Draft Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015

Anna Soubry Excerpts

Wednesday 18th November 2015 General Committees

That the Committee has considered the draft Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015.—(Stephen Barclay.)

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

It is a great pleasure to serve under your chairmanship, Mr Evans. It is particularly pleasant to say that because I have not said it before, and it is a great honour and a pleasure. I am sorry I am not my hon. Friend the Minister for Skills, who is unfortunately delayed on other business in the House.

Government and independent evidence have shown that zero-hours contracts have a place in today’s labour market. However, there is also evidence that the use of exclusivity clauses in zero-hours contracts is wrong. That is why the Government have banned them in such contracts. Provisions introduced by the Small Business, Enterprise and Employment Act 2015 ensure that employers of people on zero-hours contracts cannot demand that their staff are exclusive only to them. It is right that no one should be prevented from boosting their income if they want to. The ban is simple. It means individuals can simply ignore exclusivity terms in their zero-hours contracts if their employer includes them. They do not even have to say anything to their employer. I am delighted that the inclusivity ban came into force on 26 May this year, and we are here today to discuss the next stage.

The purpose of the redress regulations is to allow individuals on a zero-hours contract whose employer still attempts to enforce an exclusivity clause to take action. They achieve that by creating a route of redress, allowing individuals to take their employer to an employment tribunal if they are dismissed or treated unfairly as a result of ignoring a ban and seeking work elsewhere. The redress regulations have been drafted as a result of a Government consultation last summer, in which 71% of respondents supported redress via an employment tribunal. The consensus view of those who responded to the consultation was that the regulations will provide an appropriate level of reassurance to affected individuals and will provide them with the confidence to take action against an employer if they are treated unfairly.

[Kevin Brennan (Cardiff West) (Lab)]

How practical is it for most people on zero-hours contracts, given their likely level of pay and personal circumstances, to be able to afford to use the redress that the Minister proposes?

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[Anna Soubry]

The reality is that complainants at a tribunal who are in receipt of universal credit, have less than £3,000 in savings and have gross annual earnings of less than £6,000 will automatically qualify for the full remission of fees. As with any other complaints admitted to an employment tribunal, anyone who feels that they cannot afford to pay the costs associated with making the complaint can apply for a fee remission and have the fees waived or reduced. An individual can apply for remission at the fee-paying stage so that they are not out of pocket. That seems very fair and I hope that it allays some of those fears.

[Christian Matheson (City of Chester) (Lab)]

Does the Minister share my concern that employers might be more cavalier in enforcing the exclusivity clauses if they know that it is not guaranteed that claimants will be able to achieve the discounts that she describes? As costs are still associated with the tribunal, and if the decision has to be taken at the time of the cost hearings, employers might still be keen to push forward with exclusivity.

[Anna Soubry]

The legislation stipulates that exclusivity clauses cannot be enforced. It applies when an employer goes over or above the existing powers available. If it is known there is a problem with fees, there is an automatic full remission of fees, so I am satisfied that this is the right and fair thing to do. People on such contracts should feel that they have the security that we would expect, so the measures are good.

Importantly—this may relate to the two questions that have been asked—the ability to go to a tribunal will create a deterrent for employers, making them think twice about ignoring the exclusivity ban. In the consultation, it was a strongly held view that employers should face consequences if they treat their zero-hours contract workers unfairly as a result of the ban. We will be laying an order that will ensure that those on zero-hours contracts will be subject to the early conciliation regime, which is important. If early conciliation does not resolve the issue, these regulations will allow the individual to bring their case to an employment tribunal in the same way as with any other issue. If successful, the tribunal will be able to set a level of compensation that reflects the detriment caused. With all those things borne in mind, there will be a real deterrent to employers abusing the system and thwarting the will of Parliament.

In conclusion, both Government and independent evidence have shown that zero-hours contracts have a place in today’s labour market. They support workplace flexibility, make it easier to hire new staff and provide pathways to employment for young people. Many young people like zero-hours contracts, particularly students, and I think we sometimes forget that. Zero-hours contracts allow businesses to adapt to changes in their circumstances. They can support business flexibility and make it easier to hire new staff, as well as provide pathways to employment for young people, retired people or those with caring responsibilities, who often welcome that flexibility. In fact, many people choose to work in this way. These contracts and other flexible arrangements give individuals more choice and the ability to combine work and other commitments.

Evidence has highlighted that the use of exclusivity clauses in zero-hours contracts is wrong, and that is why Government have banned them, and properly so. The regulations strengthen the ban on exclusivity clauses in the 2015 Act, adding another layer of protection for individuals and ensuring that employers cannot simply ignore the law. By creating a route of redress, individuals will have the right to make a complaint to an employment tribunal if they are dismissed or treated unfairly as a result of their employer attempting to demand exclusivity. The Government believe that the regulations are essential in strengthening the ban on exclusivity clauses, so I recommend the regulations to the Committee.

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[Anna Soubry]

I think the spirit of last night’s football game has led to this outbreak of friendliness and camaraderie. A new entente cordiale is breaking out between the Government and the Opposition. This is all good stuff.

I could make a partisan point about how zero-hours contracts have been around for donkey’s years and how it took the coalition Government only three years to deal with them. Unfortunately, in 13 years, the last Labour Government did diddly squat to address the problem. We did the right thing, especially on exclusivity, and the regulations are delivering on the ban. There is no better way of dealing with things than when an employer knows that if they do not do the right thing, and if they continue to do the wrong thing, the full power and threat of an employment tribunal, with compensation, could come crashing down on them. That is a good example of deterrence being the final solution to this problem. That has been underestimated.

I will not get into the debate about whether the number of people going to employment tribunals has fallen because of the rise in fees. There is a very good argument—it is not always true, but it is valid—that sometimes the threat of high costs, as in most civil actions, is a good way of concentrating all minds to reach a sensible settlement, rather than charging off into something that might cost not only a lot of money but a lot of emotion, too.

Anything that brings people together to resolve a dispute is a good thing, and I suspect, in the absence of any evidence, that one of the reasons why fewer people are going to employment tribunals is that they are looking first at how to resolve their dispute. It is undoubtedly the case that some people are not taking forward claims that would otherwise have had no substance to them. Let us wait and see what the evidence tells us.

I have a couple of other points. The number of people working part-time because they cannot find full-time work has actually fallen to its lowest level in four years—just over 80,000 according to recent statistics. A number of other points were raised. Can I be subject to the usual rules, please, Mr Evans? If a Member has raised something that I have not responded to, I will, of course, write to them.

I should say that because someone is on a zero-hours contract, that does not mean that their rights as an employee are any less than anybody else’s. It is just the term of their contract that is different—they have a zero-hours as opposed to a 20-hour or 40-hour contract or whatever it may be. Their rights as an employee are exactly the same and therefore they are entitled, like all employees on a contract, to see the terms and conditions of the contract. I think there is a bit of a misunderstanding there.

[Kevin Brennan]

Of course, the rights are not the same because those people are not entitled to any hours of work.

[Anna Soubry]

That was not the point that was made. The point was that people should be able to get a copy of their contract, and so on. People on zero-hours contracts have all that because their rights as an employee are exactly the same; it is just the terms and conditions of their employment.

There is one point that I should put on the record. The reason why we have not done the two weeks is that that is only available to agency workers in certain circumstances who find their way into an employment tribunal. The employment tribunal has a discretion to go below the minimum of two weeks. Indeed, if anybody uses this route into a tribunal, the tribunal has discretion to apply whatever compensation it sees fit. I would urge against some sort of two-week idea for compensation. I think that is a bad idea—let us let the tribunal have discretion to apply whatever compensation it sees fit in all the circumstances of the case. That is a good idea, I suggest.

I thank hon. Members for their valuable contributions to this debate and their comments during it. The regulations will allow those who are treated unfairly by their employer with regard to the ban on exclusivity clauses to seek redress and be awarded compensation if appropriate. I think that we are agreed on that. If there are points I have not answered, I will do so by way of letter, but I urge everybody to vote for these regulations because they are a real step forward.

[Kevin Brennan]

As I hinted earlier, I will not ask my hon. Friends to vote against the regulations because they represent a welcome small step forward. I disagree with what the Minister said about employees—which is a very technical, legal term in this instance—having exactly the same rights as others if they are on a zero-hours contract, but now is not the time to debate that further. I also register a point of disagreement about the two weeks’ pay and the agency workers regulations. I think a minimum level of compensation would be a genuinely positive addition to these regulations.

[Anna Soubry]

indicated dissent.