Small Business, Enterprise and Employment Bill

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Monday 26th January 2015 Grand Committee

[Baroness Neville-Rolfe]

I thank the noble Lord for that further clarification. There is a lot of common ground here. We need to address certain issues and, clearly, we are all keen to stamp out exploitation.

[Baroness Donaghy]

My Lords, I am very grateful to noble Lords who have taken part in the debate. I thank the noble Lord, Lord Storey, for his comments. Of course, there is no intention to interfere with the perfectly well known volunteer system or with anything to do with sandwich courses in universities. I think we all know what we mean when we talk about these cases, but we are not very strong on analysis, and we need to pin that down.

My noble friends have certainly pointed to the exploitation issue—that somebody can be very willing because of the future opportunities that an internship can give them. Because their family can support them they might grit their teeth and say, “Well, let’s put up with this for a few months, because it will open doors that otherwise will never be opened”. It is still exploitation. The vast majority of people that I am talking about do not even get through the front door; they do not even get through the door to enable themselves to become disgruntled, so that they can go for enforcement or to various websites to ask about it. They are outside this semi-privileged circle. That is the issue that I want to pinpoint.

[Baroness Neville-Rolfe]

It certainly has not been my experience—and I used to work outside London—that all internships are a gilded circle. Internships and work experience are quite broadly based in the cities of Britain, which is a very good thing. I am keen that that should continue in big firms and small firms, in the public sector and in the voluntary sector. We have to be careful that we do not take steps which, with the best will in the world, have a perverse effect, so it is right that we should debate these issues. Like the noble Baroness, I have a lot of passion to make these things work and to encourage more opportunities for more people.

[Baroness Donaghy]

I thank the Minister for that comment. I think that we are not too far apart on the need to identify and be more objective about what we are talking about. I am referring all the time in this amendment to unpaid internships. As I have said, I think that there is an element of exploitation. Perhaps any report or further discussion that we might have could look at some time limits that are acceptable. I am grateful for the Minister’s comprehensive reply. I will look at that in more detail but at this stage beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Donaghy]

I want to say a brief word about this because I must admit that I have a personal dislike of the phrase “zero-hours contracts”. Casual labour has existed for a very long time. It has had different names and different fashions have been followed. I think we are all aiming to ensure that while we do not completely get rid of a flexible labour market, basic employment rights are available to those who have spent any significant length of time in a particular job. We know what we are talking about here, do we not? There is the story of the burger operative—or whatever they are called—who was told that he was not working when not serving a customer. His pay was therefore suspended so that he was receiving pay only when he was serving customers. The argument then was, “Of course, the franchisee went beyond his remit”. That is a marvellous excuse made by some national brands; they can blame a local manager for doing something when the tone has probably been set at national level.

This could be extended to all sorts of other areas by saying, “You are not actually working”. I know that the noble Lord, Lord Stoneham of Droxford, used to work for the National Union of Railwaymen. I wonder if the same would apply to a train driver who is not driving his train while stopped at a signal, and therefore should perhaps not be paid until such time as the signal is green. That was how ridiculous some of these practices were on the ground. To go back to the reality of the casual world of work, as we know it in this country, those practices are not really funny. They are quite serious examples of exploitation so I make no apology for supporting my noble friend Lord Young on these amendments, if only to try to get to a situation where we are paring back all these gimmicky phrases and looking at people’s basic employment rights.

[Baroness Neville-Rolfe]

I thank the noble Lord, Lord Young, for these amendments and for the debate we have had on this part of the Bill, which went slightly wider than the amendments. I ought to say that Labour did nothing about zero-hours contracts for 13 years. The number of them went up by 75% between 2004 and 2009. What we have done is to carry out a review into these contracts, so that we can deal with any abuse. As a result, we are banning the type of contracts which mean that employees are not allowed to work for any other employer, while still allowing people such as students to benefit from the flexibility that they offer.

We introduced Clause 148 to deal with this mischief and I am glad to hear the noble Lord’s support for it and my noble friend Lord Stoneham’s perceptive analysis. The noble Baroness, Lady Donaghy, rightly tried to improve our English and not talk about zero-hours contracts. It may be that like one of the terms we were struggling with earlier, the term is an Americanism. Wikipedia does not give its origin but I will hunt it down.

At present, an individual subject to exclusivity terms in their zero-hours contract cannot seek work elsewhere, regardless of whether the employer offers only occasional, minimal, or even no hours of work. Exclusivity terms are unfair for the individual who, as a result, is prevented from boosting their income or building on their work experience. Frankly, it is also damaging to the economy because it prevents people from reaching their full employment potential.

As my noble friend Lady Harding made clear at Second Reading, from her own experience of running a supermarket in Yeovil, zero-hours contracts are an important element of a flexible, vibrant labour market, and they work for employers and individuals alike. I even heard the shadow Business Secretary agreeing that sometimes people quite like to use them. However, I think that we also agree that people working under such a contract must get a fair deal.

The ban on exclusivity terms in zero-hours contracts, as set out in the clause, is straightforward. From the moment the clause commences, individuals can simply ignore an exclusivity clause and work for another employer as well if they wish. There is no process, no admin and no need to discuss this with the employer—I am not sure that people understand this—and any attempt by the employer to stop a second or third arrangement would be unenforceable. This is a major change and a reduction in employer flexibility, but one that we believe is right.

Amendment 68ZU seeks to provide a route of redress for zero-hours workers who need to enforce their rights, allowing for regulations to set out the details. The clause already provides for an order-making power that will allow for this.

Amendment 68ZW seeks to make the use of that order-making power mandatory. However, given the fact that routes of redress will be delivered through the order-making power, I am sure that the Committee will agree that in this case the amendment is unnecessary. The Government will have to bring forward regulations; otherwise, the ban on exclusivity terms in zero-hours contracts will have no meaning. For this reason, I do not believe that we need to make this amendment. The regulations that will be possible under the order-making power will also be able to address the issue of redress that is covered in detail in Amendment 68ZAB; that is, that an employment tribunal will have the power to consider claims related to the exclusivity ban, including providing remedies to the individual and issuing penalties to the employer. The Government recently consulted on using the order-making power. We are currently finalising the details with a view to publishing the government response shortly on how we plan to tackle avoidance.

Amendment 68ZZ suggests that the definition of an exclusivity term is too narrow. However, the Government have looked at this and consider the description in new Section 27A(3) of the Employment Rights Act 1996, which will be inserted by Clause 148, to be sufficiently broad. It covers any provision in a zero-hours contract that prohibits working for others, as well as terms that require an individual to seek permission from their employer to do so.

I believe that our approach will deal sensibly and effectively with both avoidance of the ban and routes of redress for individuals on a zero-hours contract who suffer a detriment. I hope that on this basis the noble Lord will agree to withdraw the amendment.