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.