Employment Rights Bill

Chris Law Excerpts

2nd reading
Monday 21st October 2024 Commons Chamber

[Chris Law (Dundee Central) (SNP)]

The SNP broadly welcomes the core elements of the Bill, having long called for many of these changes. We have been clear in our opposition to zero-hours contracts, fire and rehire, and other forms of precarious employment that strip workers of job security. Indeed, former MP Gavin Newlands tried twice to introduce such measures with a private Member’s Bill. We have supported the removal of the lower earnings limit for statutory sick pay and the end of the waiting period, allowing those who are ill to access support from day one. Provisions for unpaid parental leave, paternity leave, and the right to claim unfair dismissal from day one are progressive steps towards workers’ rights that we must endorse. Similarly, scrapping anti-trade union laws such as the Strikes (Minimum Service Levels) Act 2023, is an important step in restoring the ability of unions to properly represent workers.

[Johanna Baxter]

Does the hon. Gentleman agree that if he is supportive of workers’ rights, those Unison members who are currently on strike in Perth and Kinross have a valid claim to a decent pay rise from his Government?

[Chris Law]

I think the question that the hon. Member refers to is with the Scottish Government, and of course we listen to trade unions in all cases. Indeed, a fair pay settlement was agreed with all unions, until we heard about this one recently. Our former colleague, Chris Stephens, fought tirelessly for trade unions, and spoke passionately in this House about rights for workers.

However, Labour has not gone far enough or acted swiftly enough with this Bill. Gaps remain in its plans, with around half the promised reforms being kicked into the long grass through consultation, meaning that we will not see changes implemented until next year, the year after, or perhaps even 2027. Critical elements—such as the commitment to a single status of worker, the right to switch off, and addressing pay discrimination through mandatory reporting of ethnicity and disability pay gaps—are missing entirely. The Bill was meant to be a defining piece of Labour’s first 100 days in office, but what good is meeting that deadline if the meaningful reforms are missing or will not come into effect for years? This Government are looking overly cautious and hesitant, and in the past weeks people have been writing to me, asking whether that is because the Government want to delay and find a convenient way out of implementing the measures.

The SNP Government in Scotland have taken meaningful steps to promote fair work practices, such as supporting collective bargaining, achieving real living wage employer status, and closing the gender pay gap faster than the rest of the UK, which contrasts sharply with the environment created by the previous UK Government. Devolving employment law to the Scottish Parliament would ensure that no worker in Scotland is disadvantaged by Westminster Governments. Indeed, Scottish Labour’s 2021 manifesto supported devolving employment rights—that might surprise some MPs present today. I look forward to their support to ensure that employment law is devolved to Scotland during this Parliament, so that workers in Scotland never again have to see their employment rights eroded by any future Tory-led Government.

The Scottish Trades Union Congress general secretary, Roz Foyer, commented that

“the Employment Rights Bill isn’t the terminus. It’s the first stop. This can be the foundations on which we can build.”

I agree. It is imperative that workers’ rights are improved by the Bill, but it must go further and faster, and look to devolve those powers so that we can guarantee that the rights of working people in Scotland are protected and strengthened.

Employment Rights Bill (First sitting)

Chris Law Excerpts

Committee stage
Tuesday 26th November 2024 Public Bill Committees

[Steve Darling]

Q It has been said a number of times that this is almost a big bang approach around employment rights, where suddenly there are all these new rights appearing that people are having to deal with. What reflections might you have on a more staged approach to this, where it is implemented over a period of time so that employers are able to manage the new legislation?

Matthew Percival: If we were talking about staggering things, the way I would do it would be to start with areas where there is already cross-industry support and where workers, trade unions and businesses can already agree that there are areas where the Bill can be a helpful step in the right direction. To give a few examples, we have previously supported the idea that it is wrong that you should turn up for work expecting an eight-hour shift, be sent home after two hours and only be paid for two hours. There should be a right for compensation there. We have supported fixing that through legislation for years now. A Bill to bring that forward would be something we welcome and support.

We have previously supported removing the lower earnings limit within the statutory sick pay system. It feels like a hangover from when it was a publicly funded benefit rather than an employment right in a relationship between an employer and their employee. We have supported the extension around third-party harassment. We have supported what the previous Government were calling a single enforcement body and in this Bill is a fair work agency. Outside the Bill but within the wider “Make Work Pay” package, we have supported the introduction of mandatory ethnicity pay gap reporting and action plans to go alongside reports on gender pay gap reporting.

There are a number of areas where you can bring forward things in a way that can achieve consensus across social partners. But if we were staggering things, in a number of the other areas I would take more time to think how it actually will land. Beyond just staggering things, there are some aspects in the Bill—we have each touched on a number of them already so I will not repeat them—that feel like they are just a step in the wrong direction, and when the step in the wrong direction is made is less important than the direction of the step.

Jane Gratton: As I said earlier, there is lots in the Bill that we support, and there is lots that good employers are doing already. As Matthew said on the compensation of shifts, we certainly support that, and we would be very happy about the fair work agency to create a level playing field and measures around workplace equity. For us, it is about the difficulty that the SMEs will have in getting to grips with this. If you think about it, most will not have access to HR and legal support. They are going to need a lot of time to get to grips with this and to understand what is required of them. To get those processes in place, they are going to need a lot of guidance and support. We think ACAS and the tribunals system would need to be significantly boosted in their resources to cope with what we anticipate will be a lot of additional demands on them. On that very much phased approach, I would agree with Matthew about starting with the things we agree on and looking at the detail of some of the things in the Bill where we think more consultation is required.

Alex Hall-Chen: I would emphasise two factors for consideration in staggering, the first being cost. As we are all well aware, the additional costs that are coming up very shortly, particularly related to employers’ national insurance contributions, are substantial, so the more that increases to employment-related costs can be staggered, the better, such as around statutory sick pay. The other, to support what Jane said, would be around tribunal capacity. There is a particular concern that these changes, particularly around protection against unfair dismissal from day one of employment, will be introduced before the tribunal system has been sufficiently reformed to be able to deal with the influx of cases that will come with them.

[Chris Law (Dundee Central) (SNP)]

Q A number of parts of the legislation have been removed, and some are obviously there for consultation. I wanted to ask you as a panel where you would like to see the Bill go further. What more ambition would you like to see in the Bill? Matthew, maybe we could start with you. I can see you have a bit of a blank stare at the moment.

Matthew Percival: No; it is that I think there is so much in the Bill that it is not a question of where we could do more. What is already on the table is far too much for businesses to be able to engage with in its entirety. And bearing in mind that the Bill is only one aspect of the Government’s agenda, I am already finding that it is very hard for our members to engage on the breadth of topics at the pace at which the Government hope to get engagement. To squeeze anything more in at this time would just mean another issue that cannot be properly considered before we would get to legislation.

That is not say that there cannot be other conversations about other topics at other times. There are aspects of “Make Work Pay” that are not in the Bill because they are being developed; a number of them are being discussed and consulted on outside of this Bill process to support the development of those issues. But I would not be suggesting there is a lack of urgency in any way for any of these things.

The best legislation will come from having a process that stakeholders have the capacity and engagement to contribute to, rather than feeling that they have to choose one or two things to engage with and ignore the rest, which then does not get proper attention.

Jane Gratton: I would agree. The reflection from members is that they are overwhelmed with all the changes that are being put in front of them through the Bill and the wider plan to make work pay. We have said from the outset, “Please take your time with this, consult carefully and make sure we get it right.”

The biggest concern we have with all this is the cost and complexity for SMEs. They are very much behind the Government in wanting to get 80% employment. They want to help tackle economic inactivity and bring people back into work. It is good for all of us to be able to utilise those skills and resources that are under-utilised at the moment, and to help people, and to go further to support people who may be on the margins of the workforce and need additional help. But SMEs cannot do that if they are faced with additional complexity and more restrictions on what they can do, and more risk of getting it wrong. It is the risk of getting it wrong that is the problem. Someone said to me, in respect of the harassment and the inclusion of the word “or” in terms of the reasonable steps that employers have to take, “I want to comply, but as drafted, I don’t know how I could guarantee that I am compliant.” It is that complexity that is the problem. I would say, “Let’s not go further right now; let’s do this at the right pace and bring employers with us.”

Alex Hall-Chen: I would agree with what others have said. I would add that if there are areas where more ambition is needed, it is around how we can make sure that the policies that will be implemented via the Bill are sustainable and can actually be implemented on the ground in business. That partly returns to the point I made earlier around the already creaking tribunal system, but also a recognition of the costs that this will have, particularly for SMEs. That is why, for instance, we have been calling for the reinstatement of the statutory sick pay rebate scheme for SMEs. That is where we would like to see more ambition.

[Alex McIntyre]

Q I used to work on a zero-hours contract in the hospitality industry, as many do. Everyone who worked in that small business was on a zero-hours contract, which led to a situation where colleagues of mine would be on 60 hours one week and then given five hours the following week by the boss, who was doing that for personal reasons, frankly. I was a student at the time—I was growing up and at school—but they had a family and bills to pay. Would you not agree that there does need to be reform in a system that puts all the flexibility in the hands of the employer and none in the hands of the employees? Particularly on zero-hours contract reform, would you not agree that most seasonal businesses understand the seasonality of their business and, with some planning, would be able to put employees on permanent contracts for their baseline business throughout the year, but then use fixed-term contracts for the seasonal part of their year so that they had additional employees for the fixed term of their season?

--- Later in debate ---

[Steve Darling]

Q From Torbay to Tyneside, productivity in the British economy is the biggest challenge that we face. Cathryn has alluded to productivity a number of times during evidence. What opportunities do you see in the Bill for driving productivity and the culture change needed to drive that agenda through our workforce?

Ben Willmott: The Bill is focusing businesses’ minds on how they recruit, manage and develop their people. I will refer to comments I made earlier. If the measures in the Bill are designed the right way, they can support improvements in overall employment standards. But if consultation is not effective and measures are introduced that are not workable, it will have the opposite effect. It is about finding the right balance.

Cathryn Moses-Stone: Similarly, we have a lot of data that shows that policies like flexible working, enhanced family-friendly rights and day one rights make employees feel valued and supported, which in turn drives better performance.

We did a study last year looking at the impact of trained managers in effectively delivering hybrid working. By way of example, 68% of our managers said that hybrid working made it easier to increase their work productivity, and that was a result of managers being trained to manage teams that work in a hybrid way. We know that where managers trust their direct reports—this is what our evidence shows—they find that productivity rises. As I have already said, poorly managed teams face lower motivation, satisfaction and retention, and ultimately impact on business delivery. So really good management in designing work that allows employees to thrive is important.

We must remember that managers are employees themselves. Managers want it to work for themselves as much as they want it to work for employees. That in turn will boost productivity at the higher levels of the organisation as well. We have lots of data that backs that up. Again, it is all about how the legislation is implemented and all about the time and space that is given to support managers to do that.

Ben Willmott: The other thing I would add is that our members are certainly supportive of the ambition behind the Bill. Our member survey shows that there is significant support for changes to improve statutory sick pay and to improve parental leave.

There are definitely areas of the Bill that have support, but I will give an example of an issue. When talking to members in sectors that might bear more cost from changes to statutory sick pay, we found they were much more sanguine in September than they were after the Budget, because they are now thinking about it in the context of broader changes. The cumulative effect of changes and increases in employment costs needs to be taken into account when we think about individual measures.

Carly Cannings: On the point about productivity, if you look at what makes a workforce productive, there are lots of things that go in the mix, such as feeling engaged in the work you are doing and valued by your managers, as well as having an environment around you that offers things such as flexibility. The factors that lead to productivity are broad. We need to be realistic about the measures in this Bill and how far they will go to support productivity, given that lots of employers are probably already meeting lots of these minimum thresholds.

It is a step in the right direction. It raises the profile of things such as flexible working, so hopefully more businesses will adopt it—it is now a day one right anyway. It definitely moves in the right direction in terms of creating that happy, engaged workforce who feel valued and able to work in a way that works for them and their employer. Again, it is back to that point about raising minimum standards. There is more to this element about workplace culture and productivity than just minimum standards of employment legislation.

Cathryn Moses-Stone: Echoing that, it is important to acknowledge that lots of forward-thinking employers are already doing a lot of this stuff anyway. They are doing it for a reason, because they are seeing the impact on their business. That must not be forgotten.

[Chris Law]

Q This is a question for the whole panel but, Carly, you mentioned that regulations here set the minimum standards. Does this Bill go far enough, and which bits would you like to see go further?

Carly Cannings: It was not a criticism when I said that it was about minimum standards. As I said, creating a happy, thriving, engaged workforce is more than just legislation. It is not to be misunderstood as a criticism of those minimum levels, but equally, you do not want to tie the hands of good employers by making them jump through too many hoops around legislation.

For me, this Bill is about raising the standards of those employers who are not necessarily doing, and need a bit of encouragement to do, the right things. We need to be mindful of the balance. The previous panel mentioned the impact on small businesses and the importance of not going too far the other way in over-legislating that ties the hands of small businesses. It is very much not a criticism; it is a realistic statement of the Bill being part of the package.

Ben Willmott: We have done a lot of research over the last few years looking at the level of HR capability and people management capability in small firms, and what sort of support they need. The research has involved more than 500 small firms, and shows the very low level of HR knowledge and capability within them. They do not have in-house access to professional HR practitioners; most of them do not use any sort of external professional HR consultancy support either.

There are a lot of issues that you probably would not imagine. A lot of small firms may not even have written employment contracts or written terms and conditions of employment. There is a lot of informality still in that part of the economy. That is the point I was making earlier. We really do need to find ways of providing better quality, more accessible advice and support to help these small firms meet their obligations and improve the overall level of employment standards in the economy.

Cathryn Moses-Stone: From our perspective, we would hope that this is a broader catalyst and a driver to see better-led and managed organisations across the board. We want to see more investment in management and leadership in general. We have lots of evidence looking at the impact of better-trained managers in the public sector and how that can support public service reform. We have evidence for what that looks like in healthcare education settings. We have evidence for what that looks like for delivering green skills and AI, and for how that is a driver of more investment in management and leadership across the board, given the evidence we have and what it does for workplace growth, productivity, our economy and people’s happiness.

Again, I emphasise the point that 82% of people are accidental managers. We have all heard—I am sure everyone in this room has, in their time—about a bad manager and the impact that that can have on an organisation. We see this, hopefully, as a bit of a catalyst for further investment and the thought given to M&L in general.

[Nick Timothy (West Suffolk) (Con)]

Q Employment standards are obviously important and can contribute to higher productivity, but also, if you guarantee and legislate for certain standards, there will be trade-offs, because that brings cost and opportunity costs through lost time. Real improvements to productivity come from things like investment in tech and training.

May we explore the trade-offs a little? With this kind of legal framework, to what extent will managers be able to focus properly on the core purpose of their businesses, as opposed to compliance with the law? To what extent will managers be able to invest properly in training and new technologies to aid productivity, rather than have the costs set out in the impact assessment?

Ben Willmott: That is a really important point. I alluded to it earlier. We know that one of the things that will drive productivity will be looking at how businesses can identify and address skills gaps, which will require thinking about how we train and develop our staff and managers. We know that responsible technology adoption will, to a large degree, depend on the people element—things like job design, or making sure that people are trained and have the right skills to use technology, and that we are consulting employees in advance so that their views help shape how the technology is implemented.

Businesses only have so much bandwidth, so I think that there is a real challenge there, particularly for our members, who are on the frontline of trying to ensure compliance. At the same time, the business will be asking them to help improve workplace productivity through those other activities. That needs to be thought about when we think about how regulation interacts with other factors that might support workplace productivity.

Carly Cannings: You are right—there is an inevitable trade-off. Even employers who are now broadly compliant or doing good things will have some costs associated with bringing in changes to policies that reflect the actual detail of the Bill, for example. They might be broadly doing something good in that space, but it might not quite align with the provisions of the Bill. It is important to make the point that it is going to have an impact on employers, even those that are doing good things in that space already. But the way to offset that is by phasing the changes through—not dumping them all on employers all in one go, but helping them to navigate the changes. This has already been alluded to, but it is making sure that they have that support through the implementation phase.

Cathryn Moses-Stone: I am pretty much in agreement with Carly. Obviously, there will be an initial trade-off, and investment will be required, but I guess our point is that it is for longer-term gain. Once we have got those happier and more supported managers, and therefore workplaces, these things will become elements that save the business money in the long run. Understanding that broader piece is important, and making sure that the process is there in order to upskill and train people in the right ways. It will be about a clear understanding of, “Will this agency be there to support them in the right ways?”, rather than just being a place to go as a last resort, assuming a slap on the wrist and ill intent. What is the support package alongside this to manage some of those trade-offs?

Employment Rights Bill (Second sitting)

Chris Law Excerpts

Committee stage
Tuesday 26th November 2024 Public Bill Committees

[The Chair]

I am going to try to get in three more Members in five minutes, but would you like to respond to that, Gemma?

Gemma Griffin: Just to say that jobs either exist or they do not. It is very black and white for me. Fire and rehire is always a bit of a horror story, particularly when you look long term at the skills and intelligence that the people have on your operation on how to work. For me there is always another solution. That is my point of view.

[Chris Law (Dundee Central) (SNP)]

Q I am focusing still on fire and rehire. Listening to the comments made in the last five minutes, I think the consensus is that we want to see the end of fire and rehire, and I completely support that. However, when you look at the detail of the Bill, there could well be a loophole to allow it to continue. There is a clause that says that there is an exception for those in “financial difficulties”. What are your thoughts on that? For example, who defines what the financial difficulties are and who decides how that is to be negotiated? For me, using the term “financial difficulties” is a loophole to enable any employer to say, “We are going to have to let you go in this circumstance.” Do you agree with that, or do you think more work needs to be done on it?

Mick Lynch: I think we have to be very careful, because companies are very good at creating entities that are subsidiaries of subsidiaries that are based in other jurisdictions, with all sorts of measures that are far too complicated for a simple soul like me. I would like the reporting of a business to be very straightforward. Everyone will know whether a business is failing, and fire and rehire for a failing business is not going to work in many instances. Certainly on the onshore side, it is likely that the business will fold before such measures can be brought. And of course it is very difficult to do what P&O did because it relies on bringing people from overseas to replace people.

Grant Shapps, last year, or the year before, said at one stage that he was going to replace all the railway workers in Britain, so there was actually a Government Minister promoting fire and rehire during our dispute. So I think we have to be very careful not to allow loopholes. I know that accountants and auditors are very good at creating loopholes, but as far as possible it has got to be plain for the layperson to see whether a business is struggling and has genuine business needs to get any hint of an exemption, and they should be very rare indeed if they are to exist.

Martyn Gray: Quite simply, if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option. If we are looking at a scenario where directors are happy to say under companies legislation that it is a going concern but they need to do a complete restructure, strip away the employment rights, strip away the benefits, strip away working conditions—things that have been long fought over for many years of negotiation or long thought over for many years of discussions: all the benefits that sit within employment contracts—and strip them back to a minimum, that business is not in a position where it can consider itself a going concern. So I would set a really high threshold and then allow for scrutiny from the relevant bodies. If it turns out that that could have been avoided—fire and rehire in those scenarios—it is clear that those directors should not have gone through that and there must be consequences. So there is probably room for improvement, some tweaks and changes, but I would put it quite simply.

Gemma Griffin: A classic example is that during covid, overnight 80% of our business was gone and we had vessels that were worth a lot of money and a lot of crew. There were the inevitable discussions on redundancies or just stopping and what was going to happen. We made a deal with Nautilus and RMT that we would work on this together, because we were hoping things would come back. It was only in year two that we really had some sense that things would come back. But one of the things that we did was collectively go out to our workforce and say, “It is these jobs versus how about if we work together and we do a pay freeze for the two years and we just take that pain together so that we can have the jobs at the end of it.” And we did that together. If something is going to go bust, it is going to go bust. But if there was a way of keeping the money in a better way—suspending the training and non-essential stuff—we made operational changes. It is too easy to leave it in as a loophole. That loophole is like you are just taking the profits out of the pockets of your people. So I think we need to be careful there.

[Mr Peter Bedford (Mid Leicestershire) (Con)]

Q Mick, you mentioned that you felt there should be further legislation, which suggests that the Bill is falling short. Could you elaborate on what you would like to see the Government do if the Bill is falling short?

Mick Lynch: Well, we would like it very straightforward that there is going to be provision—an amendment—for sectoral collective bargaining. If there is proper sectoral collective bargaining across the economy, many of the issues that people are dealing with as individuals—individual rights, which they have to enforce for themselves, in many cases—will be dealt with. There is a lot of discussion about probation. We have probation agreements with every employer that we deal with, and we do not defend people who are incompetent or incapable. We have a process, and if we have sectoral collective bargaining, all those things will be covered.

--- Later in debate ---

[Uma Kumaran]

Q Thank you, panel, for your thoughts and representations today. My constituency of Stratford and Bow has a rich history—I am sad that the hon. Member for Mid Buckinghamshire is not here at the moment to listen to this part—and we are rooted in the fight for working people’s rights. It is the site of the 1888 London Bryant and May strike, better known as the matchgirls’ strike.

Paul, 136 years ago, Sarah Chapman was first elected as the TUC rep from the then-formed Matchmakers’ Union. She fought ardently for women’s rights, and she made great representations at the TUC for women’s rights, but it has been 136 years and there is still much more to do for women in the workplace. I am really pleased to see that the TUC has said that

“Labour’s Employment Rights Bill is so vital for women’s pay and equality.”

I am keen to hear your thoughts on why you think that is, and other reflections from the panel.

Paul Nowak: It would be good to hear from colleagues from Unison and Unite, who directly represent hundreds of thousands of women at work. We know, for example, that women are more likely to be employed on zero-hours contracts, and are more likely to be in low-paid occupations. I think things like the fair pay agreement in social care could have a transformative impact on the lives of hundreds of thousands of women who go out to work.

That is alongside all the other provisions in the Bill—for example, the presumption around flexible working, which will allow people to balance work and family life but also, crucially, allow us to bring people back into the labour market who are struggling at the moment to find work that suits their caring and other responsibilities. There is a whole range of provisions in the Bill that will have a direct, positive impact on women at work, and a direct impact on those sectors in which we know that low-paid, insecure employment is most concentrated—retail, social care and hospitality.

Maggi Ferncombe: I represent Unison. We are 80% women. I talked at the very beginning about the significant difference this Bill will make, but I will give you some examples. Paul touched on flexible working. You could sum up this Bill in lots of different ways, but it is going to make such a difference to carers who care as a profession but also to carers who have caring responsibilities outside work, most of whom are women.

I will not touch on the fair pay agreement, because Paul already has, but the other area is the reinstatement of the school support staff negotiating body. These workers are again majority women and majority working part time. It will be transformative for those workers to have a set of standard terms and conditions, opportunities for training and salary, and not to have to take part-time jobs outside of their school work to be able to make ends meet. That will be the transformation for women.

Dave Moxham: We have been fortunate in Scotland—not completely fortunate—to get a bit of a head start on some of this discussion, particularly about low-paid care workers. We have a strong developing consensus that care workers’ voices are women’s voices in the collective bargaining arena, and that is something that we want to develop in Scotland. It is something that I think the Bill may just have to address for Scotland, because this is one of those situations where, because of the devolved nature of the delivery of care, we may need to invest powers in the Scottish Government rather than the Secretary of State. That is something we would intend to submit to the Committee on.

But I think we have really good early indications that a living wage for care workers, and the full involvement of unionised care workers in the delivery and shaping of their services, can pay enormous dividends. We are a long way from getting it right in Scotland, but I think we have got a good start there, which I hope some of the legislation here will reflect.

Hannah Reed: Very briefly, I fully endorse what colleagues have said. I am not going to repeat it, so as not to take the Committee’s time. Many women are part of trade unions because they want their voices heard and they want to be able to address issues such as inequality, bullying and pay discrimination in the workplace. The introduction of equality reps’ rights will provide an important focus to say that equality must be at the heart of the negotiating agenda within workplaces.

Alongside that, I recognise that there are improvements to parental rights that will help to ensure that there is a fairer share of parental responsibilities in the home. We have already talked about a lot of zero-hours contract workers being women. One of the things we are very aware of in hospitality is that, too often, employers bring in too many workers for shifts and say: “Sorry, we do not need you any more. Go home.” They then cancel a shift without any compensation for the workers for their travel time, costs or childcare. We hope the Bill will help to address some of those concerns.

[Chris Law]

Q Following on from Mr Moxham’s comments, I wonder whether there are parts of this UK-wide Bill that give you concern for employment rights in devolved nations where devolved Governments already have responsibility for employment relations? Is it not time that employment law was devolved, as is supported by the STUC, TUC and Scottish Labour, and as already exists in Northern Ireland? That is not least because it will help to protect us from future Conservative Governments that may wish to repeal all the good legislation that is coming forward.

Dave Moxham: There is a growing consensus in favour of the devolution of employment law to Scotland, but I think we all know that the Bill cannot achieve all of that, whether this Committee was in agreement with it or not. What is of interest to us is the interface between employment law at a UK level and the responsibilities of the Scottish Government, who obviously employ the vast majority of the public sector in Scotland. In a sense, that is what I am referring to here. Through procurement and other regulations, the Scottish Government are working with us to deliver collective bargaining arrangements in Scotland, which interface and have a potential complication—if not conflict—with what is in this Bill. We would like that to be looked at.

It is important to recognise that not all employment law is reserved to Westminster. In Scotland, there are the Agricultural Wages Board and the employment tribunals already, and a range of other things are devolved. Partly with respect to Wales, which I will not try to speak for, but definitely with respect to Scotland, which I will, there may be aspects of this Bill that might need to be looked at, particularly the relative responsibilities of the two Parliaments.

[Dr Tidball]

Q Why are the changes to statutory sick pay in the Bill so significant, and what opportunities do they bring for disabled workers and those who have long-term health conditions?

Paul Nowak: Why is it so important at the moment? We have 8 million people who are reliant on statutory sick pay, which does not kick in until day three of illness. That means that you literally have people, often disabled workers but not exclusively, dragging themselves into work despite the fact that they are ill, and they are often then spreading ill health. I will give you a practical example, Dr Tidball. I was at a mental health hospital in Blackpool last year where a group of women workers had needed to take strike action, while working in an NHS mental health hospital, because they did not have access to day one sick pay. They are people who were going into an NHS setting when they were clearly unwell, because they could not afford to take time off.

We also have an issue where we have over a million very low-paid workers, mainly women, who do not get any sick pay at all because they do not meet the lower earnings threshold. I think that the Bill will be transformative, and we will get to a situation where people are not afraid to take time off if they are ill because they are worried about whether they will be able to pay the rent, mortgage or bills. I think it is absolutely essential, and a really important part of those basic day one rights that every worker should be entitled to.

Maggi Ferncombe: I concur with everything Paul said. I would only add that we end up with different workers working in the same workplace under different terms and conditions. One group of workers who cannot afford to take a day sick, because they do not get paid, potentially bring in an illness and infect other people. In the public sector, such as in health settings, they are infecting not only the workforce but the public. It will be significantly different for all of those people.

Hannah Reed: As we saw from the pandemic, it is really horrendous when people feel pressured to go into work and put themselves and their colleagues at risk. Therefore, day one rights to SSP are obviously really critical. Moving forward, we would like to see an uplift in SSP because we still have one of the lowest rates in Europe, but the Bill represents a significant step forward, as does the recognition that there will be more collective bargaining. We as trade unions will negotiate for day one rights, often at full pay and not simply at the level of statutory rights.

We are also looking forward, not just with the Bill but moving forward with the wider “Make Work Pay” measures, to working with the Government on the health and safety review. It is regrettable that there is nothing in the Bill on health and safety. We hope that the Government will continue to prioritise that, addressing not only issues about mental health in the workplace but the impact of long covid, which disadvantages some people. We recognise that not everything can be done with this Bill, but we look forward to that ongoing programme of work.

--- Later in debate ---

[Dr Tidball]

Q Jemima, you described the Bill as a “win for women”. Why do you feel the measures in the Bill are so transformative, and how will they benefit working families, women and disabled women?

Jemima Olchawski: We know that women are currently more likely to miss out on statutory sick pay because they do not earn enough to meet the threshold or have not been in their roles as long; you heard evidence earlier about the impact on people who have to try to work when they are not well enough, and the impact on incomes through people not being able to work. Women are more likely to be juggling work and care, so they are more likely to need the flexibility and protections in this Bill. That is why getting the piece around flexibility is so important, whether it is because you are caring for children, for disabled children or for elderly relatives. We also know that one in 10 women we surveyed in our research who had been experiencing the menopause had left their workplace as a result of their symptoms, and flexible work and support in the workplace is really important to enable them to continue to participate when they are at the peak of their careers and skill levels. They should be allowed to thrive and be in their prime.

We know that the majority of households in poverty have at least one adult in work, but at the moment we do not have a system that properly supports either lone parent families, which are predominantly women, or households where both parents want to work. We also know that 40% of women who are not working would work more hours, or would work paid hours, if they had access to flexible working, so these measures are also really important as a part of overall efforts to address poverty and prevent child poverty.

Joeli Brearley: Adding to what Jemima has said, particularly on flexible working, the current law is that you have a day one right to request flexible working, and that has obviously moved from having had six months in a job. A right to request is still a right to decline, and we strongly feel that it does not go far enough in changing the dial on flexible working.

I know that the RPC opinion on flexible working has said that there is no evidence that we need to change the law on this. There will never be enough official evidence because those who want flexible working tend either to ask for what they think that they can get—or, if they know that it will not be granted, they do not ask for it at all. TUC research found that a third of people who want flexible working do not ask for it, despite needing it, because they think it will be rejected, and a further third ask for what they think that they can get, rather than what they actually need to manage their personal and professional obligations.

To really change the dial on flexible working, you have got to switch this on its head, and an advertising duty would do that. It is a hugely ambitious change; it is not a slight tweak to the current legislation, which is a much easier thing to do. An advertising duty would ensure that employers design jobs as flexible from the outset. It would mean that, in a job advert, employers would have to stipulate the types of flexible working available, and the candidate they chose would have a legal right to take up employment on whatever arrangement was stipulated in that job advert. The pushback on this has been, “Well, not all jobs can be flexible.” That is of course true, so if you do not believe that a job can be done flexibly, you could stipulate that and set out the reasons why.

The duty would particularly impact the women we work with. They would not be in a situation where they are having to move job. At the moment, they need to go to a new job and then ask for the flexibility they need to fulfil their personal and professional obligations. If at that point they find out that that is not possible, they have to leave that job—and both employer and employee lose out. We are currently trying to shoehorn flexibility into a very rigid structure, and we need to really change the culture. We believe that an advertising duty is the way in which you do that.

If we are not going to be that ambitious, and an advertising duty is off the table, we really need to reduce the number of reasons that you can decline a flexible working request—we believe that it can be reduced to three. We need to make it a legal right to be able to request flexible working from the point at which a job is offered rather than the first day of employment. That makes complete sense for everybody. Finally, we need to have the ability to appeal decisions to a third body, perhaps the single enforcement body. We also want employers to have to publish their flexible working policies online so that employees can see them. It would be a game changer and would really shift the way in which our employment market works, and it certainly would be a game changer for women.

The other thing in the Bill that I would really like to talk about is parental leave—the fact that it is not remunerated and that you are moving it to the first day of employment. We know that the take-up will be very low. We did some research with the Centre for Progressive Policy that found that if you increase paternity leave to six weeks and pay it at 90% of salary, you reduce the gender pay gap by 4% and you increase labour force participation, particularly by women. We really need to keep up with our European counterparts and increase paternity leave. Two weeks at £182 a week is not good enough, and we know that one in four dads are not even taking their two weeks because they cannot afford to do so. Families are losing out as a result. It is really bad for kids if dads and second parents are not enabled to spend time with their children. It is really bad for women, and it is a big cause of the gender pay gap, so we would really like to see the parental leave review happen as quickly as possible, and paternity leave increased, ringfenced and paid properly.

Jemima Olchawski: To come back on flexible working, Fawcett has been campaigning for that advertising duty and agrees that it is really important to make these measures meaningful. It is also important to recognise that this is good for employers because it increases the pool of talent that they have access to, rather than being able to get applications only from people who meet a rigid but not relevant set of criteria. It broadens it out to everyone who genuinely can do the job, which benefits everyone and is hugely important for enabling women to succeed at work.

[Chris Law]

Q I wanted to explore something a bit more, Joeli, because my ears pricked up when you talked about non-disclosure agreements and the thousands that sign away the complete rights of women. Could you tell me a bit more about your research, and could you also tell us a bit about what lessons have been learned from Ireland? I really want to explore that.

Joeli Brearley: Sure. Non-disclosure agreements are a real problem. We do not know how many exist, or how many women who experience discrimination—I am saying women because I work with women; of course, men sign them as well—sign them, because of course they are non-disclosure agreements, so nobody can talk about them. We run a mentor programme where we pair up women who are taking legal action against an employer with somebody who has been through that process, and in 90% of the cases that we work with, they end up signing a non-disclosure agreement.

[Chris Law]

Ninety per cent?

Joeli Brearley: Ninety per cent; it is a significant proportion. Often, these are for quite measly sums of money. They are pushed on women when they are feeling very vulnerable. Women are told that, if they sign this non-disclosure agreement, they will get a really good reference and it will all go away—“You get this lump sum of money, off you go.” But what they mean is that you cannot talk about what has happened to anybody. Legally, you can talk about it to your spouse and your lawyer, but that is about it. That really damages the mental health of women who sign them, because they cannot say what has happened to them. They sort of harbour this dirty secret, and that really is very damaging to them.

It also means that we do not know what is happening behind companies’ closed doors. I can tell you now that there are companies that win awards for being brilliant employers for women, but behind closed doors they are pushing women out when they are pregnant and forcing them to sign non-disclosure agreements so they cannot talk about it publicly.

Along with Zelda Perkins, who runs Can’t Buy My Silence, we would like to see that non-disclosure agreements are unenforceable unless the claimant—the person signing it—wants them to be enforced. That is a piece of legislation that Ireland has just pushed through: making NDAs unenforceable unless the claimant would like them enforced, and unless the documents are written in very clear language—often non-disclosure agreements are really complicated to read and nobody can fully understand them—and there is still the opportunity to report what happened to a trade union and to the ombudsman. Again, at the moment nobody knows what is happening because, by their very nature, non-disclosure agreements stop you talking to anybody, so we would like to see a similar change here.

[Uma Kumaran]

Q Thank you both for your representations. Joeli, I follow your work and have a lot of friends who have followed Pregnant Then Screwed—thank you. Jemima, I have read the Fawcett Society’s report on the gender pay gap, and heard your views here. Listening to you both today has put some new questions in my head on top of those that I already wanted to ask.

You have both talked about maternity provisions and what they could mean for the country. More broadly, what is the benefit to the economy and to businesses of having stronger maternity provisions as set out in the Bill?

Joeli Brearley: By maternity provisions, do you mean maternity leave and pay?

Employment Rights Bill (Third sitting)

Chris Law Excerpts

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Laurence Turner (Birmingham Northfield) (Lab)]

Q For context in respect of a previous question, the record shows that “re-unionisation of the economy” was language used in a question by the shadow Minister, not in an answer from a witness.

The Bill covers part of the “Make Work Pay” agenda. Are there other measures in the “Make Work Pay” document published earlier this year that should be included in the Bill?

Liron Velleman: The Bill clearly represents a great step forward in improving workers’ rights. For some of our members, it is in some ways a Bill for employees’ rights, rather than an employment rights Bill. Our members in the self-employed sector are looking for rights and protections to reflect the nature of the work that they do. In the “Next Steps to Make Work Pay” document, there are clear suggestions that there will be greater rights and protections for self-employed members, but that is a priority that we would like to see as part of the Bill, to fully grasp the current employment landscape in this country.

There is also a point around the consultation on new surveillance technology in the workplace. Clearly, technology in the workplace is one of the biggest benefits to lots of our members and to businesses, but it is also one of the biggest challenges when we think about the new world of work. Making sure that workers understand and are trained on, and can get to grips with, technology in the workplace, surveillance or otherwise, is vital to ensuring that they have the best rights and protections at work. Those two things would be our strong priorities for the Bill.

Joanne Cairns: For us, one of the key areas is statutory sick pay. The removal of the three waiting days and the lower earnings limit is extremely important and will make a massive difference to a lot of low-paid workers. However, the Government committed to strengthening SSP, and we would like the level of SSP to be looked at. It is well documented that the current level of SSP is below what people can afford to live on. If you earn the national living wage, you earn only around a quarter of your salary when receiving SSP, which has a significant impact on low-paid workers. That said, the removal of the three waiting days is extremely important and will make a big difference.

In respect of the right to guaranteed hours, which we warmly welcome, it is very important that the way it is implemented covers as many workers as possible. The commitment from the Government was that everyone would have the right to a contract that reflects the hours they normally work. We are concerned about the inclusion of the term “low hours” in the “Next Steps” document, which we feel could have the unintended consequences of making the right apply less widely than it should, and potentially undermining its effectiveness.

[Chris Law (Dundee Central) (SNP)]

Q I want to ask Joanne a little bit about USDAW’s experience dealing with Tesco. Tesco is one of the biggest employers in my constituency and it has a live case in the Livingston distribution centre regarding fire and rehire. I know that USDAW has put a lot of resources into taking Tesco to court over its distribution centres elsewhere—it won and then unfortunately lost on appeal. In our attempt to ban fire and rehire, do you think it is reasonable to include in this Bill a clause that basically allows a “get out of jail free” card? If we look at those who have tried to exploit fire and rehire so far, it is P&O, British Gas, Tesco, British Airways—they are not small companies. The clause says that if the company is in financial difficulties then fire and rehire could be continued. Do you think that should be taken out of the Bill altogether?

Joanne Cairns: We welcome the Government’s commitment to tackling fire and rehire. It is an issue not only when fire and rehire tactics are used, but when they are used by employers in negotiations as a form of threat to try to force unions or individuals to accept terms that they may not be happy with. Around a third of our members have been asked to change their contracted hours to support business need in the last 12 months, and one in five of them said that they felt forced into agreeing to the change, having been threatened with fire and rehire. It is a major issue. You referenced our legal case against Tesco, which demonstrates that this issue affects members in all sorts of workplaces.

Our preference would be for an outright ban on fire and rehire, and we would prefer the provision to be removed. If that provision stays in the Bill, our concern would be about the use of the word “likely”. We would like either for the word “likely” to be removed in reference to financial problems, or, at the very least, for there to be stringent guidance and a high bar set for the definition of “likely”.

Liron Velleman: At Community we had a similar case on fire and rehire back in 2021 with Clarks shoes. Our members at a distribution centre in Street in Somerset were threatened with a huge reduction in their hourly wage and the removal of their sick pay and coffee breaks. After a long campaign from our members in the union, and solidarity from across the UK, we managed to force the company to reverse its decision through ACAS mediation, but it clearly should not have been allowed to happen in that way at all. Our general secretary said at the time that, until fire and rehire is outlawed, no worker is safe from the harms that it can cause.

We hugely welcome the Government’s efforts to end fire and rehire, but we have similar concerns to USDAW about how the language about “likely” financial distress will be used in reality, given that it is rarely good-faith employers that use tactics such as fire and rehire in their workplaces. We do understand that there might be absolutely exceptional circumstances where the business would otherwise close. The question is whether the word “likely” will cast the net too wide and allow bad-faith employers to continue fire and rehire, even if the stated intention is for that not to happen.

[Anneliese Midgley (Knowsley) (Lab)]

Q In our evidence sessions earlier this week we heard concerns about changes to collective redundancy, and particularly the changes to the “one establishment” rules. What are your views on the provisions in the Bill?

Liron Velleman: We rarely deal with collective redundancy on multiple establishments, other than for a few establishments, but it is important for the Committee to understand that collective redundancy is not always a huge battle between employers and unions. It gets into the news that this employer and that union are fighting to the death over something, but usually collective redundancy is an opportunity for employers and unions to sit around the table and try to minimise the impact on the workforce. Even with employers that unions might have a difficult relationship with, collective redundancy is usually an opportunity to do that.

It is very well known that Tata Steel recently announced collective redundancies at its steelworks in Port Talbot in south Wales. The original stated redundancy figure was around 2,500, but after work between the unions and the employer, that number has been heavily reduced through cross-matching and through finding training opportunities. Unions are not there just to say, “We are going to keep our members’ jobs for the sake of it,” and scream from the rooftops. Collective redundancy is an opportunity to allow mitigations to protect workers. Any improvements to rules around collective redundancy—whether that is reducing the number of employees needed to start a collective redundancy scheme, increasing the timeframe for that to happen, or looking at the establishment rule—are hugely welcome.

Joanne Cairns: On the establishment rule, we are very pleased that the loophole is now being removed. We took a significant legal case on behalf of our members who were employed in Woolworths, where 27,000 employees were made redundant in a single redundancy exercise when the company went into administration. In 200 stores with fewer than 20 employees each, there were 3,000 employees who were not entitled to any protective award even though collective consultation had not taken place. That was purely because they were employed in establishments with fewer than 20 people, even though the decisions were being made far above that level and affected 27,000 employees. It is just common sense that that is now being corrected.

We are aware that the issue of scope has been raised in this Committee. We went back and looked at the Trade Union and Labour Relations (Consolidation) Act 1992. Clause 23 of the Bill would not alter what section 188 of the 1992 Act says about

“the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”

It would not mean that workers are being consulted over redundancies that do not affect them; it would just mean that workers who are affected by the redundancies, or their representatives, would be consulted regardless of the size of the establishment that they are working at. We do not see people being involved in consultation exercises that do not affect them; that will not be a result of the Bill.

--- Later in debate ---

[Laurence Turner]

Q I was struck, in the impact assessments, by the statements that a number of the costs, but particularly more the benefits, or potential benefits, of these measures cannot currently be quantified. There are, of course, well-advertised problems with UK labour market statistics at the moment. Realistically, what more could the Government do in respect of future measures to better capture the full range of costs and benefits associated with employment law?

Nye Cominetti: You are right: labour market statistics are not currently in a good place. The Office for National Statistics’ labour force survey is in the doldrums in terms of response rates; so if you wanted to increase the resources going into that, I would welcome that, as a researcher. Realistically, many of these knock-on benefits are incredibly hard to estimate. Personally, I think we have to accept a world where we say, we know that workers will benefit in terms of wellbeing from some of these measures. I do not think you need to put a monetary value on that to say it is worth doing, personally, but I know that is not necessarily the way that Government Departments think about these things.

In terms of the costs—businesses will be saying, “If you do this measure, I will have to reduce hiring by this much”—I think we could be moving from relying on what businesses say. I know that many businesses will be engaging with these processes in good faith, but the history, for example with the minimum wage, is for businesses to say, “If you raise this cost there will be dire consequences: job losses will look like x and y,” and in the end that does not turn out to happen because businesses find ways to adapt. That does not mean that will happen this time—there is no guarantee that you can keep pulling off the same trick of raising labour costs and not triggering an impact on employment—but looking for evidence on what has actually happened in response to similar changes in the past or in other countries, rather than relying on what businesses say, might be a better guide. But that might be controversial.

[Chris Law]

Q I am sure you welcome some of the proposed changes to statutory sick pay. One key problem with it is the level of sick pay. People still go to work ill because the level of sick pay is simply not enough: £116.75 averages 18% of the average weekly wage at the moment. That is half the equivalent percentage when it was introduced in the 1970s, and it is the lowest of all OECD countries. Would you like to see a threshold put into the Bill by which that is measured, so that we can get statutory sick pay that stops people going to work when they are ill?

Nye Cominetti: Thank you for the question. I was hoping to get the chance to talk about sick pay specifically. That is one area where the Government have gone halfway to addressing an area of insecurity. Removing the lower earnings limit is great; the lowest earners, mainly women working few hours, all have access to SSP now, which is excellent.

Removing waiting days is an important change as well. It will no longer be the case that you have to wait four days to receive anything and, as you know, for most people who are off sick for a few days with a cold, that is a one or two-day situation, not a week. Those measures are good, but what they do is extend a very low level of coverage to more workers. As you say, we have not resolved the fundamental problem that if SSP is what you rely on, as is the case for a majority of low-paid workers, you will still face a very serious income shock if that is what your employer ends up paying you when you do that.

Raising the level of SSP comes with a much bigger cost. First, it would be employers that would pay it, and then the Government would face a decision about whether to reimburse, perhaps, smaller employers facing the largest cost, as has happened in the past. It is a more costly measure, which is why the Government have not done it, but I hope that they have it on their list to address it soon because, as you say, it remains the case that for our low-paid workers, falling sick means earning less and facing an income shock. I do not think that is right.

You can either look at high-paid workers who do not experience that shock, or you can look at the vast majority of rich countries who have set in place a statutory minimum much higher than we have in the UK. That is not the case in the US, but almost all European countries—not just the Scandinavian countries that we look to as the far end of the scale in terms of welfare state provision, but the vast majority of countries across Europe—have a sick pay system that is much more generous and offers much more protection to workers than does the system in the UK. So yes, I would agree that that remains a glaring unaddressed problem.

Employment Rights Bill (Fourth sitting)

Chris Law Excerpts

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Anneliese Midgley (Knowsley) (Lab)]

Q Before I ask this question, I refer Members to my entry in the Register of Members’ Financial Interests. I am also a member of the GMB.

I want to ask about balloting. What are the practical implications for your unions of paper balloting? What sort of difference do you think electronic balloting will bring?

Andy Prendergast: It has been a somewhat strange situation in that, as far as I am aware, the only legally required paper ballot relates to industrial action. That sometimes creates a major impediment for us taking industrial action when that is the clear view of the workforce. There was a certain irony, not lost on us, that when Liz Truss was elected, effectively as Prime Minister, that was done via an electronic ballot. We have been told consistently by people in this House that electronic ballots are not safe and secure, yet you can have one to elect a Prime Minister but you cannot have one to take industrial action. If I am absolutely honest, the state of the Post Office does not help. We often have to have a fast turnaround on a ballot. Where I live, I normally get the post about every eight days. We end up with an antiquated system that simply does not work for this purpose.

If you look at electronic ballots, the important thing is that people have the opportunity to take part in a democratic process. It is a process that is allowed under the International Labour Organisation freedom of association rules and the European convention on human rights. It is vital that people are able to partake in democracy. We believe it is something of a strange situation that the one area that currently requires paper ballots is industrial action law. If I were cynical, I would argue that that is specifically to stop industrial action taking place.

For us, industrial action is always an absolute last resort, but at times it is necessary. People do not always like industrial disputes, but when you look at what they have achieved over the years, from equal pay via Ford Dagenham to the eight-hour working day, having weekends off, and significantly improved health and safety, it is important that workers have the ability to hold their employers to account in that way. Ultimately, something that simply allows them to take part in that democratic process has to be a good thing.

Mike Clancy: For too long, the arguments for inhibiting electronic balloting have, in my view, been entirely bogus. If you look at it from an employer’s perspective, they want the most representative turnout if they have a trade union in their midst, particularly in the context of difficult circumstances where industrial action may be in contemplation—and so does the trade union. We want a representative turnout, and we also want to be able to send a clear message if we get to a juncture where bargaining or something else in the process is proving to be difficult.

Electronic balloting is going to enable exactly that. The idea—this is where I feel the argument has been very bogus—that it cannot be done securely is in the face of all the evidence to the contrary. The sooner this particular clause can be progressed and made real, the better. Clearly, it will improve not only engagement, but the validity of results, and I believe that is absolutely something that trade unions want. The sooner we can do it, the better.

[Chris Law (Dundee Central) (SNP)]

Q We have heard a general consensus breaking out around fire and rehire, but part of one of the clauses in the Bill has a bit of a loophole, to put it bluntly—“likely” financial difficulties. We have heard already today, and we heard on Tuesday, that that could be a back door for employers. I would like to hear your views on that more generally, but, Andy, you raised the situation with statutory sick pay. The witness from the Resolution Foundation was asked earlier today whether the Government have gone far enough, and he said that they have only gone “halfway”, in particular because statutory sick pay currently stands at £116.75, which is less than one fifth of the average weekly wage, and it has halved since it was introduced. It is the lowest of all the OECD countries. I want to ask both of you if that is something you want to see improved in the Bill, because there is no mention of any increase whatsoever.

Mike Clancy: I am sure we will both have our views on the subject, but on fire and rehire, this is the space in which some of the most egregious employer behaviour has played out—behaviour that probably most in the business community look away from, because it is not the way they want to conduct their business with their workforces. We therefore absolutely welcome the fact that the Bill focuses on that dynamic. It has no place in good employment relations. But of course there has to be a space in which you evaluate, if an employer has a genuine financial challenge, whether it has some form of defence in that regard.

I cannot emphasise enough—in a way, this is not seen enough in the national media, on social media and so on—that day in, day out, trade unions solve problems with employers. They face difficult business circumstances at times, and they work with employers, communicate with their members and the workforce, and come out with some form of proposition that goes some way to resolving the issue. Therefore, the number of times that employers should fall foul of these provisions should be very small. If you conduct your engagement with your workforce either through a trade union or workforce representatives and in compliance with the law, and you are not seeking to evade your responsibilities—you see the importance of open book and sharing the finances, because that is all part of keeping the workforce engaged —this is really a minimum platform to deal with the employers who might sit on the extremes. I think it is very important that this has been addressed. It is sending a message about how we should do business around here.

[Chris Law]

Q Can I press a little bit further on that, Mike? I understand that there should be some room for employers who are under extreme financial stress, but the employers we have looked at so far—British Airways, P&O, British Gas, Douwe Egberts and Tesco—are not small companies. They have deep, deep pockets. They could exploit this loophole in the Bill. I wonder what you think about the language and whether it needs to be tightened or removed completely.

Mike Clancy: We will be going through clause by clause, will we not? We will have to look at where there is potential for employers to exploit these sorts of loopholes. What you have to understand is that often in employment relations, sensible employers read the writing on the wall. The rights of access may or may not come in for some time, but employers will think, “Right, we are moving into an environment where we need to engage with our workforce differently.” Other employers will say, “Look, that sort of behaviour is frowned upon in public policy. We are not going to go near it.” I do not think we should lose sight of the direction that the Bill sets on these matters. Let us be clear about the context. This is a big endeavour, and there will be detail to work through for both employers and trade unions. I think we should set out on this in the way that we mean to go forward. Let us do it co-operatively where we can.

Andy Prendergast: Just following up on fire and rehire, I was involved in resolving the British Gas dispute, where close to 500 members of ours got fired because they would not sign a new contract. At the time, it was roundly condemned across the House. The Prime Minister at the time got up and said that it was dishonourable, and that has very much been our view.

The real concern for us, as Mike says, is that, as trade unions, we sometimes have to make very difficult decisions. Following 2008, I would go into factories to negotiate pay cuts to keep people in work. It was heartbreaking, but we had to do it because it was the right thing to do. Overwhelmingly, we had those conversations not because of fire and rehire, but because, ultimately, we could convince our members that that was the best way of securing their jobs. We did something similar during covid.

The big issue for us is that if you look at British Gas, it is a highly profitable company and it went down a route that was, frankly, disastrous for it as a business and that it is still recovering from. We need to stop that behaviour happening. A contract is a contract. In this country it is almost your word, and if you are willing to break that it asks questions about whether you went into it honourably in the first place.

Some of the points you make are right. We have seen lots of financial engineering. We see inter-company debt. I think there is a concern long term that we may find cases where companies have engineered a financial position that allows them to do something they otherwise would not. That will have to be dealt with on a case-by-case basis. Where we have collective rights, we can still take action on that when we need to. This Bill takes a significant step in the right direction towards a point where the expectation is that contracts are honoured and that companies are prevented from boosting profits at the cost of their workforce.

On the SSP point, as a trade union we are used to negotiating improvements. Occasionally we cannot let perfect get in the way of good. I am pleased that we are talking about an improvement on SSP. Does it go far enough? I do not believe it does. I think that will have to be looked at long term. There are huge areas, such as care, where it is catastrophic that people do not feel that they can take time off, and, as I said before, that has a real impact, but at the moment I am happy that, for once, we are talking about an improvement to this. Personally, I am always of the view that we bank it and move forward.

[Michael Wheeler (Worsley and Eccles) (Lab)]

Q This is a question particularly for Mr Prendergast. What do you think will be the impact of reinstating the school support staff negotiating body—a measure that your union has long called for—on your members in schools?

Andy Prendergast: When you look at the school support staff negotiating body, this is something that has been on the agenda for about the last 25 years. We have found overwhelmingly in schools that teachers have national bargaining and very clear terms and conditions that are vigorously enforced, but unfortunately for the support staff, it is almost like the soft underbelly. So often when schools enter financial difficulties, heads—when you read the school returns, they have often given themselves quite large pay rises—end up cutting hours and pay from some of the lower-paid people.

Over the last quarter of a century, we have seen a transformation in what schools are like. Most of us remember schools having one teacher and that was it. Now, we see increasingly more pupils with special educational needs go into mainstream education, and they need that additional support. People from vulnerable backgrounds get the support of teaching assistants, and we have seen educational outcomes really improve off the back of that.

For us, particularly as we see more and more academisation and more and more fragmentation, we often find that there is an undercut-and-poach approach from different schools, which ultimately means that one benefits at the expense of another. It is not helpful when we get into that situation. The school support staff negotiating body allows for minimum standards and the extra professionalisation of roles, which really have changed over the last 25 years. Originally, there was a little bit of a stereotype that teaching assistants were there to clean paint pots and tidy up. Now, they do very detailed work on things like phonics and supporting pupils with special educational needs and disabilities, and they really help to deliver classes. I think it is time that professionalism was recognised and rewarded.

--- Later in debate ---

[Chris Law]

Q We have heard from each of you about what you would ideally like to see in the legislation. One thing we have heard is that it is going either too fast or too slow for businesses. What are your thoughts on how much time will be required for businesses and employees to be ready for this legislation?

Professor Simms: Clearly, there will be a period of adjustment. The Chartered Institute of Personnel and Development, which represents human resources specialists in the UK, has indicated that a period of 12 to 18 months would probably be a sensible adjustment period. Business and managers in the UK tend to want to conform to whatever employment rights and regulation there is. The challenge is communication, and communicating clearly in a way that then allows them to access knowledge, skills, training and development for their capacity to do those things. It will take time—it always does—but the general trend, certainly over my lifetime, has been that where new rights have been introduced in this area, most UK companies want to come into line as promptly as they reasonably can. We are talking not decades.

Professor Deakin: I think it would be really important to build a consensus on this issue, because what can be achieved in this Bill will begin a process that will have to be rolled out further if we are to have a modern system of labour market regulation, and that will require cross-party consensus. I very much hope that that will be possible.

[The Chair]

I am sorry; we do not have time for any more contributions, but thank you for your attendance.

Examination of Witnesses

Luke Johnson and Michael Lorimer gave evidence.

Employment Rights Bill (Fifth sitting)

Chris Law Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Justin Madders]

On a very fundamental level, if an employee has less money coming than in the previous week, they face a challenge in paying their bills, whether that is their mortgage, their rent or whatever costs they face. That is a very clear challenge to individuals on zero-hours contracts. A great number of studies show that people in insecure work have lower levels of job satisfaction and poorer physical and mental health, and there are also issues linked to lower levels of work productivity. As my hon. Friend mentioned, there is evidence that proper workforce planning is good for businesses, as well as individual workers. I am afraid that any exceptions creating a two-tier labour market would just exacerbate some of the challenges we see in that area. That would create a downward pressure, distort competitiveness at the expense of larger businesses and, as we have heard, create a disincentive for smaller businesses to grow.

[Chris Law (Dundee Central) (SNP)]

I have heard the Minister reference two-tier rights in employment law several times. I want to raise a fundamental issue in this Bill: zero-hours contracts and the different legal categories of a worker. It is a general principle that labour law should be universal in its application, and our labour rights should apply to everyone who works for others. I just wanted some clarification, as without clarification on the legal status of all those who work, the rights in the Bill are allocated piecemeal.

I will give some examples: some rights are given to employees with contracts of employment; some rights are given to limb (b) workers, such as Deliveroo riders in Independent Workers Union of Great Britain v. Central Arbitration Committee and Deliveroo last year, or gig workers who are denied the status of employees; and some rights are given to other new ad hoc definitions of workers, such as workers on non-contractual zero-hours arrangements. The situation of the false self-employed, including those employed by umbrella companies or personal service companies, as well as anomalous workers such as foster carers, is not otherwise dealt with, and their rights are left opaque. Fundamentally, I am asking whether a new clause is required to ensure that all rights contained within the Bill apply to workers defined as

“any individual who is engaged by another to provide labour and is not, in the provision of that labour, genuinely operating a business on his or her own account”.

[Justin Madders]

I understand the point that the hon. Member is making. I think it would not need a new clause but a new Bill, because there is a whole range of very complicated issues about worker status. It is something that we are committed to looking at in our “Next Steps” document, and there is a whole range of issues in that sector. The hon. Member referred to foster carers—I should clarify for the record that I am a foster carer. Personally, I would not consider that to be employment, but I know there are others who believe that it is. He also mentioned various arrangements within the gig economy, and the shadow Minister mentioned IR35. We can very quickly get into a very detailed argument about who would be classed as a worker and who would not, and that needs a much more considered and lengthy examination. That is why, as much as we would have liked to, we were not able to get it in the Bill in the time allowed, but I absolutely understand the point the hon. Member is making.

On the amendments before us, the disincentive for an employer to grow would, unfortunately, be an unintended consequence of their provisions. There could even be a scenario where there would be an argument in an employment tribunal about how big an employer actually was. My hon. Friend the Member for Birmingham Northfield talked about some of the complicated structures that we see, and we know that some employers deliberately structure themselves to avoid particular laws. That would go against the policy objectives, which are to create a level playing field across the board, avoid undercutting and ensure that best practice is spread throughout.

We must not create a two-tier system. That is not consistent with what we are trying to achieve. It would harm not just workers, but small businesses, and, as the hon. Member for Chippenham said, would create an incentive for workers at smaller employers to leave. If someone does not get any protection for two years working for one employer, they will go and work for someone who will give them that protection. That applies to lots of the other rights as well.

On the unfair dismissal amendment, there was a brief period in the 1980s where there was a slightly different employer size qualification for unfair dismissal. I think it was 21—some way below the number that the shadow Minister is proposing—but even the Thatcher Government decided that was not a tenable situation and removed that in the end. I gently point out to the shadow Minister that the amendment as drafted would not have the effect that he hopes. I hope he will not push it to a vote.

On the issues about the impact on small employers, that is why we have legislated to include a statutory probationary period to ensure that there is not an undue burden on businesses.

--- Later in debate ---

[Justin Madders]

The shadow Minister tempts me to pre-empt what we will put in the consultation. I have had a number of conversations with my hon. Friend the Member for Worsley and Eccles over many years, because he has great experience of the retail sector, where there is a great deal of insecurity of work. People who work in that sector can be on guaranteed hours of 16 hours a week but still face insecurity. Equally, a lot of the people that we are trying to help here have no guaranteed hours at all. There is an argument that anyone below full-time hours—again, there is a debate about what that means—could be within scope.

That is why we are holding a consultation, to enable us to understand exactly who will be affected—whether we are trying to catch everyone or target the people who suffer the greatest insecurity of work. That is the purpose of the consultation. I know the shadow Minister will probably want to get some figures out of me today, but I am afraid I will not be able to oblige.

[Chris Law]

I am sorry to stop the Minister in his tracks, but it is quite an important point. There is in the Bill what I would consider to be a loophole, which enables employers to offer a guaranteed-hours contract where there is work of a short-term nature. There are some issues with that. I would like to know the justifications for it, and whether it is going to consultation. Does it mean that people engaged on such terms will be engaged on a zero-hours basis, or will they be employed on a guaranteed-hours basis? It is not clear in the Bill. If the former, why is it not possible for such workers to have a guaranteed-hours contract if they otherwise meet the proposed statutory criteria? What safeguards will there be to ensure that the power is not abused, in order to avoid a guaranteed-hours contract? I am sure that, in the spirit of the Bill, we want to ensure that that is tightened. There is nothing in the Bill for that, either.

What is the difference between a short-term contract and a fixed-term contract? Will there be a legal status for someone engaged on a short-term contract? Are they an employee, a limb (b) worker, or neither? Lastly, will non-renewal of a short-term contract be a dismissal for the purposes of unfair dismissal in the case of workers who are employees? That is a lot of questions, but I want to know whether there will be further consultation that may result in amendments to the Bill.

Employment Rights Bill (Sixth sitting)

Chris Law Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Chris Law (Dundee Central) (SNP)]

On new section 27BE, there is a lack of formality relating to the worker’s right to refuse an offer of a regular-hours contract. Indeed, the risk is that workers could be coerced into rejecting an offer if it is clear that the employer would prefer the existing arrangements to continue. There are similar arrangements in respect of the working time regulations on workers’ right to opt out of the 48-hour working week; by contrast with the Bill’s provisions on zero-hours contracts, the working time regulations do not apply to all workers, and those who opt-out may revoke their decision to do so, although there are arguably no adequate safeguards there either.

The Secretary of State will have the power to make regulations about the form and manner of the notice under proposed new section 27BE, and reference is made to a response time that is undefined, but the question is whether it would be appropriate for Parliament to give the Minister stronger guidance by requiring that the response period should be at least one week; that the worker has a right to seek advice from an independent trade union before making a decision; that the worker has a right to be accompanied by a trade union official under section 10 of the Employment Relations Act 1999 in any meeting to discuss an offer; and that the worker may revoke a rejection of an offer at any time on giving one week’s notice to the employer. Does the Minister agree that those safeguards need to be incorporated into the Bill so that an employee is not coerced by their employer into rejecting a contract that is not in their best interest?

[Justin Madders]

A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.

Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.

New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.

To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.

New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.

Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.

--- Later in debate ---

[Greg Smith]

I can assure the hon. Gentleman that, with three children, I am acutely aware of the cost of childcare. The point I am making, to go back to the one I made earlier to his hon. Friends, is that this is not “all or nothing”. It is about recognising, to refer back to the answer I gave the hon. Member for High Peak, that at certain times, albeit not the majority of cases—in fact, far from the majority of cases—circumstances will arise that are beyond the business’s and the employee’s control, and they will push that business to the very edge. It is not a happy place or a good place to be, but there are some realities here that I think need much more careful reflection.

[Chris Law]

rose—

[Greg Smith]

Here we go.

[Chris Law]

I have been both an employer and an employee in a number of situations, including in retail and hospitality, which we have been hearing about. The hon. Member talks about emergencies, and I understand that emergencies can happen—I have been an employer when we had an emergency situation. What usually happens in those circumstances is that people find other things to do. There is always stuff to do in a business—stuff that might otherwise get put to one side—so there will be an opportunity for employees to work with employers in emergency circumstances.

What I do not understand is this. At what point, in the hon. Member’s mind, do employers notify employees? When do they say, “Look, there’s a situation—it’s an emergency. There is no chance at this time that I can help you come in. Would you consider not taking hours in this instance?” The hon. Member has talked about lived experience; I have spent many years in hospitality—I trained as a chef, and I know exactly what it is like working in restaurants and hotels. Lots of things happen, including empty restaurants, but there is also an onus on the employer to make sure that the restaurant has enough people in of an evening. If they are not there, it is not the employee’s fault; it is the responsibility of the business. If the business is on its knees, then frankly that is in no way the fault of employee—unless, of course, they are not turning up for work or something. In truth, is it not the case that a business in that position is just not viable?

[Greg Smith]

I am grateful to the hon. Gentleman for his intervention. He is right that there may well be something else that can be done—perhaps a stocktake, or making a start on refurbishing the place, or whatever it might be—but that will not be the case in every circumstance. I can only repeat the point that I am not making this argument in respect of the majority of cases, or those that might affect a business that is already in distress; I am making it in respect of those few occasions that might take a business to that point or much closer to it. I cannot imagine that anybody on this Committee, or indeed any Member of this House, would want to see that unintended consequence.

Employment Rights Bill (Seventh sitting)

Chris Law Excerpts

Committee stage
Thursday 5th December 2024 Public Bill Committees

[Greg Smith]

I am grateful to the hon. Lady for that intervention, because she underlines the fundamental point that I am making: most businesses do not want to turn people away. Convenience stores are a great example of that, and are actually some of the most flexible employers out there. My constituency, which is spread across 336 square miles of rural Buckinghamshire, has a lot of small convenience stores, and they are exemplary employers. I cannot think of a problem I have ever encountered with any of them.

I come back to my central argument, which is that sometimes things happen. Nobody has planned for it, nobody wants it, and nobody is in any way happy in that situation, but sometimes these things happen. I fully accept the hon. Lady’s point that the vast majority of employers in this country are good employers. We should celebrate them, and not try to see them through the lens of some sort of Victorian novel. That is not what employers are in this country. They are responsible and want to look out for their workforce.

We had a debate the other day about the symbiotic relationship between the worker and the business owner, which are two sides of the same coin: no successful business could have one without the other. I am not saying that there are not rogue traders out there who seek to exploit their workforce—there are, and there must be proportionate, proper and robust measures in place to combat poor behaviour—but that does not undermine the central point that there must be flexibility that accounts for the realities of the real world.

[Chris Law (Dundee Central) (SNP)]

I am hearing this argument repeated again and again, but I am struggling. I need an example. Employers insure themselves against floods, fire and everything else. We talked on Tuesday about an empty restaurant giving notice if it was empty. So I am trying to find out what is the exceptional circumstance that the hon. Member is concerned about that he can see in real-life circumstances where the employee would have to lose out rather than the business.

--- Later in debate ---

[Chris Law]

I will just probe a little further. All those points are valid, but they are the responsibility of the business, not the employee—most notably because they have no shares in the business and will not benefit from any profit. Why should they have only the rough end where they end up without income? A company might have five shareholders in a small company. A cabinet-making firm is a good example—I have one in my constituency in Dundee where they all have a stake in it and can equally share the risks and the rewards. The problem with what the hon. Member is suggesting is that the employees are burdened with the risks without any of the rewards. I cannot see where there is a benefit at all. That in many respects insulates the employer and puts all the burden on the employee.

[Greg Smith]

I do accept the point that the hon. Gentleman is making. It is helpful to have this debate to tease out the core issues. The point I would put back to him is that those small microbusinesses faced with that eventuality almost certainly will not have the reserves or contingencies in place to be able to weather such a storm. A catastrophic event that delays perhaps their biggest order of the year by six months, a year or longer—some of the shipping delays in recent years have been undoubtedly severe—means they might go bust. If they go bust, there are no jobs at all. Although I am in no way, shape or form advocating a position where an unfairness is felt by employees, there can in the real world sometimes be an eventuality where it is undesirable—I will concede unfair—but a reality.

Employment Rights Bill (Eighth sitting)

Chris Law Excerpts

Committee stage
Thursday 5th December 2024 Public Bill Committees

[Alison Hume]

It is a pleasure to serve under your chairship, Sir Christopher.

We in this place enjoy the employment rights that come with our job, which is to serve our constituents to the best of our ability. When we are unwell, we can take time off but we are still paid. Before I arrived here, I spent a considerable number of years working as a freelancer while bringing up my family; I believe that is now called being a worker in the gig economy. I understand all too well the pressure for people to work when they are unwell, as they juggle work around caring responsibilities, as I had to for my disabled son, and worry about money, as our family worried about how we would pay the rent and the other bills if I did not work.

At present, large numbers of workers either rely on statutory sick pay or receive nothing at all if they are absent from work due to illness. Those workers are more likely to be low paid than others. We also heard in the evidence sessions last week that women are currently more likely to miss out on statutory sick pay than men, because they do not earn enough to meet the threshold or have not been in their jobs for long enough. It is estimated that 1.1 million workers earn less than £123 a week and most of them are women who are not eligible for statutory sick pay at all.

In practice, as we heard in the evidence sessions last week and as Minister just referred to, that means that people drag themselves into work despite the fact that they are ill. As it stands, our sick pay system pushes far too many people to go to work when they are ill. Working while in poor health is more common among those from marginalised ethnic groups, people in lower-quality jobs and workers lacking formal qualifications.

Under the Bill, hundreds of thousands of people will qualify for sick pay from the first day that they are ill. That change and other changes will help to increase productivity, reduce prolonged illness due to exacerbating existing conditions, and lead to better public health outcomes. Lower-paid workers will no longer have to face the unpalatable choice between coming to work and risking spreading infection, or struggling to put food on the table and to pay bills. Those are very real concerns that, as I mentioned, I have faced.

In conclusion, I believe that the Bill will transform the world of work for millions of people across the country. If I may say so, it is a privilege to have played a small part in scrutinising it.

[Chris Law (Dundee Central) (SNP)]

It is good to see you in your place, Sir Christopher. I will speak to an amendment on this issue shortly, but I will briefly say that everyone in this room, at some point in their working life, will be ill. It is not something that we would choose or desire, and most of us want to get back to work as soon as possible. The problem is that it happens, and when we are off ill we still have bills to pay, families to keep and mortgages or rents to pay. The level of statutory sick pay is frankly woeful in this country—in fact, for those hon. Members who do not know, it is the worst in the developed world. We should all be ashamed of that and we need to really think about it.

I welcome the changes to ensure that everybody gets statutory sick pay, but I find it disgraceful that we have not even touched on its level: it is £116 a week, or £6,000 a year. At some point in our lives, all of us have worked in very low-paid jobs. We have all done that, particularly in the early years. We would never imagine that somebody could live on £6,000 a year. Not everybody is expected to be off for a year, but some are, due to prolonged illnesses.

I will talk about this issue more on my amendment, but before I go into it in detail, I really want to hear from the Minister what changes the Government look to make so that we are no longer the sickest country in the world for being unreasonable, unfair and unjust to employees, and to ensure that statutory sick pay, which is about 17% of the average income—it was 35% when it was introduced—will start to restore the proper justice required for employees.

[Laurence Turner]

The shadow Minister’s comments to the effect that he accepted in practice the arguments on the workplace and presenteeism were welcome. If, through this Committee, we can reach some degree of cross-party consensus on the issue, it would be a real advance and proof of the value of this process. I mean that sincerely.

I turn to the measures. The question of waiting days is as old as the national insurance system. Although many of the incremental changes made in the Bill are welcome, it is time to take a step forward. The case for that step was proven during the pandemic. The Minister quoted USDAW research, and I am obliged to quote GMB research, which found that 90% of care workers could not afford to take time off if they became ill. That meant that during the pandemic, many people were presenting at work either for the duration of their illness or for the waiting period, and we have very good evidence of that. I will quote one example. A study by Dr Laura Shallcross and other authors in The Lancet found that the odds of covid infection in care home residents and staff and of large outbreaks

“were significantly lower in LTCFs”—

long-term care facilities—

“that paid staff statutory sick pay compared with those that did not.”

That was one of the key determinants or predictors of where outbreaks might occur.

To perhaps quote a more human voice, a social worker and member of the GMB said:

“For me, being on a zero-hours contract, I don’t always get work. If I become ill, I don’t get paid. If I get a cold or flu-related illness, I am expected to stay at home without pay, because I may pass the illness on to our service users. It is a very, very stressful life.”

When the Chartered Institute of Payroll Professionals surveyed its members, 47% agreed with the abolition of the waiting days period, so there is support in this area among private sector practitioners. When the Fabian Society, of which I declare I am a member, looked at this question, it found that the cost to business of adopting that measure would be very low—somewhere in the region of £15 per year for each employee.

As matters of cost have been raised in Committee on several occasions, I shall finish by quoting from the 2010 Black review, commissioned by the then incoming Government, which I think is still the best evidence we have of the cost of the statutory sick pay regime. It said:

“Great Britain has a mixed approach to sickness absence. Although employers in theory bear the cost of Statutory Sick Pay (SSP), the cost itself is not very high. Barriers to dismissal are relatively low (although it should be noted that dismissing someone specifically to avoid paying SSP is illegal). Employers are therefore obliged to bear little cost or accountability for sickness absence, albeit many employers choose to pay more in occupational sick pay (OSP) than the statutory obligation.”

There are many cases where occupational sick pay is paid at a rate higher than the SSP rate. That is of course welcome, and accounts for the majority of employers. For those employers who are being brought into paying SSP earlier, as we have heard, the cost is low, but the changes could make a really significant difference to the lives of some of the lowest paid workers in the economy. This measure is extremely welcome.

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[Justin Madders]

We have had a good debate. Most Members have spoken positively about the need for this change. Obviously, this was a measure brought in temporarily by the previous Government, during covid. They recognised the particular issue at the time.

Before I turn to the shadow Minister’s comments, I wish him the best of luck in the Mid-Buckinghamshire pantomime. I hope he does not become the George Lazenby of the Conservative party as a result. He raised two perfectly reasonable questions. The first was on Northern Ireland. I can assure him that it was not an oversight. It has been introduced as an amendment because, as this is a transferred power to Northern Ireland, we need their consent before it can be included. I think he will understand that putting it in without getting that agreement might have been counterproductive.

On the second point that the shadow Minister made, about abuse of the provision, of course employers already have the power to deal with employees whom they feel are falsely taking time off sick. Whether that is day four or day one, those powers are already there.

My hon. Friend the Member for Scarborough and Whitby made a very powerful speech to highlight the impact on particular groups. The evidence we heard from the Women’s Budget Group last week was particularly important in that respect. Other Members who spoke, my hon. Friends the Members for Birmingham Northfield and for Stratford and Bow, raised a whole plethora of examples with pieces of evidence in support of the policy. I think it is one that is generally supported.

To deal with the point made by the hon. Member for Dundee Central about the level of statutory sick pay, he may not have seen my opining on SSP at the evidence session last week, or the famous comments from the former Health Secretary about it not being enough to live on. I recognise that. Unfortunately, however, I have to give him the stock answer, which is that the actual level is set by the Department for Work and Pensions. He made a fair point about people on long-term sick, because there is a huge interplay between people on long-term sick and the benefits system, but it is in the Department’s gift to set the rate and to look at how it interplays with accessibility to other benefits, which of course depends on people’s individual circumstances.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Statutory sick pay: lower earnings limit etc

[Chris Law]

I beg to move amendment 158, in clause 9, page 26, line 17, leave out “the prescribed percentage of”.

[The Chair]

With this it will be convenient to discuss amendment 159, in clause 9, page 26, line 19, leave out paragraph (b).

--- Later in debate ---

[Chris Law]

I have already touched on the impact that illness has in our lives. Some of us have family members who have been long-term sick. If they have been in employment, £6,000 a year as an annual amount is clearly not going to be enough. I am glad that the Minister has raised the issue and addressed it, and I hope that the DWP can consider those levels. We are still the sickest country in the developed world, and I hope that that will change under this Government.

I will leave my comments on that for the moment, apart from one, which is about the TUC. I am sure that those on the Government Benches will be well aware of this. Previously, the TUC campaigned for an increase in the weekly level of sick pay to at least £320 per week. That is something to consider. I advocate statutory sick pay being based on the national living wage in respect of each hour during which the worker would have worked, but for sickness.

My amendment, however, is small and one that I hope will get cross-party support, largely because it is so modest and seeks to protect the lowest paid workers. I therefore hope to get to a conclusion today. This is not about a hammer to crack a nut, but about a small change that would help the most vulnerable and low-paid workers in our societies.

According to the Centre for Progressive Change, the wording of the Bill will make up to 1.3 million employees worse off. The Bill’s wording specifies that employees should be paid either SSP or a prescribed percentage of their usual pay, whichever is lower. However, that creates a group of workers who will receive even less in sick pay under the new arrangements than they do now. After 14 years of austerity, I am sure that the new Government do not want that to get even worse.

That is because although that group of workers might be earning above their lower earnings limit, reducing their earnings in line with the prescribed percentage would result in a weekly sick pay amount that is lower than statutory sick pay. For example, an employee earning £125 a week will currently get sick pay of £116.75. However, they would only receive £100 for the prescribed percentage of 80% or, worse, £75 for a prescribed percentage of 60%. The lower the replacement rate, the more employees will be affected, with a quarter of a million employees losing out on the 80% rate and 1.3 million employees losing out at the 60% rate.

The amendment would allow for those earning less than statutory sick pay to have their full earnings replaced. Frankly, that is the bare minimum that this Government and this Bill should be doing. That should be a starting point for statutory sick pay, increasing to the point where it is in line with the national living wage.

Employees earning less than statutory sick pay are by definition low earners. The evidence is clear that households with low incomes spend the vast majority of their earnings on essentials, such as rent and food. Cutting the incomes of those employees, even by a small percentage, risks them being unable to afford essential costs, pushing working families into hardship and deepening poverty. The changes in income may be especially difficult to bear during times of ill health, when the ability of households to adapt to budget losses is inevitably reduced.

An example of modelling that has been mentioned already is by WPI Economics. It shows that the direct cost to businesses of providing full earnings replacement would be small, calculated at £125 million per year across the entire UK economy. That is equivalent to £15 per employee per year. Reducing the earnings replacement rate below 100% as proposed would save businesses a small fraction of that already small amount, providing trivial cost savings for businesses. Furthermore, modelling shows that full earnings replacement would generate economic gains to businesses, the Treasury and the wider economy. With direct business benefits expected to be £1.1 billion, businesses would see aggregate net gains of around £1 billion every year from providing 100% earnings replacement.

I reiterate that the amendment makes a small change that should be regarded as the bare minimum. Further reform and increases to the sick pay system need to be implemented. As was mentioned earlier, we learned during the covid pandemic that employees coming into work when unwell can have a detrimental impact on public health and the economy. Those who come into physical contact with many people at work are often the least able to afford to self-isolate without pay or to have access to employer-provided sick pay, and are more likely to engage in presenteeism.

The UK’s current sick pay system contributes to economic stagnation, exacerbates the spread of infectious disease, makes long-term sickness absence more likely and drives people out of the taxpaying workforce. Everything that the Committee has discussed so far, across all parties, is about getting people into the workplace. The increased ill health adds a significant extra cost to the NHS, adds many more patients to waiting lists and increases the UK benefits bill. Workers themselves face financial hardship. There is no upside to the current system.

A meaningful increase to statutory sick pay would immediately turn the situation around. SSP reform would enable people to more proactively manage their health conditions, remain linked to their employers and stay off benefits when they fall ill. Modelling by WPI Economics shows that implementation of an increased SSP rate alongside the other changes put forward in the Bill would deliver substantial economic benefits for the UK, including net gains of up to £800 million for businesses, £1.7 billion for the Treasury and £2.1 billion for the wider economy—all upsides.

The onus is therefore on the Government to either: substantially increase the basic rate of statutory sick pay—although I have heard already that it is the DWP that needs to consider that—benchmarking it to the national living wage rate for normal working hours; use the Bill to amend existing primary legislation to give the Secretary of State additional powers, via secondary legislation, to change how the statutory sick pay rate is calculated; or, at the least, hold a statutory consultation with a timeline to establish what the new benchmark rate for SSP should be.

In the meantime, 100% replacement of earnings for employees earning below statutory sick pay is an easily affordable policy. It brings substantial net benefits to UK businesses, the Treasury and the wider economy. At the same time, it would avoid making over 1 million employees even worse off than they are today when forced to take time off sick. It would reduce hardship among employees with the lowest pay.

[Justin Madders]

I am grateful to the hon. Member for that helpful run-through of some of the issues that we are actively considering. He will be aware that a consultation on the issue closed only yesterday, so I would not want to pre-empt the outcome by accepting the amendment today. We understand the various arguments he has advanced that the level should be higher. He will not be surprised to hear that contrary arguments are put forward by some groups around having an incentive to take sick days when they are not needed.

Some of the modelling figures that the hon. Gentleman has come up with do not quite fit with the ones we have on where people would lose out at certain rates, but that will be considered in the round when we formally respond to the consultation. We hope to do so early in the new year, because we wish to put this into the Bill before it finishes its progress. It is something we are actively considering at the moment. I should be grateful if he would withdraw the amendment, so that we can take full account of the consultation that we have just completed.

[Chris Law]

I have listened with great interest to the Minister. I thank him for his comments and for the consultation that concluded yesterday. It would be helpful to hear today what the conclusion of the consultation is. I have made it crystal clear that none of us present want to see those at the lowest end of earnings worse off than they currently are. The Bill has been brought forward in good faith and good will, I am sure, by the new incoming Government to improve the lives of everyone, most of all those at the most vulnerable end. I have spoken to employers and employees quite widely about this, and the feeling I hear constantly is that this is a no-brainer. Delaying would be very difficult.

[Justin Madders]

I understand the point the hon. Member is making, but he will understand that when a Government Department—in this case the Department for Work and Pensions—undertakes a formal consultation, it is obliged to consider all responses before coming to a conclusion. That is why it is premature to agree to his amendment.

[Chris Law]

I thank the Minister for his intervention, but this is not a DWP issue. We are not talking about the level of SSP. We are talking about a sentence in the Bill that puts in a threshold that will make people on the lowest incomes worse off. That is an issue for the Minister for Employment to address rather than DWP. The level of SSP more widely has been discussed, and that may be an issue for DWP to consider. I think there will be disagreement over what that level should be. I have already quoted the TUC’s £320 a week, and I have suggested the national living wage. I look forward to that consultation, but this amendment seeks to strike a sentence out, nothing more.

[Justin Madders]

The very issue that the hon. Member is putting forward in his amendment is the issue that the Department for Work and Pensions is consulting on at the moment, which is why it would be premature to make a decision at this stage.

[Chris Law]

I need to ask for your advice, Sir Christopher, because at this point I would press the amendment to a vote but I want to be charitable and open to understanding what we are expecting from this consultation and when we would be able to bring this issue back—perhaps even during this Committee.

[The Chair]

One of the options open to the hon. Gentleman is to withdraw the amendment today but with a view to coming back to it on Report. Whether he wishes to do that or put the matter to a vote today is a matter for him.

[Chris Law]

Thank you for that advice, Sir Christopher. Based on that, I would consider coming back to this on Report, given the fact that I have not seen the consultation and I would like to work in the spirit that we have done so far in this room to try to bring about the best for all. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 6—Statutory sick pay in Northern Ireland: lower earnings limit etc.

Government amendment 107.

Employment Rights Bill (Tenth sitting)

Chris Law Excerpts

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[Jon Pearce (High Peak) (Lab)]

I promise to keep my comments brief. Clause 15 will amend section 40A of the Equality Act 2010 to provide that an employer must take all reasonable steps to prevent the sexual harassment of employees in the course of their employment.

The concept of “all reasonable steps” has been part of the Equality Act 2010 since its inception, as my hon. Friend the Member for Gloucester referred to. Section 109 of the Act provides a defence for the employer in respect of the discriminatory acts of the employee. It is about vicarious liability: in effect, if the employer can show that it has taken all reasonable steps, it will not be liable for the acts of the employee.

Exactly the same “all reasonable steps” test is being applied here. In my experience as an employment lawyer, employment tribunals are very well-versed in it and have a huge amount of experience with it. It would be a matter of fact for them to determine. It is important to understand that it will be, and always has been, a proportionate test that looks at the size and resources of the employer and the context of the employment situation.

There will inevitably be guidance from the Equality and Human Rights Commission on how employers should take all reasonable steps and what those steps might be, but it will be fact-specific. It may well include steps to mitigate, such as some form of risk assessment, policies, training or means by which an employee who is at risk of or has suffered third-party harassment can report it and action can be taken. All those things are fairly standard. They happen already as a result of the vicarious liability element of the Equality Act; the clause would just extend them to third parties.

All third-party harassment cases and issues arise from a case called Burton v. De Vere Hotels, in which Bernard Manning made racist comments to a waitress at a De Vere hotel and the waitress brought a claim. Both the original employment tribunal and the employment appeal tribunal held that it was harassment, but it was overturned on appeal because the right did not extend to protection from third-party harassment. That was the start of the process of trying to protect employees in such circumstances.

The employment tribunal and the employment appeal tribunal said that the employer knew what was likely to be in Bernard Manning’s act—we can all imagine what might be in Bernard Manning’s act—but did not take the necessary steps to protect the employee in the circumstances. These are exactly the scenarios that the shadow Minister raised, in which we would expect the employer to consider very carefully who was staffing the event, what policies should be in place and how any issues should be managed—including, for example, by warning Bernard Manning that he might not wish to make racist remarks to members of staff.

When we talk about risk assessments, we must remember that the biggest risk is that third-party harassment will continue. That is the most fundamental issue. I emphasise a point that the shadow Minister will find relevant: a 2023 Buckinghamshire healthcare NHS trust staff survey showed that there had been nearly 400 incidents of sexual harassment by third parties. Many of those incidents will have affected his constituents. It is vital that we make this legislation, because employee representatives at the trust have said that one thing that would help is a protection against third-party harassment. If we do not include this provision in the Bill, we will continue to leave his constituents exposed. I encourage the shadow Minister, who I genuinely believe cares about harassment, seriously to reconsider his opposition to the clause.

[Chris Law (Dundee Central) (SNP)]

It is a pleasure to see you in the Chair, Mr Stringer. I rise to speak in support of new clauses 39 and 40, which stand in the name of the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts).

The new clauses follow the publication of the Health and Safety at Work etc. Act 1974 (Amendment) Bill, a presentation Bill that the right hon. Member introduced in co-operation with the Suzy Lamplugh Trust and Rights of Women. They would address a critical gap in workplace safety by mandating proactive employer responsibilities to prevent all forms of violence and harassment, including gender-based violence.

The Health and Safety Executive does not currently accept domestic abuse within its remit. That might come as a surprise to some Members, but the reason is that domestic abuse and other forms of gender-based violence are not explicitly covered in the 1974 Act, even though the Domestic Abuse Act 2021 underlines the fact that employers owe their employees a duty of care that covers protection from domestic abuse.

Discrimination law inadequately protects workers from gender-based violence beyond sexual harassment, especially when such violence is not physical. The UK’s ratification in 2022 of the International Labour Organisation’s convention 190 means that the UK should take a comprehensive approach that addresses all forms and threats of gender-based violence in the workplace, psychological and emotional abuse, physical abuse and stalking, including with respect to people commuting to and from the workplace.

New clauses 39 and 40 would address those issues. They would go further than the Bill’s provisions on protection from harassment, because new clause 39 would introduce clear, actionable duties for employers to safeguard employees from gender-based harm through risk assessments, policy development and training. New clause 40 would mandate that the Health and Safety Executive create an enforceable framework that holds employers accountable and fosters inclusive, violence-free work environments for workers.

I understand that this may have been the Minister’s first opportunity to hear these points. I hope he will consider them, perhaps on Report.

[Alison Hume (Scarborough and Whitby) (Lab)]

Prior to entering this place, I spent 25 years working in the television production industry, both as a writer and as a producer. I co-own an independent production company—I refer the Committee to my declaration of interests—that has made children’s drama for the BBC, including the hit science fiction series “The Sparticle Mystery”, in which a cut-price British version of the large hadron collider at CERN sends all the adults into a parallel universe, a situation with which I have had some sympathy since arriving as a new Member. I mention that not to burnish my CV in the hope of a writing credit on the next James Bond film, but to make a point about clause 15.

The television industry is full of creative, inventive and hard-working people who wish to make the most of their talents and contribute to making the programmes with which the UK is a world leader and for which it is rightly admired. Unfortunately, the nature of a fast-moving and pressurised industry based on freelancers is that it is left open to abusive practices. Freelancers move between productions, often with no HR departments, with no formal recruitment processes and with a lack of the checks and balances that we all want to see in good workplaces. It is also an industry in which the talent is protected, which has led to a culture of exceptionalism in which appalling behaviour has been allowed to continue for years.

This is not just about sexual harassment and inappropriate behaviour. It is also about power, or rather the imbalance of it. When I was in the green room at the start of a production, someone came up to me—I was on my own with him—and put his arm around me. He said, “Make me a cup of coffee, love.” I said, “Make your own, and then start looking for a new job,” because I was the executive producer on the show. Unfortunately, far too many women endure sexually explicit comments, inappropriate touching and offensive jokes as part of their everyday experience at work.

A few years ago, a survey found that 39% of women working in film and television had been subjected to sexual harassment at work; freelancers, members of the LGBTQ+ community and disabled people are also most at risk. Women are too scared to speak out: they fear that if they do, they will simply not work in the industry again. It is hardly surprising that last year two thirds of women aged between 25 and 59 thought about leaving the industry.

I say to the shadow Minister that clauses 15 to 17 will mean that companies have to proactively take all reasonable steps to close the vacuum of responsibility that currently exists between senior and middle management. They will need to ensure that staff have the training to call out challenging behaviour, support colleagues and prevent future abuse rather than focusing solely on damage limitation, as sadly we have seen time and again.

--- Later in debate ---

[The Minister for Equalities (Dame Nia Griffith)]

We have had a full and thorough debate, and I thank my hon. Friends—in particular my learned hon. Friends the Members for High Peak and for Gloucester—for making many valuable arguments, and everybody for contributing their personal experiences.

I remind the Committee that clause 15 requires employers to take all reasonable steps to prevent sexual harassment of their employees. Including “all” emphasises the thorough approach that employers must take; at the same time, the requirement remains limited to steps that are “reasonable”. The concept of “all reasonable steps” has the advantage of being well established and familiar to employers and employment tribunals. That is a really important point, because the clause clarifies and makes things easier and more straightforward, rather than complicated and burdensome, which is the implication of some of the amendments.

I thank the hon. Member for Dundee Central for speaking to new clauses 39 and 40 tabled by the right hon. Member for Dwyfor Meirionnydd. I pay tribute to the right hon. Lady for her work on violence against women and on stalking, and indeed to the work of her predecessor on stalking. I reassure the hon. Gentleman and the right hon. Lady that the Government entirely support the importance of ensuring that workers, including women and girls, are protected from workplace violence and harassment. There is already in place a strong and appropriate regulatory regime that provides protection to workers from violence and harassment. If the hon. Gentleman so desires, I will ask the Health and Safety Executive to write to him on that point.

[Chris Law]

I thank the Minister. I would appreciate that.

[Dame Nia Griffith]

I will ensure that that happens.

The hon. Member for Mid Buckinghamshire questioned the necessity of this new legislation, so let me explain again. Often, harassment legislation, including the criminal law, allows an individual to take legal action against a perpetrator. However, that does not go far enough in tackling the wider issues and root causes. The burden of holding perpetrators to account and driving change is too great to be shouldered purely by employees who have experienced harassment. This measure therefore sends a clear signal to all employers that they must take all reasonable steps to prevent sexual harassment.

I think the hon. Member is also concerned that the clauses that we are discussing risk being unworkable or burdensome. It is important to remember that they simply require employers to do what is reasonable for their specific circumstances. That means that employers will not be penalised for failing to take unworkable or impractical steps. The clauses will not require employers to foresee the wholly unforeseeable or to police all customers’ private conversations. On one hand, the hon. Member acknowledges that good businesses already accept the need to take all reasonable steps to prevent sexual harassment, but on the other, he wants to make exceptions for a large number of businesses.

Employment Rights Bill (Eleventh sitting)

Chris Law Excerpts

Committee stage
Thursday 12th December 2024 Public Bill Committees

[Dame Nia Griffith]

Let me pick up on the point about the consultation. We very much recognise the urgency, so the consultation is expected to take place in 2025—this coming year—after which we will introduce secondary legislation. It has been noted that clauses 20 and 21 build on previous measures that received cross-party support, and I commend them to the Committee.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21 ordered to stand part of the Bill.

Clause 22

Dismissal for failing to agree to variation of contract, etc

[Chris Law (Dundee Central) (SNP)]

I beg to move amendment 160, in clause 22, page 33, leave out lines 11 to 2.

[The Chair]

With this it will be convenient to discuss amendment 161, in clause 22, page 33, leave out lines 22 to 40.

[Chris Law]

It is a pleasure to see you in the Chair, Ms Vaz. Fire and rehire is one of the most contentious issues that we have heard about over the last years, and I will speak to it in some depth.

First, I want to welcome the measures within this Bill, specifically those in clause 22, that tackle fire and rehire by considering a situation to be an unfair dismissal where an employee is dismissed for refusing to accept contractual variation, or where they have been dismissed to enable the employer to employ another employee, or to re-engage a dismissed employee on inferior terms. Over recent years, there have been several egregious examples of fire and rehire from large and very successful companies in the UK. In January 2021, the TUC found that

“nearly 1 in 10 workers…had been told to re-apply for their jobs on worse terms and conditions since the first lockdown in March”—

that is, March 2020. That is 10% of the working population. Notably, almost twice as many black workers faced fire and rehire as white workers.

The SNP completely opposes fire and rehire, which is an appalling and abusive practice, and I am sure that most members of the Committee feel the very same. It must be outlawed. We have long campaigned to ban fire and rehire tactics and ensure that workers are not the victim of bosses looking to cut costs. I pay tribute to my former colleague, Gavin Newlands, who twice brought forward Bills in previous Parliaments to outlaw the practice, which had the support of over 100 MPs and the backing of all major trade unions, including Unite, the British Airline Pilots’ Association and GMB Scotland. I also commend the work of Chris Stephens who, on a regular basis, stood up for workers against the previous Tory Government and called for an immediate end to fire and rehire.

However, there appears to be a loophole, and amendments 160 and 161 seek to remove it. Amendment 160 would delete subsection (4) to proposed new section 104I, which provides an opportunity for fire and rehire to continue where

“the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, and…in all the circumstances the employer could not reasonably have avoided the need to make the variation.”

Along with many others, I have reservations about that. If employers can point to their likelihood of financial difficulty, they will deploy fire and rehire tactics.

Let me ask some questions. Does the Minister agree with Martyn Gray, who gave evidence to this Committee just a couple of weeks ago? He is the director of organising at Nautilus International, and he made it clear to the Committee how high the bar should be set when he said:

“Quite simply, if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option…I would set a really high threshold and then allow for scrutiny from the relevant bodies.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 65, Q61.]

Employers’ unions have encountered those who have threatened or implemented fire and rehire to reduce workers’ pay and/or conditions, including companies such as British Airways, Heathrow Airport, Argos, Weetabix, Tesco, Asda and British Gas. All members of the Committee know all those names and are very familiar with them. In fact, more than half of those are in my constituency of Dundee and employ a large number of people.

I want to give an idea of the scale of the profits that those companies have made just this year. Asda made £1.1 billion—we are right in the middle of a cost of living crisis, and that is over £1 billion profit for a retail store. Tesco made £2.3 billion profit, and British Gas’s parent company has said that its profits have fallen to a humble £2.8 billion. Those are just three examples and the others—Heathrow Airport, Argos and Weetabix—are also all in profit. One simple cereal company made £368.8 million. Those are hardly companies in dire financial straits. Can the Minister explain how many of the high-profile fire and rehire cases known since 2010 would fall foul of the requirements within the Bill, and how many would be exempted under this loophole?

I think we all know that although the Bill is well-intended—and we fully support it—if it is not revised, it will fail under that loophole. As Andy Prendergast, the national secretary of GMB, explained in his evidence to this Committee:

“We have seen lots of financial engineering. We see inter-company debt. I think there is a concern long term that we may find cases where companies have engineered a financial position that allows them to do something they otherwise would not. That will have to be dealt with on a case-by-case basis.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 131, Q135.]

That is twice this Committee has heard evidence that should make us really think about the purpose of the Bill, which I totally agree with on fire and rehire, to ensure that it is watertight.

Can the Minister outline what changes the Government will make to the Bill and what regulatory regime will be put in place to prevent the provision from being exploited in the manner described? For example, will employers have to evidence the financial difficulties before making any decisions on firing and rehiring, or will they need to be evidenced only if an unfair dismissal claim is brought forward? We can clearly see now who holds all the cards. If it is the latter, and claims of financial difficulties are discovered at a tribunal to be unfounded, will employees who have been affected be reinstated on their original terms? These are important questions we need to ask.

In the absence of the detail and guarantees sought, the amendment seeks to remove the loophole altogether. We cannot allow this aspect of the Bill to pass without cast-iron protections against fire and rehire. We cannot wait and see how it plays out in reality, with people’s jobs and lives at stake.

If the provision is to remain—I can clearly see and many others so far have seen that it is a loophole—it is important that further amendments are proposed, not just to clarify definitions of financial difficulties and processes on establishing their veracity, but to ensure that there are further protections to strengthen an employee’s position in relation to any consultations and negotiations that take place when the employer is in financial difficulty. Does the Minister agree that the employer should take all reasonable steps prior to cutting workers’ wages and altering other terms and conditions? Does he agree that all material information should be provided to each union and that as much time as possible must be made available to consult? Does he agree that the employer must comply with any procedural requirements for varying contracts of employment or collective agreement?

Critically, does the Minister agree that the employer should have reduced the remuneration of partners, directors and managers at least to the extent equivalent to that which applies to the workers subject to variation of contract? After all, if an employer is struggling with his company, we cannot have the managerial class carrying on as if it is not affecting them while others have their contracts reduced and their terms and conditions worsened. Does he agree that the employer should have stopped paying dividends to shareholders, buying back shares, or making loans to partners, directors or shareholders, as soon as the financial difficulties became apparent, and renegotiated, to the greatest extent practicable, loans to third parties?

If the Minister does agree, will he give assurances that he will support such amendments being made to the Bill?

[Greg Smith]

I will speak briefly to amendments 160 and 161, standing in the name of the hon. Member for Dundee Central and the Scottish National party. These amendments seek to make the fire and rehire provisions more restrictive, saying that employers cannot vary contracts or re-engage staff on different contracts

“to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business,”

and remove the ability for the employer to do so if in the circumstances

“the employer could not reasonably have avoided the need to make the variation.”

I appreciate that it is quite a convoluted position, but it is clear to me that the SNP is siding with the trade union position that Martyn Gray set out, which is that

“if directors can sign off the business as still remaining as a going concern, fire and rehire should not be an option.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 65, Q61.]

But we heard from almost every witness—

[Chris Law]

I will re-declare that I have been an employer in the past, as well as an employee, and have employed staff; this is not just a union position. I have talked about companies. I can appreciate small businesses and even microbusinesses being really concerned about such issues, because they would impact them directly.

Typically, small businesses keep a very keen eye on where things are going in the future. If people want a good team in their employ, they make sure that their employees know very well what is going on with such issues. We had this debate earlier. I will list again, just to remind people, the relevant companies: Asda, Tesco, British Gas, Argos, Weetabix and Heathrow Airport. They are big companies, with billion-pound profits, that are taking advantage of the current situation. They have already taken advantage up until now—why will this loophole mean that they will not do it in the future?

[Greg Smith]

I understand the hon. Gentleman’s point. He likes to point to the profit lines of many of those businesses. Just because a business is making a substantial profit does not necessarily mean that it does not have to go through significant change in businesses practices in meeting market demands, manufacturing processes as technology moves on, or whatever it might be. I am really not seeking to advocate for anybody to be abused in the way he talks about. I am trying to acknowledge that things change in lots of businesses all the time. No one should be unfairly treated as part of that process, but sometimes, even for the very largest companies, significant change happens—as I say, to manufacturing processes or whatever—that requires a fundamental shift in job descriptions.

I am sure that most of those businesses want to keep their workforces on, but if the contract under which the employee was originally employed talks specifically about processes or ways of manufacturing, or uses of particular bits of equipment, that just do not exist anymore because technology has moved on, there is a requirement for contracts to change. Ideally, that will always be done in a consensual, negotiated manner, but the amendments put forward by the hon. Gentleman and the SNP go too far in shutting down that restriction. I agree with his point about small and microbusinesses, which really will struggle, in an ever-changing world with technological advancement and so on, to meet the conditions he is putting down.

[Chris Law]

We are not talking about technological changes, though, are we? We are not talking about advances that would mean changes to the structure of a business. We are talking about the language that is being used about the likeliness of financial difficulties. To any lawyer, the word “likely”—how long is a piece of string? Someone could argue the case that “likely” means this, while someone else could argue it means that. The language is lax, which is part of the issue.

In terms of financial difficulties, what is a financial difficulty? Does it mean, “We can’t afford the loo roll in the staff toilets so we will fire and rehire,” or something more structural? What I seek from the Minister is assurances that the purpose of the Bill on fire and rehire is very specific: we want to end fire and rehire. Given the current loophole, we have already heard not just from trade unions, by the way, but from businesses—

[The Chair]

Order. You are intervening on the shadow Minister.

[Chris Law]

I apologise. I just wanted to remind the shadow Minister that we are already hearing from businesses. They are clearly looking at this loophole as an opportunity for them in the future.

[Greg Smith]

Of course there will always be some who look for loopholes, but I gently suggest that the vast majority do not. They are good employers who care for their workforce, because, as we have discussed many times over, no business is anything at all without both parts—the workforce and those who risk their capital and so on to make those jobs happen, and to produce the products and sell the services in the first place.

The intervention from the hon. Member for Dundee Central neatly leads on to where I was going anyway. The Committee heard from almost every witness who was an employer or who represented employers that the dismissal and re-engagement provisions in the Bill were already too restrictive and would lead to staff being laid off. The SNP amendments make those even more restrictive, so it is not hard to work out where those witnesses would have gone on this front. Given that risk of lower employment and higher unemployment, I gently ask the hon. Gentleman to consider how the SNP would actually answer that challenge were the amendment to go through.

--- Later in debate ---

[Justin Madders]

I am grateful for the contributions in this debate, which deals with one of the central issues we have been grappling with. On this side of the Committee we certainly want to see fire and rehire consigned to the history books. Equally, we do not, as my hon. Friend the Member for Worsley and Eccles said, want to see businesses feel they have no option but to make people redundant because they do not feel they can take any other course of action. It is about trying to ensure that that is still available without opening a loophole, as it has been described, for abusive fire and rehire tactics to continue. There is an awful lot in the Bill as it stands that will make it a very high threshold indeed for any employer to want to take that step. There will, of course, be further guidance in regulations, where we will home in on the kinds of concerns that have been raised.

[Chris Law]

I appreciate that there is a lot in the Bill, and I appreciate that some Government Members on the Committee think this is a nut to crack. I have asked questions—I hope to hear some of the answers to them—and I want to add another. I raised the issue of “likely”, which is the language used. Will the Minister remark on whether the Department intends to advise on how the word “likely” should be determined? Will he consider whether that will reflect what was set out in the Trade Union and Labour Relations (Consolidation) Act 1992 and a subsequent tribunal judgment, which came to define “likely” as a need to show

“a significantly higher degree of likelihood than just more likely than not”?

[Justin Madders]

I am not familiar with the particular case law the hon. Gentleman refers to, but I will take that away.

It is fair to say that employment tribunals currently do not have the kind of inquiries into a business’s finances and general condition that we are trying to achieve with this legislation. At the moment, there is a fairly broadbrush approach, particularly in terms of redundancies, to inquiries about the business reasons. It is important to draw the hon. Member for Dundee Central’s attention to the words after “likely” in the Bill. It is about an

“employer’s ability to carry on the business as a going concern”.

That means the alternative is insolvency or redundancies, which is the eventuality that I am sure we all want to avoid. It will ultimately be a question of fact for an employment tribunal to determine whether it genuinely was the only option available to the employer, which is what the Bill will require the employer to demonstrate.

There are a legion of examples of trade unions working constructively with businesses to avoid those kinds of insolvency situations, as a result of which terms and conditions have changed. The hon. Member for Dundee Central quoted Andy Prendergast who, in respect of what happened in the 2008 financial crisis, said in an evidence session:

“It was heartbreaking, but we had to do it because it was the right thing to do.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 131, Q135.]

He was talking about changing terms and conditions in agreement with employers to avoid redundancies and potential insolvencies.

The hon. Gentleman’s amendment would take out all of subsection (5) of proposed new section 104I, which is the requirement for the employer to engage with trade unions and have the dialogue that we think is so important in industrial relations. It would say, “That does not matter any more.” The dialogue we are seeking to develop—the tripartite approach—and the move to make the arbitrary take-it-or-leave-it approach that some employers have adopted in fire and rehire a thing of the past, would not matter.

The hon. Gentleman has asked some important questions about what we would expect of employers; I think subsection (5) answers many of them. Further regulations and codes of practice will also deal with them, because we want to make sure we have a situation in which the bar for passing this test is extremely high, but in addition to that—in addition to there being no alternative but insolvency—the employer has to then demonstrate that they have carried out a full consultation with the trade union. That will involve a full explanation of the financial situation. As we develop the regulations and codes of practice, we will flesh that out in some more detail.

[Chris Law]

I am listening carefully to the words the Minister is using. When does the employer carry out that process? Ultimately, they have two options. They can carry it out well in advance to ensure that employees are kept up to speed early on. Some employees may wish to leave under those circumstances and find employment elsewhere. But often, in past cases of fire and rehire, employees have heard at a very late stage or not at all. There is currently no provision in the Bill to say what the timetable should be. I would like to get an indication of the Minister’s thoughts about potential future amendments relating to that subject.

[Justin Madders]

I hear what the hon. Gentleman is saying, but subsection (5) does set out the requirements on an employer to consult. It would be normal for further detail about consultation to be considered to be in good time when proposals are at a formative stage, as has traditionally always been the case. I see no reason why it would not also take the same form in that instance.

What we are really talking about is a situation in which there is a sudden change in a company’s financial circumstances and it has to act quickly. In that situation, we do not want to force it to go insolvent or make people redundant, if there is an opportunity to save jobs. That is why subsection (5) is so important: because it will encourage and compel the dialogue that we are seeking to achieve. I accept that there is more to be done in terms of honing some of the detail, but I urge the hon. Gentleman to withdraw his amendment because it would, I am afraid, have unintended consequences.

[Chris Law]

I thank the Minister for his comments. It is helpful to know that there will be further consultation and, potentially, amendments—which may even come from his own side—to tighten up this bit of the legislation. It is critical to the wider Bill and the SNP understands its importance; we just want to see it made tighter—not to put employers in impossible situations in which they cannot negotiate, but so that it is not exploited as a loophole. As it currently stands, employers are already discussing that.

I appreciate the Minister’s response. In that context, so long as it is something that can be further considered and, particularly, brought forward on Report, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Anna McMorrin.)