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

Barry Gardiner Excerpts

Friday 22nd October 2021 Commons Chamber

[Laura Farris]

I hope that what I am going to say will answer the hon. Gentleman’s criticism.

There is another point that I cannot ignore. I invite every Member to turn to proposed section 187F, which deals with the proposed “Award of compensation” to be made by any employer who fails to comply with the proposed new consultation requirements. It states:

“ The amount of compensation awarded shall, subject to the following provisions, be such as the employment tribunal considers just and equitable in all the circumstances”.

That is exactly the same compensation measure that is used in whistleblowing and in discrimination law. It opens the door to uncapped compensation in the area of unfair dismissal, which has a cap, It therefore drives a coach and horses through the entire principle of compensation in unfair dismissal hearings. It would make fire and rehire the only form of unfair dismissal in which the employee could receive an uncapped compensatory award. If the employee had been dismissed for gross misconduct or for being bad at his or her job, the award would have been capped at 80 grand. That cannot be right.

What will all this do to the employer who is thinking about renegotiating terms of employment? The employer will be too nervous to do it, and will lay people off. Let us take the employer in the case of Garside & Laycock v. Booth 2011, who had proposed a 5% reduction in wages which every single balloted member of staff except one had accepted. Employers would not do that; they would lay off the whole workforce. Is it better or worse for people to take a less attractive variation in their terms of employment or to lose their jobs altogether?

[Barry Gardiner]

I am grateful to the hon. Lady for engaging so closely with the Bill. I think she knows she is over-egging it, because any tribunal would look at the situation in the round. The Bill is drafted as it is because it chimes with the legislation on redundancy. Again, to be technically proficient, the Bill has to merge with the other Acts.

[Laura Farris]

I am afraid the hon. Gentleman is incorrect. This concern was raised by my head of chambers and it is shared across the employment Bar. We cannot have a just and equitable jurisdiction in the law of unfair dismissal as it does not work.

The hon. Member for Feltham and Heston (Seema Malhotra) raised a point about the aviation sector. The conduct of British Airways was poor, but there is an important issue at stake. If in primary legislation the risks of fire and rehire are so great that employers are more inclined to lay people off, think what that would mean for airline pilots, for example. Airline pilots must fly within a two-year period to retain their flying licence. If they are sacked by British Airways at a time when the entire travel sector is struggling badly, they would be very unlikely to get a job and it could easily be two years. It is not just the loss of a job; it is the loss of an entire career. We need to tread very carefully when we consider primary legislation in the area of fire and rehire.

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[Christine Jardine (Edinburgh West) (LD)]

The hon. Lady is making some excellent points and, like the hon. Member for Swansea West (Geraint Davies), I feel they might be better made in Committee. Does the hon. Lady agree that part of the motivation for the Bill is not to do away with the practice completely? It says that fire and rehire or change of contracts in exceptional circumstances can be done with negotiation, consultations and so on. The motivation was that several major companies appeared to be using the current crisis as something to hide behind and institute unfair fire and rehire practices at a time of already mounting stress and emotional trauma for a lot of people.

[Barry Gardiner]

rose—

[Madam Deputy Speaker (Dame Rosie Winterton)]

The hon. Lady needs to answer the first intervention before taking another.

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[Laura Farris]

Thank you, Madam Deputy Speaker. I will take those first two points in succession. The first was about whether these issues are not better raised in Committee. The answer, respectfully, is no, because I do not think an area as technically difficult as this belongs in primary legislation, and I have explained why the Bill is at odds with the Trade Union and Labour Relations (Consolidation) Act 1992, the intentions of Parliament when that Act was passed and the existing web of laws at section 98 of the Employment Rights Act 1996 dealing with unfair dismissal. The issues covered in the Bill belong in a code of practice backed up with financial penalties, rather than in primary legislation.

To take the point made by the hon. Member for Edinburgh West (Christine Jardine), I of course accept the stress that people were subjected to, and all the work that Members on the Government side of the House are doing is directed at minimising that, but the solution we are considering and discussing must not give employers leeway to abuse employment rights. We have been thinking about that just as much.

It is precisely because I do not think employees should have a gun to their head at the start of consultations that I cannot support clause 1 of the Bill, which requires employers to lay all their cards on the table on the issue of fire and rehire from the start. Rather than demanding full disclosure from day one, we should be much more sensitive to the legitimate desires of businesses to remedy defects before they have to reveal they are on the verge of failure, given what that might mean for their business at a stage before they would wish to disclose it.

[Barry Gardiner]

I agree that it really important to take the heat out of the situation at the very beginning. The hon. Lady is absolutely right—I mentioned it myself—about the importance of not having section 188 on the table immediately. That is why, starting at line 20, the Bill says:

“The employer shall consult with a view to reaching an agreement to avoid decisions being taken to terminate contracts of employment, or to introduce changes in work organisation or in contractual relations.”

The precise point that the hon. Lady has made is there on the face of the Bill.

[Laura Farris]

The hon. Gentleman knows that proposed new section 187B(2) says:

“The information to be disclosed is all information relating to the employer's undertaking”.

It would be almost impossible for an employer to comply with that without its having to put on the table the fact that it is considering dismissal in the first instance.

I hope that, if my speech has strayed into technical issues of industrial relations law, that reveals how difficult this question is and how any attempt to impose primary legislation runs significant risks of unintended consequences that would be much worse for workers’ rights and job losses. We on the Conservative Benches depart from the Opposition in that we think there is strength and flexibility in existing employment law, but we also think that it could do with being robustly reinforced through potential financial penalties. I hope the hon. Member for Brent North is reassured that we take this issue as seriously as he does. We are also thinking hard about it, and I am confident that we will deliver for workers’ rights.

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[Kevin Hollinrake]

My principal concern is the amount of bureaucracy in and the interpretation of the Bill. I have many good lawyer friends—this usually has a “but” attached to it, doesn’t it?—but there are bound to be different interpretations of this kind of legislation. My hon. Friend the Member for Newbury (Laura Farris) set that out very clearly. Let us take just the phrase “all information”—that can mean virtually anything. A process can be subject to challenge all the way down the line and there can then be a claim for wrongful dismissal on the basis of a simple document that was not provided. Who would decide whether all the information has been provided? The appointed representative, at any point, could challenge the fact that all the information was not provided. It could be a very small piece of information that the employer never considered relevant to the discussion. Again, there is a huge opportunity for interpretation and bureaucracy. That cannot be positive for a good business environment.

There is also the issue of capacity. We already have issues about capacity for employment tribunals. This also brings in a whole new set of responsibilities for the Central Arbitration Committee and there is no understanding of whether that capacity can be filled.

[Barry Gardiner]

There is much in what the hon. Gentleman has said that I agree with. I just point out that the Bill does not actually ask for the disclosure of “all information”. It asks for the disclosure of

“all information…without which the appropriate representatives would be to a material extent impeded in carrying on consultation with the employer, and… which it would be in accordance with good industrial relations practice that the employer should disclose”.

That is not a catch-all. It is specifically about the information necessary to conduct proper consultations about the future of the business. He is being very fair in the remarks that he has made, but he must not misrepresent the Bill in that way.

[Kevin Hollinrake]

I certainly do not seek to do that. Proposed new section 187B(2) of the 1992 Act says:

“The information to be disclosed is all information relating to the employer’s undertaking (including information relating to use of agency workers in that undertaking) which is in the employer’s possession, or that of an associated employer”.

There is a double requirement, so “all information” does seem to apply.

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[Kevin Hollinrake]

I would like to be able to, but I am not sure that is incumbent on anybody who opposes the Bill. It is right for somebody who introduces the Bill to state alongside it what extra capacity will be needed, and the cost of that to the taxpayer or the businesses concerned. To my knowledge, that work has not been done.

I am also concerned about clause 27D, on the unilateral variation of employment contracts. No doubt some of the evidence taken showed that some contracts of employment allow unilateral variation. That is not something I have never done in my business practice, but nevertheless the Bill seeks to make those provisions unworkable or not legal, meaning that employers will not be able to rely on that in future, and those elements of the contract will effectively become null and void. I do not blame the hon. Member for Brent North for seeking to do that. As an employer I would not involve myself in such a practice, but it seems to be retrospective legislation. It is bound to make businesses nervous if we legislate retrospectively about such matters, and I wonder whether he has considered that point.

[Barry Gardiner]

Indeed. The hon. Gentleman is right, and the courts find it disagreeable that such a clause, purporting to allow retrospective variation of the contract, should be embedded within the contract. I would support the hon. Gentleman’s objection if indeed it were retrospective legislation, but the precise point is that any such clause purports to give a right to one party in the contract, and in effect to dispense with the entire contract and simply change it at will. That is what is so objectionable about it, that is what the court found objectionable, and that is what the Bill seeks to change.

[Kevin Hollinrake]

It is an interesting point, and I appreciate the hon. Gentleman’s clarification. My final point is on clause 187E, which seems to say that in almost any circumstance where new terms are offered, the employee has an automatic right to go to a tribunal. That seems to me strange. If any of the things outlined in subsection (1)(a)(iii) happened and an offer has been made, the clause seems to give an automatic right for someone to go to an employment tribunal, without requiring the provisions in clause 187A or B. I might have read that wrong, but it is certainly seems to be the case. Admittedly, that kind of point could be picked up in Committee, but my overriding point is this that issue requires cross-party thought. I would much rather see the provisions become effective through guidelines, financial sanctions or other means, and I do not feel that I could support the Bill were it to be voted on today.

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[Richard Fuller]

I understand where the hon. Gentleman is coming from, but I do not think the facts of history indicate that what he suggests is the right approach. The truth is that throughout the period of the last Labour Government it was not seen fit to bring forward such legislation. As I mentioned earlier, there were no calls for it when we went through a severe financial crisis, although there was widespread fire and rehire. It is precisely because there was an exceptional event last year that I am conflating that with this legislation. In my view, the Bill has been stimulated by that experience but will sit on the statute book for the future of more regular business, though I am not sure what that will be.

Furthermore, there is a little confusion about the intent of the Bill, which perhaps the hon. Member for Brent North can help to clarify now he is back in his place. Many of us have seen Labour MPs—socialists—campaigning to outlaw fire and rehire, and one would anticipate that many of them have turned up today to vote to do that, yet we heard from the Bill’s sponsor that it does not do that. It got so confusing that the shadow Front-Bench spokesman, the hon. Member for Bradford East, urged hon. Members to “support fire and rehire”. Between those on the Opposition Benches who say that they want to ban it, the promoter of the Bill who says that his Bill does not ban it, and the shadow Front-Bench spokesman who wants us to do more of it, I wonder whether they know what indeed they are doing.

[Barry Gardiner]

rose—

[Richard Fuller]

Perhaps the hon. Gentleman can clarify.

[Barry Gardiner]

I am grateful for the hon. Gentleman’s good humour. The Bill does not ban fire and rehire, but we want—I think all hon. Members want—to end it as a tactic. That is the point. When people say, “Let’s end fire and rehire,” they mean, “Let’s end it as a tactic, as a bad practice used by disreputable employers to do the wrong thing.” I hope that that clarifies it.

[Richard Fuller]

I am very pleased that the hon. Gentleman is back. He is showing the steps that he is taking to create consensus. I think he will find that as we move forward, perhaps with an alternative approach. I would gently mention that only on 6 May this year 145 of his colleagues signed a letter to the Prime Minister urging that fire and rehire be outlawed, and he must accept that his proposal must be a severe disappointment to them, given what he has said today.

There is an important reason why I would urge the hon. Gentleman to continue his journey, perhaps towards a code of practice approach. For me, and I think for many, the work of business, the work of capitalism, is a good for society. Capitalism is good. Capitalism creates. Capitalism creates higher wages, better skills, stronger businesses and a more global Britain. It is through capitalism that this country has grown the strength to provide public services for so many of our people. It is through capitalism that we have been able to have the highest increases in wages for the lowest paid that we have had for decades. It is capitalism that gives hope to people who want to start their own business. It is capitalism that is going to close the gender pay gap and the discrimination against people based on colour, because capitalism seeks out talent. It is upon the captains of capitalism—the women and men who lead our businesses—who understand how to get that great concoction of people and investment to create wealth and security, that we should be entrusting the responsibilities to act ethically and responsibly.

In my view, that purpose is best accomplished through a code of practice that works with the best grain of business rather than against it.

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[Mark Pawsey]

I think I understand the point, and I think the hon. Lady, if she has been here throughout the debate, will understand that there is a desire from this side for that not to happen, and for discussions and negotiations to take place at a much earlier stage.

We have had reference to the ACAS paper that was published in June 2021, which of course makes interesting reading. It tells us that dismissal and re-engagement is not new and has been around for some time, and it sets out the scenarios where it has been applied. Those of course include the harmonising of terms and conditions. There are many businesses that make acquisitions and find that they have staff on different terms from businesses that have come together over a number of years, and it is not appropriate for one set of employees in a business to be operating on different terms and conditions from those elsewhere in the business. There is a prima facie case, an immediate case, for why there should be some standardisation. During the pandemic, businesses have been required to introduce temporary or permanent flexibility in respect of hours worked, shift patterns and the security of hours. Covid has substantially affected—

[Barry Gardiner]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

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[Paul Scully]

I will cover that as I continue with my remarks. I am not sure that we should equate child labour with fire and rehire, but I will develop that argument.

[Barry Gardiner]

The Minister referred to JDE at Banbury and the fact that, ultimately, an accommodation was reached about the least disagreeable way forward. He must know, however, if he has spoken to any of the 291 workers involved in that dispute, about the huge stress that was placed on their families and the complete disregard that they felt they were shown by that company for all the loyal service that they had given it for years. To hold it up as an example of a resolution of a dispute is beneath him.

[Paul Scully]

I raised it as an interesting point. I do not underestimate the stress, and I will cover that later when I talk about the solution we have come up with. It was a resolution, but none the less we want to get rid of the bully-boy tactics—the use of fire and rehire as a tactic of negotiation—because that should never be able to happen. As we have said, it has been exacerbated by the pandemic, but we want to make sure that we get our resolution and our approach correct so that it does what it says on the tin rather than have some of the unintended consequences that we have heard about today.

I was talking about the recovery. We have one of the fastest recoveries of any major economy in the world, thanks to this Government’s will to act and plan to deliver. My right hon. Friend the Prime Minister said at our conference that we were embarking on a change of direction for the UK economy, away from the broken model of low wages, low growth, low skills and low productivity; away from a broken model underpinned by reliance on uncontrolled immigration to keep wages low. We want to build back better in a new direction towards a high-wage, high-skill, high-productivity economy, which the people of this country—workers and employers—need and deserve.

A key part of the building of that economy will be to continue to champion a flexible and dynamic labour market, creating the conditions for new jobs, protecting existing ones and maintaining the UK’s excellent record on workers’ rights—one of the best records in the world.