Employment Rights Bill (Third sitting)

Justin Madders Excerpts

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.

[Justin Madders]

Q Claire, you have said that a lot of the things in the Bill are things that you do already. Could you expand on why these are things that you have done already, above and beyond your legal requirements? Is it about improved worker wellbeing? Retention? Productivity? What are the benefits that you see from taking these steps?

Claire Costello: All of the above. We pride ourselves on being as forward thinking as we can be. There is always an affordability in there, but we tend to listen very clearly to our colleagues. We work closely with our unions as well. We have focused on areas that our colleagues have told us are important to them. If I look at the bereavement policy in the Bill, for example, we built that in. We worked with Cruse, a charity that is significant in that sector, and have done something pretty unique in terms of support.

The Bill is a great development for industry. There are things that we have done, which were already quite different, in there. We do not insist that it is within the first 50 days; we ask for them to use it flexibly, because it could be a significant birthday or date. We also do not limit it to direct family members because, in today’s modern family and society, it is not always your parents who are the closest to you. We have made it based on the relationship that you have with the person that has passed, and therefore what bereavement means to you may be different.

You might want to take a week off at the beginning. It may be that you want a couple of days, and then four or five weeks later you need a couple of days, or even a year later you need to take time off because it is an anniversary and you need to support people. Things like that are where we have written policies and worked with our colleagues to do something that works for them. It is to drive retention. It is to drive engagement. It does mean that we have, hopefully, a happy group of people who want to work with us. As a member-based organisation, that is important to us.

Another good example on the bereavement policy is that I noticed that it did not cover pregnancy loss. Again, that is a policy that we have worked really hard on and I think that is an opportunity to put something slightly different into the Bill, because bereavement is bereavement. How do we make sure that it covers all aspects of it in the right way?

[Justin Madders]

Q Thank you. Helen and James, is there anything you want to add to that?

Helen Dickinson: No, the overarching point is exactly as has been said. The most successful retail businesses are ones that have highly engaged workforces that are aligned to the objectives of the business and feel part of the success of a company. People who feel like that are going to work harder and the business is going to be more successful. It is all part of a reinforcing system. If it is done well, from an individual company point of view, the exemplars are the more successful businesses. It comes back to ensuring that the Bill targets those at the bottom of the pile, those that are not engaging in the right way in having forums for employee engagement or having a two-way dialogue on flexible working or whatever it might be. It should be a win-win, but I think the risk is big in terms of making sure that we do not end up with those unintended consequences.

James Lowman: Retail is based on respect for colleagues and customers. That is how businesses work, and I think that the Bill and the principles here are very much in line with that.

[Steve Darling (Torbay) (LD)]

Q I know from conversations that I have had with businesses in my community that the Budget is set to have a significant impact on employers. Although there is a lot to welcome, broadly, in the Bill, would taking a more staged approach to its implementation be of help, or are you confident that your businesses could take this in one big bang?

Helen Dickinson: That would help. I am jumping straight in, because I feel quite strongly about this one. I do not want to rerun some of the challenges of the Budget, but the pace of additional costs that have come in for every business—particularly for retail, because of the nature of flexible work, with a lot of part-time contracts and the changing of the threshold—means that every single retailer in the country needs to look very hard at their investment plans and workforce plans, and everything that sits around that.

I think that everybody sort of breathed a sigh of relief with the clarity that the timetable was for 2026, but even now, looking at the scale of the proposals, it would be great to have more visibility over the sequencing of the different consultations, so that the industry can gear up in the right way to be able to respond effectively to them, and to make sure that we have longer than six-week periods to respond, with four consultations all going on at the same time, because that all makes it quite a challenge.

Coming back to the direct point of your question, in terms of implementation, if there are changes that need to be made in companies, I think that a run-in, or an implementation period that is workable and that gives those companies the chance to make any changes to processes, is a necessity for ensuring that the Bill lands in the right way and that we do not again end up with some of those unintended consequences. I think the Budget has unfortunately made the backdrop that much more challenging, just because of the things that people already need to deal with now and over the next six months.

Claire Costello: I will add to the piece around implementation timing: it is really easy to think of this as, “Oh, it’s straightforward; it’s about writing a policy, then, once you are in a business, sharing that with your colleagues, making sure that your line managers know what is expected of them, and landing it.” Much of what we are talking about here will require businesses, certainly larger businesses, to think about how their systems are set up as well. It changes your payroll system; it changes your workforce management system. All that is doable, but it is at the same time as other changes that organisations will be working on in the background as well. That is what we need to factor in.

On top of that, where we then have colleagues who are themselves impacted by the changes, it is about making sure that you have time to make sure that they understand that and what it means to them. It is about that run-in. It is about more than the cost; it is quite significant from the point of view of process, understanding and implementation. That is the ask, really—it is the detail and the time.

Helen Dickinson: I am sure that James will have points from a sort of one-establishment type business, but, for multi-site businesses, you could be talking about 10, 100 or 1,000 stores and distribution centres up and down the country, so we should not underestimate the significance of the need for up-front visibility of the changes.

James Lowman: The other change that has happened with the Budget and those additional significant costs on businesses is about how retail businesses respond to them. In maybe a medium-sized business—among our medium-sized members—they might have had to take out layers of management. That might include, for example, HR functions and things like that, and losing that support. In an individual store, with an independent retailer, that retailer is probably working more shifts behind the counter and in the store themselves, rather than working on the business and managing the business. That will be a consequence.

Decisions are being made to cut back shifts to compensate for those significant additional costs, so the ability and the time available for businesses of all sizes—particularly some of the smaller and medium-sized ones —to implement these changes is less than it was before the Budget, or before April. That is the reality of it.

Again, yes, it is partly about timing—that is very important and I align myself with what Helen and Claire have said about that—but that also makes it even more important that the guidance and regulations are absolutely right, so that those already increasingly and additionally stretched businesses are not spending more time in employment tribunals and having to deal with complex interpretations with their colleagues, or struggling to fill shifts and therefore having to work more hours themselves.

--- 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.

[Steve Darling]

Q I have one short question. How do you see the Bill impacting the United Kingdom’s productivity?

Liron Velleman: The Bill should have a positive impact on productivity. Following on from Joanne’s previous answer, when people are in insecure work, they are worried about whether they are going to lose their job tomorrow, whether they will lose some of their benefits or pay, and whether they will have the security of knowing what shifts they will be working. Tightening up lots of parts of employment legislation currently on the statute book should give workers extra confidence, so that they will be able to be happy at work and work more flexibly, representing the current state of the economy rather than keeping to how things were. That should, in totality, result in greater productivity for businesses as well as for individual workers.

--- 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.

[Justin Madders]

Q I assume that it would be quite difficult to quantify in economic terms the impact of removing that anxiety for 2 million workers, but if you were able to have a go at that, I would be interested to hear it.

Nye Cominetti: I would not want to try. It is not quite the same, but the closest that some studies have tried to get is saying to workers, “Would you consider this alternative job, which would improve your terms and conditions in these respects, but offer you lower pay?” That tries to get at the question of how much pay people would be willing to trade off for those other benefits, such as a more stable income or a better relationship with management.

It does not directly answer your question, but there was a study in America of Walmart workers which found that they would accept a 7% pay cut in exchange for being treated with better dignity by their managers, including things such as better advance notice of their shifts and not getting messed around late in the day to come in and pick up extra hours. I definitely cannot quantify it, but more ambitious researchers might be able to.

[Steve Darling]

Q My constituency, Torbay, is sadly in the upper quartile of the most deprived constituencies. I would welcome your reflections on how the Bill could have an impact on constituencies such as mine where there are high levels of deprivation.

Nye Cominetti: Well, I have a few caveats. First, overall employment rates are lower in high-deprivation areas, so we need to remember that all these measures will have an effect on workers, rather than those who are not working. If you want to improve income levels, this is not the place to do it. As I was just saying, however, we know that low-paid workers experience those issues of insecurity at higher rates than high-paid workers.

You also need to remember that there is not a one-for-one overlap between high pay and high income and low pay and low income. Some low-income households will have higher-paid individuals in them, but because of having a large family or having only one earner rather than two, they will still end up in that low-income category. That caveat aside, it is still the case that any measures that improve working lives for low-paid workers will have the biggest impact on lower-income households.

There are questions about what the knock-on effects are going to be. If you were really optimistic, you might say that some of these measures to improve job quality could even have a positive labour supply effect. We know that, in the 2010s, that was a big driver of improved income at the bottom and massively increased employment among low-income households. So an optimistic take on these measures might be that you could trigger some of those kinds of effects, but that is much more uncertain.