Employment Rights Bill (Fourteenth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 17th December 2024 Public Bill Committees

[Greg Smith (Mid Buckinghamshire) (Con)]

I beg to move amendment 168, in schedule 3, page 115, leave out from the beginning of line 15 to the end of line 31 and insert—

“(1) In the case of staff employed under subsection (3)(b) of section 148C, matters within the SSSNB’s remit are limited to the establishment of a framework to which employers of school support staff must have regard when discharging their functions.

(2) A framework under subsection (1) must include information on—

(a) the remuneration of school support staff;

(b) the terms and conditions of employment of school support staff;

(c) the training of school support staff;

(d) career progression for school support staff; and

(e) related matters.

(3) When taking any action related to the matters in subsection (2), an employer may disregard the framework only in exceptional circumstances.

(4) For the purposes of subsection (3), the definition of ‘exceptional circumstances’ shall be set out in regulations.

(5) In the case of staff employed under subsection (3)(a) of section 148C, the matters within the SSSNB’s remit are matters relating to the following—

(a) the remuneration of school support staff;

(b) terms and conditions of employment of school support staff;

(c) the training of school support staff;

(d) career progression for school support staff.

(6) The Secretary of State may by regulations provide that, for the purposes of subsection 5—

(a) a payment or entitlement of a prescribed kind is, or is not, to be treated as remuneration;

(b) a prescribed matter is, or is not, to be treated as relating to terms and conditions of employment of school support staff;

(c) a prescribed matter is, or is not, to be treated as relating to the training of school support staff;

(d) a prescribed matter is, or is not, to be treated as relating to 30 career progression for school support staff.”

This amendment would change the matters within the SSSNB’s remit in relation to academy staff, limiting it to the creation of a framework to which academy employers must have regard in all but exceptional circumstances.

It is a pleasure to serve under your chairmanship, Ms Vaz, at the Committee’s last sitting before Christmas—let us make it a memorable one. [Laughter.]

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

They are all memorable.

[Greg Smith]

They are.

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[Greg Smith]

I listened very carefully to what the Minister and the hon. Member for Birmingham Northfield said about amendment 168. I was open to dialogue on it to see if we can make it stronger and improved. Its proposed new subsection (2) sets out all the information we would expect to see in such a framework. There are five parts including the remuneration of school support staff; the terms and conditions of employment of school support staff; the training of school support staff; career progression for school support staff; and—the lovely catch-all phrase that drafters love to put in—all related matters. I would say that it is pretty clear what we have laid out.

To get to the nub of the argument, this is not about some sort of race to the bottom. It is not about, as the Minister asserted, arguing for low pay. That is not what we are doing at all. This is a point of principle about support for the academy system, which was brought in by a former Labour Government, and support for free schools, which was brought in by a coalition of the Conservatives and Liberal Democrats. The three main parties in this House on that basis are broadly aligned, unless anyone has radically changed their mind—perhaps they have, and 2015 probably did focus some minds.

This is a point of principle of diversity in the education system, and central to the diversification of offer is that those establishments, in this case academies, have the freedoms to decide things themselves, locally. In this case, it is on pay and terms and conditions but, wary of the fact that I do not want to go out of scope, it can be on other things as well. To take that away would be the retrograde step that I spoke about. It would undermine academies, and it would undermine the very point of having choice and the diversity of offer in the education system for parents.

[Justin Madders]

The shadow Minister is talking about choice, but the Bill does not remove any academies from the current system. Will he confirm that?

[Greg Smith]

No, of course it does not remove academies from the system, but it does take away a freedom and power that all those wonderful academies, many in my own constituency and I am sure some in the Minister’s, currently enjoy to be able to set their educational offer, including the power of who they recruit and on what basis they recruit them. I come back to the point I made when I intervened on the hon. Member for Chippenham; if we are going to just make everything the same again, there needs to be an honesty about actually advocating that from the Government, from the Liberal Democrats or from whoever it might be. I value and welcome the choice that we have in our education system, and this is one of those freedoms that makes that choice possible.

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[Greg Smith]

I am grateful to my hon. Friend; he is always reassuring. He raised an important point. Given that, as he highlighted, free schools enjoy the same freedoms —they are specifically referred to in amendment 168—as academies, I am worried that the Government’s attitude to free schools indicates that they are rowing back on support for them.

[Justin Madders]

The shadow Minister keeps referring to freedoms, but does he accept that the only freedom that would be given to academies by virtue of this amendment would be the freedom to pay their staff—I am not saying that they would—lower than the national terms and conditions?

[Greg Smith]

I come back to this point of principle: either we have autonomous bodies that can make their own decisions or we do not. If the Government’s answer is that we do not, I certainly understand why they do not want this amendment, but I do not understand why they persist with their support for that which they created in the first place—the academisation of so many schools—and resist making the more straightforward argument for a one-size-fits-all education policy. I hope they do not adopt such a policy, because of the progress that the Labour party made through academisation in the first place. However, that is the natural conclusion of what the Minister is saying.

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[Justin Madders]

Amendments 66 and 67, and 69 to 71, make minor drafting corrections to the clauses to remove the word “education” when referring to local authorities. This is necessary because of an error in terminology used in the Bill on introduction.

I will also speak to amendment 68. We know that academy trusts use a range of innovative practices to support staff in a range of roles. The sector and the workforce have evolved since the previous negotiating body for school support staff existed in 2009. That is why we intend to consult on the definition of support staff in scope and appropriate protections for staff in transitioning to the new arrangements. The consultation may bring to our attention staff in academy trusts who are not captured by the existing definition of support staff, working wholly at one or more academies, but who we think should be. Having the ability to broaden the scope, as well as to exclude staff types in secondary legislation, would give us more flexibility to respond to the consultation.

[Greg Smith]

As the Minister said, amendment 68 extends the definition of school support staff in the Bill to include people who do not work in an academy, but who are employed by the proprietor of an academy to carry out particular kinds of work, to be specified in regulations—it is our old friend, waiting for future regulations to be laid before the House—for the purposes of one or more academies. The other amendments in this grouping are minor drafting corrections, and we accept that. I merely want to put on record once more that had this Bill not been so rushed to meet the arbitrary political 100-day deadline, we might not be in this place, and we might have had greater clarity from the get-go. We accept, however, that these are fundamentally minor amendments that really should have been included at introduction.

[Justin Madders]

The shadow Minister’s comments are noted, and I commend the amendments to the Committee.

Amendment 65 agreed to.

Amendments made: 66, in schedule 3, page 116, line 8, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 67, in schedule 3, page 116, line 10, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 68, in schedule 3, page 116, line 13, leave out from “employment” to end of line 14 and insert “which—

(i) provides for the person to work wholly at one or more Academies, or

(ii) provides for the person to carry out work of a prescribed description for the purposes of one or more Academies.”

This amendment extends the definition of “school support staff” in new Part 8A of the Education Act 2002 to include people who do not work at an Academy but are employed by the proprietor of an Academy to carry out particular kinds of work (to be specified in regulations) for the purposes of one or more Academies.

Amendment 69, in schedule 3, page 123, line 31, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 70, in schedule 3, page 123, line 33, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 71, in schedule 3, page 124, line 13, leave out “education”.—(Justin Madders.)

See the explanatory statement for amendment 65.

[Greg Smith]

I beg to move amendment 123, in schedule 3, page 124, line 39, at end insert—

“(2A) Before making or revising arrangements under sub-paragraph (1), the Secretary of State must publish and lay before Parliament an impact assessment of the costs on the education sector of any proposed arrangements.”

This amendment makes a requirement from the Secretary of State to undertake an impact assessment of the costs on the education sector before making or changing arrangements related to the School Support Staff Negotiating Body.

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[Greg Smith]

I cannot remember a single time in the last Parliament when the then Opposition would have made the case that there was no need for an impact assessment. I put that to the Minister very gently as a point of principle that is specific to amendments 123 and 124. However, I understand the argument that he is making.

The Opposition still think that the Bill’s approach is flawed as to diversity across our educational establishments. We will not press our amendments to a Division now, but we reserve the right to revisit the matter when we come up for air on Report, once the Minister has had time to reflect on the implications of his policy. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the schedule, as amended, be the Third schedule to the Bill.

[Justin Madders]

As the Committee has discussed, clause 28 introduces schedule 3, which provides for the establishment, remit and functioning of the school support staff negotiating body. Paragraph 1 of schedule 3 will insert into the Education Act 2002 a new part 8A, which contains proposed new sections 148A to 148R.

New section 148A will reinstate the SSSNB as an unincorporated body. Reinstating the SSSNB will give school support staff the voice and recognition that they deserve as a crucial part of the school workforce. It will help to address the recruitment and retention challenges facing schools and will drive standards in schools to ensure that we give every child the best possible chance in life.

New section 148B sets out the remit of the SSSNB for remuneration, terms and conditions of employment, training and career progression of school support staff, and the powers of the Secretary of State to define what is or is not to be treated as falling within those categories within the regulations. This ensures clarity over the remit of the SSSNB and what can and cannot be referred to it by the Secretary of State. The remit will lead to a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.

New section 148C defines school support staff in relation to who they are employed by and their role. Support staff are defined as all staff, other than qualified teachers, who are employed by local authorities, governing bodies and academy trusts to work wholly at schools in England. The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Support staff employed by academy trusts are now included in the SSSNB’s remit, despite the shadow Minister’s attempts to persuade us otherwise.

It is crucial that the body have a remit for all state-funded schools in England to achieve greater national consistency, irrespective of the type of school in which support staff work. Roughly half of the 24,453 schools in England are now academies, compared with approximately 200 in 2009 when the body was previously established. New section 148B gives the Secretary of State a power to prescribe in regulations those who will not fall within the SSSNB’s remit.

Amendment 68 will allow the Secretary of State to include, through secondary legislation, those who do not work wholly at academies within the SSSNB’s remit, by reference to the type of work that they do. The Department currently holds limited information about the roles in which support staff are employed in academies or the terms and conditions under which they work. It intends to consult on which roles should and should not be within scope of these provisions. These powers will provide the necessary flexibility to respond to that consultation and amend the remit of the SSSNB as necessary.

New section 148D sets out the power of the Secretary of State to refer matters to the SSSNB that are within its remit, namely those matters relating to remuneration, terms and conditions of employment and training and career progression of school support staff. Referrals by the Secretary of State to the negotiating body will mean that those representing employers and employees can agree and advise on suitable outcomes for school support staff within the parameters set out by the Secretary of State in relation to wider Government priorities and context.

New sections 148E and 148F set out the powers of the Secretary of State when referring matters relating to remuneration, terms and conditions of employment and training and career progression to the SSSNB. The Secretary of State may specify factors that the SSSNB must consider and a timescale for their consideration. The new sections set out the steps that the SSSNB must take, depending on whether it has or has not reached agreement on matters relating to terms and conditions. Where the Secretary of State refers a matter relating to the training and career progression of school support staff to the SSSNB, the SSSNB is required to provide a report on the matter to the Secretary of State, rather than reaching agreement.

New section 148G will give the SSSNB the power to consider matters within its remit that have not been referred to it, with the Secretary of State’s agreement. This will give the SSSNB the ability to raise alternative matters that it wishes to negotiate or advise on. Agreement from the Secretary of State is required from the outset to ensure that no work is undertaken on a matter that could be considered to be outside the SSSNB’s remit. It will also ensure that the body has sufficient capacity to consider referred matters within the required timescale, alongside any additional matters that the SSSNB wishes to consider.

New section 148H sets out the Secretary of State’s powers in relation to agreements submitted by the SSSNB. The Secretary of State may ratify an agreement in secondary legislation in full or in part—if in part, the part not ratified falls away—or refer the agreement back to the SSSNB to reconsider it under new section 148I. This power is necessary to ensure that any agreements are practicable—for example, that they are affordable—before being incorporated into contracts. The ability for the Secretary of State to ratify agreements in part is a pragmatic approach to allow matters with agreement to progress and to avoid delays if there is an element of an agreement that the Secretary of State is not content to agree.

New section 148I sets out what happens where the Secretary of State refers a matter back to the body for reconsideration. The Secretary of State may specify factors to which the body must have regard in reconsidering the agreement and by when it must revert.

New section 148J will apply where the SSSNB has submitted an agreement to the Secretary of State after reconsideration. The Secretary of State has powers to ratify the agreement in full or in part in regulations; to refer the agreement back to the SSSNB for reconsideration; to make regulations requiring prescribed people to have regard to the agreement in exercising prescribed functions; or to make regulations that make alternative provision in relation to the same matter. The new section gives the Secretary of State a range of powers to determine the best course of action based on the agreements from the SSSNB to ensure that the desired outcomes for school support staff are met and are practicable.

New section 148K sets out the process if an agreement cannot be reached by the SSSNB on a matter relating to school support staff remuneration and terms and conditions referred to it by the Secretary of State. The Secretary of State may specify a later date by which agreement must be reached or may make regulations in relation to the matter referred to the SSSNB if there is an urgent need to do so, but the Secretary of State must consult the SSSNB before making those regulations. This will ensure that the Secretary of State is able to regulate as necessary in the event that agreement cannot be reached, for instance on a pay award for school support staff.

New section 148L sets out the Secretary of State’s powers if the SSSNB fails to submit a report on a matter relating to the training and career progression of school support staff by the deadline set by the Secretary of State. The Secretary of State can specify a later date for the SSSNB to report or issue guidance on the matter. This ensures that the Secretary of State can still issue guidance on training and career progression to support recruitment and retention in the absence of a report from the body.

New section 148M sets out the effect of regulations made by the Secretary of State that ratify agreements reached by the SSSNB in full or in part. The terms of the agreement are imposed in a person’s contract of employment so that a member of school support staff must be paid and treated in accordance with those conditions. Any inconsistent terms in contracts of employment or academy funding agreements have no effect. That allows the Secretary of State to make changes to the pay and terms and conditions of school support staff as agreed by the SSSNB, in order to ensure fairer pay rates and greater national consistency, boost recruitment and retention in those roles, and drive improved standards in schools.

New section 148N sets out the effect of regulations made by the Secretary of State where she decides not to ratify agreements reached by the SSSNB or where the SSSNB fails to reach agreement on a matter. Where the Secretary of State decides to make regulations imposing terms and conditions into school support staff contracts, for example because there is an urgent need to make changes to terms and conditions and the SSSNB has failed to reach agreement on them, school support staff must be paid and treated in accordance with those terms and conditions. It is important that the Secretary of State has the ability to legislate to provide fair terms and conditions for school support staff in the event that the SSSNB fails to reach an agreement.

New section 148O will allow regulations made under part 8A to have retrospective effect, subject to their not subjecting anyone to a detriment in respect of a period that falls before the date on which the regulations are made. This will allow the Secretary of State to backdate pay awards agreed after the start of an annual pay period to ensure that school support staff may benefit from them for the entirety of the period.

New section 148P sets out how and when the Secretary of State and the SSSNB can issue guidance on matters within the SSSNB’s remit. The SSSNB, with the Secretary of State’s approval, can issue guidance on pay and terms and conditions, as can the Secretary of State. Only the Secretary of State can issue guidance on training and career progression. Local authorities, governing bodies and academy trusts are required to have regard to guidance issued. This will allow the Secretary of State and the SSSNB to support employers in the implementation of new terms and conditions and the promotion of training and career progression opportunities for school support staff.

New section 148Q will provide a carve-out for the SSSNB framework from the collective bargaining provisions in the Trade Union and Labour Relations (Consolidation) Act 1992. The new section is necessary to ensure that agreements reached by the SSSNB can be imposed in contracts only through ratification by the Secretary of State.

Paragraph 2 of schedule 3 will insert a new schedule 12A into the Education Act 2002. New schedule 12A includes provision for the SSSNB to be constituted in accordance with arrangements made by the Secretary of State. School support staff and employer representative organisations on the SSSNB will be set out in secondary legislation; the Secretary of State will be required to consult the TUC before prescribing which organisations represent school support staff.

The membership of the SSSNB will include support staff, employee and employer representatives, an independent chair and a representative of the Secretary of State. It may also include members who do not represent school support staff or their employers. However, only school support staff and employer representatives will have voting rights. The new schedule also provides for administrative support to be provided to the SSSNB, including for the Secretary of State to pay expenses for the chair and for administrative costs incurred by the SSSNB. The SSSNB is required to provide a report for each 12-month period.

I commend schedule 3, as amended, to the Committee.

[Greg Smith]

After that lengthy oration from the Minister, I can only conclude that when it takes that long to explain something, a bureaucracy is coming that probably nobody wants. As we rehearsed during our debates on amendments to the schedule, it challenges in many respects the freedoms that some of our education establishments enjoy.

As the Bill leaves Committee at some point in January and heads back to the main Chamber for Report, I urge the Minister to reach out to educational establishments—and perhaps to the Department for Education, but real-world schools are probably better—and reflect on the impact that this new bureaucracy will have on them. Is it as streamlined as it can humanly be? The Minister was on his feet for seven or eight minutes trying to explain that bureaucracy. In fairness, he did a commendable job of it, but that does not necessarily make it right. Whether we are in opposition or in government proposing things, we too rarely ask ourselves in the House: have we collectively got this right?

The Opposition believe that this new body—which we in government, along with the Liberal Democrats, removed—should not be brought back in. There is a better way of achieving some of the noble aims that the Government have in this regard and avoiding some of the potential catastrophes that we spoke about earlier. We therefore cannot support the schedule remaining in the Bill.

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[Justin Madders]

The shadow Minister will not be surprised to learn that we do not support his amendments. Amendment 121 seeks to require an assessment of the impact of the new negotiating body on the adult social care sector. The Government have already produced a comprehensive set of impact assessments for the Bill, including one on the fair pay agreement for adult social care. That was published on Second Reading and was based on the best available evidence regarding the potential impact on businesses, workers and the wider economy.

The adult social care fair pay agreement will be subject to sector-wide collective bargaining and negotiation. At this stage, our impact assessment provides an illustrative analysis of its potential impact, including the magnitude of the cost to businesses, as well as the benefits for up to 1.6 million social care workers. We intend to refine that analysis over time, working closely with businesses, trade unions, academics and, of course, the Department of Health and Social Care.

As is standard practice, we will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the better regulation framework requirements. That will account for where the Bill has been amended in its passage through Parliament in such a way as to significantly change its impacts on business. That impact assessment will be published alongside the enacted legislation. In addition, the Government will produce an impact assessment to accompany regulations connected to the establishment of the negotiating body.

The Minister asked why the body is needed—what is the evidence base? He will be aware of the evidence given to the Committee, both orally and in writing, about its importance. The hon. Member for Chippenham spoke of the need for a level playing field, which is certainly a big part of what we are looking at here, because many of us will know from our experiences in our constituencies—never mind the evidence before the Committee—that, fundamentally, the adult social care sector is in desperate need of help. We have known that for a very long time, and if Members care to look at the Low Pay Commission’s recent reports, they will see that it has dedicated a considerable amount of space in them to the challenges in the sector. Trade unions, of course, have also been calling for action in this area for many years.

It is also well known that there are huge recruitment and retention challenges in the adult social care workforce. It is a very large sector, employing about 1.6 million workers, which is about 5% of all people in adult employment, and it plays an important role. The people in those roles are predominantly women and, as was noted during the evidence sessions—and backed up by the analysis in the impact assessment—there are about 130,000 vacancies at the moment. It was also noted that filled posts have reduced by 4% recently, and that the shortfall since 2022 has been plugged primarily by overseas workers, which we know is a topic of great interest.

The turnover rate in the sector is incredibly high: it has been higher than 25% since 2016 and was consistently over 30% between 2017-18 and 2022-23. There were some improvements last year, but that was largely driven by international recruitment, and the turnover rate is generally much higher than the UK average. The impact assessment notes that, while some movement is healthy, the higher rates witnessed can be disruptive and impact not only productivity, but the quality of service, with recipients of care not getting continuity. I think we can all recognise the situation in which a person in receipt of care has a different person turning up every day and how disruptive that can be. It is important to note that recipients of care, and not just the workers, will benefit from the Bill.

We know that low pay is rife, as has been identified by the Low Pay Commission. In December 2023, the average wage was £11, and nearly 70% of workers were paid within £1 of the minimum wage. In the last two reports by the Low Pay Commission, space has been dedicated to underpayment in the sector. In its latest report, the Low Pay Commission said:

“In the social care sector, non-compliance appears persistent”.

The shadow Minister asked a wider point about travel costs. He will no doubt welcome the announcement in the Budget that we are freezing fuel duty, but the cost of travel is a much broader issue than the point he raised. Clause 30 will allow broader questions of terms and conditions to be considered. Clause 39 is also important, because it deals with record keeping. We know from research by Unison that about one quarter of domiciliary care workers are repaid only for travel time, and only 18% of them have the travel time listed on their payslips. Given that these people often earn close to the minimum wage, this is an absolute scandal that needs to be addressed. The shadow Minister made an important point about travel, but we hope that the fundamentals of ensuring that people are paid for that travel time will be addressed by the negotiating body.

Let me turn to amendment 122. The Government are committed to engaging with the adult social care sector on the design of a fair pay agreement, including how the negotiating body will be set up, how it should operate and how negotiations will run. The powers under clause 29 allow for the Secretary of State to create the adult social care negotiating body by regulations and to provide for the smooth and efficient running of that body. The regulations will confirm the type of body being created. The power also allows for reporting requirements to be imposed on the negotiating body, such as producing reports. Engagement with the sector will ultimately influence the type of body that the negotiating body actually becomes. All public bodies have specific reporting requirements to meet transparency standards.

I can confirm that the Department of Health and Social Care has committed to publishing an impact assessment on establishing fair pay agreements in the adult social care sector to accompany the secondary legislation required to establish the negotiating body. It is intended that the assessment will include an analysis of the potential costs and benefits that will arise from a fair pay agreement. On that basis, I invite the shadow Minister to withdraw his amendment.

[Greg Smith]

I am grateful to the Minister for his remarks, and not least for acknowledging the importance of the points about just travel time and about compensation for using one’s own vehicle and having to purchase the petrol, diesel, electricity, hydrogen or whatever to get around—in a brave new world, who knows what it might be? I invite him to ensure that that can be locked into, whatever the negotiating body has the power to do. I say that not least for rural communities such as mine, where it is not unusual for someone to have to travel for half an hour between many of the villages, and from one person they are caring for to another. That adds up very quickly in terms of not just time, but the cost of the fuel to get them there and the wear and tear on the vehicle’s brakes, tyres and so on.

We will not press these amendments to a Division. However, as the Minister reflects on this issue, I urge him to again ensure that the way in which this new body will inevitably be set up accounts for the multiple different platforms of provision across local government, the private sector and the not-for-profit sector, which the hon. Member for Chippenham talked about. This is a much more complex arena than that of schools, which is much more heavily defined—we spoke about that earlier. I urge the Minister to reflect on that as he potentially brings forward Government amendments or minor surgery to the Bill ahead of Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

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[Greg Smith]

I took careful notes, and we can check Hansard later, but I am pretty certain that the Minister himself used the word sufficient in his remarks.

[Justin Madders]

We may have to write to the hon. Member on that. Having furiously double-checked clause 32 during the other hon. Members’ speeches, I cannot find the word sufficient.

My final point relates to the powerful contribution from my hon. Friend the Member for Scarborough and Whitby about her personal circumstances and how important it is that we get this right. It is people such as her son who have benefited from good support in social care, and at the end of the day, they are the people who will benefit from stability and security in the workforce and better retention rates. This is about the workforce, but it is also about the people who receive the care, and it is about time that we gave them more priority. That is why these clauses are so important, and I therefore commend them to the Committee.

Question put and agreed to.

Clause 29 accordingly ordered to stand part of the Bill.

Clauses 30 to 44 ordered to stand part of the Bill.

Employment Rights Bill (Thirteenth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 17th December 2024 Public Bill Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Good morning, Mr Mundell; it is a pleasure to see you in the Chair. As is customary, I refer to my entry in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.

The clause will empower Ministers to reinstate and strengthen the two-tier code on workforce matters where contracts for public services have been outsourced to the private sector. It will ensure fair and equitable employment conditions for public sector workers who have been transferred into the private sector, and private sector workers who work alongside them on public service contracts, while maintaining a high quality of service for the public. It therefore directly supports the Government’s manifesto commitment to make work pay and will tackle the issue of unfair two-tiered workforces where staff working alongside one another to deliver the same contract do not have comparable terms and conditions of employment.

The powers are constrained so that the provisions of the regulations and the code, when developed, will apply only to new contracts entered into once the Bill comes into force, but can and will apply to re-procurements of services already outsourced where the re-procurement leads to a further transfer of workers. Ministers will have the power to make regulations specifying provisions to be included in relevant outsourcing contracts. The provisions may, for example, set out model contract terms that, where incorporated into contracts, will impose obligations on suppliers. Authorities will be required to take all reasonable steps to include those provisions in all relevant outsourced contracts.

The regulations made under the clause will, first, have the purpose of ensuring that transferring workers are treated no less favourably as workers of the supplier than when they worked for the public sector contracting authority and, secondly, have the objective of ensuring that workers of the supplier who are not transferred from the public sector but recruited by the supplier to work on the contract are treated no less favourably than those transferring workers. Alongside that, Ministers of the UK, Scottish and Welsh Governments will be subject to a duty to publish a code of practice addressing similar matters to which contracting authorities will need to have regard.

To ensure that the code is effectively enforced, there will be several forms of redress. Contracting authorities will be required to take all reasonable steps to ensure that suppliers meet their contractual obligations, as set out in the regulations. In addition, the procurement review unit, which will be established under our new Procurement Act 2023, due to commence in 2025, will be able to investigate whether a contracting authority has had regard to the code and taken appropriate steps in relation to provisions specified in the regulations.

These powers are being extended through amendments to the clause, which we discussed last week, to the devolved Governments of Scotland and Wales so that the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts can be spread throughout the UK. Fair and equitable working conditions are the right of all employees working alongside one other on the same outsourced contracts, and these measures will help to tackle that issue head on.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship once more, Mr Mundell.

Clause 25 has got me thinking about many moons ago, in 2006, when I was part of the team that won Hammersmith and Fulham council for the Conservatives for the first time since 1968. One of our first acts was quite literally to take the red flag down from the roof of the town hall. Part of the symbolism of that, which is why I mention it, was that the council, in 2006, was one of the last to outsource anything at all. Competitive tendering simply had not happened in that London borough. Everything was still a direct service run by the local authority, and we set about contracting out waste, grounds maintenance and many other services. Why? Because we wanted to deliver better value for taxpayers—indeed, we cut council tax by 20% over the eight years that we ran the council—and to improve service standards.

One of the things I learned in that process, and the reason my point is relevant to the clause, is that the first iteration of any contracting out—that first contract, be it for refuse collection, street cleansing, grounds maintenance or whatever—does not tend to result in economies and improvements. It is often in the second or third contract iteration where the cost savings and improvements in service standards start to be seen. That is partly because of the TUPE provisions that rightly exist to ensure that those staff who are being transferred from whatever part of the public sector we might be talking about—in this case, local government—transfer with the same rights, terms and conditions, and pay that they had at the point that they ceased to be direct employees of the council, or whatever other public service, and became employees of whoever won the contract.

The rub comes in the real-world application. In such cases, the staff members who transferred are on favourable terms and conditions, and probably better pay, than some of the staff that the contractor brings into the team. If it is immediately locked in that everybody new has to be on the same terms and conditions and pay scales, we will never achieve value for money for taxpayers, and we will never enable the contractor, be that a refuse collection company or whatever, to find efficiencies and savings at the same time as increasing service standards in the way that we all want to see. It might as well never be done in the first place. That makes me question whether that is in fact the ideological position that the Government want to take. I can see the Minister grinning; perhaps I have hit upon something.

I gently remind the Committee of the time when every refuse service and local government service was provided directly, in house, before competitive tendering and the revolution of the 1980s and the Thatcher Government. We can all remember what delivery of those services looked like in the 1970s: the rubbish piled up on the streets with no one collecting it.

--- Later in debate ---

[Laurence Turner]

I would say better, having had some experience. The hon. Gentleman might want to return to that point.

On the substance of the clause, there were some concerns about the original incarnation of the two-tier code. It was purely voluntary and did not contain meaningful provisions for redress where an employer who had signed up to uphold the standards of the code did not follow through. I hope that that deficiency will be remedied when the associated regulations appear.

It is legitimate to have differences on points of principle. After the current Lord Maude abolished the two-tier code, the Secretary of State—now Baron Pickles—said that the Government of the time had

“Abolished the…two-tier code that…hindered the voluntary and independent sector from delivering better value for money.”—[Official Report, 26 March 2015; Vol. 594, c. 166WS.]

The shadow Minister has made much the same point. This was explicitly about driving down wages for the large number of people who are contracted out to deliver public services. I very much welcome the fact that this Government have a policy objective of making work pay. For a large number of people in the labour market who have been overlooked by politicians for too long, the clause represents an important step forward for remedying that deficiency.

[Justin Madders]

We have had a broad debate—very broad from my hon. Friend the Member for Birmingham Northfield, who took us on a canter through the history. He was right that it was the coalition Government who abolished the two-tier code, which is why it is welcome that the Liberal Democrats have realised the error of their ways; I welcome their support on this. Their spokesperson, the hon. Member for Chippenham, made the important point that the inherent unfairness of people doing exactly the same job for the same employer finding out that they are on different terms and conditions and are earning less is a big morale sapper. It is also a big issue in terms of workforce retention—one problem that we often see with outsourced contracts.

I will turn to the shadow Minister’s misty-eyed days at Hammersmith and Fulham, and I will raise him Ellesmere Port and Neston borough council, which was a great believer in direct provision of services; we certainly felt that was the best way to deliver value for the taxpayer and good-quality services. In his contribution, the shadow Minister alighted on the illusion of outsourcing—the fact that consultants can demonstrate that savings can be made, but when you drill into the detail, those savings are always off the back of the workforce. They are not some magical way of doing things differently. It is about cutting terms and conditions and it is about a race to the bottom, which we are determined to end.

[Greg Smith]

I do understand the ideological difference between the two sides on this point, but I take issue with the Minister that this is about a race to the bottom and cutting terms and conditions; it really is not. From my experience, it was not a matter of consultants, but of properly probing contracts, setting the right specification to deliver for the residents in the place that the council served, and requiring the flexibility to ensure that some people would be doing very different jobs in a different way from before in order to deliver that. It was not about wanting to cut anyone’s pay or terms and conditions; it was about service delivery and value.

[Justin Madders]

I take the shadow Minister’s point. I am not familiar with the machinations of Hammersmith and Fulham council in the 2010s, and it may well be that savings were made by doing things differently. But there is absolutely no reason why that cannot be done directly from a public body: if it is well led, if it is able to have constructive dialogue with its work force, savings can be made.

The difficulty with the shadow Minister’s analysis is that, while he may have been able to find savings for the taxpayer through those kinds of measures, too often the savings are made by cutting terms and conditions for new workers. That is why, as he said in his original contribution, the second or third outsourcing is usually where the savings happen, because it is when those new workers come in on lower terms and conditions that the savings begin to emerge. That is why the whole outsourcing trick is a con, because it is how those savings tend to be made.

When we add in the contract monitoring costs and the profit motivations for the outsourced company to make a living from these things, we can quickly see why it becomes a bad deal for the taxpayer. I certainly make no apologies for putting forward this proposal, because we think it is the right thing to do, to respect and value those who work in public service and ensure that they are paid the same as their colleagues for doing the same work. I therefore commend—

--- Later in debate ---

[Justin Madders]

Clause 28 introduces schedule 3, which inserts proposed new part 8A into the Education Act 2002. Paragraph 1 of schedule 3 contains proposed new sections 148A to 148R of the 2002 Act and will be discussed separately.

The reinstatement of the school support staff negotiating body will give school support staff the recognition they deserve for the crucial role they play in children’s education and development. Establishing the SSSNB through the Bill will help ensure that schools can recruit and retain the staff needed to deliver high-quality, inclusive education and support the Government’s work to drive high and rising standards in schools, so every child has the best life chances.

The body will bring together representatives of school support staff employers, representatives of support staff, an independent chairperson and a representative of the Secretary of State. The SSSNB will consider the remuneration, terms and conditions of employment, training and career progression opportunities for school support staff. Its remit will lead to the creation of a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.

Most school support staff are currently employed on National Joint Council for local government services pay and conditions. The NJC is a negotiating body made up of representatives from trade unions and local government employers. Existing NJC arrangements are not statutory or school specific. Moving to a school-specific body where pay rates and pay awards for support staff are negotiated by school support staff employer and employee representatives and ratified by the Secretary of State will both help to ensure fair pay rates for school support staff and allow central Government to have a strategic view of pay across the school workforce.

It is essential for the SSSNB to have a statutory remit so that all prospective and current support staff in state schools nationally benefit from a transparent, guaranteed core pay and conditions offer. The Bill re-establishes the SSSNB as an unincorporated body on a similar footing to the previous body from 2009 that was abolished by the coalition Government in 2010.

As education is a devolved matter, the extent of these measures is therefore England and Wales and the measures will apply to England only. This is consistent and in line with the remit of the School Teachers Review Body being England only.

The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Roughly half of schools are now academies, compared with around 200 in 2009 when the body was previously established. Support staff employed by academy trusts are now included within the SSSNB’s remit. It is crucial that the body has a remit for all state-funded schools in England in order to achieve greater national consistency, irrespective of which type of school support staff work in. That is a point that we may come on to debate in due course.

[Greg Smith]

The Opposition have tabled a number of amendments that probe what is introduced by clause 28 and schedule 3, which we will come on to in subsequent debates today. I will reserve the bulk of my remarks for those debates, although, as clause 28 introduces schedule 3, I will preview those debates now by noting our strong opposition to these provisions. There was a very good, solid and rational reason that the former Secretary of State for Education during the coalition years—now editor of His Majesty’s Spectator magazine—abolished SSSNBs, which was to give that flexibility and freedom to the quite right and good, educational standards-raising revolution in education that came through the creation of the academies by the last Labour Government and in particular the creation of free schools by the last Conservative Government, including in the coalition years. Clause 28 and schedule 3, which we will come on to shortly, seek to undo a lot of that. For the reasons I will outline when speaking on those amendments, I think this part of the Bill requires a rethink.

Employment Rights Bill (Twelfth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 12th December 2024 Public Bill Committees

[Justin Madders]

Yes, they do get worse—it is Thursday afternoon.

The shadow Minister did raise some important points, though. He gave the example of a dairy and its changing practices. Of course, a change in job function does not necessarily mean that terms and conditions have to change or indeed become worse. History is full of examples where technology has come in and made jobs different. As we look forward to the advent of automation and AI in our economy, I hope that people find new jobs and new roles and that those jobs are more fulfilling as a result of technological development.

I will say a few words about the comments from the hon. Member for Bridgwater. We are talking about overall impacts in this Bill of 0.4% of employers’ total costs—a very small price to pay for a comprehensive set of reforms that really are needed for workers. It is about rooting out bad practices and making sure that those bad employers, who we all rightly condemn, are not able to exploit existing loopholes. It is about stopping the race to the bottom. It is about creating a level playing field. One reason why P&O said that it took the action that it did was that its competitors were undercutting it. We do not want to see that race to the bottom continue. We want to see good employers rewarded for respecting and rewarding their employees well by being able to compete on a level playing field.

The general thrust of the shadow Minister’s remarks was interesting. There is nothing to stop an employee agreeing to changes to terms and conditions. Indeed, proposed new section 104I(2)(b) of the Employment Rights Act 1996 makes it clear that these provisions will not apply if the employee agrees to the changes. Changes and discussions happen every day of the week in industry—that is called negotiation, and that is what good industrial relations looks like. That is the sort of thing that we want to encourage.

We are trying to stop a situation that we have seen far too often, where an employer might just say, “Well, here are your new terms and conditions. If you don’t like it, there’s the door.” That, I am afraid, has become far too prevalent in our country. We have heard plenty of evidence about how many employers have been doing that. It is about recognising that there is a loophole in the law. This may be a probing amendment, but it would certainly make this clause ineffective, and arguably, it would make the situation worse than the status quo, because it would effectively legitimise some of those actions by employers. They could point to this legislation and say, “Well, the law says that we are able to do it.”

The way the amendment worded is quite broad. There is a reference to “outdated” terms and conditions. My hon. Friend the Member for Birmingham Northfield gave a good example of where reasonable dialogue between the trade union and the employer would see that change. The shadow Minister’s old colleague, Jacob Rees-Mogg, might have a different view about what “outdated” means. He might think anything after 1874 could be considered modern—[Interruption.] He probably does, yes. There would be very broad latitude for an employer to say that something was outdated. That is why I am concerned that the amendment would make things worse than they are now.

The Bill as drafted makes it very clear what the obligations of a responsible employer are. They are the sort of things that responsible employers do already. We recognise that there will be unfortunate situations in which an employer has no alternative but to change terms and conditions, but the Bill makes sure that, if there is a positive for the employees—there often is from a change in terms of conditions; that is what negotiations often involve—there is a way for that to continue. We are not going to stop that. If employees consent to changes, they will be able to be made under this Bill. I urge the shadow Minister not to press the amendment to a vote.

[Greg Smith]

I understand the argument that the Minister has set out, and I appreciate that this particular probing amendment was at the extremer end of the spectrum in trying to probe that response from him. I accept that there are many mechanisms whereby employees can consensually work with their employer to change contracts, and that is clear. I am still a little nervous—the proof of the pudding will be in the eating, as the Bill progresses and no doubt becomes legislation—about the nightmare scenario of businesses simply saying, “Rather than trying to engage in this process, as we were warned by the CBI, we will just make everyone redundant instead.”

There needs to be a clear, previously set out mechanism from the Government so that, if that disaster-zone eventuality comes to pass—I hope I am wrong; I do not want to see people being made redundant—there is a quick snapback or sort of provision to allow secondary legislation to throttle those measures down, or to fix them in some other way that still stops the exploitative practices without tying businesses’ hands behind their backs, because the net result will be job losses. I would be incredibly disappointed and sad if these issues, which both the Opposition and businesses have warned about throughout the passage of the Bill so far, became a job killer. The Government need to be ready, if they have got it wrong, to have a process that will give businesses the confidence again to properly engage in negotiations, such as those good industrial relations that the Minister spoke of, and not just make people redundant. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Justin Madders]

We are back on fire and rehire again; I should probably count up how many times I have spoken in debates on this issue in the last few years. It has taken a lot of parliamentary time, and rightly so. We all remember the obloquy directed towards P&O when it took those actions, several years ago, and I am afraid that fire and rehire has become far more prevalent in our economy than anyone would want to see.

Investigations by the Trades Union Congress found that around 38,000 employers were using fire and rehire as a tactic. Research from the Chartered Institute for Personnel and Development found that, between August 2021 and 2023, the proportion of firms that had used fire and rehire had almost doubled. The impact assessment estimates that there are around 178,000 workers facing the threat of fire and rehire at this very moment, so the problem is not going away—indeed, because of the way that P&O has been allowed to get away with it, employers see it as a golden opportunity to take a sword to hard-fought terms and conditions.

Other Members have spoken about the household names that have attempted to do that, and USDAW’s written evidence included some notable household names. Once upon a time, fire and rehire was a seldom-used part of the employment law and industrial relations landscape but, as part of the wider pattern of insecurity at work, it has become a much more common tool. I am afraid, as we have seen, it is far too often an act of first—rather than last—resort, and the Government are committed to ending that practice.

The solution to dealing with many of the concerns raised by the shadow Minister and others is to point to what good and bad industrial relations look like, and to say, “This is what bad employer practice looks like.” Good employers and industrial relations will take workers with them. Again I refer to USDAW’s written evidence, which noted occasions where negotiations had begun with fire and rehire on the table almost from the start. That is not a healthy place to have sometimes very difficult discussions about changes to terms and conditions. The impact assessment notes that the power asymmetry can provide incentives for the more powerful party, in this case the employer, to act in a strategic manner to suppress wages and conditions. Such tactics are why we have seen such a slump in wage growth over recent years.

--- Later in debate ---

[Justin Madders]

I beg to move amendment 58, in clause 23, page 34, line 27, at end insert—

“(3A) In section 197 (power to vary provisions), in subsection (1)—

(a) in paragraph (a), for “188(2)” substitute “188(1A)”;

(b) in the words after paragraph (b), for “188(2)” substitute “188(1A)”.”

This amendment would correct incorrect cross-references in section 197 of the Trade Union and Labour Relations (Consolidation) Act 1992.

This is a purely technical amendment to fix an incorrect cross-reference in section 197(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992. Section 197(1)(a) provides that the Secretary of State may make secondary legislation to amend the minimum time period for collective consultations in section 188(2) of the same Act. However, as I am sure the shadow Minister had already noticed, that reference is incorrect: “section 188(2)” should read “section 188(1A)”. A consequential amendment was missed when section 188 was amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995. That instrument renumbered section 188(2) as section 188(1A). Of course, it should have also made a consequential amendment to section 197(1)(a), but did not.

The amendment will not change the law, which can already be interpreted to refer to the correct cross-reference by way of the Interpretation Act 1978. The 1978 Act provides that where an instrument repeals and re-enacts a provision then, unless the contrary intention appears, any reference in any other enactment to the repealed provision is to be read as a reference to the re-enacted provision. The amendment will improve the clarity and accessibility of the law, which I am sure we will all be relieved to hear.

[Greg Smith]

I can be very brief on this amendment, Ms Vaz; in fact, I will channel the questioning style of my right hon. Friend the Member for New Forest West (Sir Desmond Swayne). This is what happens when a Bill gets rushed to meet an arbitrary political deadline, is it not?

[Justin Madders]

The shadow Minister will be pleased to hear that we have picked the error up at this stage, so that when the Bill is enacted it will of course be absolutely correct.

Amendment 58 agreed to.

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

--- Later in debate ---

[Michael Wheeler]

I am sure it is not. I worked in a retail establishment that did not benefit from trade union representation and that went through consultation, not on redundancy but on a variation of contracts, so it is relevant to what we were talking about before. It was actually a relatively smooth and easy process for employee representatives to be appointed and elected from among our number, despite the lack of an existing structure, and to engage with the company in those consultation exercises. While I would love there to be a trade union fighting the corner for every worker, when it is absent it is not a burdensome process to have employee engagement in these processes.

[Justin Madders]

I recognise that the shadow Minister welcomed the clarification I provided. No doubt there will be debate to come, as is often the case with legal issues, but the Government are fairly clear and confident that the clause will not have the unintended consequences we heard raised in evidence.

The shadow Minister asked, “Why 20?” He will pleased to know that that was a product of EU regulation. It is in existing law as part of the Trade Union and Labour Relations (Consolidation) Act 1992, which has been amended many times, so I could not say exactly when it came into force, but—

[Greg Smith]

The Minister can of course look back in history at when these measures were put in, but the Bill seeks to change all sorts of things across all sorts of sectors. We are free from the European Union! He could change it if he wished.

[Justin Madders]

I will remember that next time the shadow Minister tells me that we are trying to do too much in this Bill. With the Retained EU Law (Revocation and Reform) Act 2023, the Bill Committee for which I had the great pleasure of serving on, his Government could have done something about this before they left office.

The figure of 20 is long established, and we have no current plans to change it, but we are keen to ensure that the scenario my hon. Friend the Member for Worsley and Eccles described cannot continue. As he said, Woolworths made 27,000 people redundant, and about 3,000 of those were completely exempt from collective redundancy consultations because of this issue. There has been a number of high-profile retail redundancies where people have missed out on collective redundancy obligations because of this law, which we are pleased to be able to change.

On the question of smaller employers where there may not be trade union representation readily available, the regulations already provide for employee representatives to be engaged and elected in those circumstances, so there is no change to the law in that respect. There is already provision to deal with that situation.

Question put and agreed to.

Clause 23, as amended, accordingly ordered to stand part of the Bill.

Clause 24

Collective redundancy notifications: ships’ crew

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

[Justin Madders]

The clause will address the loophole that allowed P&O Ferries to avoid prosecution when it dismissed 786 seafarers without notice in March 2022. It will require operators of frequent services to British ports to notify the UK Government when making 20 or more redundancies even if those affected work aboard ships registered in another state. The clause means that if an operator of frequent services to a British port chooses to copy P&O Ferries and make collective redundancies without providing notice to the Government, it could face prosecution under the Trade Union and Labour Relations (Consolidation) Act 1992 and ultimately be liable for an unlimited fine.

The clause will apply to services calling between Great Britain and another place in the UK. It will also apply to any services entering Great Britain from a place outside the UK on at least 120 occasions in a 12-month period before the redundancy notification, or to new services that have been operating for less than 12 months and have called 10 times or more per month while they have been operating. We estimate the number of operators in scope of the measure to be around 2,000. The cost to businesses will be minimal; it is estimated to be around £20 per notification. We hope that the prospect of an unlimited fine will deter operators from making mass redundancies without the appropriate notification.

While this measure may not prevent redundancies from being made, it will mean that the Government and any employee representatives must be notified before any dismissals take effect. It will prevent the sort of disruption seen following the P&O Ferries dismissals and will mean that the Government will be able to provide valuable support to seafarers facing redundancy. I therefore commend the clause to the Committee.

[Greg Smith]

I understand where the Minister is coming from, particularly on the expansion of the requirement to notify the flag state. I spoke earlier about my time on the Transport Committee watching the P&O scandal unfold; we held some pretty tough evidence sessions as part of that. I understand that the clause is very specifically to protect seafarers from that sort of engagement. I very much hope that it works to protect those seafarers, and we will not oppose it.

--- Later in debate ---

[Justin Madders]

Amendment 59 will expand and restructure the provisions in clause 25, which amends the Procurement Act 2023, to reinstate and strengthen the two-tier code for relevant outsourced contracts for public services so that the powers and duties in clause 25 extend to Scottish and Welsh Ministers. Amendments 60 to 64 make changes that are consequential on those made by amendment 59, including by updating various definitions in the Procurement Act 2023 and by providing that regulations made by Scottish and Welsh Ministers must be made using the affirmative procedure of the Scottish Parliament and the Senedd.

We are making the amendments at the request of the Scottish and Welsh Governments. They are necessary because to get the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts, it is essential that a reinstated two-tier code applies throughout the UK.

We continue to engage with our counterparts in Northern Ireland about whether the powers should also extend to Ministers there. The regulations and code of practice created in our provisions will apply to reserved Northern Irish authorities. I commend the amendments to the Committee.

[Greg Smith]

I am reminded of the old chestnut about rushing out a Bill in 100 days and forgetting about the devolved settlements as part of the process. Given that devolution was largely the product of the previous Labour Government, I am slightly surprised that the current one would forget about Holyrood and Cardiff Bay. However, it is good that we now have clarity. We will of course want to test how things are actually going to work. Indeed, the question of Northern Ireland—which is just as important a part of our country as England, Scotland and Wales—really should be resolved sooner rather than later, so that there can be clarity that the Government are seeking to legislate for the whole of our United Kingdom of Great Britain and Northern Ireland, and not doing it in a piecemeal fashion.

[Justin Madders]

I gently correct the shadow Minister: we did not forget to engage with the Scottish and Welsh Governments. We were making sure that we had agreement before we tabled amendments, which is why they have appeared as they have today.

Employment Rights Bill (Eleventh sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 12th December 2024 Public Bill Committees

[Greg Smith]

It is a pleasure to serve under your chairmanship, Ms Vaz. This pair of amendments on unfair dismissal stand in my name and those of my hon. Friends from the official Opposition.

Amendment 156 would make the fact that the employee was made redundant a reason in relation to the dismissal of an employee during the initial period of employment. The Bill stipulates that the modified protections against unfair dismissal in relation to the initial period of employment mean that an employee can be dismissed for the reasons listed in section 98(2) of the Employment Rights Act 1996, which include

“the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do…the conduct of the employee”

or

“that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.”

The 1996 Act also includes a fourth reason,

“that the employee was redundant”,

which is not replicated in the Bill. This is a probing amendment—we do not intend to press it to a Division—to try to tease out from the Government a little more detail and to establish why that fourth reason is omitted from the Bill.

Amendment 157 is also a probing amendment. We want to understand what steps will be specified in regulations that an employer must follow in order for the dismissal of an employee to be treated as fair. That will come back to the test of subjective reasoning rather than specific guidelines or regulations in the Bill. It is only right that the Committee and businesses out there in the real world can fully understand the scope with which the Government are defining “fair” or “unfair”. Inherent to that is the question, why is it not in the Bill? Why is it not as clear as day in the words printed in this quite substantial tome? I know that the Government want to table more amendments, so perhaps those could be a little more specific. Critical to amendment 157 is the question how burdensome the Government intend this measure to be and how proportionate that burden will be on businesses in relation to the problem that the Minister thinks the Bill in its current form—its current vagueness—will solve.

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

It is a pleasure to see you in the Chair, Ms Vaz. I refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.

The shadow Minister has posed some questions that underlie amendment 156, which seeks to include redundancy as one of the reasons for dismissal to which the lighter-touch standards will apply during the statutory probationary period. As he has rightly identified, the Bill sets out that the reasons for dismissal to which the lighter-touch standards may apply are the statutory grounds of capability, conduct, illegality and some other substantial reason.

It is important to note that those four areas relate to the individual employee, which is why redundancy is not included. Redundancy can affect entire workforces, whereas the other areas are included because of the overlap between the potentially fair reasons for dismissal in the legislation, particularly suitability for work, and the sorts of issues that might come up in a probationary period. A redundancy situation would not ordinarily come up within a probationary period, because it would be about the wider business condition rather than the individual employee’s performance or suitability for the job. I hope that explains why redundancy has not been included.

I turn to the shadow Minister’s more general points. We are trying to strike a fair balance between strengthening employee protections against unfair dismissal and maintaining businesses’ ability to hire, assess and dismiss new employees. The Government are committed to ensuring that businesses retain the confidence to do so. We do not wish the new procedures to undermine existing fair dismissal processes for redundancy, which already provide a robust, straightforward and fair process for employees facing redundancy.

We will work closely with ACAS, in consultation with businesses and trade unions, to ensure that there is clear, straightforward and easy-to-follow guidance on how to carry out a redundancy process under the new measures. It will be an easily accessible process. One of our concerns about including redundancy is that if an employer decided to make a significant number of their workforce redundant, it would be an additional administrative job for them to identify which employees they did not need to include within a redundancy process because they were part of a statutory probationary period, and which would be subject to the wider process. That would lead to unintended consequences and possibly risk of discrimination claims.

[Justin Madders]

The hon. Member may be conflating two slightly different issues. I say to him very clearly that existing laws on redundancy will not be changed as a result of the Bill. We expect employers to follow the same processes, regardless of the length of service of the employee. In that situation, I do not imagine that there would be a particularly lengthy process if it involved only one individual and a small employer. There would not need to be a pool for selection, for example, or selection criteria. We would expect the employer to comply with the law in those circumstances.

Amendment 157 questions whether regulations should be able to set steps that an employer must follow for a dismissal to be considered fair when prescribing lighter-touch standards to apply during the statutory probationary period. We have set out clearly our intention to have a light-touch process, and we know that around 9 million employees will benefit from that. The intention behind setting out those steps in regulations is to ensure that we take account of further consultation, which we will undertake not just with employers but with trade unions and civil society, to ensure that we have the right balance of process and fairness in a statutory probationary period. We will be developing that in due course. As is often the case with the ACAS code of practice on disciplinary and grievance procedures, there are already lots of examples of really practical guidance out there, which we intend to replicate. I invite the shadow Minister to withdraw the amendment.

[Greg Smith]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Greg Smith]

As I hope I made clear in my opening remarks, amendment 155 is a probing amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Justin Madders]

I beg to move amendment 55, in schedule 2, page 112, line 36, at end insert—

“3A In section 15 of the Enterprise and Regulatory Reform Act 2013 (power by order to increase or decrease limit of compensatory award), after subsection (5) insert—

‘(5A) The power conferred by subsection (1) includes power to provide that, in the case of the dismissal of an employee that meets the conditions in section 98ZZA(2) and (3) of the Employment Rights Act 1996 (dismissal during initial period of employment), the limit imposed for the time being by subsection (1) of section 124 of that Act is a different amount from that otherwise imposed by that subsection.

(5B) Subsections (3), (4)(a) and (5) do not apply for the purposes of specifying the amount of the limit in such a case.’”

This amendment would enable the Secretary of State to specify the maximum amount of the compensatory award available where an employment tribunal finds that an employee has been unfairly dismissed during the initial period of employment provided for by new section 98ZZA of the Employment Rights Act 1996.

[Justin Madders]

Amendment 55 will expand an existing delegated power to enable the Secretary of State to specify a different maximum compensatory award where an employment tribunal finds that an employee has been unfairly dismissed under the new light-touch standards during the statutory probation period. Amendments 56 and 57 will make consequential changes to the provisions for uprating maximum awards for inflation.

In the event of any successful unfair dismissal claim, an employment tribunal will consider compensation as a remedy. Compensation will usually consist of a basic award and a compensatory award. The tribunal will determine the compensatory award by considering what it thinks is just and equitable, having regard to the financial loss suffered by the claimant that has been caused by the employer’s actions. This will include reference to salary and benefits, including pension, until the claimant finds alternative employment. The maximum compensatory award is currently the lower of 52 weeks’ pay or £115,115.

The Government have listened to concerns that changes to unfair dismissal law could lead to an increase in unfair dismissal claims, even where there is no merit, and to an increased burden on businesses and tribunals in having to deal with those claims. We have heard that uncertainty of outcome makes it hard for businesses to judge how much to invest in either defending or settling a claim. The introduction of a lighter-touch standard for fair dismissal during the statutory probationary period aims to reduce burdens on businesses and to create certainty, but it will not apply to all dismissals during the statutory probation period.

Having listened to those concerns, the Government committed in our “Next Steps to Make Work Pay” document to consulting on what a compensation regime for successful unfair dismissal claims during the statutory probation period should be. Although we want employers to pause and make considered decisions about dismissing employees during probation, the Government do not think that employers should face the full potential liabilities of unfair dismissal remedies when dismissing an employee for reasons related to performance or suitability for the role during the statutory probation period.

To have the option of implementing reform once we have consulted, it is necessary to introduce this delegated power. The power is limited to making changes to the compensatory award for unfair dismissal claims during the statutory probation period only, and only where the new lighter-touch standards apply. The Government recognise the importance of employers being able to assess new hires. We are committed to introducing a statutory probationary period in which there will be lighter-touch standards for an employer to meet in order to dismiss an employee fairly if they are not suitable for the job.

The power will not enable the Secretary of State to make changes to the level of compensation for other day one unfair dismissal rights, such as automatically unfair reasons including maternity-related dismissals, or for “ordinary” unfair dismissals such as redundancy. The power will not enable the Secretary of State to make changes to reinstatement or re-engagement as a remedy available to tribunals for unfair dismissal during statutory probationary periods, nor will it allow changes to be made to the additional compensatory award where an employer does not comply with an order of reinstatement or re-engagement by the tribunal. There may be some concerns that the power could be used to undermine enforcement of the day one right to unfair dismissal, but I assure the Committee that this is not the intention.

The Government are making basic protections against unfair dismissal a day one right for employees. They will be able to enforce their rights and take a claim to the tribunal if they have been unfairly dismissed. It is important, however, that employers are able to assess new hires and see whether they are suitable for the job without facing the full potential liabilities of unfair dismissal remedies during this period.

[Greg Smith]

I have a straightforward question. We are back once more with our old friend of not having full clarity and having consultation after legislation. The Minister gave a figure, but it is not clear exactly what the Secretary of State might consider specifying as the maximum compensation that can be awarded under this measure.

I acknowledge that there is a consultation to come, but the reason that we need greater clarity relates to the point about business confidence in making new hires, putting new job adverts out, seeing who applies and trying to recruit. If there is a risk that the figure will be disproportionately high, it will make businesses more risk-averse about growing their businesses and thereby growing the economy and creating more jobs in our country. My only substantive question is “Where is the ceiling going to be?”

[Sarah Gibson]

I share some of the shadow Minister’s concerns. Consultation to find out what most concerns businesses is obviously commendable, but if a large amount of the Bill is left to secondary legislation, a lot of it will not come back before the whole House for scrutiny. Can we be assured that decisions that are not taken before the Bill is passed can at least be considered by a Committee when they are finally made?

[Justin Madders]

I take on board the comments that the Opposition spokespersons have made, but if we put something in the Bill now, we would be pre-empting the consultation. It is very important to get this right, acknowledging the balance that needs to be struck and the points that have been made. It is worth bearing in mind that this measure will not be implemented until autumn 2026 at the earliest, which is still a considerable time off. The reason we want to take the time between now and then to engage and consult with businesses is to ensure that we get that figure to a spot that gives justice to individuals and certainty to businesses about the potential liability they may face.

[Greg Smith]

I am grateful to the Minister for that clarification. I understand the point about autumn 2026, but would he acknowledge that the vast majority of businesses are probably already working on their 2026 business plans? They are not just planning for tomorrow, next week and January; they are making medium and long-term plans. Those decisions about creating a new role, filling a vacancy or whatever it might be will already be baked into business planning for 2026, 2027 and maybe through to 2030, so it is not good enough to say, “It’s not coming in until 2026, so don’t worry.” Businesses are already in that planning space.

[Justin Madders]

I take the shadow Minister’s point, but that presupposes that businesses bake into their business plans compensation for unfairly dismissing their staff, and I do not think any business would want to proceed on that basis. This is about a potential liability that might come in at a future point.

Of course, we all want employers to retain their staff and have a productive working relationship, but if they do not, we want them to comply with the law and dismiss employees fairly. There will be a small number of cases where that does not happen, but I would not expect a business to be able to anticipate what might happen in two or three years’ time with an individual employee and whether a process was followed or not. That is probably not on a business’s desk at this point.

Amendment 55 agreed to.

Amendments made: 56, in schedule 2, page 114, line 20, at beginning insert—

“(1) The Employment Relations Act 1999 is amended as follows.”

See the explanatory statement for amendment 57.

Amendment 57, in schedule 2, page 114, line 23, at end insert—

“(3) In section 34 (indexation of amounts, etc)—

(a) in subsection (1)(c), for “124(1)” substitute “124”;

(b) omit subsection (4);

(c) in subsection (4A), for “124(1)” substitute “124”;

(d) in subsection (4B)—

(i) for “124(1)” substitute “124”;

(ii) after “1996” insert “in relation to cases of any description”;

(iii) for the words from “such a sum” to “that date” substitute “, with effect from a day within 12 months before that date, a sum specified in that section in relation to cases of that description”.”—(Justin Madders.)

This amendment and amendment 56 are consequential on amendment 55.

Question proposed, That the schedule, as amended, be the Second schedule to the Bill.

Employment Rights Bill (Ninth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

It is a pleasure to see you in the Chair this morning, Mr Mundell. As is customary, I refer to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.

As Members will be aware, clause 10 introduces new requirements on tipping, namely the requirements for employers to consult workers about the allocation of the tips they have earned, and to review their tipping policy. These new requirements will build on the measures introduced by the previous Government in the Employment (Allocation of Tips) Act 2023. The Act came fully into effect on 1 October this year and ensured that an estimated £200 million-worth of tips each year are no longer retained by employers.

The Act is accompanied by a statutory code of practice on the fair and transparent distribution of tips. Although the Act requires employers to allocate tips fairly to workers, the existing statutory code of practice only encourages consultation with workers in deciding that allocation. The Government were clear in their commitment to going further—indeed, I took part in a debate earlier this year in which I said that the legislation did not go far enough. We will therefore make it mandatory for employers to consult workers in developing or updating their tipping policies, including how tips are allocated.

The clause will support worker participation in the allocation and distribution of tips that they have earned, by mandating that employers consult workers during the development or revision of their written tipping policies. It will also mandate that employers review their tipping policy and maintain records of the consultation they have carried out, as well as giving workers the right to request and review records related to the tipping policy consultation. The consultation will be required to take place at the formative stage, before the policy is finalised or updated, and should be carried out, where possible, by engaging with representatives of recognised trade unions or other chosen representatives. If neither are available, the consultation will be required to be with workers likely to be affected.

We will continue to engage with unions and worker representatives in hospitality and other impacted industries to ensure that the measures in the Bill and in the statutory guidance deliver fully on our aims. Following Royal Assent, we will consult widely and properly with stakeholders to determine what changes should be made to the existing statutory code of practice. We are determined to ensure that guidance is as helpful as possible, ensuring that tips are allocated fairly and that worker consultation is carried out properly.

These measures will be enforced via the employment tribunal system. If an employer fails to consult their workers properly or to distribute tips in a fair and transparent manner, workers will be able to bring a claim to an employment tribunal. The tribunal will be able to order an employer to compensate workers up to £5,000 for financial loss. I think that Members can see what we are trying to achieve with the clause, and I therefore commend it to the Committee.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship once more, Mr Mundell. The Minister mentioned that the clause builds on private Member’s legislation passed in the last Parliament, and it would be remiss of me not to put on record that the transformation in some employers’ attitudes to their employees and to the retention and fair distribution of tips was in large part down to the former Conservative Member for Watford, Dean Russell, who piloted the original legislation through the House. There were one or two little bumps along the road as he came into ministerial office and then out again in—what was the number?—43 days, but many Conservative colleagues really pushed for the legislation. It is one of those great unfairnesses that, for years, incredibly hard-working people in the hospitality sector and others had an expectation that they would receive the generosity of their customers’ tips at the end of the meal, the round of drinks or whatever but, for various reasons, did not get their fair share. The legislation the Minister referred to righted that historic wrong, and clause 10, which seeks to strengthen that, is very welcome.

Where I gently suggest to the Minister that there needs to be a little more thought and clarity is settings where there is no union to consult. That might be a small business such as a restaurant or pub, where the people who work there are not affiliated with any union or body that could be consulted on their behalf. Will he say something about how those smaller businesses—smaller restaurant or pub settings—will get dialogue going with their employees so that the business has a fair and equitable, and clear and unambiguous policy to ensure that the tips reach those workers?

--- Later in debate ---

[Greg Smith]

I understand the point that the hon. Lady makes. I am the last person to want to put a greater burden or unnecessary burden on any form of business. All I gently suggest is that this probably is not that great a burden on a business, on the grounds that it will already know what it is going to do when an employee comes and asks for paternity leave, maternity leave or whatever. That is particularly the case given that much of the rules and regulations is already set in statute and, when this Bill undoubtedly achieves Royal Assent at some point, will be further enshrined in statute. There are many other regulations that businesses have to comply with when publishing on their website—I am thinking of privacy notices and various GDPR regulations and so on—just as all the members of this Committee and Members of this House have to do on our own websites. I do not think anyone would try to define any of us as large businesses or huge employers, and I do not think that there are any hon. or right hon. Members left who do not have a website. Perhaps one or two do not—

[Justin Madders]

Jacob has gone, hasn’t he?

[Greg Smith]

He is a fine television superstar these days.

All of us will have published these statements on our websites, because that is straightforwardly set out in statute—straightforwardly set out in law. I am at a loss to understand why it would be a burden for a business of any size to do that, but I am mindful that we do not want to overburden businesses. I accept the explanation given by the hon. Member for Chippenham.

Turning to new clause 17, I would have loved to have six weeks of paternity leave when my three children were born. When my first child was born, I was still self-employed. It was before my election to this place, so the time I took off in 2016 was entirely unpaid because I just had to forgo client work, but it was important to do that.

I am slightly concerned that, as desirable as six weeks would be, it is too great a burden for businesses automatically to have to shoulder. Some good and generous employers may well find a way of offering it in one way or another, paid or otherwise. However, to go beyond the current entitlement of two weeks, which can be split up, as the Minister mentioned, seems to be too big an ask for some businesses, desirable though it may be for fathers to be able be there with their new child in the most precious early days of life to support the mother and the child. I gently invite Liberal Democrat Members to reflect on whether six weeks is realistic for every business.

Employment Rights Bill (Tenth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[Justin Madders]

I will not speak for long on clause 19, because it is a fairly straightforward clause and there are more detailed clauses and amendments that may generate further debate. Clause 19 introduces schedule 2, which will repeal section 108 of the Employment Rights Act 1996, thereby removing the two-year qualifying period for protection against unfair dismissal.

An estimated 9 million employees have been working for their employer for less than two years and therefore have very limited protection against unfair dismissal. By removing the qualifying period, the Government will make basic protection against unfair dismissal a day one right for all employees, ensuring a baseline of security and predictability. It is about tackling insecurity. Unless there are automatically unfair grounds, an employer can lawfully sack a worker just by giving them their statutory or contractual notice pay and telling them not to come back to work. There is no entitlement to a fair process, nor even a right to a written statement explaining why they have been sacked.

Think about what you can do with two years in your life, Mr Stringer—well, maybe we should not think too much about it. Someone can make an awful lot of commitments, including financial commitments. They can get married, buy a house, start a family and take out loans of all descriptions, but they have no protection at work and nothing to stop them being arbitrarily dismissed in that two-year period. We think that that is wrong: it creates a great deal of insecurity in the workplace, and it has to change.

Our changes will not prevent fair dismissal. We will ensure that businesses can hire with confidence. We will ensure that employers can operate contractual probation periods, which are separate from the new statutory probationary periods. During the statutory probationary periods, employers will have a lighter-touch standard to meet when they need to dismiss an employee who is not suitable for the job.

Our changes will ensure that newly hired workers are not arbitrarily dismissed. We believe that that will help to drive up standards in the workplace. It will ensure that there is greater fairness and greater understanding between employees and businesses. It will drive up standards, quality and security—all things that we believe will improve our economy. We do not intend to bring in these measures in until autumn 2026 at the earliest. I commend the clause to the Committee.

[Greg Smith]

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

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

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

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

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

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

Employment Rights Bill (Eighth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 5th December 2024 Public Bill Committees

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to see you in the Chair, Sir Christopher. I understand the Minister’s explanation of the amendment, which appears to be a logical consequence of the other provisions on guaranteed hours, although we have the old chestnut about why it was not in the Bill when it was first introduced. It seems a pretty straightforward measure that reflects where the Government have always said they are coming from, so it is peculiar that it is coming at this stage. I might go so far as to ask the Minister whether Government amendments 50 and 51 are in fact correcting mistakes, as opposed to adding to the original drafting of the Bill.

I have some specific questions about the amendments. How does the Minister envisage that it will be proven that an employer believes that a worker is entitled to an offer of guaranteed hours? Some clarification would be helpful, not just so that the Committee and the House can understand the scope of the amendment, but so that businesses can plan for what might be coming down the line.

May I also ask the Minister for clarity about what amendment 51 will mean for dismissal during the reference period? I am not sure that we have enough clarity on that point to satisfy the Committee. Given how the schedule and the amendments are drafted, there is a possibility of a legal opinion indicating that it is possible for employers to dismiss employees during the reference period. From everything else that the Minister has said, I would be surprised if that were the Government’s intent. When he sums up, it will be useful if he clarifies whether that is indeed his intent. Is that one of the many loopholes that he is seeking to shut down with the Government’s amendments, and does it need shutting down further? Or is it the Government’s intent that that should be possible for employers within the scope of the Bill?

[Justin Madders]

I am grateful for the shadow Minister’s questions. I feel that we are embarking on an employment law masterclass, although I am not sure that I consider myself a master.

The first point was about how an individual would demonstrate that an employer had believed that they were entitled to particular rights and therefore had reason for dismissal. It is akin to existing case law and legal precedents from other jurisdictions: a set of facts can be presented to the employment tribunal to determine its judgment. I accept that it is not the easiest thing to prove, but that is how the law is currently structured and there will be no departure from that.

On the second point, clearly we would not want this to have the unintended consequence of not relating to a dismissal during the reference period. Proposed new section 104BA(3) logically demonstrates that if there is a termination during the reference period, the same protections would still apply. I am happy to seek further advice, but my understanding is that the Bill, as drafted, covers that situation. Clearly we would not want a loophole of that nature. I hope that that deals with the shadow’s Minister’s questions.

Amendment 50 agreed to.

Amendments made: 51, in schedule 1, page 108, leave out lines 39 to 41.

This amendment removes a requirement about the timing of a dismissal from proposed section 104BA(3) of the Employment Rights Act 1996.

Amendment 52, in schedule 1, page 109, leave out line 1. —(Justin Madders.)

This amendment is consequential on amendment 51.

--- Later in debate ---

[Justin Madders]

Amendment 53 will ensure that the provisions in section 225 of the Employment Rights Act 1996 on the calculation date for the purposes of calculating a week’s pay will work in relation to the new right to guaranteed hours. It is a small amendment: it will replace the word “last” with “latest” to reflect the fact that the date of termination will not necessarily correspond with the final day of the reference period. It sits alongside Government amendment 54; combined, the amendments will ensure that there is clarity for employment tribunals on calculating a week’s pay for the purpose of determining compensation for a well-founded complaint brought under proposed new section 27BF. The maximum number of weeks’ pay that may be awarded by a tribunal for a claim brought under proposed new section 27BF is to be defined in regulations.

[Greg Smith]

This is a minor and technical amendment that brings, on this specific point, the clarity that we have been asking for on so many other clauses and Government amendments. It appears to be correcting defective drafting in the version of the Bill originally presented to the House.

The need for such amendments suggests that the arbitrary target to publish the Bill in 100 days has once again been found wanting. As I have said before, I understand the political imperative for the Government to have done so, but it brings little comfort to employers or employees, who need certainty and clarity on the Bill. At least with Government amendments 53 and 54, that certainty and clarity has now come. I urge the Government to apply the same rigour to their other amendments so that businesses planning for the future can do so—perhaps not with jubilant support for the Bill, but with an understanding of what the Government are legislating for.

Amendment 53 agreed to.

Amendment made: 54, in schedule 1, page 109, line 31, at end insert

“on which the worker was employed by the employer under a worker’s contract”.—(Justin Madders.)

See the explanatory statement for amendment 53.

Question proposed, That the schedule, as amended, be the First schedule to the Bill.

[Justin Madders]

Schedule 1 will make various amendments to the Employment Rights Act 1996 and the Employment Tribunals Act 1996. Among those amendments, which are consequential on clauses 1 to 3, I highlight the insertion of proposed new section 47H of the Employment Rights Act 1996, to make provision for a worker not to be subject to detriment on various grounds relating to the right to guaranteed hours. The employer cannot penalise the worker for accepting an offer of a guaranteed hours contract, for example, or for challenging an offer that is not in compliance with the obligations on the employer regarding guaranteed hours.

Amendments have been made to extend these detriment provisions to situations in which a worker brings a claim or alleges the existence of a claim in relation to a breach of the duties relating to information rights and notice requirements. The detriment provisions are also extended to situations in which a worker suffers a detriment because they qualify for the right to guaranteed hours or the employer believes that they do. Whether a detriment has occurred in such instances will of course be for an employment tribunal to determine. Likewise, the employer cannot penalise the worker for declining to work a shift that the worker reasonably believed was offered with unreasonable notice. This is an important right that helps to address the potential power imbalance between an employer and a worker who is seeking to enforce their statutory rights.

Schedule 1 will also insert proposed new section 104BA of the Employment Rights Act, which makes provision for an employee to be treated as unfairly dismissed if the reason—or principal reason—for the dismissal is that the employee accepted or rejected, or proposed to accept or reject, an offer of guaranteed hours. Likewise, an employee will be treated as unfairly dismissed if the employer was under a duty to offer guaranteed hours but the employer dismissed the employee during the reference period to avoid having to comply with that duty. Amendments have been made to ensure that unfair dismissal protections extend to cases where a worker is dismissed because the employer believes they have a duty to offer guaranteed hours, even if that belief is mistaken.

[Greg Smith]

My argument is similar to the arguments that we have had in substantive debates on previous groups of amendments to the schedule. With this Bill, we have consistently seen an approach of legislating first and consulting second. I understand why that might be appropriate in some circumstances, but certainly for many of the schedule 1 provisions that the Minister has outlined, businesses will find it inadequate. They will find it too difficult to start making their business plans, their plans for growth, their plans for new contracts or their plans to expand in the next financial year, the year after, or even the year after that. It is not unusual for businesses to engage in medium and long-term planning, but too many aspects of the schedule mean that they cannot. Real businesses in the real world are trying to scope out where their next capital investment, their next expansion or their next acquisition of another business is coming from.

Because of those holes, the Opposition are deeply concerned that the Bill, which was incredibly rushed to meet an arbitrary 100-day political rather than legislative objective, will bring too much uncertainty to the economy and to business. At the end of the day, judging from the evidence that we heard in last week’s four sittings, it is having the net effect that businesses will simply take a deep breath and draw back from employing more people. They will not take the risk of taking on new hires. Given our debates on Tuesday, I am thinking particularly of that all-important risk of giving a second chance in life to a marginal candidate.

Sometimes an employer is not entirely convinced that a candidate is the best fit for their workplace, for any of a number of reasons—they may be a rehabilitated former offender or they may have had a number of struggles in life—but is willing to give them a chance. We heard from witnesses that those employers who were going to give people in those circumstances that chance in life—that chance to better themselves—might not now do so. That would be an absolute tragedy for the individuals involved and a travesty of justice when it comes to employment numbers in this country.

--- Later in debate ---

[Greg Smith]

I am grateful to the hon. Gentleman. There are clearly thousands of businesses in this country; I notice that he did not name a single business from his constituency. I actually know Northfield very well: my late grandmother worked in Walter Smith butchers in Northfield for many years, well into her 80s.

I fully understand the need for any Government to have ongoing dialogue with business, but I gently say to the hon. Gentleman and all Government Members that there is a big political cost when any Government legislate too swiftly without fully thinking things through and without clarity of thought and of objectives. Yes, there are principles—they are clearly Labour principles—running through the Bill, but there is not that clarity of thought as to many measures in schedule 1.

I say gently, perhaps from bitter experience in the four and a half years prior to the general election, that I know what happens when legislation is rushed. From the Nationality and Borders Act 2022 to the Illegal Migration Act 2023, there were multiple pieces of legislation, none of which hit the nail on the head. Perhaps they were a little bit too rushed. They failed to meet the objective that we, the previous Government, clearly set out to achieve of ending small boat crossings in the channel.

I raise that clearly very out-of-scope point only as a warning to the Government that if they insist on going too quickly and rushing the Bill through just to meet the headline of having published it in 100 days, it could turn out to be a very painful experience not just for them as a Government, but for the business community in this country. These are the businesses that will be the backbone of our economy and will actually create the jobs that I think the Government also want to see, but the Bill might have the unintended consequence of damping them down.

[Justin Madders]

My irony meter has reached overload. I think it is fair to say that in the last four years of chaos under the previous Government, uncertainty was brought to a new level. That was not about legislation; it was just about the way that the Government operated, or failed to operate, as the case may be.

Let me try to put the shadow Minister’s mind at ease about the process. We consulted extensively in opposition, we consulted in government before the Bill was published, and we are continuing to consult. The Bill will set out the broad powers that the Government wish to take in respect of employment rights. There will then be more detailed consultation as we get into the secondary legislation, where the detail—the real meat and veg of this law—will be dealt with. There is not going to be a rush for this provision to be enacted, because we understand that it is important to get the details right. Many of these measures will not come into force until 2026, because we want to get this right.

We want to make sure that we take businesses with us and listen to their concerns, to workers’ concerns and to trade unions’ representations. The impact assessment is clear that there is no expected impact on the number of jobs available.

[Greg Smith]

The Minister talks about further consultation. Can he give a commitment right here, on the record, to consultation on all the measures in schedule 1 and the rest of the Bill that go through to his 2026 deadline? First, can he commit that 2026 really is the deadline? Secondly, can he commit that consultation with trade unions and with business will have equal billing, and that one of the two will not outweigh the other?

[Justin Madders]

I think there was a suggestion there that we may favour one stakeholder group over another. I assure the shadow Minister that when we tot up the engagements that we have had so far, the number of businesses and business organisations is far in excess of the number of trade unions. Actually, we want to consult with everyone, broadly: we do not think that there should be an arbitrary limit on who we discuss this with.

On the time limits, the “Next Steps” document is very clear about the timetable. If it takes more time, it takes more time. We do not want to rush the Bill through and create unintended consequences of the type that the shadow Minister is rightly concerned about. We want to get it right. That is why we are committed to consulting as we go forward.

--- Later in debate ---

[Justin Madders]

Clause 5 is the first of several clauses that will repeal previous legislation, although it may not be the most controversial of our repeals. The clause will repeal the previous Government’s Workers (Predictable Terms and Conditions) Act 2023, which if commenced would have brought in a right for workers to request a more predictable working pattern. Requests could still be turned down by the employer. That approach is clearly different from the right to guaranteed hours that we have set out in the Bill. We do not want to confuse employers and workers with two different models, so the Bill will repeal the 2023 Act entirely. Nevertheless, the work that was done to develop the 2023 Act has been useful in the drafting of our new measures and will continue to be taken into account as we evolve and develop our policies.

We want predictability and security to be the baseline in all jobs, creating an economy that works for all. We think responsibility for offering guaranteed hours should therefore rest with the employer. Without guaranteed hours, workers do not have any form of certainty as to their earnings, making it difficult for them to apply for credit or a mortgage, rent a flat, plan for major events such as weddings or holidays, or even manage day-to-day expenses.

In addition, when people have a better idea of how many hours they will be working, it is easier for them to organise their family and social life, plan time together and organise travel and childcare—all things that are just so important for the wider welfare of our society. These provisions of the Bill will apply to all employers, levelling the playing field so that best-practice employers are rewarded rather than placed at a competitive disadvantage against employers who want to place risk wholly on the worker.

[Greg Smith]

On the one hand, the Minister says that he wants certainty. On the other hand, he is repealing legislation that is but a year old. I fully appreciate that a new Government will want go through the legislation that the previous Government put on the statute book: it is vital in our democracy that we maintain the principle that no Parliament can bind a future Parliament, and I fully acknowledge and accept that the Government have a mandate to deliver their manifesto. However, I gently put it on the record—I direct this point towards the Minister—that certainty does not come from abolishing year-old legislation that businesses have only just started thinking about, let alone implemented.

--- Later in debate ---

[Justin Madders]

Clause 6 will amend section 27B of the Employment Rights Act 1996 to reflect the new definition of “zero hours arrangement” in clause 4, which will apply to the whole of part 2A. As has been discussed in relation to clause 4, the definition has been amended to ensure that it does not inadvertently exclude any zero-hours workers in cases where they have a contract with the employer but the contract does not, in itself, make them a worker. The definition of “zero hours arrangement” captures those who have an arrangement to work for their employer when work is provided but have no obligation to accept work, and the employer has no obligation to provide it. Such an arrangement between the employer and the individual could, however, include other obligations that amount to a contract, albeit that they are not a workers’ contract. The clause will ensure that individuals caught in that situation are also covered by the Bill.

On a technical point—I put this on the record for clarity—the definition of “non-contractual zero hours arrangements” in section 27B of the 1996 Act is amended by clause 6, but a new definition for the whole of part 2A will be inserted by clause 4. The definition of “non-contractual zero hours arrangements” in part 2A is being changed by clause 6, as well as being inserted by clause 4, which may well be commenced after clause 6 for the rest of the provisions. The changes in clause 6 will ensure that the definition in section 27B operates as intended before the commencement of other provisions on zero-hours arrangements. The definition in section 27B will then be repealed on commencement of the other provisions, as is provided for in schedule 1.

I hope that that was clear to everyone. I commend the clause to the Committee.

[Greg Smith]

I feel that we have gone over those details multiple times, particularly on Tuesday, so I will not take up a great deal of time. However, it is important to put on the record the Opposition’s concern about cases such as the one that I outlined in this morning’s sitting. The Minister conceded that it probably was a zero-hours contract, but it did have an element of certainty of pay as that individual was contracted to be up at a certain time of day to find out whether he had work that day, so there was payment for it but not necessarily guaranteed hours. Such cases still need an answer, whether from the Government’s legal counsel or within the Department. I take the Minister at his word: he said this morning that he would look into such cases and test how the Bill will apply. That is as relevant to clause 6 as it is to other clauses that we have discussed.

The worst-case scenario is that the Bill becomes too prescriptive and takes away arrangements that individuals enter into freely and want to enter into; perhaps it suits them to do so. I accept that that is probably not the majority of cases, but there will be people out there in the economy who perhaps do not need to work. Perhaps they do not need the money. There are such people, believe it or not—I am certainly not one of them. There are people who want to take on a zero-hours contract for something to do. I fully accept and place it on the record that that will be a very small number of people, but if they are completely wiped out by some of these prescriptions without flexibility, that will be a problem for the economy, much as it is if employers just take everybody on a zero-hours contract and offer them nothing further. That, equally, would be a tragedy.

I understand where the Government are coming from in clause 6. I understand the principles behind it. Again, however, I urge the Minister to double-kick the tyres and check that there will not be unintended consequences that have a negative impact on employment in this country.

[Justin Madders]

I am grateful for the shadow Minister’s comments. I have been reflecting on his scenario from this morning. Actually, the first thing I thought about over lunch was how the employer would be checking that the individual was up and dressed at 5 o’clock in the morning to make sure he had complied with the terms of his contract. However, the intention behind the Bill is to make sure that we do not get into lots of debates about whether someone is covered by this legislation or whether everyone who is in some sort of arrangement or contract is covered by it. Of course, if they do not wish to have an offer of guaranteed hours, they are entitled under the legislation not to accept it. I think that this clause will bring clarity and consistency across the board in that respect.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Right to request flexible working

[Greg Smith]

I beg to move amendment 136, in clause 7, page 25, line 5, at end insert—

“(1AZA) But where the employer is—

(a) the Security Service;

(b) the Secret Intelligence Service, or

(c) the Government Communication Headquarters,

the test of reasonableness in subsection (2)(b)(ii) does not apply, and the notification under subsection 1(aa) need not explain why the employer considers that it is reasonable to refuse the application on that ground or those grounds.”

This amendment would exclude the security services from the Bill’s provisions on flexible working.

Amendment 136 is essentially a probing amendment—I make that clear from the outset—but one that should go to the nub of exactly where the Government want to go with this measure, not least bearing in mind the Minister’s comments at the end of the last debate about ensuring that everybody falls under the same set of rules. There may be organisations where it is impractical for their employees to be under the same set of rules. The amendment seeks to probe the matter of exempting those working in the security services from clause 7. We define the security services as MI5, GCHQ and the Secret Intelligence Service.

The Regulatory Policy Committee has explained that the Government have not proved that the measures on flexible working are necessary or undertaken any proper assessment of the costs to business. We therefore want to probe the Government’s thinking on how the provisions might apply in practice. There may be certain occupations, such as the security services, where it is harder for the employer to agree requests for flexible working. I am sure that everyone can see the practical realities and the potential consequences for national security and the safety of everyone in our great United Kingdom if the security services were to suddenly have flexible working arrangements.

Has the Minister given any consideration to which sectors may find these provisions either more difficult or completely impractical to comply with? The amendment takes the example of the security services, where irregular hours are worked. I am sure that hon. Members can think of other occupations, such as policing—and perhaps ours, if I may be so bold, Sir Christopher—where irregular hours are more than commonplace.

We would like to understand how the provisions of the Bill will apply to the security services and to understand the Minister’s thinking as to why. That is the critical question in politics—my early mentor in politics, the late, great Eric Forth, was clear that it is the only question that matters in politics—so I put it to the Minister. We want to understand the balance between the right to request flexible working and public protection. Again, I do not believe that any Member of this House wants to undermine public protection and the safety of our nation. The first duty of Government is the defence of the realm and the security of its citizens.

The security services will not be the only profession that might find the requirements difficult to administer. Will the Minister let us know, when he responds to what I repeat is a probing amendment, where the Government stand? What is his assessment of those areas that simply will not be able to comply with the provisions of the Bill? What safeguards will the Government put in place for them? We seek to understand the practicalities of the requirements that the Government are seeking to impose.

--- Later in debate ---

[Alex McIntyre]

Sadly, I am not very funny. Would M’s HR adviser not say, “That might have a detrimental impact on your performance, Mr Bond”? That flexible working request could therefore be reasonably denied.

[Justin Madders]

I am sure that was in “GoldenEye”!

[Greg Smith]

I think that has probably been a plot line already. The hon. Member for Gloucester understands the point that I am making here within certain elements of employment in this country. This was a probing amendment, and we will come back to the principle of this discussion—although maybe not the detail of the Bond example—later in the Bill’s passage. For the time being, I urge the Minister to have those conversations with colleagues in other parts of Government to double-check that they are fully appreciative of the measures in this Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

--- Later in debate ---

[Justin Madders]

Clause 9 provides for the removal of the requirement for an employee to earn at or above the lower earnings limit to be eligible for SSP. This requirement means that currently up to 1.3 million people, primarily women, are not entitled to receive SSP from their employer. This group are some of the lowest-paid in society, meaning that they and their families are most at risk of financial hardship if they cannot work. The clause ensures that all eligible employees can access statutory sick pay and the peace of mind it brings when they need to take time off due to illness.

However, we do not want to create a situation where anyone is entitled to receive more through SSP than they would otherwise earn. The clause therefore provides that an employee will be entitled to a certain percentage of their average weekly earnings or the current flat rate of SSP, whichever is lower. The clause therefore includes a power for the Secretary of State to determine that percentage rate by secondary legislation. However, it is our intention that the percentage rate is enshrined in primary legislation. I hope that gives the hon. Member for Dundee Central some comfort. We therefore published a consultation, which closed on 4 December, asking respondents what that percentage rate should be. We will now take time to carefully consider the responses we have received, before tabling an amendment to the Bill.

The changes that we are bringing in through the Bill will mean that up to 1.3 million low-paid employees will now be entitled to statutory sick pay and all eligible employees will be paid from the first day of sickness absence irrespective of their income, which will of course benefit millions of employees.

It is important to highlight that many employers choose to go further and provide more financial support to their employees during a sickness absence, with around 60% of all eligible employees being entitled to contractual sick pay. Those who need additional financial support while off sick are able to claim additional benefits through the welfare system, depending on their individual circumstances.

New clause 6 extends to Northern Ireland the benefits of strengthening statutory sick pay by removing the requirement to earn at least the lower earnings limit and creating a new percentage rate. These measures will ensure that all eligible employees have access to statutory sick pay irrespective of their income level, with the peace of mind that this brings when they need to take time off work due to sickness. The clause includes a power for the Minister for Communities to determine that percentage rate by secondary legislation.

Statutory sick pay is, as we have discussed, a transferred matter in relation to Northern Ireland. However, Northern Ireland has historically maintained parity with Great Britain on social security matters, including statutory sick pay. The Minister for Communities, Gordon Lyons MLA, has agreed to ask Westminster to legislate on the Northern Ireland Assembly’s behalf and to seek a legislative consent motion for the proposed changes in order to maintain parity in relation to statutory sick pay.

Finally, amendment 107 is consequential on new clauses 5 and 6; it limits the extent of the new clauses to Northern Ireland only.

[Greg Smith]

I shall be brief. On the Northern Ireland issues, I accept the Minister’s earlier explanation.

I have one straightforward question. The Minister says he has consulted and will consider the responses around the percentage rate going forward, and has said he will seek to amend the Bill to lock the percentage rate into the face of the Bill. The question remains when that amendment is likely to come. I appreciate it takes time to go through responses; it is unlikely to be done overnight, and potentially with Christmas coming up that will get in the way of any chance of the matter’s being considered by this Bill Committee. Therefore, is the Minister envisaging such an amendment on Report? Does he anticipate that it may come forward when the legislation is in the House of Lords? At what point will we see the detail? I do welcome the Minister’s commitment to get it into primary legislation, because that is important and is consistent with some of the things that I have been arguing for in relation to other amendments, but in order for Parliament to take a considered decision, it is important that we know when the amendment is likely to come—later in Committee, on Report in the House of Commons, or in the other place.

[Justin Madders]

That is a reasonable question. It is another Department’s consultation so there are only so many levers I can pull, but I envisage that the amendment will be tabled at Report stage at the latest. I hope that is sufficiently clear.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

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

Employment Rights Bill (Seventh sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 5th December 2024 Public Bill Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

I beg to move amendment 30, in clause 3, page 18, leave out lines 7 to 19 and insert—

“(b) in relation to the movement of a shift, or the movement and curtailment (at the same time) of a shift, notice given less than a specified amount of time before the earlier of—

(i) when the shift would have started (if the shift had not been moved, or moved and curtailed), and

(ii) when the shift is due to start (having been moved, or moved and curtailed);

(c) in relation to the curtailment of a shift where there is a change to when the shift is to start (but there is no movement of the shift), notice given less than a specified amount of time before the earlier of—

(i) when the shift would have started (if there had not been the change), and

(ii) when the shift is due to start (the change having been made);

(d) in relation to the curtailment of a shift where there is no change to when the shift is to start, notice given—”.

This amendment has the effect of clarifying what “short notice” means for the purposes of proposed Chapter 4 of Part 2A of the Employment Rights Act 1996 in cases where a shift is both moved and curtailed and makes associated drafting changes to the definition of “short notice”.

It is a pleasure, Mr Mundell, to see you in the Chair this morning. I start by referring to my entry in the register of interests and my membership of the GMB and Unite trade unions.

Government amendment 30, alongside Government amendments 31 and 32, will ensure that employers are clear about their responsibilities where a shift is both moved and curtailed at the same time. Under the Bill as introduced, it may not have been clear to employers or workers when the short notice period in these cases would run until. Under current drafting, the calculation of the short notice period for a moved and curtailed shift could be done based on the rules for either a moved shift or a curtailed shift. This could produce two different outcomes.

For example, if a shift were due to be worked from 2 o’clock until 6 o’clock, and it is moved and curtailed so that it must be worked from 4 o’clock to 7 o’clock, it is not clear whether the notice ends at 2 o’clock or 4 o’clock. The amendment clarifies that in cases where a shift is both moved and curtailed at the same time, the short notice will be the same as if the shift had been moved only. It will therefore run until the earlier of when the shift would have started before the change or when the shift is now due to start.

In terms of what payment a worker will be entitled to when their shift is both moved and curtailed at the same time, we are committed to consulting on what that amount should be and will, of course, specify that in the regulations. The maximum amount, however, cannot be higher than what the worker would have received from working hours that were changed, as is the case for shifts that are cancelled, just moved, or just curtailed.

We believe that compensation in these circumstances is only fair, given that the movement of a shift at short notice disadvantages a worker. It impacts their ability to plan their lives and can cause financial disadvantage such as excessive childcare costs. Our measures will ensure that workers do not bear all the financial risk of shift allocation and cancellation, and will compel employers to give reasonable notice. Through good leadership and planning, an employer is in a position to reduce the instances of short-notice shift changes, which the worker is unable to influence.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the Minister for his explanation of Government amendment 30, but I gently suggest to him that starting by saying that he wished to be clear, and then going on to say that the Government will be consulting on it, possibly does not give businesses the clarity that they are seeking from this clause of the Bill. I would be grateful, when the Minister sums up the debate on Government amendment 30, if he could actually clarify what he believes, in plain English, to be reasonable notice, and, while not necessarily when future regulations will be laid, the window in which they will be consulted on.

I posed a similar question about an amendment in our sitting on Tuesday. I cannot imagine that the Government will want to simply put out a blank piece of paper consultation—there will be a floor and a ceiling that is consulted on. It would be helpful for all Members, but more importantly real businesses out there in the country, to understand that as soon as possible, so that they can most fully share their thoughts formally when the consultation launches. Can the Minister give the Committee any clue about what employers will need to comply with, or was Allen Simpson, CEO of UKHospitality, right when he said that he understood that

“the Government are intending to leave it to case law and employment tribunal systems to figure out what ‘reasonable notice’ means”?––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]

We will shortly come on to debate Government amendment 31, which is relevant to this discussion.

--- Later in debate ---

[Greg Smith]

I understand the point that the hon. Gentleman makes. Actually, at no point have I said there should be no cost to the employer; I have said there needs to be flexibility, as opposed to a hard and fast rule. On Tuesday I had an exchange with the hon. Member for Birmingham Northfield on the point around, “Okay, what else?” While I put that problem list back in the column for the Government to address, there are other safeguards; there are other things that the Government could look at so that the burden is more shared, as opposed to zero cost to the business. The key word here, which I have probably said 100 times this morning, is “flexibility”, as opposed to hard and fast rules.

I will get back to my conclusion. Allen Simpson from UKHospitality made some sensible points when giving evidence to the Committee last week, so I pose his questions to the Minister. I should be grateful for a response on each, as I imagine employers throughout the country would be. Could a different approach be taken to what constitutes “reasonable notice” for different employers in different sectors? That goes back to the point made by the Opposition earlier. Will shift swapping still be allowed, and if so, how will the regulations account for it? If shift swapping will not be allowed, why not? What will be considered “reasonable notice” within shift-swapping provisions? If an employee wants to change their shift at the last minute, are they allowed to do so, and in what circumstances? What would happen if an employer were to put out a message saying, “There is a shift available right now. Does anyone want it?” Does that constitute an offer of employment? Will there be a time after which employers will not be able to do that, because it does not constitute reasonable notice? Those were very sensible, thoughtful questions from UKHospitality, and as this legislation progresses through Committee it is only right that the Government and the Minister give a clear and full answer to them.

[Justin Madders]

Well done to the shadow Minister—he must have had his Weetabix this morning. He has clearly put in a great deal of time and we appreciate the way that he has engaged with the debate and some of the issues. He is taking a much broader look at the principles behind the legislation, rather than a quite narrow technical amendment about when shifts are moved or curtailed, but I am happy to address his points as far as I can.

I understand that the shadow Minister accepts the principle that we are trying to create some additional fairness in the workplace. That is welcome to hear, and I can assure him that this will not be a rush job. We do not anticipate these measures being implemented until 2026, and he will not be surprised to hear that the reason is that we intend to engage deeply with business and workers’ representatives on the details. There will be a consultation, following which we will set out in regulations what periods of notice should be presumed unreasonable; we will also set out factors for tribunals to take into account when considering whether notices are reasonable. That will go a long way towards addressing some of the concerns he mentions from Allen Simpson of UKHospitality. I think it is fair to say he generally welcomed the approach, but clearly some of the detail is to be worked on.

I do not think there will be any prohibition on workers swapping shifts, but if the employer, having been notified that worker B has taken the shift instead of worker A, then cancels the shift at short notice, we would intend that the regulations would then be engaged.

--- Later in debate ---

[Greg Smith]

So that we are absolutely clear on the shift-swapping provision—[Interruption.] I correct the Minister on the Weetabix; it was the Tea Room black pudding.

If worker A and worker B consensually decide that they wish to switch, worker B being the one who will take the shift and worker A the one whose shift is now displaced either to another time or not at all, and worker A being quite happy with that, will the employer be penalised?

[Justin Madders]

I am grateful for the details of the shadow Minister’s dietary exploits today.

We are looking in quite close detail at that situation, because there are a number of knock-on consequences, but we do not envisage that, in a situation where two workers agree of their own volition to swap shifts, the employer should in any way be penalised. We do not think that is in the spirit of what we are trying to achieve here.

I return to the points that my hon. Friend the Member for Edinburgh East and Musselburgh made about particular workplaces. The Director of Labour Market Enforcement has undertaken quite a lot of work in respect of those issues; considerable evidence is emerging about concerns in those sectors, and I encourage him to undertake some further reading on that.

There will be further consultation on what reasonable means. We all understand that there could be different factors applying, but what we want at the end of this process is for businesses to be clear about their obligations. That could mean a particular time period, but it could be different depending on the industry or the circumstances. It is right for us to take our time to consult and engage on that.

The shadow Minister referred to the force majeure issue; there is a power in the Bill for us to provide for exemptions for short-notice shift cancellation—that is always a tricky phrase to get out—but in some of the examples he gave where a huge contract was lost, a notice cancellation payment was probably the least of the employee’s and the employer’s problems in that situation; there may be bigger questions about whether there is enough work at all. Those are the kinds of things we will be looking at, as the power in the Bill gives us that opportunity.

Amendment 30 agreed to.

--- Later in debate ---

[Justin Madders]

These amendments should be considered alongside amendment 30, because they clarify what happens when a shift is both moved and curtailed at the same time. The Bill provides a power to specify the amount that must be paid by employers when they cancel, curtail or move shifts at short notice. It cannot be used to specify a payment amount in excess of what the worker would have earned from working the original hours.

However, the Bill was not clear whether the maximum payment due when a shift is both moved and curtailed at the same time should be calculated based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, the maximum payment could be based either on one or two hours of work, as the shift was moved by two hours but was curtailed by one hour.

Amendment 31 clarifies what happens in such cases. The maximum payment in this scenario would be what they would have earned from two hours’ work, reflecting the maximum they would have earned had they worked their original four-hour shift. That will ensure that workers are compensated appropriately, and it will also provide clarity for employers.

Amendment 32 clarifies for workers and employers how to calculate what amount of contractual payment can be offset against payments under clause 3 in cases where there is a combined short notice movement and curtailment of a shift. Again, the Bill is unclear whether the calculation should be based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, then after deducting the two hours in the shift that have stayed the same—4 o’clock to 6 o’clock—the remaining hours to be offset could be based on either one or two hours’ work.

The amendment clarifies that the hours to be offset should be for two hours’ work, as the worker should be entitled to the payment under proposed new section 27BO of the Employment Rights Act 1996 for two hours. That will ensure that it is clear that an employer is not doubly liable for some hours in such scenarios.

Although I appreciate that the amendments may appear complex, they will have the overall effect of simplifying the policy for employers and workers, so that it is very clear what happens when a shift is both curtailed and moved at the same time. They therefore prevent us from ending up with a whole load of litigation to decide what the correct outcome will be.

I reassure the shadow Minister that the changes will not be rushed: they will not be implemented before 2026, which will give us time to consult further and provide some more information on how the measures will work in practice so that employers understand what is expected of them. We will provide clear guidance throughout.

Many employers already guarantee hours, give reasonable notice of shifts, and make payments when they cancel shifts at short notice, so they will not need to alter their behaviour at all. In fact, data from the Chartered Institute of Personnel and Development suggests that around 33% of employers already pay some form of compensation for shifts cancelled with less than 24 hours’ notice.

[Greg Smith]

I am grateful to the Minister for his explanation of amendments 31 and 32. As he said, these amendments clarify the maximum amount of payment and the hours to which a payment relates in cases where there is a cancellation, movement or curtailment at short notice of a qualifying shift that the worker has agreed to work for the employer. Amendment 31 establishes that the payment should be for the hours that would have been worked.

The amendments make sense given the policy direction of the Bill but, once again, I gently suggest—as I will probably do multiple times during our discussions—that it is unclear why these provisions could not have been included in the Bill on its introduction. They seem like a fundamental part of the Bill. I would be grateful if the Minister could explain why it took so long to come to the conclusion that this was the way forward.

--- Later in debate ---

[Justin Madders]

Proposed new section 27BT of the 1996 Act makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that either was not given or was inadequate or untrue.

Amendment 37 will require the employment tribunal to additionally make a declaration in cases where the employer failed to make a payment for a qualifying shift, confirming that the worker’s rights have been violated. The declaration will be accessible not only to the directly affected worker but to others, including those working for the same employer. That will ensure that it is clear to other workers where and how such payments should apply if they have a shift cancelled, moved or curtailed in a similar way.

Amendment 38 will require the employment tribunal to additionally make a declaration where an exception applied and a notice was not given or where the notice was inadequate or untrue, confirming that the worker’s rights have been violated. Again, that will ensure that workers always receive a remedy in such cases, even where the tribunal decides that an award of compensation is not justified in the circumstances. That should ensure that it is clear to other workers where exceptions do and do not apply if they have a shift cancelled, curtailed or moved in similar circumstances.

Mandatory declarations of that nature are a common remedy across employment law. The amendments are in line with other similar provisions that concern complaints to the employment tribunal. Proposed new section 27BT also makes provision for the tribunal to order an employer to pay a worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.

Amendments 39 and 41 will allow an employment tribunal discretion to award an appropriate level of compensation in cases where an exception applied but the employer either failed to give notice or gave an inadequate or untrue notice. That will remove the need for a tribunal to take an all-or-nothing approach by awarding the full, maximum amount or nothing. The amendments will instruct an employment tribunal to consider the seriousness of the matter when determining what payment to award the worker, which might include, for example, considering whether the employer had acted in bad faith.

That is a more appropriate approach than under the previous drafting, and there may be cases where the maximum award is not reasonable. For example, if a worker has a shift curtailed by an hour and their employer relied on an exception but did not give notice of that, it would not be logical for their award to be greater than the amount that would have been owed for the curtailment of a single hour. The award itself is discretionary and it is appropriate that the payment amount should equally be discretionary up to a specified amount, which will allow employment tribunals to make awards that are just and equitable to all parties.

On amendment 40, proposed new section 27BT makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.

The amendment is minor and technical, correcting drafting so that the provisions do not make reference to a scenario that could never arise. An employer cannot be found both to have unreasonably failed to give a worker notice of an applicable exception in relation to a payment, yet also to have been liable to make that payment and have failed to do so: either no exception applies and payment is due, or an exception applies and a notice should be given as no payment is due. The amendment removes the potential confusion caused by the drafting as introduced. I apologise for that, but as the Committee will appreciate that we have been working to a very swift timetable. We hope that brings some clarity to the situation.

[Greg Smith]

The word “clarity” is doing quite a lot of heavy lifting there, so I will probe it a bit. Amendments 37 and 38 concern provisions in the Bill about how employees may make a claim to an employment tribunal where they have not been paid or received reasonable notice of shifts, or the employer had purported to give notice in compliance with the rules on right to reasonable notice, but in a way that was inadequate.

The amendments specify that if an employment tribunal finds claims to be well founded, it must make a statement to that effect. Why were these amendments, along with those increasing the time limit from three to six months, not included in the Bill when introduced? Those provisions do not seem like a loophole being closed or a minor technical drafting error; they seem fundamental to what the Government are trying to do here, so that was one of the bigger surprises. Why were they not locked into the Bill from day one?

I understand the point about political priorities and commitments to publish something in 100 days, because sometimes these things take a lot longer than 100 days to get right. Whether one agrees with the principle and practicality of the provisions or not, it is tough on those in the civil service and those who are drafting the Bill to be able to deliver something of this complexity in 100 days, but these seem to be fundamental provisions. I would also be grateful for clarity from the Minister about how much the Government estimate that the provisions in these amendments, as well as in the wider Bill, will increase employment tribunal claims.

On amendments 39 to 41, if an employee brings a claim to an employment tribunal for their employer breaching the duties imposed by the Bill, amendment 39 provides that the court can award compensation up to a cap to be set in regulations. We are back to our old friend: we do not know what those regulations are going to be. I have a set of what I hope will be straightforward questions for the Minister. What is the cap planned to be? I am sure that it will be open to consultation, but again, the Government must have a window in mind. That is a reasonable question that businesses up and down the land will be interested to know the answer to, so that they can start preparing their viewpoints and evidence base to present to the Minister for any future regulations.

In our oral evidence sessions, we heard witnesses ask several questions about how the provisions on the right to reasonable notice of cancelled, curtailed or moved shifts will work in practice, because there is precious little detail in the Bill. Can we now have that detail? Will the Minister provide a timeline by which the Government intend to provide some information not just to this House, but to businesses up and down the country, about how the measure will work?

When will we be able to see the draft regulations? It would be helpful if we could see them during the passage of the Bill, be it prior to Report, which would be the best case, or before it goes to the other place for consideration, so that the House of Lords can fully explore them, which would be better than nothing. Can the Minister explain why the clauses on award of cost are proportionate to the benefit that they may bring to employers?

[The Chair]

Government amendment 37—sorry, Minister, I should allow you the opportunity to respond.

[Justin Madders]

I am sure that the shadow Minister and the whole Committee are delighted that I have the opportunity to respond.

The shadow Minister asked some perfectly reasonable questions. On the first issue, it is a well-established principle that employment tribunals have the right to make declarations in a whole range of claims. Again, I can only refer him to my previous answers with regard to why that was not in the original Bill—we were up against a tight timetable. It is also worth bearing in mind that the Bill will not become law until it has passed through this House and received Royal Assent, so when it finally appears before the public, all those issues will be ironed out. I give him the same answer about regulations, because—as we are doing as we go along—the Bill can be amended here, on Report and in the other place.

It may be that the final Bill does not entirely reflect what we have before us, so it would be premature to draw up regulations at this stage. However, part of our ongoing dialogue with businesses, workers’ representatives and trade unions is about what regulations we will look at.

[Greg Smith]

I understand the Minister’s point, but this is a Government Bill; I accept that it is derived from their manifesto and from their political priority. Notwithstanding the Minister’s perfectly correct point that the Bill can be amended before it receives Royal Assent, does he at least accept the point that as this is a Government Bill, they should at least give a starting point on any consultation or proposal that people could then work around, as a test of reasonability for business owners and the wider public? People around the country, as well as Members of this House, could then let their views be known as they seek to challenge and amend the Bill.

[Justin Madders]

We are taking this approach because we want to be reasonable and engage with businesses and trade unions on what the shape looks like. That is why the full consultation, which will look at the broad range of issues, is not yet ready. It is not really in the spirit of that for us to nail down everything in the Bill. Most employment rights have their detail in secondary legislation.

There are some clear principles about the levels of compensation that we will set out. Clearly, a worker should not be compensated for more than the number of hours that he or she has lost. If other heads of loss occur, there are already principles about wages, for example, whereby ongoing losses have to be compensated for. That is the kind of thing where the detail ought to be put into secondary legislation and consulted on fully, which is what we intend to do.

--- Later in debate ---

[Justin Madders]

I am sure you always intend to be helpful, Mr Mundell.

I will briefly go through the provisions of clause 3. I appreciate that we have covered a lot of the issues already, but I think it is important to set out what the clause does in the round, because after discussions on quite a few amendments, we may not have followed exactly where we are.

It is obvious that predictability of income is a crucial part of a secure future. We need to address the scourge of insecurity at work. Equally, we understand that businesses want clarity about their obligations. The right to reasonable notice of shifts and of changes to them is important and will be enforceable at employment tribunals. While we regard the right to reasonable notice as appropriate, we also see a need for a rather speedier mechanism to provide some reimbursement to a worker when a shift is cancelled, moved or shortened at short notice. Of the 2.4 million people potentially eligible for these new rights, we estimate that around 600,000 have shifts cancelled at short notice. Clause 3 clearly sets out the obligations on both workers and employers, and I will go through the amendments that it will make to the Employment Rights Act 1996.

New section 27BO of the 1996 Act outlines the new duty that will be placed on employers to make a payment to workers if they cancel, move or curtail shifts at short notice. The duty will apply to workers on zero-hours contracts and arrangements, and workers on contracts to be specified in regulations. When workers have the timing of their usual shifts set out in their contract but are sometimes asked to work extra or longer shifts, the duty will also apply to the additional hours. The new section also provides the power to set what period constitutes short notice; what the payment amount should be; how quickly the payment should be made; when notice is treated as having been given; and the maximum delay of a shift, or bringing forward of a shift, for which payment is not due.

New section 27BP adds several supplementary details on the powers to make regulations provided in new section 27BO and therefore on the functioning of the right to payment. It restricts the period that can be set in regulations as “short notice” to no more than seven days, and it ensures that the payment due to a worker cannot be more than they would have been paid had they worked their original shift. It allows for regulations to vary the amount of the payment according to how short the notice of cancellation is. It also provides that the contracts in scope of the right to payment may be specified in regulations by setting an hours or pay cap.

New section 27BQ provides a delegated power to make exceptions to the right to payment, and states that where an exception applies, the employer must notify the worker of it and explain why it is considered to apply. The section enables regulations to specify how the notice of the applicable exception should be given and when it is deemed to be received.

New section 27BR ensures that a worker is not entitled to receive payment both under their contract and under new section 27BO in respect of the same hours. New section 27BS enables workers to complain to employment tribunals that their employer has failed to comply with the duties. New section 27BT establishes the remedies where a complaint to a tribunal is found to be well-founded.

I commend the clause to the Committee.

[Greg Smith]

Mindful of your comments, Mr Mundell, I will not speak at length to the clause, other than to underline the points that I and my hon. Friend the Member for Mid Leicestershire have made about certainty. I understand the political priorities of the Government, and I understand the principle of what they are trying to do. However, as my hon. Friend said, businesses need to be able to plan.

I accept that not all legislation can give detail on everything to the nth degree, but I think it is reasonable and proportionate for businesses small, medium and large in this country to expect to be given at least a hint of what is coming down the line. That way, they can begin the process of planning and putting their thoughts together, so that when the consultations come they can give as full and frank an account of their circumstances as they can, and describe what the proposals will mean for them and their employees, so that the Minister can come to a reasonable judgment before laying any regulations.

The Opposition are not opposed to the principle of the clause, but because of the holes in it, we cannot support it.

Question put, That the clause, as amended, stand part of the Bill.

--- Later in debate ---

[Justin Madders]

Amendment 42 is another technical amendment that concerns not the function of the Bill but parliamentary procedure, so if we want another dry, technical debate, we certainly have the opportunity.

Clause 4 makes provision for new section 27BW to be inserted into the Employment Rights Act 1996. New section 27BW(3) would allow regulations made under part 2A of the 1996 Act, relating to the provisions concerning zero hours, that are subject to different or no parliamentary procedure to be included in regulations subject to the affirmative procedure. New clause 11 amends section 236 of the 1996 Act and makes the same provision to allow the combining of instruments, but applies to any orders and regulations made under that Act, rather than to only those made using powers in part 2A. This is a technical amendment intended to ensure that implementation can be undertaken as efficiently as possible.

On what instruments might need to be combined, we will be setting out further details required to implement zero-hours provisions through secondary legislation, but existing powers in the 1996 Act, such as the power in section 10 regarding pay statements, may play a part in supporting implementation. It may be that it would be appropriate to exercise that power to prescribe that pay statements must specify where payment has been made under proposed new section 27BO for the short-notice cancellation, movement or curtailment of a shift. Should that be the case, this provision would allow that amendment to be made in the same regulations as others to be made under new powers being inserted by this Bill that are—I am sure that the shadow Minister will be pleased to hear this—subject to the affirmative procedure. That will mean that provisions to be detailed in regulations that would have been subject to the negative procedure, or no procedure, receive greater scrutiny from Parliament before becoming law.

In the light of the amendment made to section 236, amendment 42 removes the provisions that apply only to part 2A of the 1996 Act, as they will be redundant.

[Greg Smith]

As the Minister says, this is a very technical amendment—and who doesn’t love a dry, technical debate? However, I am not sure that anyone seeking a dry, technical debate over some hours is going to be happy. I gently suggest that the Government should reflect on the procedural nature of these provisions and their intersection with the Employment Rights Act 1996, which is very complex to unpick and fully understand, not necessarily for those who sit in this House, or indeed in the other place, but certainly for businesses out there, which will require a lot of professional services and advice to navigate it.

On the particular, technical nature of the procedure, I heard what the Minister said about the affirmative procedure, but can he explain something to the Committee? This question could result in a very short answer or a very long one—I apologise for asking it if it prompts a longer one, although in some ways that would be better—but can he explain which powers in the new clause will not be subject to the affirmative procedure? Is there a list? And—it would be remiss of me not to throw this in—why could this not have been on the face of the Bill from day one?

[Justin Madders]

I am afraid that I will not be able to tell the shadow Minister what will not be subject to the affirmative procedure. I think that the intention is actually for the amendment to bring everything that is in scope of the clause under the affirmative procedure, but I will endeavour to confirm that and come back to him, if that is okay.

Amendment 42 agreed to.

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

--- Later in debate ---

[Greg Smith]

I will not speak at length on this clause because, as the Minister said, it has a bit more clarity in it than many of the others. He has just outlined the new definitions, but perhaps I can put to him an example case showing how they would meet someone on what I believe he may describe as a zero-hours contract, but which also has some compensation for being a zero-hours contract. I will explain what I mean by that.

This is a live example of someone who explained their working relationship with their contracted employer to me the other day. He is required to be up, dressed and ready to go at 5 am every day—perish the thought—and he will receive a call by 5.30 am about whether there is a number of hours to be worked that day. He receives a payment for doing that. Each week, he receives a payment for being up at 5 am and being ready to go if required, but of course if he is not required he does not receive anything further for the shift or the full day of work.

There are probably not many such contracts in the economy, but that is a real-life one. I happened to be briefed on it by the individual involved the other day. The employee is happy. Not everybody is happy at 5 am, but he gets his payment for doing that. He accepts the quid pro quo that he may or may not get a full day’s work off the back of that. If he does not, he can go back to bed or do whatever he fancies with the rest of the day. How do the definitions in the Bill fit somebody who is quite happy with such an arrangement?

[Justin Madders]

At the all-party parliamentary beer group’s reception last night, the shadow Minister and I talked about pubs. His question sounds perfect for a pub quiz for retired employment lawyers: it is the sort of thing that might end up getting taken to a group of KCs to understand the precise relationship. My best guess is that it would be classed as a zero-hours arrangement and would therefore be covered by the legislation. However, I do not wish to set a precedent inadvertently, so I will take further advice and come back to the shadow Minister. I hope he has some more interesting teasers like that: I am sure the entire employment law community are furiously scrabbling through their books to find the answer to his conundrum.

Question put and agreed to.

Clause 4, as amended, accordingly ordered to stand part of the Bill.

Schedule 1

Consequential amendments relating to sections 1 to 3

[Justin Madders]

I beg to move amendment 43, in schedule 1, page 106, line 8, at end insert—

“In section 27 (meaning of ‘wages’ for purposes of Part 2 of the Act), in subsection (1)—

(a) after the paragraph (ce) inserted by the Neonatal Care (Leave and Pay) Act 2023 insert—

‘(cf) a payment under section 27BO(1) of this Act (payment for a cancelled, moved or curtailed shift),’;

(b) renumber the paragraph (ce) inserted by the Employment (Allocation of Tips) Act 2023 as paragraph (cg).”

This amendment provides for a payment under proposed section 27BO(1) of the Employment Rights Act 1996 in respect of a short-notice cancellation, movement or curtailment of a shift to be treated as “wages” for the purposes of the provision about protection of wages in Part 2 of that Act.

The right of a worker to bring a claim for unlawful deduction of wages is an important principle in employment law. It is right that payments for cancelled, moved and curtailed shifts are included in this provision. Although a worker can already claim through the employment tribunal that their employer has not made a payment for a cancelled, moved or curtailed shift, in some cases it may be more appropriate for workers to bring a claim under the unlawful deduction of wages provisions, for example if there are instances of non-payment covering a period of months or years; if they want to claim for financial loss as a result of non-payment, for instance because of bank charges; or if a claim covers non-payment of cancellation payments and other wages.

The amendment will provide workers with an alternative remedy for non-payment, in addition to the new provisions in proposed new sections 27BS and 27BT of the Employment Rights Act 1996. That is in line with other statutory rights to payment, such as remuneration during suspension of work on medical grounds. I hope that that is a clear explanation.

[Greg Smith]

I do not say so often in this Committee, but that was actually a helpful clarification. I can only come back to a point that I will make countless times in this Committee: why on earth could that not have been clearer at the start, when businesses up and down the land were submitting their written evidence, or indeed when they were providing us with oral evidence last week? I stress that it is helpful to have that clarity now. I take no issue at all with the Minister’s explanation, other than to gently repeat the point about certainty and planning going forward.

[Justin Madders]

I am grateful for the shadow Minister’s support for the amendment.

Amendment 43 agreed to.

Amendments made: 44, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BD(5A) or (5B)”.

This amendment is consequential on amendments 11 and 14.

Amendment 45, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BEA(1) or (2)”.—(Justin Madders.)

This amendment is consequential on amendment 13.

--- Later in debate ---

[Justin Madders]

Amendment 46 will broaden the detriment provisions in respect of the right to guaranteed hours. It will ensure that a worker has a right not to be subjected to detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to an offer of guaranteed hours. The existing provisions protect workers from detriment only where a worker accepts or rejects an offer of guaranteed hours or proposes to do so; where the worker declines to work a shift, as they believe their employer has failed to comply with their obligation in relation to notice of shifts; or because the worker alleges the existence of such grounds to take a case to an employment tribunal.

Amendment 47 is a consequential amendment that clarifies the definition of “reference period” in amendment 46.

The amendments will extend the protections to ensure that detriment to the worker arising from the right to guaranteed hours can be addressed. The detriment experienced by the worker may include cases in which a worker’s contract is terminated. Whether a worker experiences a detriment on those new grounds will be a matter for the employment tribunal to determine in the usual manner.

[Greg Smith]

I am grateful for the Minister’s explanation. The Opposition can clearly see that amendment 46 will ensure that a worker’s right not to be subjected to detriment includes a case of detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to a guaranteed-hours offer under proposed new section 27BA of the Employment Rights Act 1996. The question—our old friend—is why that was not in the Bill in the first place.

I would be grateful if the Minister explained what sort of detriment the Government are concerned about and are trying to prevent with the amendments. It is another point of clarity: it is about giving businesses an early understanding of where the Government are trying to go. This is one of the areas in legislation that could be widely open to legal opinion, if I may put it that way: a sort of lawyers’ charter, whereby if a bunch of lawyers are put in a room they could easily come up with many different interpretations of detriment and of the scope of amendment 46.

We see uncertainty in legal opinion all the time on the legislation that passes through this House. Once the Bill, in some form, has become an Act—as undoubtedly it will, given the parliamentary arithmetic—and a case comes to court, it will be helpful for the judiciary to look back at the parliamentary debate and see the full meaning of this provision.

[Justin Madders]

I am grateful for the shadow Minister’s question. I recall on one or two desperate occasions quoting Hansard in an employment tribunal. I always felt, “If you’re explaining, you’re losing,” as the old phrase goes.

We are not actually creating a new category of detriment. Detriment is something that already applies across a whole range of employment rights, so we are not inventing something that is not already there. At the moment, there is quite a live academic debate about how far the extent of detriment reaches, which we may come to at a later point.

To answer the shadow Minister’s points, the amendment will not create a whole new area of litigation about understanding what detriment means in this circumstance. It will still be the same detriment that would apply in other employment-related claims.

Amendment 46 agreed to.

Amendment made: 47, in schedule 1, page 107, line 29, at end insert—

“(7) In this section ‘reference period’ has the same meaning as in Chapter 2 of Part 2A (see section 27BA(4)).”—(Justin Madders.)

This amendment is consequential on amendment 46.

--- Later in debate ---

[Greg Smith]

I have two questions for the Minister—hopefully simple ones—about Government amendments 48 and 49, which relate to the maximum award for a detriment claim.

First, there does not seem to be a set limit for the maximum award. Can the Minister explain that? Can he give an indication whether a maximum award will be set further down the line, either via a consultation process or in regulations?

My second question is possibly less straightforward, but it will be important as we look at the practical application of the Bill once it receives Royal Assent and comes into force. How much does the Minister envisage that tribunals may award under amendment 49?

[Justin Madders]

I am grateful for the shadow Minister’s questions. They cannot be answered in the round, as all cases will be very fact-specific. The maximum that a tribunal awards will be down to the circumstances in which workers find themselves. With a zero-hours contract, there will be a whole range of issues relating to the kind of work that they would have expected if the detriment had not taken place. It is a well-established principle that a tribunal will award what is just and equitable in the circumstances. Tribunals are well versed in understanding the factors that they would need to take into account in making such awards. The shadow Minister tempts me to get into details, but as this is a Bill Committee and not an employment tribunal, I cannot give him the kind of detail that he is looking for.

[Greg Smith]

I am grateful to the Minister for that answer. I understand the broad principle that he outlines, but there could be a mechanism, without putting a pounds-and-pence limit on any award, to bake in some formula that would cap an award according to proportion of original pay, contracted hours, length of service or some other factor. For the clarity of the record, is the Minister saying that no such framework is envisaged and that it will be a totally open-ended question for any employment tribunal?

[Justin Madders]

The amendments relate to detriment claims only, whereas the shadow Minister’s question is a slightly broader one. The point about compensation in other situations would be far more detailed. As this is about people on irregular contracts who may have suffered a detriment that we cannot possibly predict in advance, it is normal to say at this stage that the usual principles of the just and equitable compensation that an employment tribunal would award will apply in those circumstances.

Employment Rights Bill (Sixth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Justin Madders]

Amendment 11 will introduce a duty on employers to inform workers when an exemption applies and the employer is exempt from their obligation to offer a worker a guaranteed hours contract. Any exemptions to the duty to offer guaranteed hours will be defined in regulations.

Amendment 11 will also introduce a duty on employers to inform workers where an offer of guaranteed hours already given is to be treated as withdrawn because a relevant termination has taken place. That will ensure that workers are aware of when they are not receiving a guaranteed hours offer because an exemption applies. It will allow workers to check that the exemption is applicable to them, and then enable them to enforce their right to guaranteed hours where an exemption is not applicable.

Associated consequential amendments 14, 19 and 44 will ensure that workers will be able to take a complaint to an employment tribunal if the worker is not provided with a notice of exemption or a notice of the withdrawal of an offer already made. That will also be the case where a notice has been provided but should not have been, or where a notice has been provided but cites the wrong exemption.

Amendment 13 will introduce a new duty on employers that will ensure that workers who would likely qualify for a guaranteed hours offer are aware of certain information about the right to guaranteed hours. That will help to ensure that workers are informed about the new right and can therefore take decisions about their working hours during their reference period based on the information they receive about their possible right to a guaranteed hours offer.

Further consequential amendments 15, 23 and 45 have been made to ensure that a worker may enforce their right to be informed about the right to a guaranteed hours offer by taking a complaint to an employment tribunal. A consequential amendment 20 has been made to define the period within which a complaint of this nature may be taken to a tribunal. I think we might get to that later in relation to the general application of extended time limits.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. As a precursor to my comments on these specific amendments, I note that the sheer volume of Government amendments that we are considering really goes to show that the Bill might have met a political objective in being published in 100 days, but that it was not ready to be published in those 100 days. At worst, that is a discourtesy to the House and, at best, it shows that the legislation simply has not been drafted properly. These changes simply would not have been necessary had due diligence been done on the Bill before it was published.

I would like to focus on amendment 13 from this group of amendments. That amendment requires employers to give their employees access to certain information to be specified in regulations—we are back to our old friend of regulations to come. Let me ask the Minister the following: what information will amendment 13 require employers to make available? Why? And what further burden will be imposed later down the line by regulations, thanks to the power taken in the clauses? Employees will be able to take their employer to a tribunal for not providing this information, as provided for in amendment 15, so I suggest to the Committee and the Minister that it is vital that we can understand the requirements that the clause will place on employers.

[Justin Madders]

I am grateful for the shadow Minister’s questions. No doubt during the passage of the Bill we will come back on several occasions to that point about the number of amendments. I just place on record my gratitude to the civil service and the Office of the Parliamentary Counsel for their work in getting the Bill published to the parliamentary deadline that was politically set. Of course, lots of Bills have amendments as they progress. As is consistent with our wish to engage thoughtfully, we may still have further amendments.

As for the shadow Minister’s questions, it is entirely usual to put that sort of detailed information in regulation, and we would not normally specify it in a Bill. We are trying to ensure that workers who are captured by the zero-hours legislation are aware that they are captured by it and are entitled to certain rights, such as the offer of a guaranteed hours contract. This is about making sure that some of the most vulnerable people in society, who are often exploited by zero-hours contracts, are at least given the information to ensure that their rights are enforced. We will work with businesses and employers, and representatives and trade unions on the precise detail of the information to be provided, but this is about making sure that all parties are aware of their legal obligations. I hope that the shadow Minister understands that this is an important part of the legislation.

Amendment 11 agreed to.

[Justin Madders]

I beg to move amendment 12, in clause 1, page 8, leave out lines 8 and 9 and insert—

“(6) For the purposes of subsection (3)(c) (and subsection (4)(b), which applies subsection (3)(c))—

(a) subsection (8) of section 27BB (when it is reasonable for a worker’s contract to be entered into as a limited-term contract) applies as it applies for the purposes of that section;

(b) it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—

(i) where the period in question is the relevant reference period, during that period;

(ii) where the period in question is the offer period, during that period or the relevant reference period;

(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”

This amendment adds a rebuttable presumption to the existing provision made by proposed section 27BD(6) of the Employment Rights Act 1996. The presumption will apply when determining whether there has been a relevant termination for the purposes of that section such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.

The amendment will close a potential loophole that could mean that workers might not be entitled to a guaranteed hours offer if they are employed on a series of limited-term contracts to undertake the same or similar work. It will do that by adding a rebuttal presumption, that it will not be considered reasonable to have entered into a limited-term contract where a worker undertook work that was the same or similar in more than one contract during the relevant period. That means that the relevant termination provisions would not apply and the employer would not be excepted from its duty to offer guaranteed hours. An employer would have to offer guaranteed hours to the worker, even if that worker’s last contract was terminated at the end of the relevant period, unless it was reasonable for the employer to have entered into a limited-term contract with the worker and the presumption is rebutted, which could then lead to a relevant termination.

Under proposed new section 27BB(8) of the Employment Rights Act 1996—as referred to in the amendment—it is “reasonable” for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract will end when it is performed; if the worker is needed only until some event occurs and the contract will then end; or if the worker is needed only for some other temporary need to be specified in regulations.

To be clear, whether it is “reasonable” for the employer to enter into a limited-term contract during the relevant periods affects only whether the right to guaranteed hours applies. If such a contract is not “reasonable”, it is still a lawful contract and may, of course, be an acceptable means of conducting business. As such, the presumption introduced by the amendment would apply only to determine whether there was a relevant termination of a limited-term contract, where a worker is engaged on a series of limited-term contracts doing the same or similar work. The presumption will not prevent an employer from engaging a worker on a series of fixed-term contracts, but it will act as an anti-avoidance measure to ensure that an employer cannot get around its duty to offer guaranteed hours by engaging the worker on a series of limited-term contracts even though they are actually doing the same work.

[Greg Smith]

Amendment 12 states that it is to be presumed by tribunals

“that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract”

if the work done

“was of the same or a similar nature”

as the work undertaken by other employees, with the following conditions:

“(i) where the period in question is the relevant reference period, during that period;

(ii) where the period in question is the offer period, during that period or the relevant reference period;

(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”

I have stressed the wording of the amendment because I would be grateful if the Minister could clarify what protection the clause is designed to give employees. The vast majority of businesses reading that could easily be forgiven for getting slightly confused. Why is that wording necessary, particularly on this measure, to create the protections that I think I understand the Government want to achieve? The amendment might result in confusion from most businesses.

--- Later in debate ---

[Justin Madders]

This group of amendments is not quite as daunting as it sounds, because they all deal with the same point, which is the extension of time limits for making claims.

New schedule 2 amends time limits for making claims in employment tribunals from three months to six months. In recent years, as we know, demand has increased sharply. Increasing the time limit from three to six months will help to reduce pressure on the employment tribunal system, allowing parties to try to resolve their differences before resorting to formal litigation. The amendments apply to time limits for the majority of employment tribunal claims, including claims under the Employment Rights Act 1996, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Equality Act 2010. If Members are interested, the full list of claims is set out in the new schedule.

Government amendments 16 to 18, 22, 28, 29, 33 to 36 and 83 ensure that the change is reflected for cases relating to rights that will be introduced by the Bill. Amendments 16 to 18 and 22 will increase the time limit for taking a claim to an employment tribunal that relates to the right to guaranteed hours from three months to six months. Amendments 28 and 29 will increase the time limit for taking a claim that relates to the right to reasonable notice of shifts from three months to six months. Amendments 33 to 36 will increase the time limit for taking a claim that relates to the right to payment for a cancelled, moved or curtailed shift from three months to six months. Amendment 83 will increase the time limit for taking a claim that relates to whether a worker, or a former worker, believes they have been subject to a detriment by an employer on grounds of industrial action.

Finally, Government amendment 21 is a small technical amendment, which will correct an incorrect section reference. The words “this section” currently refer to section 27BG, which relates to time limits for bringing a complaint, but they should—as I am sure everyone noticed—refer to section 27BF, the correct section under which a complaint may be brought to an employment tribunal.

On a more general note, Members may be aware that a number of years ago, the Law Commission recommended that the time limit for bringing employment tribunal claims should be increased from three months to six months. This set of amendments simply seeks to implement that recommendation.

[Greg Smith]

Quite a list of amendments and edits to the 100-day-old Bill.

I will start where the Minister left off. The amendments extend the time for employees to bring a case to the employment tribunal from three to six months if they believe their employer has breached the duties imposed by the Bill. That includes the provisions around zero-hours contracts and the right to reasonable notice. In that light, a reasonable question would be: why were the provisions not included in the Bill on introduction? What changed? Was that an oversight, or something never originally intended to be included in the Bill? What is the rationale? Furthermore, what is the rationale for increasing the period from three to six months? That is not a modest change—not a matter of a couple of days, a fortnight or something that most people might deem reasonable; that is a substantial shift. It is only right and proper that the Minister, when he responds, gives a full explanation for such a huge change from the original provisions in the Bill.

Data from His Majesty’s Courts and Tribunals Service shows the backlog in employment tribunals, with outstanding cases increasing 18% on last year. To add in additional burdens will add to the overall burden on the service, so as part of the consideration of the Bill and of the amendments it is crucial to understand what the Government will do not just to clear that backlog, but to create the capacity in the service to deal with the increase in demand that the Bill will undoubtedly bring about. I shall be grateful if the Minister will comment on his discussions with the Ministry of Justice to deliver on that.

Businesses, especially small and medium-sized enterprises, rely on the tribunals service being able to process claims quickly so, if the Government are to bring about such a huge and significant change to demand on the service, they should put in place the relevant steps. Have the Government undertaken any assessment of the impact that such an extension will have on employment tribunals, or the likely number of claims? It would help to know what, under the amendments, the Government’s assumptions are—will the level of increase that the Opposition fear come about?

Is there a model—I fully accept that such models are rarely 100% accurate, but they give the country and the service planners an important ballpark figure to be working around, going into the future—and, off the back of that, what is the impact on businesses, particularly small and medium-sized enterprises? If there is no such modelling—if there is no ballpark figure that the Government are working to—why not?

My final question on this group of amendments is: why does the Minister believe that it is proportionate or sensible to double the window in which an employee can bring a claim? Surely the three-month window is sufficient. As I said, the Opposition would like to understand why that doubling is so necessary.

--- Later in debate ---

[Greg Smith]

indicated dissent.

[Justin Madders]

He is shaking his head—that is good. I certainly do not envisage that to be the case, but we recognise there is a backlog in the employment tribunals. Like many public services, they are under pressure, and there is a plan to recruit more judges in the new year.

--- Later in debate ---

[Justin Madders]

A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.

Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.

New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.

To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.

New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.

Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.

[Greg Smith]

I am grateful to the Minister for that comprehensive outline of clause 1 but, as I reflect on our debate over today’s two sittings on the amendments to clause 1—the Government amendments that now form part of clause 1 and the Opposition’s substantive amendments, which were not accepted, and our probing amendments, which did not produce the answers we were looking for—I remain concerned that, putting aside some of the noble intentions beneath the Bill, there is still the lack of clarity we have spoken about regarding so many areas of clause 1.

The Minister himself admitted earlier that some things are still to be consulted on and that others are yet to be brought forward through secondary legislation. I am afraid that just does not cut it for businesses up and down the country that are still struggling with the aftermath of covid, the invasion of Ukraine and so many other factors. They need certainty. They need to know, if the rules of the game are changing, exactly what they are changing to—not some ballpark or some in-principle movement towards, but precisely the rules that they are being asked to play by.

Businesses will, of course, comply with any legislation passed by this House and this Parliament, but this provision is an unreasonable ask of them, whether in respect of what would constitute a low-hours contract, fixed-term contracts for qualifying workers or agency workers, or the exact definition of the reference period. It is simply an unacceptable proposition to those who run businesses, particularly, as multiple parties have said today, small businesses, be they microbusinesses or medium-sized enterprises—I fully accept that we can debate the exact number of employees that constitutes a small or medium-sized enterprise.

I recognise many of the good points the Minister made in his speech, and there are many things that we in the Opposition can get behind—at least in principle, if not in the precise lettering of the detail—but the lack of clarity, the Henry VIII powers in some parts and the “still to consult” parts in others make it very difficult for the Opposition to support clause 1 as it currently stands.

As I said earlier, we want to be a constructive Opposition. We might not agree with the Government’s standpoint on many things, but it is important for the United Kingdom that they succeed in their endeavours and that they do not provide an environment in which there will be fewer jobs, not more, with businesses being more reticent to take on new members of staff. That goes particularly to the points around how people who are deserving of a second chance in life, no matter what has happened to them before, may not get that opportunity because it is too big a risk for small businesses that are struggling to get around all the new regulations, rules and laws.

I particularly highlight again the point about small businesses just not having the capacity to deal with new regulation. As has been said, they do not have HR departments or in-house legal services, and they cannot necessarily afford to hire them in if they are to continue producing their products or selling their services to the great British public, or wider than that. I urge the Minister to go back to the Department, focus on where the detail is lacking and put an offer to the House and the wider country. Our business community need not necessarily agree with it, but they should be comfortable that they can understand it and put in place the measures for their employees and businesses. To ensure their growth and success, they desperately require certainty.

--- Later in debate ---

[Greg Smith]

I am grateful for the intervention. On the hon. Gentleman’s first point, yes, of course there are insurance policies that many businesses will take out. But the example I just gave is one I can see affecting many businesses in my own constituency; there is a strong furniture making heritage around Prince’s Risborough in Buckinghamshire. There are very small businesses that do an incredible job and make some fantastic furniture, but they are microbusinesses with only a couple of employees and they operate on tight margins. They would not necessarily be able to bake the additional cost of a very expensive insurance policy into their bottom line without significant pressure on their overall business.

I accept that I am not talking about every or possibly the majority of businesses; my point in the amendments is that some circumstances might need a more sympathetic ear. In such cases, it could be argued reasonably and sympathetically that businesses in such a sticky spot would be unable to meet the requirements that the Bill sets out. Supply chain problems are just one example.

I take on board the second point made by the hon. Member for Gloucester, although, as I said in one of the earlier debates, I was self-employed for 15 years before entering this place in 2019. Some clients varied every month their requirements of the services that I provided back then. It was frustrating: nobody wants to be in that position, but it is sometimes a business reality, particularly if the ultimate client is struggling for whatever reason—their supply chain or the fact that they are just not doing very well so they need to throttle service provision up and down. I know that my example is not the same as that of a direct employee, but sometimes business needs a sympathetic ear.

To come back to my earlier point, nobody wants people not to be in a secure employment environment. Sometimes, however, things happen in businesses. Businesses in the automotive sector have shed quite a lot of jobs in recent weeks—look at Stellantis and Ford. Sometimes these things happen. With greater flexibility, perhaps more jobs overall can be saved in the short, medium and long terms, rather than having in every circumstance rigid rules that do not allow businesses that flexibility. I suggest that most people would want jobs to be saved rather than lost through that level of rigidity.

I will continue with my questions to the Minister about these probing amendments. In the furniture company example that I gave, what notice would an employer have to give? What do the Government expect an employer in such circumstances to do? From the hefty number of amendments that the Government have tabled, it looks as though small businesses are going to have to pay those employees for hours not actually worked; and even this will be through no fault whatever of the actual business in question.

Given that the Regulatory Policy Committee has flagged the risk that employers, often in fluctuating demand sectors such as hospitality and retail, may respond by scheduling fewer shifts to avoid penalties for cancellations and the consequential lost output to the economy, I would be grateful for the Minister’s appraisal of whether the provisions on short notice cancellations will support or inhibit the Government’s aim of actually achieving economic growth.

[Justin Madders]

I am grateful for the shadow Minister’s amendment. If it is a probing amendment, he has asked a lot of reasonable questions. There are, of course, things that we will be hoping to address today and during the passage of the Bill—and, indeed, the subsequent regulations.

The first thing to say is that we do not believe that it is right at this stage to put the time into the Bill; we want to give ourselves flexibility to respond to how the issue works in practice and to changing circumstances by doing that in secondary legislation. However, the hon. Gentleman has asked a perfectly reasonable question: who are we trying to help? What is our purpose?

Our purpose is to try to help those people who simply do not have that security in their lives at the moment. Research from the Living Wage Foundation suggests that 25% of insecure workers have had their shifts cancelled unexpectedly, with 88% receiving less than full shift compensation. Many workers receive their shift schedules without reasonable notice, and that prevents them from being able to effectively plan their work, social lives and other responsibilities.

Living Wage Foundation data found that in quarter 2 of 2023, 78% of workers received less than two weeks’ advance notice of shifts, with 5% of workers receiving less than one week. That can disadvantage workers’ ability to effectively plan their future income, particularly when that relates to budgeting for regular outgoings when shifts are cancelled, moved or curtailed at short notice. The impact on workers can include an increased reliance on debt and an inability to forecast income or find substitute work, childcare expenses and, on some occasions, travel expenses. Such implications represent the sort of one-sided flexibility that we are trying to deal with.

Evidence suggests that the income insecurity premium could be worth as much as £160 million per year, but the issue is really going to be about that benefit targeting businesses in the right way. We believe that good management practice can deal with an awful lot of this without the need to resort to legislation.

--- Later in debate ---

[Justin Madders]

As the hon. Member will know, the total cost to businesses from the Bill, as set out in the impact assessment, is about 0.4% of total employer costs. We absolutely acknowledge that there are many good employers out there who do this already, and we hope that there are many employers who do not who will feel that it is a positive once the legislation comes in. We want to take them on that journey and inform them why this is a positive thing and a benefit for their workforce. Importantly, they will see that the playing field is levelled and hopefully be able to compete more ably with others who might in the past have undercut them. But part of that will be making sure that they have access to good advice, good support and a guiding hand to make sure that the clear policy outcomes we want to see from the Bill are actually delivered. On that note, Mr Stringer, I ask the shadow Minister to withdraw his amendment.

[Greg Smith]

I remain very concerned about some of the real-world applications. I accept that it will have a negative impact in a minority of cases. The purpose of our amendment, as I said, was to probe the Government, so I am happy to confirm that we will withdraw it.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Justin Madders]

I beg to move amendment 24, in clause 2, page 13, line 42, leave out

“from what time on which day”

and insert

“when the shift is to start and end”.

This amendment requires notice of a shift to include when the shift is to end (as well as how many hours are to be worked and from when).

[Justin Madders]

I am afraid we are back into some of the more technical minor amendments, on which I will not detain the Committee too long.

Amendment 24 will ensure that employers have to give reasonable notice of not only when a shift starts and how many hours it will be worked, but also when it will end. The Government’s intention is to avoid a scenario whereby a worker is notified of the start time and total duration of a shift, but does not receive reasonable notice of whether those hours will be in a single block, or whether there may be a large break.

The current drafting would allow an employer to specify that a worker is required to work, for example, for three hours from 9 am on Friday, without specifying whether the shift will be from 9 to 12, or from 9 to 10 and then again from 12 to 2. In either scenario, the notice would meet the requirements to be a notice of the shift. The amendment closes this potential loophole. Some of my own children have gone into work and then been told to go and have a two-hour lunch break—unpaid. We clearly want to avoid that through this amendment.

I turn briefly to Government amendments 25 to 27, which will ensure that workers are entitled to reasonable notice where an employer cuts working hours from the middle of a shift as well as from the start or end. The current drafting would arguably allow employers to reduce the number of working hours in the middle of a shift without giving reasonable notice. The amendments close that loophole, ensuring that workers have to be given reasonable notice if an employer decides to change the hours of a shift by reducing the hours in the middle.

[Greg Smith]

I will be brief in my response to these Government amendments, which make the requirement for the right to reasonable notice of cancellation or changing of shifts more onerous. I spoke to these principles during our debate on the previous set of amendments in my name, but I ask the Minister gently now, why were these provisions not included in the Bill on introduction? Was it an oversight? Will there be a repeat of the line, “It was the intention but we just didn’t do it”, or is it something else? I would be grateful for clarification.

As I argued during the debate on the previous set of amendments—this point is relevant to this set too—why are these amendments so necessary? Does the Minister really think it a proportionate burden to place on businesses, particularly in those cases where there will be fair and reasonable grounds for a business not needing to provide notice of a change in shift to an employee? What assessment have the Government made of the cost to businesses, given that they will now essentially have to pay for work not done, without recourse to force majeure provisions or whatever it might be—where it is genuinely not their fault that they cannot provide the work to their workers for whatever reasons? Force majeure is a well-established principle in all sorts of sectors across the world.

I urge the Minister to consider carefully how he can ensure that out-of-control eventualities are looked after in the Bill; otherwise I fear it will create a scenario where particularly the smallest businesses—those one, two or three-employee businesses—are placed in a very difficult financial position. I cannot believe that the Government believe that is the just and right thing to do, and that they could not come up with some other safeguards to protect those microbusinesses—those small enterprises—that might find themselves in a sticky spot.

--- Later in debate ---

[Justin Madders]

I will not detain the Committee too long, because it feels like we have had the clause stand part debate already. I will briefly go through the provisions of clause 2, which creates the right to reasonable notice of shifts. As I set out when we discussed clause 1, we must tackle one-sided flexibility. Guaranteed hours is an important part of that, but we must also ensure that workers have reasonable notice of their shifts, so that they are enable to effectively plan their work and personal lives.

If someone’s shift is moved but their pay is less than the cost of the babysitter, that is obviously a negative. If someone is offered a last-minute shift but it is 60 minutes away by bus and they have no car, they should not be penalised or have a black mark put against them if they are not able to take it up. We can do better than this. We want to establish a more balanced partnership between workers and employers, and we hope to do that with clause 2. It will still allow employers to make changes to shifts, but it will also provide incentives for employers to meet the standard of the best employers, encouraging better planning and engagement with their workers. These provisions to introduce a right to reasonable notice of shifts and to changes in them are a small but important step towards making the lives of many shift workers and their families feel a little more secure.

Clause 2 creates several new sections in the Employment Rights Act 1996. New section 27BI outlines the duty that will be placed on employers to give reasonable notice of shifts. That duty will apply to workers on zero-hours contracts and arrangements, as well as workers on other contracts that will be specified in regulations but are likely to be low-hours contracts. New section 27BJ specifies that employers must also give reasonable notice of any moves or changes of shifts. New section 27BK notes that, as for other sections, agency workers are not covered by this measure—new section 27BV provides a delegated power to make corresponding or similar provision in relation to agency workers. In addition, section 27BK specifies that workers are not entitled to reasonable notice of shifts that they themselves suggested they work. For example, they would not be entitled to reasonable notice of overtime that they themselves had suggested. That right does, however, apply where the employer agrees to a suggested shift and then later changes or cancels the shift. Finally, the section contains a power to make regulations about how the notice should be given and when it is treated as being given.

New section 27BL explains that, where an employer is required to make a payment to a worker because the employer has cancelled, moved or curtailed a shift at short notice, the worker cannot get compensation for lack of reasonable notice for the same cancellation, movement or curtailment. New section 27BM enables workers to complain to employment tribunals that their employer has failed to comply with the duties to give reasonable notice. New section 27BN provides that tribunals must make a declaration where they find for a complainant and may award compensation they consider appropriate to compensate the worker for financial loss suffered as a result of the failure to give reasonable notice. This compensation will be capped in regulations and, in line with common law on recoverable damages, compensation will also take account of the duty on the claimant to mitigate their losses.

[Greg Smith]

I will not detain the Committee for much longer because, as the Minister said, it felt as though we had the debate on the whole clause during the debates on the amendments. I reiterate my concern about some of the provisions in the clause. Although I accept that the Minister said that, further on in the Bill, there is provision for force majeure measures to be introduced, there is a gaping hole for those emergency, unexpected, out-of-control circumstances, and this clause fails to fill it. However, we will almost certainly return to that on Report, so we will not press the clause to a Division.

Question put and agreed to.

Clause 2, as amended, accordingly ordered to stand part of the Bill.

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

Employment Rights Bill (Fifth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Greg Smith]

It is a pleasure to serve under your chairmanship, Ms Vaz, on this bright and breezy December morning. It will be the new year by the time we finish our consideration of the Bill—let us see whether we are all as fresh after Christmas as we are today.

I shall briefly talk through the Opposition’s rationale for each of the grouped amendments. The lead amendment, amendment 137, seeks to exclude small and medium-sized enterprises from the Bill’s provisions on zero-hours contracts. The amendment is part of a set of amendments in my name intended to ameliorate the burden of the Bill for small and medium-sized businesses, defined as those with 500 or fewer employees.

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Will the shadow Minister give way?

[Greg Smith]

I know where the Minister is going.

[Justin Madders]

I refer to my registered interests and my trade union membership.

The shadow Minister might well have anticipated my question. Obviously, we acknowledge that the Bill is being brought through at good pace, which means that sometimes mistakes occur. I cannot help but notice that the amendment on today’s paper is slightly different from the one that appeared in previous weeks, which excluded businesses with 500 or more employees, rather than 500 or fewer. Will he clarify whether he is seeking to cosy up to big business or that was indeed an error?

[Greg Smith]

I am almost grateful for the Minister’s intervention. He was very perceptive to note the minor clerical error in the amendment that was previously submitted. That has now been corrected. Of course, the Conservative party stands with all business, but particularly with small and medium-sized enterprises, which, I can clarify for the record, we define as those with 500 or fewer employees.

The Regulatory Policy Committee has rated as red the identification of options and the choice of the policy in the Bill on zero-hours contracts and guaranteed hours. That means, in effect, that the Government have not justified the provisions in the Bill, the problem they are trying to solve, why they are needed or why they would work. The provisions on zero-hours contracts will create additional burdens on all businesses. The Opposition are particularly concerned about smaller businesses, which have less resource and resilience to cope with the measures: they do not have large HR or legal departments to help them navigate the additional requirements that will be placed on them. The Institute of Directors told us in its evidence that

“crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 11, Q4.]

I am confident that the Minister will try to refute these points and somehow paint the amendment as creating a two-tier workforce, which it would not. I urge the Government to recognise the bureaucracy burden and risk that the zero-hours contract provisions will create for smaller businesses in particular. Providing for guaranteed offers of hours after 12 weeks would create a lot of additional administration for our small and medium-sized enterprises. I gently ask the Minister how credible he thinks it is that employees will reject offers made and that the process will have to start all over again.

Amendment 138 is similar to amendment 137 in what it seeks to do, but excludes small and medium-sized enterprises—again, defined as those with fewer than 500 employees—from the Bill’s provisions on flexible working requests. The RPC has said that the Government have presented “little evidence” that employers are refusing requests for flexible working unreasonably. When I talk to businesses in my constituency, I do not come across any complaints that flexible working is being refused unreasonably; I find many businesses that have, certainly in the post-covid era, made huge offers to their employees of working from home, mixed hours and working around the school run, or whatever it might be. It does not seem to me to be a particular problem in most businesses that I speak to. I want to give the Minister the opportunity to present some of his evidence for the necessity of these provisions. What led to the decision that these flexible working clauses are needed? If they are not, I urge the Government to accept our amendment to exempt SMEs from them.

--- Later in debate ---

[Greg Smith]

I am grateful to the hon. Gentleman. I will not seek to mislead the Committee by saying that I am across the Presidents Club case, but I am aware of the Manning case. Undoubtedly there are holes in the law, because harassment does take place in workplaces and outside workplaces up and down the land. Conservative Members categorically want that stamped out and want those guilty of those offences to face justice. However, as we go through the Bill line by line, we need to ask ourselves, “Does this proposal work, or are there other laws—criminal laws if necessary—to ensure that the authorities have the absolute ability to bring such prosecutions and ensure that those guilty of these horrible crimes are brought to justice?”

Amendments 141 and 142 are part of the set of amendments around ensuring that SMEs are not given undue burdens. These are about excluding employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed. RPC, which has had a lot to say about the Bill, has said that the day one unfair dismissal rights are estimated to cost businesses around £43.2 million per year.

[Justin Madders]

The shadow Minister may be familiar with this line of questioning, because it is basically the same issue as earlier. I may have misinterpreted the way that amendment 141 interplays with the Employment Rights Act 1996, but the amendment refers to

“an employer with 500 or more employees,”

although the explanatory note then says 500 or fewer. Will the shadow Minister clarify what the intention is?

--- Later in debate ---

[Justin Madders]

I am grateful to the shadow Minister for clarifying that this is a probing amendment, and possibly also that it is a ridiculous amendment, although I am not sure that that is the best way to persuade us to accept it. He will not be surprised to hear that we will not accept it.

An important point has been raised, and my hon. Friend the Member for Worsley and Eccles has asked a number of questions about what the amendment is trying to achieve. As I understand it, the amendment would mean that only workers on zero-hours contracts or arrangements, and those with two hours or fewer guaranteed per week, would be covered by the regulations. It would also remove the power to make regulations setting the maximum number of hours for those low-hours contracts to be in scope of the provisions.

The low-hours concept will be crucial in determining how many workers end up in scope of the right to guaranteed hours. That is partly intended as an anti-avoidance measure, to prevent employers from avoiding the duty to offer guaranteed hours by moving a worker on to a contract guaranteeing a very small number of hours. I think we can all see that, if the shadow Minister’s amendment were accepted, we would soon be talking in the lexicon about two-hours contracts, rather than zero-hours contract, and that would not deal with the questions of stability and security that we are trying to address.

We will consult on what we mean by low hours. We think it is very important to get this point absolutely right, and we understand that pitching it at a level that works for both the business and the worker will be absolutely critical. We are committed to working in partnership.

We are looking to clarify the provision in regulations. We understand that there are arguments about the detail being in the Bill, but the counter-argument is that putting the details in regulations gives us more flexibility to review the provisions as we move along. It is fair to say that we do not expect the number to end up being two hours. I do not think there has been any evidence put forward for that.

[Greg Smith]

As I said to the hon. Member for Worsley and Eccles, sometimes something a little obscure is needed in order to get noticed and to get an answer.

There is a serious question on what constitutes a low-hours contract. The Minister has just said he will consult, but presumably he will consult on a range—the consultation document will not be a blank piece of paper inviting people to say exactly what they think. What is the range in which the Government believe a low-hours contract should be defined, which will be within that consultation he has promised?

--- Later in debate ---

[Justin Madders]

The hon. Gentleman asked so many questions that I did not have a chance to make a note of them. A lot of the issues he raised will be dealt with by amendments that we will debate today or later in the Bill’s passage, but I take his points. We are trying to legislate in a way that prevents unintended consequences and loopholes. I would say to the shadow Minister, “Watch this space,” and encourage him to take part in the consultation, but we cannot accept his amendment.

[Greg Smith]

It is no surprise that the Government are unwilling to accept the amendment; it is a probing amendment, so we would probably have been quite upset if they had. The fundamental point I still want to get at, while making clear the probing nature of the amendment and that we will withdraw it, is that while I am half reassured by the consultation, it is critical that there is clarity and definition for businesses out there that want to understand what is coming down the line in this piece of legislation. Everyone knows the parliamentary arithmetic at the moment; this will become law at some point during this Session.

While it is never an ideal scenario to legislate first and consult second—it is far better to do it the other way round—we need greater clarity, as soon as is humanly possible, on how the Government intend to define low-hours contracts as they go to consultation. I cannot accept that there will not be some floor and ceiling within the range that the Government seek to consult on, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Greg Smith]

I beg to move amendment 152, in clause 1, page 3, line 2, after “not” insert

“on a fixed-term contract or”.

This amendment will exempt a worker on fixed-term contracts from being categorised as a “qualifying worker”.

This too will hopefully be a relatively straightforward debate. The amendment seeks to exempt workers on fixed-term contracts from being categorised as qualifying workers. This is a probing amendment in my name, on behalf of the official Opposition. We would like to understand why it is proportionate, particularly for small and medium-sized enterprises, for the provisions on guaranteed hours to apply to workers on fixed-term contracts, given that we still do not know the length of the reference period. Is it proportionate for a business to have to make an offer of guaranteed hours to a worker whose contract will in any event come to an end just after the reference period? In last week’s evidence sessions, some witnesses talked about workers who are perhaps on a very specific construction project with a definite end point—when the railway station is built, there is nothing left to build on that project—so it is not possible to escape the fixed-term nature of some contracts. Without knowing the length of the Government’s proposed reference period, it is impossible to make a judgment on the effect of extending guaranteed hours to workers on those fixed-term contracts. I should be grateful if the Minister would provide clarity on that, so that this probing amendment can be put to bed, or further questions can be asked down the road.

[Justin Madders]

The shadow Minister will not be surprised to hear that we will resist the amendment. First, it is important to note that the Bill does not ban the use of fixed-term contracts, or seek to force employers to make workers on fixed-term contracts permanent. That is not our intention. We recognise that in some cases, a fixed-term contract will be the most appropriate one for both worker and employer. For example, under the Bill’s provisions, it would be reasonable to enter into a limited-term contract where the contract is entered into for the worker to perform a specific task, and the contract will end once that task is completed. Many fixed-term contracts also already have clearly stated guaranteed hours within them.

However, where a fixed-term contract is used, we think it is important that within that fixed-term period, workers have the same right to guaranteed hours as those on permanent contracts. For eligible workers, if the fixed-term contract does not guarantee more hours than what are considered to be low hours as set out in the regulations—which we will come to in due course—and is longer than the anticipated reference period of 12 weeks, which we will continue to work on, then employers will be required to offer a guaranteed-hours contract for the remainder of the contract, reflecting the hours worked regularly over the reference period. The amendment would create a serious loophole in the legislation, allowing employers to use fixed-term contracts to evade the purposes of the legislation entirely. There would be no mechanism to prevent the use of a fixed-term contract for 12 weeks or longer, so eligible workers would not have certainty of their hours. We would open up a serious loophole, which I am afraid unscrupulous employers would exploit. I therefore ask the hon. Member to withdraw the amendment.

[Greg Smith]

I accept the points made by the Minister, but I still think there is a relative concern. We in no way, shape or form want to create loopholes—certainly not for any unscrupulous employer, and I want that to be very clear and on the record—but we do totally accept that there are some very legitimate fixed-term contracts out there, such as certain construction projects.

[Justin Madders]

indicated assent.

[Greg Smith]

I hope, from the nodding coming from the Government Front Bench, that Ministers agree with this. We will withdraw the amendment, but this point needs considerably more debate as the Bill progresses to ensure that while no loopholes for the unscrupulous are created, and that protections are there for employers around fixed-term contracts.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Greg Smith]

There are just a couple more Opposition amendments to go before we get to some Government ones. Amendments 150 and 151 propose to exclude agency workers from the provisions on the right to guaranteed hours. The provisions in the Bill relating to agency workers are another example of the Government’s not having done proper policy work before introducing the Bill. I fully understand their desire to get it out within 100 days, but sometimes, if a Government have a mandate for five years, 100 days can seem quite quick.

The Bill specifies that the right to guaranteed hours with reasonable notice of the cancellation of a shift does not apply to agency workers, but it includes a Henry VIII power to extend those provisions to agency workers at a later date. I therefore ask the Minister the following questions. Why is it not straightforwardly on the face of the Bill that those provisions apply to agency workers? Why the Henry VIII power? What is the policy decision? In the Government’s mind, are agency workers included in the principle, as well as the letter, of this legislation? We have concerns about these provisions, which could be extended to agency workers. How would the employment relationship then work? Who would dictate the hours? If it is the end user rather than the agency, surely they become the employer? It all becomes rather confusing.

Is this measure an attempt to ban agency working by the back door? I think everyone would accept that agency workers are sometimes some of the biggest heroes in our economy, as they fill gaps when full-time workers on contracts are unable to get to work that day, for whatever reason—be it sickness or anything else—particularly in key professions such as nursing, healthcare and teaching.

Until the Government can explain their intention, the Opposition do not believe it is responsible for the House to give them the powers to entirely change at a later date the policy position set out on the face of the Bill. We need clarity right now, so that this Committee, and the whole House later in the Bill’s progress, can come to a proper, informed decision.

[Justin Madders]

I am grateful to the shadow Minister for tabling these amendments. He will again be unsurprised to learn that we will not be accepting them.

The Bill fulfils our pledge to end exploitative zero-hours contracts. We are introducing a right to guaranteed hours to eligible workers on zero and low-hours contracts, to give them the greater security and stability that all workers deserve. Although workers may choose agency work because they value flexibility, they can also experience the one-sided flexibility and insecurity that we have talked about already. If we do not include a power to include agency workers, there is a risk that employers wishing to evade the Bill will simply shift their workforce on to agency work to avoid giving them rights.

--- Later in debate ---

[Justin Madders]

I am grateful to my hon. Friend for his intervention. Much employment law, particularly in relation to agency workers, is dealt with by regulations; that is appropriate because of the detail required. It is not a break with the past, albeit I accept the criticisms that we may be seen to be taking part for ourselves; I think it is entirely consistent with the way this has operated previously. It is something that we shall now consider in terms of the responses to the consultation. For those reasons, I think the hon. Member for Mid Buckinghamshire should withdraw his amendment.

[Greg Smith]

I accept many of the Minister’s points about the consultation, but as my hon. Friend the Member for Bridgwater has made clear, there is a Henry VIII power here. When legislation as wide as this is proposed, it is a big problem to have such a lack of clarity about where it will lead for agency workers, who are such a critical part of our economy and our workforce across many sectors. Given the Henry VIII element, we seek a Division.

Question put, That the amendment be made.

--- Later in debate ---

[Justin Madders]

I am grateful to the shadow Minister for intervening, but there is not a total lack of clarity. We have been clear all along, including when we were in opposition, that the reference period should be 12 weeks. However, we want to continue dialogue with businesses to ensure that we get the right answer to the question of how long the reference period should be for guaranteed hours. As we heard, it is an established period that has been used in the previous Government’s legislation, in the workers’ predictable terms and conditions provisions and under the Agency Workers Regulations 2010. It is an established principle in law that 12 weeks is about right for a reference period. Nevertheless, we will continue to consult and engage with businesses, trade unions and all employers’ organisations about whether it is right.

At the moment, our considered view is that 12 weeks is the right period; we certainly do not believe that 18 months is. [Interruption.] I think the shadow Minister is nodding. We do not think that 18 months is a realistic proposition. I understand the point about seasonal work, but 18 months would take us through half a dozen seasons. He will probably accept that that would not necessarily work.

As for why this measure is needed, the shadow Minister said that the Opposition do not presume that all employers set out to exploit their workforce. I make it clear that the Government do not presume that either; we believe that good businesses are good for their workers and good for the wider economy. We heard plenty of witnesses give evidence last week about the good industrial relations that they practise and the benefits for their workers. The point of the Bill, however, is that we know that not everyone is a good employer. We need to weed out bad practice, because we believe that all workers deserve the same protections in the economy.

The shadow Minister asked whether zero-hours contracts will still be available for those who might not want to work guaranteed hours. He will be aware that the legislation does not compel an individual to accept an offer of guaranteed hours; it has been set up in that way for the individual. There are examples of people—possibly including my hon. Friend the Member for Gloucester in his earlier years—whom zero-hours contracts suit better. If that is what he genuinely wants to continue working on, he is entitled to do so.

The hon. Member for Chippenham asked about the speed at which we are operating. I think she wants us to go faster, so she might need a word with the shadow Minister, who wants us to go a little slower. We are clear that we will take our time before we introduce a lot of the provisions, because we want to get the detail right and we want to engage with businesses. An awful lot of the press coverage is understandably raising anxiety levels, but a lot of it is based on speculation rather than on the law, because the law has not yet been set: the Bill has not been passed, and the regulations and the codes of practice that will follow have not been produced. It is important that we take our time, because we want to work with businesses as we produce information going forward.

The hon. Member for Bridgwater made a point about seasonal work that we heard on various occasions during our evidence sessions, but I think my hon. Friend the Member for Gloucester has answered it: if an employer knows that they will be busy for particular parts of the year, a fixed-term contract is the answer.

On the question of business experience, I can claim to have set up my own business when I was 17—I am not saying that it was a FTSE 100-listed effort or anything—and before I was elected I worked in the private sector for 20 years.

We do not think that the shadow Minister’s amendment would deliver the policy outcome that we seek. I suspect he recognises that, too, so I invite him to withdraw it.

[Greg Smith]

Of course we will withdraw the amendment, but the critical question is why the Minister has referred to 12 weeks, but it is not in the legislation. As he considers tabling amendments of his own in Committee or on Report, I urge him to lock that in, so that certainty for business is on the face of the Bill, rather than things being left open.

--- Later in debate ---

[Justin Madders]

If we put 12 weeks on the face of the Bill, would the Opposition support it?

[Greg Smith]

Our own legislation last year cited 12 weeks. There is clearly a lot in the Bill that we oppose because we just do not think it works in the interests of British business or workers, but 12 weeks would at least give us some certainty that would be consistent with the previous Government. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Employment Rights Bill (Fourth sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Greg Smith]

Q You mentioned the 20% unionisation rate. Do you have a target that you want to see?

Andy Prendergast: They key thing for us is that everyone who ultimately wants to join a trade union has the option to do so. It is important that people are aware of their rights, aware that they can join trade unions, and aware that they have a right to, for example, SSP on day one, statutory holidays and the minimum wage. Rights that people do not know about and that cannot be enforced are ultimately no use. This is shamelessly partisan, but I would like to see union rates being far higher, and I think that the economy as a whole would benefit from that.

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Q It is a pleasure to see you in the Chair this afternoon, Sir Christopher. Good afternoon, gentlemen. Generally speaking, do you think that the Bill will improve working conditions, particularly for those in low-paid and insecure work?

Andy Prendergast: I think the Bill is a major step in the right direction. One of the big problems that we have seen, certainly over the last 30 to 40 years, is the huge increase in insecurity in the workforce. That tends to have a massive impact on the individual concerned and their ability to fully partake in the economy, and to make long-term commitments through mortgages and loans—the kind of stuff that drives the economy. Ultimately, we have seen that as they have lost their guaranteed hours—in zero-hours jobs, for example—and there has been the removal of their employment rights, those people are less able to exercise those rights. So we see the Bill as a major way of moving industrial relations forward.

We would also point to the work around the pandemic. In the last 14 years, we were very much locked out of Government in most areas, yet when the pandemic came around, there was a fantastic bit of work between the CBI, the TUC and the Government, with Rishi Sunak standing on the steps of No. 10 talking about the fantastic work that led to the furlough scheme, which saved millions of jobs and millions of people from poverty. What surprised us is that that great work was then stopped virtually as quickly as it happened. If we look at other G7 countries, a tripartite system is what drives higher levels of productivity, lower levels of inequality, and ultimately, higher levels of investment and economic outcomes. We think that the Bill is a long overdue step in the right direction of moving some power back towards workers and away from businesses, too many of which exist for exploitation.

Mike Clancy: I echo those comments. If we look at the responses from the business community, yes, there is going to be some anxiety about the detail and how it will work—again, I reference my experience not just in ACAS, but from working with employers more generally—but we find ways to do this and operate in practice successfully. Good employers have nothing to fear in the Bill. That is not just good employers that are larger, and we think that with the right degree of consultation, which the Government have committed to, we will be able to address those areas where there are a few wrinkles and things to ensure work in practice.

We have to reflect on what the alternative was. The deregulatory, more de minimis approach to employment regulation applied previously, and if that trajectory had continued, we would not have addressed the issues of precarious work and productivity, and we would not have been able to do that in a way that looks at the workforce of the 21st century, as opposed to looking backwards.

There is a lot in the Bill, but that is not surprising. There will probably be a long period of adjustment. With the right consultation, I think we will get to a position where we look back at this as a milestone in changing how we do things, a paradigm shift in relations. I think that it will drive better engagement not just for unionised workforces, but for workforces more generally, because that is where employers will see that they can answer the challenges on the next generation of technology insertion and organisational design, and make sure that they can get the talent that they need.

--- Later in debate ---

[Greg Smith]

Q My final question is off the back of that. On Tuesday, Mick Lynch—let us name him—told us that the Bill will lead to the re-unionisation of the economy. Is he getting overexcited?

Professor Simms: We have to be realistic about the resource capacity of our trade union movement at the moment. There are certainly things in the Bill that will make life simpler for trade unions—not necessarily easier, but it will require less resource to, for example, organise for a ballot, or to organise a re-balloting during a period of industrial action. At best case, that frees up some capacity to get on with the nitty-gritty of representing workers in the workplace and solving workplace problems. I cannot prove that that is going to happen, obviously, but that is certainly more than possible. But will it free up sufficient capacity to try and organise in the breadth of the retail sector, for example—lots of small employers? Personally, I think that is unlikely. I do not think that the UK trade union movement has that resource capacity at the moment.

Professor Deakin: Historically, what drives unionisation and strike levels is the economy. High inflation drives strike action and tends to drive union membership. Union membership, union activity and strike activity are highly sensitive to the wider economic context, which at the moment probably does not favour a massive increase in union membership. I would be very surprised if this particular measure moves the dial much on membership, and I do not think it will move the dial much on industrial action either.

What could happen, especially with the arrangements for sectoral pay bargaining, is that many workers, whether or not they are in a trade union, would benefit from sector-wide collective norms. That would be the case where the arrangements come in for two sectors that are mentioned in the Bill, and hopefully that is just the start. Other European countries and many countries outside Europe have sectoral collective agreements that, in effect, set a floor for an industry or sector. I am not sure whether you would call that re-unionisation, but I think the coverage of collective agreements is perhaps more important than simple membership, although unions depend on membership for their finances. The economic effects will turn very much on coverage.

Professor Bogg: As I said, the reforms to strike law are fairly modest, and I think that is true of collective bargaining laws. There are two incremental nudges towards sectoral institutions in two sectors, and there are some very modest tweaks proposed to the statutory union recognition procedure—lowering the preliminary membership threshold, potentially, and removing the majority support likely threshold—but it is difficult to see. I do not know what re-unionisation means, I must confess, but I will be very surprised if you see a radical upsurge in union recognition as a result of these very sensible but cautious changes in the legislation.

[Justin Madders]

Q Just to aid the witnesses, it was the shadow Minister who used the term “re-unionisation” in the evidence session on Tuesday, rather than one of the witnesses. That may be why it is not something that is particularly resonating with you.

I want to ask you in particular, Professor Deakin, about the impact of the regulations on increased productivity and innovation—the general economic benefits. Do you think that that will have a positive impact on such issues?

Professor Deakin: I think so. The evidence internationally is that there is a strong correlation between stronger labour protection and both productivity and innovation. I think that sentiment in the research community has shifted very much in the past 20 years. That is partly because we have better data and probably better methods. Certainly, a generation ago, the World Bank was quite hostile to the idea of labour law and said that labour laws, in aiming to help workers, might harm them. That, however, is no longer the World Bank’s position. The World Bank has said that there can be too little labour law in an economy—too little protection for innovation and productivity.

Of course, productivity has many causes, and the way we regulate labour is only one issue. If we are talking about labour law, though, these reforms are essential to help improve the productivity position. Will this law on its own lead to an improvement in UK productivity? Not necessarily, because that depends upon how we regulate other areas of the economy, and that is affected very much by the way corporate governance works and also by training and other aspects that are not all covered by the Bill. But is this Bill essential in the area of labour law for improving economic performance? Absolutely. Does it go in the right direction? Yes, it does.

The research we have done in Cambridge, which I mentioned in my written evidence, shows that, on average, strengthening employment laws in this country in the last 50 years has had pro-employment effects, for various reasons. That is, as I said in my notes, not a predication or a forecast, but historically in this country, stronger labour laws are not associated with unemployment.

Professor Simms: Could I chip in as well and emphasise the point that Simon has just made about skills and training? Skills and training of managers—the professionalisation of managers—and of our workforce are really crucial ways of shaping productivity and innovation. They intersect very strongly with some of the issues in the Bill.

In general, the push to professionalise management of work—the managerial decisions—is a really important part of that more complex story that Simon has just spoken to. The signals through the law, but also through other areas of policy, to managers, organisations and employers about the professionalisation of their management are a really important thing that the state can do to support that general up-tick in productivity and innovation in general.

--- Later in debate ---

[Greg Smith]

Q I certainly recognise the picture you paint of Banbury; it is very close to my constituency and I am sure you have people from Buckinghamshire on your payroll. What modelling and projections have you done—on the presumption that the Bill becomes law and obtains Royal Assent at some point next year—on employment numbers in your businesses?

Luke Johnson: We are still grappling with the fallout from the Budget. There are millions of pounds of additional tax that some of my companies will have to pay, and a 6.7% increase in the national living wage, when average inflation is 2% or 3%. As for the idea that many businesses have already given deep thought to this new piece of 150-page legislation—when we already have such things as the Employment Rights Act 1996, the Equality Act 2010, the Health and Safety at Work etc. Act 1974, and many other pieces of legislation—I dare say that large companies have given it some thought, but most of the businesses I am involved with are not so big. I think they will wait and see what the final result is before trying to measure whether it leaves the business smaller.

With any piece of legislation like this, we have to remember that it is not just the current jobs affected, but the unseen jobs and opportunities that were never created. I urge you to look at the fact that, for the first time in many years, the number of businesses being created in this country has been falling or stagnant for five years. That is more or less the first time in decades. If we lose the full employment we have enjoyed and the enterprise economy that we have managed to create—I believe it to be much more fragile than some might believe—it will be incredibly hard to get back. Jobs do not just fall from the sky. They appear because companies are created by risk takers, and they take a risk with every job they create. Jobs only exist because they are helping that business to progress, and 80% of jobs are nothing to do with the Government—they are private sector. If you crush the private sector, you crush jobs. All the research shows that the single most important ingredient for a happy society is jobs. Without jobs, you do not have civilisation.

Michael Lorimer: Our turnover is in the public domain, so I can share it with you. We will probably turn over about £370 million this year. We are in a high-turnover, very tight-margin business, so if we make £10 million net, that is about the height of it. It is very difficult to estimate the increased cost of national insurance contributions and the national living wage, because not all the details are yet clear, but we think it will be somewhere between £1.5 million and £1.8 million. That is quite a big chunk out of our net profit.

We do not have a huge problem with it. We are a company that believes strongly in creating prosperity. The national living wage is something that our hearts have no problem with, because we would like to see people getting paid correctly, but we have to mitigate that. That is something that we just have to get on with. Our company has grown successively every year since it started 30 years ago, in top line, bottom line and people numbers.

I need to stress this again to you: the passion that we have is growth and job creation. When we see people coming into the business, working their way through it, earning more money, developing their career and prospering, that is what brings us the greatest joy of all. My concern, which I have to repeat, is that businesses smaller than ours—following on from Luke’s point, we were a small business at one stage—are going to find it very hard to get on that growth trajectory.

[Justin Madders]

Q Good afternoon. A number of witnesses, including many from the business community, have welcomed the intention behind the Bill to increase workplace protections. Do you feel that the current employment law landscape is too favourable to employees, too difficult for employees or about right?

Michael Lorimer: From my perspective, there is a pretty good balance between employer and employee at the minute. I am sure you could unpick that, and there could be cases for either side, but as somebody who runs a business in, quote unquote, a “fast-moving environment”—in fact, Luke Johnson’s business is much faster-moving even than ours—where you are focusing on driving your business and trying to get results, I think that there is actually a good balance. I am not particularly in favour of tinkering too much with it. That is my personal view.

Luke Johnson: I would slightly differ, in that I think some areas are increasingly onerous for employers. Increasingly, when I talk to entrepreneurs, they are looking to outsource, offshore or automate rather than employ people. Not all of that is legislation and regulation; post furlough and lockdowns, there is a vast amount of talk among employers and owners of businesses about workforce motivation. That goes back to a point that Michael made earlier about the number of people not in work who are of working age and able-bodied. I think this is an issue for society as a whole, and I think a happy society is one in which people are productively occupied.

I am surprised that you say that many employers want greater protections for their staff. They are very entitled to give them to them if they want. They do not need to rely on the Government for that; they can just give them better contracts if they want.

There are a number of concerning aspects to the Bill, which could be counterproductive if the objective is higher living standards. As I understand it, this Government’s priority is wealth creation, prosperity and jobs. Ultimately, although I do not believe that this legislation will be devastating to employers, I think it will be damaging for job creation and therefore counterproductive to wealth creation and to achieving higher standards of living.

--- Later in debate ---

[Greg Smith]

Q I appreciate that, from the perspective of the Department of Business and Trade, there might be a more clearcut answer, but from your perspective, Mr Kirkpatrick, given your answer earlier, do you think there is a high risk that the measures in the Bill could reduce the number of jobs in the UK economy?

John Kirkpatrick: The answer is that it is hard to tell. You have already heard evidence on that—I heard some of the evidence this afternoon and you have heard other evidence in other sessions—from others who are arguably better qualified to answer the question than I am. As I say, I encourage you as a Committee to encourage the Government to ensure that it thinks that point through carefully, as you consider the Bill, and to bear that advice in mind as you scrutinise it.

Margaret Beels: My office has not done that analysis and I would be guessing if I answered the question.

[Justin Madders]

Q May I ask you, Margaret, for your views on how the fair work agency might help in the enforcement landscape?

Margaret Beels: I took on this role in the expectation that there was going to be a single enforcement body, which the previous Government had referred to but did not bring about. I was strongly supportive of the creation of a single body and accordingly I am supportive of the creation of the fair work agency.

From my perspective, which involves looking at what has worked under the existing arrangements and what could work better, I went back and looked at the recommendations in the strategy that I most recently published, on 11 November, and it had 12 recommendations. I looked at them and considered how things are working out now under three bodies with different governance, different plans and different ways of doing things, and whether I think that under a fair work agency regime those things would be done better. A fairly quick assessment is that half of them would definitely be done better; the other things would probably be done much the same. The ones that relate to having a better joined-up approach, to greater efficiency and to better sharing of information among bodies are the things that I think the fair work agency will do a lot better.

Employment Rights Bill (Third sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Greg Smith]

Q There has been a lot in the media, and I have seen this in my constituency, about workers in retail and convenience stores facing unacceptable abuse. Shoplifting is particularly problematic in many places at the moment. Do you think that some measures in the Bill will add to the difficulties in recruiting to the sector, because people are that bit more nervous about coming face to face with an abusive customer or shoplifter?

James Lowman: There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.

There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.

I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Q Good morning, everyone. Like a number of other witnesses who have spoken, I think you are generally supportive of and positive about the impact of the Bill. Do you feel that it will help to raise standards across the board and create the level playing field that we are trying to achieve?

Claire Costello: As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.

Helen Dickinson: I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.

At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.

James Lowman: I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.

It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.

Helen Dickinson: So does sickness.

James Lowman: And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.

--- Later in debate ---

[Greg Smith]

Q On Tuesday, we heard a witness from a different trade union say that the Bill will lead to the re-unionisation of the economy. Do you concur with that assessment? If you do not, or perhaps even if you do, are there any areas in which your unions feel the Bill should actually be going much further?

Liron Velleman: At Community, we are confident that the Bill would represent a positive step for our existing members and would allow for greater coverage of trade union membership across the sectors we work in. For example, in the third sector or in education and early years—especially in early years, where, in some of the private provision of nurseries and early years settings, there is not currently as much trade union coverage—the Bill would make it easier for people to join a trade union and see the benefits of membership. On whether it would bring full unionisation of the economy, I am not sure it would necessarily go that far, but some of the onus is on trade unions to make sure that we are delivering, in a modern way, the best way for working people in this country to understand the benefits that they could receive by joining one of our unions.

Joanne Cairns: I agree with Liron. We have good relationships with a number of major employers where we are recognised. You heard earlier from the Co-op. We are recognised there and by a number of other major employers. However, across the retail sector, trade union membership is currently at around only 12%, which is a similar level to the rest of the private sector. Very often, the reason people have not joined a union is simply that they have not had the opportunity to find out about what a union does—nobody has ever asked them to join a trade union. We think that the rights that the Bill will bring in around access to workplaces will be particularly important. The Bill will also simplify the statutory framework around recognition, which is currently extremely burdensome and makes it very difficult for trade unions to gain statutory recognition, particularly with larger employers.

[Justin Madders]

Q Good morning. One of the issues the Bill is trying to tackle is the level of insecurity at work. Could you explain a little bit about how the current framework impacts your members in terms of insecurity?

Joanne Cairns: Across the whole economy, precarious employment is a major issue. There is clearly a need for policy intervention in the labour market. The TUC estimates that one in eight people are in precarious employment, and that has risen by 1 million people since 2011. It has risen nearly three times faster than secure employment. That is certainly backed up by what we see with our members. Living standards have fallen quite significantly, and the impact of insecure work on our members is significant.

Of our members, 40% tell us that they have missed meals to pay their bills, 73% cannot afford to take time off work when they are ill, 15% struggle to pay their bills every month, and more than half have told us that financial worries are having an impact on their mental health. The level of statutory sick pay and the three waiting days for it is an issue of major concern for our members, as is having contracts that do not reflect the hours that they normally work. We welcome the Government taking action in those areas.

--- Later in debate ---

[Greg Smith]

What do you base that on?

Nye Cominetti: Internationally, we can draw scatter plots of the employment level in a country and the extent of employment regulation, and basically those lines come out flat. You have some countries with very high employment and very high levels of regulation, and some countries with lower employment and high regulation, so there is no clear relationship with the employment levels across countries. That is confirmed by the OECD, which has done lots of detailed work looking into the impact of periods when countries have either rowed back on reforms or expanded them.

What we do see in the employment data is that when you beef up the reforms around dismissals for individual or collective workers, you tend to see lower hiring rates. So the rate at which workers move around the economy will probably slow down if you make it significantly harder for employers to fire workers, and that gives rise to potential implications for productivity growth. Now, I still think those effects will be small. When the Office for Budget Responsibility, in one or two years’ time, starts putting the numbers into its forecasts, I expect them to be very small indeed. My expectation is that the employment level will be very, very narrowly lower if anything.

To give you some sense of scale, the OBR said it thinks that the employer national insurance contributions bill will be about £25 billion, and that that would lower the employment level in this country by 0.2%. The DBT said that it thinks the direct costs of the measures, including sick pay, are in the order of magnitude of £5 billion. If you compare those numbers, that starts to give you a sense of the scale of potential employment effects that we are talking about. I am sorry not to give you a more exciting answer, but my best guess is that the impact on employment levels will be small.

[Justin Madders]

Q What is your assessment of the current landscape, in terms of security and income, for lower and middle-income earners?

Nye Cominetti: It is a good question. One of the ways that I like to think about this package of reforms is that it extends to low-paid workers the kind of everyday flexibilities and dignities at work that people in professional jobs such as me and you take for granted. It is not the case that all low-paid workers hate their job or face the risk of losing their job every week, but it is the case that they experience a higher level of insecurity than higher-paid workers do.

You can look at that in various ways. In recessions, low-paid workers are more likely to lose their job, so they face a higher risk of losing their job in downturns. They are also more likely to rely on statutory sick pay if they fall ill, so for many low-paid workers, falling ill comes with an income shock. That is not the case for someone like me: if I fall ill, I go home and pick up an online meeting or two if I can, but if I cannot, I will get paid as normal. That is not the case for many low-paid workers, so that is a real insecurity.

Obviously, there are zero-hours contracts as well. For low-paid workers, I think roughly one in 10 is on a zero-hours contract. For higher-paid workers—the top fifth in the hourly pay distribution—it is a vanishingly small number and very uncommon indeed. I am sure that you have heard plenty of evidence about the kind of impact on security that zero-hours contracts can bring to some—not all—workers.

The most illuminating statistic is probably that 2 million workers say that they are fairly or very anxious about unexpected changes to their hours of work. You might think that that is because that comes with not just an impact on their life—“I do not know which days I’m going to be working next week, and I have to make it work alongside childcare”—but a potential income risk as well. In many respects, the working lives of low-paid workers are less secure than those of higher-paid workers. My hope is that some of these measures will go some way to redressing that balance.

Employment Rights Bill (Second sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 26th November 2024 Public Bill Committees

[Greg Smith]

Q Mr Carberry, if I can come to you, looking at those you represent, what is it in the Bill that you think is right, wrong or needs amendment?

Neil Carberry: I will not repeat what Allen said about the aggregate cost of the Bill, but clearly it is an enormous piece of legislation, coming at a time when businesses—particularly consumer-facing businesses—have been through the pandemic, are carrying more debt and are struggling to drive the growth that the Government want. Among my members, as with many business organisations, the tone of the debate about the Bill was changed by the Budget. That was particularly around the shift on the threshold, which directly pushes up the costs of all of the people for whom an employer’s decision to hire is maybe more marginal. I associate myself with Allen’s comments on that.

More specifically, for those who are not familiar with it, our sector places 1 million people into new permanent jobs every year, but it placed 1 million people as temporary workers into workplaces today. So I come at this from the point of view of what do those people need to have good, positive, healthy working lives. Colleagues may remember the attempt to change the conduct regulations to allow agency workers to replace striking workers, which we opposed, because at the REC we believe in protecting temps and putting them in the right space.

The most important thing for our sector is the proposal to apply the same tests and rules on zero-hours contracts to agency workers as to directly employed workers. I will be really frank about that: there is a power in the Bill, we have been through the consultation, and we cannot see how any of the approaches in the consultation work. For some of the reasons that Allen has set out, agency workers are well protected. They benefit from the Employment Agencies Act 1973, from their own set of conduct regulations—the Conduct of Employment Agencies and Employment Businesses Regulations 2003, passed by the last Labour Government—and from the Agency Workers Regulations 2010.

There is a lot we can do to deliver the Government’s commitment to more certainty for agency workers—it is just not by applying the powers in the Bill. We fear that the Government are trying to avoid direct employers moving to agency to avoid the powers in the Bill. A few direct employers doing that is not worth damaging the employment prospects of 1 million people. For instance, if a supply teacher in a school has worked the autumn term to cover a sickness absence, and then the absent teacher comes back, we cannot see how giving that supply teacher a right to a contract from that school is good for the school or the supply teacher. Ultimately, we think that we will just see a move to using more overtime and lengthening the working hours of existing staff. That will be net negative for the workforce.

I think there are things that we can do on the zero-hours rules to protect agency workers, but it is not applying the proposals in the Bill. More generally, I think our members would say that the Bill feels a little undercooked in its thinking. I think it is a very quick Bill, and that there is quite a lot in it that employment lawyers and our members are looking at and thinking, “How would that work?” A classic example would be the collective consultation sections of the Bill. I do not think it is in anyone’s interests for large companies employing thousands of people to be stuck in perpetual collective consultation when they are shutting down one site with 20 people in it. That is just an example of one of the things that maybe need to be worked out through regulation—lots of this is in regulation—but we need to ensure that we are not putting up barriers to employment with the Bill.

[Justin Madders]

Q Mr Simpson, can I take you back to your traffic light? We will go to amber, because you mentioned the notice of shift as an issue in the amber section. I am aware from the UKHospitality workforce strategy that there is a general view that the hoteliers charter is a model of good practice, which does require reasonable notice of shift. Could you explain a little more what your concerns are on that?

Allen Simpson: It is more about the unknown. Again, reasonable notice is an important principle and there should be protections. I think that the challenge will be—I notice, by the way, from what I understand from having read what is, again, a complex and lengthy piece of work, that the Government are intending to leave it to case law and employment tribunal systems to figure out what “reasonable notice” means. In general, with different sorts of work, it is reasonable to say that there are different versions of what “reasonable notice” means. If I were going to go and work on an oil rig for three months, I would want more notice of a change of shifts than if I was going to work in the local pub. Therefore, I think it is partly about figuring out what the right starting position for notice is. It is partly about reflecting differences in things, such as whether it comes with a residential element; there are questions around that.

Then there are some practical things that I think will come out in the wash, but do need considering, such as shift swapping. What if two chefs say, “Do you mind covering Saturday, because I want to go out with my friends?” “Yes, of course; that’s fine.” Is that allowed, or can that decision only be taken outwith that notice period? There are also questions around other things. What if you put out a message saying, “There is a shift available; does anybody want it?” Have you made an offer of employment to everybody you have put that message out to? Is there a time after which you are not allowed to do that? One last thing: what if somebody agrees to move their shifts around—so you say on the Friday, “Do you mind coming in this Saturday and you can have next Saturday off?” “Yes, absolutely. Fine.” Is that acceptable?

Therefore, there are there are some practical questions about, first of all, the principle of different suitable notices of shifts depending on different forms of work, and about some practicalities, which I am sure are solvable, around the management of it.

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[Greg Smith]

Q We heard from witnesses in previous sessions that they worry that some measures in the Bill—on zero-hours contracts and some of the fire and rehire potential unintended consequences—will make some employers more reticent to take on a new hire, or to take a gamble on someone who might need a chance or second chance, or whatever it might be. Is that reflected in either of your sectors?

Jim Bligh: Unfair dismissal and the probation periods are a concern for us. Most of our sector uses three or six-month probation periods now. About 85% of our members have told us that that is what they will use. About 6% use 12 months. There would be, I think, a concern about a nine-month period—the reduction from two years. It is critical that performance management from day one does not put a significant burden on SMEs in particular, and it is important that we keep the flexibility. If something is not right for the employee and not right for the employer—that performance is not there, that quality standards or whatever are not met—there should be flexibility in ending that employment relationship, on both sides.

What concerns us about the Bill’s proposals is that young people or people re-entering the workforce—which rightly is a priority for Government as well, and I note that Liz Kendall is speaking about this in the House at the moment—could be shut out under the changes that are coming through in the Bill. Our proposal would be to revert to a 12-month probation period. Obviously, people automatically qualify for unfair dismissal on some elements. It is right that those elements are retained, but it is important to us that you keep that flexibility from 12 months, that you have a light-touch approach and a process there as well, but also that we have enough time to implement.

What concerns us is that we are talking now about changes that will come in, I think, in two years’ time—that is a commitment from Government. That period is welcome, but we are not certain what the final provisions of the Bill will be. There is a long commitment to consultation, which we also welcome. Our proposal would be to implement two years after Royal Assent, to make sure that that concrete security and guarantee is there and that the goalposts are not shifted for employees and employers as they start.

Jamie Cater: I would echo that and agree with those comments. Stepping back slightly to look at the bigger picture, it has become difficult for us, with members, to separate out the impact of the legislation and the impact of the autumn Budget—the increase in employer NICs in particular, but in general the tax burden on businesses. That, taken together with the measures in the Bill, increases the cost and the admin associated with taking on people. There is a risk that that disproportionately impacts people on the edges of the labour market, I suppose.

It is very welcome that the Work and Pensions Secretary is today talking about how to reduce economic inactivity, particularly focusing on skills and health. We really support that focus, but there is a danger that the measures in the Bill, combined with the total cost impact, will make employers less likely to take that risk on someone.

On the protection for unfair dismissal in the statutory probation period, we typically hear from members that the usual approach would be to have a six-month probation period in an employment contract. They might then have a bit of additional flexibility for someone who is a borderline candidate if they need to be kept on probation for a bit longer, perhaps if they need a bit more skills training, experience or additional guidance in something before a firm decision is made about permanent recruitment.

Members often talk to us about effectively a six plus three model, where there is a contractual six-month probation period with the flexibility for an additional three months’ probation if there is a bit of uncertainty. The Government’s stated preference for a nine-month statutory probation period feels about right. That is probably the minimum; we would not want to see it go any lower than that. I think our preference would be 12 months, just to give that additional leeway, but nine months is probably about right for what we see reflected in standard practice from our members.

[Justin Madders]

Q Good afternoon. I think you have generally been positive about the Bill, albeit with some caveats. How do you see the implementation of the Bill being of benefit to the businesses that you represent?

Jamie Cater: To come back to the impact of things like statutory sick pay, I think that will help with productivity and retention. We see a huge amount of feedback from member companies about their own investment in health and wellbeing, and the positive impact of that in keeping people in work, helping with productivity and reducing presenteeism. I think the measures on statutory sick pay will help with all those things, including reducing long-term sickness absence, reducing presenteeism and improving people’s productivity. I think all those measures are really positive.

However, what we need to be careful of, and what we are concerned about—going back again to the impact of the Bill alongside the autumn Budget—is that it does not reduce or restrict employers’ ability to continue to invest in all those other things that also improve productivity. We have heard concerns about impacts on training budgets, internal budgets for things like occupational health and wellbeing, and investment in technology and new machinery that can help workers to become more productive and efficient. There is a risk that some of the costs associated with the Bill and the autumn Budget mean that those internal investment budgets will be squeezed. There is an opportunity, through some of the measures in the Bill, to improve productivity and improve security for people in the labour market, but we need to ensure that some of those other measures are not undermining those benefits.

Jim Bligh: I agree with that as well, and I endorse everything that Jamie just said. I think that the statutory sick pay clarifications are particularly helpful, and the clarity on parental leave should be helpful too. Flexibility is also important, and we need to ensure that the flexible working practices that are already widespread in our sector, as I know they are in other sectors as well, are protected and clear. I think there are concerns that potentially outweigh some of those benefits, which we are very keen to explore with the Government through the consultation periods.

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[Greg Smith]

Q This is a question to all of you, off the back of the last answer. It was suggested during the last evidence session that this Bill does not go far enough. It is evident from the declarations made at the start of the sitting that the relationship between the trade union movement and the Labour party is symbiotic, so what more have you asked the Government to put into the Bill? Where do you want it to go further? Mick Lynch gave a very clear answer in the previous session. What are your respective unions’ greater asks of this Government?

Paul Nowak: Can I make a point first about the symbiotic nature of the relationship between Labour and the unions? We certainly have a shared history and shared values, and in some cases we have unions that are affiliated to the Labour party. The TUC represents those 5.3 million workers regardless of who is in government, and it does not have a formal relationship with the Labour party. Our job as trade unionists is always to want more and better for working people. I think it is important to recognise that this will be the biggest upgrade to workers’ rights in decades—I was going to say in a generation, but it is more than that. It will directly benefit millions of working people.

I came in at the end of the last panel, and Mick was talking about sectoral collective bargaining. The Government have indicated that the first fair pay agreement will be in social care. We would love to see that approach—those fair pay agreements—rolled out to other sectors of the economy. That is a point that we will make going forward.

It would be churlish not to accept that the Bill is a big upgrade to workers’ rights and to union rights. This will be the first time that a Government have repealed anti-union legislation in my 35 years as a union activist, and I think it is really important that they do. If we take the minimum service levels legislation as an example, we always warned that it would be unworkable. It was red-flagged by the Regulatory Policy Committee and by the Government’s own impact assessment when it was introduced, and not a single employer has ever used the legislation. We will be positive; there will always be more that we would like any Government to do on behalf of working people, but this is a really important piece of legislation.

Maggi Ferncombe: I agree. To be frank, as the largest trade union in the country, the political stripe of the Government does not matter to us; we will obviously do what we can to improve public services and the terms and conditions and salaries of workers in those public services. You asked what more we would want, but, to be honest with you, we want an extension of what is already in the Bill: the opportunity to have some sort of legal mechanism for collective claims. Individual workers, unions when they are involved, employers and employment tribunals spend hundreds and hundreds of hours trying to deal with individual claims from individual workers. An unintended consequence would be the savings to employers from not having to deal with individual claims that take years to go through tribunals. If there was an opportunity to have a mechanism to deal with it collectively, it would save everyone time and money, including employers.

Dave Moxham: We have a disproportionate number of zero-hours contracts in Scotland, probably because we have proportionally more small businesses as part of the UK economy. We welcome the moves in the Bill to address that. I heard the evidence given by the last panel, and from our perspective the majority of employers do not use them but they have an intensive impact. For the last 10 years, the STUC has run a campaign called BetterThanZero, which goes out daily and talks to these workers, who are predominantly, but far from all, young workers. The impact on their lives—ergo the impact on the economy because of their lack of stability, certainty and security—has a far wider effect than on just the individual and cannot be overestimated. When we look at the provisions currently in the Bill, we certainly believe that what defines a short-hours contract and some of the other things that have yet to be decided need to be quite strong. If you go on to the internet, you can already see discussions among employers about how they will circumvent the proposals, so that will be one area where we will be looking for strength.

Hannah Reed: There is an awful lot to welcome in the Bill, and I will not take up the Committee’s time by listing it. We can submit evidence to you on equality rights, trade union rights and so on.

Like all Committee members, I am sure, we are keen to ensure that the Bill comes out as watertight legislation that makes a real difference to people’s rights. There are some elements of the Bill where we would want to continue working with you as a Committee and with the Government to tighten up what we consider to be potential loopholes, and I will briefly name three areas.

The first is the provisions on fire and rehire. Unite’s concerns are that some of the uses of heavy-handed tactics by employers that we saw during the pandemic and since could still be lawful under this Bill. We are concerned that employers may be able to justify fire and rehire in certain circumstances, and our view is that there needs to be a total ban. We are not confident that the employment tribunals will look behind the corporate veil or question an employer’s arguments for why they needed to use fire and rehire tactics, so we do not think it goes far enough. Importantly, there is nothing in the Bill at the present time that stops the employer from sacking the workforce. While we welcome the Government’s consultation on interim relief, we, like previous participants. would like to see some measures before that that stop the employer and require them to open their books to demonstrate to forensic accountants that changes are needed, and to provide a genuine opportunity for negotiation with trade unions. We are very equipped; we know what needs to be done if changes are needed.

Secondly, we would like to see further measures in the Bill to extend collective bargaining. Very briefly, we recognise that there are important measures on statutory recognition in the Bill, but we would like the Government to consider going further, particularly to ensure that laws prevent the abusive practices seen in the recent Amazon campaign. We would also like faster routes to recognition. Workers often have to wait for six months and are repeatedly asked, “Do you want statutory recognition?” They repeatedly say, “Yes, we want statutory recognition,” but employers are given time to fight against the workers’ will. We think there should be a faster route to automatic recognition.

The last point I would raise is on access. I have already talked about the benefits of working people having the opportunity to meet with trade unions in the workplace, to tackle discrimination and press for better pay and conditions through negotiation. We would like to ask the Government to look at the access measures, to see if there are ways of having a default or free-standing right of access so working people have a genuine right to democracy and representation at work.

[Justin Madders]

Q Good afternoon, everyone. I want to start with a question to you, Paul. You have referenced this £13 billion benefit, which I think is from some recently published research by the TUC. Could you tell us a little more about what that will look like in terms of benefits to individuals?

Paul Nowak: The research was based on a very modest estimate, taken from the Government’s own suggestions that there would be improvements on things like productivity, reducing absenteeism and bringing back into the workforce people who currently find it difficult to access the workforce, for example because they have caring responsibilities or a need to balance work and family life. We assumed a 1% uptick across those measures —as I say, a very modest assessment—which meant £13 billion-worth of positive impact on the UK economy.

In many ways, this just reflects what already happens in unionised workplaces. One of the things I do as the general secretary of the TUC is to visit places up and down the country, large and small. Some of the most successful and most productive employers in this country —whether it is Airbus, Jaguar Land Rover, Rolls-Royce or, indeed, our largest private sector retailer—are employers who have close working relationships with trade unions and treat their staff with respect.

This legislation is really important, Minister, because it does what it says on the tin. It is about making work pay, and for far too many people in this country, work does not pay at the moment. We have a problem with low-paid, insecure employment, with over a million people on zero-hours contracts. Overwhelmingly, when you ask those individuals if they would like the right to guaranteed hours, poll after poll shows that 80%-plus say they would. When you play that out in practice—I know that the Work Foundation did some work with Wetherspoons. When Wetherspoons offered their staff a choice between zero hours and guaranteed hours, 99% of their staff took the guaranteed hours. That is good for those workers, but it is also good for employers, because workers who are securely employed, who feel good about their work and who are supported at work are more productive, and employers are more likely to invest in them. I genuinely believe that this legislation is win-win—it is a win for employees and workers but a win for employers as well, and it is good for the UK economy overall.

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[Greg Smith]

Q Thank you for being with us. Can you give us your view on whether the Bill goes far enough to combat the issues that you campaign on, particularly women’s rights at work? Where would you like to see elements of it amended, either to make it stronger or to get rid of things that might have unintended consequences, and are you concerned about any particular areas of the Bill either not delivering what they say they will or delivering something completely different?

Jemima Olchawski: At Fawcett, we really welcome the Bill. Overall, we still have an economy and workplaces that consistently disadvantage and exclude women. That means that they are much more likely to be on zero-hours contracts, to be in low-paid work and to be held back by a lack of access to quality flexible part-time work. Each of those issues is intensified for most black and minoritised women, and for disabled women. The situation results in serious consequences for individual women. We have a gender pay gap of just under 14%. On average, women take home just over £630 a month less than men. It also has a detrimental impact on our economy, because it is a marker of the ways in which women are not fully participating or contributing to the economy at their full potential. Estimates indicate that that means we are missing out on tens of billions of pounds of GDP.

We strongly support the measures as an important step towards redressing that balance. In particular, we are pleased to see the inclusion of equalities action plans as an important way to get employers to drive forward progress on the gender pay gap. We are glad to see the emphasis on the importance of flexible working and the day one right to statutory sick pay, which will have a disproportionate beneficial impact on women, as well as further protection from sexual harassment in the workplace. Some 40% of women experience sexual harassment at some point during their career.

There are areas where we would like to see additional inclusions or things going further. Flexible working is incredibly important for women who have caring responsibilities and continue to do the majority of unpaid care, and having access to flexible work is vital to enable them to progress and earn to their full potential. We would like to see a duty on employers to advertise jobs as flexible, rather than a situation where women have to wait until they are in a job before they can begin that conversation. You cannot move into a new job if you are not sure whether you will be able to replicate the flexibility that you have in an existing role. That leads to women being under-employed and their skills underused.

The day one rights to maternity, paternity and parental leave are important, but they have to be remunerated. There has to be a day one right to pay if we actually want people to take it. Particularly if we want men to take on more caring roles, we need to make sure we have a refocus on remunerated leave, and that includes parental leave. We welcome the fact that there will be a review, but we need to think about this as part of those measures.

I would like to see more around equal pay in the Bill. Measures could be taken that would support women to access fair pay, such as pay transparency and ending salary history questions. The last thing I would like to see more on is making sure that there is proper enforcement of those rights—that the enforcement bodies are properly resourced and have the teeth to ensure that the rights really hold.

Joeli Brearley: It is a big question that you have asked. I support everything that Jemima has just said. We are very supportive of the Bill, but I think there is a lack of clarity on some of the areas that we are particularly interested in. On flexible working, we are really pleased to see that the Government want to make it the default way of working. That is really important, but we need to know exactly how, and what mechanisms will be in place to do that. The current law on flexible working isn’t working. We want to see an advertising duty as well, which I am sure we can explore in a bit more detail later.

We are also very supportive of parental leave being moved to a day one right. It is kind of amazing that that is not in place already. But without it being remunerated, take-up will be very low. We would have liked to see more on parental leave. We have a shockingly low rate of pay for maternity. We have the worst paternity benefit in Europe. This is causing huge problems for families, particularly new families that have just had a baby. They are getting themselves into terrible amounts of debt. Also the way that our parental leave system is structured means that women are responsible for the care of a baby. They tend to take long periods of time out of work, whereas men tend to go back to work very quickly. They fall into the role of breadwinner, and the woman falls into the role of caregiver, and that continues for the rest of their lives—which is why there is such a large gender pay gap.

The redundancy protections are great. Again, we are very pleased to see that, but we need specifics about what it means. We would like to see that pregnant women and new parents can only be made redundant in exceptional circumstances. By that we mean when a business is closing or perhaps when a service has stopped being delivered. It is very difficult, if you are made redundant when you are pregnant or have just had a baby, to get another job. Often you are made redundant and then cannot access statutory maternity pay. These are very particular circumstances. We know that many women are still being made redundant when they are pregnant or when they are new mums; 17% of calls we get to Pregnant Then Screwed are related to redundancy, so it is a big problem.

What we do not have at the moment, but really need, is data that shows us what is happening on the ground. A report was done by the Equality and Human Rights Commission under the coalition Government that found that 54,000 women a year are pushed out of their jobs for getting pregnant or for taking maternity leave, and 77% of new mums experience some form of discrimination. That report was done in 2016, and there was a guarantee at that point that the report would be done again five years later. It is now nine years later and we still do not have any new data to show us exactly what is happening on the ground. Without it we are making decisions in the dark, so we would really push for that report to be done again.

We would have liked to see something in the Bill on non-disclosure agreements. Our research found that 435,293 mothers had been gagged by non-disclosure agreements when experiencing some form of discrimination. It is a serious problem. Again, we do not know what is happening in companies across the country. Women tend to experience this form of discrimination and are then forced to sign these agreements and are given a low amount of compensation. They suffer mental health consequences because of that. We want to see the UK follow what Ireland has recently done, so that non-disclosure agreements cannot be enforced unless the claimant wants them to be. We would also have liked to see something in the Bill on miscarriage leave, because at the moment there is no right to any leave or pay if you miscarry before 24 weeks. We would have liked to see something on fertility treatment. As many of you will know, we have a baby crisis in the UK—we are not having enough babies. We want to encourage people to have fertility treatment, so we need a legal right to time off.

We would like to see something on reasonable adjustments. There are currently reasonable adjustments if someone has a disability, but not if they have a dependant with a disability. Many mothers of disabled children are struggling in the workplace because they need time off for appointments, or whatever it may be. We would like to see a requirement for all employers to publish parental leave policies.

[Justin Madders]

Q I have just one question, mainly for Jemima, but you are welcome to chip in, Joeli. The Regulatory Policy Committee has suggested that there is no evidence base for third-party harassment. Do you have any thoughts on that criticism?

Jemima Olchawski: There is strong evidence that the majority of sexual harassment experienced in the workplace comes from third parties. This is where someone experiences harassment from a client, customer or patient. Some of those who are most vulnerable would include those working in retail and hospitality. It is essential that anyone working in those environments is as safe as they can be and respected in their workplace. We would consider it essential that employers’ responsibility to take reasonable steps to prevent harassment includes third parties, because as a victim, it is not relevant that the person was not a direct co-employee. What matters is the harm experienced. It is absolutely within the bounds of good practice and reasonable steps for employers to address that.

Joeli Brearley: Nothing from me. It is not my area.

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[Greg Smith]

Q Do you have a view on how it would be best to structure change around specific single projects like the building of a railway station, which might take two, three or four years and then that is it; there is a cliff edge and the project is over? How would you best structure that?

Alasdair Reisner: It is an interesting question. There is the notification element and the consultation element. I suppose we have to ask what the policy is trying to achieve. If it were trying to avoid people almost hiding redundancies by doing them in small units, I do not think we would have any complaints about ensuring that notification was still required. It is where you are forcing people into consultation who are never going to be made redundant, yet they find themselves under the scope of that. Splitting those two things apart—so you would still have the notification, but you would not necessarily have the consultation for those who are unaffected—is something we are exploring. I do not want to say that that is the silver bullet that will solve things. We have not even discussed that collectively as an industry; we are just trying to consider what options might be on the table.

[Justin Madders]

Q I think you said you had the largest collective agreement in the country—congratulations on that. Could you tell us a bit more about what your members see as the advantages of that?

Alasdair Reisner: It is a cliché, but we rely on the people we work with, and they must be represented. Having good, positive relationships with the employees’ representatives is crucial. The CIJC has for decades provided us with that vehicle—I should say that it is not the largest overall; it is just the largest in the construction sector. I think back to covid, when we needed a relationship with the workforce that provided us with the independence —I have to say that Unite was brilliant at that time—to engage with the rest of the industry to say, “We’re all working collectively towards a common good.”

From discussing the Bill with members over the past few days, I know that one of the potential concerns is that it might in some way undermine existing collective agreements. I do not think that is written in the Bill; it is more in the discussion that has happened prior to the Bill. That is something we would like to protect. I am not going to pretend it is all sunshine and roses—sometimes it can be quite challenging—but I think we would want to ensure that whatever the outcome of the Bill, there is a strong, positive partnership between the employers’ representatives and the employees’ representatives.

Employment Rights Bill (First sitting)

Debate between Greg Smith and Justin Madders

Committee stage
Tuesday 26th November 2024 Public Bill Committees

[Greg Smith]

Q I want to come back on this point, as it goes to the nub of any change to employment law. This does not mean that I am against employment law—I want to make that clear before anyone suggests otherwise. Alex, you mentioned the net impact of this legislation on the number of people in the United Kingdom in employment and the number of new jobs that will be created—or not, as the case may be—and you gave clear data from the 700 business leaders you spoke to. Could I ask the other two witnesses about your research among your members? What is your assessment of the likely impact of the Bill on job creation and job losses? Matthew, you talked about the risk of redundancy actually becoming greater as a result of some of the measures on fire and rehire. What is your assessment of the Bill’s impact on job numbers?

Matthew Percival: It is very difficult to put a number to it, because there are so many unanswered questions in areas where details are intended to be put into the Bill at a later stage. That leads to a wide range of potential estimates about the impact of a number of the measures. Work we are doing at the moment will give us updated figures on sentiment around a number of measures. We are looking to publish that soon, and I will make sure that we include those numbers in our written evidence.

Jane Gratton: The feedback we have had from members has been concern about increased cost, complexity and lack of flexibility to manage the workforce in the way that a business needs to. Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights, unless there were at least a nine-month probation period with a light-touch approach. There would be a preference for contractors and temporary staff, again to reduce the risk and avoid legal complications. To give some figures, 38% said that there would be a hiring freeze, 25% said that the Bill would result in less pay, and 30% spoke of less investment in their business. There would be significant risks and costs, particularly to small and medium-sized enterprises.

Alex Hall-Chen: In addition to considering recruitment levels at the higher level, we are also getting feedback about types of recruitment and the impact that the policies will have on that. We have had a lot of feedback, particularly with respect to day one protection against unfair dismissal, that essentially boils down to the fact that, under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher. I think there are really important questions about what that means for people on the fringes of the labour market, especially as those are precisely the people the Government need to get back into work to meet their 80% employment rate target.

[Justin Madders]

Q Good morning, everyone. You have mentioned quite a few surveys, but there are other surveys available that show high levels of support among managers and senior decision makers in businesses, with up to three quarters of managers supporting the measures in the Bill. Matthew, a number of the concerns you raised are the subject of live consultations, so I am sure you will be responding to those.

On a more general point, Jane in particular said that a lot of the businesses you represent do a lot of the things in the Bill already. Do you think it is important that we have a level playing field so that good businesses are encouraged to treat their staff properly?

Jane Gratton: Yes. There has been a cautious welcome for some of the measures in the Bill—lots of businesses agree with the sentiment that it is about fair pay, security and non-discriminatory workplaces—but the question is around the proportionality of the changes that are being introduced in relation to the problem that the Government think needs to be addressed. From a business point of view, it is about the additional complexity and, in respect of some of the detail of the measures, the restrictions that the Bill will impose.

For example, on changing the “one establishment” rule, the feedback from members has been, “For every change, will we have to consult all our employees across all of our businesses, even if they are doing completely different things at different ends of the country, with different levels of skill and job role? It is disruptive for the business and unsettling for every employee.” It is about the detail. In principle we all want these things, but the detail of some of the measures and the impact they are likely to have is causing a lot of concern.

Matthew Percival: You are right to say there is a live consultation on a number of measures, and the consultations on a number of things are promised to come but have not started yet. That is why I resisted putting a figure on what it would currently cost, because there is a wide variance in what that could end up being. We are committed to trying to find a landing zone for the Bill that means that the Government can deliver their ambitions, which include the Bill not having a negative impact on the ambitions around growth or the focus today, outside this room, on the “Get Britain Working” agenda and an 80% employment rate. We want to stitch all those things together and find that landing zone.

It is a credit to you and to colleagues that the engagement we have had up until now has led to things like some movement on the recognition of the importance of a probation period. There is so much in the Bill and we have only really scratched the surface in terms of what we have been able to get into the detail of so far. We are hoping that through this process, and as the Bill progresses through Parliament, we are able to give the same amount of attention to the rest of the Bill.

--- Later in debate ---

[Greg Smith]

Q I have a final question on the upskilling of professionals, which Cathryn just mentioned, so that they can advise on the new measures coming in through both the Bill and the secondary legislation that will follow. What would be the cost burden and the impact on the whole sector to get into a position where it can give accurate and good advice when the Bill finally reaches the statute book? We can see the parliamentary maths: it will become an Act.

Cathryn Moses-Stone: I cannot talk to the specifics of the Bill’s initial cost implications, but I can talk to the cost implications of having really highly trained managers in the workplace. When thinking about general management training, we know that chartered managers, on average, boost a business’s revenue by £59,000. We know that the average pay rise of a chartered manager is £13,000. We see in a lot of our data that there is a direct productivity impact on an organisation from having highly skilled, highly trained managers who are able to implement policies that increase retention, retain talent, boost morale and create a more positive workplace culture, which prevents turnover, which saves a business from losing money.

It probably also comes back to the point that managers need time to get it right and to understand it, so that the burden on their business in the long run is not huge because they have the right amount of time to understand how they will work with their employees so that they do not have to escalate everything to tribunal. The early training period is crucial for the wider cost savings, because we know that there are lots of concerns from businesses on these issues, as well as the broader sentiment of being in support of the Bill.

Ben Willmott: One of the challenges for a business looking to upskill its managers is that that will incur a cost. If we look at the proposed increases in employment costs overall, we see those from the different measures in the Bill and those from the changes in the Budget, which also need to be taken into account. Businesses will have to find the money to upskill and train their managers. That is one reason why we are saying that ACAS needs to be resourced, particularly to help those smaller businesses that are more resource-challenged and have less knowledge and capability around the HR and people-management side of the business, which is so important to this.

Carly Cannings: Ben made a really important point about making sure that small businesses are adequately resourced to deal with the changes. I am, as many employers are—as the statistics bear out—very supportive of raising the standards of employment, and the Bill certainly takes a step in the right direction towards raising standards. The balance that needs to be struck is about making sure that employers, and particularly small employers, are able to cope with the changes.

There are lots of businesses out there already doing really good things, and some of the things in the Bill will be measures, practices and policies that lots of employers already have in place. That is not the case for everyone and, in particular, that might not be the case for small businesses. Echoing Ben’s point, small businesses are more likely to fall foul of the legislation accidentally, rather than intentionally, because they do not have the right access to support and advice in the same way. That is an important point that must not be missed.

Cathryn Moses-Stone: Would it be all right if I added a point? It is true, obviously, that there is a cost to training managers, but that is why we are also really concerned about the proposed defunding of the level 7 apprenticeships, because there will be a huge knock-on impact. Potentially, a huge skills gap could open up in highly trained management across the UK, at a time when businesses are going to be required to know their staff and to implement the legislation in the right way. We are concerned about how that aligns with the development and delivery of the Bill.

[Justin Madders]

Q Good morning, everyone. To pick up on the points you just raised, I reassure you that there will be continued dialogue before implementation.

I have a more general question about what you see as the current weaknesses in the employment rights sphere. What do we need to do to give people more protection and security at work? Do you think the Bill addresses that?

Ben Willmott: The introduction of the fair work agency—a single enforcement body—is a positive step forward, but there needs to be further thought about how to improve the labour market enforcement system. We need a long-term strategy to improve labour market enforcement that includes not just a fair work agency but the Equality and Human Rights Commission and the Health and Safety Executive, not in a single enforcement body but as part of the strategy. We need measures to improve the efficiency of the employment tribunal system, which we know is swamped, and we need to increase the overall number of labour market inspectors—by international standards the UK is under-resourced on the number of inspectors.

As I have said before, we also need to significantly increase ACAS’s budget so that it can help small firms to comply. If labour market enforcement is about getting the carrot and stick balance right, that is why it is so crucial that ACAS can play that role in helping to raise employment standards. Businesses that are not bad employers—those that are poorly resourced, or might be knowledge-poor or time-poor, particularly micro and small firms—tend to fall foul of legislation because of those issues, not because of any malicious intent.

Cathryn Moses-Stone: I will start with the latter part of the question. We have a lot of data showing the impact of good management practice on both productivity and an improved workplace culture. Much of the Bill falls into that camp. For example, we know that one third of employees have cited negative work culture as a driver for leaving their organisation. That is obviously driven by ineffective management. We know that when managers in organisations have mutual trust and respect with their direct reports, they find that productivity rises. Poorly managed teams have lower motivation, satisfaction and retention. We believe a lot of the elements of the Bill are tied up in driving much of that in a positive way.

The things we are worried about, which echo what I have said before and what Ben has said, come down to implementation—that is, what the fair work agency looks like, how it behaves, how it supports, and how it gives space for managers to upskill. We know that 40% of our managers have expressed some concern about the detail of some of the policy, such as the right to disconnect. For example, what defines business-critical comms, versus just maintaining team comms?

We know that with high-quality management training—helping people to understand how to have difficult conversations, prioritise and have emotional intelligence—people can navigate those things much more effectively in the workplace. Our worry is about what the implementation will look like and about how managers and leaders will be supported in respect of the fair work agency.

Carly Cannings: I think the Bill is about raising minimum standards. As I said previously, a lot of employers are doing a lot of good things. Let us be realistic about the impact of the Bill: it is about raising minimum standards. Cathryn alluded to the bigger picture of creating happy, thriving workplace cultures, and it goes far further than that. This is not a call for further legislation; for me, legislation is about raising minimum standards. There is so much more outside and beyond legislation that makes a real difference to whether somebody has a happy, thriving workplace culture, and the benefits of that culture.

Thank you, Cathryn. You have done a very good job of outlining the things that I see in reality and when working with my clients—the factors that play a part in creating a workplace culture. Like I said, for me the Bill is about raising minimum standards.