Employment Law: Devolution to Scotland

Jane Hunt Excerpts

Tuesday 6th September 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jane Hunt)]

It is a pleasure to serve under your chairmanship, Sir Edward.

I congratulate the hon. Member for Lanark and Hamilton East (Angela Crawley) on securing this important debate on the potential merits of devolving employment law to Scotland. As Members can well imagine, there is an awful lot for me to respond to, so I probably will not take interventions at this stage, because I do not think there will be time for me to do so.

As the hon. Member is aware, employment matters are reserved to the UK Parliament under the Scotland Act 1998, with a few exceptions, such as the subject matter of the Agricultural Wages (Scotland) Act 1949. The Government have no intention of devolving legislative competence for employment rights matters to the Scottish Government.

The Scotland Acts of 1998, 2012 and 2016 have created one of the most powerful devolved Governments in the world. The Scottish devolution settlement gives the Scottish Parliament power over numerous aspects of its governance and strikes a good balance. The current settlement was agreed between the Scottish Government and the UK Government after extensive cross-party consultation and discussion by the Smith Commission.

We strongly believe that in order for the labour market to work most effectively across Great Britain, the underlying legislative framework concerning rights and responsibilities in the workplace needs to be consistent and must not be devolved to the Scottish Parliament. Employers and employees benefit hugely from a single, simple system where employment rights are the same across Great Britain, whether someone is working in Dunstable or Dundee. Devolving employment rights to Scotland could create a two-tier employment rights framework, with Scotland adopting different policy and legislation to England and Wales. This would create a significant burden for businesses. It would be costly for employers who operate on both sides of the border, as they would need to understand the differences between the systems and potentially implement different sets of policies and procedures.

[David Linden]

In the 25 minutes left, will the Minister give way?

[Jane Hunt]

I have an awful lot to get through, but I will allow one intervention.

[David Linden]

The Minister makes a point about companies operating over borders and having different employment practices to adhere to. She is, of course, fully aware that employment law is devolved in Northern Ireland. She mentions Dunstable and Dundee. Notwith-standing the lovely big sea border that her Government have just put down in the Irish sea, which I know some in her party are vexed about, why is it good enough for people in Larne but not people in Livingston?

--- Later in debate ---

[Jane Hunt]

I will get to that in a short while.

Devolving employment rights to Scotland could also disadvantage workers by suppressing the free flow of labour between England and Scotland. Having this valuable free flow of labour is essential, as it increases the chances of workers finding the jobs that will make the most of their skills and employers finding the best employees for their businesses. Office for National Statistics data from 2019 estimates that around 68,000 people work in Scotland and live in England, or vice versa. Devolving employment rights could therefore be highly disruptive for workers who work across the border.

The UK Government remain strongly committed to working together with all the devolved Administrations to ensure the UK’s institutions are working collectively as one United Kingdom. We appreciate and value our ongoing, close working relationship with the Scottish Government, while also respecting their unique devolved nature. Through this close working, we are determined to build a highly skilled, highly productive high-wage economy that delivers on our ambition to make the UK the best place in the world to work and grow a business. Ministers and officials within my Department engage regularly with their counterparts in the Scottish Government, as well as the Welsh and Northern Irish Governments, to consider various employment-related issues. I look forward to discussing employment rights issues with my Scottish counterparts too.

I would like to highlight that the UK, including Scotland, has a very strong labour market. Its strength results from balancing labour market flexibility with worker protections. The figures speak for themselves. Early estimates for July 2022 indicate that there were 29.7 million payrolled employees—around 650,000 higher than pre-pandemic levels. The unemployment rate is 3.8%, which is close to record low rates. Making any changes to the current devolution settlement could jeopardise our labour market’s success. On employment rights, the hon. Member for Lanark and Hamilton East stated that workers’ rights are being disregarded in the UK. I disagree with that. She also said that Ministers are sleeping on the job. Chance would be a fine thing—since 8 July at least!

It is not only the labour market’s strength that is exemplary. The UK’s record on employment rights is one of the best in the world, giving vital protections to workers. We have one of the highest minimum wages in the world. In April, the national living wage was raised to £9.50. In the UK, people get a minimum of over five weeks of annual leave, whereas the EU requires only four weeks. People in the UK get a year of maternity leave. The EU minimum is just 14 weeks.

I am proud that we have implemented many important changes to the UK labour market, which are benefiting workers across England, Scotland and Wales. In recent years, this Government have brought forward a raft of legislation on employment rights issues. That legislation has closed a loophole that saw agency workers employed on cheaper rates than permanent workers, and quadrupled the maximum fine for employers who treat their workers badly. We have given all workers the right to receive a statement of their rights from day one. We have given parents a new legal right to two weeks’ paid bereavement leave for those who suffer the devastating loss of a child. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) mentioned the Taylor review, and the Government are making progress on a number of the recommendations it set out.

The Government supported workers throughout the covid-19 pandemic, taking steps to protect the earnings of workers through the UK-wide coronavirus job retention scheme. We also ensured that furloughed employees who were made redundant received full redundancy payments. In Scotland, a total of 911,900 employees were on furlough during the course of the scheme, and we were able to offer this unprecedented package of support through our ability to act on a UK-wide basis. Our response to the covid-19 pandemic exemplifies that we are at our strongest when we come together as one United Kingdom.

We are going still further with employment rights reforms. Numerous private Members’ Bills have been introduced on the matter of employment rights, and we are working closely with these Members on their proposals. On 15 July, this Government supported two private Members’ Bills on Second Reading. The Employment (Allocation of Tips) Bill, introduced by my hon. Friend the Member for Watford (Dean Russell), will ensure that all tips go to staff, and allow them to bring a claim to an employment tribunal if businesses do not fairly distribute workers’ well-earned tips. The Neonatal Care (Leave and Pay) Bill, introduced by an SNP Member, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald), will allow parents whose new-born babies are admitted to neonatal care to take up to 12 weeks of paid leave, in addition to other leave entitlements, such as maternity leave. This will allow them to spend more time with their babies at what is a hugely stressful time. Our productive work with the SNP Member on this Bill goes to show just how far we can make progress on important employment rights issues by collaborating across parties, and between the UK Government and the devolved Administrations. My officials have also met their Scottish Government counterparts to discuss the private Members’ Bills, and will continue to engage closely with them throughout their passage.

As well as those private Members’ Bills, on 6 July, we laid legislation that extends the ban on exclusivity clauses in contracts where a worker’s guaranteed weekly income is below the lower earnings limit, which is currently £123 a week. That will ensure that an estimated 1.5 million people have the opportunity to pick up extra work to top up their income if they wish. Two further private Members’ Bills will be considered on Friday, including the Carer’s Leave Bill, which was mentioned earlier. Also mentioned was shared parental leave, which is exceeding the expectations in the targets set for it. The online tool is also proving successful in helping parents decide what to do for their family.

In July, we published guidance to clarify the existing employment status boundaries, making it easier for businesses to comply with existing regulations and for individuals to understand which employment protections apply to them. In April, we made sure that 2.5 million people across the UK received a pay rise by raising the minimum wage and the living wage. The largest ever cash increase to the national living wage will put over £1,000 a year extra into full-time workers’ pay packets, helping to ease cost of living pressures. We are helping younger people too by lifting the minimum wage for under-23-year-olds and apprentices. What is more, in December 2021, we named and shamed 208 UK employers who failed to pay the minimum wage, including 19 Scottish employers.

We take action where it is needed to tackle appalling business practices, such as P&O Ferries firing its employees without consultation. We reported P&O to the Insolvency Service and took an active role in ensuring it treated its workers fairly. In March this year, we announced that we will introduce a statutory code of practice on dismissal and re-engagement—so-called fire and rehire tactics. That will include practical steps that employers should follow if they are considering changes to workers’ terms and conditions and there is the prospect of dismissal and re-engagement. All that comes in addition to the UK Government’s £37 billion cost of living support package, which will benefit households across the UK, including those in Scotland. For these reasons, the Government do not support the devolution of employment rights to the Scottish Government.

Let me turn to some of the points raised during the debate. The hon. Member for Lanark and Hamilton East spoke about the Miscarriage Leave Bill. The Government recognise that losing a child at any stage is incredibly difficult, and we expect employers to respond with compassion and understanding. Because the death of a child is a particularly tragic event, we have legislated to give parents who lose a child under the age of 18, including cases where a baby is stillborn after 24 completed weeks of pregnancy, a right to take up to two weeks off work in the 56 weeks following the death of their child.

Although there is no statutory entitlement to leave for women who lose a baby before 24 completed weeks of pregnancy, those who are not able to return to work may be entitled to statutory sick pay while off work, subject to the eligibility conditions. If eligible for statutory sick pay, employees are able to self-certify incapacity for work for the first seven days of their absence, regardless of the cause. All employees are also entitled to 5.6 weeks of annual leave a year, and many employers also offer compassionate leave.

[Angela Crawley]

My ten-minute rule Bill is due for Second Reading on 16 September. Does the Minister acknowledge that it is simply unfair that a parent who loses a pregnancy or baby at 23 weeks and six days has no right whatsoever to any form of paid leave, while after 24 weeks a parent has the right to bereavement leave and pay? Should that legislation not be extended or provision not be made for parents who experience that loss before 24 weeks? Can she explain why the Government will not do so?

[Jane Hunt]

I will look at that point, because I understand the hon. Lady’s argument. However, a line has to be drawn somewhere.

The hon. Member for Glasgow East (David Linden) talked about the four-day working week. We appreciate that a four-day working week may work well for some workers and employers, but we do not believe in a one-size-fits-all approach to working arrangements. That is why rather than telling people and businesses how to work, we put individual agency and choice at the heart of our approach to flexible working.

The hon. Members for Paisley and Renfrewshire South, for East Dunbartonshire (Amy Callaghan), for Glasgow East and for Lanark and Hamilton East asked why no employment Bill was announced in the Queen’s Speech. While I know it is disappointing that it did not include one set out as a single Bill, there is an ambitious legislative programme that includes a comprehensive set of Bills that will enable us to deliver on priorities such as growing the economy. As I mentioned, numerous private Members’ Bills have been introduced on employment rights as a result of the PMB ballot in the Commons. We are working closely with those Members on their proposals, and are grateful to those from across the House who are helping us with that.

The hon. Member for Edinburgh South (Ian Murray) and others questioned why we are not banning fire and rehire. Imposing a ban would not be appropriate because in some situations fire and rehire can play a valid role, as businesses may need the flexibility to use this option to save as many jobs as possible. We are taking proportionate action to address firing and rehiring practices by bringing forward a statutory code of practice.

The hon. Member for East Lothian (Kenny MacAskill) talked about tribunals. The UK Government and Scottish Government continue to work closely on drafting the Order in Council. Once that is concluded, we will look to agree a timeline for the devolution of the first tranche of tribunals.

I thank the hon. Member for Lanark and Hamilton East for bringing this important topic to the House and enabling this debate. While the Government have no plans to devolve employment rights to the Scottish Government, I thank the hon. Members who contributed constructive arguments. We will continue to work with the Scottish Government and other devolved Administrations as we continue to build on the UK’s record on employment rights.