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

Lord Woodley Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

Moved by

[Lord Woodley]

That the Bill be now read a second time.

[Lord Woodley (Lab)]

My Lords, I am grateful for the opportunity to propose for your Lordships’ consideration what I believe are urgently needed changes in the law to protect UK workers from gross exploitation. I am referring to the shameful practice of dismissal and re-engagement, otherwise known as fire and rehire, where workers are threatened with the sack unless they agree to cuts to their pay, terms and conditions.

Exploitative employers have abused a legal loophole for many years by threatening to sack staff while protecting themselves against unfair dismissal claims, with so-called substantial reasons for the firing. This immoral practice took off in the pandemic, when major firms, such as British Airways, British Gas and many more took advantage of the crisis to boost profits off the backs of their own workers.

Fire and rehire continues post pandemic. At PHINIA in Gillingham, workers began industrial action in January over plans to remove paid lunch breaks, and the firm has now threatened to fire and rehire everyone to force through this pay cut. This does not affect just the private sector; Wiltshire Council is trying to fire and rehire care staff, social workers, traffic wardens and others to remove unsocial-hours payments. Border Force staff at Heathrow Airport are fighting against proposed pay cuts of up to 20% due to changing their shift patterns and allowances.

We ask ourselves how on earth this can be allowed to happen. Firms currently have free rein to cut workers’ pay, terms and conditions, as long as they tick a few boxes, such as claiming financial difficulties and holding a superficial consultation. There is no need to prove that the proposed cuts are necessary to save the business from collapse or for redundancy payments if staff do not agree to new contracts. They just lose their jobs. It is scandalous. There is also no need for company directors and executives to cut their pay and pension pots; that is just for the little people.

The Government accept that fire and rehire is a problem, but say that legislation is not needed because they have a new code of practice. While I welcome the Government’s efforts, the code as written is completely toothless. There is no requirement for employers to open the books to prove that the pay cuts or other changes are absolutely necessary to stop a firm going bust.

The code creates no new legal obligations on employers at all. In fact, paragraph 12 is clear that breaching it does not make a company liable to any proceedings. The worst that can happen is that they might—I emphasise “might”—have to pay an extra 25% on any compensation awarded by an employment tribunal, no matter how small. With respect, this is woefully inadequate punishment for such abusive behaviour.

Of course, we all know that employment tribunals are notoriously hard for workers to win. As I have said many times, what is needed to end these fire and rehire abuses is legislation. I offer my Employment and Trade Union Rights (Dismissal and Re-engagement) Bill to your Lordships for consideration.

I am grateful to my noble friend Lord Hendy for drafting the Bill alongside Professor Keith Ewing. I am grateful to Barry Gardiner for bringing the Bill to the other place and raising public awareness. I am very grateful to the TUC and its numerous member unions who support the Bill, and particularly to my union, Unite. I am very grateful to my party, the Labour Party, for backing the Bill enthusiastically, and for committing to end fire and rehire abuses within the first 100 days of government.

Before I explain what the Bill does, let me explain and make clear what it does not do. It does not ban fire and rehire completely and utterly in all circumstances. That is an important point, which I ask the Minister to take note of. I accept that, when a company is in financial crisis, this might sometimes be necessary, as a last resort, when the alternatives really are seeing the business going down. I think we can all agree that this would be a regrettable but acceptable use of fire and rehire. I am sure the Minister agrees, because this is exactly the scenario the Government always use when they say we must not ban fire and rehire—extreme circumstances, where the alternative is bankruptcy. Likewise, I am sure the Minister will also agree that fire and rehire should never be used simply as a tactic—a “bully-boy tactic”, in the words of a Minister in the other place.

That is exactly what my Bill seeks to address. Quite simply, it puts on a statutory footing the procedure that decent employers—and there are many of them—already follow. Central to this is the requirement for employers to show workers and the trade unions that such an extreme step really is a last resort; to show that, without this drastic action, everyone would lose their jobs because the business would go under. As my Bill puts it, they must show that

“there is a real threat to continued employment”

because of

“the economic situation affecting the employer”.

This is exactly what the new code of practice does not do—not at all. Respondents to last year’s consultation suggested that

“the Code should use a tighter definition of when dismissal could be used, for example when the employer has shown that it is required to ensure the survival of its business”.

Disappointingly, the Government do not agree with this tighter definition, so it is not part of the code.

My Bill would compel bosses to hand over any information

“without which the appropriate representatives would be … impeded in carrying on consultation with the employer”.

Unions could also involve the Central Arbitration Committee if bosses drag their feet or refuse to engage in meaningful consultation. This would be far more effective than the Government’s meek suggestion to employers, at paragraph 26 of the code, that they,

“should share as much information … as is reasonably possible”.

Remarkably, the code then suggests that bosses can avoid sharing even the basics by claiming imminent bankruptcy—how convenient. Paragraph 32 says that,

“if a business is suffering a financial crisis … the employer may not be able to provide as much information as a business in more settled times”.

Then, in paragraph 35, the code gives a get-out clause for any information that bosses believe to be “commercially sensitive or confidential”. How convenient, yet again. My Bill would allow information to be withheld only if sharing it would

“seriously harm the functioning of, or … be prejudicial to”

the operation of the business. I suggest that this is a fairer way of operating.

My Bill would also provide enhanced protection to any workers who refuse changes and find themselves fired as a result. Above all, it would help level, at least to some degree, the unequal playing field between bosses and workers. Right now, bad bosses are using fire and rehire as a tactic to boost their profits at the expense of workers. For these bosses, it is not about saving their business from bankruptcy; it is about using the current cost of living catastrophe as cover, basically to blackmail workers into worsening wages. It is simply not right to treat a loyal workforce—many with long service—in this way. That is why I am asking for support to take the Bill into Committee, where it can rightfully be fully scrutinised and, I am sure, vastly improved by the many fine minds we are fortunate enough to have in this place.

In finishing, I ask the Minister the following questions. Does he accept that my Bill does not ban fire and rehire in all circumstances but simply stops it being used as an abusive tactic by bad bosses to boost profits? Does he appreciate that fire and rehire could still be used as a last resort when a company is genuinely facing financial ruin, and that this line of argument should not be used as a reason to oppose my Bill? Does he believe that the code would have stopped British Airways, British Gas or, to take a live dispute, the Border Force at Heathrow Airport, where the Home Office is firing and rehiring loyal staff over rosters and allowances? Does he appreciate that the 25% uplift—the one and only sanction contained in the code—applies only if a worker wins at an industrial tribunal, which is difficult at the best of times? Does he understand that this lack of any serious consequences is why the code is widely seen as toothless? Will he explain why the Government did not agree with the consultation respondents who said that dismissal should be used only when needed to ensure the survival of a business? Does he agree with respondents who warned that the code was “too weak” and would actually “legitimise” fire and rehire? I thank noble Lords for their patience and consideration. I beg to move.

--- Later in debate ---

[Lord Woodley (Lab)]

I thank the Minister and your Lordships. I think we can all agree that this has been a stimulating and valuable debate. I do not know about anyone else, but I have certainly learned some lessons from today’s speakers and I thank them for their excellent contributions.

I thank my noble friend Lord Balfe; it was nice to have cross-party support, especially as nobody here has spoken against my Bill. Also, on this important issue, it is nice to listen to your own trade union roots. One interesting comment—which I thought about mentioning but did not—is that, in a recent analysis, in which around 1,800 participants were surveyed, 3% indicated that they had used fire and rehire. Across the business population of Britain, as was said that this could equate to 40,000 employers; it is actually 48,500 employers. So this is not a small issue. If you look at the scope and size of the problem surrounding us at the moment, you see that it is almost a pandemic.

As always, I found my noble friend Lady O’Grady’s contribution stimulating. She is correct to suggest, again, that the Government did not give very strong commitments to stop these abuses happening in the past and, to make sure they do, they need to put legislation in place to stop the casualisation of our industry, which blights working people. There is no doubt in my mind that assuring the importance of workers’ rights from day one would go some way to helping prevent the abuse that is out there.

I thank my noble friend Lord Hendy for his forensic analysis of the Bill and for explaining the legal logic behind it. It is always interesting to listen to an expert and it is good to know that people know what they are talking about. We all owe him a great debt of gratitude for drafting this elegant and powerful piece of legislation. He points out that the millions of predominantly low-paid, black and ethnic minority workers who will be, and are indeed being, attacked by fire and rehire are not protected at all under the current proposals, which is why we need legislation. I thank him for those comments.

I thank my noble friend Lord Prentis for confirming what I have said: this is not just about the private sector but is endemic right across the public sector. The examples that he gave were clear for everybody to see.

I thank my noble friend Professor Lord Sikka for highlighting the important economic advantages to the Bill that are so desperately needed to rebuild our broken economy and to give people security in their jobs and as workers. All that is really important and is contained within the Bill. If anyone disagrees with me that at the moment our country certainly needs that security—there is no doubt at all about that.

On my noble friend Lord Browne’s comments, I did not appreciate until he mentioned this earlier today that the Government were indeed thinking of bringing back employment tribunal fees. When you realise what that could mean in relation to the proposals that the Government have down there, never mind the outrageous time it takes to even get an industrial tribunal heard, that is detrimental to the well-being of workers right across our country.

To my noble friend Lord Davies, I say that there is no doubt that a new deal would be incredibly important for us. He mentioned that the limitations within the code of conduct are clearly there for everybody to see, and he highlighted, as indeed did numerous speakers today, the limitations of what is presently on the table. That is why it needs changing.

I am grateful to my noble friend Lord Leong and, as I said in my speech, I am grateful for the support that my own party has shown for the need for change and for the Bill. It is really important that we bring in the legislation that is needed, and I sincerely hope that if we cannot get this Government to move at the moment, my own party in power will indeed honour its commitments.

The Minister mentioned P&O and said that, to some extent, it was not a case of fire and rehire. I accept those comments, but at the same time, with respect, it got away with it, and did so when the Government promised that it would not. It is as simple as that. The Minister said that what is actually happening out there may not be as significant as speakers point out. I say to the Minister that, with respect, he is absolutely wrong on that—hence the comments that the noble Lord, Lord Balfe, made in his contribution.

I thank the Minister for his response, but I am bitterly disappointed that, although the Government accept that there is a problem with fire and rehire, they are not prepared to give real support to struggling workers who are facing the prospect of being forced out of their jobs and seeing their wages and conditions slashed. It is simply unacceptable that workers can be fired and rehired without proper consultation and fair compensation, and, despite the Minister’s assurances, the code of practice is simply no substitute for legislation, as all speakers today have expressed to him very clearly. As I said, nobody here today has opposed the Bill.

I am also disappointed that the Minister has not answered satisfactorily the straightforward questions that I posed to him, and I respectfully request that he write to me on those particular issues.

I will just say this to the Minister. We have nothing to fear from the Bill and, if I am honest, I have yet to hear any coherent argument against it. If the Government have serious objections, I urge them and the Minister to engage with the Bill in Committee. I thank all noble Lords again for their contributions and for being part of this debate today and I beg to move.

Bill read a second time and committed to a Committee of the Whole House.