Employment Rights Bill (Twentieth sitting)

Greg Smith Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

[Justin Madders]

I will not detain the Committee long, as we have debated schedule 7 and the amendments to it at length.

Part 5 of the Bill lays the groundwork for the creation of the fair work agency. As a result, it will abolish the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement. Schedule 7 sets out transitional and savings provisions that we need in place to set up the new body. Part 1 of schedule 7 gives powers to the Secretary of State to make transfer schemes to move staff, property, rights and liabilities of the GLAA and the DLME to the Secretary of State, and part 2 provides for other necessary transitional provisions, such as to ensure that smooth sharing of information can continue and to retain provisions that devolved legislation relies on.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to see you in the Chair, Ms Vaz. I wish you a happy new year, too. As the Minister said, we have debated schedule 7 in some depth through the various amendments to it, so I have nothing further to add.

Question put and agreed to.

Schedule 7, as amended, accordingly agreed to.

Clause 111

Meaning of “non-compliance with relevant labour market legislation”

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

[The Chair]

With this it will be convenient to discuss clause 112 stand part.

[Justin Madders]

These clauses set out a single set of investigatory and enforcement powers that inspectors will have to carry out their job of enforcing the list of labour market legislation in part 1 of schedule 4.

Clause 111 defines what constitutes non-compliance with relevant labour market legislation. It provides a clear definition of non-compliance, ensuring consistency and transparency in enforcement actions. It therefore underpins the enforcement purposes of the Bill.

Clause 112 defines the key terms used throughout part 5 of the Bill relating to the governance of the fair work agency, including the concepts of the advisory board, the enforcement function and the role of an enforcement officer under clauses 75, 73 and 72, respectively. Other key terms defined by the clause include labour market enforcement undertakings and orders, “non-compliance with relevant labour market legislation” and “labour market offence”. It does not introduce any additional policy, but it is a necessary and normal part of the Bill to ensure that it is functional.

[Greg Smith]

The clauses give some rare clarity to the Bill. Clause 112, in particular, goes into significant detail, which His Majesty’s loyal Opposition of course welcome.

Question put and agreed to.

Clause 111 accordingly ordered to stand part of the Bill.

Clause 112

Interpretation: general

Amendment made: 205, in clause 112, page 102, line 7, at end insert—

“‘GCHQ’ has the same meaning as in the Intelligence Services Act 1994;

‘intelligence service’ means—

(a) the Security Service;

(b) the Secret Intelligence Service;

(c) GCHQ;”.—(Justin Madders.)

This amendment defines “GCHQ” and “intelligence service” for the purposes of Part 5 of the Bill.

Clause 112, as amended, ordered to stand part of the Bill.

New Clause 5

Statutory sick pay in Northern Ireland: removal of waiting period

“(1) Part 11 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (statutory sick pay) is amended as follows.

(2) In section 147(1) (employer’s liability), for ‘sections 148 to 150’ substitute ‘sections 149 and 150’.

(3) In section 148 (period of incapacity for work)—

(a) omit subsection (1);

(b) in subsection (2), for the words from ‘any’ to ‘is’ substitute ‘a period of one day which is, or of two or more consecutive days each of which is,’.

(4) In section 149(1) (period of entitlement), for ‘second’ substitute ‘first’.

(5) In section 150(1) (qualifying days), for ‘third’ substitute ‘second’.

(6) In section 151 (limitations on entitlement), omit subsection (1).

(7) In section 152(2) (notification of incapacity for work), omit paragraph (b) (and the ‘or’ at the end of paragraph (a)).”—(Justin Madders.)

This new clause makes the same provision for Northern Ireland as is made by clause 8 of the Bill for Great Britain. It is intended that this new clause and NC6 be inserted after clause 9.

Brought up, read the First and Second time, and added to the Bill.

New Clause 6

Statutory sick pay in Northern Ireland: lower earnings limit etc

“(1) Part 11 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (statutory sick pay) is amended as follows.

(2) In section 153 (rate of payment)—

(a) for subsection (1) substitute—

‘(1) The weekly rate of statutory sick pay that an employer must pay to an employee is the lower of—

(a) £116.75, and

(b) the prescribed percentage of the employee’s normal weekly earnings.’;

(b) in subsection (2)—

(i) omit the ‘and’ at the end of paragraph (a);

(ii) after paragraph (a) insert—

‘(aa) prescribe a percentage, or percentages, for the purposes of subsection (1)(b);’.

(3) In Schedule 11 (circumstances in which periods of entitlement to statutory sick pay do not arise), in paragraph 2, omit paragraph (c) (lower earnings limit).”—(Justin Madders.)

This new clause makes the same provision for Northern Ireland as is made by clause 9 of the Bill for Great Britain.

Brought up, read the First and Second time, and added to the Bill.

New Clause 7

Employment outside Great Britain

“In section 285 of the Trade Union and Labour Relations (Consolidation) Act 1992 (employment outside Great Britain)—

(a) in subsection (1), before ‘works’ insert ‘ordinarily’;

(b) in subsection (1A), before ‘works’ insert ‘ordinarily’.” —(Justin Madders.)

This new clause would correct omissions of the word “ordinarily” in provisions of section 285 of the Trade Union and Labour Relations (Consolidation) Act 1992.

Brought up, and read the First time.

[Justin Madders]

I beg to move, That the clause be read a Second time.

[Justin Madders]

New clause 7 and amendment 110 have been tabled to fix an apparent drafting error in the Trade Union and Labour Relations (Consolidation) Act 1992. The Committee has already debated a Government amendment to section 285(1B) of that Act, which will close a loophole in the requirement to notify the UK Government of collective redundancies for foreign-flagged ships.

New clause 7 and amendment 110 concern subsections (1) and (1A) of the same section. Section 285(1) currently disapplies the collective redundancy notification requirements and certain other requirements for employees who are “working”—as opposed to “ordinarily working”—outside Great Britain, and section 285(1A) disapplies the requirements of sections 145A to 151 of the 1992 Act,

“where under his contract personally to do work or perform services a worker who is not an employee works outside Great Britain.”

This, unfortunately, could have the effect of excluding employees who spend any of their working time outside the UK from the requirements of the legislation. I apologise, as that appears to have been a drafting oversight.

New clause 7 will introduce the word “ordinarily” ahead of the words “works outside Great Britain”, which will ensure that employees who spend some of their working time outside the UK or its territorial workers will not be excluded from the legislation. I hope that Members can see that this is an important and necessary change.

[Greg Smith]

New clause 7, as the Minister outlined, will correct omissions of the word “ordinarily” in provisions of section 285 of the Trade Union and Labour Relations (Consolidation) Act 1992. Amendment 110 would bring new clause 7 into force two months after Royal Assent. The only real question that follows that is: could the Minister clarify why it is necessary to commence this measure earlier than the usual three months?

[Justin Madders]

The shadow Minister has been eagle-eyed and spotted the difference there. I am not aware of whether there is any specific reason, other than that, although this measure is quite important in its scope, it will not actually have too much of a practical day-to-day effect. As always, I will write to him if there is any more information that I can give him about the difference.

Question put and agreed to.

New clause 7 accordingly read a Second time, and added to the Bill.

New Clause 8

Power to enter dwelling subject to warrant

“(1) An enforcement officer may not by virtue of section 79 enter any dwelling unless a justice has issued a warrant authorising the officer to enter the dwelling.

(2) A justice may issue a warrant under this section only if, on an application by the officer, the justice is satisfied—

(a) that the officer has reasonable grounds to believe that—

(i) there are documents in the dwelling which for any enforcement purpose the officer wishes to inspect, examine or seize, or

(ii) there is computer or other equipment in the dwelling to which the officer wishes to have access for any enforcement purpose, and

(b) that any of the conditions in subsection (3) is satisfied.

(3) The conditions are—

(a) that it is not practicable to communicate with any person entitled to grant entry to the dwelling;

(b) that it is not practicable to communicate with any person entitled to grant access to the documents or equipment;

(c) that entry to the dwelling is unlikely to be granted unless a warrant is produced;

(d) that the purpose of entry may be frustrated or seriously prejudiced unless an enforcement officer arriving at the dwelling can secure immediate entry to it.

(4) In this section—

‘enforcement purpose’ has the same meaning as in section 79;

‘justice’ means—

(a) in relation to England and Wales, a justice of the peace;

(b) in relation to Scotland, a sheriff or summary sheriff;

(c) in relation to Northern Ireland, a lay magistrate.

(5) For further provision about warrants under this section, see section (Warrants) and Schedule (Warrants under Part 5: further provision).”—(Justin Madders.)

This new clause provides that an enforcement officer may not exercise the power conferred by clause 79 to enter premises that are a dwelling without first obtaining a warrant.

Brought up, read the First and Second time, and added to the Bill.

New Clause 9

Warrants

“(1) A warrant under section (Power to enter dwelling subject to warrant) or 83 may be executed by any enforcement officer.

(2) A warrant under section (Power to enter dwelling subject to warrant) or 83 may authorise persons to accompany any enforcement officer who is executing it.

(3) A person authorised under subsection (2) to accompany an enforcement officer may exercise any power conferred by this Part which the officer may exercise as a result of the warrant.

(4) But the person may exercise such a power only in the company of, and under the supervision of, an enforcement officer.

(5) Schedule (Warrants under Part 5: further provision) contains further provision about—

(a) applications for warrants under section (Power to enter dwelling subject to warrant) or 83, and

(b) warrants issued under section (Power to enter dwelling subject to warrant) or 83.

(6) The entry of premises under a warrant issued under section (Power to enter dwelling subject to warrant) or 83 is unlawful unless it complies with the provisions of Part 3 of that Schedule (execution of warrants).”—(Justin Madders.)

This new clause makes further provision about warrants under Part 5. It enables warrants to authorise people to accompany the enforcement officer executing the warrant. It also provides that entry under a warrant is unlawful unless it complies with provisions of NS1 relating to the execution of warrants.

Brought up, read the First and Second time, and added to the Bill.

New Clause 10

Increase in time limits for making claims

“Schedule (Increase in time limits for making claims) makes amendments for the purpose of increasing time limits for making claims in employment tribunals in Great Britain (and, in certain cases, industrial tribunals in Northern Ireland) from three months to six months.”—(Justin Madders.)

This new clause would introduce NS2.

Brought up, read the First and Second time, and added to the Bill.

New Clause 11

Orders and regulations under Employment Rights Act 1996: procedure

“In section 236 of the Employment Rights Act 1996 (orders and regulations), after subsection (4) insert—

‘(4A) A statutory instrument containing an order or regulations under this Act to which subsection (3) applies may include an order or regulations under this Act to which subsection (3) would not otherwise apply.

(4B) In such a case, the statutory instrument is to be proceeded with as if all of the orders and regulations contained in it were orders or regulations to which subsection (3) applies.’”—(Justin Madders.)

This new clause, to be inserted into Part 6 of the Bill, would enable the combination of orders or regulations under the Employment Rights Act 1996 that would otherwise be subject to different Parliamentary procedures (or no Parliamentary procedure) in a statutory instrument subject to the affirmative procedure.

Brought up, read the First and Second time, and added to the Bill.

New Clause 48

Seafarers’ wages and working conditions

“Schedule (Seafarers’ wages and working conditions) amends the Seafarers’ Wages Act 2023.”—(Justin Madders.)

This new clause introduces the Schedule proposed to be inserted by NS3.

Brought up, and read the First time.

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[Justin Madders]

This group concerns the mandatory seafarers’ charter and amendments to international maritime convention measures. New schedule 3, and consequential amendments new clause 48 and Government amendments 206 to 208, deliver on our commitment to introduce a legally binding seafarers’ charter. The actions of P&O Ferries in 2022, when it sacked almost 800 seafarers in order to replace them with agency workers on much worse terms and conditions, highlighted the lack of protections for those working on the frequent international services that keep our country moving.

We are expanding the scope of the Seafarers Wages Act 2023, which will become the Seafarers (Wages and Working Conditions) Act 2023. The Act currently makes payment of the national minimum wage equivalent for work in UK waters a condition of port access for international services that call at a UK port at least 120 times a year. It does that by requiring harbour authorities to request declarations from operators to confirm that they are paying the national minimum wage equivalent, or they will impose surcharges each time a vessel enters the port. Non-payment of surcharges will result in access to the port being refused.

The new schedule introduces provisions that, once the necessary regulations have been made, will require harbour authorities to also request safe working declarations and remuneration declarations from operators in scope. Operators will be required to confirm that they are meeting the requirements of those declarations, which will be set out in regulations. We will consult on the requirements and the services they will apply to in due course.

Safe working regulations can specify conditions relating to working patterns and rest requirements, including maximum periods of work and minimum periods of rest. They can also require operators to produce fatigue management plans, and make provision relating to safety training of seafarers. Remuneration regulations may specify requirements relating to the remuneration of seafarers, whether in UK waters or outside them. Where we are able to make agreements with other countries about pay on routes between us and them, this provision will allow us to enforce those agreements. Operators that provide false or misleading declarations, or act inconsistently with declarations, will be guilty of an offence under the Seafarers Wages Act. The Maritime and Coastguard Agency will be responsible for enforcing those offences, as it is for the existing provisions of the Act.

The new schedule represents a proportionate and necessary approach to ensuring that the seafarers who serve our country are not subject to dangerous or unfair working conditions. It will level the playing field by setting an appropriate minimum standard for seafarers, which will ensure that good employers are not undercut by those willing to exploit their workers.

I turn to new clause 52. The UK has a proud and long-standing reputation as a maritime nation, and is a leader on the global stage in matters of international maritime employment law. To maintain that position, it is crucial that we are able to keep pace with the international conventions that we have ratified and meet our future obligations. The new clause will fix a powers gap that was left following Brexit. It will give us the powers to make regulations under the negative procedure giving effect to the maritime labour convention and the work in fishing convention, and to make regulations giving effect to any other international agreements ratified in the UK relating to maritime employment. The first time that regulations are made in relation to a particular agreement, they will be subject to the affirmative procedure, and subsequent regulations relating to that agreement will be subject to the negative procedure.

The new clause allows for regulations to make the necessary provisions to give effect to the conventions in question. For example, it allows for regulations to make provision relating to monitoring compliance, and to criminal offences and detention of ships for contravention of provisions in the regulations. It may not represent any changes in Government policy, but it will allow us to uphold our existing obligations and any future obligations under conventions that the UK may choose to ratify.

[Greg Smith]

New clause 48 introduces the schedule to be inserted by new schedule 3, which in turn amends the Seafarers Wages Act 2023 to give the Secretary of State power to make regulations specifying conditions relating to the wages and working conditions of seafarers who work on ships providing the services currently covered by that Act. Those conditions are enforceable in the same way as existing provisions of the Act. Amendment 208 is consequential on new schedule 3. Amendment 207 states the extent of the new chapter to be formed by new clause 48 and new schedule 3, extending it United Kingdom-wide. Amendment 206 is consequential.

New clause 52 inserts into the Merchant Shipping Act 1995 powers for the Secretary of State to make regulations to give effect to the maritime labour convention, adopted on 23 February 2006, to the work in fishing convention, adopted on 14 June 2007, and to future international agreements that relate to the employment of masters and seamen.

Let me turn to the substance. As I said, the maritime labour convention was adopted on 23 February 2006, and the work in fishing convention on 14 June 2007, so the first question is why the then Labour Government did not see fit to introduce provision in legislation in the first place? Will the Minister explain why it is necessary to legislate to give the Secretary of State sweeping powers to

“by regulations make such provision as the Secretary of State considers appropriate for the purpose of giving effect”

to those two conventions? Precisely what regulations are needed?

Will the Minister give the Committee specific examples of the regulations that the Government intend to make under this power, and justify them? I do not think it is good enough for us to be in this position. Notwithstanding the usual comments the Minister makes about not predetermining consultations and about talking to stakeholders at a later point, this is one of those areas where we need concrete examples of where he expects to go.

A key reason for my asking is that article IV of the maritime labour convention, on seafarers’ employment and social rights, states:

“1. Every seafarer has the right to a safe and secure workplace that complies with safety standards.

2. Every seafarer has a right to fair terms of employment.

3. Every seafarer has a right to decent working and living conditions on board ship.

4. Every seafarer has a right to health protection, medical care, welfare measures and other forms of social protection.”

Will the Minister explain which of the rights I just outlined are not already enforceable under United Kingdom law? Is there difficulty with implementing any of the implementation and enforcement responsibilities in article V?

Will the Minister further explain whether any of the provisions of the work in fishing convention are currently unenforceable under United Kingdom law—I seek just one example—and if so, what specific changes would be needed to enforce them? I ask because I do not think that is clear from any of the new clauses, the new schedule or the amendments that we are considering in this group.

New clause 52 also takes sweeping powers for the Secretary of State, who can make regulations that

“may make provision in respect of the checking or monitoring of compliance with any provision of the regulations, including (among other things) provision for—

(a) the making and keeping of records and the keeping of documents;

(b) the issue of certificates;

(c) the furnishing of information.”

What on earth is encompassed by “the furnishing of information”? That seems like a very vague term to be put on to the statute book. To what intrusive or burdensome use is the Secretary of State planning to put this power? Precisely what does the Minister mean by it?

To convince the Committee that these powers are necessary, can the Minister name one occasion on which the Government’s ability to enforce the provisions of the maritime labour convention has been found wanting, and in what respect? If such an example exists, could the Government better target the powers in proposed new section 84B(4) of the Merchant Shipping Act 1995 to actually solve the problem, rather than allow a Government free-for-all?

This is not a trivial matter, as proposed new section 84B(5) allows the Government to

“provide for the detention of a ship in respect of which a contravention of the regulations is suspected to have occurred”.

Will the Minister explain how long such a detention might last? How great an infraction would need to have been committed for a ship to be detained?

As if the Government had not hoarded enough power through this new clause, proposed new section 84B(8) contains the real kicker, stating that regulations may

“make different provision for different purposes”.

Will the Minister explain the limits on this power? That language is far too woolly and loose to be contained in any piece of primary legislation in this country.

I also do not think it is appropriate that regulations to

“make such provision as the Secretary of State considers appropriate for the purpose of giving effect to an international agreement that has been ratified by the United Kingdom, so far as the agreement relates to maritime employment”

should be subject to the negative procedure. The regulations apply to international agreements that have not yet been entered into. Parliament should at least be guaranteed the ability to debate regulations that implementing such agreements. Otherwise, proposed new section 84B(13) is the very definition of a blank cheque.

The Government tabled new clause 52 just in time for debate today; we have been given very little opportunity to scrutinise it. Given the powers it takes for Ministers, I gently suggest that that is discourteous to the House. The least the Minister can do is provide answers to each of the questions I have posed, so that we are able to understand a little better whether the new clause is even necessary and to what use Ministers actually intend to put the powers.

[Sir Ashley Fox]

The maritime labour convention, which was adopted on 23 February 2006, and the work in fishing convention, adopted on 14 June 2007, represent significant international agreements aimed at improving the working conditions and rights of seafarers and those working in the fishing industry. However, despite their adoption many years ago, the provisions in those conventions have not yet been fully legislated for within the UK framework.

One must ask why the previous Labour Government did not introduce this crucial provision into UK law during their time in office. The conventions were in existence long before the current Government came to power, and it is concerning that they were not prioritised earlier. What led to that omission, and why has it taken so long to bring them into the scope of our legislation? Given the importance of these rights, we must understand why it has taken so long for the Government to act on these matters.

New clause 52, which grants the Secretary of State broad and sweeping powers to, by regulations,

“make such provision as the Secretary of State considers appropriate for the purpose of giving effect”

to the maritime labour convention and the work in fishing convention, raises several questions. I would like to understand more about why it is deemed necessary to grant such wide-reaching power to the Secretary of State. Specifically, why does this provision allow for the creation of regulations that give the Secretary of State the authority to determine what should be done without offering a clear, predefined set of actions? It is important to explore whether such overreach is truly necessary and what specific circumstances justify such broad powers.

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[Steve Darling]

It is a pleasure to serve under your chairmanship, Ms Vaz. When I became an MP, I never thought that I would be standing before a Committee talking about clause 4. However, this is not about public ownership but is actually about non-disclosure agreements. Non-disclosure agreements were originally about keeping trade secrets but, over recent years, they have proliferated and, sadly, have kept shameful secrets away from the public eye in situations where light needs to be cast to make sure that things are tackled. Sadly, I personally have been signed up to one of these agreements. I reassure the Committee that it was not a business in my constituency, but another one where I suffered a level of discrimination, and I had to sign an NDA. That did not allow me to cry foul on a certain issue that myself and my family suffered.

As for the bigger picture of where NDAs have been used at an industrial level, one only has to look at Harrods and the stories that have come up around sexual harassment. Part of the Bill is about trying to tackle harassment and sexual harassment. New clause 4 strengthens the Bill by making sure that NDAs are exempt from this area. As I alluded to with Mohamed al-Fayed, these were used at an industrial level when people were at a very confused stage, and were very vulnerable. I ask the Minister to give serious consideration to incorporating the new clause in our proposals.

This is a golden opportunity. We have already seen Ireland take this step. I encourage the Minister to embrace new clause 4.

[Greg Smith]

I shall speak briefly to new clause 4, tabled by the Liberal Democrats. Of course, His Majesty’s loyal Opposition support all practical measures to combat harassment and sexual harassment wherever it occurs. Our challenge to the proposal put forward by the hon. Member for Torbay on behalf of the third party is about understanding where the shortfalls are in existing whistleblower legislation that make the amendment necessary. I heard what he said about his personal experience, but our analysis of the provisions of legislation that is active and live now, as we consider the new clause in Committee, shows that whistleblowing legislation already covers what he is trying to achieve. We are not certain why it is necessary, on a practical level, to add the new clause to the Bill.

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Substitution clauses enable a culture of maximising profit at the expense of workers and without any regard for the law or the wider community. They have created an illegal workforce without access to the rights that should underpin the labour market. That is why I urge Labour Members here today to look at the new clause with an open mind and consider how it could help to tip the scales against those in positions of power who are willing to see the misery endure. It is the right thing to do.

[Greg Smith]

I commend my hon. Friend for proposing new clause 12 and amendment 111. He has just outlined a very serious and live concern in our economy today. I cannot believe that any Government Member, having heard the evidence that my hon. Friend has outlined, would want those practices to continue in our economy, not least given the grave and worrying evidence presented about sexual harassment, sexual offences and rape. Those facts cannot be ignored. Even if the Government will not take action off the back of my hon. Friend’s new clause, I call on the Minister to take very seriously the evidence that he has outlined and come up with another vehicle in which to get protections into legislation.

My hon. Friend has explained the situation at some length, so I will conclude by saying that the Government have a clear choice here. They can go down the political route and, having heard compelling evidence, still say, “We do not want to do this because it has come from a Conservative Member,” or find some language to say that in a different way. Alternatively, we can do something all too rare in this place: we can take a real and live problem identified by my hon. Friend and reach cross-party consensus on the need to tackle it, and acknowledge that tackling it fits very neatly with the aims and objectives of the Bill we have been considering for some weeks in Committee. We all make political choices in this place. It is now incumbent on the Minister to give us the political choice that he and the Government wish to make on this: stand with the victims whom my hon. Friend’s new clause aims to protect, or go down the political route.

[Justin Madders]

I am genuinely grateful to the hon. Member for West Suffolk for raising this matter, because I take it extremely seriously. I am pleased to see that he and the shadow Minister do too. It has clearly become more and more of an issue in recent years. It is based on exploitation of vulnerable individuals. It is about a race to the bottom and about a labour market that is, as Matthew Taylor identified all those years ago, fundamentally not working.

That said, we are not able to accept the new clause, and I will explain why. That does not mean I am not sympathetic to it. We have been doing a number of things. I recently met the Director of Labour Market Enforcement, Margaret Beels, and the Home Office to discuss this matter. In fact, we have now met the Home Office twice on this issue, because we are aware that there are concerns about how substitution clauses in the gig economy, in particular, are operating. I have recently written to Deliveroo, Just Eat and Uber, because their substitution clauses—certainly some of them—do not appear to have any cognisance of whether the substitute has the right to work in the UK. I would not say that applies to all gig economy companies—I could say “employers”, but of course they would say that they are not employers. They do not all take that view of substitution, but it is clear from what we have heard that this is not being policed properly at the moment, so we want these companies to step up and make sure that those who are working for them are entitled to do so legally, that they know who they are and that they are who they say they are, and that all the checks that we would expect any responsible employer to make have been made.

The challenge is that there is a broad definition of self-employment and substitution clauses are used far more widely than the gig economy. There have been cases going back decades on whether someone has employment rights, and that often centres on the use of a substitution clause. In recent years, that has been turbocharged by gig economy companies to create this new network of workers, but there would be a number of unintended consequences in the wider economy if we accepted the new clause, because of its broadness. It would make people such as IT contractors or plumbers—indeed, there was a case involving a gym instructor who had a substitution clause—unable to provide a substitute. There are all sorts of jobs out there—many thousands and possibly millions—where substitution clauses are used perfectly well, and unfortunately, because of the way the new clause is drafted, it would mean that none of those people could continue to use them. Clearly, we would not want to see that, because it is an important part of self-employment for someone to be able to provide a substitute for their services if they are unavailable, but we recognise that the law needs modernising in this area. We have committed to consulting on a simpler, two-part framework for employment status. We think that is really important to drive out the many abuses that we have heard about.

I agree with the hon. Member for West Suffolk that it should not be left to the courts to determine whether someone has particular rights. That should be set down by Parliament, and it should be clear and make sure that there is no room for loopholes. It is important that we get that right. I think that the new clause would create a whole range of unintended consequences and exclude people from carrying out their legitimate business, but I assure hon. Members that I take this matter very seriously and I am doing what I can, before we have the review, to make sure that those companies that are employing people in this way are doing so safely and responsibly.

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[Greg Smith]

The new clause would create new rates of statutory maternity pay, paternity pay, adoption pay, shared parental pay and parental bereavement pay. That all sounds very good, and I do not necessarily oppose it—everybody would love to see those rates increase.

Without making any comments on the merits or otherwise of this policy choice, I would be grateful if the hon. Member for Torbay could comment on why the Liberal Democrats have alighted on these specific rates of pay. Why not more? How did they come to this conclusion? What research have they done to ascertain whether these rates are affordable for employers? I am sure that we would all like to see these rates offered, but we always need to be able to pay for them. It is incumbent on anyone proposing a new clause such as this to be certain that the rates are affordable for employers. Let us not forget that the rates proposed are effectively double the current rates.

On maternity, paternity and shared parental pay specifically, what engagement have the Liberal Democrats undertaken with businesses on whether the proposed rates would make them more hesitant about hiring candidates at the stage of life when they might be thinking about having children? It is very important that nothing stops any employer considering people at that stage of their life. It is also very important that we understand, when considering such a new clause, which on the face of it has great merit—I do not intend to distract from that point—what work the Liberal Democrats have done on its potential unintended consequences. I repeat that, on the face of it, this proposal has strong merit, but I just do not see any evidence that the research has been done to substantiate its affordability or effectiveness, no matter how much we might all want to see it.

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[Steve Darling]

Apologies, Ms Vaz; I was somewhat premature on the previous item. I pay tribute to my hon. Friend the Member for Twickenham, who has highlighted this matter and proposed this new clause on kinship care. The kinship care APPG discussed this proposal and was mostly in favour of it.

The number of children in our United Kingdom who benefit from kinship care is 130,000—equivalent to the population of Colchester or Watford. That is three times more than the number of youngsters who benefit from fostering, which is where one imagines, and one would hope, most youngsters in need of support would get it. The new clause, by allowing additional leave, would allow greater flexibility to get those youngsters into the family, and would help families come to terms with, and settle into, kinship care.

There are eye-watering costs in the care system. Some companies are making outrageous profits from family breakdown. I encourage Members to think about how we can reshape society to give more support. As somebody who has adopted myself, adoption and fostering are matters very close to my heart, and I would strongly welcome more opportunities for kinship care.

Equally, new clause 45, which would provide for an additional week of unpaid leave for foster carers, is extremely important. We need to change the workplace so that it supports foster families and kinship care families, making sure that, the vast majority of the time, the best place for a child is within a loving family home—whatever shape or form that takes—rather than in a care home or similar place miles away from home.

This collection of proposals would help to drive the agenda to change our culture in the UK and support young people in loving homes, with families.

[Greg Smith]

I preface my comments by saying that I welcome anything that supports kinship carers. I had an inspirational meeting with a constituent who is a kinship carer over the summer, which certainly opened my eyes to many of the challenges faced by those who take on the heroic and wonderful mission in life of looking after those young people.

New clause 14 sets out an entitlement to kinship care leave. That in its own right seems to me a very good, sensible and noble proposal. Where the clause falls a little short is that it appears to be very trusting of the Government. Some on the Committee might think that is equally a very sensible and good thing, but obviously Governments come and go. Anything set out in any legislation that leaves things open also leaves them open to misinterpretation and the risk that they will not necessarily deliver that which was intended.

The entire eventual policy that new clause 14 would enable would be left up to Ministers, including the extent of an employee’s entitlement to leave, when leave may be taken and much more. I wonder whether the Liberal Democrats have a policy position on those matters; if they do, it seems rather trusting to just leave it up to the Government to determine, rather than setting it out in the new clause.

New clause 15 defines what is meant by kinship care. There is some confusion here, because the Government have set out their definition of kinship care in the Children’s Wellbeing and Schools Bill, which specifies that a child is in kinship care if

“the child lives with a relative, friend or other person connected with the child for all or part of the time”,

or if the child lives with that person

“for all of the time, or for more time than the child lives with a parent”,

and that person provides

“all of the care and support provided for the child, or more of that care and support than is provided for the child by a parent.”

A child is also in kinship care if the child lives with two or more relatives, friends or other persons

“all or most of the time (whether or not the child lives with those persons at the same time)”,

and

“those persons, taken together, provide all or most of the care and support provided for the child.”

That definition was introduced after new clause 15 was tabled, so it would be interesting to know whether there are aspects of the Government’s definition that the Liberal Democrats support, or whether they prefer their own, and why. It seems to me that, now there is live Government legislation in this area providing a perfectly good and well-meaning definition of kinship care, we do not need the new clause.

New clause 45, on additional leave for foster carers, would ensure that local authority foster parents are entitled to at least one extra week’s leave every 12 months. I would be interested to know whether the Liberal Democrats have undertaken any assessment of how businesses would be able to absorb the additional cost. That is not to say that we necessarily oppose the principle, but again, like with new clause 13, it would be important to know, before we could formally support any such change—well-meaning as it might be—whether that research has been done to understand the cost to business.

[Dame Nia Griffith]

New clause 14 aims to establish a new kinship care leave entitlement for employed kinship carers, with a minimum of 52 weeks of leave being available for eligible employees. New clause 15 then seeks to create a legal definition of “kinship care” to be used to establish eligibility for kinship care leave.

I start by emphasising how much I value kinship carers, who provide loving homes for children who cannot live with their parents. This Government are committed to ensuring that all employed parents and carers receive the best possible support to balance their work and family lives. We are also aware that the existing system of leave for parents and carers needs improvement.

Some of the improvements to that system will be made through this Bill, while others will be delivered separately. As the hon. Member for Mid Buckinghamshire has mentioned, for the first time, this Government’s Children’s Wellbeing and Schools Bill will create a legal definition of kinship care for the purposes of measures within that Bill, including the duty to provide information to children and their kinship carers by local authorities, and extending the role of a virtual school head to promote the educational achievement of children in kinship care. That is a vital part of our commitment to keeping families together and supporting children to achieve and thrive.

That Bill defines kinship care as a situation in which a child lives with, and is cared for by, a relative, friend or someone else connected to them, instead of their parents, and that person provides all or most of the care and support to the child. By defining kinship care in law, the legislation will ensure that local authorities have a clear and consistent understanding of what constitutes kinship care.

I am also pleased to say that the Government recently announced a £40 million package to trial a new kinship allowance, which is the single biggest investment made by Government on kinship care to date. That investment could transform the lives of vulnerable children who can no longer live at home. It could allow children to grow up within their extended families and communities, reducing disruption to their early years so that they can focus on schooling and building friendships.

Employed kinship carers may already benefit from a number of workplace employment rights that are designed to support employees in balancing work alongside caring responsibilities. Those rights include: a day one right to time off for dependants, which provides a reasonable amount of unpaid time off work to deal with an unexpected or sudden emergency involving a child or dependant and to put care arrangements in place; the right to request flexible working; and the right to unpaid parental leave, which, through this Bill, we are making a day one right.

An employee may not automatically have parental responsibility as a result of being a kinship carer, but they may acquire parental responsibility through, for example, a legal guardianship order. We have also committed to a review of the parental leave system to ensure that it best supports all working families. That review will be conducted separately from the Employment Rights Bill, and work is already under way on planning for its delivery.

New clause 45 proposes to introduce an entitlement to a week of leave for local authority foster parents. Foster parents offer crucial support to some of the most vulnerable children in our society. They provide love, stability and compassion to children and young people when they need it most.

--- Later in debate ---

[Steve Darling]

I thank the Minister for that reassurance. In the light of that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 19

Consultation on trade union legislation

“(1) The Secretary of State must initiate a consultation on—

(a) the operation of the Trade Union and Labour Relations (Consolidation) Act 1992; and

(b) the effects on that operation of provisions contained in Part 4 of this Act.

(2) The Secretary of State must lay before each House of Parliament, no sooner than eighteen weeks after the initiation referred to in subsection (1), a report on—

(a) the outcome of that consultation, and

(b) the Government’s proposals for changes to the legislation referred to in subsection (1).”—(Greg Smith.)

This new clause requires the Secretary of State to undertake a consultation on the operation of trade union legislation, and see also Amendment 116.

Brought up, and read the First time.

[Greg Smith]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss amendment 116, in clause 118, page 104, line 34, leave out subsection (2) and insert—

“(2) No provision of Part 4 of this Act may be brought into force in accordance with subsection (3) until the report referred to in section [Consultation on trade union legislation] has been published.”

This amendment removes provisions to bring much of Part 4 of the Bill into force two months after the passing of the Act and makes commencement of Part 4 conditional upon the publication of a report arising from consultation carried out in accordance with NC19.

[Greg Smith]

This is probably one of the meatier amendments that the official Opposition has tabled—[Interruption.] As bits of the Palace fall down around us, it may be symbolic of the Bill. [Interruption.] I am glad I missed whatever the quip back on that was.

New clause 19 and amendment 116 would require the Secretary of State to consult on the operation of trade union legislation. We have heard a lot during this Committee about the need to consult, but we are missing the crucial bit about consulting on the actual operation of the trade union legislation.

New clause 19 would require the Secretary of State to consult precisely on the operation of the Trade Union and Labour Relations (Consolidation) Act 1992 and the effects of provisions in part 4 of the Bill on that operation. The second limb of new clause 19 is for the Secretary of State to lay before Parliament the outcome of that consultation and the Government’s proposals for changes to the legislation. We would like to ensure that part 4 cannot come into force until that has been done.

Why are new clause 19 and amendment 116 needed? We have seen pages of Government amendments tabled in Committee because the Bill was introduced to the House before it was ready and before the Government had done the necessary policy work to determine what should be in it—all in a rush to meet the arbitrary 100-day deadline rashly proposed by the Deputy Prime Minister. It is not often that I agree with the Prime Minister’s former chief of staff, but there were reports before the election that even she thought that was an unrealistic deadline, and events have proven her correct. It may embarrass the Minister or make him a little awkward every time I raise this point, but that will not stop me from stating the facts.

Part 4 of the Bill is an enormous expansion of the power of trade unions. These measures have not been consulted on and will have an enormous impact on not just businesses, but the efficiency of private and public sector employers, with all the associated costs. There is a strange doublespeak between the Government’s stated aims for the Bill and its likely consequences. The Government’s impact assessment says:

“The objectives of the Bill are to…Improve industrial relations and reducing the number of days lost to strike action by allowing working people to organise collectively through trade unions and improving the legislative framework in which they operate.”

How can the Government believe that the Bill will reduce the days lost to strike action when part 4 specifically takes measures to make strike action easier? For example, it makes it easier for unions to be recognised by removing the requirement for a union to demonstrate that the proposed bargaining unit is 10% of its membership on application to the Central Arbitration Committee and replaces it with references to the “required percentage test”, which will surely make strike action more likely. Part 4 also requires the Central Arbitration Committee to declare a trade union as recognised for collective bargaining purposes where the result of the ballot shows that a majority of those voting were in favour of union recognition. The additional requirement for the union to have at least 40% support in the bargaining unit has been deleted. That is why this consultation needs to be laid before part 4 can come into force.

We then come to the changes to ballot thresholds, which seem specifically designed to make it more, not less, likely that more days will be lost to industrial action.

[Sir Ashley Fox]

Surely not.

[Greg Smith]

From a sedentary position, my hon. Friend makes a very good point. The Bill removes the requirement for at least 50% of trade union members entitled to vote to do so for an industrial action ballot to be valid. It also removes the requirement for trade unions in important public services to obtain the support of at least 40% of members entitled to vote in the ballot for industrial action to be successful and replaces that with a simple majority of those voting, with no requirements for any level of turnout. Can the Minister explain how that will make industrial action less likely?

Surely making it easier for trade unions to gain a mandate for strike action by removing sensible thresholds imposed by the previous Conservative Government will make strike action more likely, which is contrary to the Government’s stated aims for the Bill. That is why it is so important for the consultation in new clause 19 to be laid before the House. That contradiction between the Government’s stated intentions for part 4 and the result of the Bill, which is likely to be the opposite, is the first reason we believe the Government need to enact a proper consultation to prove that the Bill will work, which they should have done before introducing the Bill in the first place.

[Laurence Turner (Birmingham Northfield) (Lab)]

Will the shadow Minister give way?

[Greg Smith]

I would be delighted to give way. The Government Back Benchers have been so quiet today. It would be wonderful to hear from the hon. Gentleman.

[Laurence Turner]

It is a pleasure to serve under your chairship, Ms Vaz; I am glad to make the shadow Minister so happy and to see the smile on his face. I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests: I am a member of the GMB and Unite trade unions.

I have two points about the new clause. First, the Trade Union and Labour Relations (Consolidation) Act was a monumental undertaking; as the name implies, it consolidated all previous industrial relations legislation. One of the effects of the new clause would be to cast a pall of doubt over every measure in that legislation, including measures that I am sure the hon. Gentleman supports, including the building blocks of our industrial relations system, such as the immunity of trade unions from tort claims when they act in pursuit of legitimate industrial action. That has underpinned our system since 1906.

Secondly, the 1992 Act is an enormous piece of legislation—some three times the length of the Bill—but the hon. Gentleman’s new clause allows only three months for the exercise. Would the exercise not therefore be unduly onerous to undertake or, in practice, perfunctory? It will have the effect only of delaying a number of very important measures, including some that the hon. Gentleman has welcomed in Committee.

[The Chair]

May I just say that interventions should be short, not speech length?

[Greg Smith]

Government Members have been quiet all day, Ms Vaz, and the hon. Gentleman has got that off his chest. On the timeframe, if he wants the consultation to take longer, we are open to negotiation; we would certainly be pleased to have a longer timeframe for this important consultation.

The hon. Gentleman is right about the size of the 1992 Act; it was a monumental undertaking. Of course, there are many things in it that my party supports: we were in government—or just about; we had a majority of something like 21—in that Parliament. The question is, how is it working out in practice, some decades on? Are the laws that were consolidated on our statute book in 1992 fully relevant in 2025, and how are they working? Until we can answer that rather tricky exam question, it is important that we do not make the leaps forward contained in the Bill that we have debated over the past few weeks.

The next reason why a consultation is necessary before part 4 is commenced is the burden on employers, which is laced throughout part 4. Leaving aside the likely burden and cost of additional days of strike action, I want to ask for the Minister’s assessment of the burden that the measures will place on employers. The requirement on an employer to provide an employee with a written statement of the worker’s rights to join a trade union means more red tape, as do the trade unions’ rights of access to workplaces. There is also the requirement to provide a response notice and the fact that trade unions can request access to workplaces for the extremely wide purposes of meeting, representing, recruiting or organising workers, whether or not they are members of a trade union, or facilitating collective bargaining.

How much time will those take out of employees’ working days? The employer will not be compensated for that, but will have to bear the cost. How burdensome will it be for an employer to defend at tribunal the reasons for not granting access, and can the system even cope with that? Reversing the effect of section 8 of the Trade Union Act 2016 will reduce the notice that a trade union must give the employer of industrial action after it has secured a ballot mandate and before any such action is taken from 14 to seven days.

Can the Minister explain how any of the above measures will enable employers to increase productivity, reduce costs or reduce red tape? Perhaps they are just another set of anti-growth measures from this Government, in contrast to their stated foundational mission of growth. Is it a first step, or a milestone? It is hard to keep track of the labels. Growth is important, and the measures that I have just mentioned from part 4 make that harder. That is why the consultation for which the new clause calls is so important.

We come to the third reason that a consultation is necessary. The Government have not done any evidence-based work—at least not publicly—on how effectively existing trade union legislation, in particular the balanced approach we introduced with the Trade Union Act 2016, is working and on how the proposals in part 4 of the Bill would change that. That basic level of due diligence is needed before part 4 can be commenced.

--- Later in debate ---

[Justin Madders]

The shadow Minister seeks through the new clause and amendment to relitigate a number of the issues we debated last week, and he will not be surprised to hear that I will pick up on just one or two of his comments. He said that the 100-day deadline was unrealistic, but it was not, because we achieved it. All involved made a fantastic effort to ensure that we had a Bill published within that 100-day deadline. There have been some minor technical amendments to the Bill as we have moved along, and there are important issues of principle that we continue to engage and consult on.

As the shadow Minister said, the new clause would require a consultation on the operation of the Trade Union and Labour Relations (Consolidation) Act 1992, as amended by part 4 of the Bill. I was not entirely clear whether he was referring just to the amendments to the 1992 Act by virtue of part 4 of this Bill or to the entire Act; in any event, there is some overlap between the two. We are pretty clear that the intention behind the new clause is to delay the Bill as much as possible. It would impinge on our desire and our manifesto commitment to improve workers’ rights and the ability of workers to have a meaningful voice through collective bargaining to secure pay and conditions.

The shadow Minister will be aware that the Government have already undertaken a number of consultations, with four over the Christmas period, including one on modernising the framework for industrial relations, which would cover many of the provisions of the 1992 Act. As we move forward, get the Bill through Parliament and lay secondary legislation, there will be ongoing consultations and discussions about the provisions in the Bill, the application of codes of practice, and some of the matters that have been left for regulation. I do not believe that there is criticism about the level of consultation. We have engaged extensively with all stakeholders on a number of matters, and we will continue to do that almost weekly.

The shadow Minister challenged me about how we can push the Bill forward, without there being questions as to whether it would lead to increased industrial action. The evidence we have is that legislation introduced by the Conservative Government led to increased industrial action in the last two years, and saw the highest levels of industrial action in decades. That shows that not putting industrial relations on a sensible footing and a collegiate basis is detrimental to them. The impact assessment for the Strikes (Minimum Service Levels) Act 2023 made it clear it would worsen industrial relations, and so it proved.

The shadow Minister talked about the burden and the red tape. A number of measures in the Bill will actually reduce burdens on employers’ organisations and trade unions in terms of notification and reporting requirements. He also challenged us on what the impact of some of this stuff will be. We can never say for sure that the Strikes (Minimum Service Levels) Act 2023 will have any impact, because it has never been used. One of the fundamental weaknesses with that legislation was that it was so unworkable and so damaging to industrial relations that no one ever thought it was a sensible idea to implement it. There were also powers in the Trade Union Act 2016 that were never used. Where powers were used—for example, on facility time and the requirement to report that in the public sector—the figures at the start of the period for reporting were exactly the same as they were at the end. So there was a lot of hot air and posturing in that previous legislation, and it was not conducive to good industrial relations. We are more than happy to see the back of it, but of course we will continue to consult and engage with all stakeholders as we move forward on implementing our clear manifesto commitments. On that note, I would oppose these proposals.

[Greg Smith]

It is a shame that the Minister has taken that attitude towards proper consultation before commencement of part 4. We still think it should happen, but we will, in good faith, give the Minister time to reflect ahead of Report. For now, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 21

Right to switch off in relation to trade union representatives

“(1) The Trade Union and Labour Relations (Consolidation) Act 1992 is amended in accordance with subsection (2).

(2) After section 69 (right to terminate membership of trade union), insert—

‘Right to switch off in relation to trade union representatives

69A Right to switch off in relation to trade union representatives

In every contract of membership of a trade union, whether made before or after the coming into force of this section, a term conferring a right on the member to refuse to monitor, read or respond to contact (or attempted contact) by a trade union representative outside their working hours shall be implied.’.” —(Greg Smith.)

This new clause confers a right to switch off on trade union members in relation to contact from trade union representatives.

Brought up, and read the First time.

[Greg Smith]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss amendment 120, in clause 118, page 105, line 20, at end insert—

“(3A) But if the provisions of section [Right to switch off in relation to trade union representatives] have not been fully brought into force before the end of the period of 12 months beginning with the day on which this Act is passed, that section (so far as not already in force) comes into force at the end of that period.”

This amendment is consequential on NC21 and provides that the provision must have effect within a year of the passing of this Act.

[Greg Smith]

I rise to speak to new clause 21 and amendment 20, standing in my name and those of my hon. Friends. The new clause would confer a right on trade union members to switch off from contact by their union representatives. Amendment 120 provides that new clause 21 must have effect within one year of the passing of this Act.

We know that the Government would like to give employees the legal entitlement to disconnect from work-related communications during non-working hours, to ensure a healthier work-life balance. My understanding, and I would be grateful for the Minister’s confirmation, is that this would apply to all forms of communication, including emails, phone calls and instant messaging. That is a burdensome requirement for employers. To ensure that they are complying with the eventual law, they are likely to need to establish clear boundaries for out-of-hours communication to protect employees’ rights and avoid legal risks. In other words, they need another policy and then to enforce it.

I accept that I am speculating a little, because we do not know whether the Government will impose a code of practice or legislation and exactly what that would contain, but I have made an educated guess, allowing for the Government’s pronouncements so far. We think that any requirement placed on employers that restricts the contact that can be made with their employees should also apply to trade unions. Surely, it is damaging for employees’ mental health to be contacted by their trade union reps around the clock. We have adopted our own definition of the right to switch off, in the absence of any clear definition yet from the Government. It amounts to this:

“In every contract of membership of a trade union, whether made before or after the coming into force of this section, a term conferring a right on the member to refuse to monitor, read or respond to contact (or attempted contact) by a trade union representative outside their working hours shall be implied.”

It is only fair to secure a balance between the requirements on employers and trade unions to respect mental health and wellbeing, and to allow employees and trade union members alike to secure a healthy work-life balance.

[Laurence Turner]

Will the hon. Gentleman give way?

[Greg Smith]

I had not sat down, so I will be generous.

[Laurence Turner]

I am very grateful. Having listened to what the hon. Gentleman has had to say, I am still unclear what problem in the real world he is seeking to solve. From experience of working in trade unions, it is clear that the new clause would block a trade union member who was negotiating to save a company or reach an agreement, say over a weekend, from checking communications during that time. Someone might also be a delegate to a conference, and there may be serious safeguarding concerns about their behaviour. In that circumstance, it is for the trade union to take them out of that environment. The hon. Gentleman is making a didactic point, but does he accept that there would be very perverse consequences if the new clause were implemented?

[Greg Smith]

I am grateful to the hon. Gentleman for his intervention, but the points he makes could equally be applied to employers needing, in those special circumstances, to make contact with an employee or a representative of an employee, but the Government are not making those exemptions on that side of the fence. They would seem—we are yet to hear from the Minister, but what the hon. Member for Birmingham Northfield has said is indicative—to be resisting those same provisions applying to trade unions. It seems to be a bit of a double standard, and it is one that the amendment and the new clause seek to address. There cannot be one rule for employers and another rule for the trade unions. It is a matter of fairness that we are proposing the new clause and the amendment, and I look forward to hearing what the Minister has to say in response.

[Justin Madders]

The first thing to say is that it is pretty obvious that the shadow Minister has never been a member of a trade union.

[Greg Smith]

Just so that I can formally get it on the record, I can assure the Minister that I have never been a member of a trade union.

[Justin Madders]

I am sorry to say this, but the shadow Minister seemed almost proud of that fact.

--- Later in debate ---

[Greg Smith]

I am deeply hurt that the Minister will not take our new clause seriously. It is part of debate in this place, and our job as the Opposition, to test the boundaries of Government legislation. The new clause has exposed a double standard within the Labour Government’s approach to working practices, in that they seek to exempt trade unions but not employers. I invite the Minister to reflect on that point in the coming weeks, before we get to Report. Perhaps we can debate it on Report, when he has had more time to consider it. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 22

Assessment of the costs of establishing a single labour market enforcement body

“(1) The Secretary of State must lay before Parliament a report containing an assessment of the costs of establishing a single labour market enforcement body.

(2) A report under subsection (1) must be published no earlier than a year and no later than 18 months after the passing of this Act.”—(Greg Smith.)

This new clause would require the Secretary of State to conduct a review of the costs of establishing a single labour market enforcement body and to report its findings to Parliament.

Brought up, and read the First time.

[Greg Smith]

I beg to move, That the clause be read a Second time.

I rise to speak to new clause 22, although from the mutterings of my hon. Friend the Member for Bridgwater, I am sure all Government Members will now have their phones on display, just in case they ring. The new clause would require the Secretary of State to lay before Parliament a report containing an assessment of the costs of establishing a single labour market enforcement body or, as we now refer to it, the fair work agency. The report must be published no earlier than a year, and no later than 18 months, after the Bill becomes an Act.

We tabled the new clause because we want to understand the cost-benefit analysis the Government have undertaken in relation to establishing the labour market enforcement body. Will the Minister inform the Committee about that work? Specifically, whenever there is a reorganisation of the responsibilities between the Government and non-departmental public bodies, there are always logistical difficulties to manage, such as the transfer of staff and so on.

The Government’s own impact assessment of the establishment of the fair work agency is fairly damning:

“Limited evidence and an incomplete design of the operational and organisational structure of the FWA mean that it has not been possible to quantity the impact of benefits arising from its introduction nor the majority of associated costs. Where costs have been calculated they are limited to the one-off costs faced by businesses in order to familiarise themselves with changes to the enforcement system. We estimate that these costs would be £33m.”

That is not my estimate, but the estimate in the Government’s own impact assessment. In other words, our new clause is needed. The Government have not been able to assess the costs of bringing together enforcement in this way and whether it represents value for money.

As for the cost to business, the impact assessment is, again, not exactly glowing:

“It is unclear what the total impact on business will be as a result of the creation of the FWA, this uncertainty is due to:…The operational and organisational design of the FWA not being finalised…Uncertain evidence on the number of employers and employees in scope of changes to labour market enforcement…Undetermined behavioural responses by both employers and employees as a result of the creation of the FWA.”

On the direct cost to businesses, it says:

“Businesses will face one off familiarisation costs due to the introduction of the FWA. We estimate that the costs of these changes would be £33m. Additionally, businesses who are subject to investigation will face costs even if they are later found to be compliant with relevant regulation. It is not possible to state the total number of affected businesses, but we estimate that an investigation would cost each investigated business £770.”

That is not an inconsiderable sum just for the investigation, before anything else is found, particularly for our small and medium-sized enterprises.

All of that shows that the Government’s policy thinking is at such an early stage that it is difficult to make any reliable judgments about it. We may all agree that the fair work agency is a nice idea in principle, but the Government are introducing it, and it is their job to make sure they can demonstrate that it will work in practice and provide a better deal for taxpayers, employers and workers than they are getting now. At the moment, the jury is straightforwardly still out.

There are several strands to this issue. For example, on the enforcement system for labour market legislation, the impact assessment states that

“the Bill could increase the volume of cases in the ‘individual enforcement’…system by around 15%, albeit this would be offset to some degree by the implementation of the Fair Work Agency (FWA). The exact impact on the enforcement system is difficult to predict because the number of cases that enter the system each year fluctuates, and it will ultimately depend on behavioural factors like employers’ willingness and ability to comply with regulation, and employees’ willingness to bring forward a dispute.”

In other words, the Government are really not sure about the impact that the Bill will have on the number of enforcement claims being brought to tribunal and the ability of the tribunal system to cope.

For all those reasons, we have tabled new clause 22, which would require the Secretary of State to lay before Parliament a report containing an assessment of the costs of establishing a single labour market enforcement body. Given the level of detail available so far, that would seem to be a reasonable and moderate requirement to enable Parliament to scrutinise the new agency and the value for money that it provides. It might even enable the Government to provide the House with a good news story. The only reason to resist the new clause would be if the Government thought that the new agency was not going to be such good news after all.

[Justin Madders]

Let me start by explaining once again why we believe the fair work agency is so important.

As we know, the current landscape for employment rights is, as was actually recognised by the previous Government, fragmented and in need of reform. I believe there is widespread agreement about that. As a Committee, we heard evidence from Margaret Beels, the Director of Labour Market Enforcement, that the current fragmentation creates a barrier to providing effective sector-wide enforcement. She noted that bringing powers together in the fair work agency would allow for better information sharing and a more flexible and adaptive approach to enforcement, enabling resources to be directed where they are most needed.

Other witnesses agreed with that assessment; indeed, I recall that a huge range of witnesses at the evidence sessions spoke in favour of a single enforcement body. The CBI, the British Chambers of Commerce, the British Retail Consortium, the Chartered Institute of Personnel and Development, the Recruitment and Employment Confederation, the Food and Drink Federation, the Co-operative or Co-op, the Women’s Budget Group and the Work Foundation all spoke in favour of a single enforcement body.

The shadow Minister mentioned the impact assessment, but the Bill was in fact green-rated by the Regulatory Policy Committee. There is a commitment to keep the performance and cost of the fair work agency under review. There will be a review three years after implementation of the agency. As would be expected, merging different structures together is a complex task, so costings are still being developed at this stage. Nevertheless, securing value for money is clearly a key consideration in that process.

The shadow Minister made an interesting point about behavioural change. Clearly, such change is very difficult to model in, but we hope that by establishing the fair work agency we will send a very clear signal that we expect employers to comply with the law, that the best standards should be adhered to, and that the race to the bottom should end. As a result of all that, we will see far better employment practices across the country.

The fair work agency will be part of the Department for Business and Trade, so its costs will be in the Department’s accounts, which Parliament can scrutinise in the normal way. Once the agency is fully established, it will produce its own accounts as part of its reports, and those accounts will be consolidated into the Department’s annual accounts, which, of course, will also be subject to parliamentary scrutiny.

Consequently, I do not believe that new clause 22 would add anything to the multiple channels that are already available for parliamentarians to establish and identify the costs and benefits of the agency.

[Greg Smith]

I heard what the Minister said. The cost is important because it is ultimately both cost to the taxpayer and cost to our businesses which create all the wealth in the first place, which then gets taxed and pays for our public services. I invite the Minister to reflect on that, going forward. It is absolutely vital that the Government understand what things will cost before we make them happen, whether that is a Labour, Conservative or coalition Government—or whatever it might be. Once more, in a developing theme with the earlier new clauses that we proposed, I invite the Minister to reflect on that point ahead of Report, and we certainly intend to return to that on a future occasion, but for now, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 24

Impact assessment: sections 1 to 6

“(1) The Secretary of State must conduct a review of—

(a) the impact of those sections on the operation of employment tribunals, and

(b) the ability of employment tribunals to manage any increase in applications resulting from those sections.

(2) The Secretary of State must lay the review made under subsection (1) and the Government’s response to the review before Parliament.”—(Greg Smith.)

This new clause would require the Secretary of State to conduct a review of the impact on the employment tribunals of the Bill’s provisions on zero hours workers.

Brought up, and read the First time.

[Greg Smith]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

New clause 25—Impact assessment: sections 19 to 22 and Schedule 2—

“(1) The Secretary of State must conduct a review of—

(a) the impact of section 19 to 22 and Schedule 2 on the operation of employment tribunals, and

(b) the ability of employment tribunals to manage any increase in applications resulting from those provisions.

(2) The Secretary of State must lay the review made under subsection (1) and the Government’s response to the review before Parliament.”

This new clause would require the Secretary of State to conduct a review of the impact on the employment tribunals of the Bill’s provisions on dismissal.

Amendment 128, in clause 118, page 105, line 20, at end insert—

“(3A) But the provisions of sections 1 to 6 of this Act may not be brought into force before the review conducted under section [impact assessment: sections 1 to 6] has been laid before Parliament.”

This amendment, paired with NC24, would require the Secretary of State to conduct a review of the impact of the provisions on zero hours workers before those clauses can be commenced.

Amendment 129, in clause 118, page 105, line 20, at end insert—

“(3A) But the provisions of sections 19 to 22 and Schedule 2 of this Act may not be brought into force before the review conducted under section [impact assessment: sections 19 to 22 and Schedule 2] has been laid before Parliament.”

This amendment, paired with NC25, would require the Secretary of State to conduct a review of the impact of the provisions on dismissal before these clauses can be commenced.

[Greg Smith]

This is quite a meaty grouping of proposals so, once more, I will get through my comments as quickly as I can. Amendment 128 paired with new clause 24 would require the Secretary of State to conduct a review of the impact of the provisions on zero-hours workers before these clauses can be commenced. The Government’s impact assessment suggests that the provisions in the Bill on the right to guaranteed hours will cost businesses around £160 million a year in administration needed for compliance—that is something, but not much, in terms of business costs. The Government also say:

“The extent to which the policy will provide a net positive impact for total welfare will depend on (i) how well targeted the policy is at those facing detriment whilst retaining flexibility for those that value it, and (ii) the extent that wellbeing impacts of the policy feed through to productivity improvements for employers. As such, at this stage of policy development we deem the net impact on society as uncertain.”

In terms of the impact on employment tribunals, the Government estimate a “slight increase” of:

“300 additional ET1 claims and 55 additional cases which require judicial time”.

The justification for that assessment is:

“The changes to Zero-Hour Contracts are expected to impact 2.4 million workers. The assessed impact of right to regular contract on the enforcement system is based on the frequency of cases within the jurisdictions of Part time worker regulations and written statement of terms and conditions. These jurisdictions represented 2.5% of all complaints to ETs in 22/23 and therefore an additional 2.4 million workers with the right to make a claim is expected to lead to a slight increase in cases.”

I would like to question some of the assumptions underlying the Government’s analysis. What analysis has been undertaken of the increased likelihood of claims, now that the Bill is giving employees both more enforceable rights and a longer period of up to six months to make a claim? Given the importance to employers of claims brought to tribunal being quickly resolved, I would appreciate further reassurance from the Minister on that point. That is also why we have tabled new clause 24, because we wish to make sure—given the uncertainty about the costs and benefits of the provisions on guaranteed hours because, as the Department acknowledges, much is being left to regulations—that the Government are confident the tribunal system can cope before the legal changes are commenced.

Amendment 129 paired with new clause 25 would require the Secretary of State to conduct a review of the impact of the provisions on unfair dismissal before these clauses can be commenced. The Government admitted that they do not have robust data on the incidence of dismissal for those with under two years of employment. In other words, we do not know whether there is even the problem with unfair dismissal that the Bill seeks to solve.

--- Later in debate ---

[Justin Madders]

I thank the shadow Minister for moving the new clause, and for tabling new clause 25 and amendments 128 and 129. In new clause 24 and amendment 128 he seeks, first, to insert into the Bill a new clause requiring the Secretary of State to conduct a review of the impact on employment tribunals of the Bill’s zero-hours measures in clauses 1 to 6; and secondly, to provide that those measures cannot be commenced until that review has been conducted and laid before Parliament.

The Government have already produced a comprehensive set of impact assessments. Our analysis included illustrative analysis of the impact on employment tribunal cases, which we intend to refine over time by working closely with the Ministry of Justice, His Majesty’s Courts and Tribunals Service, ACAS and wider stakeholders. The quantifiable impact of the measures on zero-hours contracts is estimated to be an annual increase of about 1,000 additional cases for employment tribunals per year. That assessment was published at Second Reading and was based on the best available evidence for the potential impact on business, workers and the wider economy.

We will also publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the requirements of the better regulation framework. That will account for ways in which the Bill has been amended in its passage through Parliament in such a way as to change significantly the impacts of the policy on employment tribunals. That impact assessment will then be published alongside the enacted legislation. I therefore reassure the shadow Minister that there is no need for the Government to be required to bring new impact assessments before Parliament, as we intend to publish further analysis alongside future consultations, ahead of secondary legislation, in accordance with the better regulation requirements.

The shadow Minister also seeks to insert new clause 25, which would include an assessment of the impact on employment tribunals of changes to protections against some kinds of dismissal in the Bill. Amendment 129 then seeks, again, to delay commencement of those changes until the review has been laid before Parliament. As I said, we have already produced a comprehensive set of impact assessments, which were published at Second Reading and based on the best available evidence for the potential impact. Our analysis includes illustrative assessment of the impact on employment tribunal cases, which we intend to refine over time by working closely with the Ministry of Justice, His Majesty’s Courts and Tribunals Service, ACAS and wider stakeholders.

The shadow Minister mentioned the concerns about unfair dismissal, especially for those on the margins of employment. Such concerns are, of course, one reason why a statutory probationary period has been proposed. He also mentioned the experience of the statutory dismissal and grievance procedures in the early 2000s. I assure him, having lived through that, that we do not wish to repeat those mistakes. We will look to ensure as much clarity and certainty as possible in the legislation before it is enacted.

We will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the requirements of the better regulation framework. That will account, in those areas, for any ways in which the Bill has been amended in Parliament that change significantly the policy impact on the enforcement system. That will be published alongside the enacted legislation. I therefore assure the Committee that there is no need for the Bill to require the Government to undertake further assessment of the impact on tribunals before commencement, because we will do that as we go along.

Impacts will be considered, and I am also looking at ways to ensure that the tribunals system is able to deal with any additional claims that may arise as a result of the Bill, and how it can work more efficiently with the significant backlogs that it already has. As the Committee will appreciate, that is within the purview of the Ministry of Justice, but clearly it is something that we intend to work closely with it on. I therefore invite the shadow Minister to withdraw his new clauses and amendments.

[Greg Smith]

I hear what the Minister says. I am grateful for his comments about his desire not to repeat the mistakes of the early 2000s. I still think that the new clauses and amendments that we tabled would be important for business and for employees. We will seek to return to them on Report, as with the other new clauses. For the time being, however, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 31

Sections 1 to 6: impact assessment

“The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament an assessment of the expected impact of sections 1 to 6 on—

(a) the hospitality sector,

(b) the retail sector, and

(c) the health and social care sector.”—(Greg Smith.)

This new clause requires the Government to publish an impact assessment on the impact of sections 1-6.

Brought up, and read the First time.

[Greg Smith]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 153, in clause 118, page 104, line 33, at end insert—

“(ba) section [sections 1 to 6: impact assessment];”

This amendment is consequential on NC31.

Amendment 154, in clause 118, page 105, line 20, at end insert—

“(3A) No provision of the following sections of this Act may be brought into force in accordance with subsection (3) until the Government has published the impact assessment specified in section [sections 1 to 6: impact assessment]—

(a) section 1 (Right to guaranteed hours);

(b) section 2 (Shifts: rights to reasonable notice);

(c) section 3 (Right to payment for cancelled, moved and curtailed shifts);

(d) section 4 (Amendments relating to sections 1 to 3);

(e) section 5 (Repeal of Workers (Predictable Terms and Conditions) Act 2023);

(f) section 6 (Exclusivity terms in zero hours arrangements).”

This amendment is consequential on NC31 and requires the Government to publish an impact assessment on the impact of sections 1-6 on the hospitality, retail, and health and social care sectors.

[Greg Smith]

Amendment 154, which is consequential on new clause 31, would require the Government to publish an impact assessment on the impact of clauses 1 to 6 on the hospitality, retail and health and social care sectors. The Government’s impact assessment states that zero-hours contracts are most frequently used in the hospitality, retail and health and social care sectors, which is why new clause 31 would require the Government to conduct an impact assessment to understand how well those sectors are able to cope with the provisions before they come into force. In the social care sector, given the workforce challenges that we all know about, that is particularly acute, especially if the provisions are also extended to agency workers, as it is not clear how that would be workable.

The impact assessment provided by the Government is for the guaranteed hours provisions across the economy as a whole, but we know that the impact will be more severe in particular sectors. The Government estimate that the administrative costs of facilitating the right to guaranteed hours will be around £160 million. Since healthcare and education are large employers of zero-hours contracts and agency workers, some of the impact will fall on His Majesty’s Treasury. Has that been accounted for in the departmental headroom left after the Chancellor’s disastrous 2024 Budget?

On the provision of reasonable notice of shifts, the Government estimate that business behaviour will change so that fewer shifts are cancelled, but the value of unavoidable cancellations could still be as high as £120 million a year, although that will depend on the detail of the policy further down the line. That is a fairly cavalier attitude to take towards business costs, particularly, as we discussed earlier, given the requirements of some shift work in the sectors mentioned in new clause 31.

Our new clause therefore attempts to encourage the Government to do the job properly and set out the costs to hospitality, retail and health and care sectors from clause 1 on the right to guaranteed hours; clause 2 on rights to reasonable notice for shifts; clause 3 on the right to payment for cancelled, moved and curtailed shifts; clause 4 on amendments relating to sections 1 to 3; clause 5 on the repeal of the Workers (Predictable Terms and Conditions) Act 2023; and clause 6 on exclusivity terms in zero-hours arrangements. Given that so much of this policy is still to be determined by regulations, we do not think it unreasonable that this assessment should take place before the relevant clauses of the Bill can be commenced.

[Justin Madders]

As the shadow Minister has identified, his new clause 31 seeks to require the Government to publish an assessment of the impact on specific sectors of the economy of the Bill’s provisions on zero-hours workers in clauses 1 to 6, and to lay the assessment before Parliament within six months of the passage of the Bill. Amendments 153 and 154 seek to ensure that the proposed new impact assessment requirement comes into force on the day that the Bill is passed, and that the provisions in clauses 1 to 6 cannot be commenced until the impact assessment has been published.

I point out to the shadow Minister that we produced a set of impact assessments at Second Reading, which included analysis of the best available evidence on the specific sectors that he referred to. We recognise the importance of ensuring that the impacts of these policies on workers, businesses and the economy are considered, and that the analysis considers those potential impacts. We will refine our analysis of the impact over time, working closely with businesses, trade unions, academics and think-tanks, and continue to engage with the relevant sectors and Government Departments on these issues. We will publish enactment impact assessments in line with the requirements of the better regulation framework, which will account for ways in which the Bill has been amended in its passage through Parliament so as to change the impacts of the policy on businesses significantly. These will be published alongside the enacted legislation.

In addition, we are committed to consulting with businesses and workers ahead of setting out secondary legislation, which will be necessary to implement the provisions, and we will work with the sectors listed in the proposed new clause as part of that. We will publish further analysis alongside those consultations to meet our better regulation requirements. There is no need for the new clause—there will be many opportunities for further analysis and refinement before the commencement of the regulations—and I therefore urge the shadow Minister to withdraw it.

[Greg Smith]

I am grateful to the Minister for that response. I do not fully share his view of the world but, as he rightly says and similarly to the previous new clauses that we have proposed, we can come back to this on Report. For the time being, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

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