Unpaid Trial Work Periods (Prohibition) Bill

Chris Philp Excerpts

2nd reading: House of Commons
Friday 16th March 2018 Commons Chamber

[Stewart Malcolm McDonald]

This may be the only time that I have looked forward to using my parliamentary privilege: I am going to name some companies that have come up when I have had this conversation with people.

The first company that came up was Mooboo Bubble Tea. I understand why there are confused looks on some Members’ faces because I do not know what bubble tea is either, but I can tell hon. Members that I will not be trying Mooboo’s. Mooboo was the company—based in Glasgow, with franchises right across the United Kingdom—that asked one of my constituents to work 40 hours for no money whatever. Not only did my constituent not get the job, although I am sure that she made a fine fist of the trial period, but the company just ignored her. It happens too often that people apply for jobs, go through trials and all the rest of it, but then do not even get told yes or no. They just get left hanging in the air. What a cynical and gross way to treat applicants in this day and age!

[Chris Philp (Croydon South) (Con)]

I quite agree with the hon. Gentleman that this case is a shocking example of abuse. Did he report the matter to HMRC for investigation? If he did, will he update the House on the outcome?

[Stewart Malcolm McDonald]

Yes, I did. I sent a letter to the former HMRC Minister, Jane Ellison, who I think is now employed by the Government as a special adviser—[Interruption.] Forgive me, I may have got that wrong. Jane Ellison did deal with the case for me at the time. I had a conversation with her on one of the few occasions that we were in the same Lobby, and she assured me that my complaint was passed on to the right people. Part of the problem with raising an issue via a Minister, rather than directly to the unit, is that we do not actually get told the outcome of the investigation.

If hon. Members come across cases where there is any question that the definition of the national minimum wage has been abused, I encourage them to report the situation to HMRC. I did a Facebook Live broadcast with House of Commons digital officials earlier this week, and I gave lots of examples from members of the public who have gone through such things. People rely on the National Minimum Wage Act 1998, and the low paid rely on it more than any other group in society, so it needs to be enforced with rigour.

--- Later in debate ---

[Chris Philp (Croydon South) (Con)]

It is a great pleasure to follow the very thoughtful, well-researched and well-considered speech by the hon. Member for Glasgow South (Stewart Malcolm McDonald). I must say that I found myself in agreement with large parts of it, partly because I am a very passionate believer in the national minimum wage.

One of the things I did after I was first elected in 2015 was to seek out the then Chancellor of the Exchequer, George Osborne—I understand he is more than modestly occupied these days—to press him on what I thought was the very strong case for a big increase in the minimum wage, because it is so important, and I was delighted when, a short time later, the Government announced large increases in the minimum wage. I am very proud of the fact that a Conservative Government, between 2010 and today, have increased the minimum wage from £5.93 an hour back in 2010 to £7.83 an hour today, which is a 32% increase. The national living wage is a legally required minimum wage, and I am very proud that a Conservative Government have increased it by 32%. Over that period, inflation has been only 19%, so it has risen by substantially more than inflation.

[Stephen Kerr]

Does my hon. Friend accept that the premise of the Bill is that it is a wonderful thing to learn to work, which is a very important part of growing up? The Bill is particularly about protecting the young, however, so is it not an important lesson for the young to learn that if they go to work and they work hard, they are also entitled to be paid fairly?

[Chris Philp]

Yes, I agree with that principle. As my hon. Friend pointed out in his earlier intervention, the idea that people should be fairly paid for a fair day’s work, or even for a fair few hours’ work, is an important Conservative principle, and I think it is an important fundamental right as well, so I agree entirely with that premise.

I want to put on the record once again my very strong support for the concept of the minimum wage—the national living wage—and the fact that it has been increased by such a large amount. While talking about wages for those on low earnings, I would point out in passing that the increase in the tax-free allowance in the past few years—from £6,500 to £11,500—means that take-home wages for people on the minimum wage, the topic of the Bill, have actually gone up by 37%, because not only has the minimum wage gone up by 32%, but they are also paying proportionately less tax. It is important to bear it in mind that low tax, as well as a decent wage itself, has a role to play in making sure people are properly paid.

We have talked quite a bit already about enforcement. Clearly, a national minimum wage, or national living wage, is only as effective as its enforcement, as the hon. Member for Glasgow South touched on. In the last financial year, 2016-17, HMRC, the body responsible for enforcing the national minimum wage, took action against 1,134 individual businesses—quite a good track record of taking action to enforce the minimum wage; clawed back £10.9 million—a fairly substantial sum; and took action that encompassed 98,000 workers who had been illegally underpaid. That suggests that HMRC is taking its enforcement role very seriously and enjoying some success in making sure that the national living wage and minimum wage are adhered to.

[Bob Stewart]

Just to clarify, HMRC did not keep the money but presumably gave it to those who had lost it. Is that right?

[Chris Philp]

When someone has been illegally underpaid, I believe that they receive retrospective compensation. As to where the funds go, I rather suspect they end up with Her Majesty’s Treasury, but certainly the unfair loss suffered by people who have been underpaid is made good.

[Lloyd Russell-Moyle]

My brother took part in one of these trials for a telephone sales company. He worked for two days unpaid while having to pay for transport up and down. He is a physics graduate—very intelligent—and knows that it is illegal, but he has no confidence that if he reports the matter, it will go anywhere. Is not part of the key to enable easier reporting to HMRC and to require companies to report how many jobs are available, as the Bill requires, and is that not why the Bill is needed?

[Chris Philp]

I will come to the substance of the Bill in a moment, but I entirely agree that the hon. Gentleman’s brother’s experience—two days!—is clearly well beyond anything that is remotely reasonable and also that reporting should be made easier. We should put some of these facts into the public domain so that people who think they might have been unfairly abused, either in this area or a related one, can report the companies and action can be taken.

[Kevin Foster (Torbay) (Con)]

My hon. Friend is making an interesting speech. Does he agree that one way of dealing with this is to have very clear guidance on the existing law about what is an acceptable trial period and what is flagrantly trying to dodge the law and the minimum age, as Mooboo Bubble Tea tried to do in Glasgow?

[Chris Philp]

I will come to that point, but first I want to put two other facts about enforcement on the record. First, HMRC has a team of 400 people working on this. I am very sorry that the brother of the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) did not feel able to report the matter to one of those 400 HMRC staff. Secondly, the budget for enforcement was recently doubled from £13 million to £25 million, which I hope gives some confidence that HMRC and the Government are taking this very seriously.

I turn now to the point just raised by my hon. Friend the Member for Torbay (Kevin Foster). There is clearly an issue with enforcement. My understanding of the law is that excessively long unpaid work trials are currently unlawful and should be paid. We have heard three examples in the Chamber today, two from the hon. Member for Glasgow South and the one we heard a moment ago from the hon. Member for Brighton, Kemptown. All involved periods of work—two days in the last case and periods of two or three days and 40 hours in the other two—that strike me as clearly far in excess of what is reasonable and ought to fail the test of not being excessively long unpaid work trials. I would welcome the Minister’s confirmation that those three examples do indeed contravene existing regulations and that, in his view, had they been reported—I think one or two were—the company would likely have been found against.

[Michelle Donelan (Chippenham) (Con)]

Current legislation states that a job should be intended at the end of a trial period, but in some of the examples we have heard that is not happening. There is a potential problem with the enforcement of current legislation, so perhaps we need a review of that, rather than to duplicate our laws.

[Chris Philp]

If trials are taking place with no certain job at the end, or no vacancy, that is an outrageous abuse.

[Stephen Kerr]

It’s fraud.

[Chris Philp]

It is indeed fraud as my hon. Friend says, and I entirely agree with his interjection. I look forward to the Minister offering his thoughts on that in due course. [Interruption.] Excuse me Madam Deputy Speaker. I am recovering from the remains of a cold that my children kindly gave me last week. [Interruption.] Does the hon. Member for Glasgow Central (Alison Thewliss) wish to intervene?

[Neil Gray]

She was suggesting you could sit down.

[Chris Philp]

That is a very kind suggestion, but I am afraid I have not yet finished. This is an important matter, and we will give it due consideration—[Interruption.] That has made my cough even worse.

As I understand, under current drafting, any period of trial working, even as little as five minutes, would fall foul of the Bill. [Interruption.] The hon. Member for Glasgow South is nodding his head in assent. As with any piece of regulation, there is a balance to be struck. I completely agree that all the examples we have heard about are totally unreasonable. Such behaviour should be unlawful, and those companies should be prosecuted and fined. However, there are examples—I am coming to the conclusion of my remarks—of companies that, quite legitimately, want someone to do a reasonable amount of trial work, by which one might mean a few hours. I would consider three or four hours to be the maximum amount of time considered reasonable, and it could be unfair to impose on those businesses the administration involved in setting up payroll, PAYE, national insurance, a return to HMRC and so on, for a short and reasonable period of trial work.

[Stewart Malcolm McDonald]

The hon. Gentleman knows about other instruments that exist for employers, and someone’s skills can be tested. If he applies to work at my coffee shop and I ask him to prove that he can make a cappuccino, he will do what he has to do, and I will be satisfied with that. I do not need to put him on a shift with the rest of my staff and have him working alongside other colleagues, serving customers and contributing to my profit margin without payment.

[Chris Philp]

As we have discussed previously, that would be wholly unreasonable for an entire eight-hour shift. However, a trial for an hour, testing someone serving coffee in a live work environment, for example, gives the potential employer information about that person’s suitability. In the coffee shop example, I would consider it reasonable to have someone work for one hour as a trial and not require payment. Working an eight-hour shift would and should require full payment. My concern is that the one-hour trial would get caught by the Bill as drafted.

[Neil Gray]

I am pretty sure that Members who are employers will have it written into their contracts that all staff start with a probationary period. Is that not a more appropriate way to handle this matter?

[Chris Philp]

I am not sure that it is. If someone is taken on as an employee for a probationary period, the reasonable expectation is for them to work with the company for a few months—a probationary period is typically at least one month, and in some cases three. Asking an employer to employ for between one and three months someone who, it transpires after a few hours, is unsuitable is a little unfair on the employer.

[Several hon. Members rose—]

[Chris Philp]

I am spoilt for choice, but I will first give way to my hon. Friend the Member for Thornbury and Yate (Luke Hall).

[Luke Hall (Thornbury and Yate) (Con)]

Does my hon. Friend accept that some people are much more comfortable doing a trial period of one hour than they are sitting through an interview of 45 minutes, which they might find extremely stressful and uncomfortable, and for which they might be unprepared?

[Chris Philp]

I agree with that point. I set up and ran my own businesses for 15 years before being elected, and found that often interviews are not a very good way of ascertaining someone’s suitability. People can come up with all sorts of nonsense, but if they get to do the job in some way, even for a short period such as an hour, the employer learns a lot about their capability.

[Chris Green (Bolton West) (Con)]

I appreciate the point about the coffee shop and the mechanical process of producing coffee, but would my hon. Friend accept that a far more subtle process is needed to assess social skills before an offer of employment is made?

[Chris Philp]

I agree that it is a subtle process.

[Stewart Malcolm McDonald]

Would you work for free?

[Chris Philp]

In a sense, all of us here have done a gigantic free trial shift: it is called being a parliamentary candidate. I was first selected in December 2006 and ran in the 2010 election. I then proceeded to lose by 42 votes, so that was a pretty extended unsuccessful four-year unpaid trial period.

[Michelle Donelan]

Does my hon. Friend agree that a trial period can be beneficial for those trying out for a job, so they can see if they want and like the job? When I was younger, I did a trial period for a few hours. This is about getting the balance right between rights and responsibilities. We do not want to exploit anybody; we want to create and facilitate opportunities and jobs.

[Chris Philp]

A short trial period—just be clear again, I mean one to two hours—can give an employer the confidence to give someone a job, perhaps someone from a disadvantaged background who does not necessarily come across very strongly in interview. That might give an employer the confidence to employ that person when they might not otherwise do so.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I wonder if the hon. Gentleman can clarify something for me. I am listening very carefully to what he says, but I cannot understand why there have to be unpaid trial shifts when it would be much fairer just to put somebody on a temporary contract, then assess them and decide whether to give them a permanent contract.

[Chris Philp]

To be absolutely clear, I do not think that full, unpaid trial shifts are ethical, right or moral. My understanding is that they are illegal already, and if they are not illegal they certainly should be made so. I definitely do not want full, unpaid trial shifts to be legal. However, a short period of time—one or two hours, I would suggest—should not require a temporary contract. Asking someone to enter into a temporary contract entails a certain amount of paperwork and bureaucracy. Notwithstanding the point about the two years, in relation to discrimination it creates immediately binding legal obligations. To do all that for someone who is essentially going through an interview process imposes an unreasonable burden on a prospective employer. If an employer is interviewing 10 people for one position, to have to give all 10 a temporary contract would be excessive in the context of a one or two-hour trial.

I have spoken for a little bit longer than I planned to. Before I conclude, I will take one last intervention.

[Jeremy Quin]

My hon. Friend referred to his time as a parliamentary candidate. As we all know, as a parliamentary candidate one receives a lot of feedback whether we like it or not. One of the powerful points made by the hon. Member for Glasgow South (Stewart Malcolm McDonald) in his excellent speech was in relation to feedback from employers to prospective employees, an excellent idea that should be encouraged. I worry that companies are very nervous about providing honest and helpful feedback. If the Bill moves on to the Committee stage, I hope—as a former employer—that that point is focused on so that a safe harbour can be established.

[Chris Philp]

I agree. We heard from the Scottish National party Benches about a powerful case study. It is a gross discourtesy—an insult, in fact—to interview someone, have them go to the trouble of coming to your place of work, going through an interview and possibly doing some trial work, and not even provide feedback for them. That discourages people from going to interviews.

[Stewart Malcolm McDonald]

If the Bill does not get a Second Reading and go on to Committee, that will continue to happen. Does the hon. Gentleman agree that the Bill should go on to the Committee stage?

[Chris Philp]

I have a very open mind. I would like to hear what the Minister has to say in response to the questions I have posed, in particular on whether one or two hours of work is part of current legislation.

In conclusion, there is a balance to strike. If we impose too many barriers to creating employment—this applies to generally onerous employment legislation—there is a risk that rather than protecting people, we prevent jobs from being created. One of the reasons why this country has created 3 million jobs in the past eight years—more than the rest of Europe put together—is that we have a sensible balance between protections for workers on the one hand and avoiding over-burdening employers on the other. I am very nervous about upsetting that delicate balance.

As I said at the beginning, I agree that practices relating to full shifts in this context should not be lawful. I will listen very carefully to the Minister’s comments when he winds up the debate.