection will not apply. Dismissal in breach of a CAC order or a collective agreement will render a dismissal automatically unfair. The remedy of reinstatement or re-engagement is strengthened by the Bill in these circumstances.

The Bill will also relieve trade unions of the procedural burdens in relation to industrial action in response to an employer’s proposal to vary terms and conditions under threat of dismissal. The Bill provides that the Secretary of State must be notified of situations giving rise to the obligation to consult, and it will be an offence on the part of the undertaking and of any responsible director or manager not to do so.

By these means, so long as the employer does its reasonable best to consult and disclose, it has nothing to fear from litigation and can achieve variation of terms and conditions, if necessary by compulsion. I commend my noble friend Lord Woodley’s Bill to the House.

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

Lord Hendy Excerpts

Tuesday 19th December 2023 Lords Chamber

[Lord Offord of Garvel (Con)]

Well-run companies can operate only with the consent of their workforce. Well-run bosses run companies well with the consent of their workforce. Therefore, no well-run company wants to be a position where there are disputes with its workforce except in extremist situations. Bringing in agency workers is never a panacea, and is quite often more expensive. Well-run companies would not want to do that. It would be only in extreme situations where I could ever envisage this happening.

[Lord Hendy (Lab)]

My Lords, on 20 June 2016, the relevant committee of the International Labour Organization called on the Government to review the proposal to revoke Regulation 7 with the social partners—that is to say the unions and employers’ associations—bearing in mind that

“the use of striker replacements should be limited to industrial action in essential services”.

The Government’s response was to undertake to the ILO that they would conduct such a review. However, by 13 July this year—seven years later—in the judgment to which the noble Lord refers, the Government had not done so. Will they do so now?

[Lord Offord of Garvel (Con)]

To be very clear, the appeal was put forward on two bases: the first was on the lack of consultation and the second was on the merits of Article 11. The court did not find on the second, only on the first. Therefore, the consultation is being done between now and mid-January, with a view to collecting views from all registered parties so that a decision can be made in the future or not.

Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023

Lord Hendy Excerpts

Wednesday 13th December 2023 Grand Committee

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, on 12 May 2023, the Government launched a consultation on three areas that could benefit from reform and where we could remove unnecessary bureaucracy: record-keeping requirements under the Working Time Regulations; simplifying annual leave and holiday pay calculations in the Working Time Regulations; and consultation requirements under the Transfer of Undertakings (Protection of Employment) Regulations—the TUPE regulations. The consultation sought views on proposals for these areas of retained EU employment law to ensure that they are tailored to the needs of the UK economy.

I turn first to the record-keeping requirements. The Working Time Regulations are derived from the EU working time directive and create various entitlements for workers, including minimum rest breaks and maximum working hours, as well as an entitlement to paid annual leave. While the regulations provide important protections to workers, they can also place disproportionate burdens on business in relation to recording working hours and other administrative requirements. That is why we consulted on removing the effects of a 2019 judgment of the Court of Justice of the European Union, which held that employers must have an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured. Our proposed regulations make it clear that employers will not be required to keep burdensome and disproportionate records of daily working hours of each worker. Instead, employers will need to keep adequate records to demonstrate compliance with their working time obligations—I stress that point. This clarification could help to save businesses around £1 billion a year, without changing workers’ rights.

I assure noble Lords that people will continue to be able to enforce their rights under these regulations. Workers can take a case to an employment tribunal where they feel they have not been permitted to exercise their rights under the Working Time Regulations, including the rights to annual leave and to daily and weekly rest. The Health and Safety Executive, other state enforcement bodies and local authorities can also directly enforce maximum working hours and record-keeping requirements. It is important that employers comply with the Working Time Regulations and that they are held to account if they do not.

I turn to the Transfer of Undertakings (Protection of Employment) Regulations 2006. Before a TUPE transfer, the current employer and the new employer need to consult the affected workforce’s existing representatives or arrange elections for employees to elect a new representative if they are not already in place before the transfer. We want to simplify the process for businesses where worker representatives are not already in place. Currently, micro-businesses have the flexibility to consult directly with workers rather than hold elections. The SI would extend that flexibility to small businesses, with fewer than 50 employees, undertaking a transfer of any size and to businesses of all sizes involved in transfers of fewer than 10 employees if there are no existing employee representatives in place. That means that they will not be required to undertake the time-consuming process of arranging elections for new employee representatives.

This reform will simplify the TUPE process, while ensuring that workers’ rights continue to be protected. It does not erode the role of trade unions in the work- place. We are only proposing changing the consultation process in instances where businesses do not have employee representatives to consult. Where employee representatives, including trade unions, are in place, employers will still be required to consult them. I make it clear that the reforms will not change the requirement for businesses to consult employees on transfers; they will only change the requirement to elect employee representatives if they are not in place. Clear guidelines remain in place for employers regarding what they must consult employees on. Employers who fail to properly consult their employees about TUPE transfers could be taken to an employment tribunal.

The regulations also introduce reforms to holiday entitlement and pay. We have defined irregular-hours and part-year workers in these regulations to ensure that they are clear to employers and workers to whom some of the reforms apply. How a worker is classified will depend on the precise nature of their contractual working arrangements. We encourage employers to ensure that working patterns are clear in their workers’ contracts. We recognise that there are a vast number of different working patterns. The definitions seek to take all of these into account, so that the regulations are relevant for modern working practices. We will keep them under review.

I turn now to the holiday accrual method for irregular-hours and part-year workers. The regulations respond to the 2022 Harpur Trust v Brazel Supreme Court judgment. This resulted in part-year workers being entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year. To address this disparity, the regulations introduce a simplified method to calculate holiday entitlement for irregular-hours and part-year workers. This will be calculated as 12.07% of hours worked in a pay period, in the first year of employment and beyond. This accrual method was widely used before the Harpur Trust judgment and better reflects what workers actually work in a leave year. The introduction of this accrual method could save businesses up to £150 million over the long term.

The regulations also introduce a method to work out how much leave an irregular-hours or part-year worker has accrued when they take maternity leave, family-related leave or sick leave. Introducing a 52-week reference period will allow employers to look back and work out an average of hours worked across that period. Employers will need to include weeks not worked and not on maternity leave, family-related leave or sick leave so that leave is proportionate to the time actually worked. This will ensure that workers are not unfairly disadvantaged when on maternity leave, family-related leave or sick leave. For example, if an irregular-hours worker goes on maternity leave, her holiday entitlement is reflective of how much she worked in the 52 weeks prior to going on maternity leave.

We are also legislating to allow the introduction of rolled-up holiday pay for irregular-hours and part-year workers. Rolled-up holiday pay is where an employer includes an additional amount with every payslip to cover a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave. We consulted on introducing rolled-up holiday pay for all workers. However, taking into account stakeholder feedback, rolled-up holiday pay will be introduced as an additional method of calculating holiday pay for irregular-hours and part-year workers only. Employers do not have to use rolled-up holiday pay for these workers if it does not suit their business; they can continue to use the 52-week reference period to calculate holiday pay.

Employers that use rolled-up holiday pay will calculate it based on a worker’s total earnings in a pay period. This will avoid the complexity of applying the rolled-up holiday calculation to different rates of holiday pay. Despite the fact that it has been unlawful since the 2006 European Court of Justice case of Robinson-Steele v RD Retail Services, rolled-up holiday pay is already used in a lot of sectors due to the simplicity that it offers to calculate holiday pay for irregular-hours workers. Allowing holiday pay to be paid as an enhancement to a worker’s pay at the time that the worker performed work instead of when they are on holiday will ensure that the worker’s holiday pay is as closely aligned as possible to the pay that they would have received. Rolled-up holiday pay also ensures that a worker receives the holiday pay that they are due even if they work for that business for only a short period of time. For example, an irregular-hours worker who works for a company over a period of three months will receive holiday pay as part of each payslip.

We note the concerns that allowing rolled-up holiday pay may disincentivise workers from taking leave. Compared with full-time workers, people who work irregular hours and part-year contracts are already likely to have periods when they are not working and, as a result, these concerns are less applicable. We also consider that existing safeguards are proportionate in addressing these concerns. For example, employers are already required to provide an opportunity for workers to take leave and we have heard through our stakeholder engagement that this is taking place. We also have safe- guards in relation to the 48-hour working week, where a worker cannot work more than 48 hours a week on average, unless they choose to opt out.

I turn now to the issue of retaining two rates of holiday pay and distinct pots of leave. We consulted on a further reform: the introduction of a single annual leave entitlement with a single rate of pay. We will not introduce this as part of the package. These regulations maintain the two distinct pots of annual leave and the two existing rates of holiday pay, so that workers will continue to receive four weeks at the normal rate of pay and 1.6 weeks at the basic rate of pay, totalling 5.6 weeks. Following a review of case law in this area and engagement with stakeholders, we are legislating to restate the case law in respect of the four weeks of leave. This is to ensure that workers continue to receive pay for those weeks at their normal pay rate, rather than having the whole pot paid at the basic rate, which for some workers can be a reduced amount. The intention is for workers to continue to enjoy the same rates of holiday pay from 1 January as they do now. We would like to assess the take-up of rolled up holiday pay and then consider more fundamental reforms to the rate of holiday pay. This will allow employers to continue with their current payroll systems, while providing clarity on what elements form part of normal remuneration.

I turn to restatements and revocations. In addition to these reforms, the statutory instrument revokes the European Cooperative Society (Involvement of Employees) Regulations 2006 and the Working Time (Coronavirus) (Amendment) Regulations 2020. The main European co-operative society regulations were repealed in 2021 and the regulations on involvement of employees therefore no longer have any effect in practice. The Covid regulations referred to in the statutory instrument were introduced as temporary legislation intended to prevent workers from losing annual holiday entitlement if they were unable to take it due to the effects of Covid. Therefore, these regulations are clearly no longer needed.

The scope of the statutory instrument is limited to Great Britain, other than the revocation of the European Cooperative Society (Involvement of Employees) Regulations 2006, which extends to Northern Ireland. Employment law in Northern Ireland is a transferred matter.

In addition, the statutory instrument mitigates the risk that the removal of interpretive effects on employment law could lead to a reduction in workers’ rights by restating the following three principles: the right to carry over annual leave where an employee has been unable to take it due to being on maternity or other family-related leave or sick leave; the right to carry over annual leave where the employer has failed to inform the worker of their right to paid annual leave or enable them to take it; and the rate of pay for annual leave accrued under regulation 13 of the working time regulations.

Northern Ireland has its own employment legislation. Accordingly, any secondary legislation on this would be for the Northern Ireland Executive, or the Northern Ireland Civil Service in their absence, to decide, with support from the UK Government to legislate if needed.

Although interpretive effects will cease from the end of 2023, the Government’s position is that the UK will remain in compliance with our international obligations under Article 2 of the Windsor Framework. The REUL Act’s restatement powers are available until June 2026. Therefore, the UK Government and the Northern Ireland Civil Service will keep all decisions on restatements under continuous review in both Northern Ireland and Great Britain.

As mentioned, the Government’s approach to restatements seeks to mitigate the risk that the removal of interpretive effects on employment law could lead to a reduction in workers’ rights. We undertook an analysis of the employment law, including domestic and EU legislation and case law, to assess the full extent of the risk that certain principles would be lost. Our assessment concluded that the three principles we are restating carried a high level of risk of being lost because they are largely or wholly dependent on the special features of EU law that are removed by the 2023 Act with effect from 1 January 2024. Therefore, the instrument will restate the three principles before the end of 2023 to ensure these employment rights continue, notwithstanding the removal of the special features of EU law by the 2023 Act. We are confident that these changes comply with our international legal obligations, including those in the EU-UK Trade and Cooperation Agreement.

In conclusion, under this Government we have seen employment reach near record highs. The number of payroll employees for September 2023 was 30.2 million, 370,000 higher than this time last year and 1.2 million higher than before the pandemic. Through Brexit we regained the ability to regulate autonomously, and we are using these new freedoms to ensure that our regulations are tailored to the needs of the United Kingdom economy. In addition to providing cost and administrative savings for businesses, these reforms aim to provide clarity on complex holiday pay legislation so that it is simpler for employers to follow and comply. Approximately 5.1 million workers will be affected by the holiday pay reforms. By simplifying the legislation, workers will receive the holiday entitlement and holiday pay that they are entitled to, and the restatements of the three principles mentioned above will retain existing rights. I beg to move.

[Lord Hendy (Lab)]

My Lords, this draft statutory instrument is the tip of the iceberg which noble Lords on this side of the House warned would appear over the horizon during the debates on the Retained EU Law (Revocation and Reform) Act 2023. Workers’ rights are on a collision course with it. We said that the Act would be used to remove workers’ rights. We moved amendments to try to protect those rights, but they were all rejected by the Government. For example, the then Minister, the noble Baroness, Lady Neville-Rolfe, said:

“I should say straightaway, as my noble friend Lord Callanan already has, that this Government have no intention of abandoning our strong record on workers’ rights, and nor are the delegated powers intended to undermine the UK’s high standards on workers’ rights.


Our high standards were never dependent on our membership of the EU. Indeed, the UK provides for stronger protections for workers”.


She then gave some examples.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

As always, I thank noble Lords for their valuable input in this crucial statutory instrument debate. I also join in the thanks to the noble Viscount, Lord Stansgate, and welcome him to his position.

I will try to go through the various points raised, beginning with those of the noble Lord, Lord Hendy; by answering some of his questions, I will have a chance to answer others as well. The point about rolled-up holiday pay is important because, if you are an irregular-hours contractor and you work for an employer for a very short period of time, for example, it would be impractical for you to take a fraction of a day’s holiday paid in that way. It is much more reasonable, useful and suitable for the employee to have their holiday pay rolled up into the work they are doing.

This is important, and we consulted on whether we should bring it in for all employees in the UK. We decided that that was very much not the right thing to do, precisely for the reasons raised by the noble Lord: it is essential, in many respects—in order to have a good and functioning workforce—that holiday is taken at the right time and that people have the right level of rest, let alone in relation to the implications for health and safety. As a result, this only applies to part-year and irregular-hours workers. Whether the employees wish to receive their pay in that way is at the discretion of the employer, in consultation with them. From my point of view—I have been an employer—this strikes me as eminently reasonable. It does not necessarily change anything significant; it just clarifies the important point about how that can be rolled up. We also brought in important clarifications between part-year workers’ holiday entitlements and irregular hours workers’ holiday entitlements, which now bring them into line. Again, this is about fairness, which I know that the noble Lord is keen on.

On record-keeping, it is relevant to mention the court case that has been referred to: CCOO v Deutsche Bank—I will use the acronym “CCOO”, rather than try to pronounce the full name. It is important to note that we are not changing anything at all. I am not sure whether noble Lords realise that this was never implemented in the UK, so the point is that we will not implement it in the UK and it is currently not implemented. Tomorrow morning, or whenever the statutory instrument comes into effect, there will be no change in employment systems for any company—no one would see any difference—because we are not implementing this necessity to track every minute of every worker’s day. Instead, employers will have the rights that they have today, so if we are comfortable—which we are—with the obligations that employers have to confirm under the working time directive, we should be very comfortable with where we are.

We believe very firmly that bringing in this necessity would in many instances be unnecessary. This does not relate to making sure that irregular-hour workers, workers in part-time roles or those who work complex shifts, and so on, have worked the right amount of time. In most instances, this is for regular office-hours workers who work roughly nine to five; to have them clocking in and out, and having complex systems monitoring them, is entirely unnecessary. We do not do it now and do not see why we should do it. We think that the cost to industry in this country could be much as £1 billion in terms of new systems and familiarisation.

The noble Baroness, Lady Brinton, mentioned Ukraine. The consultation referred to the fact that in a cost of living crisis, and with other global headwinds and challenges, it would seem unnecessary and wrong to impose burdens on businesses that we are not already imposing on them. There is nothing to lose. It is important to be reassured that employers’ obligations have not been changed. There are no changes as a result of this instrument. It simply ensures that we do not have to conform to unnecessary and restrictive paperwork-oriented activities.

The noble Baroness, Lady Brinton, also raised an important point about the use of AI and technology. I completely agree with her raising those points. I do not think it is in doubt that employers will want to use AI to ensure that they are conforming to their obligations and that their workforces are properly managed, but we should not forget that it is important that we respect small businesses in this country, which may not have the time or capital to invest in such systems. In most of these instances, we think it is unnecessary. I believe that, collectively, we are doing a sensible act in not implementing this judgment, by keeping things as they are and ensuring that workers are protected. Employers have obligations and we are allowing the system to function appropriately.

The third point covered by noble Lords was on TUPE. I know that the noble Lord, Lord Hendy, has been described as the barrister champion of the trade union movement, and it is a title of which he should be proud, but this relates to organisations with fewer than 50 employees—currently, it relates to organisations with fewer than 10 employees—who do not have a representative force in place. While he is indeed the barrister champion of the trade union movement, it may surprise him to know that some companies do not have trade union movements or representative organisations in them. We find ourselves in a bizarre situation where small companies with few employees are obliged to have elections for representative organisations that do not exist. Even in the world of the noble Lord, that would seem bizarre, unnecessary and indeed unkind to small businesses. It does not at any point derogate the rights of employers when it comes to TUPE transfers where there are representative organisations.

The noble Lord, Lord Leong—perhaps it was the noble Baroness, Lady Brinton, or the noble Lord, Lord Davies—rightly raised whether this can be used as a way round, so that large companies transferring small units to other companies could do it piecemeal, say 10 employees at a time. I do not believe that that would be the case. The obligations of an employer under TUPE regulations—the liabilities accruing to them—have not changed in any material way whatever. Tribunals where they could be found at fault would clearly see through such a plan. I am sure noble Lords know that when you buy businesses that are relevant in terms of team transfers to other companies, it simply does not work in that way, so I do not believe there can be an abrogation of rights.

Let me give an example, which I am sure noble Lords will agree is common sense: if you are transferring a small unit of two people, I understand that you are currently obliged to have an election and a representative for two people who are not members of a union and do not have a representative organisation. That does not mean they cannot receive external advice; of course, we would always advise people to receive the advice they need. In this instance, we are clarifying the situation, simplifying it and making it completely reasonable. At no point are we rolling back on any of the workers’ rights that we hold so strongly in this country and which we are committed to, either through trade agreements with Europe or any agreements that we have undertaken.

Genuinely, I have looked very carefully at each aspect of this statutory instrument and think it is a welcome tidying-up of paperwork and bureaucracy, alleviating burdens on businesses while at the same time simplifying the rights of workers and ensuring that the economy can function effectively. I commend this instrument to the Committee.

[Lord Hendy (Lab)]

I wonder whether the Minister would care to say something about the trade and co-operation agreement. If he does not want to, that is for him.

[Lord Johnson of Lainston (Con)]

I am always delighted to talk about the trade and co-operation agreement, as it is one of my favoured specialist areas, but I am not sure what the noble Lord wants me to refer to. If he is relating this back to the relationship with the CCOO v Deutsche Bank SAE case, the important point is that we have not brought this into effect as it stands, in any event, so I am not sure what the relevance there is. I cannot really see how his comments on the need to protect workers’ rights in terms of derogation of input production capabilities in relation to our European colleagues are relevant here. These are paperwork changes; they do not negatively change the rights of any workers in the UK.

Code of Practice on Reasonable Steps to be taken by a Trade Union (Minimum Service Levels)

Lord Hendy Excerpts

Wednesday 6th December 2023 Lords Chamber

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, I rise to support the amendment standing in the name of my noble friend Lord Collins, and to join him in reminding the House that Labour will repeal this toxic legislation that would turn the clock back on mature industrial relations and workplace justice in this country.

First, I relay my thanks to the Minister, the noble Lord, Lord Offord, for taking the time to meet with me yesterday. Our discussion touched on the P&O Ferries scandal. I confirmed that, after those unlawful mass sackings, no one was prosecuted and there have been no government sanctions against either the firm or the owner. Compare and contrast that with the proposals that we have before us today. This House rightly raised the alarm about the risks of a skeleton Bill railroaded through without proper scrutiny or parliamentary accountability and without proper regard for our international obligations.

Sadly, this legislation was never about good policy-making; rather, it is about an unpopular Government trying to shift the blame for their own failings on to decent public servants and punishing trade unions which exist to defend them. Ministers say they are standing up for public service users, but those claims ring hollow. During the recent wave of strike action, polls showed public sympathy with the strikers and exasperation with Ministers’ high-handed, slow and chaotic approach to resolving these disputes. Now, the OBR is forecasting an unprecedented two-decade squeeze on real pay by 2028, and the Autumn Statement heralds another round of deep austerity cuts for many public services. That is why the Government are railroading through this bad legislation. They have no intention of addressing the causes of discontent; the objective is to crush it.

The code of practice is just the latest manifestation of contempt for the rights and freedoms of ordinary working people. The code sets out so-called “reasonable steps” that unions must take to comply. However, there is nothing reasonable about the code’s ridiculous requirements and deadlines for identification, state interference in what an independent union must communicate with its own members, new demands on picket supervisors when the strikes Act did not even mention picketing or imposing draconian sanctions on staff and unions. Rather, the code enables employers, no doubt under pressure from Ministers, to disregard democratic strike ballot, drag unions into court, attack union funds, strip away automatic protection against unfair dismissal and ban strikes by the back door.

On the day that the former Prime Minister, Boris Johnson, professes gratitude to healthcare workers and other public servants for protecting people through the pandemic, this is their reward. In drawing up this code, Ministers ignored the advice of Select Committees of this House, trade unions who opposed the strikes Act, employers who never wanted it, the RPC, which red-rated it, the UN’s labour arm—the ILO—and even the UK’s widely respected industrial relations body, ACAS.

I have two questions for the Minister. First, the Government fund ACAS with taxpayers’ hard-earned cash to promote good industrial relations and provide real-world expertise. However, ACAS’s long list of sensible proposals for substantive amendments to this code were rejected. Can the Minister tell us why? In what area of good industrial relations practice have this Government proved to be more expert than ACAS?

Secondly, the code spells out that an individual worker who disobeys a work notice will lose automatic protection against unfair dismissal and, if unions are deemed to have failed to have taken the so-called reasonable steps, all striking workers lose that automatic protection. However, the code says absolutely nothing about what positive rights NHS staff, rail staff and other dedicated key workers would then have in those circumstances. This is quite an oversight. If, as a result of the legislation, workers individually or en masse are sacked, precisely what would their rights be and why does the code fail to set this out?

[Lord Hendy (Lab)]

My Lords, I declare my interests as in the register and that I am a member of the Delegated Powers and Regulatory Reform Committee.

Of the many points that I would like to make, I will restrict myself to four. First, having spent 46 years of professional practice largely involved in the legal consequences of industrial relations disputes, I find it offensive that the Act and the code of practice compel trade unions to serve the interests of employers in undermining their right, guaranteed by all relevant international law and hence diminishing the only bargaining power our 34 million workforce have, to enhance the terms and conditions on which they sell their labour.

Secondly, in November 2021 the Delegated Powers and Regulatory Reform Committee published Democracy Denied? and the Secondary Legislation Scrutiny Committee published Government by Diktat. Your Lordships will recall the two principles underlying those reports. First, primary legislation should conform to the principles of parliamentary sovereignty, the rule of law and the accountability of the Executive to Parliament. Secondly, the threshold between primary and delegated legislation should be founded on the principle that the principal aspects of policy should be in the Bill and only detailed implementation should be left to secondary legislation. These principles were debated in this House on 6 January 2022 and 12 January 2023. The House clearly and strongly endorsed them. I understood that the then Leader of the House did not dissent from them. Yet this legislation failed both principles.

In its consideration of the Bill, the Delegated Powers Committee, in its 27th report, criticised the Bill’s granting of a Henry VIII power to the Secretary of State to set minimum service levels by regulations. We said:

“This is a Bill that deals with minimum service levels during strikes. Yet there is nothing in the Bill saying what those minimum service levels are. We shall only know when Ministers make regulations after the Bill is enacted. This is small comfort to Parliament, which is considering the matter right now”.