Employment Rights

Iain McKenzie Excerpts

Thursday 12th September 2013 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

I congratulate the Backbench Business Committee and my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on securing the debate. I want to concentrate on two examples of employment contracts that challenge employment rights. Many people who are desperate for work sign such contracts, only to find later that they have signed a document that allows the employer to opt out of the natural progression to equal employment conditions. I have been told of employment agencies using and developing ways to absorb into their contracts the list of “reset to zero” the qualifying period for equal pay and conditions. I speak, of course, of zero-hours and pay between assignments contracts.

Austerity has been the spur that some unscrupulous employers have used to introduce erosion of employment rights, as evidenced by the increasing frequency of zero-hours contracts. The zero-hours contract offers no guaranteed work. As part of the general erosion of terms and conditions of employees, employers have increasingly been turning to the likes of zero-hours contracts. Under such contracts, an individual typically undertakes to be available for work, but the employer does not undertake to provide any work, and only pays for the hours worked. The zero-hours contract is now widely used, and a survey by the industrial relations service indicates that 23% of employers now include zero-hours contracts as one of their employment options. The Office for National Statistics also found a major surge in zero-hours contracts during 2012.

Zero-hours contracts quite simply undermine employment rights. The variability of earnings throws into doubt an individual’s eligibility to claim various forms of benefit. The employment rights of those employed on zero-hours contracts pivot on whether the contract imposes “mutuality of obligation” between employer and employee. To gain such rights, it is crucial for employees to prove that the contract constitutes an employment relationship—not as easy as it sounds, but it has been successful, and it is why we see a move to find an even more flexible contract option, which offers a loophole even to avoid the commitments of zero-hours contracts. That is why we witness the growth in pay between assignments.

As we have heard, the pay between assignments contract is sometimes referred to as the Swedish derogation. Someone with experience of the Swedish derogation recently commented in HR Magazine that he was advised that

“if they ask me to go to an assignment 5 hours away from my home for minimum wage with no expenses and I refuse”,

his contract would expire and he would have to start again with no direct employment in this country. He said that indicates how bad employment rights have got in this country.

The TUC has lodged a formal complaint with the European Commission against the UK Government for failing to implement the temporary agency workers directive properly, which has led to tens of thousands of agency workers being paid less—up to £135 a week less—than permanent staff for doing the same job, despite EU rules saying that they are entitled to equal pay. The Government are yet again failing to protect British workers from exploitation.

Pay between assignments contracts can often be even worse than the much-criticised zero-hours contracts. The whole point of the 2011 agency regulations was to bring the principle of equal treatment, including equal pay for agency employees, into UK law. However, the introduction of these contracts means that many agency workers are signing away their rights to equal pay, which for most people is the most important element of the regulations. The madness here is that, compared with those on pay between assignments contracts, those on zero-hours contracts are actually better off, because they qualify for equal pay after 12 weeks—although that does not always necessarily follow.

I am proud that Labour introduced the minimum wage, one of our greatest achievements in government. In its last budget, my Inverclyde Labour council introduced the living wage. We spent most of the 19th and 20th centuries trying to build up employment rights; let us not spend the 21st century dismantling them.