Employment Rights Bill (Fifth sitting)

Justin Madders Excerpts

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.

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[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?

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[Laurence Turner]

My personal view is that they should not be accepted, but the hon. Gentleman surely knows that he should not seek an opinion on the party position from a Back-Bench MP.

My second point is on the sectors that would be affected by the amendments. My hon. Friend the Member for Gloucester made an incredibly powerful contribution, which we all thank him for having the courage to make, about his experience in the hospitality industry. I want to talk about the social care sector, and it is important to remember that one in three workers on a zero-hours contract in England works in adult social care.

In a former life, I spent many hours going through the corporate structures of social care employers, and their accounts and other filings. It is commonplace for an individual care home to be constituted as an individual employer, even though they ultimately all share a common ownership structure, so what appears to be a small business is often not one. During the pandemic, there was a complex interaction between care workers on zero-hours contracts and a lack of access to statutory sick pay, and there was a direct link between SSP coverage and high rates of infection, and indeed deaths, in those homes among both workers and residents.

The measures in the Bill will make real progress. Going back to points that have been covered already, I fear that this group of amendments will have serious unintended and perverse consequences, and I encourage Members to vote against it.

[Justin Madders]

I congratulate the shadow Minister on tabling the amendments and on the measured way in which he presented them. However, it will not come as any surprise to him to hear that we will not be able to support any of them.

The intention of amendment 137—or amended amendment 137—is to exclude SMEs from the provisions in clauses 1, 2 and 3. As we understand it, the additional amendments would commit the Government to exempting employers with fewer than 500 employees from measures designed to improve access to flexible working, from their obligations not to permit the harassment of their employees by third parties, from unfair dismissal provisions and from the measure designed to stop unscrupulous fire and rehire practices.

I understand that the general thrust of the shadow Minister’s argument was about the impact on SMEs and the lack of an evidence base for some of the policies. The general response has to be that we will not accept a two-tier system of employment rights in this country. We believe that everyone should have the same rights and protections in the workplace, and that is fundamental to our principles.

I will address some of the specific points. The shadow Minister mentioned the RPC’s criticism of our proposals on zero-hours contracts. There is legion evidence about the impact of those contracts on individuals. I am grateful to my hon. Friend the Member for Gloucester, who spoke movingly about his own personal experience, including of third-party harassment. His example of the individual who was, effectively, punished when they refused to take a bag of shopping upstairs was telling, and it showed the risks of the power balance in zero-hours relationships. I think that that individual, having already been punished for refusing to take shopping upstairs, would have received similar retribution had he raised a grievance. That goes to show some of the challenges of the power balance for people working on zero-hours contracts.

There is considerable evidence on the impact of the zero-hours contracts. According to the Chartered Institute of Personnel and Development, 22% of workers on zero-hours contracts do not believe that their contractual arrangements suit their life, and the previous Government’s Taylor review in 2017 found that many workers on zero-hours contracts struggled with that one-sided flexibility and power imbalance, where employers often require employees to be available.

[Dr Marie Tidball (Penistone and Stocksbridge) (Lab)]

I thank the Minister for his speech so far. We heard a lot from the Opposition about the cumulative impact on business, and I wonder whether he might say something about the cumulative benefit for workers. We know that 2 million zero-hours workers may benefit from the changes in the Bill, and we also heard evidence last week from a number of small businesses, or those who work with them, that they do not want a two-tier system. They said there are benefits in these provisions that will lead to not only better quality rights for those currently on zero-hours contracts but happier businesses with a more productive workforce.

[Justin Madders]

On a very fundamental level, if an employee has less money coming than in the previous week, they face a challenge in paying their bills, whether that is their mortgage, their rent or whatever costs they face. That is a very clear challenge to individuals on zero-hours contracts. A great number of studies show that people in insecure work have lower levels of job satisfaction and poorer physical and mental health, and there are also issues linked to lower levels of work productivity. As my hon. Friend mentioned, there is evidence that proper workforce planning is good for businesses, as well as individual workers. I am afraid that any exceptions creating a two-tier labour market would just exacerbate some of the challenges we see in that area. That would create a downward pressure, distort competitiveness at the expense of larger businesses and, as we have heard, create a disincentive for smaller businesses to grow.

[Chris Law (Dundee Central) (SNP)]

I have heard the Minister reference two-tier rights in employment law several times. I want to raise a fundamental issue in this Bill: zero-hours contracts and the different legal categories of a worker. It is a general principle that labour law should be universal in its application, and our labour rights should apply to everyone who works for others. I just wanted some clarification, as without clarification on the legal status of all those who work, the rights in the Bill are allocated piecemeal.

I will give some examples: some rights are given to employees with contracts of employment; some rights are given to limb (b) workers, such as Deliveroo riders in Independent Workers Union of Great Britain v. Central Arbitration Committee and Deliveroo last year, or gig workers who are denied the status of employees; and some rights are given to other new ad hoc definitions of workers, such as workers on non-contractual zero-hours arrangements. The situation of the false self-employed, including those employed by umbrella companies or personal service companies, as well as anomalous workers such as foster carers, is not otherwise dealt with, and their rights are left opaque. Fundamentally, I am asking whether a new clause is required to ensure that all rights contained within the Bill apply to workers defined as

“any individual who is engaged by another to provide labour and is not, in the provision of that labour, genuinely operating a business on his or her own account”.

[Justin Madders]

I understand the point that the hon. Member is making. I think it would not need a new clause but a new Bill, because there is a whole range of very complicated issues about worker status. It is something that we are committed to looking at in our “Next Steps” document, and there is a whole range of issues in that sector. The hon. Member referred to foster carers—I should clarify for the record that I am a foster carer. Personally, I would not consider that to be employment, but I know there are others who believe that it is. He also mentioned various arrangements within the gig economy, and the shadow Minister mentioned IR35. We can very quickly get into a very detailed argument about who would be classed as a worker and who would not, and that needs a much more considered and lengthy examination. That is why, as much as we would have liked to, we were not able to get it in the Bill in the time allowed, but I absolutely understand the point the hon. Member is making.

On the amendments before us, the disincentive for an employer to grow would, unfortunately, be an unintended consequence of their provisions. There could even be a scenario where there would be an argument in an employment tribunal about how big an employer actually was. My hon. Friend the Member for Birmingham Northfield talked about some of the complicated structures that we see, and we know that some employers deliberately structure themselves to avoid particular laws. That would go against the policy objectives, which are to create a level playing field across the board, avoid undercutting and ensure that best practice is spread throughout.

We must not create a two-tier system. That is not consistent with what we are trying to achieve. It would harm not just workers, but small businesses, and, as the hon. Member for Chippenham said, would create an incentive for workers at smaller employers to leave. If someone does not get any protection for two years working for one employer, they will go and work for someone who will give them that protection. That applies to lots of the other rights as well.

On the unfair dismissal amendment, there was a brief period in the 1980s where there was a slightly different employer size qualification for unfair dismissal. I think it was 21—some way below the number that the shadow Minister is proposing—but even the Thatcher Government decided that was not a tenable situation and removed that in the end. I gently point out to the shadow Minister that the amendment as drafted would not have the effect that he hopes. I hope he will not push it to a vote.

On the issues about the impact on small employers, that is why we have legislated to include a statutory probationary period to ensure that there is not an undue burden on businesses.

[Jon Pearce]

I should refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB.

The shadow Minister talks about employment rights from day one and the extra burden, when the reality is that cases of discrimination and whistleblowing can be brought on day one. Giving some structure to the probationary period will actually assist many employers. In my experience in private practice advising businesses, many of them found themselves subject to claims of discrimination because they failed to go through a proper process. The Bill will assist businesses in giving a greater structure and could potentially lessen the burden on employers with regard to the threat of litigation.

[Justin Madders]

I think I understand the point my hon. Friend is making: sometimes, an individual who is aggrieved about their treatment will find a legal claim to pursue the employer even if it does not necessarily fit their circumstances. Giving a much clearer structure for employers will hopefully allow closure—I think that is probably the right word—for both sides.

The shadow Minister asked about the evidence on flexible working. I refer him to a Flexible Jobs Index survey in 2023 which found that nine in 10 people wanted to work flexibly, but only six in 10 were able to do so. There is clear evidence, and we heard plenty in the evidence sessions about that.

I will briefly touch on the issue of third-party harassment. My hon. Friend the Member for Birmingham Northfield gave a scholarly run-through of some of the issues, but for the benefit of the Committee, third-party harassment was actually unlawful for the five years between 2008 and 2013, and I am certainly not aware of businesses claiming that that was an undue burden. That was repealed in 2013 because, at the time, it was considered that there were broader protections available regarding third-party harassment. However, that interpretation was challenged in the Nailard judgment in 2018, which found that employees were not in fact protected against third-party harassment. One of the intentions behind the Bill is to close that gap. We think it is absolutely fundamental that, if someone is being harassed at work, it should not matter how big their employer is. Harassment is unacceptable in all its forms, whoever someone works for and however big their employer is, and we intend to close that gap.

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[Michael Wheeler]

I would not agree, which will not surprise the hon. Member. I gently suggest that the number of Government amendments will possibly provide the clarity that he asks for—they will be baked in, and will provide that clarity. This is part of the process of getting the provisions right for all involved. I would suggest that it reflects exactly the opposite of what the hon. Member suggests.

I return to the point about stability and instability. If the basis of the provision is to have hours regularly worked included in contracts, having that contractual term would provide not only stability for the employee, but predictability and stability for the employer. I am sure we can agree that stability all round is beneficial.

However, I come on to possible unintended consequences. The term,

“not exceeding a specified number of hours”,

could do with some clarity, in order to provide that stability and to ensure that the measure applies to the widest number of people within our workforce, to fulfil the intended aim. There is also the phrase “regularity”. Will the Minister consider how to clarify that term to provide the clarity that we would all welcome? Finally, I come on to the term, “excluded worker”. As I have said, we want to see as many people as possible covered by the Bill, so that they feel the benefits of it. The provisions are measured, for both workers and employers. I would welcome the Minister’s commitment to consider those points, as well as his roundly rejecting the ridiculous premise on which the amendment is based.

[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?

[Justin Madders]

The shadow Minister tempts me to pre-empt what we will put in the consultation. I have had a number of conversations with my hon. Friend the Member for Worsley and Eccles over many years, because he has great experience of the retail sector, where there is a great deal of insecurity of work. People who work in that sector can be on guaranteed hours of 16 hours a week but still face insecurity. Equally, a lot of the people that we are trying to help here have no guaranteed hours at all. There is an argument that anyone below full-time hours—again, there is a debate about what that means—could be within scope.

That is why we are holding a consultation, to enable us to understand exactly who will be affected—whether we are trying to catch everyone or target the people who suffer the greatest insecurity of work. That is the purpose of the consultation. I know the shadow Minister will probably want to get some figures out of me today, but I am afraid I will not be able to oblige.

[Chris Law]

I am sorry to stop the Minister in his tracks, but it is quite an important point. There is in the Bill what I would consider to be a loophole, which enables employers to offer a guaranteed-hours contract where there is work of a short-term nature. There are some issues with that. I would like to know the justifications for it, and whether it is going to consultation. Does it mean that people engaged on such terms will be engaged on a zero-hours basis, or will they be employed on a guaranteed-hours basis? It is not clear in the Bill. If the former, why is it not possible for such workers to have a guaranteed-hours contract if they otherwise meet the proposed statutory criteria? What safeguards will there be to ensure that the power is not abused, in order to avoid a guaranteed-hours contract? I am sure that, in the spirit of the Bill, we want to ensure that that is tightened. There is nothing in the Bill for that, either.

What is the difference between a short-term contract and a fixed-term contract? Will there be a legal status for someone engaged on a short-term contract? Are they an employee, a limb (b) worker, or neither? Lastly, will non-renewal of a short-term contract be a dismissal for the purposes of unfair dismissal in the case of workers who are employees? That is a lot of questions, but I want to know whether there will be further consultation that may result in amendments to the Bill.

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[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.

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[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.

[Sir Ashley Fox]

What is more important in relation to this amendment is that the Government are granting themselves a Henry VIII power to amend their own Bill. The Minister really should say whether agency workers are intended be within its scope. He must not just say, “We will make this up at a later date.” We need clarity on that point. In previous Parliaments, the Labour party rightly criticised Conservative Governments for introducing Henry VIII clauses, but it is doing precisely the same thing because it has not actually made a decision. Will the Minister please answer this question: does he intend agency workers to be covered or not?

[Justin Madders]

I am grateful for the hon. Member’s question. It is our intention to include agency workers, which is why we have been consulting. The consultation finished yesterday on how best to apply the Bill to agency workers, because we understand it is a different relationship. There are a range of considerations, which is why the power has been taken in this way. I am sure that the hon. Member would criticise me if we had set out the scope of the Bill without having taken that consultation first. We are concerned about ensuring that there is a level playing field and not creating another loophole. We will now engage with the responses that we have had to the consultation.

[Laurence Turner]

The Minister spoke about the insecurity that can hang over agency workers, and said that their employment situation does not always represent genuine flexibility. As someone who has been an agency worker, I can certainly identify with what he says. On the point around regulations, does he agree that this is a long-standing precedent in employment law, dating all the way back to the Employment Agencies Act 1973, under which the current agency workers regulations are made? In terms of powers, this is nothing new.

[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.

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[Sir Ashley Fox]

I am grateful to the hon. Member for making that point, but in Burnham-on-Sea in my constituency there are many very small businesses, with perhaps two or three employees, that take on an extra person or two during the summer season. This summer has been particularly bad because there has been an awful lot of rain. Business needs change. The danger is that if there were a short reference period and we were fortunate enough to have a very hot and sunny April, May and June but a very wet July, August and September, businesses would be employing more staff because they had to, rather than because it was justified by the business conditions.

This is just not necessary. It is Government regulation for the sake of it, and it will make life more difficult for small business owners. Every time Government Members have risen to speak, they have declared that they are a member of one union or another, but very few have actually run a small business. I did run a small business. I was self-employed before I came to this place. It is challenging, because you are on your own: you take the decision whether to employ someone or not. Dare I say it, there are too few Government Members who have set up small businesses and who have actually employed people and experienced that challenge. That is part of why they do not understand how difficult this regulation would make life for some very small businesses.

[Justin Madders]

The amendment tabled by the hon. Member for Mid Buckinghamshire seeks to amend clause 1 to specify in the Bill that the initial and subsequent reference periods for the right to guaranteed hours will be 18 months long. I do not think he is prepared to concede that it is a ridiculous amendment, but shall we say that it was ambitious? Can we agree on that?

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[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.

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[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.)