Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022

Justin Madders Excerpts

Thursday 20th October 2022 General Committees

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this morning, Mr Robertson. I welcome the Minister to his place—I think this is our first formal engagement. I am grateful to him for setting out the context for the regulations.

The precarious nature of work is at the forefront of many people’s minds at the moment. We are all determined to address that and, for that reason, we do not oppose the regulations. We welcome any step, however modest, to tackle the problems in the country’s labour market, and by any measure, today’s proposals are pretty modest in scope. I note that the statutory instrument is numbered 000; I do not know if that is a drafter getting a little bit carried away, but I am sure that it is not the correct number for the regulations.

As we have heard, the regulations are not just about zero-hours contracts but about some of the most low-paid people in society. We cannot separate what is in the regulations from the wider context of our current situation. The regulations may be presented as part of the Government’s post-covid plans to “build back fairer” or framed as part of the battle against one-sided flexibility, but we need to stop for a minute and consider the two key contextual issues that are unavoidable in today’s debate. At the forefront of our minds should be the experience of the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015, which are in many ways the progenitor of today’s regulations, alongside the Government’s continued failure to deliver on their own commitments to improve worker’s rights.

A departmental press release from May this year said that the regulations

“will give workers more flexibility over when and where they work”

and will

“help increase businesses’ confidence to create jobs”.

It is very difficult to see how the our current circumstances will create much business confidence, but even in the very best of times, these measures are only one small step to tackle the imbalance between too many employers and employees across the country. If the Government are serious about tackling the imbalance associated with low pay and insecure work, more will have to be done.

The draft regulations are unlikely to deal with some of the core issues affecting those in low-paid work, such as being compelled to accept any shift offered at short notice, and having no remedy if one is cancelled at short notice. Workers on zero-hours contracts still feel worried about losing favour with their employer if they refuse work, despite having had protection from exclusivity clauses for well over seven years. Despite the Government promising to address these problems since their acceptance of the Taylor review in 2018, flexibility still rests primarily with the employer.

Is it not a sad indictment of our current labour market that the principle of someone being able to take up another job alongside another low-paid job is being championed as a major step forward towards a fairer labour market? Can we not do better? Do hard-working people not deserve the right to more predictable contracts? For the record, that was a Conservative manifesto commitment in 2019. Do they not deserve a fair notice period for their shifts, enabling them to plan their life, their caring responsibilities and even, God forbid, their social life? So while we welcome the regulations as a step to provide some extra security, we have to accept that this is just a small step when huge leaps are required.

The campaign group Zero Hours Justice has kindly provided a briefing for Members on today’s legislation. I have found that group’s work and its intimate understanding of the 2015 regulations to be useful and relevant. As I mentioned earlier, it has been more than seven years since the original regulations were introduced, so we have to ask what the results of those regulations have been. Given the casework that Zero Hours Justice continues to receive, we can be clear that the regulations have not ended the feeling of compulsion towards accepting shifts and the insecurity that that brings. It has reports from many people, including one who talked about

“getting hours at the last minute and having to make urgent arrangements for childcare or other caring responsibilities or cancel social plans.”

One airport worker reported that they would

“often only get one hour’s notice before a shift”.

Another said:

“Spending time with my family was really difficult as I never knew if I would be working or not”.

There was a common fear of refusing hours in case doing so resulted in fewer hours being offered, or bullying and harassment by the employer or manager. A worker told Zero Hours Justice that:

“If I said I couldn’t work one day, I was told I was not working for the rest of the week. I was told I wasn’t wanted at all that week.”

Those are some of the real challenges people on zero-hours contracts face. What is the Government’s response to deal with those challenges?

It would be remiss of me not to ask the Minister to provide us with a view on whether the original regulations have in fact been a success. It is striking that the post-implementation review of the original 2015 regulations commented that no formal disputes involving the regulations had been recorded in the tribunal system. There may be many reasons for that, but the explanations proffered by stakeholders who were surveyed paints a worrying picture. A major concern is that the 2015 changes were not adequately communicated by the Government to employers and employees. As workers can only assert their rights if they are aware of them, good pieces of legislation can fail to deliver on their promise if communication is inadequate. How does the Minister intend to remedy that situation with the regulations before us today?

Of course, the problems could be much more systemic. Are the costs, or even just the perceived costs, of tribunals too high for workers to take their cases forward? I note that recently, in a response to a written parliamentary question, the Minister stated that the median cost for obtaining legal representation for a tribunal claim was £2,500. To put that into the context of today’s regulations, that is more than four months’ pay for someone seeking to enforce their rights under these regulations. I am sure the Minister can see why that might prove to be a serious barrier to justice. What can be done, either financially or through greater information and representation, to ensure that those who wish to seek legal redress under these regulations are able to do so?

I also suggest that requiring workers to undertake the calculations mentioned in regulation 5 in particular will require some serious heavy lifting in terms of public information being transmitted to workers so that they know whether they are covered by these regulations. It is not a straightforward calculation; it is not that easy to say what your average earnings will be without reference to some calculations. How many people will actually benefit from these regulations? We know from what the Minister said that around 1.5 million workers are currently earning below the lower earnings limit, but how many of those have exclusivity clauses in their contracts? If the Minister is able to answer that, that would be useful.

Ultimately, this instrument ought to be viewed in the context of half a decade of failures to deliver on promises to Britain’s workforce. It has been over five years now since the much-lauded Taylor review reported and over four and a half years since the Government accepted many of the report’s findings, and we are now coming up to three years since the Conservative party committed in their manifesto to tackle abuses of employment law and to implement genuine flexibility. We have been taunted time and again with the promise of an employment Bill that looks like it is not going to see the light of day. The Minister will probably not be aware that I took every opportunity to ask his predecessor when we could expect to see the employment Bill, so I will ask the same question of him. Sadly, I expect the same answer as his predecessor gave—the timeless classic, “When parliamentary time allows.” If we hear something different from the new Minister, that would be welcome.

Looking at the rest of the Taylor review, it is important in the context of these regulations to see that it also recommended that workers on zero-hours contracts who have been in post for 12 months should have a right to request a contract that better reflects the hours they work. That recommendation was accepted by the Government in their “Good Work Plan”, which was published in 2018. The Low Pay Commission also recommended a stronger “right to switch” to stable hours, as well as a right to reasonable notice of shifts and shift cancellations. Consultation on notice of shifts and shift cancellations took place between July and October 2019, but the response to that consultation is yet to be published. If the Minister can update us on progress in that respect, I will be grateful.

It is not just the limitations of the current legislation and the wider context that are disappointing; there are a number of specific points in the regulations themselves on which I would be grateful for clarification. First—the hon. Member for Glasgow South West asked about his, but I do not think was fully answered by the Minister—why have we chosen to go for the lower earnings limit? Why has that threshold been chosen rather than another? In the consultation, several ways to decide the beneficiaries of this legislation were put forward. Suggestions ranged from using objective measures, such as only accepting exclusivity clauses for the protection of intellectual property or for health and safety reasons, to other earnings-based approaches. In their response to the consultation paper, the TUC suggested that the Government should consider or, at the very least, explain why they do not wish to adopt the same approach laid out in the European Union's directive on transparent and predictable working conditions. In particular, it stated that the Government should consider ensuring that

“an employer neither prohibits a worker from taking up employment with other employers, outside the work schedule established with that employer, nor subjects a worker to adverse treatment for doing so.”

I know that the current vogue in the Government is automatically to dismiss as undesirable anything that comes from Brussels, but there is much to commend in that approach and I would be grateful if the Minister explained to the Committee why he chose not to take it.

It is disappointing that a threshold of even the national minimum wage or the national living wage has not been adopted, which would have extended support to many more workers than the lower earnings limit. Indeed, in the consultation carried out for the 2015 regulations there was a suggestion that exclusivity clauses would be banned for anyone earning less than £20 an hour, which is obviously a significant way away from where we are today. The true cost of that choice to workers was clearly highlighted in the consultation, in which it was stated that earnings-based thresholds become targets to exploit.

The fact that the Government still actively chose the lowest reasonable income-based threshold tells us that there is far more to do in this area, and that is compounded when we look at the implications for those claiming universal credit. It is a legal requirement that those working less than 35 hours on the minimum wage, which is currently £332 a week for those over 23, be actively seeking additional work as a condition of receiving their allowance. What assurances can the Government give to those earning above the current lower earnings level of £123 per week but below the universal credit threshold of £332 about exclusivity clauses that may remain in their contracts? Will they face sanctions if they are unable to take additional work? Will the Government consider extending the scope of the regulations to cover those people as a result of what may well be some difficult conversations?

What steps will be taken to protect those who may earn below the lower earnings limit but may not be covered by the regulations because they are classed as self-employed? I am not talking about people who are genuinely self-employed, but those who are working in the gig economy and are often placed on highly restrictive contracts that do not offer the genuine freedom that self-employment provides. I think we all know the kinds of contracts that I am talking about.

Speaking of the effectiveness of the regulations, it would also be useful to have an assessment of how effective previous measures have been. As I have said, it is unclear what impact the 2015 regulations have had. While there are clear differences between workers on low pay and those on zero-hours contracts, they share the insecurity about accepting other sources of income, which the instrument is designed to challenge. It would be reassuring and helpful to hear how the Minister will evaluate both today’s regulations and the previous ones.

The Minister mentioned the follow-up regulations, which will enshrine the right of legal redress. As we know, due to the implementation of the compulsory extra hurdle of ACAS conciliation that the Government have introduced, those rights do not become live until the early conciliation process is enshrined in law, so I would be grateful if the Minister gave us an assurance, and ideally a date by which the Government are committed to introducing those regulations, so that the rights that we are considering today become enforceable.

Finally, I wonder why we have taken so long to get to this point. I refer not only to the commitments made by the Government but to the Taylor report. We are seven years on from the original regulations, the review of which took place over 18 months ago. That it has taken us until today to get to where we are now seem like slow progress, but overall this is a welcome first step. In today’s climate, though, and given that the Government were elected on a promise of delivering more wide-ranging labour market reforms to create genuine fairness and flexibility, much more needs to be done.

--- Later in debate ---

[Dean Russell]

I appreciate the intervention and the diligence with which the hon. Gentleman follows Government process and Conservative manifestos. Of course, there is still a desire to introduce an employment Bill, but a lot of the activity that would have been in such a Bill is coming forward. A neonatal private Member’s Bill is currently in play, and there is some really great work going on in that space. I hear him and will feed back the comments, but we are forging ahead in a positive way. I too was disappointed that the Queen’s Speech did not include an employment Bill, but we remain committed to delivering our as many of our commitments on employment as parliamentary time allows. As I say, numerous private Members’ Bills on employment rights have been introduced as a result of PMB ballots in the Commons. Wherever possible, there is a keenness to support those that are aligned with the goals of the Government..

The hon. Members for Glasgow South West and for Ellesmere Port and Neston both asked why the draft regulations are not being extended further, and I understand their views. Ultimately, the intention is to ensure that low-paid workers who are not able to secure the number of hours they would like from their current employer are able to seek additional work elsewhere. The lower earnings limit is set each tax year by the Government and is an established marker of a low-paid worker. Using the lower earnings limit will also ensure that the threshold remains relevant. Setting the threshold at the level of the lower earnings limit balances the needs of various businesses while protecting the most vulnerable workers and enabling them to boost their income where required.

[Justin Madders]

I am grateful to the Minister for providing some explanation. Can he say a bit more about why the needs of those businesses mean that the level is set at where it is now?

[Dean Russell]

Obviously they are wide-ranging, but a good example would be that if someone is working in an company where the information that they are working on is sensitive and there is a major competitor, that would be a challenge for exclusivity. A company would not want that worker to go and work for a competitor.

[Justin Madders]

I suggest that the general confidentiality duty in contracts of employment ought to cover those sorts of situations. I urge the Minister to look again at that as a reason not to extend the scope.