Redundancy Modification Orders

Debate between Drew Hendry and Martyn Day

Wednesday 12th July 2017 Commons Chamber

[Martyn Day]

Thank you, Mr Speaker. I am grateful to you for allowing me this opportunity to raise the issue of redundancy modification orders—or, to use the full Sunday name, the Redundancy Payments (Continuity of Employment in Local Government, etc.) (Modification) Order 1999.

As the name implies, the order acts to preserve continuity of employment where an employee moves between certain local government, and indeed some other identified, positions. Pretty much every type of job that once belonged to the local government family is covered by the RMO, with a wide range of bodies listed. To illustrate that, the list already includes bodies in my constituency, such as West Lothian Leisure Ltd, and others including the Scottish Environment Protection Agency, Scottish Water, the Scottish Commission for the Regulation of Care and the Scottish Social Services Council, to name just a few.

I refer Members to the order’s explanatory notes, which describe its effect quite clearly:

“The Order modifies certain provisions of the Employment Rights Act 1996 concerning redundancy payments, in their application to persons employed by certain local government employers or other employers in related sectors. The modifications have the effect that the employment of such a person by more than one such employer may be treated as if it were continuous for the purposes of those provisions; and re-engagement of such a person, or an offer of re-engagement made to such a person, by any such employer is treated as if it were re-engagement, or as if the offer had been made, by that person’s employer.”

In ordinary language, that means that the order deems certain successive employments as continuous, and the provisions of the Employment Rights Act 1996 would apply as if the individual had been employed by the same employer throughout the entire period.

If an employee under notice of redundancy receives a job offer from another listed body on the modification order and starts the new role within four weeks of the end of their old job, they are considered to have continuity of employment. If an employee decides during the first four weeks not to continue with the new job, they will be able to terminate the contract, and they would be entitled to receive any redundancy payments from the old employer. However, no continuous service accrued under the redundancy modification order applies to anything other than the redundancy payment. Such continuous service fails to entitle employees to any additional annual leave or other benefit over and above that of their contractual entitlements.

While the order treats certain types of successive employments as continuous, it does not preserve continuity if there is a break in service. The order has been amended a number of times to include new employments, with the last amendment being in 2015.

The crux of the issue, and the reason for this debate, is the lack of progress made on updating the order, and the impacts of this on employees’ rights and continuous service benefits—benefits such as pension and annual leave entitlement, as well as the calculation of redundancy payments. Many terms and conditions of local government employment are linked to continuous service, so the impact of changing employers extends far beyond redundancy rights, affecting other entitlements, such as sickness allowance and maternity pay.

The lack of an update to the order means that a number of organisations across the UK have yet to be included in the order, despite applying for inclusion—in some cases, several years ago. One such organisation is the Falkirk Community Trust, which applied for inclusion shortly after its establishment in 2011. Its application has been considered, and the trust has been approved for inclusion in the schedule of bodies in the order. To date, this inclusion has not taken place and has been beset with delays.

The Government stated in 2015 that the order would be updated in due course. As the House will be aware, the Department for Communities and Local Government administers the local government redundancy modification order on behalf of the UK Government and the devolved Administrations in Scotland and Wales. I have been told in answer to parliamentary questions that the Department is

“actively looking at options on taking forward the Redundancy Modification Order and will update relevant organisations in due course.”

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend is making a powerful speech about this important issue for employees. Has he had any indication from the Government of why this is taking so long and when it will be resolved?

[Martyn Day]

That is indeed a question that I shall be coming to, and one that I have asked by way of written questions and in letters to Ministers. I hope that this Minister will answer it tonight.

In November last year, I wrote to Ministers in the Department for Communities and Local Government asking them to set a firm timescale for updating the order. The response that I received was completely unsatisfactory: it gave no explanation for the delays, and made no firm commitment to updating the order within any definitive timescale. It is now 2017 and no updates have been made, which leaves many employees throughout the country in a kind of limbo, not knowing whether their continuous service will be recognised. Indeed, literally thousands of local government workers may be unaware that they could be affected by this lack of action if they were to move posts.

One such person is my constituent Jill Kernan, who first made me aware of this issue—and I am grateful to her for doing so. Jill has worked in local government for more than 20 years, and because she has transferred between employers on occasion, her case very much highlights the problem. In 2013 her employer at the time, North Lanarkshire Council, formed an arm’s-length company called North Lanarkshire Properties LLP. The small number of staff, and Unison, which was representing staff in the TUPE process, were assured that addition to the order was a formality, and would happen imminently. Given how relatively straightforward the process should be, that assurance did not seem unreasonable. Life, however, is seldom as straightforward as we would expect, and when Jill took up a new post with Falkirk Council early last year, she discovered that the arm’s-length company—and, indeed, many others—had still not been informed of the decision on addition to the order. Consequently, Jill has lost continuation of service. She and others like her need to know when a decision will be made, and whether it will be retrospective.

The right not to be unfairly dismissed and the right to a redundancy payment require two years’ continuous service, and workers affected by these delays in updating the order clearly risk losing those rights. While I hope that the situation can be resolved retrospectively, I am left wondering what happens to anyone who is made redundant during this limbo period. The redundancy modification order has undoubtedly had a huge impact on Jill’s continuous-service benefits, including pension and annual leave entitlement as well as other service-related conditions. Quite simply, that is not good enough: our public sector staff deserve to be treated better. There are more than enough challenges in the local government and public sector environment without managers and staff having to investigate and try to sort out staff conditions and benefits when people are changing jobs in such circumstances.

In recent years, local government has had to come up with many innovative and effective ways of making efficiency savings and streamlining the delivery of public services, and the creation of arm’s-length companies has been a regular feature of that process the length and breadth of the UK. Many Members will have, for example, culture or leisure trusts in their constituencies which have been set up in the last few years. I wonder how many of those are included in the current RMO, and how many are—as in my own local experience—still awaiting inclusion. The number of new companies of that kind, and consequently the number of affected workers, are likely to continue to increase.

The frequency of updates of the order to include new employments is simply not keeping pace with the reality of life in the public sector, and those affected are very frustrated by that. I share their frustration with the Government in this regard, and I have a number of questions to ask. Why is the process taking so long? When will it be resolved? What will be done to sort the problem out retrospectively so that hard-working constituents who have been affected by the delays do not potentially lose out? In particular, how can we ensure that those affected can reclaim any lost benefits when the RMO finally catches up with the new employments?

The redundancy modification order is a key instrument in protecting the terms and conditions of local government workers, and its timeous updating should be given a higher priority than it has been given by this Government. I also think that Ministers should consider the preservation of other length-of-service benefits such as annual leave and sick pay entitlements, and not just that of redundancy pay.

As I mentioned earlier, the Department for Communities and Local Government administers the order on behalf of the devolved Administrations. I therefore suggest that, given that legislative competency over local government is devolved to the Scottish Parliament, it might make sense to devolve the administration of the redundancy modification order to Scotland as well. I should like to hear the Minister’s opinion of that suggestion.

I look forward to the Minister’s response, and to his answers to my questions.