Employment Rights Bill (Fifteenth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 7th January 2025 Public Bill Committees

[The Chair]

May I begin by wishing everyone a happy new year? Will 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 sittings is available in the room and on the parliamentary website. I remind Members about the rules on declaration of interests, as set out in the code of conduct.

Clause 45

Right to statement of trade union rights

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

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

Good morning, Mr Mundell. It is a pleasure to see you in the Chair. Happy new year to you and to all members of the Committee. I start by making my customary reference to my declarations in the Register of Members’ Financial Interests.

This, I hope, is a fairly straightforward and uncontroversial clause; it does exactly what it says on the tin. Currently, there is no general requirement for employers to let their staff know of their right to join a trade union. The clause introduces a legal duty for employers to inform all new employees of their right to join a union and to remind all staff of that right at prescribed intervals. Employers must provide this information alongside the written statement of particulars that they are already required to produce under section 1 of the Employment Rights Act 1996. Specific details, including the frequency and manner of notification, will be set out in secondary legislation following consultation.

A lack of awareness of the right to join a trade union may be contributing to declining union membership and reduced worker engagement in collective bargaining. The clause will help empower workers to become active in protecting their rights. This is a step forward in strengthening worker representation and the collective voice in the workplace, ultimately supporting more effective collective bargaining. I therefore commend the clause to the Committee.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Mundell, and I too wish you and all members of the Committee a very happy, prosperous and healthy new year. If only the optimism of that statement were matched by business confidence around the country as we start this new year.

I understand why the Government want to take this measure, and it is pretty clear that it will happen as part of the Bill. As the Minister prepares for the consultation that he spoke about, I ask him to reflect on how quickly we can give businesses certainty on the frequency with which they will have to remind their employees of their right to join a trade union. Of course everyone has a right to join a trade union—there is no issue with that—but this is yet another thing that HR departments of bigger businesses, and individual owners of smaller businesses, who have to do everything from the HR function down to replacing the loo roll in the toilets, will have to remember to do on a regular basis, and presumably they will face consequences if they do not. It might not seem onerous as we talk about it at half-past 9 on a Tuesday morning in Westminster, but once we start ratcheting up all these different things for businesses—particularly those very small businesses—to do, it will become a burden.

The other thing that I gently ask the Minister to consider as part of his consultation is this. Would it not be a fairer, more balanced and better way of doing things to have in the proposed statement, as well as a reminder to employees of their right to join a trade union, a reminder that they do not have to do so—that there is equally a right not to join a trade union if they do not wish to? It would be much more fair and balanced if the consultation focused on ensuring that both sides are equally reflected—yes, a reminder that there is a right to join a trade union, but equally, a reminder that there is no compulsion and no absolute, set-in-stone requirement to do so. If we could have that, the clause would be much more balanced.

[Sir Ashley Fox (Bridgwater) (Con)]

It is a pleasure to serve under your chairmanship, Mr Mundell, and I wish you and other colleagues a happy new year.

I want to follow on from the comments made by the shadow Minister, my hon. Friend the Member for Mid Buckinghamshire, and emphasise that the clause is completely pointless. Of course all workers have the right to join a trade union and the right not to join a trade union. Will the Minister outline the consequences for a small employer of not complying with the clause? Will there be a penalty? Will the employer be taken to a tribunal that can make a protective award? If there will not be a penalty, surely the clause is only performative, and just more evidence that the Government are doing what their trade union masters are telling them to.

Time and again in the Bill, we see measures that are small and inconsequential individually, but in total mount up to £5 billion of additional costs, most of them on small and medium-sized businesses. We see from surveys of business confidence that businesses are reeling under the imposition of additional taxes and of these rights, and the Government’s business-unfriendly stance. While the Minister talks about growth, the actions of his Government point to the very opposite. They believe that somehow they can regulate their way to growth. We start this new year with more regulation from the Government, none of which will contribute to the wealth and prosperity of our citizens.

[Justin Madders]

There was a mix of responses there. We heard from the hon. Member for Torbay that the Liberal Democrats welcome the clause, I think the shadow Minister was generally supportive, albeit not explicitly, and then the hon. Member for Bridgwater was fairly critical. I will address the points made by all three individuals.

The shadow Minister made a fair point that the frequency with which employees will have to be notified is important. That will be determined by the responses that we get to the consultation. Clearly, we do not want to make this measure too onerous, but we believe that it is important as a matter of principle that employees are aware of their right to join a trade union, for all the reasons that have been amply set out over many months and years.

On making it clear within a notification that the employee is not obliged to join a trade union, I am sure the shadow Minister is aware that the closed shop principle was abolished quite some time ago—possibly not even in his lifetime. [Interruption.] Well, possibly not; perhaps his rest over the Christmas period has made him look more youthful than he is. The precise wording of the notification will be set out in secondary legislation. I am sure it will not be worded in a way that indicates that there is a compulsion on individuals to join a trade union, but it is important that people know of the right.

In reference to the comments from the Liberal Democrat spokesperson, the hon. Member for Torbay, I too have had many conversations with constituents who have notified me of issues with their workplace. I hope most Members respond with the question, “What has your trade union said about this?” When I ask that, quite often I get the response, “My employer doesn’t allow us to join a trade union.” That response is far too common for my liking. Evidence has been submitted to the Committee, particularly by the Union of Shop, Distributive and Allied Workers, about the lack of awareness of employees’ right to join a trade union. In a free society, we should be ensuring that people are aware of their rights.

On the points made by the hon. Member for Bridgwater, the consequences for not notifying an individual of this right will be the same as they currently are for failure to provide a statement of terms and conditions under section 38 of the Employment Act 2002. It is not a free- standing claim on its own; it can be put on top of another employment tribunal claim, and the penalty can be between two and four weeks’ pay.

On the administrative burden, there is already prescribed in legislation a long list of matters about which the employer must notify the employee when they join in a statement of terms and conditions. Really, we are just adding this to that list. We think this is an important measure.

[Sir Ashley Fox]

I think this comes together with day one employment rights. Take the example of a very small businessman or woman who takes someone on with no written contract, and within a week or two the employment does not work out and the employee is fired. They might be within a—what is the word for the period of time in the first few weeks of employment?

[Justin Madders]

Probation.

[Sir Ashley Fox]

Probation period—thank you. It is early in the new year, Mr Mundell. That member of staff might be within their probation period, but if that is not specified in a written contract, that dismissal would be procedurally unfair, according to the Bill. If that same small businessman or woman has not notified the employee of their right to join a trade union, the Minister seems to be saying that the employee will get a protective award of another two to four weeks’ salary on top of that. Can he not see that for microbusinesses, the array of sanctions becomes threatening—many weeks’ wages, for a very short contract that did not work out—and that he threatens to make it very difficult and onerous for them to take on new employees?

[Justin Madders]

I understand the point the hon. Member makes. I do not think it is helpful to get into hypotheticals about what might or might not happen under the statutory probation system, given that we have not really fleshed out the details. That will happen in due course, but it is already the law that statements of terms and conditions are required to be presented to employees, I think within the first month. There is not an additional burden of extra paperwork that has to be delivered; this is already built into the system, in terms of ensuring that employees receive their statement of terms and conditions when they start employment.

On that note, I commend the clause to the Committee.

Question put and agreed to.

Clause 45 accordingly ordered to stand part of the Bill.

Clause 46

Right of trade unions to access workplaces

[Justin Madders]

I beg to move amendment 72, in clause 46, page 50, line 30, leave out “listed” and insert “qualifying”.

This amendment and other amendments to this clause would require a trade union to have a certificate of independence in order to have the rights provided for in the clause.

[The Chair]

With this it will be convenient to consider Government amendments 73 and 75 to 79.

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[Justin Madders]

The clause makes provision for trade unions and employers to negotiate access agreements, under which employers will be required to permit trade union officials to enter workplaces for various purposes, such as recruitment, organising, and meeting and providing support to existing members. This is particularly significant for unrecognised unions. Access to a workplace can provide an opportunity to recruit and organise with the aim of gaining formal recognition.

The Bill currently provides that any listed trade unions can apply for access to a workplace. Under the current definition, it is possible that employers could use staff associations and non-independent bodies to frustrate independent trade unions’ access to the workplace. Therefore, proposed amendments 72, 73 and 75 to 79 require trade unions to have a certificate of independence issued by the Certification Officer to qualify for access.

The amendments will ensure that clause 46 is used as intended. The clause will ensure that independent unions can initiate and agree access agreements with an employer, while not affecting the existing ability of non-independent bodies to negotiate voluntary access agreements. Amendment 73 inserts the defined term “qualifying trade union” and defines it as a union that has a certificate of independence issued by the Certification Officer. That will apply to proposed new chapter 5ZA of the Trade Union and Labour Relations (Consolidation) Act 1992 only, and amendments 72 and 75 to 79 update other provisions that refer to “listed” trade unions accordingly.

[Greg Smith]

As the Minister clearly outlined, the requirement for a trade union to have a certificate of independence to have the rights provided for in clause 46 is a tidying up of the Bill. The Opposition are not entirely on board with the spirit of the Bill in this regard, but we welcome its being tidied up and the clarity that the amendments bring to what the Government are trying to do to prevent even more of a free-for-all in terms of access to workplaces.

I have said many times that it is a shame and regrettable that so many of these tidying-up amendments have had to be tabled. Welcome though they are in bringing certainty to businesses about the Bill’s core provisions, if we had not had that arbitrary 100-day deadline, we probably would not be spending our time going through these sorts of amendments, and could instead be debating much more of the substance of the Bill. As I say, the Opposition are not convinced about some of the core provisions of the Bill, but these particular amendments do at least tidy it up to some extent.

[The Chair]

Minister, do you wish to say anything further?

[Justin Madders]

Just that I welcome the support from the shadow Minister, albeit for the wording rather than the spirit of the amendment.

Amendment 72 agreed to.

Amendment made: 73, in clause 46, page 51, leave out lines 1 and 2 and insert—

“(3) A ‘qualifying trade union’ is a trade union that has a certificate of independence.”—(Justin Madders.)

See the explanatory statement to amendment 72.

[Justin Madders]

I beg to move amendment 74, in clause 46, page 51, line 4, at end insert—

“(4A) ‘Workplace’ does not include any part of a workplace used as a dwelling.”.

This amendment would ensure that the right of access does not include access to dwellings.

This important amendment adds some clarity about the right of access to a workplace, providing an exemption so that the right of physical access does not apply to private dwellings such as the private homes of workers who are working either fully from their home or in a hybrid manner between their workplace and their home. Most exemptions will be provided for and set out in detail in secondary legislation, but we think it is important to set out this principle in the Bill.

We will provide in secondary legislation and guidance more detail on how complex physical access cases, such as care homes, where premises are a mix of residential and a workplace, will be negotiated. To protect the privacy of people living in the premises, that could, for example, set out the terms that it is reasonable for the trade union to comply with when exercising access, for example limiting access to parts of the premises that are used by workers only, and specifying that unions should take a specific route to the particular room where access activities are due to take place. That sort of detail will be set out in secondary legislation following consultation.

[Greg Smith]

As the Minister says, the amendment ensures that the right of unions to access workplaces does not extend to dwellings. Of course the Opposition welcome that the Government have acknowledged that trade unions should not be able to access private dwellings. The fact that the Bill was introduced in such a manner that would have permitted trade unions to do so begs a number of worrying questions about the speed with which the Bill was drafted. The fact that we are debating whether a trade union should have access to someone’s private dwelling is deeply regrettable. I would have hoped that the Government, from first principles, would acknowledge that it was never an acceptable outcome for anyone to have their own home invaded by a trade union or otherwise.

The way people set up their homeworking arrangements within their own dwelling is very much a matter for them. Balancing what they do in their own home with their family life and perhaps their children’s needs or the needs of someone they are caring for, and the way they structure that should, of course, remain entirely private. This is just another example of the damage that can inadvertently be done when legislation that is not ready is introduced to this House. It makes us question what other mistakes, if I may call them that, are lurking in the Bill that are still yet to be spotted by the Bill Committee.

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[Greg Smith]

I am grateful to the hon. Gentleman for his intervention. I understand his fundamental point, but before the Government tabled the amendment a feasible interpretation of the rules would have allowed access to a private dwelling. We can all stand or sit here in Committee Room 10 of the House of Commons and think how preposterous that would be and how that it never actually happen, but there are plenty of examples in history where the preposterous has come to be—where someone’s interpretation of legislation or rules or regulations or whatever it may be has brought about perverse outcomes.

We would have been in a much more satisfactory position had the Government, from first principles and at the very start, laid out in the Bill that someone’s private dwelling is just that: private. Although there has been an explosion in working from home and a fundamental shift, particularly in the post-pandemic world, of people actively choosing to work from home, either all the time where they can, or in a hybrid arrangement where they work from home for a couple of days a week and in the office, factory, warehouse or wherever it might be for the other days, it should be an enshrined principle in this country—the free society the Minister spoke of—that a private dwelling should from absolute, unquestionable first principle remain private, and not be an area to which a trade union or otherwise can freely demand access. It is important that private dwellings remain accessible only by warrant, which has to be granted by a magistrate, for clear purposes, such as where criminality or some such activity is suspected.

The Opposition welcome the core text of the amendment, but we want it firmly on the record that such an amendment should never have been required in the first place.

[Justin Madders]

I feel that we are going to have a few of these conversations again this year. Heaven forbid the previous Government ever amended anything in Committee! We knew the Bill was issued at a challenging pace and that it was large, so there were always going to be elements that needed clarification at this stage. It is right to do that now before it becomes law and well in advance of any practical application. Like amendment 72, this amendment is an example of us responding to concerns raised when the Bill was published. It is probably fair to say that no one actually envisaged trade unions marching into people’s homes, so it was not something we thought it necessary to spell out in the Bill, but that concern has been raised in feedback, and we are able to provide clarification and reassurance. I therefore commend the amendment to the Committee.

Amendment 74 agreed to.

Amendments made: 75, in clause 46, page 51, line 18, leave out “listed” and insert “qualifying”.

See the explanatory statement to amendment 72.

Amendment 76, in clause 46, page 52, line 13, leave out “listed” and insert “qualifying”.

See the explanatory statement to amendment 72.

Amendment 77, in clause 46, page 52, line 26, leave out “listed” and insert “qualifying”.

See the explanatory statement to amendment 72.

Amendment 78, in clause 46, page 53, line 36, leave out “listed” and insert “qualifying”.

See the explanatory statement to amendment 72.

Amendment 79, in clause 46, page 53, line 40, leave out “listed” and insert “qualifying”.—(Justin Madders.)

See the explanatory statement to amendment 72.

[Justin Madders]

I beg to move amendment 80, in clause 46, page 54, line 11, leave out from “circumstances” to “a determination” in line 13 and insert—

“in which it is to be regarded as reasonable for the Central Arbitration Committee to make”.

This amendment would clarify that, if circumstances are specified under subsection (4)(a), the effect of specifying those circumstances is that it is to be regarded as reasonable for the CAC to make a determination that officials of a union are not to have access (but without requiring the CAC to make such a determination).

[The Chair]

With this it will be convenient to discuss Government amendment 81.

[Justin Madders]

Proposed new section 70ZF(4)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992 allows the Secretary of State to prescribe circumstances in which it would be reasonable for the Central Arbitration Committee to determine that a trade union is not to have access to a workplace. Amendment 80 is a minor technical amendment to clarify that, if circumstances are specified under proposed new section 70ZF(4)(a) of the Act, the effect of specifying those circumstances is that it is reasonable to make a determination that officials of a union are not to have access, but it does not require the CAC to make such a determination.

Amendment 81 allows the Secretary of State to prescribe in secondary legislation the matters to which the CAC must have regard when determining whether access is to be granted to a trade union. As an example, that would usefully allow the Secretary of State to prescribe that the CAC must, when making determinations about access, have regard to the presence of a trade union with existing access to the workplace to which another union is seeking access. In that scenario, the amendment provides reassurances that an access request will not be rejected by default if there is an existing arrangement with another trade union. The Government have consulted on the exact details of what the CAC is required to consider when making determinations about access, and secondary legislation will follow Royal Assent to the Bill. With that in mind, I commend the amendments to the Committee.

[Greg Smith]

As the Minister said, Government amendment 80 clarifies that if circumstances are specified under new section 70ZF(4)(a), the effect of specifying those circumstances is that it is to be regarded as reasonable of the CAC to make a determination that officials of a union are not to have access, but does not require the CAC to make such a determination. Government amendment 81 would allow the Secretary of State to prescribe matters to which the CAC must have regard when considering an application for a determination about access. Therefore, these amendments set out that if the Secretary of State has specified circumstances in which it would be reasonable to decline union access to a workplace, the CAC must accept those circumstances.

That is all well and good, but the access principles, as they are set out, are incredibly broad and make it very difficult for an employer to refuse access. For example, subsection (2)(a) of new section 70ZF specifies that

“officials of a listed trade union should be able to access a workplace for any of the access purposes in any manner that does not unreasonably interfere with the employer’s business”.

That accepts that access can and should be allowed to cause interference, but what would count as unreasonable interference? Can the Minister give any concrete examples? How will businesses know what they are or are not expected to put up with in terms of inconvenience and disruption to their operations? This all seems to be still particularly woolly and ill-defined. It will cause a lot of headaches and a lot of businesses to scratch their heads to work out what they have to put up with, bear the burden of, or lose profit to in order to enable some of the access that the Bill determines will take place.

The circumstances in which it would be reasonable for officials of a union not to have access will be specified in future regulations, but this is an area where it is incumbent on the Government to be very clear—indeed, crystal clear—about where the Minister or the Department feels these regulations should sit, or the operating window in which they should sit, moving away from woolly language and into real practical detail to allow businesses to begin to prepare. Can the Minister give any examples of matters that might be specified by the Secretary of State to set some constraints on the access principles envisaged by the amendments? I know he will say that he wishes to consult, which is all very well and good, but as I said a moment ago, this is an area where I do not think businesses will simply accept the offer of future consultation; they will instead want an operating window with practical examples and very clear language about what the amendments envisage will happen in the future. It is just not good enough for us to be left in this position of trying to second-guess and wonder what things will be like when the consultation finally happens.

[Steve Darling]

I will be concise and echo the shadow Minister’s call for clarity.

[Justin Madders]

I acknowledge the points made by the shadow Minister, but of course, as he has already anticipated, my response is that all of that will be determined in secondary legislation following a consultation. That is the right approach. The sort of detailed questions he is rightly posing are best dealt with in secondary legislation and probably in codes of practice as well. That is the kind of detail that would not normally find its way into a Bill. Of course, for me to prejudge any consultation on the circumstances in which it may or may not be appropriate for unions to gain access would of course, be to predetermine the outcome of the consultation.

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[Justin Madders]

The shadow Minister tempts me to set out the kind of detail that I really cannot supply at this stage. Clearly, a consultation document will ask a series of fairly broad questions. Given that we will deal with pretty much every workplace in the country, the consultation will cover a range of different set-ups, businesses, places of work and working arrangements. The question at the start will necessarily be fairly broad, so we can understand the kinds of effects on their ability to carry on their business that firms are concerned about.

Equally, we want to hear from trade unions about their experiences of where they feel that they have unreasonably been refused access or perceived that that might be a risk. The shadow Minister is trying to get me to draw up a consultation document in the Bill Committee, but I am afraid I will have to decline to do so. Clearly, we will come back to this and talk about it in further detail at a later date.

Amendment 80 agreed to.

Amendment made: 81, in clause 46, page 54, line 27, at end insert—

“(6) The Secretary of State may prescribe matters to which the Central Arbitration Committee must have regard in considering an application for a determination under section 70ZE.”—(Justin Madders.)

This amendment would allow the Secretary of State to prescribe matters to which the CAC must have regard in considering an application for a determination about access.

[Justin Madders]

I beg to move amendment 82, in clause 46, page 57, line 37, at end insert—

“(c) dismiss the appeal.”

This amendment would clarify that the Employment Appeal Tribunal may dismiss an appeal under new section 70ZK(2) of the Trade Union and Labour Relations (Consolidation) Act 1992.

The amendment is straightforward, providing clarity that an Employment Appeal Tribunal can dismiss an appeal under the new section 70ZK(2) of the Trade Union and Labour Relations (Consolidation) Act 1992. It is a fairly straightforward and self-explanatory amendment.

[Greg Smith]

As the Minister said, the amendment clarifies that the Employment Appeal Tribunal may dismiss an appeal under new section 70ZK(2) of the Trade Union and Labour Relations (Consolidation) Act 1992. Of course the Opposition agree that this amendment should be accepted and put into the Bill, but it beggars belief that the amendment was necessary in the first place. Of course the Employment Appeal Tribunal should be allowed to dismiss an appeal if it finds that to be necessary, but how on earth was a Bill put before this House of Commons—this Parliament—that only envisaged that the tribunal might quash the order or make an order requiring the person to pay a reduced amount to the CAC? How was this Bill introduced in a form in which the dismissal of an appeal was not even an option?

It is extraordinary that a Bill could have been allowed through the write-around process—the various processes that Government have—without this anomaly being spotted and rectified before the Bill was presented and had its Second Reading debate. I gently ask the Minister to reflect on that and go back through the Bill’s provisions to double-check for any other glaring omissions, which I am sure he never wished to see in the first place and is now correcting by the amendment in his name. Could he ensure that the Bill contains no more of these, frankly, howling errors that could cause so much damage?

[Steve Darling]

Bill Committees are here to check for snags in the final construction of legislation. I am pleased that this snag has been picked up and will be sorted out by this amendment.

[Justin Madders]

I am not sure that the shadow Minister wants me to check everything again, because it might lead to further amendments and we may have this debate repeatedly. I would gently push back on the suggestion that this is a “howling error”, as he described it. Of course, the Employment Appeal Tribunal already has the jurisdiction of the CAC to hear appeals. It is probably more a case of making sure it is clear that that applies to this particular provision rather than its being an oversight in the first place.

Amendment 82 agreed to.

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

[Justin Madders]

Clause 46 formally provides trade unions with the right of access to workplaces where an access agreement is reached between a trade union and an employer following negotiation. This will make it easier for union representatives to recruit and organise and potentially secure a collective bargaining agreement with an employer. It will not impact existing voluntary access agreements between a union and an employer. For unrecognised unions, access to a workplace is an opportunity to recruit and organise with the aim of gaining formal recognition.

In this framework a union can provide an employer with a request for access, to which the employer can either agree or object within a set timeframe. If both parties agree on the access terms, the Central Arbitration Committee is notified to record the agreement and proceed. In the instance that a union and employer cannot agree on access terms, the CAC can impose an agreement. The decision will be guided by prescribed terms which will be set out in secondary legislation. The CAC will have some discretion when making a determination on whether access should occur, and the decision will be subject to principles set out in the Bill that consider both union and employer interests.

The clause also establishes an enforcement mechanism whereby complaints of breaches of an access agreement can be raised with the CAC. The CAC can then vary the agreement, make a declaration that the complaint is well-founded or not, and issue an order requiring specified steps to be taken to ensure that the agreement is complied with. We recently consulted on some specifics of the enforcement mechanism, which various unions and employers contributed to and which we are now carefully considering. Regulations relating to a union’s right of access, such as notice periods for employers and the terms of reasonable access, will be prescribed in secondary legislation after consultation.

Amendments 72, 73 and 75 to 79 require trade unions applying for access to be certified as independent instead of being only listed as a trade union. This will help independent unions initiate and agree access agreements with an employer. Non-independent bodies’ existing ability to negotiate voluntary access agreements will remain unaffected. Amendment 81 will amend this clause to allow for the Secretary of State to set specific matters that the CAC must consider and have regard to. Amendment 74 will ensure that private dwellings are exempt, as we have discussed. Through the provision of a formal right of access, the Government are delivering on our commitment to modernise outdated and ad hoc access arrangements and align them with the 21st century. I commend clause 46 to the Committee.

[Greg Smith]

We have covered the bulk of the commentary that the Opposition want to make in the debate that we have had on the amendments. All I will say on clause 46 is that there is still so much left for secondary legislation, and I do not think businesses can have any certainty as to what is truly coming down the line until there have been the consultations we have spoken about and the secondary legislation has been laid, debated and, let’s face it, probably passed given the parliamentary arithmetic we have at the moment. While clause 46 as amended is better than what was first presented to the House, there are still many open-ended questions that businesses and trade unions alike will want to know the answers to. I urge the Minister to ensure that his Department moves at pace to get those consultations out there, so that he and the Department can hear from real businesses, trade unions and workers when it comes to the provisions that they are proposing. Then the questions of uncertainty can be ironed out as quickly as possible and nobody is left in the position of not knowing where this is going.

[Justin Madders]

The shadow Minister is of course right—we do need to get this right and engage with businesses and trade unions about the detail. That is what we intend to do.

Question put and agreed to.

Clause 46, as amended, accordingly ordered to stand part of the Bill.

Clause 47

Conditions for trade union recognition

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

[Justin Madders]

The clause makes amendments to the statutory trade unions recognition process, which is administered by the Central Arbitration Committee. Hon. Members will possibly not all be aware of the current statutory recognition process, so I will just take a moment to detail that. Where an employer refuses to recognise a trade union voluntarily, that union can apply to the CAC to obtain statutory union recognition. On application, unions have to show the CAC that, first, they have 10% membership of the proposed bargaining unit and secondly, that they are likely to have a majority in the subsequent trade union ballot. Where the majority of workers in the bargaining unit are members of the unions, the CAC can decide to automatically recognise the union without holding a recognition ballot. However, the CAC must still hold a ballot if it receives credible evidence from a significant number of union members that they do not want the union to conduct collective bargaining on their behalf, or membership evidence is produced that leads the CAC to doubt whether a significant number of union members want recognition, or if the CAC believes that holding a ballot would help further industrial relations. For the union to win, it must then obtain a majority in a recognition ballot and also in that ballot, at least 40% of the workforce in the proposed bargaining unit must support union recognition.

We are committed to strengthening collective bargaining rights and trade union recognition. We believe that strong trade unions are essential for tackling insecurity, inequality, discrimination, enforcement and low pay. Our view is that the existing legal framework needs to be simplified so that workers have a more meaningful right to organise through their trade unions. To achieve that, the clause therefore removes the current requirement for a union to have at least 40% of the workforce in the proposed bargaining unit supporting union recognition. In future, unions will only need a simple majority in a recognition ballot to win.

The current requirement for a union to demonstrate, at the application stage, that it is likely that there will be a majority for the recognition process is a significant hurdle in modern workplaces, which are increasingly fragmented. That is why the clause deletes the requirement for a union to demonstrate on application to the CAC that they are likely to win a future recognition ballot. Now unions will only need to show that they have 10% membership of the proposed bargaining unit for their application form recognition to be accepted by the CAC. We are also considering whether the current 10% membership requirement upon application should be lowered in future. The clause therefore provides a power to enable the Secretary of State to make affirmative regulations, which we will of course consult on, to amend the 10% membership requirement in future within parameters of 2% to 10% as set out in subsection (10) of the clause.

[Greg Smith]

I am grateful to the Minister for his detailed explanation. I will focus my remarks predominantly around the proposed new range of 2% to 10%. I would think, to most reasonable people, 10% is already a relatively low number: 10% is, generally speaking and in most walks of life, not a difficult proportion for anybody to reach if they truly believe that right is on their side, and they have wider support, with wider mandates to get on and negotiate within those bargaining units, to deliver a better outcome. I would argue that any union that cannot be kept to 10% really is not clearing the first hurdle and is certainly not passing “Go” or collecting the metaphorical £200. I question why it is in any way, shape or form necessary to lower that.

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

It is a pleasure to serve under your chairmanship, Mr Mundell. I refer to my entry in the Register of Members’ Financial Interests and to my membership of Unison and the Writers’ Guild of Great Britain.

I am pleased that the Bill will take significant steps to simplify the union recognition process by removing unnecessary barriers that unions currently face. As my hon. Friend the Member for Birmingham Northfield mentioned, recent events at Amazon’s Coventry distribution site, where the unionisation effort was defeated by 28 votes, serve as a reminder of the challenges that workers encounter.

I particularly welcome the flexibility in the Bill to lower the membership threshold required to begin the recognition process from the current 10% to potentially as low as 2%. That will give workers the opportunity to organise effectively from the outset. Ensuring that unions need only a simple majority in favour of recognition will mean that the will of the workers is fairly and clearly reflected without being stifled by unnecessary procedural hurdles.

[Justin Madders]

We have had a good debate. The main focus of the shadow Minister’s questioning was the 2% issue. The first thing to say is that, as it stands, the 10% figure will remain. We are simply giving ourselves the power to reduce it to 2% following consultation, although as various Committee members have powerfully set out, including my hon. Friends the Members for Worsley and Eccles and for Birmingham Northfield, there is a strong case for it to be reduced from the current 10%. As my hon. Friend the Member for Birmingham Northfield pointed out, the previous Government set a precedent in this area with the reduction to 2% in the Employment Rights (Miscellaneous Amendments) Regulations 2019, which were introduced not long ago.

The shadow Minister must understand that these measures are about the very worst employers that are actively hostile to trade unions. Most employers recognise the value of a trade union and, as my hon. Friend the Member for Worsley and Eccles pointed out, enter into voluntary arrangements, but there are examples, such as the GMB-Amazon dispute, of unwillingness to engage. I remember the example of an employer not far from where I live who sacked all the people who joined the trade union. It will not surprise the shadow Minister that no one wanted to join a trade union after that. That is a clear example of why, in the most extreme situations with hostile employers, it is difficult to increase trade union membership. Of course, we also now have workplaces that are much more fragmented, because there is more homeworking and hybrid working, and people are often out in the field.

--- Later in debate ---

[Michael Wheeler]

It could be dangerous for me to admit that sometimes I might have wished to instruct a member, but I can reassure everyone here that the instructions flow the other way when someone is a trade union official acting at the behest of members at all times.

I was one sentence from the end before the interventions. I have been thoroughly derailed by people in this room, so I will wrap up and say that I do not agree with the amendment. I disagree with a lot of what was raised in the debate and the false analogy around subscription models versus membership of a democratic organisation. I will obviously not support the amendment.

[Justin Madders]

We have had a good debate on the amendment. It is fair to say there is a deep divide in our positions. I will address the amendment and the clause stand part debate.

Amendment 126 would make two changes to clause 48. First, it seeks to retain the requirement on trade unions to provide their members with an annual notice of their right to opt out of contributions to the political fund. Secondly, it seeks to require trade union members to opt in to contributions to the political fund annually. As we have heard, that would place substantial and unnecessary bureaucratic requirements both on trade unions and on their members. As my hon. Friend the Member for Worsley and Eccles said, this is one of those rare occasions when the Conservative party seems to be in favour of more red tape, which is clearly something that we want to see reduced.

I will start with the change that would retain the requirement for trade unions to send an annual notice to members reminding them that they can opt out of contributing to a political fund. The amendment targets the wrong section. It would amend section 86 of the Trade Union and Labour Relations (Consolidation) Act 1992, which relates to ensuring that employers do not deduct contributions through check-off from the member where the union member has opted out of the political fund or where the opt-out notice has been given but is not yet in force.

However, I will respond in terms of the spirit of the amendment tabled by the shadow Minister. The Government have been clear in our intention to repeal the Trade Union Act 2016, which was a clear manifesto commitment. We have a mandate to deliver on that. The amendment seeks to frustrate that clear intention by retaining the substantive effect of section 84A of the Trade Union and Labour Relations (Consolidation) Act 1992, as amended by the Trade Union Act 2016.

We should be clear that members are, of course, free to opt out of contributing to a political fund whenever they wish. Clause 48, which I will come to, sets out how that is possible. Currently, alongside the requirement to ballot members on the maintenance of a political fund every 10 years, trade unions must also remind their members of their right to opt out of a political fund. The Government are proposing to remove the ballot requirements. We have consulted on whether to retain a requirement for trade union members to be reminded on a 10-year basis that they can opt out of the political fund.

[Greg Smith]

I understand the point the Minister is making. On the one hand, he wants everyone to be reminded annually of their right to join a trade union, but he wants them to be reminded of their ability to opt out of the political fund only every 10 years. Surely he can see the inconsistency in that approach. Even though I am sure that he wants the political funds to be as bulging as possible, certainly for those unions that donate to the Labour party, surely he must see that there is an inconsistency between reminding people of their right to join a trade union annually but reminding them of their right to withdraw their support for the political fund on a less frequent basis.

[Justin Madders]

I thank the shadow Minister for his question. I have not actually said that we will require members to be informed of their right to join a trade union annually—we are simply consulting about the frequency of a reminder. That is the point the hon. Member for Bridgwater raised earlier. We are consulting on that point, and we are consulting on the 10-year reminder about being able to opt out of the political fund. What is sauce for the goose is sauce for the gander. If the shadow Minister thinks we should not inform people annually of their right to join a trade union, presumably he would also agree that they should not be reminded annually of their right to opt out. The arguments work both ways.

[Greg Smith]

In the spirit of following that debate through to its natural conclusion, no matter where we stand on the politics, surely the happy medium would be to marry up whatever the consultation ends up concluding for the reminder of the right to join a trade union in the first place with the reminder of the right to opt out of the political fund. Surely that would be the fair and equitable way through this—to simply say that the answer is to marry up the reminder of the right to join a trade union with the reminder to opt out of the political fund, with whatever frequency the consultation says.

[Justin Madders]

Those are of course two entirely separate requirements. At the moment, trade union members can choose to opt out of contributing to the political fund at any time. Clause 48 sets out clearly how they can do that by post, email or other electronic means. As my hon. Friend the Member for Worsley and Eccles so eloquently said, most trade union members will be aware of their rights in this area should they wish to exercise them. The comparisons between trade union membership and political funds and Netflix subscriptions and insurance contracts are bogus, because they are not the same thing at all. Membership of a trade union and a political fund is membership of a democratically organised society and independent trade union. The members have control of the organisation because it is democratically organised, so it is not the same thing at all.

--- Later in debate ---

[Greg Smith]

I do not think I need to correct the record, in that I made a statement of the obvious, which is that Conservatives wish to beat Labour in elections, but equally I went on to say that, with the right consent, it is perfectly fair, democratic and legitimate for the Labour party to receive funding from those trade unions that wish it to do so. I went even further by saying that that is perfectly fine; so long as it is done transparently and stated on the record—as Labour Members have assiduously done every time they have stood up to speak during this Bill Committee and, indeed, in other debates—there is nothing wrong with it.

This is about the process for members, whether they are contributing to political funds where the unions do donate to Labour, or to any other cause, be it party political or a campaign on this side or the other— the hon. Member for Birmingham Northfield himself recognised and spoke earlier about the very good campaign in relation to attacks on emergency workers. That is a perfectly good, legitimate and worthwhile use of that money, to which I would anticipate—although presumption is a dangerous thing—that most, if not all, contributors to the political fund that supported the campaign would happily continue to contribute. However, there are circumstances and times when trade union members contributing to political funds may not see that money being spent as they would like it to be. It is the ease of being able to opt out, not just having the right to opt out, that the amendment gets to the heart of.

Before the Committee divides on amendment 126, I urge Committee members to reflect on whether they really want to say to the outside world that, while consumers have the right to be reminded on a monthly or annual basis of how to opt out of their mobile phone contract, magazine subscription or whatever else, such a reminder of how to opt out of political funds—not the right to opt out but how—should be denied to trade union members.

[Justin Madders]

The shadow Minister talks about this being a rule that applies to every other section of society. Is he saying that the principle should apply to every membership organisation, be it the Chartered Institute of Personnel and Development, the Royal Society for the Protection of Birds, the Royal National Lifeboat Institution or any of the many other membership organisations that exist in the country? There will be millions of members of those organisations, so should the principle apply equally to them all? Is he aware that it applies at the moment?

[Greg Smith]

For the most part, I would say that it does exist. I am thinking of membership organisations outside the world of politics that I have subscriptions to: at the annual point of renewal—most of the ones I have are annual—I do get either an email or a letter saying, “Your direct debit for the next year is going to be £2 higher a month. It will automatically renew unless you do x, y and z.” The x, y and z to opt out, stop or unsubscribe is always very clear.

[Justin Madders]

rose—

[Greg Smith]

The Minister is going to tempt me to say which memberships, isn’t he?

[Justin Madders]

I am not sure that we need to know about the shadow Minister’s memberships. I have two points: there is not legislation requiring this, and when trade unions raise subscriptions they will send a similarly worded letter out. The analogy the shadow Minister has drawn already takes place.

[Greg Smith]

I am grateful for that, but there is not an increase every year.

[Justin Madders]

There is.

--- Later in debate ---

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

[Justin Madders]

The clause is relatively simple in that it seeks to repeal section 15 of the Trade Union Act 2016 by amending the Trade Union and Labour Relations (Consolidation) Act 1992 to remove section 116B. Section 15 of the 2016 Act required trade unions to pay public sector employers where they administered payroll deductions for trade union subscriptions—known as check-off. Section 15 further mandated that the service be made available only where workers had the option to pay their union subscriptions by other means.

The check-off regulations were apparently introduced as a cost-saving measure, with estimated annual savings of £1.6 million, totalling £12 million over the next 10 years. However, as last year’s check-off impact assessment acknowledged, the Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2024 brought a cumulative cost of £17 million to public sector employers and trade unions over that period, which is far higher than the estimated cost savings.

In the spirit of wanting to save businesses and the public sector from burdens, we think that this is an entirely sensible move. I urge members of the Committee to support the clause.

[Greg Smith]

Of course we wish to save taxpayers money, particularly when it comes to the public sector, but likewise we do not see why businesses should bear the cost of trade union subscription collections. That should be a cost entirely for the trade unions to bear, just as we would never tolerate—on the Opposition Benches for sure—the public purse or the taxpayer’s pound having to subsidise any other body that should be funding itself.

I understand where the Minister is coming from. As he looks across other parts of the Bill, I urge him to have a similar approach to saving businesses and taxpayers money across the piece.

Question put and agreed to.

Clause 49 accordingly ordered to stand part of the Bill.

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

Employment Rights Bill (Sixteenth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 7th January 2025 Public Bill Committees

[The Chair]

With this it will be convenient to discuss the following:

Amendment 114, in clause 51, page 64, line 9, after “employer”, insert—

“(aa) in relation to a public sector employer, the performance condition is met.”

This amendment paves the way for Amendment 115.

Amendment 115, in clause 51, page 64, line 10, at end insert—

“(3A) The performance condition is met if the Secretary of State is satisfied that the public sector employer is meeting any performance standards set out in a relevant enactment.”

This amendment, together with Amendment 114, prevents facility time for equality representatives being provided unless the relevant public sector organisation is meeting its statutory targets for performance.

Clauses 51 and 52 stand part.

New clause 18—Facility time: cost assessment—

“(1) The Secretary of State must commission an assessment of the cost and prospective cost of—

(a) time off and associated payments under sections 168 to 170 of the Trade Union and Labour Relations (Consolidation) Act 1992, and

(b) implementing section 168B of that Act,

in relation to each sector of the economy.

(2) For the purposes of subsection (1), a sector of the economy means—

(a) an area of the economy in which businesses share the same or related business activity, product, or service, or

(b) in relation to the public sector, a sector which provides similar or related services.

(3) The Secretary must lay a report of the assessment commissioned under subsection (1) before each House of Parliament.”

This new clause requires the Secretary of State to undertake a sectoral cost assessment of trade union facility time, and see also Amendment 113.

Amendment 113, in clause 118, page 105, line 20, at end insert—

“(3A) But the provisions of section 51(2) to (12) may not be brought into force before the report of the cost assessment referred to in section [Facility time: cost assessment] has been laid before each House of Parliament.”

This amendment provides that the amendments made in Clause 51 cannot come into force until after the completion of the review referred to in NC18.

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

It is a pleasure to see you in the Chair, Sir Christopher. I wish you a happy new year. As always, I will start by referring to my entry in the Register of Members’ Financial Interests.

I shall attempt to navigate this mega-grouping of clauses, amendments and new clauses. Clause 50 will amend section 168 of the Trade Union and Labour Relations (Consolidation) Act 1992 to provide that an employer that permits an employee to take time off for carrying out trade union duties, including as a learning representative, must, where requested by the employee, provide the employee with accommodation and other facilities for carrying out their duties or undergoing training related to their trade union duties, as is reasonable in all the circumstances. “Facilities” could include office and meeting space and access to the internet or intranet. In providing the employee with facilities, the employer should have regard to a relevant code of practice issued by ACAS.

The clause will also strengthen the existing right to reasonable paid facility time for union representatives, including union learning representatives, by establishing a presumption that the employee’s view on what is considered reasonable time off is reasonable in all the circumstances, having regard to any relevant provisions of a code of practice issued by ACAS. The clause will require that the employer show that it was not a reasonable amount of time off at an employment tribunal, in the event of legal proceedings.

Despite the fact that most union representatives receive paid time off, it is often insufficient to allow them to carry out all their trade union duties, and many union representatives use significant amounts of their own time to do so. This Government want to ensure that union workplace representatives can take sufficient paid facility time and have sufficient access to facilities to enable them to fulfil their union representative duties. That will lead to improved worker representation and industrial relations by giving trade unions and workplace representatives the freedom to organise, represent and negotiate on behalf of their workers and to increase co-operation between employers and unionised workers, leading to beneficial outcomes for the economy.

The Government will not support the shadow Minister’s amendments 114 and 115, which would place an unnecessary restriction on trade union equality representatives’ ability to take time off during working hours to carry out their role as equality representatives. Equality representatives have a key role to play in raising awareness and promoting equal rights for all members, as well as developing collective policies and practices that will enable organisations to realise all the benefits of being an equal opportunities employer. Placing a performance condition on the right to paid time off for equality representatives is at odds with existing rights and protections for other trade union representatives, such as union learning representatives.

In addition, the Bill is clear that the amount of time off that an employee is permitted to take, the purposes and occasions for which it is taken and any conditions subject to which it may be so taken are those that are reasonable in all the circumstances, having regard to any relevant provision of a code of practice issued by ACAS or the Secretary of State. The existing code of practice on time off for trade union representatives will be updated in due course to cover equality representatives. The Government would therefore strongly argue that the additional condition is not required for equality representatives.

Clause 51 will insert new section 168B into the Trade Union and Labour Relations (Consolidation) Act 1992. The proposed new section requires that an employer must permit an employee who is a member of an independent trade union recognised by the employer and an equality representative of the trade union to take paid time off during the employee’s working hours for the following purposes: carrying out activities for the purpose of promoting the value of equality in the workplace; arranging learning or training on matters relating to equality in the workplace; providing information, advice or support to qualifying members of the trade union in relation to matters relating to equality in the workplace; consulting with the employer on matters relating to equality in the workplace; obtaining and analysing information on the state of equality in the workplace; and preparing for any of the things mentioned previously.

The above applies only if the trade union has given the employer notice in writing that the employee is an equality representative of the union and has undergone sufficient training to enable them to carry out the activities listed above, or if the trade union has in the past six months given the employer notice in writing that the employee will be undergoing such training—this can be done only once in relation to any one employee—or within six months of the trade union giving the employer notice in writing that the employee will be undergoing such training, the employee has done so and the trade union has given the employer notice of that. “Sufficient training” is that which is sufficient for fulfilling the purposes of an equality representative, having regard to any relevant code of practice issued by ACAS or the Secretary of State.

Clause 51 will also require an employer to permit an employee to take paid time off during working hours to undergo training relevant to their role as an equality representative and, where requested, provide the employee with accommodation and other facilities to enable them to fulfil their role, having regard to a relevant code of practice issued by ACAS. Should an employer fail to permit the employee to take time off or provide the employee with facilities as required, the employee may present a complaint to an employment tribunal, at which it will be for the employer to show that the amount of time off that the employee proposed was not reasonable.

Trade unions have long fought for equality. Equality reps have a key role to play in raising awareness and promoting equal rights for all members, as well as developing collective policies and practices that will enable organisations to realise all the benefits of being an equal opportunities employer. Clause 51 therefore recognises in statute the role of trade union equality representative, which is defined in proposed new section 168B(12) as a person appointed or elected in accordance with the trade union rules and defined by reference to, and in a manner consistent with, the Equality Act 2010.

I turn to the shadow Minister’s amendments 113 and new clause 18. I should start by stating that sections 168 to 170 of the Trade Union and Labour Relations (Consolidation) Act 1992 are long-standing provisions that require employers to provide facility time for union representatives and union learning representatives of a recognised trade union.

Our legislation also requires employers to make payments to union representatives for time off for carrying out their union duties. Despite the fact that most union representatives receive paid time off, it is often insufficient to allow them to carry out all of their trade union duties, and many union representatives use significant amounts of their own time to do so. We want to ensure that union workplace representatives can take sufficient paid facility time and have sufficient access to facilities to enable them to fulfil their union representative duties. That is why we are strengthening the rights of trade union representatives in the Bill. As part of that, we are also providing—in clause 51, which will insert new section 168B into the 1992 Act—new rights for time off for union equality representatives. Equality reps have a key role to play in raising awareness and promoting equal rights for all members, as well as developing collective policies and practices that will enable organisations to realise all the benefits of being an equal opportunities employer.

The shadow Minister’s new clause 18 would require Ministers to commission a cost assessment of facility time for trade union representatives and for union learning representatives and the prospective costs of time off for equality representatives across all sectors of the economy. It would also require Ministers to lay a report before both Houses of Parliament once the assessment has been made. Amendment 113 would further require that the provisions of clause 51 could not come into force until after completion of the assessment referred to in new clause 18.

New clause 18 is not necessary. We do not need such a time-consuming assessment across all sectors of the UK economy. Also, union representatives under our legislation are already entitled to reasonable paid facility time to enable them to carry out their duties. As I have said already, we know that many union representatives do not have sufficient time; the Bill is intended to rectify that. I also note that no such assessment of facility time, sector by sector, for the entire UK economy was ever carried out by the previous Government.

Clause 52 will repeal sections 13 and 14 of the Trade Union Act 2016 by removing sections 172A and 172B of the Trade Union and Labour Relations (Consolidation) Act 1992. Regulations made under section 172A, inserted by section 13, require relevant public sector employers to publish information relating to facility time for relevant union officials. Section 172B, inserted by section 14, provided a power—although I do not think that it was ever implemented—to impose a cap on public sector facility time. Repealing these sections will help to ensure that trade union representatives have sufficient time to represent workers, negotiate with employers and conduct training.

The removal of the reporting requirements represents a significant step in resetting the relationship between public sector employers and trade unions by recognising the importance of union representatives and the time needed for them to fulfil their duties effectively. The removal of the regulations will reduce the annual administrative burden on many public sector employers, freeing up more time to focus on delivery for the public.

This Government believe that it is for each employer to work in partnership with their own recognised trade unions to determine the facility time needed to ensure that their trade union representatives can properly represent their members and the workforces within which they operate. It is unnecessary to require annual reporting or to introduce an arbitrary cap on facility time. I therefore ask the hon. Member for Mid Buckinghamshire not to press amendments 113 to 115 and new clause 18. I commend clauses 50 to 52 to the Committee.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I, too, wish you a very happy new year.

I will start with amendments 114 and 115, which stand in my name and those of my hon. Friends on the Committee. The amendments would prevent facility time from being provided for equality representatives unless—this is the important bit—the relevant public sector organisation is meeting its statutory performance targets.

In workplaces in which a trade union is recognised, trade union workplace representatives have a right to paid time off for the purpose of carrying out their trade union duties or to take part in union training. That right currently applies to workplace representatives, health and safety representatives, union learning representatives, and information and consultation representatives. The Bill will extend that right to equality representatives, who will now be allowed paid time off to carry out

“activities for the purpose of promoting the value of equality in the workplace”;

to arrange

“learning or training on matters relating to equality in the workplace”;

to provide

“information, advice or support to qualifying members of the trade union in relation to matters relating to equality in the workplace”;

to consult

“the employer on matters relating to equality in the workplace”;

and to obtain and analyse

“information relating to equality in the workplace.”

I make no criticism or comment about the value of those activities, but what I would say is that they are straightforwardly set out in the law already, and employers already have a duty to consider them. Creating a duty to allow more facility time for this purpose seems to be at cross-purposes with what employers are already, rightly, under an obligation to consider.

The amendments are an attempt to ensure that the taxpayer gets something out of this latest concession from the Labour Government to the trade unions. We would like to make sure that equalities representatives working for public sector employers are entitled to facility time only if that employer is meeting any statutory targets that it has. We suggest that if the employer is not meeting those targets, that is more important to taxpayers than facility time.

New clause 18 and amendment 113 also stand in my name and those of my hon. Friends on the Committee. As the Minister says, new clause 18 would require the Secretary of State to undertake a sectoral cost assessment of trade union facility time. It would require the Secretary of State to undertake an assessment of the cost, and prospective cost, by sector of that facility time. Amendment 113 would provide that clause 51, which will introduce facility time for trade union equalities representatives, could not come into force until after the completion of the review referred to in new clause 18.

That is an eminently sensible step. I cannot see how anyone could object to a cost analysis and assessment being done before provisions come into effect. People need to know what they are dealing with and how much it will cost them, whether that is in the public sector or the private sector, a Government Department or a Government quango, a council, an NHS trust or a private business. It is not reasonable for these things to be asked for without a true assessment and understanding of the cost.

The Opposition are concerned about the increased impetus that the Bill places behind facility time and about extending it to equalities representatives. We would therefore like to make sure that the Government have done their homework and understood the cost to business of these changes before they implement them.

--- Later in debate ---

[Sir Ashley Fox (Bridgwater) (Con)]

It is good to see you in the Chair, Sir Christopher.

I rise to speak in support of Opposition amendments 113 to 115 and new clause 18. These are modest proposals to ameliorate the additional costs and burdens that the Bill is will place on employers and the public sector. It seems extraordinary that the Government want to introduce this new facility time without any thought about what the cost will be. It strikes me that the measures the Government are bringing forward are simply a bung to their trade union friends to provide extra money to employ extra trade union officials to do work that genuinely does not need doing.

The law is clear and should be enforced. We do not need the state to impose further burdens by employing trade union officials to effectively double up as Government inspectors. I shall therefore support the amendments and vote against the Government’s new clauses. A pattern is being followed through this Bill, whereby Ministers rise and say that each individual proposal is reasonable and modest, yet each one is an additional burden on the taxpayer and/or employers. The net result is £5 billion in additional costs, which will make this country less competitive, efficient, and effective.

[Justin Madders]

I will respond briefly to some of the points that have been made. I was asked why we need to put equality representatives on statutory footing. I think the hon. Member for Torbay gave just one example of the ongoing issues of discrimination in many workplaces up and down the country but, of course, this Bill also seeks to expand family friendly rights. Anyone who takes cognisance of local authority matters—I know that my hon. Friend the Member for Birmingham Northfield does so more than most—will be aware that equal pay is still a huge issue in many local authorities. This is over 50 years since the Equal Pay Act 1970 was brought into force, so there is a strong case for allowing equality reps to bring their value to the workplace.

The amendment on performance targets is particularly unfair. In effect, the hon. Member for Mid Buckinghamshire is seeking to punish trade union members for the failings of their employer if they do not hit performance targets. None of those targets have been specified in the legislation. Perhaps it is a reflection of the fact that under his party’s Administration, most public services did not meet performance targets, and he was hoping that if they got back into power he would be able to use that to deny facility time to all trade union representatives.

[Sir Ashley Fox]

Does the Minister really expect us to believe that his Government has not costed these proposals? Does he believe that providing additional facility time to trade unions will improve public sector performance? What we have said is that in cases where Departments are not meeting their targets, the Department should use taxpayer money to meet those targets before granting additional facility time to trade union officials.

[Justin Madders]

I understand the hon. Gentleman’s point but I refer him to the impact assessment, which sets out the cost of these individual measures and their cumulative impact. For facility time, the amount is very small indeed. It has been green-rated by the Regulatory Policy Committee, and studies by the predecessor Department of the Department of Business and Trade showed that facilities time did lead to significant savings and reduced dismissals, reduced employment tribunals, reduced voluntary exits and enhanced productivity. We are talking about figures in the region of hundreds of millions of pounds here. I accept that it is an old study, but the principle remains the same. We heard repeatedly during evidence that strong engagement from trade unions is a good thing for employers, because it helps to engage the workforce and improve productivity. Therefore, I do not accept the premise of his argument.

Regarding the general thrust of what is coming from the Opposition about the use of facilities, the Trade Union Act 2016 was designed to make it more difficult for trade unions to perform their duties by increasing the amount of investigation and focus on their time, but the reported figures in terms of the percentage of the public sector pay bill were the same at the start of the reporting requirements as they were at the end, which was 0.07%—007; we are back to James Bond again. That shows that the requirements of the 2016 Act were simply burdens that added nothing. I therefore urge hon. Members to reject the Opposition amendments and to support the clauses.

Question put and agreed to.

Clause 50 accordingly ordered to stand part of the Bill.

Clauses 51 and 52 ordered to stand part of the Bill.

Clause 53

Blacklists: additional powers

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

[Justin Madders]

The clause will enable us to strengthen the protections against blacklisting. The Consulting Association scandal, in which thousands of union workers were blacklisted, underscored the need for strong anti-blacklisting laws. Blacklisting persists, yet the rules have not been updated for over a decade. That is why we are taking steps to modernise them.

The clause amends section 3 of the Employment Relations Act 1999. It will enable regulations to be made that extend prohibitions to lists that are not prepared for the purpose of discrimination, but are subsequently used for that purpose. Secondary legislation and guidance can then make clear that blacklisting prohibitions extend to lists created by predictive technology.

The clause also extends the scope of the powers, so that prohibitions no longer have to be limited to employers or employment agencies. First, the reference to employers or employment agencies is removed from section 3(1)(b) of the 1999 Act. Secondly, an amendment to section 3 adds a power for the Secretary of State to make regulations in relation to third party use of blacklists. It is important that the Government continue to make it clear that blacklisting is unacceptable, and updating the law supports that.

[Greg Smith]

This is one of the less contentious clauses in the Bill. The Minister is right to say that something that has not been updated for a decade probably should be looked at again, especially in the light of some of the technology that we see emerging. We will not oppose clause 53 standing part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 55 and 56 stand part.

New clause 32—Workplace intimidation in regard to balloting—

“(1) The Employment Relations Act 2004 is amended as follows.

(2) After section 54 (12) (c) insert—

‘(d) measures are in place to prevent workplace intimidation.’”

This new clause requires the Secretary of State to consider whether there are sufficient measures to be in place to prevent workplace intimidation before they make any order to allow balloting to take place by a means other than by postal ballot.

New clause 33—Balloting in the workplace—

“(1) The Employment Relations Act 2004 is amended as follows.

(2) After section 54 (12) insert at end—

‘(12A) No order may be made under this section that would permit balloting to take place in the workplace.’”

This new clause would prohibit the Secretary of State from making an order to extend the means of voting in trade union ballots and elections that would allow the ballot to be held in the workplace.

New clause 43—Industrial action: impact assessments and family tests—

“In Part V of the Trade Union and Labour Relations (Consolidation) Act 1992, before section 234A (and the italic heading before it), insert—

‘Industrial Action: impact assessments and family tests

234ZA Impact assessments and family tests

(1) No ballot for industrial action may take place unless the trade union has taken the following steps—

(a) published a report containing an economic impact assessment of the industrial action;

(b) published a report containing a family test on the impact of the industrial action; and

(c) informed members of the trade union of the publication of reports required under paragraphs (a) and (b).

(2) For the purposes of this section, a “family test” is defined as an assessment on the impact of industrial action on family relationships.’”

This new clause would require trade unions to carry out an impact assessment and a family test, for the reports of these to have published, and trade union members informed of their publication, before a ballot for industrial action can take place.

[Justin Madders]

This is a large group of measures, comprising clauses 54, 55 and 56 and new clauses 32, 33 and 43. Clause 54 seeks to repeal sections 2 and 3 of the Trade Union Act 2016 by amending section 226 of the Trade Union and Labour Relations (Consolidation) Act 1992 to reverse the changes made by sections 2 and 3 of the 2016 Act. This will mean that trade unions will no longer have to meet a minimum turnout or support threshold for a ballot for industrial action to be successful. The trade union will only need a simple majority of those voting in the ballot to vote in favour of industrial action, as was the case prior to the 2016 Act being passed.

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[Steve Darling]

I have some sympathy with the desire to understand the cost, but to me, the vast majority of the Government proposals before us today are about modernising the system appropriately. I am concerned that this afternoon we have seen the official Opposition one minute say that all in the garden is rosy and there is no need for equality, and the next flip over and catastrophise about the Government’s proposals. We need to get a firm hand on the tiller and see that the vast majority of these proposals simply entail modernisation. I welcome them.

[Justin Madders]

The shadow Minister asked why we cannot support new clauses 32 and 33. The simple answer is that there are already legislative protections in section 54(12) of the Employment Relations Act 2004, which sets out the conditions that must be adhered to in order to ensure that balloting is done in a secure and safe manner. He made some interesting points about people peering over others’ shoulders when votes are taking place. Clearly, his colleagues in the parliamentary Conservative party cannot be trusted to behave themselves when electronic voting takes place. That is something he will no doubt address with his colleagues in private.

If the shadow Minister is concerned about the impact of electronic balloting in all spheres—I am sure there are sometimes reasons in his own party to question the outcome of the electronic ballot—we can look at that, but there is already clear provision in law about how any trade union ballot is to be conducted. The working group will be considering that. If the Conservative party thought there were concerns about the use of electronic ballots for industrial disputes, they might not have commissioned the Knight review back in 2017 to consider the matter. That they did so suggests that they considered that it is right and appropriate that we modernise trade union practices to allow for electronic balloting for industrial action.

Moving on to the assessments the shadow Minister is requesting, the Government are pretty clear that, through new clause 43, the Opposition seek to add another administrative hurdle for a trade union that wants to take industrial action. There is no doubt that any such tests or assessments that were undertaken would lead to a multitude of satellite litigation, delay resolution of disputes, and divert both parties’ focus from resolving the disputes to arguing about impact assessments. I am not quite sure what the family test is. I think there is a family and friends test that some organisations use. It is a little vague. It is also unclear who would be the arbiter of whether these tests and assessments were being done sufficiently accurately. It is also fair to say that trade union members know, when they take industrial action, that there will be consequences. They are well aware. They do the job every day, they know the impact, and that is why they always take these matters very seriously.

The central point that the Bill will lead to more industrial action is counterintuitive, given that we are, in the main, reversing provisions of the 2016 Act. As we know, there has been more industrial action in recent years than there has been for decades. Perhaps there is not a cause and effect relationship between that and the 2016 Act, but I would suggest that the evidence points to it.

Question put and agreed to.

Clause 54 accordingly ordered to stand part of the Bill.

Clauses 55 and 56 ordered to stand part of the Bill.

Clause 57

Industrial action: provision of information to employer

[Greg Smith]

I beg to move amendment 167, in clause 57, page 69, line 16, leave out “seventh” and insert “twenty-first”.

This amendment would increase, from seven to 21 days, the notice period that trade unions are required to adhere to when notifying employers that they plan to take industrial action.

The amendment would increase from seven to 21 days the notice period that trade unions are required to adhere to when notifying employers that they plan to take industrial action. As we noted in the debate on the previous group, the Bill liberalises trade union law and repeals legislation passed by the last Conservative Government that brought some balance to the relationship between employers, the British public and trade unions. We think it is fair to require trade unions to provide 21 rather than seven days’ notice to employers that they plan to take industrial action, particularly given that the Bill repeals the minimum service levels legislation passed by the last Conservative Government to ensure sufficient levels of critical public services during strike action.

Given that the British public no longer have that protection, we think it is only fair that employers should have more time to prepare to mitigate some of the damage that occurs during strike action, particularly in vital public services such as ambulance and rail services. When strike action takes place, while of course employers have to prepare to mitigate its effect and put in place other steps to ensure that people still get their healthcare, education or critical services such as transport, the general public also need to make considerable preparations. Preparing properly and putting in place other ways of doing things often cannot be done at the last minute.

I would rather the minimum service levels legislation remained in place and, indeed, was strengthened, but when there is strike action on the railway, for example, it takes place at the drop of a hat—I consider seven days’ notice as at the drop of a hat. I think of the number of children in my constituency who get on at Wendover and Stoke Mandeville stations to travel to Dr Challoner’s grammar school in Amersham, and the number of my constituents who rely on the railway to get to hospital appointments, often in London. Some 7% of Buckinghamshire cancer referrals are to Mount Vernon, which is within London, and most of my constituents who go there for chemotherapy try to travel by train. To put in place a different route to that key chemotherapy appointment, or for parents to mitigate against or make different arrangements for their child to get to school, takes more than a handful of days.

I appeal to the Government to listen to us on what I argue is a moderate and reasonable amendment. Increasing the time limit would give people a fighting chance to put in place different ways of getting to their hospital appointment and getting their kids to school.

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[Justin Madders]

As the shadow Minister eloquently set out, amendment 167 seeks to increase from seven to 21 days the notice that a trade union must give an employer of industrial action after it has secured a ballot mandate and before any such action is taken. As we know, the Trade Union Act 2016 brought in a requirement for unions to provide 14 days’ notice to employers. As we are committing to repealing the 2016 Act through this Bill, it stands to reason that if the clauses are agreed to, the seven-day notice period that was required prior to the 2016 Act will apply in its place.

We want to reset the relationship with both employers and unions to resolve disputes through meaningful negotiations. Far from supporting the economy, the effect of the legislation in recent years has been an increase in strikes. In 2023, close to 2.7 million working days were lost to strikes, up from 2.5 million in 2022. Both those figures were the highest since the 1980s.

However, we recognise the importance of striking a balance between allowing for effective strike action and ensuring that employers can reasonably prepare. That is especially important in public services such as the NHS, as the shadow Minister has mentioned, where managers need adequate time to plan for periods of industrial action, and that includes adequate time to agree patient safety mitigations with unions. That is why we have given employers, workers, and trade unions the opportunity, through a consultation, to comment on what notice of industrial action should be provided to employers. That consultation closed on 2 December 2024 and our response will be published in due course.

It seems to me that the shadow Minister’s proposal of a 21-day period is effectively a finger-in-the-air job rather than something considered. If he had tabled an amendment to keep it at 14 days, that would at least have been consistent with his party’s previous position. His statement that it is important to change this in the light of the repeal of the minimum service levels legislation is slightly erroneous given that, to our knowledge, no one has ever actually used the provisions of that Act. When we consider the consultation responses, we will look at whether there is a case for changing the length of the notice period from seven days. I therefore suggest that the amendment is unnecessary, and I ask the shadow Minister to withdraw it.

[Greg Smith]

I accept the Minister’s point about where precisely the number of days should sit. I slightly take issue with him when he says that the 21-day proposal was a finger-in-the-air job. Most people would describe that three-week window as a reasonable notice period to enable people in many walks of life to make plans, such as alternative provision for childcare.

If the Minister is offering up 14 days, we might well take him up on that, but I suspect he is teasing us rather than making a firm offer. Therefore, we stick with our belief that all our constituents deserve fair and reasonable time to plan and make provision in their daily lives to mitigate against strike action and industrial action, which have such a devastating impact on our economy and on people’s healthcare and their children’s education. We wish to see amendment 167 in the Bill, and we will press it to a Division.

Question put, That the amendment be made.

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

[Justin Madders]

I will not detain the Committee long, because we have kind of had the debate already. Clause 57 seeks to repeal section 8 of the Trade Union Act 2016 by amending section 234A of the Trade Union and Labour Relations (Consolidation) Act 1992. This will revert the notice period that trade unions need to provide, after securing a successful mandate, from 14 days to seven days.

As I have said, the Government are committed to modernising employment laws, striking a balance between enabling effective industrial action and ensuring that employers can reasonably prepare for such action. We have sought views on what notice period is suitable for modern working patterns and practices through a formal consultation, which closed last month, and we will be reporting on its outcome in due course. I commend the clause to the Committee.

[Greg Smith]

The bulk of the argument to be had on the clause was made in the debate on amendment 167. The Opposition still believe that the time period stated in this clause is insufficient to enable real people to plan. I therefore urge the Government to go back and consider this, and to see what more reasonable compromise they might be willing to offer our Great British public on Report.

Question put and agreed to.

Clause 57 accordingly ordered to stand part of the Bill.

Clause 58

Union supervision of picketing

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

[Justin Madders]

The clause seeks to reverse the effect of section 10 of the Trade Union Act 2016, thereby removing the requirement under section 220A of the Trade Union and Labour Relations (Consolidation) Act 1992 for trade unions to appoint a picket supervisor and to meet other bureaucratic and administrative burdens in relation to the supervisor, such as taking reasonable steps to provide their name to the police. As the period of disruption between 2022 and 2024 has shown, administrative requirements and bureaucratic hurdles do not prevent strikes; they only make it more difficult for trade unions to engage in good faith negotiations with employers. These changes will bring trade union law into the 21st century and fix the foundations for industrial relations that have not delivered for workers, employers or unions in decades, costing the economy £3.3 billion in lost productivity in the last two years alone.

The Government recognise that regulations governing picketing lines are important, however. That is why the Bill repeals only those measures introduced by the Trade Union Act 2016 in relation to the role of the picket supervisor. Other legislation and an amended code of practice on picketing will remain in place. We are returning the law on picketing to what it was prior to 2016, when I believe that it was working well and was clearly understood by all parties. I therefore commend clause 58 to the Committee.

[Greg Smith]

I will not take much of the Committee’s time on this. The Opposition do not understand why the Government wish to remove perfectly sensible measures from the statute book, other than that the trade unions have clearly demanded that the change be made. It does not seem proportionate or reasonable to us, and we think that those picket supervisors should instead remain on the statute book, as they are the status quo.

[Justin Madders]

Our view was that the legislation was not required when it was introduced in 2016. There was no evidence at the time that there were issues with picketing, and there was already a code of practice in place to deal with abuse and intimidation on picket lines. Therefore, we believe that reverting to the pre-2016 position, when in most people’s opinion everything was working as it should, is an entirely reasonable move.

Question put and agreed to.

Clause 58 accordingly ordered to stand part of the Bill.

Clause 59

Protection against detriment for taking industrial action

Amendment made: 83, in clause 59, page 71, line 4, leave out “three” and insert “six”.—(Justin Madders.)

This amendment would increase the time limit for bringing proceedings under the new section 236A of the Trade Union and Labour Relations (Consolidation) Act 1992 from three months to six months.

[Greg Smith]

I beg to move amendment 166, in clause 59, page 72, line 21, at end insert—

“236E Actions short of a strike: exemption

(1) The right of a worker not to be subjected to detriment under section 236A does not apply in cases where the worker is involved in one or more of the following activities—

(a) intimidation at picket lines;

(b) protests organised by trade unions in furtherance of a dispute—

(i) at the premises of a company;

(ii) at the private residences of senior managers; or

(iii) at the premises of other organisations that are connected with the dispute;

(c) harassment or bullying of non-striking workers, or those who are covering for striking workers;

(d) victimisation or harassment of senior managers; or

(e) action aimed at damaging property or disrupting business contingency planning.

(2) The Secretary of State must ensure that the circumstances under subsection (1), in which the right of a worker not to be subjected to detriment do not apply, are set out in a code of practice.”

This amendment would disapply the right not to suffer detriment as a result of industrial action in certain circumstances.

Amendment 166, which was tabled in my name and those of my hon. Friends the Members for West Suffolk, for Bridgwater and for Mid Leicestershire, would disapply the right not to suffer detriment as a result of industrial action in certain circumstances. This amendment is designed to target what has become known as leverage, which is action taken by a trade union other than traditional industrial action to put pressure on an employer to settle a dispute or meet various demands. When describing leverage in the context of the Grangemouth dispute, Unite said:

“Leverage targets all areas of weakness of an employer, group of employers or sector—both direct and indirect. Leverage is an extension of the understanding that ‘weight of argument’ does not change the position of an employer. Leverage analyses what will change the position of the employer. Leverage is the translation of an organising mind-set into the planning and implementation of a campaign strategy, underpinned by the escalation of pressure to create uncertainty.”

Those are not my words, but the words of a spokesperson for Unite the union. Unite was also of the view that in a leverage campaign

“the employer is routinely treated as a target to be defeated not a friend to be convinced.”

I am not sure that is the good faith relationship between trade union and employer that Labour Members have tried to paint as the normal back and forth between the two. I would certainly condemn as unacceptable any relationship between a trade union and an employer in which

“the employer is routinely treated as a target to be defeated not a friend to be convinced”.

That is not good faith.

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[Greg Smith]

I welcome the hon. Gentleman’s constructive approach. If he accepts the principle of what we are saying, we will work with the Government to polish it, and to ensure the amendment gives the maximum protection and protects junior managers as well as senior managers, and land adjacent to a premise that may not be owned or leased by the company. I will happily work with him and the Minister in a constructive tone to ensure the protections against leverage are as strong as possible. I will happily withdraw the amendment if the Minister commits the Government to working with us and coming up with a stronger amendment on Report that will stamp out the practices I have outlined. I dare say that we will see in a few moments whether he does so.

[Justin Madders]

I think it would be helpful if I set out why we are seeking to address the issue of detriment within the Bill. The reason is that new section 236A of the Trade Union and Labour Relations (Consolidation) Act 1992 is required because of the Supreme Court’s ruling in April 2024 that section 146 of the 1992 Act is incompatible with article 11 of the European convention on human rights, because it fails to provide any protection against detriments intended to deter or penalise trade union members from taking part in lawful strike action organised by their union. Hopefully, Members will accept as a starting proposition that we cannot continue to be in breach of our international obligations under the ECHR.

The intention is to rectify that situation by inserting new section 236A into part V of the 1992 Act. This will provide that a worker has the right not to be subject as an individual to detriment of a prescribed description by an act, or any deliberate failure to act, by their employer, if the act or failure to act takes place for the sole or main purpose of preventing or deterring the worker from taking protected industrial action, or penalising the worker for doing so. The prescribed detriments will be set out in secondary legislation following consultation, which will take place after the Bill gains Royal Assent.

The shadow Minister made some interesting points in his speech. However, his amendment seeks to prejudge the consultation on this issue. He made some valid points and I am sure that we will discuss this issue again in future, because there is a need for us to clarify what is considered a detriment, for the reasons that I have outlined.

Some of the examples that the shadow Minister gave are of things that are already catered for in the law. The protection from prescribed detriment only applies where the sole or main purpose of an act or a failure to act is to subject the worker to detriment, to prevent them from or penalise them for taking protective industrial action. For example, if a worker is subjected to detriment solely because, for example, they have damaged property, the protection would not apply. That is the existing position.

Of course the criminal law would still apply to pickets, just as it applies to everyone else, so no person involved in activities associated with pickets or organising pickets has any exemption from the provisions of the criminal law as it applies, for example, to prevent obstruction and preserve public order, or to regulate assemblies or demonstrations. There is already a relevant code of practice in place for that. Consequently, although I understand the points that the shadow Minister is making, I say to him that this issue will be dealt with in detail in a forthcoming consultation. I therefore ask him to withdraw his amendment.

[Laurence Turner]

The Minister raised the Fiona Mercer case, which was brought by Unison. As he said, the final judgment in that case found that new protections are needed to prevent the victimisation of workers who undertake lawful industrial action. Can he confirm that, as a result of the changes that we are making here today, the UK should now be compliant with international law?

[Justin Madders]

My hon. Friend is correct. That is indeed the purpose of the—well, we will get to the clause stand part debate shortly, when we will hopefully deal with that issue. However, this measure is about dealing with a particular ECHR judgment. Therefore, as I say, I ask the shadow Minister to withdraw his amendment.

[Greg Smith]

I understand the point that the Minister makes about prejudging any consultation, notwithstanding the points he makes about international obligations, but this is one of those areas where we have a particular identified problem in leverage that is not being challenged. I should be grateful if the Minister would provide further detail, not in Committee this afternoon but perhaps in writing, on where he thinks that protections exist around this.

From our perspective, it looks very much like this practice is happening and there are no protections against it. If there are protections against it, they are not being enforced. If they are not being enforced, there needs to be a mechanism to enable and allow that enforcement to take place. In good faith, I will withdraw the amendment for now and reserve the right to bring it back on Report, but notwithstanding some of the legitimate points made by the Minister, it is incumbent on us to properly stamp down on this practice and see it as very separate and distinct from the more traditional form of industrial action—strike action. The public understand that in a way that means that there would be even less sympathy when it comes to leverage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[The Chair]

With this it will be convenient to discuss clause 60 stand part.

[Justin Madders]

We touched on this in our debate on the shadow Minister’s amendment. Clause 60 addresses the Supreme Court ruling made in April 2024 that section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992 is incompatible with article 11 of the European convention on human rights, in so far as it fails to provide any protection against detriments intended to deter trade union members from or penalise them for taking part in lawful strike action organised by their union. Clause 59 therefore amends the 1992 Act by inserting new section 236A into part V of the Act.

New section 236A provides that a worker has the right not to be subject as an individual to detriment of a prescribed description by an act, or any deliberate failure to act, by the worker’s employer if the act or failure takes place for the sole or main purpose of preventing or deterring the worker from taking protected industrial action or penalising the worker for doing so. The prescribed detriments will be set out in secondary legislation following consultation, which will take place after Royal Assent of the Bill. I will write to the shadow Minister with further detail on that in due course. However, the power in the Bill enables the Secretary of State to prohibit all detriments in secondary legislation should that be the preferred approach following consultation. Employers will continue to be able to deduct pay from workers in proportion to hours taken by strike action.

If a worker or former worker believes that they have been subject to a detriment by an employer in contravention of new section 236A, they may present a complaint to an employment tribunal within six months of the detriment occurring, or later if the tribunal is satisfied that it was not reasonably practicable for the complaint to be presented within that time period. On complaint to the employment tribunal, it is for the employer to show what was the sole or main purpose for which the employer acted or failed to act. If the tribunal finds that the complaint is well-founded, it must make a declaration to that effect and may make an award of compensation to be paid by the employer. The approach taken in the Bill addresses the ruling by the Supreme Court and, once the relevant secondary legislation has been made, will ensure that our legislation is compatible with the ECHR and ensure that protections against some forms of detriment for trade union representatives and members extend to industrial action.

Section 238A of the Trade Union and Labour Relations (Consolidation) Act currently provides that workers can claim unfair dismissal if they are dismissed for taking protected industrial action and the dismissal takes place within 12 weeks of the worker starting the industrial action. The strike action could be intermittent rather than continuous. The worker will also be automatically regarded as unfairly dismissed if they are dismissed after the 12-week period but had stopped taking action before the end of that period or the employer had not taken reasonable steps to resolve the dispute. Industrial action is protected if it is official action for which the union has immunity under section 219 of the 1992 Act.

Clause 60 amends section 238A of the 1992 Act so that protection against dismissal will apply whatever the length of the strike action. Should the employer wish to dismiss an employee as a result of a long-running protected industrial action, the dismissal would have to be for reasons other than participating in industrial action. The clause also makes consequential amendments to sections 229 and 238B of the 1992 Act and sections 26 to 28 of and schedule 1 to the Employment Relations Act 2004. I commend the clauses to the Committee.

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

It is a pleasure to serve under your chairmanship once again, Sir Christopher. I know that the shadow Minister likes us to draw attention to our union membership, so I again draw attention to my membership of Unison.

I welcome clause 59 because it addresses the critical issue of protecting workers taking part in industrial action, ensuring that they are safeguarded not just against dismissal but against other forms of detriment. As my hon. Friend the Member for Birmingham Northfield has previously mentioned, the case of Fiona Mercer, a care worker suspended after participating in legal industrial action, highlights why the reforms are needed. Like so many care workers, Fiona dedicated her career to supporting some of the most vulnerable in our society—in Fiona’s case, adults with learning difficulties. Yet she faced suspension for standing up for fair pay and better conditions. Her case is a pertinent reminder of the vulnerabilities faced by workers in critical sectors such as social care when their legal rights are not adequately protected.

Therefore, I welcome the clause’s introduction of protections against detriment, ensuring that employers cannot punish workers like Fiona for exercising their right to strike. This provision is essential to safeguard the ability of care workers and others to advocate for fair treatment without fear of suspension, demotion or other retaliatory measures. The removal of the arbitrary 12-week protected period for unfair dismissal means that workers like Fiona can continue to fight for justice without compromising on protections.

[Justin Madders]

I will start by recognising the contribution of my hon. Friend the Member for Scarborough and Whitby; the reason we are debating this clause is the case of Fiona Mercer and the quest for justice that my hon. Friend highlights. I will try to put the shadow Minister’s mind at ease about lawyers’ charters. As a former employment lawyer, I stand in the peculiar position of not wanting to see matters go to tribunal if we can avoid it. If we can resolve things before they get to that stage, it is always better. His fears are misplaced about the likelihood of creative lawyers going back many months or even years to link a particular dismissal to a period of industrial action.

There are many other potential claims that people can bring that relate to an act or something they may have done; whistleblowing is a very good example of that. Clearly, the further it is from the protected act and the dismissal, the harder it is to show that there is a connection, particularly, as will probably be the case for most dismissals that take place many months or years after the initial action, if there is an intervening event that causes the dismissal to take place. We do not want to get into the details of what those may be, but there are many intervening reasons why a dismissal might take place that have nothing to do with industrial action, but these are matters of law and fact for a tribunal to determine. We need to move away from a situation where we could have a particularly unscrupulous employer who wished to take advantage of the current law and seek to dismiss those who took part in industrial action 12 weeks and one day after that action had finished. That is not a state of affairs we want to defend.

Question put and agreed to.

Clause 59, as amended, accordingly ordered to stand part of the Bill.

Clause 60 ordered to stand part of the Bill.

Clause 61

Repeal of provision about minimum service levels

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

[The Chair]

With this it will be convenient to discuss the following:

New clause 27—Section 61: impact assessment—

“(1) The Secretary of State must carry out an assessment of the likely impact of section 61 of this Act on the ability of the services listed in section 234B(4) of the Trade Union and Labour Relations Consolidation Act 1992 to provide minimum service levels during strike action.

(2) The Secretary of State must lay a report setting out the findings of the assessment before each House of Parliament.”

This New Clause requires the Secretary of State to assess the impact of the provisions of Clause 61.

Amendment 133, in clause 118, page 105, line 20, at end insert—

“(3A) But no regulations under subsection (3) may be made to bring into force section 61 of this Act until the findings set out in the report under section [section 61: impact assessment] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”

This amendment is linked to NC27.

[Justin Madders]

The clause seeks to repeal the Strikes (Minimum Service Levels) Act 2023, which provides powers for the Government to make regulations to set minimum service levels during strike action in some essential services. The previous Government introduced regulations to implement minimum service levels in rail, border security, fire and rescue, and ambulance services. No work notice, however, has ever been issued by an employer to require individuals to work to meet the minimum service level during strike action. This demonstrates the futility and misguided approach of the Act and I urge Members to support its repeal. Minimum service levels unduly restrict the right to strike and undermine good industrial relations. As a result, our plan—it is a clear manifesto commitment—pledged to repeal the Act to give trade unions the freedom to organise, represent and negotiate on behalf of their workers.

The clause amends the Trade Union and Labour Relations (Consolidation) Act 1992. Subsection (1) repeals provisions of the 1992 Act as inserted by section 1 of the Strikes Act, with sections 234B to 234G falling away. A number of further amendments are made by the clause to the 1992 Act to reverse other changes made by the Strikes Act. As a result, all associated powers, regulations, provisions and defined terms related to minimum service levels will also fall away. We want to reset the relationship with both employers and trade unions to resolve disputes through meaningful negotiations, and repealing the Strikes Act will help us to achieve that.

I will now turn to new clause 27 and amendment 133, which were tabled by the hon. Member for Mid Buckingham- shire. The Government will not support his proposals, which unnecessarily ask for an assessment of the ability of essential public services to provide minimum service levels during industrial action, and to lay a report containing the findings before the House. The Government have already produced a comprehensive set of impact assessments, including an assessment covering the repeal of the Strikes (Minimum Service Levels) Act 2023. This was published alongside the Bill at Second Reading and is based on the best available evidence about the potential impact on business, workers and the wider economy. The assessment is hamstrung by the fact that the Act has never been implemented, so we are in some difficulty in seeing whether there was an impact from it.

The analysis we undertook, however, included labour market and broader macroeconomic analysis, including sectoral analysis on industries providing essential services, potential influence on collective bargaining and dispute resolution processes, while also addressing the balance between employer needs and union representation. We want to reset the relationship with both employers and trade unions to resolve disputes through meaningful negotiations, and believe that the Act was a hindrance to doing so. I therefore ask the shadow Minister not to move his new clause or amendment.

[Greg Smith]

I will focus my remarks predominantly on new clause 27 and amendment 133, which stand in my name and those of my hon. Friends. New clause 27 would require the Secretary of State to assess the impact of clause 61, which, as the Minister outlined, repeals legislation passed by the last Conservative Government that implemented minimum service levels in vital public services during periods of strike action. Amendment 133 would specify that regulations could not be laid to repeal minimum service levels legislation until the reports required by new clause 27 had been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.

We think that is fundamentally right because, with no justification or explanation, the Government will repeal legislation designed to ensure that, during a strike, levels of service are maintained to ensure public safety. We consulted on minimum levels of service for the ambulance service, fire and rescue services and passenger rail services during the last Parliament. It is an important principle that members of the public, who pay through their taxes for lifesaving public services such as ambulance and fire services, should be able to rely on those services at all times, including when members of those services choose to take strike action. Equally, members of the public depend on rail services and in many cases will have already paid for them through season tickets. They have a right to an acceptable level of service, even when members of unions decide to take strike action.

Therefore, before the Government can commence the repeal of the minimum service levels legislation, we think it is only right that the Secretary of State should demonstrate and reassure the House that, in the sectors that the Conservatives specified as suitable for requiring minimum service levels during strike action—to recap, because I think it is important that we get this back on the record, those are health services, fire and rescue services, education services, transport services, services involved in the decommissioning of nuclear installations and management of radioactive waste and spent fuel, and border security—minimum levels of acceptable service can be provided to the public. I make that point not on a whim, but as a matter of public safety and public convenience, and I would be grateful for reassurance from the Minister on it.

If I may humanise it for a moment, this is not about simply saying that people should not be allowed to strike, or taking away rights or anything, although I am sure it will be painted as that; it is about expanding an established custom and precedent in this country about certain sectors, such as the police, being unable to strike. My father was a police officer for 31 years before he retired. We have always accepted as a country that the police should not be able to strike, because they are there for the fundamental purpose of public safety. We know that when we need them, they will be there and available. The same core public service, which we all pay for through our taxes, is provided by the other professions I outlined, not least fire and rescue services, border security and the niche but important services involved in the decommissioning of nuclear facilities, and there absolutely must be minimum service levels there too. Any one of us could need an ambulance at any point at no notice. Whether or not that minimum service level is in place is quite literally the difference between life and death. This is a serious issue.

The Labour party has always been opposed to minimum service levels. It opposed the legislation in the previous Parliament, and through this clause it is taking the quickest action possible to repeal it. I urge Labour Members to consider the practical, life-and-death consequences of not ensuring minimum service levels for fire, ambulance and border security services. If they have issues with some of the detail of the minimum service levels legislation, they should by all means strengthen it, but it would be simply negligent to allow the minimum service levels to drop and to leave any of our constituents—even just one—in a position of potentially life-and-death danger by repealing the legislation.

[Justin Madders]

I understand the points that the shadow Minister has made, but they would carry rather more weight if we had seen the minimum service levels Act operate in practice. The reality is that not a single day of industrial action has been prevented as a result of that legislation. The Government’s own impact assessment at the time indicated that it would have a detrimental impact on industrial relations, and the increase in strike days in the past couple of years has proved that to be the case.

It is also true that all the public sector bodies the shadow Minister referred to that are covered by the Act had voluntary arrangements in place to ensure that there was no endangerment to life. Trade unions and their members have and always will work with employers during periods of industrial action to ensure that life is not endangered. That is absolutely right. Indeed, there is potential criminal liability for those who do not. The evidence given by all at the time—including employers, who saw that the legislation was designed to drive a wedge between employers and trade unions—was that the existing voluntary arrangements worked and ensured that vital services were able to continue during periods of industrial action.

The minimum service levels Act drove a coach and horses through decades of agreement and understanding about how sensitive issues were dealt with during periods of industrial action. The proof is in the pudding: the fact that the Act was never used by any of the organisations that were empowered to use it shows that it was simply a bad piece of legislation, done purely for cosmetic political purposes, and had no meaningful impact. Therefore, its repeal will have no impact on the issues the shadow Minister has raised. I commend the clause to the Committee.

Question put and agreed to.

Clause 61 accordingly ordered to stand part of the Bill.

Clause 62

Annual returns: removal of provision about industrial action

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

[The Chair]

With this it will be convenient to discuss the following:

Clauses 63 to 69 stand part.

New clause 44—Certification Officer: growth duty—

“When discharging its general functions, the Certification Officer must, so far as reasonably possible, act in such a way as to advance the following objectives—

(a) the international competitiveness of the economy of the United Kingdom; and

(b) its growth in the medium to long term.”

This new clause would require the Certification Officer to advance the objectives of the international competitiveness of the economy and its growth in the medium to long term.

[Justin Madders]

Clause 62 seeks to reverse the effect of section 7 of the Trade Union Act 2016. It will remove the additional reporting requirements imposed on trade unions for their annual returns to the Certification Officer regarding details of industrial action taken during the reporting period. Specifically, trade unions will no longer be required to include information on any industrial action taken during the reporting period, the nature of the trade dispute relating to the industrial action, the type of industrial action taken or when it was taken, or confirmation that the relevant thresholds covering industrial action ballots have been met. Additionally, trade unions will no longer be required to include information regarding the results of industrial action ballots—for example, the number of votes cast and the number of those who voted yes or no.

Subsection (1) removes section 32ZA from the Trade Union and Labour Relations (Consolidation) Act 1992, which sets out the additional reporting requirements on trade unions. Trade unions will still be required to submit an annual return to the Certification Officer. However, the amount of information they will be required to include will be reduced. By removing these additional administrative burdens on trade unions, we are freeing up their time to engage in bargaining and negotiation with employers and allowing them to devote more time to representing their members’ interests.

Clause 63 seeks to repeal amendments made to the 1992 Act by section 12 of the Trade Union Act 2016 and thereby remove the requirement for trade unions to include political fund expenditure in their annual return to the Certification Officer. Currently, this information must be provided where a union spends more than £2,000 per annum from its political fund. Subsection (2) removes section 32ZB from the 1992 Act, which sets out the information to be included in a union’s annual return on political expenditure.

Other subsections of clause 63 make other amendments to the 1992 Act that are consequential on the removal of section 32ZB, including as to its enforcement and its application to employers’ associations. Section 12 of the 2016 Act itself is repealed by subsection (7). Trade unions will still have to report to the Certification Officer on their income and expenditure. That includes reporting on the income and expenditure of the political fund. Moreover, all political parties will still be subject to the reporting requirements in the Political Parties, Elections and Referendums Act 2000, which requires certain donations and loans to be recorded and reported to the Electoral Commission.

Clause 64 seeks to repeal the remainder of the effect of section 18 of the 2016 Act. It removes the power of the Certification Officer to publicise a trade union’s failure to include the required industrial action data in its annual return. Clauses 62 and 63 remove the requirement for trade unions to include details of industrial action and political expenditure in their annual returns, so there is clearly no need for the Certification Officer to retain powers to enforce such a requirement.

Enforcement relating to details of political expenditure is addressed in clause 63, and enforcement relating to details of industrial action in clause 64. Therefore, clause 64(2) removes section 32ZC of the 1992 Act, thereby removing the powers of the Certification Officer to enforce the additional annual return requirements relating to industrial action. The Certification Officer will retain the powers to enforce the remaining annual return requirements in relation to a union’s financial affairs and governance.

Clause 65 seeks to reverse the effect of section 17(1) and (2) of the 2016 Act, which inserted schedule A3 to the 1992 Act. It will repeal the enhanced investigatory powers of the Certification Officer, including the power to launch investigations by inspectors, the ability to compel trade unions to produce documents, and the related powers of enforcement. Schedule A3 to the 1992 Act sets out the details of the Certification Officer’s investigatory powers as introduced by the 2016 Act.

Clause 65(5) removes section 256C of the 1992 Act and subsection (6) removes schedule A3 from the 1992 Act. Subsections (2), (3) and (4) make more minor amendments that relate to the removal of schedule A3. Consequentially, subsection (7) removes section 17(1) and (2) of the 2016 Act, and schedule 1 to that Act, and makes further minor amendments to schedule 4 to that Act and to section 43 of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014.

The enhanced powers created by the 2016 Act were unnecessary. There was no evidence of regulatory failure, and unions have consistently complied with their statutory obligations in relation to their finances, governance and reporting requirements. Since their introduction, the Certification Officer has never used those additional powers. Removing onerous regulatory burdens from trade unions is part of the Government’s commitment to bringing in a new era of partnership that sees employers, unions and Government work together in co-operation and through negotiation.

Clause 66 seeks to remove the powers of the Certification Officer to investigate trade unions proactively without first having received a complaint from a member of that trade union. Those powers were added to various provisions of the 1992 Act by schedule 2 to the 2016 Act. The enhanced investigatory powers created by the 2016 Act were unnecessary. There was no evidence of regulatory failure, and unions have consistently complied with their statutory obligations in relation to their finances, governance and reporting requirements. In fact, since their introduction, the Certification Officer has never used those additional investigatory powers either.

Subsections (2) to (9) of clause 66 remove the ability for the Certification Officer to proactively investigate a range of issues, reverting to the position pre-2016, when the Certification Officer could only consider and act upon a complaint from a member. Trade unions are voluntary associations, run by and for their members. We are returning the Certification Officer’s role to one of adjudicating when it receives members’ complaints in relation to a union.

Clause 67 seeks to reverse the effect of section 19 of the 2016 Act to remove the ability of the Certification Officer to impose financial penalties on trade unions. The previous Government presented no evidence as to why the Certification Officer needed those additional powers. Since they have come into force, no financial penalties have been imposed on any trade union.

Schedule A4 to the 1992 Act sets out the detail of the power to impose financial penalties. Clause 67(2) removes section 256D of the 1992 Act, which gave effect to the schedule, and subsection (3) removes the schedule. As a result, the clause removes subsections (1) to (3) of section 19 of the 2016 Act and schedule 3 to that Act. The Certification Officer will retain the power to issue enforcement orders, and if those orders are not complied with, the union may be found in contempt of court.

Clause 68 will repeal sections 257A and 258(1A) of the 1992 Act, as inserted by section 20 of the 2016 Act. That will remove the levy charged by the Certification Officer on employers’ associations and trade unions. Furthermore, the Certification Officer will no longer be required to report on the levy as part of its annual report to Parliament. The levy is an impediment to the rights of voluntary associations, and it attracted criticism from international bodies, including the International Labour Organisation.

Clause 68(2) removes section 257A of the 1992 Act, which sets out the requirements for a levy to be paid to the Certification Officer by trade unions and employers’ associations. Subsection (3) removes the requirement in section 258(1A) of the 1992 Act for the Certification Officer to report on the levy. The Government believe that we should interfere as little as possible in the activities of social partners, which are voluntary associations.

Clause 69 seeks to reverse the changes made by section 21 of the 2016 Act to the 1992 Act so that the right of appeal against decisions of the Certification Officer to the Employment Appeal Tribunal is on questions of law only, rather than on questions of law and fact. That brings the appeals process back in line with the position before the 2016 Act and with many other enforcement bodies of employment law. For example, appeals against the decisions of employment tribunals are considered only on points of law, not points of fact. I hope hon. Members were keeping up with that; I shall be asking questions later.

New clause 44 would place a new duty on the Certification Officer, the regulator of trade unions and employers’ associations, by requiring it to advance the objectives of the international competitiveness of the economy and its growth over the medium to long term when carrying out its statutory functions.

It is helpful at this stage to set out the role of the Certification Officer. It has been the regulator of trade unions and employers’ associations since 1975 and not only carries out regulatory functions, but has administrative and supervisory functions and a significant quasi-judicial function, where it adjudicates on complaints raised by trade union members and other parties. As part of our repeal of the provisions of the Trade Union Act, we will be repealing the Certification Officer’s enhanced investigatory and enforcement powers and the levy imposed on trade unions and employers’ associations. As such, we will be returning the role much to what it was before the Trade Union Act was implemented.

The Certification Officer’s primary role is to ensure that both unions and employers’ associations adhere to the statutory requirements in relation to their finances and governance that Parliament has decided they are required to observe. Its statutory functions are to maintain lists of trade unions and employers’ associations; determine complaints from union members against their unions relating to alleged breaches of statutory duties and some other types of union rules; determine union independence; ensure that annual returns are made; supervise mergers, political fund ballots and members’ superannuation schemes; and investigate alleged financial irregularities and breaches in relation to trade union membership. The Certification Officer therefore has no locus in relation to industrial action and no role in making assessments of how unions and employers’ associations impact the economy. It has no economists or statisticians on its payroll.

In view of the Certification Officer’s functions and role, the new clause is not appropriate. It is not clear how the Certification Officer, in making decisions on whether a union or employer association has breached its statutory obligations, will act to advance the objectives of international competitiveness of the economy and its growth in the medium to long term. Hopefully the shadow Minister will set out how that would work in practice, because it is not obvious to me how the Certification Officer could take those factors into account when determining the statutory obligations that unions and employers’ associations have to observe under Acts of Parliament. For that reason, I ask him not to press his new clause, and I commend clauses 62 to 69 to the Committee.

[Greg Smith]

I congratulate the Minister on his marathon run through clauses 62 to 69. I will focus my comments particularly on new clause 44, which, as the Minister has outlined, would require the Certification Officer to advance the objectives of the international competitiveness of the economy and its growth in the medium to long term.

--- Later in debate ---

New clause 44 is designed to help the Government achieve their growth mission by getting the unions on side with the Government’s own agenda for growth. I cannot believe that the Minister does not wish to get on board with that mission from the Prime Minister, whether it is a mission, a yardstick or milestone, or whatever it is they are calling it these days. We on the Opposition Benches would like the Certification Officer to act in such a way as to advance the international competitiveness of the economy of the United Kingdom and its growth in the medium to long term. We do not believe that the Certification Officer should be legally able to preside over industrial action that is contrary to these aims—aims that, up until today, we really did think the Government shared.

[Justin Madders]

I am grateful to the shadow Minister for taking slightly less time than I did on this grouping. For the record, I am fully supportive of the Prime Minister’s action plans, milestones, missions and all other types.

[Greg Smith]

Can he name them?

[Justin Madders]

I am afraid that would be out of scope of the Bill Committee. I hear what the shadow Minister says. His essential argument is that we should be able to judge the actions of trade unions in terms of the damage or disruption they cause to the UK economy. Of course, we want to see growth and we want to see industrial action minimised. We believe that by having a more harmonious set of industrial relations, we will see that.

Unfortunately, the shadow Minister’s new clause really mischaracterises the Certification Officer’s role. He is not, as the hon. Gentleman said, there to preside over strikes; he is there to preside over the governance, finances, reporting requirements and statutory obligations of trade unions and employers’ associations—I noted that the hon. Gentleman did not mention employers’ associations. The Certification Officer is not there to preside over industrial disputes and strikes. There are courts to intervene if a party feels aggrieved about the way industrial action has been observed, whether lawfully or not. I can see the intention of the new clause: the shadow Minister wants the Government to succeed in their growth mission. We all do, but I do not think the Certification Officer is the right or appropriate vehicle for that to take place.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Clauses 63 to 69 ordered to stand part of the Bill.

Clause 70

Regulations subject to affirmative resolution procedure

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

[Justin Madders]

The clause amends section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992, with which I am sure all Members are now very familiar, to require that regulations made under the following new sections of the 1992 Act are subject to the affirmative resolution procedure. This therefore will apply to the following regulations: section 70ZC, on access agreements, response period and negotiation period; section 70ZE, on access agreements and the period to make an application to Central Arbitration Committee; section 70ZF, on access agreements and determinations by the Central Arbitration Committee; section 70ZI, on the enforcement of access agreements and the maximum penalty; and section 236A, on detriment for taking industrial action. Any other regulations made under section 293 will continue to be subject to the negative resolution procedure. I therefore commend clause 70 to the Committee.

[Greg Smith]

I will not detain the Committee with a commentary on this clause.

Question put and agreed to.

Clause 70 accordingly ordered to stand part of the Bill.

Clause 71

Devolved Welsh authorities

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

Employment Rights: Terminal Illness

Justin Madders Excerpts

Wednesday 18th December 2024 Westminster Hall

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

It is a pleasure to see you in the Chair this morning, Sir Edward. I start by referring to my entry in the Register of Members’ Financial Interests, including my membership of the Unite and GMB unions; obviously, there is a particular reference to the GMB from one of the leading proponents of the campaign.

I congratulate my hon. Friend the Member for Corby and East Northamptonshire (Lee Barron) on securing this important debate. We have been talking about death recently: the Second Reading of the Terminally Ill Adults (End of Life) Bill was an important moment in its own right and clearly raised a lot of interest across the country. It was also a wider discussion about how we approach the end of life as a society and as individuals—and indeed as employers, who are the subject of today’s debate. Today we are continuing the discussion about how we handle this important issue.

The private Member’s Bill proposed that only those with a terminal diagnosis who were expected to live for six months or less could come under its auspices, but there can be a considerable time between diagnosis and death. It is important that that time, however long it is, is considered carefully when it comes to how we better support people to live with dignity and fulfilment. Today’s debate has raised interesting points about how we best do that. My hon. Friend was right to say that the vast majority of employers would not dream of dismissing a terminally ill member of staff, but of course the Dying to Work campaign is a much broader look at how employers can support employees in that situation; the issue is not just the prohibition on dismissal.

We had contributions from a number of Back Benchers. As always, the hon. Member for Strangford (Jim Shannon) made a thoughtful contribution. He paid tribute to Marie Curie’s work to provide wider support for individuals in this situation. I understand that colleagues in the Department for Work and Pensions continue to engage with Marie Curie on the issue. He mentioned the “Dying in poverty” report, which I have not read, but will.

My hon. Friend the Member for Morecambe and Lunesdale (Lizzi Collinge) highlighted a number of measures that are already available—I will talk about those shortly—such as reasonable adjustments and flexible working, which enable those who want to carry on working to do so in a way that suits them. She made the important point that continuing to work is particularly important for people on lower incomes.

My hon. Friend the Member for Sherwood Forest (Michelle Welsh) paid tribute to the campaigner Jacci Woodcock; I echo her tribute, and those of all the other hon. Members who praised her work. Jacci Woodcock has brought the campaign to the attention of many parliamentarians over a number of years, and the fact that we are having this debate is a tribute to the work that she started all those years ago.

As I would have expected him to do, my hon. Friend the Member for Wolverhampton West (Warinder Juss) gave a thorough legal analysis of the protections available. He noted, as did a number of hon. Members, that there is a lack of direct protection for people with a terminal illness. Equally, my hon. Friend the Member for Birmingham Northfield (Laurence Turner) gave a characteristically thorough analysis of the situation. He made the important point that employers want clear guidance, and mentioned a number of relevant codes that may need to be updated. The shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), also made the point that a number of employers do not have any policy at all; we can certainly take that away and look at it.

My hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) made an important point about St Andrew’s hospice in particular: both the people who work there and those they help in their last days of life have protection, should it be needed. That is a reassurance to those in the hospice.

My hon. Friend the Member for Blyth and Ashington (Ian Lavery) spoke movingly about the awful moment when someone gets a diagnosis. He made the point, as did a number of hon. Members, that different people will react differently: some want to continue to work and carry on as best they can. He mentioned the potentially traumatic experience of having to notify one’s employer—seeing, in black and white, that there is a terminal illness. That is one of the challenges we would face if we were to legislate in this area.

The Liberal Democrat spokesperson, the hon. Member for Wokingham (Clive Jones), raised questions about statutory sick pay. He will be aware that the Employment Rights Bill will significantly increase the scope of those who are eligible for statutory sick pay by removing the lower earnings limit and the waiting days. I hope that his party will be able to support that Bill on Third Reading. He also mentioned raising benefits, and I will pass on his request to colleagues in the Department for Work and Pensions who are responsible for the matter.

The hon. Member for Strangford, as well as a number of other Members, made the point that people with a terminal illness want the choice to work if they can. For some people, work forms a big part of their social group. Work is about dignity; it is about finding something that occupies a person’s mind other than thoughts about the terrible situation they are in. People should be able to continue to work if they want to. Of course, not everyone wants to, and not everyone can—this issue is not simple to characterise. Everyone reacts differently, and everyone is a different situation: their medical conditions and prognoses will all be very different. People will therefore need very different kinds of support, depending on their situation.

We must deal with this issue with sensitivity, but also with flexibility. We must not only make sure that protections are in place, but enable employers and employees to have the space and freedom to come to the arrangements that suit them best. A number of hon. Members referred to protections under the Equality Act. I remind hon. Members that anyone with a health condition that has a substantial and long-term effect on their ability to carry out normal day-to-day activities is classified as disabled and therefore has protection under that Act, whether as an employee or a job applicant. Certain chronic illnesses, such as cancer, entitle the employee to automatic protection under the Act.

The vast majority of people with a terminal illness should be covered by the Equality Act. However, I have heard what various Members have said—indeed, my hon. Friend the Member for Corby and East Northamptonshire, who introduced the debate, mentioned people who may not fit within the protections of that Act, and I am happy to have a further conversation with him to understand where the gaps are. There are also more general protections relating to unfair dismissal under the Employment Rights Act 1996.

As we know, terminal illness is a longer journey for some than for others. Some facing it may wish to carry on working; some may not. However, we need to think about what support is available for people. The individual placement and support in primary care programme provides support to unwell people who are out of work and to those who need support with their health to stay in work. The support available includes physical and psychological treatment, in recognition that illness, including terminal illness, can take many forms. Alongside that, the Government provide Access to Work grants to help with the extra costs of working beyond standard reasonable adjustments and tailored support for individuals through work coaching, among other support.

More generally, the Government provide employers with guidance on health disclosures and having conversations about health, as well as guidance on legal obligations. However, I take the point that that guidance is not well understood out there. We think our guidance is helpful for employers, but we need to make sure that they are aware of it and that it is as up-to-date as possible.

As we have already touched on, terminally ill people who wish to remain in work may need reasonable adjustments to do so. One of the options for people is to look at flexible working. Quite often, terminal illnesses have a debilitating effect on people’s energy levels, so being able to take time off flexibly is important. All employees have a statutory entitlement at the moment to request flexible working from day one of their employment. The new Employment Rights Bill will update that entitlement to introduce, among other changes, a requirement that any rejection of a flexible working request be a reasonable one. We hope that will make it more likely that any such request made by an individual with a terminal illness will be accepted.

If terminally ill people do fall out of work, they are eligible for enhanced access to a range of benefits under the special rules for end of life. Those rules allow for faster, easier access to certain benefits without needing to attend a medical assessment, and in most cases entitle the recipient to the highest rate of benefit. It is important to note that the rules apply to those who are unable to work and to those who wish to continue working, but require support to do so. The special rules for end of life aim to positively impact the quality of life of people with limited time left by ensuring that they can receive the financial support they are entitled to quickly and easily.

However, as hon. Members have already referred to, we are determined to go further. As we have heard, many employers have signed up to the Dying to Work charter, a TUC initiative that aims to unite employers under a standardised action plan to support employees as and when they are concerned. The charter represents a commitment from employers to ensure that all employees experiencing terminal illness have

“security of work, peace of mind and the right to choose the best course of action for themselves and their families which helps them through this challenging period with dignity and without undue financial loss”.

The Government have worked with ACAS to promote the charter and the TUC encourages union negotiators to seek clear agreement that their employer will abide by the charter’s principles. I am among 130 Members in this place who have already signed the charter as a commitment to my staff, because I believe that we should be setting an example as employers.

I understand that, as has been mentioned already, we are looking closely at being to implement the charter in full across Government. The Government People Group, which is in the Cabinet Office and responsible for civil service human resources, is currently working to develop a package of measures for all Departments as employers, including this Department, to introduce the Dying to Work charter. The Government People Group is due to meet the TUC in January to discuss that and a Minister will then be appointed to lead that work across Government. Once we are in a position to say that we have adopted the charter, we can hopefully be much more forward in encouraging others to sign up.

I conclude by thanking everyone for their contributions in the debate. It has been a very thoughtful and considered debate; we understand that there are concerns about how the law currently operates, but the employer needs space with the employee to agree arrangements appropriate to their own situations. We therefore believe that our current flexible approach is probably the right one and will deliver the best practical working arrangements, hopefully giving people not only the protection they need, but the flexibility and space to deal with this awful situation in the way that best suits them.

Employment Rights Bill (Thirteenth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 17th December 2024 Public Bill Committees

[The Chair]

Will 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 sittings is available in the room and on the parliamentary website. I remind Members about the rules on declarations of interests, as set out in the code of conduct.

Clause 25

Public sector outsourcing: protection of workers

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

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

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

The clause will empower Ministers to reinstate and strengthen the two-tier code on workforce matters where contracts for public services have been outsourced to the private sector. It will ensure fair and equitable employment conditions for public sector workers who have been transferred into the private sector, and private sector workers who work alongside them on public service contracts, while maintaining a high quality of service for the public. It therefore directly supports the Government’s manifesto commitment to make work pay and will tackle the issue of unfair two-tiered workforces where staff working alongside one another to deliver the same contract do not have comparable terms and conditions of employment.

The powers are constrained so that the provisions of the regulations and the code, when developed, will apply only to new contracts entered into once the Bill comes into force, but can and will apply to re-procurements of services already outsourced where the re-procurement leads to a further transfer of workers. Ministers will have the power to make regulations specifying provisions to be included in relevant outsourcing contracts. The provisions may, for example, set out model contract terms that, where incorporated into contracts, will impose obligations on suppliers. Authorities will be required to take all reasonable steps to include those provisions in all relevant outsourced contracts.

The regulations made under the clause will, first, have the purpose of ensuring that transferring workers are treated no less favourably as workers of the supplier than when they worked for the public sector contracting authority and, secondly, have the objective of ensuring that workers of the supplier who are not transferred from the public sector but recruited by the supplier to work on the contract are treated no less favourably than those transferring workers. Alongside that, Ministers of the UK, Scottish and Welsh Governments will be subject to a duty to publish a code of practice addressing similar matters to which contracting authorities will need to have regard.

To ensure that the code is effectively enforced, there will be several forms of redress. Contracting authorities will be required to take all reasonable steps to ensure that suppliers meet their contractual obligations, as set out in the regulations. In addition, the procurement review unit, which will be established under our new Procurement Act 2023, due to commence in 2025, will be able to investigate whether a contracting authority has had regard to the code and taken appropriate steps in relation to provisions specified in the regulations.

These powers are being extended through amendments to the clause, which we discussed last week, to the devolved Governments of Scotland and Wales so that the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts can be spread throughout the UK. Fair and equitable working conditions are the right of all employees working alongside one other on the same outsourced contracts, and these measures will help to tackle that issue head on.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship once more, Mr Mundell.

Clause 25 has got me thinking about many moons ago, in 2006, when I was part of the team that won Hammersmith and Fulham council for the Conservatives for the first time since 1968. One of our first acts was quite literally to take the red flag down from the roof of the town hall. Part of the symbolism of that, which is why I mention it, was that the council, in 2006, was one of the last to outsource anything at all. Competitive tendering simply had not happened in that London borough. Everything was still a direct service run by the local authority, and we set about contracting out waste, grounds maintenance and many other services. Why? Because we wanted to deliver better value for taxpayers—indeed, we cut council tax by 20% over the eight years that we ran the council—and to improve service standards.

One of the things I learned in that process, and the reason my point is relevant to the clause, is that the first iteration of any contracting out—that first contract, be it for refuse collection, street cleansing, grounds maintenance or whatever—does not tend to result in economies and improvements. It is often in the second or third contract iteration where the cost savings and improvements in service standards start to be seen. That is partly because of the TUPE provisions that rightly exist to ensure that those staff who are being transferred from whatever part of the public sector we might be talking about—in this case, local government—transfer with the same rights, terms and conditions, and pay that they had at the point that they ceased to be direct employees of the council, or whatever other public service, and became employees of whoever won the contract.

The rub comes in the real-world application. In such cases, the staff members who transferred are on favourable terms and conditions, and probably better pay, than some of the staff that the contractor brings into the team. If it is immediately locked in that everybody new has to be on the same terms and conditions and pay scales, we will never achieve value for money for taxpayers, and we will never enable the contractor, be that a refuse collection company or whatever, to find efficiencies and savings at the same time as increasing service standards in the way that we all want to see. It might as well never be done in the first place. That makes me question whether that is in fact the ideological position that the Government want to take. I can see the Minister grinning; perhaps I have hit upon something.

I gently remind the Committee of the time when every refuse service and local government service was provided directly, in house, before competitive tendering and the revolution of the 1980s and the Thatcher Government. We can all remember what delivery of those services looked like in the 1970s: the rubbish piled up on the streets with no one collecting it.

--- Later in debate ---

[Laurence Turner]

I would say better, having had some experience. The hon. Gentleman might want to return to that point.

On the substance of the clause, there were some concerns about the original incarnation of the two-tier code. It was purely voluntary and did not contain meaningful provisions for redress where an employer who had signed up to uphold the standards of the code did not follow through. I hope that that deficiency will be remedied when the associated regulations appear.

It is legitimate to have differences on points of principle. After the current Lord Maude abolished the two-tier code, the Secretary of State—now Baron Pickles—said that the Government of the time had

“Abolished the…two-tier code that…hindered the voluntary and independent sector from delivering better value for money.”—[Official Report, 26 March 2015; Vol. 594, c. 166WS.]

The shadow Minister has made much the same point. This was explicitly about driving down wages for the large number of people who are contracted out to deliver public services. I very much welcome the fact that this Government have a policy objective of making work pay. For a large number of people in the labour market who have been overlooked by politicians for too long, the clause represents an important step forward for remedying that deficiency.

[Justin Madders]

We have had a broad debate—very broad from my hon. Friend the Member for Birmingham Northfield, who took us on a canter through the history. He was right that it was the coalition Government who abolished the two-tier code, which is why it is welcome that the Liberal Democrats have realised the error of their ways; I welcome their support on this. Their spokesperson, the hon. Member for Chippenham, made the important point that the inherent unfairness of people doing exactly the same job for the same employer finding out that they are on different terms and conditions and are earning less is a big morale sapper. It is also a big issue in terms of workforce retention—one problem that we often see with outsourced contracts.

I will turn to the shadow Minister’s misty-eyed days at Hammersmith and Fulham, and I will raise him Ellesmere Port and Neston borough council, which was a great believer in direct provision of services; we certainly felt that was the best way to deliver value for the taxpayer and good-quality services. In his contribution, the shadow Minister alighted on the illusion of outsourcing—the fact that consultants can demonstrate that savings can be made, but when you drill into the detail, those savings are always off the back of the workforce. They are not some magical way of doing things differently. It is about cutting terms and conditions and it is about a race to the bottom, which we are determined to end.

[Greg Smith]

I do understand the ideological difference between the two sides on this point, but I take issue with the Minister that this is about a race to the bottom and cutting terms and conditions; it really is not. From my experience, it was not a matter of consultants, but of properly probing contracts, setting the right specification to deliver for the residents in the place that the council served, and requiring the flexibility to ensure that some people would be doing very different jobs in a different way from before in order to deliver that. It was not about wanting to cut anyone’s pay or terms and conditions; it was about service delivery and value.

[Justin Madders]

I take the shadow Minister’s point. I am not familiar with the machinations of Hammersmith and Fulham council in the 2010s, and it may well be that savings were made by doing things differently. But there is absolutely no reason why that cannot be done directly from a public body: if it is well led, if it is able to have constructive dialogue with its work force, savings can be made.

The difficulty with the shadow Minister’s analysis is that, while he may have been able to find savings for the taxpayer through those kinds of measures, too often the savings are made by cutting terms and conditions for new workers. That is why, as he said in his original contribution, the second or third outsourcing is usually where the savings happen, because it is when those new workers come in on lower terms and conditions that the savings begin to emerge. That is why the whole outsourcing trick is a con, because it is how those savings tend to be made.

When we add in the contract monitoring costs and the profit motivations for the outsourced company to make a living from these things, we can quickly see why it becomes a bad deal for the taxpayer. I certainly make no apologies for putting forward this proposal, because we think it is the right thing to do, to respect and value those who work in public service and ensure that they are paid the same as their colleagues for doing the same work. I therefore commend—

[Laurence Turner]

I thank the Minister for giving way at the death. Does he also recognise that one example of a council that tried to go down the wholesale outsourcing route was Northamptonshire? We all know how that story ended, and Eddie Martin, the Conservative former leader of Cumbria county council, stated that the then Government

“says that outsourcing is everything, but while it might get you an initial cheaper price, that price simply doesn’t last, you lose flexibility, and it causes a great deal of unrest.”

[The Chair]

I call the Minister to rise from the dead.

[Justin Madders]

I think that is the kindest thing that has been said about me this year, Mr Mundell. I thank my hon. Friend for his intervention; I think we can all see the difficulties. I know, from dealing with public bodies in my area, that sometimes when there is more than one person responsible for a service—the public body and then the contracting body—we find duplication, differing priorities and often a poorer service as a result, because there are competing ambitions in those bodies. That is one of the main reasons why we want to see a much more holistic approach to our public services. I commend clause 25 to the Committee.

Question put and agreed to.

Clause 25, as amended, accordingly ordered to stand part of the Bill.

Clause 26

Equality action plans

[Sarah Gibson]

I beg to move amendment 112, in clause 26, page 38, line 35, at end insert―

“(c) supporting employees with menstrual problems and menstrual disorders.”

This amendment would add menstrual problems and menstrual disorders to “matters related to gender equality”, in relation to any regulations made under the Bill to require employers to produce equality action plans.

I am very pleased to move this amendment. First, as the Bill stands, there are provisions for businesses to report on the impact of menopause on women in the workplace as part of the equalities impact assessments. I think the hon. Member for Sheffield Brightside and Hillsborough (Gill Furniss) is right to table this amendment and to remind us all that menstrual problems can hinder women at any point in their working life, not just as they enter menopause. She is the chair of the all-party parliamentary group on women’s health and an officer on the APPG on endometriosis; I feel confident that she has tabled this amendment with the best intentions. It seems an omission that this issue was not included in the original Bill.

Several constituents have contacted me about endometriosis, and specifically its impact on them at work. Endometriosis costs the UK economy £8 billion a year in treatment, loss of work and healthcare costs, and it takes an average of eight years to get a diagnosis. One in six workers with endometriosis leaves the workforce due to their condition—an issue that the Government and employers cannot afford to ignore. Those people could go back to work and stay in work if there was additional flexibility for them.

As one of my constituents told me—she does not wish to be named for these reasons—many employees with endometriosis find that their employers do not believe them about their symptoms, that their flexible working requests are refused and that they are subject to discriminatory automated absence procedures that penalise short but intermittent time off work. The amendment seeks to address that injustice. I want to be very clear that I support it, and I hope that the rest of the Committee will see its importance.

--- Later in debate ---

[Justin Madders]

Clause 28 introduces schedule 3, which inserts proposed new part 8A into the Education Act 2002. Paragraph 1 of schedule 3 contains proposed new sections 148A to 148R of the 2002 Act and will be discussed separately.

The reinstatement of the school support staff negotiating body will give school support staff the recognition they deserve for the crucial role they play in children’s education and development. Establishing the SSSNB through the Bill will help ensure that schools can recruit and retain the staff needed to deliver high-quality, inclusive education and support the Government’s work to drive high and rising standards in schools, so every child has the best life chances.

The body will bring together representatives of school support staff employers, representatives of support staff, an independent chairperson and a representative of the Secretary of State. The SSSNB will consider the remuneration, terms and conditions of employment, training and career progression opportunities for school support staff. Its remit will lead to the creation of a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.

Most school support staff are currently employed on National Joint Council for local government services pay and conditions. The NJC is a negotiating body made up of representatives from trade unions and local government employers. Existing NJC arrangements are not statutory or school specific. Moving to a school-specific body where pay rates and pay awards for support staff are negotiated by school support staff employer and employee representatives and ratified by the Secretary of State will both help to ensure fair pay rates for school support staff and allow central Government to have a strategic view of pay across the school workforce.

It is essential for the SSSNB to have a statutory remit so that all prospective and current support staff in state schools nationally benefit from a transparent, guaranteed core pay and conditions offer. The Bill re-establishes the SSSNB as an unincorporated body on a similar footing to the previous body from 2009 that was abolished by the coalition Government in 2010.

As education is a devolved matter, the extent of these measures is therefore England and Wales and the measures will apply to England only. This is consistent and in line with the remit of the School Teachers Review Body being England only.

The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Roughly half of schools are now academies, compared with around 200 in 2009 when the body was previously established. Support staff employed by academy trusts are now included within the SSSNB’s remit. It is crucial that the body has a remit for all state-funded schools in England in order to achieve greater national consistency, irrespective of which type of school support staff work in. That is a point that we may come on to debate in due course.

[Greg Smith]

The Opposition have tabled a number of amendments that probe what is introduced by clause 28 and schedule 3, which we will come on to in subsequent debates today. I will reserve the bulk of my remarks for those debates, although, as clause 28 introduces schedule 3, I will preview those debates now by noting our strong opposition to these provisions. There was a very good, solid and rational reason that the former Secretary of State for Education during the coalition years—now editor of His Majesty’s Spectator magazine—abolished SSSNBs, which was to give that flexibility and freedom to the quite right and good, educational standards-raising revolution in education that came through the creation of the academies by the last Labour Government and in particular the creation of free schools by the last Conservative Government, including in the coalition years. Clause 28 and schedule 3, which we will come on to shortly, seek to undo a lot of that. For the reasons I will outline when speaking on those amendments, I think this part of the Bill requires a rethink.

--- Later in debate ---

[Sir Ashley Fox]

I am trying to think of how clause 28 and schedule 3 relate to SEND education, and I am struggling. I do not believe that the SEND system is a success, and I do not think that more central control is the way to solve that. In fact, one of the problems is that every time there is a problem, we in Parliament and Whitehall think, “The solution is a directive from above. That will sort out the problem.” That is precisely the model that the Government are adopting in clause 28 and schedule 3: “There’s a problem with low pay, so we will set up a process in London that will help matters.” That is not true at all.

I hope we can all agree that the purpose of spending money on education is to improve the life chances of our children. How are resources allocated? Are they best managed on a school basis or an academy basis? Or are they best decided in London? I argue that they are best decided on a school or an academy level. As I say, I fear that clause 28 and schedule 3 are the beginning of a process in which we will see more and more central control exerted over schools, and that that will lead to worse outcomes for our children.

[Justin Madders]

I will respond in the strict terms that you have directed, Mr Mundell. I also point out to Members that an education Bill will be presented today. So there will be an opportunity for the wider debate that Members are keen to have, when that Bill gets its Second Reading in due course.

[Nick Timothy]

Will the Minister give way?

[Nick Timothy]

I will avoid the temptation to start to read out the PISA statistics. It is important that the Bill that is published today is seen alongside this Bill, because together they chip away quite substantially at the academy freedoms that have been behind school reform. It would be good to hear the Minister acknowledge that fact.

[Justin Madders]

Of course, the Bill has not been published yet, so we cannot stray into that. We may be able to get on to it this afternoon, but we are trying to help some of the most poorly paid people in our society, who do such an important job. My hon. Friends the Members for Penistone and Stocksbridge, for Birmingham Northfield and for Stratford and Bow all talked about how important teaching assistants are, particularly in supporting those with special educational needs. My hon. Friend the Member for Birmingham Northfield was right that it is shameful that the Low Pay Commission has now deemed teaching assistants to be part of the low pay environment. We are determined to address that, which is why the reinstatement of the SSSNB is an important step.

Let us reflect on some of the evidence that we have had—for example, the GMB evidence. Andy Prendergast said:

“we see increasingly more pupils with special educational needs go into mainstream education, and they need that additional support.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 132, Q136.]

Some of those staff do detailed things such as phonics, supporting pupils with special educational needs and disabilities, and help to deliver classes.

I take the point that has been made about the NJC being an inappropriate way of evaluating and assessing job value. It is clear—indeed a number of other pieces of written evidence have supported our assertion—that the NJC is not the right vehicle for assessing teaching assistants’ pay. We believe that the SSSNB is the way ahead.

The hon. Member for Bridgwater talked about this being a centralising move. Of course, the SSSNB will comprise mainly employers and employee representatives. It will not be a Whitehall-dominated machine.

[Sir Ashley Fox]

But to the extent that the SSSNB will decide the terms and conditions of assistants in Bridgwater, Mid Buckinghamshire and Birmingham Northfield, and those conditions will apply to all teaching assistants, regardless of the school’s or academy’s view on the subject, it is a centralising measure, does the Minister not agree?

[Justin Madders]

It is a necessary measure because, as we have seen, teaching assistants and school support staff have suffered in recent years. The point that the hon. Member for Chippenham and several other Members made about funding is correct. It will, of course, be incumbent on future Governments to ensure that any proposals that come forward are affordable. It should be noted that the recent Budget put some additional funds into special educational needs.

Let us look at why this measure is needed. We know that there is a chronic issue of low pay, a lack of career progression and damaged recruitment and retention among school support staff. A survey of teaching assistants found that 27% were considering leaving education altogether—surely we need them to stay—while 60% cited low pay as a reason for leaving, and 40% said that lack of opportunities for progression was. Eighty-nine per cent of schools said they found recruitment difficult, particularly in respect of teaching assistants, and 78% said they found that group hard to retain. There were similar figures in terms of the difficulties with the recruitment and retention of teaching assistants with SEND specialisms.

We are setting up this body to recognise that these people do a critical job in our education system and that they are not properly represented at the moment. They do not have a proper voice, and they do not have a proper mechanism to ensure that the valuable work they do is properly measured, remunerated and recognised. That is why the SSSNB is so important.

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

Employment Rights Bill (Fourteenth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 17th December 2024 Public Bill Committees

[Greg Smith (Mid Buckinghamshire) (Con)]

I beg to move amendment 168, in schedule 3, page 115, leave out from the beginning of line 15 to the end of line 31 and insert—

“(1) In the case of staff employed under subsection (3)(b) of section 148C, matters within the SSSNB’s remit are limited to the establishment of a framework to which employers of school support staff must have regard when discharging their functions.

(2) A framework under subsection (1) must include information on—

(a) the remuneration of school support staff;

(b) the terms and conditions of employment of school support staff;

(c) the training of school support staff;

(d) career progression for school support staff; and

(e) related matters.

(3) When taking any action related to the matters in subsection (2), an employer may disregard the framework only in exceptional circumstances.

(4) For the purposes of subsection (3), the definition of ‘exceptional circumstances’ shall be set out in regulations.

(5) In the case of staff employed under subsection (3)(a) of section 148C, the matters within the SSSNB’s remit are matters relating to the following—

(a) the remuneration of school support staff;

(b) terms and conditions of employment of school support staff;

(c) the training of school support staff;

(d) career progression for school support staff.

(6) The Secretary of State may by regulations provide that, for the purposes of subsection 5—

(a) a payment or entitlement of a prescribed kind is, or is not, to be treated as remuneration;

(b) a prescribed matter is, or is not, to be treated as relating to terms and conditions of employment of school support staff;

(c) a prescribed matter is, or is not, to be treated as relating to the training of school support staff;

(d) a prescribed matter is, or is not, to be treated as relating to 30 career progression for school support staff.”

This amendment would change the matters within the SSSNB’s remit in relation to academy staff, limiting it to the creation of a framework to which academy employers must have regard in all but exceptional circumstances.

It is a pleasure to serve under your chairmanship, Ms Vaz, at the Committee’s last sitting before Christmas—let us make it a memorable one. [Laughter.]

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

They are all memorable.

[Greg Smith]

They are.

--- Later in debate ---

[Sarah Gibson]

I appreciate the clarification. That makes perfect sense—it would be unlikely that a body representing employees would create a ceiling, so I cannot help feeling that that issue is not likely to come up. With that in mind, I am unable to support the amendment.

[Justin Madders]

It is a pleasure to see you in the Chair this afternoon, Ms Vaz, and as always I refer to my entry in the Register of Members’ Financial Interests, and my membership of the GMB and Unite trade unions.

The shadow Minister will not be surprised to hear that we are not going to accept the amendment, as it would drive a coach and horses through what we are trying to achieve. The remit in the Bill gives the negotiating body the scope necessary to negotiate and reach agreements on pay and conditions, and advise on training and career progression for all school support staff. The Secretary of State may then incorporate agreements reached in support staff contracts through secondary legislation. As has been pointed out, that would be a floor. It will be possible for schools to innovate above that, and the detail will be worked out in due course. This is about creating a baseline for terms and conditions, not a ceiling.

As the shadow Minister knows, as roughly half of the 24,000 state-funded schools are academies the amendment would seriously undermine the policy intention of the SSSNB. We believe that about 800,000 employees would be positively impacted by the Bill, but the amendment would mean that school support staff in academies would have no voice, and no opportunity to raise their concerns about pay, career progression and training prospects, which we know are real issues, particularly in the SEN sectors. There would no vehicle for them, because they would not be part of this body. Of course their employers would have to have regard to what the SSSNB decided, but there would be no legal requirement for those terms to be incorporated into individual contracts. I think that misses the point of what we are trying to achieve here. I do not accept that there is a connection between good educational outcomes and low pay for teaching assistants, which seems to be the thrust of the argument from the Opposition. As my hon. Friend the Member for Birmingham Northfield said, the references in the amendment to a framework are not particularly helpful, as it is not defined and would create more confusion. We should say that it is not just academies that can demonstrate excellence in innovation. All schools have the ability to do that, and there will be room for all schools to continue to innovate under the legislation and meet their local recruitment needs.

--- Later in debate ---

[Greg Smith]

I listened very carefully to what the Minister and the hon. Member for Birmingham Northfield said about amendment 168. I was open to dialogue on it to see if we can make it stronger and improved. Its proposed new subsection (2) sets out all the information we would expect to see in such a framework. There are five parts including the remuneration of school support staff; the terms and conditions of employment of school support staff; the training of school support staff; career progression for school support staff; and—the lovely catch-all phrase that drafters love to put in—all related matters. I would say that it is pretty clear what we have laid out.

To get to the nub of the argument, this is not about some sort of race to the bottom. It is not about, as the Minister asserted, arguing for low pay. That is not what we are doing at all. This is a point of principle about support for the academy system, which was brought in by a former Labour Government, and support for free schools, which was brought in by a coalition of the Conservatives and Liberal Democrats. The three main parties in this House on that basis are broadly aligned, unless anyone has radically changed their mind—perhaps they have, and 2015 probably did focus some minds.

This is a point of principle of diversity in the education system, and central to the diversification of offer is that those establishments, in this case academies, have the freedoms to decide things themselves, locally. In this case, it is on pay and terms and conditions but, wary of the fact that I do not want to go out of scope, it can be on other things as well. To take that away would be the retrograde step that I spoke about. It would undermine academies, and it would undermine the very point of having choice and the diversity of offer in the education system for parents.

[Justin Madders]

The shadow Minister is talking about choice, but the Bill does not remove any academies from the current system. Will he confirm that?

[Greg Smith]

No, of course it does not remove academies from the system, but it does take away a freedom and power that all those wonderful academies, many in my own constituency and I am sure some in the Minister’s, currently enjoy to be able to set their educational offer, including the power of who they recruit and on what basis they recruit them. I come back to the point I made when I intervened on the hon. Member for Chippenham; if we are going to just make everything the same again, there needs to be an honesty about actually advocating that from the Government, from the Liberal Democrats or from whoever it might be. I value and welcome the choice that we have in our education system, and this is one of those freedoms that makes that choice possible.

--- Later in debate ---

[Greg Smith]

I am grateful to my hon. Friend; he is always reassuring. He raised an important point. Given that, as he highlighted, free schools enjoy the same freedoms —they are specifically referred to in amendment 168—as academies, I am worried that the Government’s attitude to free schools indicates that they are rowing back on support for them.

[Justin Madders]

The shadow Minister keeps referring to freedoms, but does he accept that the only freedom that would be given to academies by virtue of this amendment would be the freedom to pay their staff—I am not saying that they would—lower than the national terms and conditions?

[Greg Smith]

I come back to this point of principle: either we have autonomous bodies that can make their own decisions or we do not. If the Government’s answer is that we do not, I certainly understand why they do not want this amendment, but I do not understand why they persist with their support for that which they created in the first place—the academisation of so many schools—and resist making the more straightforward argument for a one-size-fits-all education policy. I hope they do not adopt such a policy, because of the progress that the Labour party made through academisation in the first place. However, that is the natural conclusion of what the Minister is saying.

--- Later in debate ---

Division 7

Question accordingly negatived.

Ayes: 3

Noes: 12

[Justin Madders]

I beg to move amendment 65, in schedule 3, page 116, line 6, leave out “education”.

This amendment, and amendments 66, 67, 69, 70 and 71, make a minor drafting correction.

[The Chair]

With this it will be convenient to discuss Government amendments 66 to 71.

[Justin Madders]

Amendments 66 and 67, and 69 to 71, make minor drafting corrections to the clauses to remove the word “education” when referring to local authorities. This is necessary because of an error in terminology used in the Bill on introduction.

I will also speak to amendment 68. We know that academy trusts use a range of innovative practices to support staff in a range of roles. The sector and the workforce have evolved since the previous negotiating body for school support staff existed in 2009. That is why we intend to consult on the definition of support staff in scope and appropriate protections for staff in transitioning to the new arrangements. The consultation may bring to our attention staff in academy trusts who are not captured by the existing definition of support staff, working wholly at one or more academies, but who we think should be. Having the ability to broaden the scope, as well as to exclude staff types in secondary legislation, would give us more flexibility to respond to the consultation.

[Greg Smith]

As the Minister said, amendment 68 extends the definition of school support staff in the Bill to include people who do not work in an academy, but who are employed by the proprietor of an academy to carry out particular kinds of work, to be specified in regulations—it is our old friend, waiting for future regulations to be laid before the House—for the purposes of one or more academies. The other amendments in this grouping are minor drafting corrections, and we accept that. I merely want to put on record once more that had this Bill not been so rushed to meet the arbitrary political 100-day deadline, we might not be in this place, and we might have had greater clarity from the get-go. We accept, however, that these are fundamentally minor amendments that really should have been included at introduction.

[Justin Madders]

The shadow Minister’s comments are noted, and I commend the amendments to the Committee.

Amendment 65 agreed to.

Amendments made: 66, in schedule 3, page 116, line 8, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 67, in schedule 3, page 116, line 10, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 68, in schedule 3, page 116, line 13, leave out from “employment” to end of line 14 and insert “which—

(i) provides for the person to work wholly at one or more Academies, or

(ii) provides for the person to carry out work of a prescribed description for the purposes of one or more Academies.”

This amendment extends the definition of “school support staff” in new Part 8A of the Education Act 2002 to include people who do not work at an Academy but are employed by the proprietor of an Academy to carry out particular kinds of work (to be specified in regulations) for the purposes of one or more Academies.

Amendment 69, in schedule 3, page 123, line 31, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 70, in schedule 3, page 123, line 33, leave out “education”.

See the explanatory statement for amendment 65.

Amendment 71, in schedule 3, page 124, line 13, leave out “education”.—(Justin Madders.)

See the explanatory statement for amendment 65.

[Greg Smith]

I beg to move amendment 123, in schedule 3, page 124, line 39, at end insert—

“(2A) Before making or revising arrangements under sub-paragraph (1), the Secretary of State must publish and lay before Parliament an impact assessment of the costs on the education sector of any proposed arrangements.”

This amendment makes a requirement from the Secretary of State to undertake an impact assessment of the costs on the education sector before making or changing arrangements related to the School Support Staff Negotiating Body.

--- Later in debate ---

[Sarah Gibson]

For similar reasons as I was concerned about previous amendments, I feel that I cannot support this amendment. I think it is unnecessary to add more complications to the system on things that are probably already covered in other areas.

[Justin Madders]

I thank the shadow Minister for tabling amendment 123 and 124 and for raising these issues. The Department will assess the cost implications of the constitutional arrangements of the SSSNB prior to constituting it, but it would be disproportionate to require an impact assessment. My hon. Friend the Member for Birmingham Northfield referred to some costs; those costs have not necessarily been pinned down at this stage, but they are clearly below the level at which a formal impact assessment would normally be required. It is envisaged that the costs of the body will be limited to administrative expenses and fees, so we do not think that amendment 124 is necessary.

The Bill requires the constitutional arrangements for the SSSNB to provide for it to prepare annual reports; it allows the Secretary of State to specify the manner in which reports are published. Assessing the impact on the education sector of agreements reached will be important, prior to the Secretary of State’s ratification of any agreements. We anticipate that the Department for Education will undertake an assessment of affordability and impact, as it will be better placed to do so than the SSSNB itself. It is important to note that there will be employers on the SSSNB who will be part of the body making those recommendations, so they will have those considerations at the forefront of their mind.

Considerations of cost and affordability will be an important part of any discussions and negotiations that take place in the SSSNB. Annual reports are likely to set out the work undertaken by the body, but the exact detail of what will be in the annual reports will be agreed at a later date; I do not think that it would be appropriate to specify that in the Bill.

--- Later in debate ---

[Greg Smith]

I cannot remember a single time in the last Parliament when the then Opposition would have made the case that there was no need for an impact assessment. I put that to the Minister very gently as a point of principle that is specific to amendments 123 and 124. However, I understand the argument that he is making.

The Opposition still think that the Bill’s approach is flawed as to diversity across our educational establishments. We will not press our amendments to a Division now, but we reserve the right to revisit the matter when we come up for air on Report, once the Minister has had time to reflect on the implications of his policy. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the schedule, as amended, be the Third schedule to the Bill.

[Justin Madders]

As the Committee has discussed, clause 28 introduces schedule 3, which provides for the establishment, remit and functioning of the school support staff negotiating body. Paragraph 1 of schedule 3 will insert into the Education Act 2002 a new part 8A, which contains proposed new sections 148A to 148R.

New section 148A will reinstate the SSSNB as an unincorporated body. Reinstating the SSSNB will give school support staff the voice and recognition that they deserve as a crucial part of the school workforce. It will help to address the recruitment and retention challenges facing schools and will drive standards in schools to ensure that we give every child the best possible chance in life.

New section 148B sets out the remit of the SSSNB for remuneration, terms and conditions of employment, training and career progression of school support staff, and the powers of the Secretary of State to define what is or is not to be treated as falling within those categories within the regulations. This ensures clarity over the remit of the SSSNB and what can and cannot be referred to it by the Secretary of State. The remit will lead to a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.

New section 148C defines school support staff in relation to who they are employed by and their role. Support staff are defined as all staff, other than qualified teachers, who are employed by local authorities, governing bodies and academy trusts to work wholly at schools in England. The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Support staff employed by academy trusts are now included in the SSSNB’s remit, despite the shadow Minister’s attempts to persuade us otherwise.

It is crucial that the body have a remit for all state-funded schools in England to achieve greater national consistency, irrespective of the type of school in which support staff work. Roughly half of the 24,453 schools in England are now academies, compared with approximately 200 in 2009 when the body was previously established. New section 148B gives the Secretary of State a power to prescribe in regulations those who will not fall within the SSSNB’s remit.

Amendment 68 will allow the Secretary of State to include, through secondary legislation, those who do not work wholly at academies within the SSSNB’s remit, by reference to the type of work that they do. The Department currently holds limited information about the roles in which support staff are employed in academies or the terms and conditions under which they work. It intends to consult on which roles should and should not be within scope of these provisions. These powers will provide the necessary flexibility to respond to that consultation and amend the remit of the SSSNB as necessary.

New section 148D sets out the power of the Secretary of State to refer matters to the SSSNB that are within its remit, namely those matters relating to remuneration, terms and conditions of employment and training and career progression of school support staff. Referrals by the Secretary of State to the negotiating body will mean that those representing employers and employees can agree and advise on suitable outcomes for school support staff within the parameters set out by the Secretary of State in relation to wider Government priorities and context.

New sections 148E and 148F set out the powers of the Secretary of State when referring matters relating to remuneration, terms and conditions of employment and training and career progression to the SSSNB. The Secretary of State may specify factors that the SSSNB must consider and a timescale for their consideration. The new sections set out the steps that the SSSNB must take, depending on whether it has or has not reached agreement on matters relating to terms and conditions. Where the Secretary of State refers a matter relating to the training and career progression of school support staff to the SSSNB, the SSSNB is required to provide a report on the matter to the Secretary of State, rather than reaching agreement.

New section 148G will give the SSSNB the power to consider matters within its remit that have not been referred to it, with the Secretary of State’s agreement. This will give the SSSNB the ability to raise alternative matters that it wishes to negotiate or advise on. Agreement from the Secretary of State is required from the outset to ensure that no work is undertaken on a matter that could be considered to be outside the SSSNB’s remit. It will also ensure that the body has sufficient capacity to consider referred matters within the required timescale, alongside any additional matters that the SSSNB wishes to consider.

New section 148H sets out the Secretary of State’s powers in relation to agreements submitted by the SSSNB. The Secretary of State may ratify an agreement in secondary legislation in full or in part—if in part, the part not ratified falls away—or refer the agreement back to the SSSNB to reconsider it under new section 148I. This power is necessary to ensure that any agreements are practicable—for example, that they are affordable—before being incorporated into contracts. The ability for the Secretary of State to ratify agreements in part is a pragmatic approach to allow matters with agreement to progress and to avoid delays if there is an element of an agreement that the Secretary of State is not content to agree.

New section 148I sets out what happens where the Secretary of State refers a matter back to the body for reconsideration. The Secretary of State may specify factors to which the body must have regard in reconsidering the agreement and by when it must revert.

New section 148J will apply where the SSSNB has submitted an agreement to the Secretary of State after reconsideration. The Secretary of State has powers to ratify the agreement in full or in part in regulations; to refer the agreement back to the SSSNB for reconsideration; to make regulations requiring prescribed people to have regard to the agreement in exercising prescribed functions; or to make regulations that make alternative provision in relation to the same matter. The new section gives the Secretary of State a range of powers to determine the best course of action based on the agreements from the SSSNB to ensure that the desired outcomes for school support staff are met and are practicable.

New section 148K sets out the process if an agreement cannot be reached by the SSSNB on a matter relating to school support staff remuneration and terms and conditions referred to it by the Secretary of State. The Secretary of State may specify a later date by which agreement must be reached or may make regulations in relation to the matter referred to the SSSNB if there is an urgent need to do so, but the Secretary of State must consult the SSSNB before making those regulations. This will ensure that the Secretary of State is able to regulate as necessary in the event that agreement cannot be reached, for instance on a pay award for school support staff.

New section 148L sets out the Secretary of State’s powers if the SSSNB fails to submit a report on a matter relating to the training and career progression of school support staff by the deadline set by the Secretary of State. The Secretary of State can specify a later date for the SSSNB to report or issue guidance on the matter. This ensures that the Secretary of State can still issue guidance on training and career progression to support recruitment and retention in the absence of a report from the body.

New section 148M sets out the effect of regulations made by the Secretary of State that ratify agreements reached by the SSSNB in full or in part. The terms of the agreement are imposed in a person’s contract of employment so that a member of school support staff must be paid and treated in accordance with those conditions. Any inconsistent terms in contracts of employment or academy funding agreements have no effect. That allows the Secretary of State to make changes to the pay and terms and conditions of school support staff as agreed by the SSSNB, in order to ensure fairer pay rates and greater national consistency, boost recruitment and retention in those roles, and drive improved standards in schools.

New section 148N sets out the effect of regulations made by the Secretary of State where she decides not to ratify agreements reached by the SSSNB or where the SSSNB fails to reach agreement on a matter. Where the Secretary of State decides to make regulations imposing terms and conditions into school support staff contracts, for example because there is an urgent need to make changes to terms and conditions and the SSSNB has failed to reach agreement on them, school support staff must be paid and treated in accordance with those terms and conditions. It is important that the Secretary of State has the ability to legislate to provide fair terms and conditions for school support staff in the event that the SSSNB fails to reach an agreement.

New section 148O will allow regulations made under part 8A to have retrospective effect, subject to their not subjecting anyone to a detriment in respect of a period that falls before the date on which the regulations are made. This will allow the Secretary of State to backdate pay awards agreed after the start of an annual pay period to ensure that school support staff may benefit from them for the entirety of the period.

New section 148P sets out how and when the Secretary of State and the SSSNB can issue guidance on matters within the SSSNB’s remit. The SSSNB, with the Secretary of State’s approval, can issue guidance on pay and terms and conditions, as can the Secretary of State. Only the Secretary of State can issue guidance on training and career progression. Local authorities, governing bodies and academy trusts are required to have regard to guidance issued. This will allow the Secretary of State and the SSSNB to support employers in the implementation of new terms and conditions and the promotion of training and career progression opportunities for school support staff.

New section 148Q will provide a carve-out for the SSSNB framework from the collective bargaining provisions in the Trade Union and Labour Relations (Consolidation) Act 1992. The new section is necessary to ensure that agreements reached by the SSSNB can be imposed in contracts only through ratification by the Secretary of State.

Paragraph 2 of schedule 3 will insert a new schedule 12A into the Education Act 2002. New schedule 12A includes provision for the SSSNB to be constituted in accordance with arrangements made by the Secretary of State. School support staff and employer representative organisations on the SSSNB will be set out in secondary legislation; the Secretary of State will be required to consult the TUC before prescribing which organisations represent school support staff.

The membership of the SSSNB will include support staff, employee and employer representatives, an independent chair and a representative of the Secretary of State. It may also include members who do not represent school support staff or their employers. However, only school support staff and employer representatives will have voting rights. The new schedule also provides for administrative support to be provided to the SSSNB, including for the Secretary of State to pay expenses for the chair and for administrative costs incurred by the SSSNB. The SSSNB is required to provide a report for each 12-month period.

I commend schedule 3, as amended, to the Committee.

[Greg Smith]

After that lengthy oration from the Minister, I can only conclude that when it takes that long to explain something, a bureaucracy is coming that probably nobody wants. As we rehearsed during our debates on amendments to the schedule, it challenges in many respects the freedoms that some of our education establishments enjoy.

As the Bill leaves Committee at some point in January and heads back to the main Chamber for Report, I urge the Minister to reach out to educational establishments—and perhaps to the Department for Education, but real-world schools are probably better—and reflect on the impact that this new bureaucracy will have on them. Is it as streamlined as it can humanly be? The Minister was on his feet for seven or eight minutes trying to explain that bureaucracy. In fairness, he did a commendable job of it, but that does not necessarily make it right. Whether we are in opposition or in government proposing things, we too rarely ask ourselves in the House: have we collectively got this right?

The Opposition believe that this new body—which we in government, along with the Liberal Democrats, removed—should not be brought back in. There is a better way of achieving some of the noble aims that the Government have in this regard and avoiding some of the potential catastrophes that we spoke about earlier. We therefore cannot support the schedule remaining in the Bill.

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[Laurence Turner]

We have covered a huge amount of ground in this debate, so I will restrict my remarks to a few matters that have been raised. I say to the shadow Minister that if he thought that the Minister’s summary was bureaucratic and difficult to follow, he should sit through some meetings of the National Joint Council for Local Government Services, which is the dominant mode through which pay and terms and conditions are set.

It is worth reflecting briefly on some of the practical issues in schools that can be remedied through this new approach. It is a well-known problem that schoolteachers’ and school support staff’s pay award dates are misaligned. For schoolteachers, it is September; for school support staff, it is April, with the financial year. That can be a nightmare for bursars, school business managers and large employers, who have to plan their budgets with that significant difference.

In a previous life, I sat through a working group convened by the Local Government Association through the NJC on a vexed issue: how can school support staff’s work out of term-time be calculated on a term-time-only contract, because they are accumulating annual leave but cannot take all of it during term? It was a bit like a version of this Committee that reached no conclusions and never ended. These are real problems that result from the ossification of the NJC system. It is not appropriate for school support staff workers. As we all know, when a pay and grading system becomes ossified, legal danger lurks for employers in the inconsistencies that emerge.

There is no justification for saying that TA level 2 means something completely different in neighbouring authorities. That can become a block on people’s progression and ambitions to relocate. Multi-academy trusts and other academy employers overwhelmingly remain subscribed to the NJC, because this system of pay and grading, which has grown up over decades, is labyrinthine and difficult to follow, and most academy trusts do not have the HR and payroll functions to put something new in place.

We can put some figures on this. The school workforce census carried out by the Department for Education collects data on NJC coverage compared with other pay gradings. For local authority maintained schools, 80% of school support staff are paid on NJC grades, when non-responses are excluded. For academies, the figure is 77%, so there is no huge difference between the two sectors. Even among the remainder, some staff are employed under separate agreements with Soulbury terms, so are quite separate, and a high proportion—possibly even the majority—are paid on NJC-like terms and conditions, although there might be some local improvements to those pay gradings. That is the issue that the Confederation of School Trusts raised in its written evidence, and I think it has been addressed through this Committee. We are seeking to establish a floor, not a ceiling, so local improvements can still be made where employers and trade unions agree them.

The clause takes a lot from the lessons that were learned from the previous iteration of the SSSNB, which is welcome. The clauses on the adult social care negotiating body contain a general provision that any specified matter relating to employment could be referred to that body. Proposed new section 148J is drafted a bit more tightly for the SSSNB—at least, that is my reading of it—so I wonder whether there is a case for aligning the wording for the two bodies.

Let me go back to why we are doing this. School support staff are the hidden professionals in the education system. I did not just represent school support staff; I was once a school governor in a specialist SEND setting, and there were school support staff and teaching assistants. It is important to remember that the term covers site staff, cleaners, caterers and all sorts of other workers, who often do not get talked about. Those workers make lifesaving interventions—they may have to administer medicine or perform a medical intervention that literally keeps a child alive—but they are paid about £14,000 a year. That represents a failure of central Government to account for the pay, conditions and wellbeing of all the people who work in schools. The measures we are discussing are hugely important and welcome, and it is very welcome that the Bill has been brought forward this early in the Parliament.

[Justin Madders]

I am grateful for Members’ contributions. The shadow Minister gently joshed me about the technical detail but, as my hon. Friend the Member for Birmingham Northfield pointed out, that is the nature of the beast: it is important that all eventualities are covered. We have not reinvented the wheel here; we have lifted much of what was already in place for the previous iteration of this body, and we have taken some further learnings from that.

On my hon. Friend’s points, we have not needed to take the broader powers of the adult social care body, which we will discuss shortly, because the clauses relating to the SSSNB give it a remit to negotiate terms and conditions, as well as advise on training and career progression. That is broader than its 2009 remit, and we think it covers the areas that are recognised as those that need to be included, in addition to the powers the body had in 2009. Of course, the Bill has to be detailed—it has to be right—because it will affect 800,000 people, and a lot of people in that workforce are on low pay, have poor career prospects and are frustrated at the lack of progression in their job. When setting up such a body, it is important to cover all eventualities.

This is not a novel concept, but it is an important step forward in our industrial relations in this country, and in tackling low pay and insecurity. I am proud that we are able to discuss it today.

Question put, That the schedule, as amended, be the Third schedule to the Bill.

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[Sarah Gibson]

I rise to speak to the amendment, but I note that the whole clause is relevant. As the shadow Minister stated, this debate is fairly similar to the discussion we had about the SSSNB. Our hope for the adult social care negotiating body, similar to that for the SSSNB, is that having a uniform body can help to negotiate and address some of the issues that he highlighted, such as the poor pay and terms and conditions that a lot of adult social care workers suffer.

Social care providers in my constituency, many of which are not for profit, have welcomed the fact that the adult social care negotiating body will include providers, and that they will be able to discuss this issue together. I feel that that is an important point when discussing some of the issues that hon. Members might be concerned about. There is a suggestion that the Government might consider that some of those not-for-profit providers should be included in the negotiating body so that they have a voice.

However, several of the providers in my constituency that I have spoken to have said that, as employers who take their employees seriously and pay them properly throughout the day, they welcome the body on the grounds that it will give them a level playing field against the many employers who do not do that, since they feel that they are commercially disadvantaged against those employers. That is the predominant response that I have heard from employers in my constituency. With that in mind, I will not support the amendment and I do support the clause.

[Justin Madders]

The shadow Minister will not be surprised to learn that we do not support his amendments. Amendment 121 seeks to require an assessment of the impact of the new negotiating body on the adult social care sector. The Government have already produced a comprehensive set of impact assessments for the Bill, including one on the fair pay agreement for adult social care. That was published on Second Reading and was based on the best available evidence regarding the potential impact on businesses, workers and the wider economy.

The adult social care fair pay agreement will be subject to sector-wide collective bargaining and negotiation. At this stage, our impact assessment provides an illustrative analysis of its potential impact, including the magnitude of the cost to businesses, as well as the benefits for up to 1.6 million social care workers. We intend to refine that analysis over time, working closely with businesses, trade unions, academics and, of course, the Department of Health and Social Care.

As is standard practice, we will publish an enactment impact assessment once the Bill reaches Royal Assent, in line with the better regulation framework requirements. That will account for where the Bill has been amended in its passage through Parliament in such a way as to significantly change its impacts on business. That impact assessment will be published alongside the enacted legislation. In addition, the Government will produce an impact assessment to accompany regulations connected to the establishment of the negotiating body.

The Minister asked why the body is needed—what is the evidence base? He will be aware of the evidence given to the Committee, both orally and in writing, about its importance. The hon. Member for Chippenham spoke of the need for a level playing field, which is certainly a big part of what we are looking at here, because many of us will know from our experiences in our constituencies—never mind the evidence before the Committee—that, fundamentally, the adult social care sector is in desperate need of help. We have known that for a very long time, and if Members care to look at the Low Pay Commission’s recent reports, they will see that it has dedicated a considerable amount of space in them to the challenges in the sector. Trade unions, of course, have also been calling for action in this area for many years.

It is also well known that there are huge recruitment and retention challenges in the adult social care workforce. It is a very large sector, employing about 1.6 million workers, which is about 5% of all people in adult employment, and it plays an important role. The people in those roles are predominantly women and, as was noted during the evidence sessions—and backed up by the analysis in the impact assessment—there are about 130,000 vacancies at the moment. It was also noted that filled posts have reduced by 4% recently, and that the shortfall since 2022 has been plugged primarily by overseas workers, which we know is a topic of great interest.

The turnover rate in the sector is incredibly high: it has been higher than 25% since 2016 and was consistently over 30% between 2017-18 and 2022-23. There were some improvements last year, but that was largely driven by international recruitment, and the turnover rate is generally much higher than the UK average. The impact assessment notes that, while some movement is healthy, the higher rates witnessed can be disruptive and impact not only productivity, but the quality of service, with recipients of care not getting continuity. I think we can all recognise the situation in which a person in receipt of care has a different person turning up every day and how disruptive that can be. It is important to note that recipients of care, and not just the workers, will benefit from the Bill.

We know that low pay is rife, as has been identified by the Low Pay Commission. In December 2023, the average wage was £11, and nearly 70% of workers were paid within £1 of the minimum wage. In the last two reports by the Low Pay Commission, space has been dedicated to underpayment in the sector. In its latest report, the Low Pay Commission said:

“In the social care sector, non-compliance appears persistent”.

The shadow Minister asked a wider point about travel costs. He will no doubt welcome the announcement in the Budget that we are freezing fuel duty, but the cost of travel is a much broader issue than the point he raised. Clause 30 will allow broader questions of terms and conditions to be considered. Clause 39 is also important, because it deals with record keeping. We know from research by Unison that about one quarter of domiciliary care workers are repaid only for travel time, and only 18% of them have the travel time listed on their payslips. Given that these people often earn close to the minimum wage, this is an absolute scandal that needs to be addressed. The shadow Minister made an important point about travel, but we hope that the fundamentals of ensuring that people are paid for that travel time will be addressed by the negotiating body.

Let me turn to amendment 122. The Government are committed to engaging with the adult social care sector on the design of a fair pay agreement, including how the negotiating body will be set up, how it should operate and how negotiations will run. The powers under clause 29 allow for the Secretary of State to create the adult social care negotiating body by regulations and to provide for the smooth and efficient running of that body. The regulations will confirm the type of body being created. The power also allows for reporting requirements to be imposed on the negotiating body, such as producing reports. Engagement with the sector will ultimately influence the type of body that the negotiating body actually becomes. All public bodies have specific reporting requirements to meet transparency standards.

I can confirm that the Department of Health and Social Care has committed to publishing an impact assessment on establishing fair pay agreements in the adult social care sector to accompany the secondary legislation required to establish the negotiating body. It is intended that the assessment will include an analysis of the potential costs and benefits that will arise from a fair pay agreement. On that basis, I invite the shadow Minister to withdraw his amendment.

[Greg Smith]

I am grateful to the Minister for his remarks, and not least for acknowledging the importance of the points about just travel time and about compensation for using one’s own vehicle and having to purchase the petrol, diesel, electricity, hydrogen or whatever to get around—in a brave new world, who knows what it might be? I invite him to ensure that that can be locked into, whatever the negotiating body has the power to do. I say that not least for rural communities such as mine, where it is not unusual for someone to have to travel for half an hour between many of the villages, and from one person they are caring for to another. That adds up very quickly in terms of not just time, but the cost of the fuel to get them there and the wear and tear on the vehicle’s brakes, tyres and so on.

We will not press these amendments to a Division. However, as the Minister reflects on this issue, I urge him to again ensure that the way in which this new body will inevitably be set up accounts for the multiple different platforms of provision across local government, the private sector and the not-for-profit sector, which the hon. Member for Chippenham talked about. This is a much more complex arena than that of schools, which is much more heavily defined—we spoke about that earlier. I urge the Minister to reflect on that as he potentially brings forward Government amendments or minor surgery to the Bill ahead of Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[The Chair]

With this it will be convenient to discuss clauses 30 to 44 stand part.

[Justin Madders]

As Committee members will have noticed, this is a significant group of clauses, which relate to the establishment of a negotiating body for the adult social care sector, a key element of the Government’s plan to make work pay. The body aims to address the long-term issues of low pay and poor retention in the adult social care sector.

The adult social care sector is large, with 1.59 million people working for it in England in 2023-24, which as I have already said is equivalent to 5% of all adults in employment. Poor terms and conditions are associated with higher staff turnover. For example, the Skills for Care annual report states that care workers were less likely to leave their posts if their employers paid above the 3% auto-enrolment rate for pensions, or paid more than statutory sick pay if care workers could not work due to illness. This is a key element of the Bill.

I will speak to each clause in turn. Clause 29 gives the Secretary of State the power to create the adult social care negotiating body by regulations, with the aim of negotiating a fair pay agreement within the adult social care sector. Giving specific powers to the Secretary of State in relation to the body is key to ensuring that the Government have the necessary powers to set up and design this body, and that will take place after engagement with the sector.

The clause ensures that the Secretary of State has the power to create a body that is appropriately made up of members including representatives from relevant trade unions and employers. It also enables regulations to provide for the smooth and efficient running of the body, and for it to be subject to reporting requirements. The Secretary of State will have the power to set out the body’s decision-making process and to make provision for any staff and facilities and for payment of fees and expenses.

Clause 30 defines the matters within the negotiating body’s remit—namely, the remuneration and other terms and conditions of employment of social care workers. The clause enables the body to cover not only pay, but wider terms and conditions of employment of adult social care workers.

We know that the adult social care sector is diverse, so the clause also allows the Secretary of State to add further matters to the remit of the body, provided they relate to a social care worker’s employment. The remit of the body can also be narrowed by the Secretary of State, who has the power to specify in regulations the types of social care worker that fall within the remit of the body.

Members will see that clause 31 defines “social care worker” as including those who work in, or are employed in connection with the provision of, adult social care. The clause specifically excludes from the definition of adult social care anything provided by an establishment or agency regulated by His Majesty’s chief inspector of education, children’s services and skills, to ensure that children’s services are not captured. The clause provides an essential definition of adult social care worker, which the other clauses refer to throughout. Without it, the remit of the body and the scope of the clauses would not be sufficiently defined.

Clause 32 sets out the power of the Secretary of State to make provision in regulations about the consideration by the negotiating body of matters within its remit. In accordance with regulations made under the clause, the Secretary of State will be able to specify conditions that any agreement must meet, such as on funding. It also allows regulations to provide that the body may consider only matters referred to it by the Secretary of State, such as specific terms and conditions for certain types of social care worker, and must take into account specified factors when coming to an agreement.

The regulations that can be made under clause 32 can impose information-sharing duties on the body’s members to enable efficient negotiation and require the body to submit any agreement to the Secretary of State for consideration. They also allow for the body to be allocated clear deadlines for discussion, so as not to delay this important process.

Clause 33 enables regulations to provide that the Secretary of State can refer agreements back to the negotiating body for reconsideration. Making provision for reconsideration of an agreement ensures that any agreement can be refined following review by the Secretary of State and that the Government are not forced to reject an agreement they are unable to implement. It also provides the Secretary of State with an appropriate safeguard to ensure that further work can be done, where necessary, to ensure that a suitable agreement is reached. The Secretary of State can also make regulations that provide for the same matters listed in clause 32.

Clause 34 allows the Secretary of State to make provision in regulations for circumstances where the negotiating body is unable to reach an agreement. Providing a clear process for the body to resolve roadblocks in reaching an agreement is key to ensuring that the body arrives at a conclusion that is agreeable to all parties. In regulations made under this clause, the Secretary of State will have the power to appoint someone to resolve the barriers to an agreement and confer the relevant dispute resolution powers on them.

Clause 35 allows the Secretary of State to ratify an agreement made by the negotiating body and thereby give it legal effect. That is essential to successful implementation and ensures that any agreement provides the maximum protection for affected workers. It allows for sufficient flexibility, because the Secretary of State can ratify part of an agreement, such as implementing some aspects through employment contracts, while leaving others that would be more appropriately implemented through codes of practice.

The regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the date on which regulations are made.

Clause 36 explains that the effect of ratifying an agreement under clause 35 is to change the employment contracts of adult social care workers included in the scope of the agreement. The ratification regulations can change both the remuneration and the terms and conditions of employment contracts, depending on the content of the fair pay agreement. They also give precedence to the terms in ratified agreements over inconsistent terms in existing employment contracts. For example, if an agreement sets a new minimum hourly rate, that will take precedence over employment contracts that set out a lower rate, and so ensure that the employee enjoys the rate set out in the ratified agreement. The clause is essential to ensuring that any ratified agreement will be on a statutory footing and therefore legally implemented.

Clause 37 gives the Secretary of State the power to make provision in regulations when the body has notified the Secretary of State that it has been unable to reach an agreement. The Secretary of State’s powers under this clause are limited to those matters on which the body has failed to reach an agreement. The powers under the clause are similar to those in clause 35, and enable regulations to override the pay and other terms and conditions set out in social care workers’ contracts.

As under clause 35, the regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the day on which regulations are made.

Clause 38 gives the Secretary of State the power to make regulations about the creation of guidance or codes of practice in relation to the agreements reached by the body. The clause also enables regulations to impose duties on specific persons in relation to provision in guidance or a code of practice, and makes provision around the consequences of failing to comply with those duties, including increased financial awards in any later court or tribunal proceedings. That will ensure that any pieces of guidance or codes of practice are appropriately followed, with appropriate consequences for parties that fail to comply.

Clause 39 gives the Secretary of State the power to make regulations imposing record-keeping obligations on employers. Similar provisions already exist for enforcing other aspects of employment law, such as the national minimum wage and the working time regulations. The clause therefore gives the power to apply the provisions under the National Minimum Wage Act 1998, to give social care workers a right of access to records. There may be new requirements under a ratified agreement that are not covered by existing record-keeping obligations, and without this clause the employer may not be able to provide evidence to enforcement authorities that the new requirements are being followed. We expect the fair work agency, upon its creation, to take on responsibility for the enforcement of the national minimum wage, including those record-keeping requirements.

Clause 40 will give the Secretary of State the power to make regulations about the enforcement of remuneration terms in ratified fair pay agreements. These regulations can apply enforcement mechanisms used under the National Minimum Wage Act 1998, notably the notices of underpayment regime, and the clause lists specific sections of that Act in relation to enforcement. We do not intend to introduce any criminal sanctions to enforce the fair pay agreement framework. That will ensure that any pay terms can be appropriately enforced by the state, ensuring that employees are effectively paid under the conditions of a ratified agreement. The clause also prevents double recovery of remuneration, ensuring that enforcement cannot take place twice—once for the national minimum wage and again for a ratified fair pay agreement—in respect of the same work.

Clause 41 gives the Secretary of State the power to create regulations under clauses 35 and 37 that have retrospective effect. As we have set out previously, that is to ensure that provision in terms of pay and conditions that falls after an agreement is reached and before the day on which regulations are made can have retrospective effect. That is necessary to enable regulations to appropriately fill any gap between the body reaching agreement and subsequent regulations being passed to ratify that agreement. Subsections (3) and (4) ensure transparency, creating an obligation to publish documents, such as the ratified agreement, that are referred to in the regulations.

Clause 42 makes further provision about the regulations that can be made under the powers in this chapter. These provisions are non-controversial, and they include the option for regulations to confer discretion on a person. That may be needed, for example, to give the chair of the body discretion to deal with a matter during the negotiation process or to give a third party discretion to resolve a dispute in accordance with the regulations under clause 34. Subsections (2) and (3) provide that ratification regulations will be subject to the negative resolution procedure, and any other regulations made under this chapter will be subject to the affirmative resolution procedure. That is because ratification relates to an agreement that has been reached by the negotiating body and assessed by the Secretary of State as being appropriate for ratification, and it would not be necessary to subject the ratification regulations to detailed parliamentary scrutiny.

Clause 43 simply allows regulations to provide that any actions or agreement by the body would not constitute collective bargaining or a collective agreement as defined in the Trade Union and Labour Relations (Consolidation) Act 1992. The Government have taken that approach because these clauses, and the regulations made under them, will create a new, separate legal framework under which fair pay agreements in the adult social care sector will be negotiated. For example, the clauses provide for a fair pay agreement to apply across the entire sector and to be legally binding when it is ratified in regulations.

That goes further than the 1992 Act, which sets different requirements for collective agreements to be legally binding and envisages that collective bargaining will be on a much smaller scale between one or more recognised trade unions and one or more employers or employer associations. The Government’s intention is very much for the negotiating body’s activities to be a form of collective bargaining, as a concept. It is simply that we cannot have two different legal frameworks to the same process.

Clause 44 is uncontroversial. It simply provides definitions for the terms used in this chapter and ensures that the definition of worker’s contract can cover agency workers who might not have a contract with their agent or the person they have been supplied to work for. That ensures that an agreement can be ratified for agency workers who do not have a contract with the agent or principal. The clause clarifies that references to a ratified agreement may also include references to parts of an agreement that have been ratified.

I am confident of the Government’s ability to deliver this flagship policy, supported by the Health Foundation, which indicated the strong case for improving pay and conditions in the social care sector in its written evidence to the Committee. Indeed, the same thing was noted in much of the evidence that we have heard in support of these measures. I commend clauses 29 to 44 to the Committee.

--- Later in debate ---

[Sarah Gibson]

I start by thanking the hon. Member for Scarborough and Whitby for that very personal story. I imagine it has been extremely difficult. She must be very relieved to have finally found somewhere where her son is happy. I have several friends with children in similar situations. I know that it can be extremely stressful.

We are all in agreement that people working in social care have been undervalued for a long time. These provisions are incredibly helpful in bringing them to the fore and in trying to make their conditions of work considerably better. Members on both sides of the Committee have made that point very clearly.

I have one specific concern, which is on clause 41, where it talks about

“provision that has retrospective effect.”

Like the hon. Member for Mid Buckinghamshire, I find the word retrospective in any legislation extremely worrying. My background is in the building industry, and that retrospective element has been introduced many times in the 20 years that I have been in the building industry, to the detriment of many of the hard-working professionals involved.

This clause concerns me because many of our care-provider employers are small businesses, and they are also not-for-profit small businesses. Those small businesses will be in no position whatsoever to provide any retrospective increase in salary if they are asked to do so, because they simply do not have any profits—because they are not for profit—to draw on to pay any increase. I am very concerned that if subsequent legislation were to introduce a retrospective pay increase that these firms do not have provision for, that would detrimentally affect some of these hard-working and useful not-for-profit care providers. As it stands, I will not be able to support that clause.

[Justin Madders]

I will deal with the point raised by the Liberal Democrat spokesperson and the shadow Minister first. This measure is about the practicality of negotiations. Clause 41 is not trying to say that the body will reach back in time to change workers’ terms and conditions; it is about the fair pay body agreeing terms and conditions, and the period between that agreement being reached and it then being ratified and passed in regulations by the Secretary of State.

For example, if the body said that from 1 April 2028, for argument’s sake, there would be an uplift of whatever pence or pounds an hour to everyone’s pay, and if the regulations enacting that were not passed until July of that year, the retrospectivity would be from July 2028 back to 1 April, so that pay can be included. That is normal in pay negotiations. That is all it is; it is not about trying to unpick previous agreements; it is about the way that anything agreed is implemented.

The shadow Minister said that we legislate first and consult second. As he will be aware, introducing a fair pay agreement in such a huge area of employment in this country is a novel and groundbreaking introduction to our legal system, so we need to put the legislative framework in place, which is what the Bill does. The detail and how it will work in practice is what the consultation and the secondary legislation will deal with. That is the proper way to do this, and that is how we will get this right. The Government are absolutely committed to getting this right. We absolutely recognise the terrible pay and conditions that lots of people in the adult social care sector face and the need for this kind of body to try and drive out those poor practices.

The shadow Minister asked about clause 33 and the ability of the Secretary of State to refer matters back to the negotiating body. He will of course understand that as the Bill is currently drafted the Secretary of State will need to pass regulations in order to enact many of the recommendations from the body. Some will be guidance, but that will still need the Secretary of State’s involvement. It simply would not be tenable for the Secretary of State to be compelled to pass legislation with which they did not agree, so I am sure that the shadow Minister will appreciate why that is in the Bill. We hope that that does not come to pass—it would clearly not be in the spirit of what we are trying to achieve—but we have no way of knowing what the future holds in that respect. It is therefore important for the Secretary of State, who is the person responsible for this system, to have the final say on such matters.

--- Later in debate ---

[Greg Smith]

I took careful notes, and we can check Hansard later, but I am pretty certain that the Minister himself used the word sufficient in his remarks.

[Justin Madders]

We may have to write to the hon. Member on that. Having furiously double-checked clause 32 during the other hon. Members’ speeches, I cannot find the word sufficient.

My final point relates to the powerful contribution from my hon. Friend the Member for Scarborough and Whitby about her personal circumstances and how important it is that we get this right. It is people such as her son who have benefited from good support in social care, and at the end of the day, they are the people who will benefit from stability and security in the workforce and better retention rates. This is about the workforce, but it is also about the people who receive the care, and it is about time that we gave them more priority. That is why these clauses are so important, and I therefore commend them to the Committee.

Question put and agreed to.

Clause 29 accordingly ordered to stand part of the Bill.

Clauses 30 to 44 ordered to stand part of the Bill.

[The Chair]

Before I call the Whip to move the Adjournment, I wish everybody a very happy Christmas and a happy new year.

[Justin Madders]

On a point of order, Ms Vaz. I thank all those who have worked behind the scenes—the Clerks and other staff—to ensure that the Committee has run smoothly. We have had some very interesting debates and made good progress with the Bill. I wish everyone involved a very merry Christmas and a happy new year. No doubt we will see many of them in January.

Royal Mail Takeover

Justin Madders Excerpts

Monday 16th December 2024 Commons Chamber

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

With permission, Madam Deputy Speaker, I will make a statement on the ongoing takeover of Royal Mail Group’s parent company, International Distribution Services plc.

Royal Mail is an iconic national institution, and this Government are committed to ensuring that it remains one. Since taking office in July, the Secretary of State for Business and Trade and I have been clear that the Government will robustly scrutinise the proposed takeover of Royal Mail and ensure that there are safeguards for its future. While a takeover bid is still ongoing and subject to the relevant regulatory processes, the purpose of this statement is to update the House on the legally binding undertakings that have now been given to the Department for Business and Trade by the bidder, EP Group. I wish to be clear that this does not mark the conclusion of the takeover, and these undertakings will become effective only if the takeover goes through. Should the takeover complete, I am pleased to announce that the Department for Business and Trade has secured significant commitments to promote a long-term and financially sustainable future for Royal Mail in the United Kingdom.

It will be helpful if at the outset I set out where Royal Mail was at the time the takeover bid was announced. Before the bid, Royal Mail’s financial position was challenging. In its financial year 2023-24, Royal Mail recorded a loss of £348 million. That loss was in part due to a long-term decline in letters, and the significant fixed costs of the universal service delivery network. At the same time, Royal Mail has not met its quality of service targets set by the independent regulator, Ofcom. Royal Mail’s performance for the 2023-24 financial year resulted in Ofcom fining it £10.5 million. While the previous Government were happy to accept decline, this Government have worked closely with the buyer to secure significant commitments to deliver the transformation of Royal Mail into a sustainable service, and hard-wired in stronger protections for Royal Mail’s identity.

When the discussions with EP Group began, my Department’s objectives were: first, to strengthen the financial sustainability of this iconic and important British institution; and secondly, to protect the customers, workers and brand of Royal Mail. Today I can confirm that we have agreed a deed that customers and the workforce alike can welcome, with significant new commitments from the buyer to the Government. This deed is a clear example of the Government’s commitment to working hand-in-hand with business to generate reform and investment in public service. It is also yet another example of this Government fixing the foundations where the previous Government did not.

I am proud to announce to the House that we have agreed that the Government will have a golden share in Royal Mail. This golden share will ensure that the Department for Business and Trade now has an ability to prevent Royal Mail from moving its headquarters abroad or moving its tax residency without Government permission. I should make it clear that that is an entirely new measure that was not in place at the time of Royal Mail’s privatisation. Except in very limited circumstances, that measure will remain in place in perpetuity, including when there is a subsequent change in ownership of Royal Mail. I want to be clear that the agreement will not give the Government any role in the day-to-day running of the business—Royal Mail remains a private entity.

Not only have we agreed a golden share, but the EP Group has made a number of other commitments in addition, which I will set out at a high level. Those commitments include a commitment to prevent value extraction unless two tests are satisfied: first, a financial test that takes into account the debts of Royal Mail, so that value cannot be extracted if the company is heavily indebted; and secondly—this recognises a key concern of the public—a quality test to ensure that value is not extracted unless specific performance targets are met.

All businesses need to adapt and improve in order to respond to change, and Royal Mail is no different. Recognising that there is a need for Royal Mail to modernise, there is a commitment from EP Group to ensure that Royal Mail has the financial means to fund the transformation of its business in the three-year period following completion of the acquisition. In addition, EP Group has agreed to take an immediate step to strengthen Royal Mail’s balance sheet by removing a significant intra-group debt, which is currently due to the remainder of the International Distribution Services group. The agreed undertakings also include a commitment to ensure that Royal Mail retains ownership or access on fair terms to those assets necessary to meet the universal service obligation.

Next, EP Group has agreed to meet all the regulatory requirements that Royal Mail Group is subject to, including ensuring that it remains the universal service provider for as long as EP Group is in control. We all know—not just in this House, but across the UK—that Royal Mail is an iconic British brand, and that is why there is a commitment to the existing brand protections in place for Royal Mail. Royal Mail is a respected and revered operator, and not just in the UK—it has various international responsibilities at international fora and with the overseas territories. Those will be respected and continued, maintaining the UK’s prestigious international position.

EP has stated its long-term commitment to Royal Mail, and the discussions have demonstrated the wide range of areas of public interest in the work of the company, so I am also pleased to confirm that EP has committed to taking steps to facilitate discussions between any future owner of the business and the Government, be that in 10 or 20 years’ time. These commitments have been offered by EP Group to the Department on a voluntary basis; nothing has been offered in exchange.

I take this opportunity to thank EP Group. I am confident that we share the same objective of a reliable and financially sustainable universal service provider, while workers and consumers are placed at the heart of a sustainable Royal Mail. I am also pleased that, as well as reaching an agreement with the Department, EP Group has today announced that it has in-principle negotiated agreements with both unions representing the Royal Mail workforce. The Government welcome those agreements, and I am confident that the constructive and collegiate approach between the unions and the buyer can represent a restart for industrial relations in the Royal Mail Group.

I have set out some of the key commitments, but there are further commitments from EP Group that I do not have time to set out in full today. I am therefore placing copies of the deed in the Libraries of both Houses. I will keep the House informed as much as I can as the takeover progresses. I commend this statement to the House.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

May I start by thanking the Minister for advance sight of his statement? Before I get into my questions, can we take a moment to thank every postman and postwoman up and down this country for their hard work, particularly at this time of year? In all the challenging weather, they are out there putting letters through every letterbox in the land and collecting thousands of letters from the red pillar boxes in every corner of our country. I take the opportunity, especially in this Christmas season, to say thank you on behalf of all of us.

Every colleague here will recognise the importance of Royal Mail, both as an institution and as a provider of a vital nationwide service. It has been in existence for more than 500 years, and it has seen a lot of change over those years, but the one consistent thing is that it is still a service on which we all depend every day. It is not the only way we communicate any more, but it is a vital one, and it will continue to be needed, including by Government. What a shame it is that one of the biggest postal deliveries done by Royal Mail this year was from the Government. It was a letter to many pensioners—often on low incomes—cancelling their winter fuel payments.

The dwindling number of letters sent has eroded the base on which the success of Royal Mail was built. The inevitable consequence is that Royal Mail has been facing serious financial challenges, and amid those challenges the service received by people across Britain has become worse, whether that is deliveries missing their deadlines, letters going missing or occasionally, in some areas, people going weeks at a time without post. The example of that failure was shown last week by the fines that Royal Mail received. The cost of this poor service cannot be overstated, whether it is for those who subscribe for services by mail, those who rely on business deliveries or those who miss appointments with their general practitioner, impacting their health and costing the Government. That poor service cannot be allowed to continue.

The inward investment into the service announced today will be scrutinised by shareholders, but given that they are the golden shareholder, I have questions for the Government. What guarantees has the Minister received about the service provision? What commitments has he received about the level of jobs across Royal Mail? How much of Royal Mail do the employees themselves now own? In some places it has been reported that the commitment to the tax residency guarantee is for five years, but I heard the Minister say at the Dispatch Box that it was perpetual. Can he clarify that?

What ongoing role will the Government have in making sure that Ofcom ensures that Royal Mail delivers the service expected by customers? The fines do not seem to be doing it. An important part of the service offered by Royal Mail is the universal service obligation, which now requires post to be delivered six days a week and parcels to be delivered five days a week. When the Royal Mail is working well, the universal service obligation provides an outstanding service. However, Royal Mail wishes for it to be reformed. Does the Minister believe that the obligation must be maintained in its current form? Can he confirm what discussions he has held with EP Group about the obligation? Will he confirm whether there is a sunset on the obligation? He mentioned that there potentially was with a transfer of ownership.

The value of Royal Mail goes far beyond the universal service obligation. Can the Minister outline whether he expects any of the other services provided by Royal Mail to be impacted? For example, can my rural constituents continue to count on their letters being collected from every post box? What risks has he identified with the takeover itself? Although the Post Office and Royal Mail are separate entities, they are closely tied. Just over a month ago, the Government announced that more than 100 post office branches were at risk of closure, with hundreds of jobs lost. Can the Minister explain what assessment he has made of the risks facing the Post Office and how they will be impacted by the sale of Royal Mail?

Royal Mail faces the same headwinds, often created by this Government, as other businesses. Whether it is Labour’s employment regulations or the national insurance jobs tax, businesses have warned that they may be forced to put up prices and cut jobs, because of the very actions of this Government. Finally, can the Minister confirm whether Royal Mail has expressed concerns over the Budget or the Employment Rights Bill?

[Justin Madders]

I thank the shadow Minister for her comments, and I start by joining her in thanking all those postal workers who throughout the year—not just at this time of year, when it is particular busy, but 12 months a year—come rain or shine, sleet or snow, deliver those much-needed communications from friends, family and loved ones. I was pleased to be able to go to my own depot in Ellesmere Port last Friday. I will go to another one in my constituency, in New Ferry, this Friday. All hon. Members should be encouraged to make those visits, because they really show how much we appreciate the work that our postmen and women do.

The hon. Lady is right that the Royal Mail is a service that we all depend on. I agree that performance has not been good enough in recent years. That is why we have had a number of discussions with the company and with Ofcom about how we will get things back on track. That is why the agreement is so important, because the deal will get in the investment needed to try to drive up that performance.

I turn to some of the hon. Lady’s specific questions. On guarantees of service provision, the legislative framework is already there for the universal service obligation, and I see the takeover having no impact on that. It has not been part of the discussions—it is an entirely separate issue—but Parliament will have its say on that if needed. Next year, Ofcom will have a consultation on the universal service obligation. I think it is recognised that an awful lot of work is needed to bring standards up to the level that we would like, and one of the protections in the agreement will hopefully deliver on that.

On jobs guarantees, the hon. Lady will be aware that the general secretary of the Communication Workers Union has spoken positively about the agreement reached. He believes that sufficient assurances have been given on jobs. On employee engagement, she asked whether the employees will own the company. That is not the case, but they will have a say in governance in future as a result of an agreement between the Communication Workers Union and EP Group. That is to be ratified by the Communication Workers Union executive, but that will be a groundbreaking arrangement that we did not have previously. She also asked about tax residency in perpetuity, which is what the golden share does indeed intend to deliver.

[Madam Deputy Speaker (Judith Cummins)]

I call the Chair of the Business and Trade Committee.

[Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)]

I welcome the statement made by this hard-working Minister. I take it from the announcement that Mr Křetínský has cleared the investment screening tests that the Cabinet Office is responsible for. It would be useful to have that confirmed.

Let me press my hon. Friend about the universal service obligation. Is it his intention that beyond the initial five years he will seek six-day delivery and a universal service obligation in place for Royal Mail for as long as His Majesty’s Government retain the golden share?

[Justin Madders]

I thank the Chair of the Select Committee for his comments. The golden share is to deal with tax residency and headquarters being domiciled in the UK. Obviously, there will be discussions about the universal service obligation. We know that this is a fast-moving market, and that will be for determination by Ofcom some time next year.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Madam Deputy Speaker]

Order. I am sorry, but the Liberal Democrats get two minutes for their response and we are quite a while after that.

[Justin Madders]

I assure the hon. Lady that the universal service obligation is not contingent on this deal—that is an entirely separate matter for Ofcom to be considering—but a number of commitments that we have secured in this agreement will hopefully improve standards, which in any event have clearly not been as we would all want.

[Gregor Poynton (Livingston) (Lab)]

I welcome the Minister and the Government’s work to secure the long-term future of the Royal Mail. The statement shows that we have got a good deal for UK customers and workers. Will the Minister assure me, Royal Mail customers and workers in the Livingston constituency that when the deal goes through, the new owners will be held rigorously to their obligations on an ongoing basis? We have had too many instances over the last 14 years of privatised industries going off track because the regulatory environment has not ensured that they meet their obligations.

[Justin Madders]

My hon. Friend will not be surprised to hear that some of my early discussions in this role have been with Ofcom, and indeed with Royal Mail about its performance. There is a shared determination between not just the regulator and the Government but the trade union, the workers and the new owners to drive up that performance, because we can all clearly see that it is not good enough at the moment.

[Sir Edward Leigh (Gainsborough) (Con)]

Thirty-one years ago, when I had the Minister’s job, I was trying to privatise the Post Office, but I was stopped by rebellious Tory Back Benchers—nothing new there. I was sacked a week later. So I warn him that this is quite a difficult issue.

What people were worried about was the universal service obligation—it costs so much more to deliver in rural Lincolnshire than in central London—so I think that what we are all worried about is that, as the Royal Mail moves ever further away from public ownership, this new private company will try to chip away at the universal service obligation, particularly in rural areas. Can the Minister reassure us that he is really on the case?

[Justin Madders]

I thank the right hon. Member for his question. Is he now the rebellious Back Bencher, I wonder? We all share those concerns about the universal service obligation. This deal is not contingent on the universal service obligation. We have had discussions on how we improve the current state of affairs, because it is clearly not good enough. I hope that his constituents will see an improvement in service as a result of this deal.

[Peter Swallow (Bracknell) (Lab)]

Barely a week goes by without a constituent reaching out to me to express frustration at the quality of service they receive from our local Royal Mail delivery services. What will the announcement mean for them and for the quality of service that they receive?

[Justin Madders]

We hope that the deal will lead to an improvement in service. Specific investment commitments are being made as part of the deal, which we hope will be used to drive up standards. I think that everyone is committed to seeing an improvement on where we are at the moment.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

I have eight Royal Mail delivery offices in my constituency, staffed by a team of hard-working posties who cover a vast rural area around the Scottish Borders. Will the Minister tell them, and me, what commitment the new owner has given to maintaining those offices and staff levels?

[Justin Madders]

The hon. Member must be busy at Christmas time if he has eight offices to visit. He makes an important point about the Royal Mail’s vital role in rural constituencies. We have got commitments to improve standards, and hopefully the deal will deliver on that through the increased investment that has been agreed.

[Chris Vince (Harlow) (Lab/Co-op)]

Postmen and postwomen in my constituency were shaken to the core a couple of months ago when one of our postmen was brutally attacked and hospitalised while doing his rounds. I am sure the Minister will join me in sending my sympathies to him and his family for that terrible incident. When I visited the depot in my constituency—fortunately, I only have one—the postmen were concerned about the long-term future of Royal Mail. What assurances can he give me and postmen in Harlow that he has done all he can to protect Royal Mail and ensure that any future takeover does not lead to a running down of services?

[Justin Madders]

First, I extend my sympathies to my hon. Friend’s constituent who was attacked. We all feel abhorrence when public servants are attacked doing their job.

My hon. Friend can be assured that services will be protected. This is an opportunity to get investment. We have commitments that were not in place previously post privatisation, so we are in a better place than before.

[Christine Jardine (Edinburgh West) (LD)]

On Friday I will be visiting the delivery office in my constituency. Like other Members, I am concerned to reassure those who work there about what this privatisation will mean for them. We have talked a lot about services and universal obligations, but what reassurances can the Minister give that jobs will not be lost down the line?

[Justin Madders]

It is not a privatisation—that began under the hon. Lady’s party’s time in office. This is an important step forward, getting commitments that were not previously in place to protect the Royal Mail brand and delivering the investment that we all clearly see is needed.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Our posties go above and beyond 12 months of the year, but especially at this time of the year. I welcome my hon. Friend’s statement, but I particularly welcome the support that it has garnered from the workforce. Can he say a little more about his conversations with the trade unions during the negotiations about the industrial relations reset that has been discussed by the general secretary of the Communication Workers Union? What steps have been taken to ensure that any future owner of Royal Mail does not run it into the ground?

[Justin Madders]

The Secretary of State and I have regularly met the Communication Workers Union. As my hon. Friend rightly points out, there has been considerable industrial unrest in recent years, so it is extremely good news that the Communication Workers Union has talked positively about the groundbreaking deal that it has signed with EP Group. I agree with the union that it is time for a fresh start and a complete reset of employee and industrial relations. We want good industrial relations across the whole economy, so we welcome the constructive way that EP Group has engaged with the trade unions. We hope that that spirit carries forward into the future.

[Simon Hoare (North Dorset) (Con)]

As many have mentioned, many rural communities will be concerned to know how this could affect them. I spoke to postal workers in Blandford Forum in my constituency on Friday; they can be the best advocates, so can the Minister ensure that they are well primed to explain to their customers—who they are very proud to serve—what this means for the universal service obligation?

Likewise, the Royal Mail has such a crucial job in delivering elections, particularly but not exclusively with postal votes. There is growing concern about the resilience of Royal Mail to meet the growing demand. I appreciate that it is outside the Minister’s brief and he may need to write to me, but can he provide some assurance to the House that the contract that the Government give to Royal Mail will be honoured in full by the new owners to ensure that our democracy can still function?

[Justin Madders]

The hon. Member may have noticed that I was sitting next to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali), before the statement and we had a brief conversation about that, because we all agree on the importance of Royal Mail delivering our democracy. I assure him and his constituents that it is our intention to see that the universal service obligation is complied with and improved on in future.

[Lee Barron (Corby and East Northamptonshire) (Lab)]

I start by thanking postal workers across the country for the magnificent job that they do all year round. I remind Liberal Democrat Members seeking assurances that it was under the coalition Government that the Royal Mail was privatised in the first place, with none of the assurances that we have currently have.

I refer Members to my entry in the register, and I declare that I started my working life on a Royal Mail apprenticeship. It is a proud part of my life—28 years of service, and I am proud of all of it. The Royal Mail has been run into the ground and is currently broken. Through the golden share, the Minister has been able to get this Government back in the room, because we have been locked out ever since privatisation. That represents a breakthrough, and ensures that Royal Mail does not carry on as it has. The current board is responsible for the biggest failure in quality of service, the biggest attack on its workforce and the creation of a two-tier workforce. Can the Government give us some assurances that those responsible will not walk away filling their wallets, but will turn around and apologise for what they have done?

[Justin Madders]

I thank my hon. Friend for his questions and his service in the Royal Mail. Clearly, arrangements for those currently in the Royal Mail are a matter for the new owners once the deal goes through, and I am sure that that point will be discussed. He is right that the performance has not been good enough, and we are very pleased to have secured a number of commitments in the deal that were not previously in place.

[Chris Law (Dundee Central) (SNP)]

I welcome many parts of the statement, not least the part on quality assurance. I would like to know a little more about that because one issue in Dundee, which has the largest teaching hospital in Europe, is that appointments letters often arrive too late, which of course has an impact on the NHS.

I want to focus specifically on the question not yet answered, which is about jobs. In Scotland, 11,000 people are employed by the Royal Mail, and they will be listening today to find out what cast-iron assurances there will be for their jobs. Mr Křetínský recently completed a takeover of a French supermarket, promising in 2023, in the run-up to that deal, that there would be no job losses, but one year later there were plans to cut 3,000 jobs. Can the Minister be very specific today and tell us what cast-iron guarantees he has for the 11,000 people employed in Scotland and those who are employed elsewhere across the UK?

[Justin Madders]

I have no doubt that the Communication Workers Union and the Unite Communication Managers Association would not have spoken positively about the deals that they had struck had they not received sufficient guarantees about the workforce. As I said, the general secretary of the Communication Workers Union has been on the air today, speaking very positively about the commitments that he has received about not just job security but governance arrangements, and about workers having a “meaningful stake” in the success of the business moving forward. This is a really positive deal, and if the CWU is speaking positively about it, I think the hon. Member should be reassured.

[Sarah Coombes (West Bromwich) (Lab)]

On Friday morning, I visited the West Brom Royal Mail sorting office and saw the fantastic work that the staff there do. Many of the posties have worked there for decades, and one for as long as 40 years. How will this deal protect Royal Mail and, critically, the postmen and postwomen who are so important to our communities?

[Justin Madders]

My hon. Friend is absolutely right. One of the biggest assets in the Royal Mail is the workforce itself. That is widely understood not just on the Labour Benches but by the EP Group. As I said, commitments have been made between the trade unions and the EP Group on job security. I hope that goes some way to dealing with her concerns.

[Jim Allister (North Antrim) (TUV)]

When I visited the two depots in my constituency last week—I join Members in thanking our posties—I noticed how run down and aged the van fleets are. Will there be an upgrade of Royal Mail fleets as part of this deal? Given the Minister has said that the Government’s golden share does not extend, maybe understandably, to operational matters, is the takeaway today that there can be no assurance for my rural constituents that their service will be maintained at the level that they expect?

[Justin Madders]

I can assure the hon. and learned Member that there is nothing in the deal that affects the universal service obligation, and it is our understanding and commitment to continue to ensure that there is a universal service obligation moving forward. There are commitments in the agreement to deliver more investment. On the van network, I know that Royal Mail has purchased a number of vans in recent times, conveniently from the Stellantis plant in my constituency. Hopefully, that will be replicated throughout the country, because it is an ageing fleet. As the company has ambitious targets to meet net zero, I think it wants to improve the make-up of the stock.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

I thank John Kay, my local CWU rep, for showing me around the Fotherby Street depot on Friday morning. It was very good to see my current postie, Nev, there as well. They pointed out that some of the performance issues, including missed deliveries, come down to a lack of staff, which comes down to the two-tier workforce. It is less desirable now to work for Royal Mail. Has the Minister had conversations with Royal Mail, EP and the CWU about moves to end the two-tier workforce?

[Justin Madders]

When I visited my depot on Friday, we discussed the two-tier workforce and the variation in terms and conditions. I think it is generally recognised that it is not a helpful thing; I do not think it has helped Royal Mail with retention. My understanding is that there are agreements to be made between the Communication Workers Union and the EP Group on moving away from that. The detail has yet to be ratified by the union’s executive, but I hope that will mean there is a common basis to try to deal with the issue.

[Chris Webb (Blackpool South) (Lab)]

I am the proud son of a postie, as the Minister knows, and I refer to my entry in the Register of Members’ Financial Interests as a proud member of the CWU. When I met my local posties at the depot on Friday, they told me that they have seen the demise of Royal Mail since privatisation. My constituents are asking for reassurances—what can the Minister tell them about how we can finally get Royal Mail operating to a decent standard again, ensuring they get their letters on time?

[Justin Madders]

I pay tribute to the work my hon. Friend father does, and to his work as an official of the Communication Workers Union. What the union has said about the reset in industrial relations is really important to improving standards; of course, the other part of the agreement—on investment in the company—is much needed. When everyone works together, everyone shares the common goal of the business expanding and improving its performance. I think we have got everyone aligned on that at last, and I hope that we will all see improvements off the back of that.

[Tom Hayes (Bournemouth East) (Lab)]

Our posties are friendly, familiar faces who go above and beyond all year round, but never more so than at Christmas. It was a pleasure to visit Bournemouth Royal Mail depot recently, on a tour with Martin and Sonia. Will the Minister outline how the Government will prevent any future owner of Royal Mail from driving the company into the ground? What assurances can he give the people of Bournemouth that Royal Mail will finally deliver?

[Justin Madders]

There are a number of safeguards in the deed of understanding that relate to value extraction, so the EP Group will not be able to take profits out of the company unless there is an improvement in performance; there are also safeguards in respect of debt leverage. I hope that gives my hon. Friend the assurances he is looking for.

[Amanda Martin (Portsmouth North) (Lab)]

I join Members in paying tribute to and thanking our postal workers. In particular, I thank those at my depot in Portsmouth North, which I will be visiting for the second time next week; that was one of my first visits when I was elected. Like me, the posties and people of Portsmouth North were concerned when the previous Government began to negotiate a takeover deal. We therefore welcome the steps that this Minister and his team have taken, particularly around the involvement of the workforce and the trade unions. Can he give us further information on those negotiation talks?

[Justin Madders]

A number of commitments have been made that were not previously in place, and there is no doubt that we are in a much better position than we were post privatisation. As I say, this groundbreaking deal between the unions and the company includes rights in terms of governance, a profit-sharing incentive and guarantees on job security. I am sure that Members will be pleased to hear that we really have made fantastic progress.

[Madam Deputy Speaker (Judith Cummins)]

For the final question from the Back Benches, I call Dave Robertson.

[Dave Robertson (Lichfield) (Lab)]

My hon. Friend the Member for Bracknell (Peter Swallow) is right to raise the issue of complaints, which I am sure all Members from across the House receive from constituents let down by failures to meet the universal service obligation. From speaking to posties, as I did today, it is clear that posties right across the country, just like my hon. Friend the Member for Corby and East Northamptonshire (Lee Barron), are proud of what they do. They are proud of the job that they do, proud of being part of the community, and proud of the identity that working for that iconic brand gives them. It is clear that they are not the ones who are letting the public down; that is down to the current board of the company, which is running the organisation into the ground. Today I spoke to a proud postie, who said that he feels the company is a national disgrace—that shows how far it has fallen under the current ownership. Can the Minister assure me that the new ownership will not be allowed to sink to the depths that the current ownership did under the guidance of the previous Conservative Government?

[Justin Madders]

I agree with my hon. Friend that when the Royal Mail fails to deliver, it is not the fault of the postmen and postwomen; it is about institutional failure in the company that has been allowed to fester for too long. He will be pleased to hear that we have secured a number of commitments to get the investment and security that we need to ensure that the poor performance does not carry on.

Royal Mail Takeover Bid: EP Group

Justin Madders Excerpts

Monday 16th December 2024 Written Statements

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

Royal Mail is an iconic national institution, and this Government will ensure that it continues to be one. Since taking office in July, the Secretary of State and I have been clear that the Government would robustly scrutinise the proposed takeover of Royal Mail, and ensure there are safeguards for its future.

While the takeover bid is still ongoing and subject to the relevant ongoing regulatory processes, this statement is to update the House on the legally binding undertakings that have now been given to Government by the bidder— EP Group. This does not mark the conclusion of the takeover, and these undertakings will only become effective if the takeover goes through.

Should the takeover complete, I am pleased to confirm that the Department for Business and Trade has secured significant commitments to promote the long-term and financially sustainable future of Royal Mail in the United Kingdom.

It may be helpful to set out where Royal Mail was at the time the takeover bid was announced. In its financial year 2023-24, Royal Mail recorded an operating loss of £348 million. At the same time, Royal Mail had not met its quality of service targets as set by the independent regulator, Ofcom. Royal Mail’s performance for the 2022-23 financial year resulted in a £5.6 million fine.

While the previous Government were happy to accept decline, this Government have worked closely with EP Group to secure significant commitments to delivering transformation of Royal Mail into a sustainable service, and hardwired in stronger protections for Royal Mail’s identity.

My Department’s objectives when these discussions with EP Group began were to first strengthen the financial sustainability of this iconic and important British institution. Secondly, we wanted to protect the customers, workers and brand of Royal Mail.

The Department for Business and Trade has agreed unprecedented commitments from the potential buyer of Royal Mail to protect its long-term future and to recognise its position in the UK’s national life.

Significantly, EP have committed to issue the Department for Business and Trade with a “golden share” in Royal Mail for certain matters. This means that—except in very limited circumstances—the Department for Business and Trade can now prevent Royal Mail from moving its headquarters abroad or moving its tax residency without the Government’s permission. This is an entirely new measure which was not in place at the time of Royal Mail’s privatisation, and it will remain in place in perpetuity, including where there is a subsequent change in ownership of Royal Mail in the future.

I want to be clear that this will not change any of the Government’s role in the day-to-day running of the business; Royal Mail remains a private entity.

In addition to this golden share, there are several other commitments made by EP Group to the Department for Business and Trade. These include:

A number of financial commitments to guard against value extraction and introduce a set of requirements to strengthen Royal Mail’s finances, including the implementation of a balance sheet restructuring, which will remove a significant intra-group debt that is currently due to the remainder of the IDS group.

There is a commitment from EP Group to ensure that Royal Mail has the financial means to fund the transformation of its business in the three-year period following completion of the acquisition.

Royal Mail has consistently not met its targets set by Ofcom. Recognising this, there will be a commitment such that EP Group cannot extract value from Royal Mail Group until it both can afford to do so, and has achieved specific performance targets.

I am placing copies of the deed in the Libraries of both Houses.

[HCWS311]

Oral Answers to Questions

Justin Madders Excerpts

Thursday 12th December 2024 Commons Chamber

[Munira Wilson (Twickenham) (LD)]

4. If he will make an assessment with the Secretary of State for Education of the potential merits of introducing a right to paid employment leave for kinship carers.

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

We recognise the vital role that kinship carers play in caring for vulnerable children, and the challenges that many face in balancing that care with employment. We recently announced the largest ever investment in support for kinship carers: £40 million to trial a kinship allowance in up to 10 local authorities. We will also review the parental leave system to ensure that it best supports all working families, and work is already under way to plan for that delivery.

[Munira Wilson]

I am sure the Minister will agree that kinship carers are unsung heroes, who often step up at a moment’s notice to look after a child whose parents cannot, but four in 10 are forced to give up work to do so, which means they often struggle to pay the bills or put food on the table. Will the Minister look to right that wrong through the Employment Rights Bill, and introduce a right to paid employment leave for kinship carers, given the savings to the public purse and the better outcomes for children that arise from kinship care?

[Justin Madders]

I met a kinship carer in my constituency recently who told me about the challenges the hon. Lady has articulated. The carer said that the most important thing to her was getting respite care—a point that we can all recognise. We are looking at how the trial pans out. I have spoken in detail to my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) about the proposals coming forward, but we think it is best to see how the trial works, and to look at the wider review of the parental leave system.

[Rebecca Paul (Reigate) (Con)]

5. What steps he is taking to support the hospitality sector.

--- Later in debate ---

[Christine Jardine (Edinburgh West) (LD)]

15. What assessment he has made of the adequacy of levels of take up of parental leave.

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

The parental rights survey 2019 found that 89% of employee mothers took maternity leave and 70% of employee fathers took paternity leave, but take-up of shared parental leave is much lower. In fact, it is disappointingly low, which is why we are committed to a review of the parental leave system. Work is under way to deliver on that, and I will provide an update in due course.

[Christine Jardine]

I agree with the Minister: it is very disappointing. For many parents, current maternity pay is too low, and the leave system is not flexible enough. A recent report by the BBC said that almost half of new fathers were unaware of what was available to them. The system is skewed, and the take-up is lower among lower earning families. That is particularly important—this was pointed out to me by a constituent in Edinburgh West—for those with multiple births who need not only more time but more financial support during maternity leave. Does the Minister agree that maternity pay levels need to be increased, and that the flexibility of the scheme needs to be improved, as does public awareness?

[Justin Madders]

The hon. Member makes a number of points, which I am sure we will consider as part of the review we are undertaking. The Employment Rights Bill has a number of important measures to support working families, bringing 1.5 million parents into scope for parental leave and another 32,000 into scope for paternity leave. We are keen to build on that and we want to support families who are in work.

[Tristan Osborne (Chatham and Aylesford) (Lab)]

17. What recent estimate he has made of the contribution of creative industries to the economy.

--- Later in debate ---

[Sarah Gibson (Chippenham) (LD)]

Tomorrow—on Friday the 13th—the EU’s general product safety regulation comes into effect. Businesses are telling me that the additional costs will mean that they can no longer sell to the EU and to Northern Ireland. What steps is the Department taking to ensure that small businesses are supported as the regulation comes into effect?

[Justin Madders]

As the hon. Lady rightly pointed out, the regulation comes into force tomorrow. Actually, it covers things that most businesses are doing already, but we have provided guidance for businesses, including online marketplaces, on how the regulation will apply in Northern Ireland. We will continue to engage with businesses and online marketplaces to ensure that we are supporting them in dealing with this new regulation.

[Perran Moon (Camborne and Redruth) (Lab)]

T5.   I declare an interest as an officer of the all-party parliamentary group on critical minerals. Although Cornwall sits on some of the richest deposits of critical minerals in the world, including tin and lithium in my constituency of Camborne, Redruth and Hayle, there are significant geological reserves right across the United Kingdom, including in the north of England, Northern Ireland and the lands of our Celtic cousins in Wales and Scotland. Will the Minister confirm that domestic critical mineral production and processing will form a key part of the Government’s industrial strategy?

--- Later in debate ---

[Lisa Smart (Hazel Grove) (LD)]

My constituent Kirsty is self-employed and is looking to adopt a child, but she does not qualify for adoption leave or adoption pay and, because she is not having her child biologically, she does not qualify for maternity allowance. Would the Government support changing that, whether through the Employment Rights Bill or otherwise, so that brilliant future parents are not put off from adopting because they cannot afford it?

[Justin Madders]

That is an interesting question. There is a great interplay with rights for self-employed people. We are committing to a review on that in due course, together with a wider look at the parental leave system. We will get back to the hon. Lady on that.

[Sam Rushworth (Bishop Auckland) (Lab)]

I welcome this Government’s commitment to getting more disposable income in the pockets of working people. At Christmas time a lot of people will want to buy concert tickets; what conversations is the Minister having with Cabinet colleagues on reforming the secondary ticketing market?

[Justin Madders]

Hopefully, we will make an announcement very shortly about plans in that area.

Employment Rights Bill (Eleventh sitting)

Justin Madders Excerpts

Committee stage
Thursday 12th December 2024 Public Bill Committees

[Greg Smith]

It is a pleasure to serve under your chairmanship, Ms Vaz. This pair of amendments on unfair dismissal stand in my name and those of my hon. Friends from the official Opposition.

Amendment 156 would make the fact that the employee was made redundant a reason in relation to the dismissal of an employee during the initial period of employment. The Bill stipulates that the modified protections against unfair dismissal in relation to the initial period of employment mean that an employee can be dismissed for the reasons listed in section 98(2) of the Employment Rights Act 1996, which include

“the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do…the conduct of the employee”

or

“that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.”

The 1996 Act also includes a fourth reason,

“that the employee was redundant”,

which is not replicated in the Bill. This is a probing amendment—we do not intend to press it to a Division—to try to tease out from the Government a little more detail and to establish why that fourth reason is omitted from the Bill.

Amendment 157 is also a probing amendment. We want to understand what steps will be specified in regulations that an employer must follow in order for the dismissal of an employee to be treated as fair. That will come back to the test of subjective reasoning rather than specific guidelines or regulations in the Bill. It is only right that the Committee and businesses out there in the real world can fully understand the scope with which the Government are defining “fair” or “unfair”. Inherent to that is the question, why is it not in the Bill? Why is it not as clear as day in the words printed in this quite substantial tome? I know that the Government want to table more amendments, so perhaps those could be a little more specific. Critical to amendment 157 is the question how burdensome the Government intend this measure to be and how proportionate that burden will be on businesses in relation to the problem that the Minister thinks the Bill in its current form—its current vagueness—will solve.

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

It is a pleasure to see you in the Chair, Ms Vaz. I refer to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.

The shadow Minister has posed some questions that underlie amendment 156, which seeks to include redundancy as one of the reasons for dismissal to which the lighter-touch standards will apply during the statutory probationary period. As he has rightly identified, the Bill sets out that the reasons for dismissal to which the lighter-touch standards may apply are the statutory grounds of capability, conduct, illegality and some other substantial reason.

It is important to note that those four areas relate to the individual employee, which is why redundancy is not included. Redundancy can affect entire workforces, whereas the other areas are included because of the overlap between the potentially fair reasons for dismissal in the legislation, particularly suitability for work, and the sorts of issues that might come up in a probationary period. A redundancy situation would not ordinarily come up within a probationary period, because it would be about the wider business condition rather than the individual employee’s performance or suitability for the job. I hope that explains why redundancy has not been included.

I turn to the shadow Minister’s more general points. We are trying to strike a fair balance between strengthening employee protections against unfair dismissal and maintaining businesses’ ability to hire, assess and dismiss new employees. The Government are committed to ensuring that businesses retain the confidence to do so. We do not wish the new procedures to undermine existing fair dismissal processes for redundancy, which already provide a robust, straightforward and fair process for employees facing redundancy.

We will work closely with ACAS, in consultation with businesses and trade unions, to ensure that there is clear, straightforward and easy-to-follow guidance on how to carry out a redundancy process under the new measures. It will be an easily accessible process. One of our concerns about including redundancy is that if an employer decided to make a significant number of their workforce redundant, it would be an additional administrative job for them to identify which employees they did not need to include within a redundancy process because they were part of a statutory probationary period, and which would be subject to the wider process. That would lead to unintended consequences and possibly risk of discrimination claims.

[Sir Ashley Fox (Bridgwater) (Con)]

Can the Minister give me an assurance on how microbusinesses will be affected by the change? A very small business might choose to take on one person, and there might be nothing wrong with that person, but within a couple of months the business might realise that it is not working from an economic point of view. The employee would then be effectively redundant, because that small business cannot sustain their employment. Can the Minister assure me that if that small business cannot dismiss that person for the reason of redundancy during the probationary period, there will not be a separate, complex redundancy process to follow?

[Justin Madders]

The hon. Member may be conflating two slightly different issues. I say to him very clearly that existing laws on redundancy will not be changed as a result of the Bill. We expect employers to follow the same processes, regardless of the length of service of the employee. In that situation, I do not imagine that there would be a particularly lengthy process if it involved only one individual and a small employer. There would not need to be a pool for selection, for example, or selection criteria. We would expect the employer to comply with the law in those circumstances.

Amendment 157 questions whether regulations should be able to set steps that an employer must follow for a dismissal to be considered fair when prescribing lighter-touch standards to apply during the statutory probationary period. We have set out clearly our intention to have a light-touch process, and we know that around 9 million employees will benefit from that. The intention behind setting out those steps in regulations is to ensure that we take account of further consultation, which we will undertake not just with employers but with trade unions and civil society, to ensure that we have the right balance of process and fairness in a statutory probationary period. We will be developing that in due course. As is often the case with the ACAS code of practice on disciplinary and grievance procedures, there are already lots of examples of really practical guidance out there, which we intend to replicate. I invite the shadow Minister to withdraw the amendment.

[Greg Smith]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Steve Darling (Torbay) (LD)]

It is a privilege to serve under your chairmanship, Ms Vaz. I want to unpick another issue on which I would welcome some reassurances from the Minister.

I have spoken to a gentleman from the Torbay Business Forum who supports a charity that works across Devon, particularly by supporting people with learning disabilities into employment. One often finds that it can take a bit longer for people with learning disabilities to find the right place and get a firm contract. What safeguards are there for charitable organisations and not-for-profit companies working in that sector to prevent them from ending up in the difficult position of having people on their books who, sadly, over an extended period of time, they realise are not fit for purpose because of challenges in their lives? There will no longer be the opportunity to offer extended flexibility.

Like my hon. Friend the Member for Chippenham, I broadly welcome the Bill’s direction of travel, but I would like to see some of the rough edges knocked into shape for Torbay residents.

[Justin Madders]

I am grateful to Opposition Members for tabling their amendments and asking a series of questions.

The hon. Member for Chippenham seeks to set the boundaries for the statutory probation period at three and nine months. The hon. Member for Torbay seemed to argue for a lengthier period; I do not know whether he was asking for nine months or beyond, but I take his point. The hon. Member for Mid Buckinghamshire asked us to put six months on the face of the Bill, so there is quite a range of options. We have decided that the best thing to do is work with businesses and consult with them on the detail of the proposal as we move forward. We have expressed a preference for nine months as a result of the engagement that we have undertaken.

As the hon. Member for Mid Buckinghamshire indicated, businesses have said that generally six months is about the right period, but in some circumstances they may need a bit longer to ensure that the person is the right fit. That is why we alighted on the proposal for nine months, but we do not want to tie our hands by putting it on the face of the Bill; we want to continue to work with businesses and trade unions to understand whether that is the right figure. Putting a number in the Bill would be premature, because we will have further conversations. As we develop the light-touch process in our deliberations, that may help people to firm up their views about whether nine months is indeed the right amount of time.

The hon. Member for Mid Buckinghamshire questioned the evidence base. Of course there can be no evidence base for people being unfairly dismissed under two years’ employment, because there is no right protecting them from unfair dismissal before then, except for those who may seek to hang their hat on an automatically unfair dismissal. As we have discussed at length, people sometimes do that because they have a sense of grievance about the way they have been treated, and they may well have a legitimate claim.

Hon. Members generally accepted that the labour force survey statistics are not particularly helpful, but there is quite a lot of evidence about the impact of job insecurity more generally and the fact that the two-year qualification period creates uncertainty for individuals. Business in the Community surveyed 4,000 employees, of whom 66% say that their mental health and wellbeing is affected by their personal job insecurity. In written evidence to this Committee, the Union of Shop, Distributive and Allied Workers notes:

“Being dismissed on spurious conduct or capability grounds, without a fair investigation”—

as can happen at the moment under two years of employment—

“can have devastating consequences for an employee. It can destroy the individual’s morale and confidence and…living standards”.

This is happening to people already, and it is having an impact.

There is also evidence to suggest that there are further advantages for the wider economy. The Resolution Foundation has done some research on the cooling effect of people not moving jobs because they do not have job security. Someone who is considering moving from one job to another may be more likely to take the leap if they have that window of protection, so it is important for individuals as well.

--- Later in debate ---

[Justin Madders]

I thank the shadow Minister for his questions. Those are exactly the same arguments that we had about the minimum wage, and they did not bear examination in the end. Indeed, the Conservative party eventually decided to support the minimum wage too.

The shadow Minister quoted from the evidence of Jane Gratton of the British Chamber of Commerce. She has actually said that she would favour a nine-month probationary period being set out in regulations, which I think is reflective of comments that I have made. It seems a little odd for her evidence to be used in support of an amendment that seeks a six-month period.

We are committed to working with businesses and trade unions to finalise the period in regulations. Setting it out in the Bill would tie our hands somewhat. It would also go against the spirit of what we are trying to achieve, which is working in a tripartite manner. The shadow Minister has sometimes criticised me for rushing a little bit, so he will appreciate that we are taking our time with this measure because we want to get it right. I urge him and the Liberal Democrat spokesperson not to press their amendments.

[Sarah Gibson]

I am happy not to press amendment 5.

[Greg Smith]

As I hope I made clear in my opening remarks, amendment 155 is a probing amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Justin Madders]

I beg to move amendment 55, in schedule 2, page 112, line 36, at end insert—

“3A In section 15 of the Enterprise and Regulatory Reform Act 2013 (power by order to increase or decrease limit of compensatory award), after subsection (5) insert—

‘(5A) The power conferred by subsection (1) includes power to provide that, in the case of the dismissal of an employee that meets the conditions in section 98ZZA(2) and (3) of the Employment Rights Act 1996 (dismissal during initial period of employment), the limit imposed for the time being by subsection (1) of section 124 of that Act is a different amount from that otherwise imposed by that subsection.

(5B) Subsections (3), (4)(a) and (5) do not apply for the purposes of specifying the amount of the limit in such a case.’”

This amendment would enable the Secretary of State to specify the maximum amount of the compensatory award available where an employment tribunal finds that an employee has been unfairly dismissed during the initial period of employment provided for by new section 98ZZA of the Employment Rights Act 1996.

[The Chair]

With this it will be convenient to discuss Government amendments 56 and 57.

[Justin Madders]

Amendment 55 will expand an existing delegated power to enable the Secretary of State to specify a different maximum compensatory award where an employment tribunal finds that an employee has been unfairly dismissed under the new light-touch standards during the statutory probation period. Amendments 56 and 57 will make consequential changes to the provisions for uprating maximum awards for inflation.

In the event of any successful unfair dismissal claim, an employment tribunal will consider compensation as a remedy. Compensation will usually consist of a basic award and a compensatory award. The tribunal will determine the compensatory award by considering what it thinks is just and equitable, having regard to the financial loss suffered by the claimant that has been caused by the employer’s actions. This will include reference to salary and benefits, including pension, until the claimant finds alternative employment. The maximum compensatory award is currently the lower of 52 weeks’ pay or £115,115.

The Government have listened to concerns that changes to unfair dismissal law could lead to an increase in unfair dismissal claims, even where there is no merit, and to an increased burden on businesses and tribunals in having to deal with those claims. We have heard that uncertainty of outcome makes it hard for businesses to judge how much to invest in either defending or settling a claim. The introduction of a lighter-touch standard for fair dismissal during the statutory probationary period aims to reduce burdens on businesses and to create certainty, but it will not apply to all dismissals during the statutory probation period.

Having listened to those concerns, the Government committed in our “Next Steps to Make Work Pay” document to consulting on what a compensation regime for successful unfair dismissal claims during the statutory probation period should be. Although we want employers to pause and make considered decisions about dismissing employees during probation, the Government do not think that employers should face the full potential liabilities of unfair dismissal remedies when dismissing an employee for reasons related to performance or suitability for the role during the statutory probation period.

To have the option of implementing reform once we have consulted, it is necessary to introduce this delegated power. The power is limited to making changes to the compensatory award for unfair dismissal claims during the statutory probation period only, and only where the new lighter-touch standards apply. The Government recognise the importance of employers being able to assess new hires. We are committed to introducing a statutory probationary period in which there will be lighter-touch standards for an employer to meet in order to dismiss an employee fairly if they are not suitable for the job.

The power will not enable the Secretary of State to make changes to the level of compensation for other day one unfair dismissal rights, such as automatically unfair reasons including maternity-related dismissals, or for “ordinary” unfair dismissals such as redundancy. The power will not enable the Secretary of State to make changes to reinstatement or re-engagement as a remedy available to tribunals for unfair dismissal during statutory probationary periods, nor will it allow changes to be made to the additional compensatory award where an employer does not comply with an order of reinstatement or re-engagement by the tribunal. There may be some concerns that the power could be used to undermine enforcement of the day one right to unfair dismissal, but I assure the Committee that this is not the intention.

The Government are making basic protections against unfair dismissal a day one right for employees. They will be able to enforce their rights and take a claim to the tribunal if they have been unfairly dismissed. It is important, however, that employers are able to assess new hires and see whether they are suitable for the job without facing the full potential liabilities of unfair dismissal remedies during this period.

[Greg Smith]

I have a straightforward question. We are back once more with our old friend of not having full clarity and having consultation after legislation. The Minister gave a figure, but it is not clear exactly what the Secretary of State might consider specifying as the maximum compensation that can be awarded under this measure.

I acknowledge that there is a consultation to come, but the reason that we need greater clarity relates to the point about business confidence in making new hires, putting new job adverts out, seeing who applies and trying to recruit. If there is a risk that the figure will be disproportionately high, it will make businesses more risk-averse about growing their businesses and thereby growing the economy and creating more jobs in our country. My only substantive question is “Where is the ceiling going to be?”

[Sarah Gibson]

I share some of the shadow Minister’s concerns. Consultation to find out what most concerns businesses is obviously commendable, but if a large amount of the Bill is left to secondary legislation, a lot of it will not come back before the whole House for scrutiny. Can we be assured that decisions that are not taken before the Bill is passed can at least be considered by a Committee when they are finally made?

[Justin Madders]

I take on board the comments that the Opposition spokespersons have made, but if we put something in the Bill now, we would be pre-empting the consultation. It is very important to get this right, acknowledging the balance that needs to be struck and the points that have been made. It is worth bearing in mind that this measure will not be implemented until autumn 2026 at the earliest, which is still a considerable time off. The reason we want to take the time between now and then to engage and consult with businesses is to ensure that we get that figure to a spot that gives justice to individuals and certainty to businesses about the potential liability they may face.

[Greg Smith]

I am grateful to the Minister for that clarification. I understand the point about autumn 2026, but would he acknowledge that the vast majority of businesses are probably already working on their 2026 business plans? They are not just planning for tomorrow, next week and January; they are making medium and long-term plans. Those decisions about creating a new role, filling a vacancy or whatever it might be will already be baked into business planning for 2026, 2027 and maybe through to 2030, so it is not good enough to say, “It’s not coming in until 2026, so don’t worry.” Businesses are already in that planning space.

[Justin Madders]

I take the shadow Minister’s point, but that presupposes that businesses bake into their business plans compensation for unfairly dismissing their staff, and I do not think any business would want to proceed on that basis. This is about a potential liability that might come in at a future point.

Of course, we all want employers to retain their staff and have a productive working relationship, but if they do not, we want them to comply with the law and dismiss employees fairly. There will be a small number of cases where that does not happen, but I would not expect a business to be able to anticipate what might happen in two or three years’ time with an individual employee and whether a process was followed or not. That is probably not on a business’s desk at this point.

Amendment 55 agreed to.

Amendments made: 56, in schedule 2, page 114, line 20, at beginning insert—

“(1) The Employment Relations Act 1999 is amended as follows.”

See the explanatory statement for amendment 57.

Amendment 57, in schedule 2, page 114, line 23, at end insert—

“(3) In section 34 (indexation of amounts, etc)—

(a) in subsection (1)(c), for “124(1)” substitute “124”;

(b) omit subsection (4);

(c) in subsection (4A), for “124(1)” substitute “124”;

(d) in subsection (4B)—

(i) for “124(1)” substitute “124”;

(ii) after “1996” insert “in relation to cases of any description”;

(iii) for the words from “such a sum” to “that date” substitute “, with effect from a day within 12 months before that date, a sum specified in that section in relation to cases of that description”.”—(Justin Madders.)

This amendment and amendment 56 are consequential on amendment 55.

Question proposed, That the schedule, as amended, be the Second schedule to the Bill.

[The Chair]

With this it will be convenient to discuss the following:

New clause 28—Unfair dismissal: impact assessment—

“(1) The Secretary of State must carry out an assessment of the likely impact of section 19 and Schedule 2 of this Act on—

(a) employers, and

(b) the economy.

(2) The assessment must –

(a) include labour market and broader macroeconomic analysis,

(b) examine the impact of the measures in section 19 and Schedule 2 of this Act on employment, wages and economic output,

(c) consider the likelihood the dismissal measures leading to lower employment, and greater use of temporary contracts, and

(d) examine the likely effect of section 19 and Schedule 2 of this Act on—

(i) productivity,

(ii) wage growth,

(iii) equality of opportunity,

(iv) job security,

(v) economic activity, and

(vi) employment.

(3) The Secretary of State must lay a report setting out the findings of the assessment before each House of Parliament.”

This new clause requires the Secretary of State to assess the impact of the provisions of Clause 19 and Schedule 2.

Amendment 134, in clause 118, page 105, line 20, at end insert—

“(3A) But no regulations under subsection (3) may be made to bring into force section 19 or Schedule 2 of this Act until the findings set out in the report under section [unfair dismissal: impact assessment] have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.”

This amendment is linked to NC28.

[Justin Madders]

Schedule 2 amends the Employment Rights Act 1996, including the introduction of a statutory probation period. It also removes the qualifying period for the right to written reasons, replacing it with a requirement for the dismissal to have occurred after the statutory probation period ends. By removing the qualifying period, schedule 2 makes basic protection against unfair dismissal a day one right for all employees, ensuring that employees receive a baseline of security and predictability.

By introducing a statutory probation period in legislation, the schedule ensures that employers can continue to assess new hires. It allows the duration of the statutory probation period to be set out in regulation by the Secretary of State, which will follow public consultation.

I will take Members briefly through the elements of schedule 2. Paragraph 1 repeals the two-year qualifying period. Paragraph 2 makes it clear that the right to be unfairly dismissed does not apply to those who have not yet started employment. Paragraph 3 makes provision about dismissal during the initial period of employment, which we have already discussed. It will ensure that the “potentially fair” reasons in section 98 of the Employment Rights Act 1996 will be subject to the light-touch regime where they relate to the employee with the exception of redundancy.

As we have already discussed, the Government intend to consult on the standards, and the schedule repeals the two-year qualifying period. A Government amendment has been made to schedule 2 to include a delegated power to change the maximum compensatory award available during the statutory probation period where the lighter-touch standards apply, as we have just discussed. We will consult on that.

--- Later in debate ---

[Justin Madders]

I will try to put the shadow Minister’s mind at ease. I point out that not just is there an overall impact assessment for the Bill, but there are 24 separate impact assessments for different measures. That shows the amount of work that has been put in. The RPC has approved two thirds of those assessments, and it was looking only at the evidence base, not the policies themselves.

The impact assessment for day one rights covers everything we would expect an impact assessment to look at: the business environment, the wider economic impact, trade implications, wages, labour mobility, productivity, and sectoral and regional impacts. As the evidence base is firmed up, we will continue to refine and develop it. It deals comprehensively with many of the shadow Minister’s concerns, and I invite him not to press his amendments to a vote.

Question put and agreed to.

Schedule 2, as amended, accordingly agreed to.

Clause 20

Dismissal during pregnancy

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

[The Chair]

With this it will be convenient to discuss clause 21 stand part.

--- Later in debate ---

[Sarah Gibson]

I thank the hon. Member for Dundee Central for tabling the amendment, which has drawn out a potential loophole that I hope the Government will look at carefully. We so often see legislation introduced with good intentions, and then 90% of businesses—especially smaller businesses—comply with it to the letter, because they think that is the right thing to do, but the larger corporations find a way around it.

[Justin Madders]

I am grateful for the contributions in this debate, which deals with one of the central issues we have been grappling with. On this side of the Committee we certainly want to see fire and rehire consigned to the history books. Equally, we do not, as my hon. Friend the Member for Worsley and Eccles said, want to see businesses feel they have no option but to make people redundant because they do not feel they can take any other course of action. It is about trying to ensure that that is still available without opening a loophole, as it has been described, for abusive fire and rehire tactics to continue. There is an awful lot in the Bill as it stands that will make it a very high threshold indeed for any employer to want to take that step. There will, of course, be further guidance in regulations, where we will home in on the kinds of concerns that have been raised.

[Chris Law]

I appreciate that there is a lot in the Bill, and I appreciate that some Government Members on the Committee think this is a nut to crack. I have asked questions—I hope to hear some of the answers to them—and I want to add another. I raised the issue of “likely”, which is the language used. Will the Minister remark on whether the Department intends to advise on how the word “likely” should be determined? Will he consider whether that will reflect what was set out in the Trade Union and Labour Relations (Consolidation) Act 1992 and a subsequent tribunal judgment, which came to define “likely” as a need to show

“a significantly higher degree of likelihood than just more likely than not”?

[Justin Madders]

I am not familiar with the particular case law the hon. Gentleman refers to, but I will take that away.

It is fair to say that employment tribunals currently do not have the kind of inquiries into a business’s finances and general condition that we are trying to achieve with this legislation. At the moment, there is a fairly broadbrush approach, particularly in terms of redundancies, to inquiries about the business reasons. It is important to draw the hon. Member for Dundee Central’s attention to the words after “likely” in the Bill. It is about an

“employer’s ability to carry on the business as a going concern”.

That means the alternative is insolvency or redundancies, which is the eventuality that I am sure we all want to avoid. It will ultimately be a question of fact for an employment tribunal to determine whether it genuinely was the only option available to the employer, which is what the Bill will require the employer to demonstrate.

There are a legion of examples of trade unions working constructively with businesses to avoid those kinds of insolvency situations, as a result of which terms and conditions have changed. The hon. Member for Dundee Central quoted Andy Prendergast who, in respect of what happened in the 2008 financial crisis, said in an evidence session:

“It was heartbreaking, but we had to do it because it was the right thing to do.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 131, Q135.]

He was talking about changing terms and conditions in agreement with employers to avoid redundancies and potential insolvencies.

The hon. Gentleman’s amendment would take out all of subsection (5) of proposed new section 104I, which is the requirement for the employer to engage with trade unions and have the dialogue that we think is so important in industrial relations. It would say, “That does not matter any more.” The dialogue we are seeking to develop—the tripartite approach—and the move to make the arbitrary take-it-or-leave-it approach that some employers have adopted in fire and rehire a thing of the past, would not matter.

The hon. Gentleman has asked some important questions about what we would expect of employers; I think subsection (5) answers many of them. Further regulations and codes of practice will also deal with them, because we want to make sure we have a situation in which the bar for passing this test is extremely high, but in addition to that—in addition to there being no alternative but insolvency—the employer has to then demonstrate that they have carried out a full consultation with the trade union. That will involve a full explanation of the financial situation. As we develop the regulations and codes of practice, we will flesh that out in some more detail.

[Chris Law]

I am listening carefully to the words the Minister is using. When does the employer carry out that process? Ultimately, they have two options. They can carry it out well in advance to ensure that employees are kept up to speed early on. Some employees may wish to leave under those circumstances and find employment elsewhere. But often, in past cases of fire and rehire, employees have heard at a very late stage or not at all. There is currently no provision in the Bill to say what the timetable should be. I would like to get an indication of the Minister’s thoughts about potential future amendments relating to that subject.

[Justin Madders]

I hear what the hon. Gentleman is saying, but subsection (5) does set out the requirements on an employer to consult. It would be normal for further detail about consultation to be considered to be in good time when proposals are at a formative stage, as has traditionally always been the case. I see no reason why it would not also take the same form in that instance.

What we are really talking about is a situation in which there is a sudden change in a company’s financial circumstances and it has to act quickly. In that situation, we do not want to force it to go insolvent or make people redundant, if there is an opportunity to save jobs. That is why subsection (5) is so important: because it will encourage and compel the dialogue that we are seeking to achieve. I accept that there is more to be done in terms of honing some of the detail, but I urge the hon. Gentleman to withdraw his amendment because it would, I am afraid, have unintended consequences.

[Chris Law]

I thank the Minister for his comments. It is helpful to know that there will be further consultation and, potentially, amendments—which may even come from his own side—to tighten up this bit of the legislation. It is critical to the wider Bill and the SNP understands its importance; we just want to see it made tighter—not to put employers in impossible situations in which they cannot negotiate, but so that it is not exploited as a loophole. As it currently stands, employers are already discussing that.

I appreciate the Minister’s response. In that context, so long as it is something that can be further considered and, particularly, brought forward on Report, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Employment Rights Bill (Twelfth sitting)

Justin Madders Excerpts

Committee stage
Thursday 12th December 2024 Public Bill Committees

[Sir Ashley Fox (Bridgwater) (Con)]

It is a pleasure to see you in the Chair again, Ms Vaz. My hon. Friend the Member for Mid Buckinghamshire has explained that this is a probing amendment to find out the Government’s intentions, but I put it to the Minister and Labour Members that each of the Government’s proposals seems to be based on the premise that we need to legislate against the worst possible outcome.

The hon. Member for Worsley and Eccles referred to P&O, and that was in fact a scandal. But the problem with this approach, of course, is that a regulatory burden is imposed on each and every other employer, and the labour market is made less flexible and employing people is made more expensive. Therefore, every time the Government see a problem with one employer and say, “We have to regulate for everyone,” the whole labour market is made more expensive and less attractive to foreign investors—less like Britain and more like France. As we look across the channel, we see a country with a similar-sized economy, but an unemployment rate approximately double our own.

Combine that, for example, with the proposal on unfair dismissal, and employers could be less likely to employ that marginal worker. In this case, as Matthew Percival from the CBI said, it becomes more attractive, perhaps, for employers to make their workers redundant than to try to renegotiate terms and conditions.

I ask the Minister to consider the cumulative effect of each and every one of his proposals. It is easy for him to stand up and say, “This proposal on its own is modest and reasonable and good,” but the whole Bill will add £5 billion of costs to industry, and the majority of that falls on small and medium-sized enterprises. My fear is that the Minister, through the very best of intentions, will end up with unemployment higher at the end of this Parliament than when he started.

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

It is a pleasure to see you in the Chair this afternoon, Ms Vaz. For the benefit of the Committee, I again refer to my entry in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.

It has been an interesting debate. I think we are on the opposite end of the spectrum from where we were in the earlier debate about where the balance lies with our measures to end fire and rehire. I think that the fact that we have two arguments from other ends of the spectrum suggests that we are in about the right place—but if the shadow Minister expects us to believe that cows queue up to be milked in the morning, I just say to him: pull the other one!

[Sir Ashley Fox]

They get worse.

--- Later in debate ---

[Justin Madders]

Yes, they do get worse—it is Thursday afternoon.

The shadow Minister did raise some important points, though. He gave the example of a dairy and its changing practices. Of course, a change in job function does not necessarily mean that terms and conditions have to change or indeed become worse. History is full of examples where technology has come in and made jobs different. As we look forward to the advent of automation and AI in our economy, I hope that people find new jobs and new roles and that those jobs are more fulfilling as a result of technological development.

I will say a few words about the comments from the hon. Member for Bridgwater. We are talking about overall impacts in this Bill of 0.4% of employers’ total costs—a very small price to pay for a comprehensive set of reforms that really are needed for workers. It is about rooting out bad practices and making sure that those bad employers, who we all rightly condemn, are not able to exploit existing loopholes. It is about stopping the race to the bottom. It is about creating a level playing field. One reason why P&O said that it took the action that it did was that its competitors were undercutting it. We do not want to see that race to the bottom continue. We want to see good employers rewarded for respecting and rewarding their employees well by being able to compete on a level playing field.

The general thrust of the shadow Minister’s remarks was interesting. There is nothing to stop an employee agreeing to changes to terms and conditions. Indeed, proposed new section 104I(2)(b) of the Employment Rights Act 1996 makes it clear that these provisions will not apply if the employee agrees to the changes. Changes and discussions happen every day of the week in industry—that is called negotiation, and that is what good industrial relations looks like. That is the sort of thing that we want to encourage.

We are trying to stop a situation that we have seen far too often, where an employer might just say, “Well, here are your new terms and conditions. If you don’t like it, there’s the door.” That, I am afraid, has become far too prevalent in our country. We have heard plenty of evidence about how many employers have been doing that. It is about recognising that there is a loophole in the law. This may be a probing amendment, but it would certainly make this clause ineffective, and arguably, it would make the situation worse than the status quo, because it would effectively legitimise some of those actions by employers. They could point to this legislation and say, “Well, the law says that we are able to do it.”

The way the amendment worded is quite broad. There is a reference to “outdated” terms and conditions. My hon. Friend the Member for Birmingham Northfield gave a good example of where reasonable dialogue between the trade union and the employer would see that change. The shadow Minister’s old colleague, Jacob Rees-Mogg, might have a different view about what “outdated” means. He might think anything after 1874 could be considered modern—[Interruption.] He probably does, yes. There would be very broad latitude for an employer to say that something was outdated. That is why I am concerned that the amendment would make things worse than they are now.

The Bill as drafted makes it very clear what the obligations of a responsible employer are. They are the sort of things that responsible employers do already. We recognise that there will be unfortunate situations in which an employer has no alternative but to change terms and conditions, but the Bill makes sure that, if there is a positive for the employees—there often is from a change in terms of conditions; that is what negotiations often involve—there is a way for that to continue. We are not going to stop that. If employees consent to changes, they will be able to be made under this Bill. I urge the shadow Minister not to press the amendment to a vote.

[Greg Smith]

I understand the argument that the Minister has set out, and I appreciate that this particular probing amendment was at the extremer end of the spectrum in trying to probe that response from him. I accept that there are many mechanisms whereby employees can consensually work with their employer to change contracts, and that is clear. I am still a little nervous—the proof of the pudding will be in the eating, as the Bill progresses and no doubt becomes legislation—about the nightmare scenario of businesses simply saying, “Rather than trying to engage in this process, as we were warned by the CBI, we will just make everyone redundant instead.”

There needs to be a clear, previously set out mechanism from the Government so that, if that disaster-zone eventuality comes to pass—I hope I am wrong; I do not want to see people being made redundant—there is a quick snapback or sort of provision to allow secondary legislation to throttle those measures down, or to fix them in some other way that still stops the exploitative practices without tying businesses’ hands behind their backs, because the net result will be job losses. I would be incredibly disappointed and sad if these issues, which both the Opposition and businesses have warned about throughout the passage of the Bill so far, became a job killer. The Government need to be ready, if they have got it wrong, to have a process that will give businesses the confidence again to properly engage in negotiations, such as those good industrial relations that the Minister spoke of, and not just make people redundant. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Justin Madders]

We are back on fire and rehire again; I should probably count up how many times I have spoken in debates on this issue in the last few years. It has taken a lot of parliamentary time, and rightly so. We all remember the obloquy directed towards P&O when it took those actions, several years ago, and I am afraid that fire and rehire has become far more prevalent in our economy than anyone would want to see.

Investigations by the Trades Union Congress found that around 38,000 employers were using fire and rehire as a tactic. Research from the Chartered Institute for Personnel and Development found that, between August 2021 and 2023, the proportion of firms that had used fire and rehire had almost doubled. The impact assessment estimates that there are around 178,000 workers facing the threat of fire and rehire at this very moment, so the problem is not going away—indeed, because of the way that P&O has been allowed to get away with it, employers see it as a golden opportunity to take a sword to hard-fought terms and conditions.

Other Members have spoken about the household names that have attempted to do that, and USDAW’s written evidence included some notable household names. Once upon a time, fire and rehire was a seldom-used part of the employment law and industrial relations landscape but, as part of the wider pattern of insecurity at work, it has become a much more common tool. I am afraid, as we have seen, it is far too often an act of first—rather than last—resort, and the Government are committed to ending that practice.

The solution to dealing with many of the concerns raised by the shadow Minister and others is to point to what good and bad industrial relations look like, and to say, “This is what bad employer practice looks like.” Good employers and industrial relations will take workers with them. Again I refer to USDAW’s written evidence, which noted occasions where negotiations had begun with fire and rehire on the table almost from the start. That is not a healthy place to have sometimes very difficult discussions about changes to terms and conditions. The impact assessment notes that the power asymmetry can provide incentives for the more powerful party, in this case the employer, to act in a strategic manner to suppress wages and conditions. Such tactics are why we have seen such a slump in wage growth over recent years.

--- Later in debate ---

[Steve Darling (Torbay) (LD)]

Fire and rehire is an absolute scourge to those people who are impacted by it. Whether in significant numbers or a minority, it is utterly shameful. My Liberal Democrat colleagues broadly welcome the amendments, and we look forward to supporting the clause.

[Justin Madders]

It is good to hear that we have the support of the Liberal Democrats. Most of the country supports this measure; fire and rehire is rightly seen as a practice that should see its end. I quote the former right hon. Member for Welwyn Hatfield, Grant Shapps, who said at the time, when P&O first started on that course, that

“we will not allow this to happen again: that where new laws are needed, we will create them, that where legal loopholes are cynically exploited, we will close them, and that where employment rights are too weak, we will strengthen them.”—[Official Report, 30 March 2022; Vol. 711, c. 840.]

I have news for the Committee: I am afraid that only this week several Members of this place have told me about fire and rehire tactics going on in their constituency. A fire and rehire situation is taking place right now in Wrexham. The loopholes have not been closed. That is why we need to act.

To put the shadow Minister’s mind at rest, I believe that proposed new subsection (5) gives employers a real guideline as to how they need to deal with this. Furthermore, as was common to much of the evidence we heard, responsible and good employers do all those things anyway, so they will not be penalised or face any additional burdens, but rather will be able to operate on a level playing field.

To refer to the evidence given by DFDS about this particular matter, or to someone working in an area very relevant to it, they said that they were pleased that fire and rehire was going to be dealt with, because as an operator, they are

“simply looking for a fair and level playing field.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 56, Q54.]

That is why we need to act today.

I also refer to the support of the Institute of Directors; approximately two thirds of its members who were polled supported this action, too. I think it will come to be seen as a watershed moment in industrial relations in this country, where we finally got rid of one of the most obnoxious and outdated practices that this country has ever seen.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Clause 23

Collective redundancy: extended application of requirements

[Justin Madders]

I beg to move amendment 58, in clause 23, page 34, line 27, at end insert—

“(3A) In section 197 (power to vary provisions), in subsection (1)—

(a) in paragraph (a), for “188(2)” substitute “188(1A)”;

(b) in the words after paragraph (b), for “188(2)” substitute “188(1A)”.”

This amendment would correct incorrect cross-references in section 197 of the Trade Union and Labour Relations (Consolidation) Act 1992.

This is a purely technical amendment to fix an incorrect cross-reference in section 197(1)(a) of the Trade Union and Labour Relations (Consolidation) Act 1992. Section 197(1)(a) provides that the Secretary of State may make secondary legislation to amend the minimum time period for collective consultations in section 188(2) of the same Act. However, as I am sure the shadow Minister had already noticed, that reference is incorrect: “section 188(2)” should read “section 188(1A)”. A consequential amendment was missed when section 188 was amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995. That instrument renumbered section 188(2) as section 188(1A). Of course, it should have also made a consequential amendment to section 197(1)(a), but did not.

The amendment will not change the law, which can already be interpreted to refer to the correct cross-reference by way of the Interpretation Act 1978. The 1978 Act provides that where an instrument repeals and re-enacts a provision then, unless the contrary intention appears, any reference in any other enactment to the repealed provision is to be read as a reference to the re-enacted provision. The amendment will improve the clarity and accessibility of the law, which I am sure we will all be relieved to hear.

[Greg Smith]

I can be very brief on this amendment, Ms Vaz; in fact, I will channel the questioning style of my right hon. Friend the Member for New Forest West (Sir Desmond Swayne). This is what happens when a Bill gets rushed to meet an arbitrary political deadline, is it not?

[Justin Madders]

The shadow Minister will be pleased to hear that we have picked the error up at this stage, so that when the Bill is enacted it will of course be absolutely correct.

Amendment 58 agreed to.

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

[Justin Madders]

Employers are currently obliged to collectively consult when they propose to make 20 or more employees redundant at one establishment. Collective consultations are an important part of ensuring fairness and transparency between employers and employees.

In the year to November 2024, approximately 3,500 employers in Great Britain gave notification that they were initiating a collective redundancy process at a single establishment. The benefits of consultation are felt by both employees and employers. Consultation ensures that affected employees can input into the process with a view to avoiding or mitigating redundancies wherever possible, and it helps employers to retain skilled workers and reduce the risk of disputes.

That is why the Government intend to strengthen the collective redundancy framework. The clause will amend the framework to ensure that employers must fulfil collective consultation obligations whenever they are proposing 20 or more redundancies, regardless of whether the redundancies take place at one establishment or not. This will ensure that more employees—many of them in vulnerable positions—will now benefit from redundancy consultation, and that affected employees can participate meaningfully in the redundancy process, regardless of how they might be dispersed across an employer’s business. The clause will also make it easier for employers to understand when they have to comply with these obligations.

I know that businesses have raised some concerns about the practical implications of the clause and I will take this opportunity to clarify its scope. First, the clause does not mean that employers will need to consult with the entire workforce in their organisation whenever they propose 20 or more redundancies. As is currently the case, they must consult only the relevant trade union or employee representatives of employees being proposed to be made redundant, or those who may be affected by measures implemented as a result of the proposed redundancies, such as relevant line managers.

Secondly, when an employer is required to undertake collective consultation with employees across different establishments, they have the flexibility to tailor the process to suit each location. For example, they are not required to undertake a single, uniform consultation across affected locations, but can hold separate consultation activities with each group of affected employees to ensure that discussions are both localised and meaningful.

--- Later in debate ---

[Michael Wheeler]

I am sure it is not. I worked in a retail establishment that did not benefit from trade union representation and that went through consultation, not on redundancy but on a variation of contracts, so it is relevant to what we were talking about before. It was actually a relatively smooth and easy process for employee representatives to be appointed and elected from among our number, despite the lack of an existing structure, and to engage with the company in those consultation exercises. While I would love there to be a trade union fighting the corner for every worker, when it is absent it is not a burdensome process to have employee engagement in these processes.

[Justin Madders]

I recognise that the shadow Minister welcomed the clarification I provided. No doubt there will be debate to come, as is often the case with legal issues, but the Government are fairly clear and confident that the clause will not have the unintended consequences we heard raised in evidence.

The shadow Minister asked, “Why 20?” He will pleased to know that that was a product of EU regulation. It is in existing law as part of the Trade Union and Labour Relations (Consolidation) Act 1992, which has been amended many times, so I could not say exactly when it came into force, but—

[Greg Smith]

The Minister can of course look back in history at when these measures were put in, but the Bill seeks to change all sorts of things across all sorts of sectors. We are free from the European Union! He could change it if he wished.

[Justin Madders]

I will remember that next time the shadow Minister tells me that we are trying to do too much in this Bill. With the Retained EU Law (Revocation and Reform) Act 2023, the Bill Committee for which I had the great pleasure of serving on, his Government could have done something about this before they left office.

The figure of 20 is long established, and we have no current plans to change it, but we are keen to ensure that the scenario my hon. Friend the Member for Worsley and Eccles described cannot continue. As he said, Woolworths made 27,000 people redundant, and about 3,000 of those were completely exempt from collective redundancy consultations because of this issue. There has been a number of high-profile retail redundancies where people have missed out on collective redundancy obligations because of this law, which we are pleased to be able to change.

On the question of smaller employers where there may not be trade union representation readily available, the regulations already provide for employee representatives to be engaged and elected in those circumstances, so there is no change to the law in that respect. There is already provision to deal with that situation.

Question put and agreed to.

Clause 23, as amended, accordingly ordered to stand part of the Bill.

Clause 24

Collective redundancy notifications: ships’ crew

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

[Justin Madders]

The clause will address the loophole that allowed P&O Ferries to avoid prosecution when it dismissed 786 seafarers without notice in March 2022. It will require operators of frequent services to British ports to notify the UK Government when making 20 or more redundancies even if those affected work aboard ships registered in another state. The clause means that if an operator of frequent services to a British port chooses to copy P&O Ferries and make collective redundancies without providing notice to the Government, it could face prosecution under the Trade Union and Labour Relations (Consolidation) Act 1992 and ultimately be liable for an unlimited fine.

The clause will apply to services calling between Great Britain and another place in the UK. It will also apply to any services entering Great Britain from a place outside the UK on at least 120 occasions in a 12-month period before the redundancy notification, or to new services that have been operating for less than 12 months and have called 10 times or more per month while they have been operating. We estimate the number of operators in scope of the measure to be around 2,000. The cost to businesses will be minimal; it is estimated to be around £20 per notification. We hope that the prospect of an unlimited fine will deter operators from making mass redundancies without the appropriate notification.

While this measure may not prevent redundancies from being made, it will mean that the Government and any employee representatives must be notified before any dismissals take effect. It will prevent the sort of disruption seen following the P&O Ferries dismissals and will mean that the Government will be able to provide valuable support to seafarers facing redundancy. I therefore commend the clause to the Committee.

[Greg Smith]

I understand where the Minister is coming from, particularly on the expansion of the requirement to notify the flag state. I spoke earlier about my time on the Transport Committee watching the P&O scandal unfold; we held some pretty tough evidence sessions as part of that. I understand that the clause is very specifically to protect seafarers from that sort of engagement. I very much hope that it works to protect those seafarers, and we will not oppose it.

[Steve Darling]

We are strongly supportive of the measure.

[Justin Madders]

I am pleased to see that we have support all round.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Public sector outsourcing: protection of workers

[Justin Madders]

I beg to move amendment 59, in clause 25, page 36, line 14, leave out subsection (2) and insert—

“(2) After Part 5 insert—

‘Part 5A

Outsourcing: protection of workers

83A Application of this Part

(1) This Part provides for a Minister of the Crown, the Scottish Ministers and the Welsh Ministers to make provision for the protection of workers in relation to relevant outsourcing contracts (see section 83B).

(2) Accordingly, in this Part, “appropriate authority”—

(a) means—

(i) a Minister of the Crown,

(ii) the Scottish Ministers, or

(iii) the Welsh Ministers, and

(b) does not include a Northern Ireland department.

(3) In addition to the restrictions in section 113, a Minister of the Crown—

(a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a reserved procurement arrangement;

(b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement.

(4) The Scottish Ministers—

(a) may only exercise a power under this Part for the purpose of regulating—

(i) devolved Scottish authorities, or

(ii) procurement under a devolved Scottish procurement arrangement;

(b) may not exercise a power under this Part for the purpose of regulating—

(i) joint or centralised procurement under a reserved procurement arrangement, or

(ii) joint or centralised procurement under a devolved Welsh procurement arrangement.

(5) In addition to the restrictions in section 111, the Welsh Ministers—

(a) may exercise a power under this Part for the purpose of regulating devolved Scottish authorities only in relation to joint or centralised procurement under a devolved Welsh procurement arrangement;

(b) may not exercise a power under this Part for the purpose of regulating joint or centralised procurement under a devolved Scottish procurement arrangement.

(6) This Part does not apply in relation to—

(a) a private utility;

(b) a person referred to in regulation 4(1)(b) of the Utilities Contracts (Scotland) Regulations 2016 (S.S.I. 2016/49);

(c) a devolved Welsh authority listed in Schedule 1 of the Social Partnership and Public Procurement (Wales) Act 2023 (asc 1);

(d) procurement under a transferred Northern Ireland procurement arrangement, except to the extent that the procurement—

(i) is carried out by a devolved Scottish authority, and

(ii) is not joint or centralised;

(e) a transferred Northern Ireland authority, except in relation to—

(i) procurement under a reserved procurement arrangement,

(ii) procurement under a devolved Scottish procurement arrangement, or

(iii) procurement under a devolved Welsh procurement arrangement.

(7) For the purposes of this section, procurement under a procurement arrangement is “joint or centralised” if as part of that procurement arrangement a contract is to be awarded following a procedure or other selection process carried out—

(a) jointly by a devolved Scottish authority and another contracting authority which is not a devolved Scottish authority, or

(b) by a centralised procurement authority or equivalent body.

83B Relevant outsourcing contracts

(1) In this Part, “relevant outsourcing contract” means a contract in relation to which conditions A to C are met.

(2) Condition A is met where the contract—

(a) is a public contract under this Act, or

(b) is a contract regulated by Scottish procurement legislation.

(3) Condition B is met where the contract—

(a) is a contract for the supply of services that include the performance of functions that are or have previously been performed by the contracting authority, or

(b) is—

(i) in the case of a public contract, a framework for the future award of a contract referred to in paragraph (a), or

(ii) in the case of a contract regulated by Scottish procurement legislation, a framework agreement the purpose of which is to establish the terms governing a contract referred to in paragraph (a).

(4) Condition C is met where the functions referred to in subsection (3)(a) are, or are expected to be, performed by individuals (“transferring workers”) who—

(a) in performing the functions, are employed by the supplier or a sub-contractor under a worker’s contract, and

(b) were employed by the contracting authority under a worker’s contract in performing functions of the same kind.

(5) For the purposes of this Part—

(a) “contract regulated by Scottish procurement legislation” means a contract the procurement of which by a devolved Scottish authority is regulated by Scottish procurement legislation;

(b) in relation to a contract regulated by Scottish procurement legislation—

(i) “contracting authority” means a devolved Scottish authority that is a contracting authority within the meaning of the relevant Scottish procurement legislation;

(ii) “framework agreement” has the same meaning as in the relevant Scottish procurement legislation;

(iii) “supplier” means an economic operator within the meaning of the relevant Scottish procurement legislation;

(iv) “the relevant Scottish procurement legislation” means the Scottish procurement legislation regulating the procurement of the contract.

83C Power to specify provision for inclusion in relevant outsourcing contracts

(1) An appropriate authority may by regulations specify provision to be included in a relevant outsourcing contract for the purpose of ensuring that—

(a) transferring workers of a specified description are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and

(b) workers of the supplier or a sub-contractor who are not transferring workers and are of a specified description are treated no less favourably than those transferring workers.

(2) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must—

(a) take all reasonable steps to ensure that provision specified under subsection (1) is included in the contract;

(b) where provision specified under subsection (1) is included in the contract, take all reasonable steps to secure that such provision is complied with.

(3) Subsection (2) does not apply—

(a) where the contracting authority or the relevant outsourcing contract is of a specified description, or

(b) in specified circumstances.

(4) In this section, “specified” means specified in regulations made by an appropriate authority.

83D Code of practice on relevant outsourcing contracts

(1) An appropriate authority must prepare and publish a code of practice containing guidance to contracting authorities for the purpose of ensuring that, where a contracting authority carries out the procurement of a relevant outsourcing contract—

(a) transferring workers of a description specified in the code are treated no less favourably as workers of the supplier or a sub-contractor than they were as workers of the contracting authority, and

(b) workers of the supplier or a sub-contractor who are not transferring workers and are of a description specified in the code are treated no less favourably than those transferring workers.

(2) An appropriate authority—

(a) may amend or replace a code published by it under subsection (1), and

(b) must publish any amended or replacement code.

(3) A code published under subsection (1) or (2) must—

(a) in the case of a code published by a Minister of the Crown, be laid before Parliament;

(b) in the case of a code published by the Scottish Ministers, be laid before the Scottish Parliament;

(c) in the case of a code published by the Welsh Ministers, be laid before Senedd Cymru.

(4) In carrying out the procurement of a relevant outsourcing contract, the contracting authority must have regard to the code of practice for the time being published under subsection (1) or (2).

(5) This section does not require an appropriate authority to do anything which the authority does not have power to do (see section 83A and Part 11).

83E Interpretation of this Part

(1) In this Part—

“appropriate authority” has the meaning given in section 83A(2);

“contract regulated by Scottish procurement legislation” has the meaning given in section 83B(5)(a);

“relevant outsourcing contract” has the meaning given in section 83B;

“transferring worker”, in relation to a relevant outsourcing contract, has the meaning given in section 83B(4);

“worker” and “worker’s contract” have the same meaning as in the Employment Rights Act 1996 (see section 230 of that Act).

(2) For the purposes of this Part, in relation to a contract regulated by Scottish procurement legislation, “contracting authority”, “framework agreement”, “supplier” and “the relevant Scottish procurement legislation” have the meaning given in section 83B(5)(b).

83F Power of Scottish Ministers to amend this Part

The Scottish Ministers may by regulations modify section 83A, 83B or 83E in consequence of a modification of Scottish procurement legislation.’”

This amendment would restructure the new provisions to be inserted into the Procurement Act 2023 so that the powers and duties extend to the Scottish Ministers and Welsh Ministers and devolved Scottish and Welsh authorities. The amendment also clarifies that the duty to publish a code of practice does not depend on the making of the regulations.

[The Chair]

With this it will be convenient to discuss Government amendments 60 to 64.

[Justin Madders]

Amendment 59 will expand and restructure the provisions in clause 25, which amends the Procurement Act 2023, to reinstate and strengthen the two-tier code for relevant outsourced contracts for public services so that the powers and duties in clause 25 extend to Scottish and Welsh Ministers. Amendments 60 to 64 make changes that are consequential on those made by amendment 59, including by updating various definitions in the Procurement Act 2023 and by providing that regulations made by Scottish and Welsh Ministers must be made using the affirmative procedure of the Scottish Parliament and the Senedd.

We are making the amendments at the request of the Scottish and Welsh Governments. They are necessary because to get the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts, it is essential that a reinstated two-tier code applies throughout the UK.

We continue to engage with our counterparts in Northern Ireland about whether the powers should also extend to Ministers there. The regulations and code of practice created in our provisions will apply to reserved Northern Irish authorities. I commend the amendments to the Committee.

[Greg Smith]

I am reminded of the old chestnut about rushing out a Bill in 100 days and forgetting about the devolved settlements as part of the process. Given that devolution was largely the product of the previous Labour Government, I am slightly surprised that the current one would forget about Holyrood and Cardiff Bay. However, it is good that we now have clarity. We will of course want to test how things are actually going to work. Indeed, the question of Northern Ireland—which is just as important a part of our country as England, Scotland and Wales—really should be resolved sooner rather than later, so that there can be clarity that the Government are seeking to legislate for the whole of our United Kingdom of Great Britain and Northern Ireland, and not doing it in a piecemeal fashion.

[Justin Madders]

I gently correct the shadow Minister: we did not forget to engage with the Scottish and Welsh Governments. We were making sure that we had agreement before we tabled amendments, which is why they have appeared as they have today.

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

Does the Minister agree that this is actually an example of the Government keeping not only their manifesto promise to deliver a new deal for working people, but the manifesto promise that I certainly made many times during the election campaign, which was that the new Government would show the utmost respect for the Scottish Parliament and Government, and for all the devolved institutions? I reassure the Minister that the Scottish Parliament was not forgotten during the drafting of the Bill, because there was extensive engagement with the Scottish Government, some of which I saw myself.

[Justin Madders]

I could not agree more with my hon. Friend. On that note, I commend the amendments to the Committee.

Amendment 59 agreed to.

Amendments made: 60, in clause 25, page 37, line 33, at end insert—

“(2A) In section 2 (contracting authorities), after subsection (1) insert—

‘(1A) But see also section 83B(5)(b)(i) (which provides for “contracting authority” to have an extended meaning in relation to certain contracts regulated under Part 5A (outsourcing: protection of workers)).’”

See the explanatory statement to amendment 59.

Amendment 61, in clause 25, page 37, line 34, leave out subsection (3).

See the explanatory statement to amendment 59 - because the new provisions are now being inserted as a new Part of the Procurement Act 2023, there is no longer any need to amend section 100 of that Act.

Amendment 62, in clause 25, page 38, line 3, leave out subsection (4) and insert—

“(4) In section 122 (regulations)—

(a) in subsection (4) (regulations by Ministers of the Crown subject to affirmative procedure), after paragraph (i) insert—

‘(ia) section 83C (provision for inclusion in relevant outsourcing contracts);’

(b) in subsection (10) (regulations by Welsh Ministers subject to affirmative procedure), after paragraph (g) insert—

‘(ga) section 83C (provision for inclusion in relevant outsourcing contracts);’

(c) in subsection (14) (regulations by Scottish Ministers subject to affirmative procedure), before paragraph (a) insert—

‘(za) section 83C (provision to be included in relevant outsourcing contracts);

(zb) section 83F (power to amend section 83A, 83B or 83E);’”.

See the explanatory statement to amendment 59.

Amendment 63, in clause 25, page 38, line 6, at end insert—

“(4A) In section 123 (interpretation), in subsection (1), in the definition of ‘appropriate authority’, at the end insert—

‘(but see section 83A(2) for a different meaning of “appropriate authority” in Part 5A (outsourcing: protection of workers));’.

(4B) In section 124 (index of defined expressions), for the entry for ‘appropriate authority’ substitute—