Employment Rights Bill (Tenth sitting)

Chris Murray Excerpts

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[Greg Smith]

It is a pleasure to serve under your chairmanship, Mr Stringer. I accept the Minister’s point that clause 19 essentially just introduces schedule 2. Several amendments in my name and in the name of my hon. Friends will explore schedule 2 in detail over the coming days and potentially even weeks.

However, as we discuss clause 19, I think it is important gently to challenge what is actually quite a big leap, from two years down to day one. It is incumbent on the Government to come up with a rationale and a reason for such a considerable change. This is not a taper or a gradual decrease from two years to a year or six months; we can have a debate about what the right number is.

It is clear that the Government wish to move down from two years, but what we heard in our public evidence sessions shows the very real risk that introducing these day one rights for all employees will mean that employers are reticent, are more risk-averse and do not hire as readily, freely or easily as we might want in order to create jobs in our economy. I remind the Minister what Jane Gratton of the British Chambers of Commerce said about her members:

“Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights”.––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 8, Q2.]

She went on to argue for a nine-month probationary period—a period to which it would potentially be feasible to reduce this timeframe.

Whenever a new law comes in and makes a significant change, be it to business, regulation or whatever sector, I gently ask the Minister to reflect on the time period. Is it really necessary to make such a giant leap in one go? Even if in years to come the Government get what they want in terms of day one rights, would it not be better to face this now, listen to industry, listen to the evidence that this very Committee heard a couple of weeks ago and be more measured, proportionate and risk-averse as to what these measures might end up doing to the overall jobs market in the United Kingdom of Great Britain and Northern Ireland? If the Government did that, it would help with some of the stark and staggering business confidence numbers in the economy at the moment. Businesses are worried about where the future lies, and real people out there looking for work are worried that jobs might not be as readily available after the Bill comes into effect.

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

I declare an interest as a member of a trade union. We have seen a change in the labour market over recent decades. Previously, people used to stay in work for much longer; currently, the average tenure is 4.5 years—there has been a slight increase, because it has been bang on four years for the past five or six years. That means that people nowadays spend half their time in a job without any rights, because of the two-year threshold. The proposals in this legislation are updating the labour market to the realities of today’s jobs. People spending half their time without rights leads to a lack of confidence and security. The way to address business confidence and worker security is by bringing these rights in from day one, as this legislation proposes; sticking with the status quo is what leaves people more insecure.

[The Chair]

Order. I remind hon. Members that they can catch my eye to make significant points in the debate. Interventions should be short and to the point.

--- Later in debate ---

[Laurence Turner (Birmingham Northfield) (Lab)]

Throughout these proceedings, we have talked a lot about evidence bases and the likely impact of particular measures on business. The clause might be short and to the point—I do take the points made by the shadow Minister that we will come on to more detailed discussions, and it is right to debate the general principles here—but it does have precedents. In terms of the dilemma or decision over whether the qualifying period should be two years, one year or, as in the Bill, day one—but with that important provision for a probationary period—the issue has been road-tested.

The period was set at two years for many years. Then it was reduced to one year in the late 1990s, and economic growth continued. When the qualifying period was raised from one year to two years in 2012, the impact analysis that the then Government produced said that one year was easily sufficient in the overwhelming number of cases. On this aspect of the Bill, the businesses I have spoken to in my constituency and in the general Birmingham area have told me that, in almost all roles, employers are not still talking about whether someone is suitable for the job 12 months in; it is usually apparent within weeks. That circumstance is still covered by the initial period of employment provided for in the Bill.

According to the impact assessment, the estimated saving to business across the entire the economy, after the familiarisation cost period, was relatively small—I believe it was around £2 million to £3 million in 2011 prices, so probably somewhere around double that today. I think my hon. Friend the Member for Worsley and Eccles used the word “grandiose”. We are really not talking about that, but about a relatively small number of cases that could fall under that initial period of employment provision.

Let me return to an argument that has been made previously in the Committee, but that is relevant here. One undesirable effect of that change in the qualifying period was that because a worker who faced detriment and unfair treatment in the workplace had no recourse to an unfair dismissal claim through the employment tribunal system until they reached their two years, they found themselves relying on equalities arguments instead—a day one right in law as it stands. The effect—another perverse outcome—has been to overload that part of the employment tribunal system.

This change is sensible. It will help with the undesirable effects in the court system as it stands. The Chartered Management Institute, which we heard evidence from, surveyed its members and found that 83% of managers agreed that improvements in family-friendly policies and day one rights, including in respect of unfair dismissal, would positively impact workplace productivity.

In some of the related provisions in the Bill, particularly around the initial period of employment, there is promise that we will see a light-touch regime, and we are all looking to see what the details will be. I know that the Government are due to come back on that.

[Chris Murray]

I promise that I will make a short intervention this time, Mr Stringer. The statistics show that one in 10 workers never spend more than a year in a job, so they are particularly affected by the lack of provision on day one. At any one time, one in five workers are within the first two years of their employment. Does my hon. Friend agree that we are talking about a group of people who need the security of these rights to improve their productivity, but who are currently completely excluded from them?

[Laurence Turner]

My hon. Friend makes an important and relevant point. The people who are most adversely affected are those who have the least and who are on the lowest incomes in the economy, and the social care sector is a good example of that. In the city of Birmingham, the average turnover rate for care workers is around 30% every year. An enormous number of people are concentrated in particular sectors. One of the difficulties in Committee is that we use overall, aggregate numbers when weighing the impact of policies, but they are felt particularly in certain sectors—that is a common point of agreement among Members on both sides. If we get this change right, the benefits will be felt most keenly in the parts of the economy, and by the people, that need these protections most.

Again, it is worth reflecting on what we heard in the evidence sessions. We heard from Professor Bogg, from the University of Bristol, that

“if you look at the OECD countries, we are the fifth least regulated on dismissal protection out of 38 countries, and we are the third least regulated on hiring on temporary contracts”,

and that the change

“just pushes the UK back into the mainstream of other…OECD countries with employment regulation that works effectively.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 143, Q147.]

There can be a lot of sound and fury about the individual measures that we are debating, but I want to reinforce the point that all the evidence we have had, whether that is written evidence from interested parties, evidence the Committee has heard or historical evidence—maybe not going quite back to the industrial revolution, but at least over the past 30 years of changes in the qualifying period—shows that the effect on the overall economy will be sensible and limited. However, it will be the lowest-income workers, whose living standards, rights and dignity of work we all want to improve, who will benefit most. The clause is extremely welcome, and I commend it to the Committee.