Small Business, Enterprise and Employment Bill

Brian H. Donohoe Excerpts

Wednesday 19th November 2014 Commons Chamber

[Ian Murray]

I haven’t finished yet—just you wait!

Let me go through why not being able to enforce these rights is a real problem. If, as the Minister suggested, people go through the normal employment tribunal channel, there would be a two-year qualification period for unfair dismissal. They would then have to go through compulsory early conciliation at ACAS. If that failed, they would have to pay a disproportionately high fee to enter the employment tribunal system. If they were found to have been wronged in the workplace, they could receive a compensatory award, but in up to 50% of cases those awards are no longer paid, and the chances of them getting their job back, or any job, would be much diminished.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

When I used to deal with what were then known as industrial tribunals, I understood that someone had to earn a certain wage before they could make any application to a tribunal. In those circumstances, how does someone on a zero-hours contract get into the position of being able to apply?

[Ian Murray]

That is part of the problem of enforcement, in that we do not know what mechanisms could be used for it. That is why we tabled the amendment to ask the Secretary of State to bring forward proper proposals for enforcing these rights. My hon. Friend is right. If an employer has offered someone a zero-hours contract containing an exclusivity clause, I suspect that most will have done so on a take-it-or-leave-it basis. Does that person then have the qualification period needed to enter the employment tribunal system? The answer is clearly no, because they have not worked for two years. Do they have the status of being a worker or an employee? The chances are that the courts would probably deem them not to be in employment at that stage. That is why it is important for the Government to come back with proposals on how they will prevent exclusivity clauses.

Sarah Veale from the Trades Union Congress said in one of the evidence sessions:

“It is actually quite extraordinary to have a breach of employment rights proposed in a Bill without any kind of penalty—or rather, without any compensation for the individual, because that is largely the way it works in employment law.”––[Official Report, Small Business, Enterprise and Employment Public Bill Committee, 14 October 2014; c. 71, Q162.]

The Government need to be clear about how individuals can enforce the provision against exclusivity. We cannot just hope that employees who refuse to work exclusively for an employer will not subsequently be discriminated against in the workplace.

It is very easy to construct a scenario in which that might be the case, and I have already mentioned one to my hon. Friend. In future, if an employer offers a zero-hours contract with an exclusivity clause, the employee might be incredibly knowledgeable about employment rights, and say, “Under section 145 of the Small Business, Enterprise and Employment Public Act, an exclusivity clause is against the law.” However, the employer could turn round, and ask, “Well, what are you going to do about it? You can either take or refuse the job and the contract, but if you do not abide by its terms, we’ll zero you out,” meaning that the employee would not be offered any hours at all. The employer could in effect have exclusivity by threatening the employee with losing their employment altogether.

That is a very real issue for the economy. I am not talking about businesses or individuals that welcome the use of zero-hours contracts, but mainly about people at the lower end of the employment scale who need to be properly protected. We need to ensure that there is effectively no exclusivity and that people are not zeroed out.

We need the Government to make a proper proposal about how they will enforce the prevention of a practice that is against the law. If someone driving down the motorway at slightly over the speed limit is caught doing 75 or 77 mph in a 70 mph zone, they receive a ticking off and a fine, but if there were no need to pay the fine or if no fine were levied, where would be the deterrent against breaking the law? I shall be interested to hear the Minister’s response on that point.

Amendment 10 is about compensation. People often go to great expense to turn up at work: they arrange child care or pay train or bus fares, and that takes time to organise and costs money from their much-reduced resources. Having been told that they are needed for work, people sometimes get a text a couple of hours beforehand or on arriving at their workplace saying that they are not needed that day. In a modern workplace, that is completely and utterly unacceptable.

The CBI has recognised that point and has expressed its support for it. In its March 2014 zero-hours briefing, it stated:

“a ban on offering short notice for work…is not in the interests of the workers on zero hours contracts, whose interests are best served by always being offered work opportunities with the freedom to decline them. An intervention which creates a simple formula for compensation due to zero hours employees when a shift is cancelled at short notice—two hours’ pay for example—would be better targeted.”

I think that everyone in the House would agree that there should be some kind of compensation if people are unable to do their shift at short notice because the employer has changed the particular shift pattern.

The House needs to look seriously at this matter. It is quite clear that the vast majority of employers in this country are respected for looking after their employees as their business’s No. 1 asset. Many businesses that do the right thing spend an inordinate amount of time—I did when I ran my own small business—making sure that all employees get the hours they want and are contracted to do, so that they can gain the salary they are contracted to earn and can pay their rent or mortgage and maintain their standard of living.

Most reasonable people would say that it was unacceptable for such businesses to be undercut by companies that decide to take on a vast number of workers on zero-hours contracts without offering them regular hours and regular pay. That is why I think that the Government have really missed an opportunity by not going slightly further on zero-hours contracts.

I now move on to the right to fixed hours. My right hon. Friend the Leader of the Opposition said last week:

“We are going to change…the zero-zero economy…Under Labour, if you work regular hours you will have a legal right to a regular contract.”

Iain Birrell, a partner at Thompsons Solicitors, said in his evidence in Committee:

“The Chartered Institute of Personnel and Development research of last November noted that 83% of staff on zero-hours contracts have been engaged for longer than six months and 65% have been engaged for two years or more. We have a situation, then, in which 65% of staff on zero-hours contracts have been there for two years or more. That is not short-term need”.––[Official Report, Small Business, Enterprise and Employment Public Bill Committee, 14 October 2014; c. 27-28, Q54.]

We appreciate that there are situations in which employers require workers on a zero-hours basis. However, employers should be able to refuse an employee’s request not to be on a zero-hours contract only if they can demonstrate that their business needs cannot be met by any other form of flexible contract. For example, seasonal work may be a legitimate exemption. In the United Kingdom, someone who makes ice cream might require people on zero-hours contracts to deal with seasonal needs.

--- Later in debate ---

[Sheila Gilmore]

That allegation is made frequently. In the years up to 2007 when I was a local councillor, I did not see these things happening in the care industry. I really did not see huge numbers of zero-hours contracts being used in my area. I do not think that what the hon. Gentleman said was a factual statement.

[Mr Donohoe]

In my constituency—I am sure the same is true of my hon. Friend’s constituency—the words “zero-hours contract” did not exist until very recently. In the past two or three years, I have heard more and more of my constituents talk about these contracts. It is because of the policies of this Government that we are in that position, is it not?

[Sheila Gilmore]

I agree with my hon. Friend.

The hon. Member for Burnley (Gordon Birtwistle) seems to believe that the last Government did nothing on this issue. I do not agree, but even if that were true, it would not be a reason for not dealing with the issue now. On that basis, we would never do anything different or new because a previous Government had not done so. That would be a very strange way of doing politics.

--- Later in debate ---

[Bill Esterson]

My hon. Friend must have been reading my speech, because I was about to make exactly that point. He has made it for me. The reality of the naming and shaming policy is that it has not worked: it has not delivered an improvement in the enforcement of the national minimum wage. If 300,000 people are being paid less than the national minimum wage, Government Members should be ashamed of that.

[Mr Donohoe]

Even if they were paid the minimum wage, working for three hours a week does not, in any shape or form, allow them to live, does it?

[Bill Esterson]

We should undoubtedly do everything we can to encourage employers to pay a much higher rate. The real level of the national minimum wage has fallen year on year. I agree that we should push employers to pay the living wage, too.

[Mr Donohoe]

I am talking not so much about the living wage or the minimum wage as the number of hours people work a week. People cannot pay their keep if they are not working a particular number of hours a week. Regardless of what they are being paid an hour, they need the hours. The introduction of zero-hours contracts has surely been the biggest mistake.

[Bill Esterson]

My hon. Friend rightly brings me back to zero-hours contracts and the problems and difficulties they create for people. Working a very low number of hours causes enormous hardship and difficulties: the difficulty of working an uncertain number of hours that can go up or down; the difficulty of claiming benefits to cover some of the gaps when going on and off benefits; and the difficulty in trying to navigate a system deliberately put in place by the Government to restrict what people, who are in work mostly, are paid in social security. I am glad he has made that point.

The use of agency workers, typically from eastern Europe, by companies in this country to undercut local staff is wholly unfair on the migrant workers who work for very low rates of pay and wholly unfair on local staff who are pushed out of the picture by being undercut. That is disastrous both for them and for the workers who are brought in. The knock-on effect is very damaging to the local economy too, because often any money earned, even in such low amounts, is sent back home and not spent locally and circulated around the local economy. The agencies have to be stopped. I am glad that it is Labour policy to take action to reduce the abuse perpetrated by such agencies. My hon. Friend the Member for Edinburgh South (Ian Murray) made the point very well: good businesses want to pay decent wages, but they are undercut in so many ways that they find it difficult to do so when unscrupulous employers exploit the system. Agencies’ use of overseas staff on low rates of pay is just one of the ways in which that happens.

The Bill introduces a penalty for employers who do not pay the national minimum wage. The problem is that there will be no improvement in enforcement. I mentioned the cuts in the number of staff at Her Majesty’s Revenue and Customs.