Employment Rights

Julian Smith Excerpts

Thursday 12th September 2013 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

I beg to move,

That this House has considered employment rights.

Hitherto, discussion of the impact of austerity has focused largely on public services being cut, benefits being slashed, jobs being lost, insecurity becoming rampant, and wages falling—they are now, in real terms, 9% below the 2007 level. However, another process has been going on during this time which is equally relentless and callous but which has not been accorded the attention it deserves. Remedying that is part of the purpose of today’s debate. I refer, of course, to the continuing vicious attack on employment rights.

[Julian Smith (Skipton and Ripon) (Con)]

Will the right hon. Gentleman give way?

[Mr Meacher]

No, I do not have time because of the two ministerial statements and the overrunning of the previous debate. A lot of other people wish to speak, and I want to be fair to them.

Because this attack has been pursued piecemeal and gradually across a wide spectrum of employment law, its cumulative impact has been concealed, but collectively it amounts to something very substantial. Workers with less than two years’ service in their current job have already lost the right to go to a tribunal over unfair dismissal. Very recently, fees of up to £1,200 have been introduced for anyone who wants to make an application to an employment tribunal. Then there are the heartless cuts—drastic cuts of £1,500 to £2,000—in compensation for the innocent victims of crime in occupations that deal directly with the public.

Now the Government have plans for a further range of attacks on employment rights. Proposals for reducing consultation rights over redundancies are well advanced. The Government want to introduce so-called settlement agreements to make it easier for employers to pressure or bully workers they want to get rid of into resigning. Compensation for unfair dismissal is to be limited. Even though there has been widespread opposition, and only lukewarm support even from business, the Government have still pushed ahead with introducing a new employment status of employee shareholder so that employers can buy out the rights to unfair dismissal, statutory redundancy pay, time to train, and the right to request to work flexibly. The Government want to reduce the protection that TUPE offers to workers who have their job transferred to another business. In addition, leading Tories, including the Mayor of London, are making noises about attacking trade union facility time, increasing thresholds for strike ballots—to levels, I might say, that no politician would dream of allowing with regard to their own election—and making statutory trade union recognition even more difficult.

This sledgehammer—I do not think that is an exaggerated word, because cumulatively it amounts to that—attack delivered piece by piece to weaken the whole range of employment rights is clearly designed to overturn the social settlement after 1945 and return Britain to workplace conditions similar to those operating in the 1920s and ’30s when employers flaunted overwhelming market power. The attack on the Agricultural Wages Board has already removed the last vestige of the wages safety net, which was originally erected by Winston Churchill, and the removal of strict liability from health and safety law means that in future injury victims will have to prove negligence even when their employers have brazenly broken the law.

The one area of employment law that the Tories have not been able to touch has been those rights provided for by the European Union: paid holidays, health and safety, equal treatment for part-time workers and women, protection when a business is sold off and a voice at work. They are all valuable rights. By repatriating those rights—I think this is a big part of the motive of current Tory Euroscepticism—the Government will make it easier for bad employers to undercut good ones, which was, of course, the reason why Winston Churchill favoured wages boards in the first place; to drive down wages; and to make people who already work some of the longest hours in Europe work even longer hours.

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[Richard Harrington (Watford) (Con)]

I must apologise for my lack of co-ordination in sitting down and standing up, Madam Deputy Speaker. I will endeavour to correct that in future.

I listened carefully to the speech by the right hon. Member for Oldham West and Royton (Mr Meacher) and wondered if he was living in the Britain of Benjamin Disraeli’s book “Sybil”, or the United States of “The Grapes of Wrath” by John Steinbeck. It is not the Britain I recognise today. Historically, I agree and accept that in the industrial revolution and beyond—I include his point about the 1920s—there was large-scale exploitation of workers by organised capital and its management. I know that that sounds a bit Marxist for Conservative Member, but I accept that that happened. Today, however, thanks very much to trade unions and, I might say, the endeavours of the Labour party in the past, there is now a situation where the rights of organised labour, and labour that is not organised, have reached an equilibrium with the rights of capital and management. I accept that right hon. and hon. Members on the Opposition Benches will disagree with that.

I am very pleased to say that the days of images of employers sitting in their brown leather chairs in gentlemen’s clubs in Pall Mall sacking workers at will, and the images of people driving up and hiring those who are desperate for employment for a day or two days, have long gone. Workers have won their rights the hard way and I would oppose any attempt to take them away. However, it is my contention that while low pay is a significant problem and I would never make light of it, and while poverty is a significant problem and I would never make light of it, the balance today is very different.

The argument that private sector employment spends its time trying to get around the labour laws by coming up with devices, such as zero-hours contracts and casual labour, is not only misleading but insulting to the many businesses, small and large, in my constituency that are expanding. They are taking on labour and apprentices—whoever they can—because they have confidence in the economy and in their employees. Employees are a very expensive commodity for employers, because of training and the time it takes for recruitment, and employing people is not done lightly. It is not something that employers do just because they think, “Well, I’ll try it for a few weeks and then if it doesn’t work I’ll fire them and make them get on with something else.” Life today is not like that. I can say that, having been an employer most of my life. In our current position we are all employers, albeit on a small scale.

[Julian Smith]

Will my hon. Friend clarify how many people he has created employment for in his long career?

[Richard Harrington]

In one business, I started with two employees, of which I was one. When I left, the business was responsible for 2,000 employees in seven countries, but I cannot claim full credit for that since the purchase of the company, when there were 600 employees. I therefore have some experience of being an employer, and of seeing different regimes in different countries. I am absolutely appalled by the exploitation of labour, in whatever country it may be, by those who employ people on wages that are not living wages. Whatever the law is, I believe that a morality applies: employers should not employ the labour if they cannot afford it.

In the limited time available, I would like to say a few words about zero-hours contracts. It is very easy to criticise them, without really understanding what they are. The general public might think, from reading newspapers, that these contracts are like the casual labour of old. Actually, they are not. This may sound like a GCSE question, but are they about modern employment flexibility or old-fashioned exploitation? It is clear from his speech that the right hon. Member for Oldham West and Royton feels that these contracts are very much like industrial revolution-type exploitation of labour.

It is certainly true that there are some abuses of these zero-hours contracts, and that should not be tolerated. I am delighted that the Department for Business, Innovation and Skills—I am pleased to see in her place the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson)—is conducting a full inquiry into zero-hours contracts, and we all very much look forward to hearing its findings.

My proposal is that many companies in all types of industry use zero-hours contracts responsibly. They provide work, for example, to parents who have different needs for child care and to students, and they provide opportunities for people to join the work force in a flexible manner, perhaps while they study or carry out other commitments. Companies that use these contracts responsibly offer full training, paid holiday and all the other things that people in normal employment receive—and so they should, both legally and morally. They do not ask people simply to be on call at all times or prevent them from knowing how much they are going to earn.

Let me cite McDonald’s as an example. Here I must disclose an interest in that my younger son has been working for the company over the summer. Interestingly, McDonald’s employs 92,000 people in 1,200 restaurants. Many Opposition Members sneer at this kind of work; they call it “McD work” and there are many other clichés that go with it. McDonald’s, however, takes a pride in the employment it offers and in the training it gives people. During the application procedure, it asks how many hours people want to work, and it organises its shift systems accordingly. I ask all hon. Members not to view zero-hours contracts in completely black-and-white terms; I think there is a place for them.

To finish, let me explain that during my employment career, I did a lot of business in Spain and a lot in the UK. I regret to have to tell you, Madam Deputy Speaker, that in Spain, where youth unemployment stands at more than 53%, much of the problem stems from the fear of employers knowing that if they recruit people but things do not work out, they will be left with a terrible liability. They are not employing people and not giving people a chance because of the type of laws that certain Opposition Members would have us embrace in this country.

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[Julian Smith (Skipton and Ripon) (Con)]

I pay tribute to Labour Members, particularly the hon. Member for Hayes and Harlington (John McDonnell), who highlighted examples of employer malpractice. They raise powerful issues that we need to address.

The points that I shall make will not belittle those issues, nor shall I suggest that we should not take better enforcement action on such malpractice, but I want to make the case for the Government, who for the whole of this Parliament are reviewing employment law. They are considering that framework for two big reasons, the first of which is jobs. The Government have been proven right that consideration of employment law, and they are considering other parts of the legal system as well, can lead to the creation of jobs—1.4 million, as we heard earlier. The second reason is that when we poll employers in Britain or talk to them about what is causing them issues in their business, they say that it is employment law.

Generally, employers do not want to take away workers’ rights, and often problems arise because of bureaucracy, perhaps when they want to make people redundant when the work relationship has broken down. The Government have rightly decided to consider employment law from the perspective of employers in much more detail.

Some initiatives have been referred to, such as that to make things easier if the relationship between employee and employer breaks down. It is a modest proposal on settlement agreements, which are a simplified form of compromise agreements, which developed under Labour. Employers will have two years to make a decision on a worker, which will give them the confidence to take somebody on and allow them to end a relationship if it is not working out. As my hon. Friend the Member for Watford (Richard Harrington) said, an employer would not bring a relationship to an end unless there was a real problem. Employers want good workers and will look after them.

[Stephen Lloyd]

Does my hon. Friend agree that one challenge in countries such as Italy, or even France, is the fact that it is so expensive to hire new people that the economy is locked down and sclerotic? That means that it is almost impossible for young people to get a job.

[Julian Smith]

My hon. Friend is right: we are the envy of most countries in terms of our employment law. The shareholder initiative has received a lot of criticism but it is just another attempt to make it easier for new, smaller, principally technical companies to take people on, give them a shareholding, maintain their fundamental rights but provide a bit of flexibility. It is not just about making things easier for employers, however, as the Government have a good track record on employees. We have introduced the commitment to flexible working and are bringing forward shared maternity and paternity leave. Labour Members talk about a high level of pay, but the Government have introduced shareholder votes for executive pay, and we are pushing forward with numbers of women on boards. We are reviewing zero-hours contracts and the minimum wage has risen under this Government. I think we can be proud.

[Mr Graham Stuart]

May I take issue with my hon. Friend because he missed out the fact that we have also raised the threshold at which someone pays tax? By rising to £10,000, that threshold will make a huge difference to people on low earnings, creating an incentive to work.

[Julian Smith]

My hon. Friend is absolutely right. There is a long list, and I think we can be proud. These are modest changes but they are intended to help both employer and employee.

I do not agree that unions cannot be helpful in relationships between employers and employees, and I think they play an important role, particularly in bigger companies. I believe, however, that the current tactic of the unions on the relationship between employee and employer is barking mad, and I will give two examples of that. First, a gentleman in a village in my constituency runs a big company. He outsourced some of his work, and that outsource company laid off some staff. That gentleman and his family have been harassed by a particular union for months, with people coming on coaches to invade the village and demonstrate against a decision for which he was not responsible, using a tactic that the union has imported from America.

The second example is a piece of information sent to, I think, Unite members over the past few weeks, suggesting that they see the employer as an opponent and someone with whom they should be deliberately having a fight. That is what upsets me most about the way that the unions are looking at the issue. I have attended most debates on employment law since becoming a Member of Parliament, and the fact that so many Labour Members take the view of the unions, as in the examples I have given, means that they are not taking an objective view of the importance of employment law. The shadow Minister has employed people and knows full well that these reforms are the right way forward, but for whatever reason, he is blinkered by other constraints.

In conclusion, the employment law world is changing, and changing fast. This debate on zero-hours contracts will be writ large in years to come, and there will be more part-time working, more multiple employment and working from home, and probably much more self-employment and entrepreneurship. It will be a wholly different way, and if Labour Members do not look at that trend and look five or 10 years ahead, they will fail to represent workers and those people they have often represented so well through the unions, as in the cases we heard earlier. I urge them to consider the Government’s reforms, support them and see them in the light of incremental change, rather than as a radical return to a past that possibly never existed.