Employment Rights Bill (Ninth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[The Chair]

Would everyone please ensure that all electronic devices are turned off or switched to silent mode? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sitting is available in the room and on the parliamentary website. I remind Members about the rules on the declaration of interests, as set out in the code of conduct.

Clause 10

Policy about allocating tips etc: consultation and review

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

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

It is a pleasure to see you in the Chair this morning, Mr Mundell. As is customary, I refer to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.

As Members will be aware, clause 10 introduces new requirements on tipping, namely the requirements for employers to consult workers about the allocation of the tips they have earned, and to review their tipping policy. These new requirements will build on the measures introduced by the previous Government in the Employment (Allocation of Tips) Act 2023. The Act came fully into effect on 1 October this year and ensured that an estimated £200 million-worth of tips each year are no longer retained by employers.

The Act is accompanied by a statutory code of practice on the fair and transparent distribution of tips. Although the Act requires employers to allocate tips fairly to workers, the existing statutory code of practice only encourages consultation with workers in deciding that allocation. The Government were clear in their commitment to going further—indeed, I took part in a debate earlier this year in which I said that the legislation did not go far enough. We will therefore make it mandatory for employers to consult workers in developing or updating their tipping policies, including how tips are allocated.

The clause will support worker participation in the allocation and distribution of tips that they have earned, by mandating that employers consult workers during the development or revision of their written tipping policies. It will also mandate that employers review their tipping policy and maintain records of the consultation they have carried out, as well as giving workers the right to request and review records related to the tipping policy consultation. The consultation will be required to take place at the formative stage, before the policy is finalised or updated, and should be carried out, where possible, by engaging with representatives of recognised trade unions or other chosen representatives. If neither are available, the consultation will be required to be with workers likely to be affected.

We will continue to engage with unions and worker representatives in hospitality and other impacted industries to ensure that the measures in the Bill and in the statutory guidance deliver fully on our aims. Following Royal Assent, we will consult widely and properly with stakeholders to determine what changes should be made to the existing statutory code of practice. We are determined to ensure that guidance is as helpful as possible, ensuring that tips are allocated fairly and that worker consultation is carried out properly.

These measures will be enforced via the employment tribunal system. If an employer fails to consult their workers properly or to distribute tips in a fair and transparent manner, workers will be able to bring a claim to an employment tribunal. The tribunal will be able to order an employer to compensate workers up to £5,000 for financial loss. I think that Members can see what we are trying to achieve with the clause, and I therefore commend it to the Committee.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship once more, Mr Mundell. The Minister mentioned that the clause builds on private Member’s legislation passed in the last Parliament, and it would be remiss of me not to put on record that the transformation in some employers’ attitudes to their employees and to the retention and fair distribution of tips was in large part down to the former Conservative Member for Watford, Dean Russell, who piloted the original legislation through the House. There were one or two little bumps along the road as he came into ministerial office and then out again in—what was the number?—43 days, but many Conservative colleagues really pushed for the legislation. It is one of those great unfairnesses that, for years, incredibly hard-working people in the hospitality sector and others had an expectation that they would receive the generosity of their customers’ tips at the end of the meal, the round of drinks or whatever but, for various reasons, did not get their fair share. The legislation the Minister referred to righted that historic wrong, and clause 10, which seeks to strengthen that, is very welcome.

Where I gently suggest to the Minister that there needs to be a little more thought and clarity is settings where there is no union to consult. That might be a small business such as a restaurant or pub, where the people who work there are not affiliated with any union or body that could be consulted on their behalf. Will he say something about how those smaller businesses—smaller restaurant or pub settings—will get dialogue going with their employees so that the business has a fair and equitable, and clear and unambiguous policy to ensure that the tips reach those workers?

[Laurence Turner (Birmingham Northfield) (Lab)]

I draw attention to my declaration in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions. I noticed last week that the Prime Minister made a James Bond joke, and I wondered whether he was following the Committee’s proceedings in real time. There is a valid question here: when James Bond buys a vodka martini, what happens to the tips? Hopefully, thanks to this Bill and the legislation passed last year, we will have a more equitable solution.

I want quickly to raise two issues. The “Make Work Pay” document published earlier this year stated:

“Labour will strengthen the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.”

I would be interested in the Minister’s views on whether this measure meets that very welcome commitment. Whether tips that would have been received during shifts that are cancelled fall under the definition of reasonable compensation is presumably a question to be addressed in the future.

In respect of the points raised by the hon. Members for Torbay and for Mid Buckinghamshire about consultation with groups of workers who are not represented by a trade union, I suggest that the kinds of businesses they mentioned should have at least a degree of familiarity with the principles of that, since they are established and well understood in the context of redundancy situations and in other areas.

[Justin Madders]

First, I will acknowledge, as did the shadow Minister, the hon. Member for Mid Buckinghamshire, the work in this area by previous Members of this place, including the former Member for Ynys Môn. I think it was seven years after the announcement that there was to be legislation that we finally got action, but it is welcome. I note the shadow Minister’s comment that the legislation has transformed attitudes, and that is what we are trying to do with this Bill in general: transform the workplace so that workers have better security and a better voice.

The shadow Minister raised some important questions, as did the Liberal Democrat spokesperson, the hon. Member for Torbay, about what this measure means for smaller businesses where there may not be a trade union. Of course, that is an argument for greater organisation in the workplace so that employers can consult collectively with the workforce. Those smaller employers—the Great British café, for example—would not always have an easy route to consult with their workforce, but in that kind of informal setting, where there is only a handful of employees, it should be fairly straightforward. Everyone will know their role and what goes on, and the existing code of practice deals with the guidance for smaller employers in that sense.

My hon. Friend the Member for Birmingham Northfield asked whether this measure meets our commitments under “Make Work Pay”, and I believe it does. It is a significant step in continuing the welcome, transformational moves that we have seen on tips, and it gives workers an absolute right to be consulted, which I think is important. There is evidence, such as the research by the Chartered Institute of Personnel and Development, that certain sections of the workforce, including agency workers and people working in certain parts of a business, feel that they do not have a voice. This provision will give them that voice and the real teeth they need to ensure that tips are fairly distributed. As the shadow Minister said, this is all about them. It is about ensuring that everyone who contributes to the service that we all enjoy gets those tips, which the customer clearly wants to ensure are spread among the workforce. On that note, I commend the clause to the Committee.

[The Chair]

It is good to hear the Great British café will be covered by these provisions.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Clause 11

Parental leave: removal of qualifying period of employment

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

--- Later in debate ---

[Greg Smith]

I understand the point that the hon. Lady makes. I am the last person to want to put a greater burden or unnecessary burden on any form of business. All I gently suggest is that this probably is not that great a burden on a business, on the grounds that it will already know what it is going to do when an employee comes and asks for paternity leave, maternity leave or whatever. That is particularly the case given that much of the rules and regulations is already set in statute and, when this Bill undoubtedly achieves Royal Assent at some point, will be further enshrined in statute. There are many other regulations that businesses have to comply with when publishing on their website—I am thinking of privacy notices and various GDPR regulations and so on—just as all the members of this Committee and Members of this House have to do on our own websites. I do not think anyone would try to define any of us as large businesses or huge employers, and I do not think that there are any hon. or right hon. Members left who do not have a website. Perhaps one or two do not—

[Justin Madders]

Jacob has gone, hasn’t he?

[Greg Smith]

He is a fine television superstar these days.

All of us will have published these statements on our websites, because that is straightforwardly set out in statute—straightforwardly set out in law. I am at a loss to understand why it would be a burden for a business of any size to do that, but I am mindful that we do not want to overburden businesses. I accept the explanation given by the hon. Member for Chippenham.

Turning to new clause 17, I would have loved to have six weeks of paternity leave when my three children were born. When my first child was born, I was still self-employed. It was before my election to this place, so the time I took off in 2016 was entirely unpaid because I just had to forgo client work, but it was important to do that.

I am slightly concerned that, as desirable as six weeks would be, it is too great a burden for businesses automatically to have to shoulder. Some good and generous employers may well find a way of offering it in one way or another, paid or otherwise. However, to go beyond the current entitlement of two weeks, which can be split up, as the Minister mentioned, seems to be too big an ask for some businesses, desirable though it may be for fathers to be able be there with their new child in the most precious early days of life to support the mother and the child. I gently invite Liberal Democrat Members to reflect on whether six weeks is realistic for every business.