Employment Rights Bill (Sixth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

I beg to move amendment 6, in clause 1, page 7, line 7, leave out

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

[The Chair]

With this it will be convenient to discuss Government amendments 7 to 10.

[Justin Madders]

It is a pleasure to see you in the Chair, Mr Stringer. I apologise in advance to the Committee because amendment 10 is rather technical, as several amendments are this afternoon. The amendment is required to clarify wording and intent. It clarifies which worker’s contract or arrangement needs to be considered, in cases where a worker has worked under multiple contracts or arrangements during a relevant period, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply, or a guaranteed hours offer that has been made is to be treated as withdrawn.

Amendment 10 effectively means that once there is a relevant termination in such cases, the provision is not treated as meaning that the duty ceases to apply where the worker goes on to be offered further limited-term contracts from the employer. It is essentially a clarification and an anti-avoidance measure. Given that there are rather a lot of those today, I will not detain the Committee any longer.

Amendment 6 agreed to.

Amendments made: 7, in clause 1, page 7, line 10, leave out

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

Amendment 8, in clause 1, page 7, line 16, leave out

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

Amendment 9, in clause 1, page 7, line 19, leave out

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

Amendment 10, in clause 1, page 7, line 20, at end insert—

“(2A) Where a qualifying worker works for an employer under more than one worker’s contract, or in accordance with the terms of more than one arrangement, during—

(a) the relevant reference period,

(b) the offer period, or

(c) the response period,

the references in subsections (1) and (2) to the worker’s contract or (as the case may be) the arrangement are to the worker’s contract under which, or (as the case may be) the arrangement in accordance with the terms of which, the qualifying worker last worked for the employer before the end of the period in question.”—(Justin Madders.)

This amendment clarifies which worker’s contract or arrangement needs to be considered, in multiple contract/arrangement cases, when determining whether there has been a relevant termination of a contract or arrangement such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.

[Justin Madders]

I beg to move amendment 11, in clause 1, page 8, line 7, at end insert—

“(5A) Where, by virtue of subsection (2), a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn, the employer must, by no later than the end of the response period, give a notice to the qualifying worker stating this to be the case.

(5B) Where, by virtue of regulations under subsection (5)—

(a) an employer who would otherwise have been subject to the duty imposed by section 27BA(1) in relation to a qualifying worker and a particular reference period is not required to make a guaranteed hours offer to the qualifying worker, or

(b) a guaranteed hours offer made by an employer to a qualifying worker is treated as having been withdrawn,

the employer must give a notice to the qualifying worker that states which provision of the regulations has produced the effect referred to in paragraph (a) or (b) (as the case may be).

(5C) A notice under subsection (5B) must be given by an employer to a qualifying worker—

(a) where it is required to be given by virtue of paragraph (a) of that subsection, by no later than the end of the offer period;

(b) where it is required to be given by virtue of paragraph (b) of that subsection, by no later than the end of the response period.

(5D) The Secretary of State may by regulations make provision about—

(a) the form and manner in which a notice under subsection (5A) or (5B) must be given;

(b) when a notice under subsection (5A) or (5B) is to be treated as having been given.”

This amendment requires an employer to give a notice to a qualifying worker where the employer’s duty to make a guaranteed hours offer to the worker does not apply, or an offer already made is treated as having been withdrawn, as a result of proposed section 27BD(2), or regulations made under proposed section 27BD(5), of the Employment Rights Act 1996.

[The Chair]

With this it will be convenient to discuss Government amendments 13 to 15, 19, 20, 23, 44 and 45.

[Justin Madders]

Amendment 11 will introduce a duty on employers to inform workers when an exemption applies and the employer is exempt from their obligation to offer a worker a guaranteed hours contract. Any exemptions to the duty to offer guaranteed hours will be defined in regulations.

Amendment 11 will also introduce a duty on employers to inform workers where an offer of guaranteed hours already given is to be treated as withdrawn because a relevant termination has taken place. That will ensure that workers are aware of when they are not receiving a guaranteed hours offer because an exemption applies. It will allow workers to check that the exemption is applicable to them, and then enable them to enforce their right to guaranteed hours where an exemption is not applicable.

Associated consequential amendments 14, 19 and 44 will ensure that workers will be able to take a complaint to an employment tribunal if the worker is not provided with a notice of exemption or a notice of the withdrawal of an offer already made. That will also be the case where a notice has been provided but should not have been, or where a notice has been provided but cites the wrong exemption.

Amendment 13 will introduce a new duty on employers that will ensure that workers who would likely qualify for a guaranteed hours offer are aware of certain information about the right to guaranteed hours. That will help to ensure that workers are informed about the new right and can therefore take decisions about their working hours during their reference period based on the information they receive about their possible right to a guaranteed hours offer.

Further consequential amendments 15, 23 and 45 have been made to ensure that a worker may enforce their right to be informed about the right to a guaranteed hours offer by taking a complaint to an employment tribunal. A consequential amendment 20 has been made to define the period within which a complaint of this nature may be taken to a tribunal. I think we might get to that later in relation to the general application of extended time limits.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. As a precursor to my comments on these specific amendments, I note that the sheer volume of Government amendments that we are considering really goes to show that the Bill might have met a political objective in being published in 100 days, but that it was not ready to be published in those 100 days. At worst, that is a discourtesy to the House and, at best, it shows that the legislation simply has not been drafted properly. These changes simply would not have been necessary had due diligence been done on the Bill before it was published.

I would like to focus on amendment 13 from this group of amendments. That amendment requires employers to give their employees access to certain information to be specified in regulations—we are back to our old friend of regulations to come. Let me ask the Minister the following: what information will amendment 13 require employers to make available? Why? And what further burden will be imposed later down the line by regulations, thanks to the power taken in the clauses? Employees will be able to take their employer to a tribunal for not providing this information, as provided for in amendment 15, so I suggest to the Committee and the Minister that it is vital that we can understand the requirements that the clause will place on employers.

[Justin Madders]

I am grateful for the shadow Minister’s questions. No doubt during the passage of the Bill we will come back on several occasions to that point about the number of amendments. I just place on record my gratitude to the civil service and the Office of the Parliamentary Counsel for their work in getting the Bill published to the parliamentary deadline that was politically set. Of course, lots of Bills have amendments as they progress. As is consistent with our wish to engage thoughtfully, we may still have further amendments.

As for the shadow Minister’s questions, it is entirely usual to put that sort of detailed information in regulation, and we would not normally specify it in a Bill. We are trying to ensure that workers who are captured by the zero-hours legislation are aware that they are captured by it and are entitled to certain rights, such as the offer of a guaranteed hours contract. This is about making sure that some of the most vulnerable people in society, who are often exploited by zero-hours contracts, are at least given the information to ensure that their rights are enforced. We will work with businesses and employers, and representatives and trade unions on the precise detail of the information to be provided, but this is about making sure that all parties are aware of their legal obligations. I hope that the shadow Minister understands that this is an important part of the legislation.

Amendment 11 agreed to.

[Justin Madders]

I beg to move amendment 12, in clause 1, page 8, leave out lines 8 and 9 and insert—

“(6) For the purposes of subsection (3)(c) (and subsection (4)(b), which applies subsection (3)(c))—

(a) subsection (8) of section 27BB (when it is reasonable for a worker’s contract to be entered into as a limited-term contract) applies as it applies for the purposes of that section;

(b) it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—

(i) where the period in question is the relevant reference period, during that period;

(ii) where the period in question is the offer period, during that period or the relevant reference period;

(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”

This amendment adds a rebuttable presumption to the existing provision made by proposed section 27BD(6) of the Employment Rights Act 1996. The presumption will apply when determining whether there has been a relevant termination for the purposes of that section such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.

The amendment will close a potential loophole that could mean that workers might not be entitled to a guaranteed hours offer if they are employed on a series of limited-term contracts to undertake the same or similar work. It will do that by adding a rebuttal presumption, that it will not be considered reasonable to have entered into a limited-term contract where a worker undertook work that was the same or similar in more than one contract during the relevant period. That means that the relevant termination provisions would not apply and the employer would not be excepted from its duty to offer guaranteed hours. An employer would have to offer guaranteed hours to the worker, even if that worker’s last contract was terminated at the end of the relevant period, unless it was reasonable for the employer to have entered into a limited-term contract with the worker and the presumption is rebutted, which could then lead to a relevant termination.

Under proposed new section 27BB(8) of the Employment Rights Act 1996—as referred to in the amendment—it is “reasonable” for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract will end when it is performed; if the worker is needed only until some event occurs and the contract will then end; or if the worker is needed only for some other temporary need to be specified in regulations.

To be clear, whether it is “reasonable” for the employer to enter into a limited-term contract during the relevant periods affects only whether the right to guaranteed hours applies. If such a contract is not “reasonable”, it is still a lawful contract and may, of course, be an acceptable means of conducting business. As such, the presumption introduced by the amendment would apply only to determine whether there was a relevant termination of a limited-term contract, where a worker is engaged on a series of limited-term contracts doing the same or similar work. The presumption will not prevent an employer from engaging a worker on a series of fixed-term contracts, but it will act as an anti-avoidance measure to ensure that an employer cannot get around its duty to offer guaranteed hours by engaging the worker on a series of limited-term contracts even though they are actually doing the same work.

[Greg Smith]

Amendment 12 states that it is to be presumed by tribunals

“that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract”

if the work done

“was of the same or a similar nature”

as the work undertaken by other employees, with the following conditions:

“(i) where the period in question is the relevant reference period, during that period;

(ii) where the period in question is the offer period, during that period or the relevant reference period;

(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”

I have stressed the wording of the amendment because I would be grateful if the Minister could clarify what protection the clause is designed to give employees. The vast majority of businesses reading that could easily be forgiven for getting slightly confused. Why is that wording necessary, particularly on this measure, to create the protections that I think I understand the Government want to achieve? The amendment might result in confusion from most businesses.

--- Later in debate ---

[The Chair]

Minister, would you care to respond?

[Justin Madders]

We have had a good debate on this amendment. It is fair to say that my reaction when I first saw the amendment was similar—that it is quite wordy. However, that is the way our legislation is crafted in this country, and it is not unusual. We will make sure that when we drill down into the practical applicability of the Bill, we produce regulations. There will be guidance on gov.uk. ACAS will get involved.

The amendment is intended to deal with a particular situation. I do not believe most employers will behave in that way, but we know that some might, and that some will deliberately avoid their obligations to give a right to a guaranteed-hours contract. It may be, in the words of the hon. Member for Bridgwater, “gobbledegook”, but I can assure him that ACAS documents and Government guidance on employment rights are not gobbledegook; they are easily accessible. We are committed to making sure that when the Bill is passed, the legislation is easily accessible, because it will not work otherwise. That is clearly part of our aim.

It is pretty clear what section 27BB(8) actually means in terms of when it will be reasonable not to offer guaranteed hours, but I appreciate that that is very easy for us sat in this room to say, having indulged in the niceties of the legislation. It is not what will end up on businesses’ doorsteps. We will not give them a copy of the Bill through the post and say, “Knock yourselves out.” They will get proper support and guidance because that is how we want our employment relations to work. We want them to be practical; we want them to be effective; we want people to be able to understand what their rights and obligations are. On that note, I commend the amendment to the Committee.

Amendment 12 agreed to.

Amendments made: 13, in clause 1, page 10, line 11, at end insert—

“Information

27BEA Information about rights conferred by Chapter 2

(1) An employer who employs a worker who it is reasonable to consider might become a qualifying worker of the employer in relation to a reference period (whether the initial reference period, or a subsequent reference period, as defined in section 27BA) must take reasonable steps, within the initial information period, to ensure that the worker is aware of specified information relating to the rights conferred on workers by this Chapter.

(2) An employer who is subject to the duty in subsection (1) in relation to a worker must take reasonable steps to ensure that, after the end of the initial information period, the worker continues to have access to the specified information referred to in that subsection at all times when—

(a) the worker is employed by the employer, and

(b) it is reasonable to consider that the worker might become (or might again become) a qualifying worker of the employer in relation to a reference period.

(3) “The initial information period”, in relation to a worker and the worker’s employer, means the period of two weeks beginning with—

(a) where the worker is employed by the employer on the day on which section 27BA(1) comes into force (“the commencement day”), the commencement day, or

(b) where the worker is not so employed, the first day after the commencement day on which the worker is employed by the employer.

(4) But where, on the day referred to in subsection (3)(a) or (b), it was not reasonable to consider that the worker might become a qualifying worker of the employer in relation to any reference period, subsection (3) is to be read as if it provided for the “initial information period” to mean the period of two weeks beginning with the day on which it becomes reasonable so to consider.

Enforcement”.

This amendment imposes a duty on employers to ensure workers who have the potential to qualify for a guaranteed hours offer are aware of, and continue to have access to, certain information (to be specified in regulations).

Amendment 14, in clause 1, page 11, line 11, at end insert—

“(4A) A worker may present a complaint to an employment tribunal that the worker’s employer—

(a) has failed to give to the worker a notice under section 27BD(5A) or (5B);

(b) has given to the worker a notice under section 27BD(5A) or (5B)(b) in circumstances in which the employer should not have done so;

(c) has given to the worker a notice in purported compliance with section 27BD(5B) that does not refer to any provision of the regulations or refers to the wrong provision.”

This amendment is consequential on amendment 11.

Amendment 15, in clause 1, page 11, line 11, at end insert—

“(4B) A worker may present a complaint to an employment tribunal that the worker’s employer has failed to comply with—

(a) the duty imposed by section 27BEA(1);

(b) the duty imposed by section 27BEA(2).”—(Justin Madders.)

This amendment is consequential on amendment 13.

[Justin Madders]

I beg to move amendment 16, in clause 1, page 11, line 18, leave out “three” and insert “six”.

This amendment would increase the time limit for bringing proceedings under the new section 27BF(1) of the Employment Rights Act 1996 from three months to six months.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 17, 18, 21, 22, 28, 29, 33 to 36 and 83.

Government new clause 10—Increase in time limits for making claims.

Government new schedule 2—Increase in time limits for making claims.

Government amendments 108 and 109.

--- Later in debate ---

[Justin Madders]

This group of amendments is not quite as daunting as it sounds, because they all deal with the same point, which is the extension of time limits for making claims.

New schedule 2 amends time limits for making claims in employment tribunals from three months to six months. In recent years, as we know, demand has increased sharply. Increasing the time limit from three to six months will help to reduce pressure on the employment tribunal system, allowing parties to try to resolve their differences before resorting to formal litigation. The amendments apply to time limits for the majority of employment tribunal claims, including claims under the Employment Rights Act 1996, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Equality Act 2010. If Members are interested, the full list of claims is set out in the new schedule.

Government amendments 16 to 18, 22, 28, 29, 33 to 36 and 83 ensure that the change is reflected for cases relating to rights that will be introduced by the Bill. Amendments 16 to 18 and 22 will increase the time limit for taking a claim to an employment tribunal that relates to the right to guaranteed hours from three months to six months. Amendments 28 and 29 will increase the time limit for taking a claim that relates to the right to reasonable notice of shifts from three months to six months. Amendments 33 to 36 will increase the time limit for taking a claim that relates to the right to payment for a cancelled, moved or curtailed shift from three months to six months. Amendment 83 will increase the time limit for taking a claim that relates to whether a worker, or a former worker, believes they have been subject to a detriment by an employer on grounds of industrial action.

Finally, Government amendment 21 is a small technical amendment, which will correct an incorrect section reference. The words “this section” currently refer to section 27BG, which relates to time limits for bringing a complaint, but they should—as I am sure everyone noticed—refer to section 27BF, the correct section under which a complaint may be brought to an employment tribunal.

On a more general note, Members may be aware that a number of years ago, the Law Commission recommended that the time limit for bringing employment tribunal claims should be increased from three months to six months. This set of amendments simply seeks to implement that recommendation.

[Greg Smith]

Quite a list of amendments and edits to the 100-day-old Bill.

I will start where the Minister left off. The amendments extend the time for employees to bring a case to the employment tribunal from three to six months if they believe their employer has breached the duties imposed by the Bill. That includes the provisions around zero-hours contracts and the right to reasonable notice. In that light, a reasonable question would be: why were the provisions not included in the Bill on introduction? What changed? Was that an oversight, or something never originally intended to be included in the Bill? What is the rationale? Furthermore, what is the rationale for increasing the period from three to six months? That is not a modest change—not a matter of a couple of days, a fortnight or something that most people might deem reasonable; that is a substantial shift. It is only right and proper that the Minister, when he responds, gives a full explanation for such a huge change from the original provisions in the Bill.

Data from His Majesty’s Courts and Tribunals Service shows the backlog in employment tribunals, with outstanding cases increasing 18% on last year. To add in additional burdens will add to the overall burden on the service, so as part of the consideration of the Bill and of the amendments it is crucial to understand what the Government will do not just to clear that backlog, but to create the capacity in the service to deal with the increase in demand that the Bill will undoubtedly bring about. I shall be grateful if the Minister will comment on his discussions with the Ministry of Justice to deliver on that.

Businesses, especially small and medium-sized enterprises, rely on the tribunals service being able to process claims quickly so, if the Government are to bring about such a huge and significant change to demand on the service, they should put in place the relevant steps. Have the Government undertaken any assessment of the impact that such an extension will have on employment tribunals, or the likely number of claims? It would help to know what, under the amendments, the Government’s assumptions are—will the level of increase that the Opposition fear come about?

Is there a model—I fully accept that such models are rarely 100% accurate, but they give the country and the service planners an important ballpark figure to be working around, going into the future—and, off the back of that, what is the impact on businesses, particularly small and medium-sized enterprises? If there is no such modelling—if there is no ballpark figure that the Government are working to—why not?

My final question on this group of amendments is: why does the Minister believe that it is proportionate or sensible to double the window in which an employee can bring a claim? Surely the three-month window is sufficient. As I said, the Opposition would like to understand why that doubling is so necessary.

--- Later in debate ---

[Nick Timothy (West Suffolk) (Con)]

I want to add a couple of thoughts, not so much about the principle of the amendments, but about what they say about the process. I note what the hon. Member for Birmingham Northfield said about the history and about the Law Commission having made its proposals in 2020. That rather adds to our confusion about why the amendments are being introduced in Committee and why they were not part of the Bill on Second Reading. I would be grateful if the Minister could tell us a little about the preparation of the Bill and what his officials said at the time of Second Reading about how many more amendments would be necessary in Committee and about its readiness. Will he also tell us more about the precise impact of the amendments, and what they mean for the Bill’s impact assessment?

[Justin Madders]

We have had a pretty wide-ranging debate. Generally, there has been support for the amendments. I welcome the Liberal Democrats’ support and hope they carry on in the same spirit for the rest of the Bill—we will see about that.

On the principle of what we are trying to achieve, let me take the Committee back to a time before the advent of the employment lawyer, when we had a thing called industrial tribunals. Industrial tribunals were about having a speedy and informal way to resolve industrial disputes where there was an individual issue. As time has passed, employment law has grown and industrial tribunals have become employment tribunals, and the original time limits have not been able to keep pace with the range of developments.

A number of examples have been given for why some people will not be able to enforce their rights, because of the strict time limits. Equally, there is evidence that enabling a longer period between a claim being discovered and a tribunal deadline being set means that there is more opportunity for parties to try to resolve their differences. On maternity leave in particular, I recall many occasions when a woman has returned to work and tried to crack on with things but been discriminated against all the time, yet because of the understandable pressures and her eagerness to try to get on, she has not acted as quickly as she should have done.

I will give a recent practical example of a constituent who came into my surgery. He had been involved in a road traffic accident while he was working, and he had been dismissed for that. He was not a member of a trade union and had taken no legal advice on his situation. Clearly, I am not in a position to give him legal advice, because I am not insured to do so, but I pointed out to him that he might want to think about talking to someone about his rights with respect to unfair dismissal. The point I am trying to make is that I was having that conversation two months after he was dismissed, which does not give him—or, indeed, the employer—much time to try to resolve things. It would be preferable for that individual to have the opportunity to have a dialogue with his employer, possibly get a process done correctly, and be reinstated. Because the time limits are so pressured, though, if he did go away and take legal advice, he will probably have been told that the only realistic avenue for him was to put a claim in as soon as possible.

There will be real benefits to the amendments, not just for making sure that people are able to enforce their rights, but in giving people more opportunity and time to resolve their differences before proceeding to litigation. For that reason, the impact assessment has not really been able to pin down a particular figure for the impact of these measures. It is probably fair to say that there are a number of other measures in the Bill that may impact tribunal claims, not least the introduction of the fair work agency. The possibility for that agency to enforce holiday pay claims and wages claims, for example, could take a significant burden off the tribunal.

Let me return to the original point of the amendments. They are about removing anomalies and giving people more time to resolve their differences. It has been an anomaly in the law for many years that equal pay claims and redundancy pay claims can be brought up to six months after the termination of employment, but most other claims cannot. Indeed, there are some claims that, depending on where they are progressed, can take even longer, such as certain types of employment-related claims that go through county court. This is about ensuring consistency.

--- Later in debate ---

[Greg Smith]

indicated dissent.

[Justin Madders]

He is shaking his head—that is good. I certainly do not envisage that to be the case, but we recognise there is a backlog in the employment tribunals. Like many public services, they are under pressure, and there is a plan to recruit more judges in the new year.

[Jon Pearce]

I want to pick up a point that the shadow Minister made about the effect of the pandemic on the backlog of employment tribunal claims. When the last Labour Government left office, the time between a claim being brought and the first hearing was about 30 weeks. By 2019—pre-pandemic—it had increased to 38 weeks. We are now at about 55 weeks. We have seen a huge increase in that time, but it was already rising significantly pre-pandemic.

[Justin Madders]

There are a whole range of Government performance indicators where trends were already going in the wrong direction before covid hit, and that is just another of them. We recognise that there is more to be done to deal with the backlog, which is why we intend to recruit more judges in the new year. We hope that the Bill will not increase demand on the tribunal service, and that the extra time we are giving and the other powers we are giving the fair work agency will encourage people to resolve their disputes without going to litigation. We understand that it is a tremendous expense to go to employment tribunal, and of course, by that point, the employment relationship is already fractured beyond repair. This is the right thing to do, it is consistent with the Law Commission’s recommendations, and we think it will improve access to justice.

Amendment 16 agreed to.

Amendments made: 17, in clause 1, page 11, line 22, leave out “three” and insert “six”.

This amendment would increase the time limit for bringing proceedings under the new section 27BF(2) of the Employment Rights Act 1996 from three months to six months.

Amendment 18, in clause 1, page 11, line 26, leave out “three” and insert “six”.

This amendment would increase the time limit for bringing proceedings under the new section 27BF(3) of the Employment Rights Act 1996 from three months to six months.

Amendment 19, in clause 1, page 11, line 28, at end insert—

“(3A) An employment tribunal must not consider a complaint under section 27BF(4A)(a) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on or before which the notice should have been given (see section 27BD(5A) and (5C)).

(3B) An employment tribunal must not consider a complaint under section 27BF(4A)(b) or (c) relating to a notice unless it is presented before the end of the period of six months beginning with the day after the day on which the notice is given.”

This amendment is consequential on amendment 14.

Amendment 20, in clause 1, page 11, line 28, at end insert—

“(3C) An employment tribunal must not consider a complaint under section 27BF(4B)(a)unless it is presented before the end of the period of six months beginning with the day after the last day of the initial information period (see section 27BEA(3) and (4)).

(3D) An employment tribunal must not consider a complaint under section 27BF(4B)(b) unless it is presented before the end of the period of six months beginning with the day on which the worker first becomes aware of the failure to which the complaint relates.”

This amendment is consequential on amendment 15.

Amendment 21, in clause 1, page 11, line 30, leave out “this section” and insert “section 27BF”.

This amendment corrects an incorrect section reference.

Amendment 22, in clause 1, page 11, line 31, leave out “three” and insert “six”.

This amendment is consequential on amendments 16, 17 and 18.

Amendment 23, in clause 1, page 11, line 36, leave out “(3)” and insert “(3D)”.—(Justin Madders.)

This amendment is consequential on amendment 20.

Question proposed, That the clause, as amended, stand part of the Bill.

[Justin Madders]

Here we are, three and a bit hours in, and we are on the stand part debate for clause 1. I hope we can make swifter progress, but I am sure Members will appreciate that we have debated a number of amendments to this clause, from both sides of the Committee.

I will talk a little about clause 1, because it is central to our aim to improve working relations in this country. It introduces a new right to guaranteed hours, which, alongside some of the other measures in the Bill, will address the issue of one-sided flexibility by ensuring that those who are in scope of the Bill receive a baseline of security and predictability that has been sadly lacking to date.

Our ability to care for loved ones, provide essentials, look after our health and deal with life and its challenges all relies on an element of predictability in our circumstances and finances. We know that a stable base makes us more resilient and more able to deal with challenges that come our way. Raising children, supporting family and our communities, making mortgage and rent payments, effective budgeting, and regular exercise are all good for the individual and for our society, and none combines easily with the unpredictability that some people face in their working lives.

The proposed provisions on guaranteed hours and on notice regarding shifts, which we will come to in due course, will go some way to helping the many workers who work regularly—often for the same employer, and some of them for years—but who do not have the security of knowing there will be a pay packet next week or next month. These proposals, which are the result of engagement with employers and social partners, will introduce fair and proportionate duties. Many of these have already been adopted by our most forward-looking employers. The duties are rightly ambitious but also, if we continue to work collaboratively, workable and achievable.

I will now explain the effects of each new section inserted into the Employment Rights Act 1996 by clause 1—this is effectively a series of new clauses inserted into our favourite, the 1996 Act. The first is new section 27BA, which outlines a new duty that will be placed on employers to offer qualifying workers guaranteed hours based on those hours worked during the reference period. While I hear and am considering the calls for the reference period to be put on the face of the Bill, at the moment the intention is for it to be specified in regulations. It is expected to be 12 weeks. The reason why consideration is being given to putting the initial and subsequent reference periods in regulations rather than in the Bill is that that will allow changes to be made to those periods. This is a novel right and we want to consider the emerging evidence on how it works in practice and, indeed, how it is evaded. However, I hear the calls about the need for certainty, and I will continue to engage with all relevant parties on whether this is something that we should put on the face of the Bill.

New section 27BA outlines the qualifying criteria for this new right, which will be targeted at workers who are on zero-hours contracts or zero-hours arrangements, or have some guaranteed hours—up to a maximum number that will be defined in regulations—but work in excess of those hours, and whose hours over the reference period meet the conditions for regularity or number. Agency workers are not in the scope of the new section, but separate provisions may be made for them using the power in new section 27BV. We recently closed a consultation on applying the rights to guaranteed hours, notice of shifts and payment for cancelled shifts to agency workers. We will now analyse the responses to that consultation and consider whether to seek to amend the Bill later during its passage.

The conditions for regularity and number of hours worked that must be satisfied during the initial reference period, as well as conditions for subsequent reference periods, will be set out in regulations following consultation. That will enable us to ensure that the measure is appropriately targeted at those workers who work regularly and in excess of their contracted hours. Although our intention is to minimise exemptions, regulations may be made to exclude categories of workers from the provisions, providing us with the flexibility to adjust the scope of this new right over time to respond to emerging practices. I have to say that at this stage I am not able to conceive of any particular exemptions that would apply, but I think it is important that we keep that power in the Bill.

New section 27BB sets out the requirements that a guaranteed hours offer must meet. It allows a guaranteed hours offer to take the form of either a variation of terms and conditions or a new contract, depending on the circumstances. A guaranteed hours offer may take the form of an offer to vary terms and conditions only if the worker worked under a single worker’s contract from the beginning of the relevant reference period until the day after an offer is made or later. That would allow all other terms of the contract, other than hours and length of employment, to be kept the same.

Where a worker has been engaged on more than one worker’s contract between the beginning of the reference period and the making of a guaranteed hours offer, that offer should take the form of an offer to enter into a new worker’s contract. Where a new contract is proposed, it must propose terms and conditions that, taken as a whole, are no less favourable than the terms and conditions relating to matters other than working hours and length of employment that the qualifying worker had when working for the employer during the relevant reference period.

New section 27BB also allows regulations to set out details on how it is to be determined whether the hours offered in the guaranteed hours offer reflect those worked during a reference period. It also makes provisions around the use of limited-term contracts by employers offering guaranteed hours. “Limited-term contracts” means fixed-term contracts and those that are to end by virtue of a limiting event. That ensures that employers can continue to use limited-term contracts where it is reasonable to do so.

The new section provides that, where the guaranteed hours offer takes the form of an offer to vary terms and conditions, the contract should usually become permanent. That should be done by removing the provision stipulating the termination of the contract by virtue of a limiting event, unless it can be said on the day after the offer is made that it would be reasonable for that contract to be entered into for a limited term.

The use of a limited-term contract will be regarded as reasonable where the worker is needed only to perform a specific task and the contract ends after it is completed, or likewise for a particular event, or in other circumstances where the employer considers there is a temporary need, as set out in the regulations. For example, if would be reasonable for a contract to be of a limited term where a worker is providing cover for a colleague on parental leave.

New section 27BC sets out requirements for a guaranteed hours offer where that offer takes the form of an offer to enter into a new worker’s contract and a worker has had more than one set of terms and conditions during the reference period. Its provisions will protect workers from being moved on to the worst of all the terms and conditions that they worked under during the reference period. Where an employer makes an offer of guaranteed hours with less favourable terms than the best the worker worked under the during the reference period, new section 27BC introduces a duty on employers to give the worker a notice explaining how the proposed terms and conditions constitute a

“proportionate means of achieving a legitimate aim.”

This will help to protect workers against being given less favourable terms and conditions in contravention of the aims of the Bill.

New section 27BD provides for exceptions to the duty to offer guaranteed hours, including circumstances in which an offer already made should be treated as having been withdrawn. Exceptions will apply if the worker’s contract or arrangement is terminated during the reference period or offer period and it is a “relevant termination”. Similarly, where an offer of guaranteed hours has been made and there is a relevant termination of that worker’s contract during the response period, the offer will be treated as having been withdrawn.

A relevant termination takes place where the worker decides to terminate the worker’s contract through no fault of the employer; the employer had a qualifying reason for terminating the contract and acted reasonably in treating that reason as sufficient to terminate the contract; or a worker’s limited-term contract ends by virtue of a limiting event and it was reasonable for that contract to have been entered into for a limited term. A qualifying reason is a reason that, when an employer is dismissing an employer, can be a fair reason for dismissal under section 98 of the Employment Rights Act 1996.

New section 27BD also allows regulations to be made to specify circumstances in which the duty to offer guaranteed offers does not apply, and it is that section that sets out offer and response periods. The response period, during which a worker must respond to an offer, will begin on the day after an offer is made and its duration will be set out in regulations.

We have made amendments to new section 27BD that will require employers to inform a worker when circumstances exist that exempt them from their duty to offer guaranteed hours, and similarly where a guaranteed hours offer is treated as having been withdrawn as a result of an exemption applying. That will ensure that workers are aware of which exemption applies, and that their employer has not merely failed to offer guaranteed hours. Any exemptions will of course be defined in regulations. Similarly, a further amendment requires that a notice is given where a guaranteed hours offer is treated as having been withdrawn as a result of a relevant termination. We have made further amendments to the new section, designed to close a potential loophole.

As previously drafted, the provisions could have meant that in situations where an employer employs a worker on a series of short-term contracts and the last contract of the period terminates with a limiting event, that could have been treated as a relevant termination. As a result, an employer might not have been required to offer the worker guaranteed hours. The amendment has added a rebuttable presumption, which presumes that it is unreasonable for an employer to engage a worker on a series of limited-term contracts to undertake the same work, and that would therefore not be a relevant termination excepting the employer from their duty to offer guaranteed hours. If the employer fails to rebut that presumption, no exception will apply and the employer will still be required to offer guaranteed hours.

New section 27BE sets out how the worker accepts or rejects an offer, and when the new contract or varied terms and conditions are deemed to take effect. It provides that a worker who does not respond to an offer will be treated as having rejected it, because we would not wish workers to be moved on to guaranteed hours if they had not specifically agreed to them. It provides for regulations to set the form and manner in which the worker must respond to the employer’s offer, and when the response is taken as having been given.

[Chris Law (Dundee Central) (SNP)]

On new section 27BE, there is a lack of formality relating to the worker’s right to refuse an offer of a regular-hours contract. Indeed, the risk is that workers could be coerced into rejecting an offer if it is clear that the employer would prefer the existing arrangements to continue. There are similar arrangements in respect of the working time regulations on workers’ right to opt out of the 48-hour working week; by contrast with the Bill’s provisions on zero-hours contracts, the working time regulations do not apply to all workers, and those who opt-out may revoke their decision to do so, although there are arguably no adequate safeguards there either.

The Secretary of State will have the power to make regulations about the form and manner of the notice under proposed new section 27BE, and reference is made to a response time that is undefined, but the question is whether it would be appropriate for Parliament to give the Minister stronger guidance by requiring that the response period should be at least one week; that the worker has a right to seek advice from an independent trade union before making a decision; that the worker has a right to be accompanied by a trade union official under section 10 of the Employment Relations Act 1999 in any meeting to discuss an offer; and that the worker may revoke a rejection of an offer at any time on giving one week’s notice to the employer. Does the Minister agree that those safeguards need to be incorporated into the Bill so that an employee is not coerced by their employer into rejecting a contract that is not in their best interest?

[Justin Madders]

A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.

Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.

New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.

To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.

New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.

Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.

[Greg Smith]

I am grateful to the Minister for that comprehensive outline of clause 1 but, as I reflect on our debate over today’s two sittings on the amendments to clause 1—the Government amendments that now form part of clause 1 and the Opposition’s substantive amendments, which were not accepted, and our probing amendments, which did not produce the answers we were looking for—I remain concerned that, putting aside some of the noble intentions beneath the Bill, there is still the lack of clarity we have spoken about regarding so many areas of clause 1.

The Minister himself admitted earlier that some things are still to be consulted on and that others are yet to be brought forward through secondary legislation. I am afraid that just does not cut it for businesses up and down the country that are still struggling with the aftermath of covid, the invasion of Ukraine and so many other factors. They need certainty. They need to know, if the rules of the game are changing, exactly what they are changing to—not some ballpark or some in-principle movement towards, but precisely the rules that they are being asked to play by.

Businesses will, of course, comply with any legislation passed by this House and this Parliament, but this provision is an unreasonable ask of them, whether in respect of what would constitute a low-hours contract, fixed-term contracts for qualifying workers or agency workers, or the exact definition of the reference period. It is simply an unacceptable proposition to those who run businesses, particularly, as multiple parties have said today, small businesses, be they microbusinesses or medium-sized enterprises—I fully accept that we can debate the exact number of employees that constitutes a small or medium-sized enterprise.

I recognise many of the good points the Minister made in his speech, and there are many things that we in the Opposition can get behind—at least in principle, if not in the precise lettering of the detail—but the lack of clarity, the Henry VIII powers in some parts and the “still to consult” parts in others make it very difficult for the Opposition to support clause 1 as it currently stands.

As I said earlier, we want to be a constructive Opposition. We might not agree with the Government’s standpoint on many things, but it is important for the United Kingdom that they succeed in their endeavours and that they do not provide an environment in which there will be fewer jobs, not more, with businesses being more reticent to take on new members of staff. That goes particularly to the points around how people who are deserving of a second chance in life, no matter what has happened to them before, may not get that opportunity because it is too big a risk for small businesses that are struggling to get around all the new regulations, rules and laws.

I particularly highlight again the point about small businesses just not having the capacity to deal with new regulation. As has been said, they do not have HR departments or in-house legal services, and they cannot necessarily afford to hire them in if they are to continue producing their products or selling their services to the great British public, or wider than that. I urge the Minister to go back to the Department, focus on where the detail is lacking and put an offer to the House and the wider country. Our business community need not necessarily agree with it, but they should be comfortable that they can understand it and put in place the measures for their employees and businesses. To ensure their growth and success, they desperately require certainty.

[Sarah Gibson]

Despite some of my concerns, I would like to lend my support to the clause, because the guarantees for workers are important. I caveat that by saying that the guidance for SMEs must be clear and must come out soon, so that there is less concern in the business community about taking on staff. Currently, I see an unintended consequence in SMEs, certainly in the near future, not taking on staff because of the fear of additional costs.

While I am on my feet, I would like to make a correction for the record in respect of this morning’s debate. In the debate on amendment 137, although the shadow Minister made a comment about this in his closing speech, it was not my intention to suggest that the Liberal Democrats wish to alter the current definition of SMEs from being 249 employees. I want to make sure that is clear.

[Justin Madders]

To pick up on the points made by my hon. Friend the Member for Birmingham Northfield, this is about who we are trying to help. This clause is primarily about low-income workers who do not currently have the security and certainty of regular hours. They are more likely to be young, female or from an ethnic minority background. We have heard about the real impact that can have and about the power imbalance when an employer holds all the cards. To use my hon. Friend’s imagery, it is effectively like pointing to people at the factory gate and deciding whether they get work that day or not. We must move on from the indignity of that arrangement.

I welcome the support from the Liberal Democrats. It is worth saying that there was general, albeit caveated, support from the witnesses we heard from in last week’s evidence sessions.

I will tackle head-on the shadow Minister’s criticism about the lack of clarity and the need for certainty. Of course we want to give business certainty. I am sure that after the last few years of Conservative Government, we are all crying out for certainty, and there will be certainty. We are at an early stage of the legislative process for this Bill. It will be taken through Committee and through the Lords, and then there will be further consultation, secondary regulations and codes of practices, after which the laws will be implemented. As the Liberal Democrat spokesperson, the hon. Member for Chippenham, said, there is anxiety out there for businesses, but we are a long way off introducing this legislation, because there is so much more to do, and it is important that we do it. We want to get it right, we want to get clarity and certainty, and we want to ensure that this is an effective piece of legislation.

--- Later in debate ---

[Greg Smith]

I am grateful for the intervention. On the hon. Gentleman’s first point, yes, of course there are insurance policies that many businesses will take out. But the example I just gave is one I can see affecting many businesses in my own constituency; there is a strong furniture making heritage around Prince’s Risborough in Buckinghamshire. There are very small businesses that do an incredible job and make some fantastic furniture, but they are microbusinesses with only a couple of employees and they operate on tight margins. They would not necessarily be able to bake the additional cost of a very expensive insurance policy into their bottom line without significant pressure on their overall business.

I accept that I am not talking about every or possibly the majority of businesses; my point in the amendments is that some circumstances might need a more sympathetic ear. In such cases, it could be argued reasonably and sympathetically that businesses in such a sticky spot would be unable to meet the requirements that the Bill sets out. Supply chain problems are just one example.

I take on board the second point made by the hon. Member for Gloucester, although, as I said in one of the earlier debates, I was self-employed for 15 years before entering this place in 2019. Some clients varied every month their requirements of the services that I provided back then. It was frustrating: nobody wants to be in that position, but it is sometimes a business reality, particularly if the ultimate client is struggling for whatever reason—their supply chain or the fact that they are just not doing very well so they need to throttle service provision up and down. I know that my example is not the same as that of a direct employee, but sometimes business needs a sympathetic ear.

To come back to my earlier point, nobody wants people not to be in a secure employment environment. Sometimes, however, things happen in businesses. Businesses in the automotive sector have shed quite a lot of jobs in recent weeks—look at Stellantis and Ford. Sometimes these things happen. With greater flexibility, perhaps more jobs overall can be saved in the short, medium and long terms, rather than having in every circumstance rigid rules that do not allow businesses that flexibility. I suggest that most people would want jobs to be saved rather than lost through that level of rigidity.

I will continue with my questions to the Minister about these probing amendments. In the furniture company example that I gave, what notice would an employer have to give? What do the Government expect an employer in such circumstances to do? From the hefty number of amendments that the Government have tabled, it looks as though small businesses are going to have to pay those employees for hours not actually worked; and even this will be through no fault whatever of the actual business in question.

Given that the Regulatory Policy Committee has flagged the risk that employers, often in fluctuating demand sectors such as hospitality and retail, may respond by scheduling fewer shifts to avoid penalties for cancellations and the consequential lost output to the economy, I would be grateful for the Minister’s appraisal of whether the provisions on short notice cancellations will support or inhibit the Government’s aim of actually achieving economic growth.

[Justin Madders]

I am grateful for the shadow Minister’s amendment. If it is a probing amendment, he has asked a lot of reasonable questions. There are, of course, things that we will be hoping to address today and during the passage of the Bill—and, indeed, the subsequent regulations.

The first thing to say is that we do not believe that it is right at this stage to put the time into the Bill; we want to give ourselves flexibility to respond to how the issue works in practice and to changing circumstances by doing that in secondary legislation. However, the hon. Gentleman has asked a perfectly reasonable question: who are we trying to help? What is our purpose?

Our purpose is to try to help those people who simply do not have that security in their lives at the moment. Research from the Living Wage Foundation suggests that 25% of insecure workers have had their shifts cancelled unexpectedly, with 88% receiving less than full shift compensation. Many workers receive their shift schedules without reasonable notice, and that prevents them from being able to effectively plan their work, social lives and other responsibilities.

Living Wage Foundation data found that in quarter 2 of 2023, 78% of workers received less than two weeks’ advance notice of shifts, with 5% of workers receiving less than one week. That can disadvantage workers’ ability to effectively plan their future income, particularly when that relates to budgeting for regular outgoings when shifts are cancelled, moved or curtailed at short notice. The impact on workers can include an increased reliance on debt and an inability to forecast income or find substitute work, childcare expenses and, on some occasions, travel expenses. Such implications represent the sort of one-sided flexibility that we are trying to deal with.

Evidence suggests that the income insecurity premium could be worth as much as £160 million per year, but the issue is really going to be about that benefit targeting businesses in the right way. We believe that good management practice can deal with an awful lot of this without the need to resort to legislation.

[Alison Hume (Scarborough and Whitby) (Lab)]

Last week, we heard from companies that say they are good employers and offer security of shifts to their workers. Would the Minister agree that companies that offer their workers the right to payment for cancelled, moved or curtailed shifts are in fact good employers and therefore have nothing to fear from the Bill?

[Justin Madders]

I thank my hon. Friend for her intervention. That is indeed the overall message from every provision in the Bill: that good employers are doing lots of these things already. Those things represent the kind of practice that we want to encourage and even to legislate for, because there is plenty of evidence that good workforce planning and valuing employees increases business efficiency and improves productivity; those are, of course, secondary to the individual benefits to the workers. However, the policy is specifically targeted to benefit low income workers in particular—people who are more likely to be younger, female or from ethnic minority backgrounds.

There is also a wellbeing background. Extensive research has reported that the impact of on-call contracts, with short or no-notice cancellation of shifts adding to insecurity, leads to considerable increases in anxiety. There have been quite a lot of representations to the Low Pay Commission about that, with concerns about workers on flexible or variable contracts not being able to suitably assert their rights due to fears of repercussions, being zeroed down or having no additional dialogue with the employer.

--- Later in debate ---

[Justin Madders]

As the hon. Member will know, the total cost to businesses from the Bill, as set out in the impact assessment, is about 0.4% of total employer costs. We absolutely acknowledge that there are many good employers out there who do this already, and we hope that there are many employers who do not who will feel that it is a positive once the legislation comes in. We want to take them on that journey and inform them why this is a positive thing and a benefit for their workforce. Importantly, they will see that the playing field is levelled and hopefully be able to compete more ably with others who might in the past have undercut them. But part of that will be making sure that they have access to good advice, good support and a guiding hand to make sure that the clear policy outcomes we want to see from the Bill are actually delivered. On that note, Mr Stringer, I ask the shadow Minister to withdraw his amendment.

[Greg Smith]

I remain very concerned about some of the real-world applications. I accept that it will have a negative impact in a minority of cases. The purpose of our amendment, as I said, was to probe the Government, so I am happy to confirm that we will withdraw it.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Justin Madders]

I beg to move amendment 24, in clause 2, page 13, line 42, leave out

“from what time on which day”

and insert

“when the shift is to start and end”.

This amendment requires notice of a shift to include when the shift is to end (as well as how many hours are to be worked and from when).

[The Chair]

With this it will be convenient to discuss Government amendments 25 to 27.

[Justin Madders]

I am afraid we are back into some of the more technical minor amendments, on which I will not detain the Committee too long.

Amendment 24 will ensure that employers have to give reasonable notice of not only when a shift starts and how many hours it will be worked, but also when it will end. The Government’s intention is to avoid a scenario whereby a worker is notified of the start time and total duration of a shift, but does not receive reasonable notice of whether those hours will be in a single block, or whether there may be a large break.

The current drafting would allow an employer to specify that a worker is required to work, for example, for three hours from 9 am on Friday, without specifying whether the shift will be from 9 to 12, or from 9 to 10 and then again from 12 to 2. In either scenario, the notice would meet the requirements to be a notice of the shift. The amendment closes this potential loophole. Some of my own children have gone into work and then been told to go and have a two-hour lunch break—unpaid. We clearly want to avoid that through this amendment.

I turn briefly to Government amendments 25 to 27, which will ensure that workers are entitled to reasonable notice where an employer cuts working hours from the middle of a shift as well as from the start or end. The current drafting would arguably allow employers to reduce the number of working hours in the middle of a shift without giving reasonable notice. The amendments close that loophole, ensuring that workers have to be given reasonable notice if an employer decides to change the hours of a shift by reducing the hours in the middle.

[Greg Smith]

I will be brief in my response to these Government amendments, which make the requirement for the right to reasonable notice of cancellation or changing of shifts more onerous. I spoke to these principles during our debate on the previous set of amendments in my name, but I ask the Minister gently now, why were these provisions not included in the Bill on introduction? Was it an oversight? Will there be a repeat of the line, “It was the intention but we just didn’t do it”, or is it something else? I would be grateful for clarification.

As I argued during the debate on the previous set of amendments—this point is relevant to this set too—why are these amendments so necessary? Does the Minister really think it a proportionate burden to place on businesses, particularly in those cases where there will be fair and reasonable grounds for a business not needing to provide notice of a change in shift to an employee? What assessment have the Government made of the cost to businesses, given that they will now essentially have to pay for work not done, without recourse to force majeure provisions or whatever it might be—where it is genuinely not their fault that they cannot provide the work to their workers for whatever reasons? Force majeure is a well-established principle in all sorts of sectors across the world.

I urge the Minister to consider carefully how he can ensure that out-of-control eventualities are looked after in the Bill; otherwise I fear it will create a scenario where particularly the smallest businesses—those one, two or three-employee businesses—are placed in a very difficult financial position. I cannot believe that the Government believe that is the just and right thing to do, and that they could not come up with some other safeguards to protect those microbusinesses—those small enterprises—that might find themselves in a sticky spot.

--- Later in debate ---

[Anneliese Midgley]

I am sorry for referring to the shadow Minister as “you” earlier, Mr Stringer; I was not suggesting that you needed to clarify whether you thought workers should shoulder all of the burden.

I want to remind hon. Members of some evidence that we were given last week in support of the right to reasonable notice of a shift. Matthew Percival from the CBI said that

“there are areas where the Bill can be a helpful step in the right direction. To give a few examples, we have previously supported the idea that it is wrong that you should turn up for work expecting an eight-hour shift, be sent home after two hours and only be paid for two hours. There should be a right for compensation there.”

Jane Gratton from the British Chambers of Commerce said:

“As Matthew said on the compensation of shifts, we certainly support that, and we would be very happy about the fair work agency to create a level playing field and measures around workplace equity.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 13, Q6.]

Allen Simpson from UKHospitality said:

“Again, reasonable notice is an important principle and there should be protections.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]

[Justin Madders]

The way the shadow Minister was intervened on made it feel like this was an Opposition amendment, but it is actually a Government amendment to deal with the issue of split shifts and the anti-avoidance measures. This is about rebalancing the level of risk faced by a worker and an employer. At the moment, the balance is shifted too far one way. We estimate in the impact assessment that the cost to businesses of this policy could be up to £320 million a year. Clearly, a lot of that will end up being transferred directly into workers’ pockets. We hope that, through better workforce planning, that figure will go down and we will see improvements to the lives of those who will benefit from the Bill.

I will make one further point. The shadow Minister referred several times to force majeure situations. There is provision in a later clause, which we will not get to today, for us to set out in regulations when there might be exceptions to this provision. There are lots of potential arguments about whether the provision should apply, and we intend to consult further before the final regulations are published and debated.

--- Later in debate ---

Question proposed, That the clause, as amended, stand part of the Bill.

[Justin Madders]

I will not detain the Committee too long, because it feels like we have had the clause stand part debate already. I will briefly go through the provisions of clause 2, which creates the right to reasonable notice of shifts. As I set out when we discussed clause 1, we must tackle one-sided flexibility. Guaranteed hours is an important part of that, but we must also ensure that workers have reasonable notice of their shifts, so that they are enable to effectively plan their work and personal lives.

If someone’s shift is moved but their pay is less than the cost of the babysitter, that is obviously a negative. If someone is offered a last-minute shift but it is 60 minutes away by bus and they have no car, they should not be penalised or have a black mark put against them if they are not able to take it up. We can do better than this. We want to establish a more balanced partnership between workers and employers, and we hope to do that with clause 2. It will still allow employers to make changes to shifts, but it will also provide incentives for employers to meet the standard of the best employers, encouraging better planning and engagement with their workers. These provisions to introduce a right to reasonable notice of shifts and to changes in them are a small but important step towards making the lives of many shift workers and their families feel a little more secure.

Clause 2 creates several new sections in the Employment Rights Act 1996. New section 27BI outlines the duty that will be placed on employers to give reasonable notice of shifts. That duty will apply to workers on zero-hours contracts and arrangements, as well as workers on other contracts that will be specified in regulations but are likely to be low-hours contracts. New section 27BJ specifies that employers must also give reasonable notice of any moves or changes of shifts. New section 27BK notes that, as for other sections, agency workers are not covered by this measure—new section 27BV provides a delegated power to make corresponding or similar provision in relation to agency workers. In addition, section 27BK specifies that workers are not entitled to reasonable notice of shifts that they themselves suggested they work. For example, they would not be entitled to reasonable notice of overtime that they themselves had suggested. That right does, however, apply where the employer agrees to a suggested shift and then later changes or cancels the shift. Finally, the section contains a power to make regulations about how the notice should be given and when it is treated as being given.

New section 27BL explains that, where an employer is required to make a payment to a worker because the employer has cancelled, moved or curtailed a shift at short notice, the worker cannot get compensation for lack of reasonable notice for the same cancellation, movement or curtailment. New section 27BM enables workers to complain to employment tribunals that their employer has failed to comply with the duties to give reasonable notice. New section 27BN provides that tribunals must make a declaration where they find for a complainant and may award compensation they consider appropriate to compensate the worker for financial loss suffered as a result of the failure to give reasonable notice. This compensation will be capped in regulations and, in line with common law on recoverable damages, compensation will also take account of the duty on the claimant to mitigate their losses.

[Greg Smith]

I will not detain the Committee for much longer because, as the Minister said, it felt as though we had the debate on the whole clause during the debates on the amendments. I reiterate my concern about some of the provisions in the clause. Although I accept that the Minister said that, further on in the Bill, there is provision for force majeure measures to be introduced, there is a gaping hole for those emergency, unexpected, out-of-control circumstances, and this clause fails to fill it. However, we will almost certainly return to that on Report, so we will not press the clause to a Division.

Question put and agreed to.

Clause 2, as amended, accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Anna McMorrin.)