Fireworks: Sale and Use

Justin Madders Excerpts

Monday 9th 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, Mr Mundell. As the shadow Secretary of State, the hon. Member for Arundel and South Downs (Andrew Griffith), said, this has been a good debate and a wide range of suggestions have been made.

We had speeches from 20 Back-Benchers: my hon. Friend the Member for Newport East (Jessica Morden), the hon. Member for Hazel Grove (Lisa Smart), my hon. Friend the Member for Luton North (Sarah Owen), the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), the hon. Member for Cheadle (Mr Morrison), my hon. Friend the Member for Uxbridge and South Ruislip (Danny Beales), the hon. Member for Hornchurch and Upminster (Julia Lopez), my hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis), the hon. Member for Bradford East (Imran Hussain), my hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge), the hon. Member for Edinburgh West (Christine Jardine), my hon. Friend the Member for Glasgow South West (Dr Ahmed), the hon. Member for Eastleigh (Liz Jarvis), and my hon. Friends the Members for Edinburgh South West (Dr Arthur), for Gloucester (Alex McIntyre), for Stourbridge (Cat Eccles), for Glasgow East (John Grady), for Morecambe and Lunesdale (Lizzi Collinge) and for Southport (Patrick Hurley). That was quite a good spread across the isles: it shows that the issue affects everyone in this great nation of ours. Everyone spoke with great passion and insight into how fireworks affect individuals, and there were a range of suggestions about what might be done.

I congratulate the hon. Member for Keighley and Ilkley (Robbie Moore) on leading this important debate. He set out well the balance of issues that we have to take into account when considering these matters. As he highlighted, fireworks can have a dreadful impact.

The two petitions that we are debating are “Ban the sale of fireworks to the general public” and “Limit the sale and use of Fireworks to licence holders only”. I join the shadow Secretary of State in paying tribute to Chloe Brindley and Alan Smith for their work in helping to get the petitions debated today. The debate has shown that there is an appetite across the House to look at the issue. As a constituency MP and as a member of the Government, I know from my own postbag that it is an issue of widespread concern.

I express my condolences to the family of Josephine Smith, who, as we know, sadly passed away following the placing of a firework through her letterbox. The tragic story, which was conveyed by the hon. Member for Hornchurch and Upminster, brings home the consequences of the deliberate misuse of fireworks. We heard from her about how the CCTV caught those responsible talking about what they might do, and I cannot imagine how difficult that must have been to view that irresponsible behaviour. The hon. Lady conveyed Mr Smith’s thoughts well. He asked for a sensible and respectful debate, and I certainly believe that we have had one today. I assure him that we will meet in the new year and that we will continue to engage in a sensible and respectful way. There are many things to explore in what he said.

My hon. Friend the Member for Luton North has caught the attention of a lot of Members with her private Member’s Bill. She highlighted what is arguably an illogical approach to licensing, and mentioned the challenge of enforcement, which all Members spoke about. Many Members clearly feel that the enforcement regime is not working as it should. There may be a number of reasons for that. She also mentioned the impact on children with special educational needs and on guide dogs, and the impact of online sales, which were not something of which we were cognisant when fireworks were last legislated for. Those were important points.

The hon. Member for Edinburgh West is not in her place, but her constituency contains Edinburgh Zoo, where Roxie the panda cub sadly died. That graphically brings home the impact that fireworks can have on animals. She was right to highlight the irony of a zoo doing its utmost to protect an endangered species but losing an animal through the deliberate and possibly unthinking acts of humans. There are many elements to this. We must recognise that for many people and animals, noise and disruption can be challenging. That is why we have had this debate today and why many people have signed the petition.

We must recognise that for the many people who use and enjoy fireworks responsibly, they are an important part of their life for enjoying celebrations with family and friends, and as part of the wider community. We know they are a popular product: the industry is valued at £200 million a year. Research published by the Social Market Foundation showed that 77% of the public like fireworks a lot or somewhat. As I think my hon. Friend the Member for Bexleyheath and Crayford said, about 14 million Britons—a significant number of people—plan to have their own displays each year. However, the research also showed that only 15% of people in Great Britain want the regulations to stay as they are. It was clear from the debate that a lot of Members share that view. As my hon. Friend the Member for Stourbridge mentioned, there is potential for alternatives, including the use of light displays, drones and lasers. The use of alternatives was also highlighted in the Social Market Foundation report.

As Members have said, the Petitions Committee launched an inquiry into the sale and use of fireworks in 2019, which gave people the opportunity to raise their concerns. I believe it attracted more than 350 written submissions. The Committee made a number of recommendations but did not, in the end, advocate for a total ban on fireworks. I think it recognised the concern that doing so would create a black market. When we look at the possibility of a total ban, we must recognise that an extensive regulatory framework for fireworks already exists. We should also recognise that, particularly in Scotland, there have been a number of developments in trying to regulate them. I listened with great interest to what my hon. Friends the Members for Glasgow South West and Edinburgh South West said about their experiences of that system. They both talked about the horrendous injuries that police officers and other public servants have received, and why it is so important for them to get control of the issue.

When my hon. Friend the Member for Edinburgh South West said that a lot of this is just lawlessness, he hit the nail on the head. That feels such a long way away from the displays that many Members talked about from their youth. How we have gone from that innocent, joyful experience to downright anarchy is a sad indictment, I am afraid. I also noted my hon. Friend’s question about whether exclusion zones have been as effective as we would have liked. I think my hon. Friend the Member for Glasgow East suggested that their application had not been as good as we would have liked. There are certainly things we need to look at from the experience of Glasgow and Edinburgh so far, to understand whether that tool is fit for purpose.

Under the Fireworks Act 2003, the Fireworks Regulations 2004 introduced a package of measures to reduce the nuisance and injuries caused by the misuse of fireworks, which forms part of the broader public concern with the problems of antisocial behaviour. As we know, there is an 11 pm curfew for the use of fireworks, with later exceptions only for the traditional firework periods of 5 November, Diwali, new year’s eve and Chinese new year, as well as for local authority displays, celebrations and events. In addition, the Pyrotechnic Articles (Safety) Regulations 2015 include a 120 dB noise limit on the fireworks available to consumers. It should be said that the majority of people who use fireworks do so appropriately and have a sensible and responsible attitude to them, but, as we have heard this afternoon, too many people use them in a dangerous, inconsiderate or antisocial manner.

The police, local authorities and other local agencies have a range of tools and powers that they can use to respond to antisocial behaviour, including the antisocial use of fireworks offence through the Anti-Social Behaviour, Crime and Policing Act 2014. Going even further back, the Explosives Act 1875 made it an offence to throw, cast or fire a firework into a highway, street, thoroughfare or public place, demonstrating that it is sadly not a new problem.

Members have referred to the different categories of fireworks. It is worth setting out the fact that retailers must not sell low or medium-hazard fireworks, known as F2 and F3 fireworks, to anyone under the age of 18. Category F1, classed as very low hazard, cannot be sold to anyone under the age of 16. F4 fireworks are the most hazardous and can be sold only to those with specialist knowledge who have undertaken training recognised in the fireworks business and who hold a valid liability insurance. It is also an offence for anyone under the age of 18 to possess an F2, F3 or F4 firework in a public place, or for anyone to possess an F4 firework unless it is for specified professional reasons. Those offences can attract a £90 on-the-spot fine or, on summary conviction, up to six months’ imprisonment or an unlimited fine.

Retailers are restricted to selling consumer fireworks during a limited period around each of the seasonal celebrations that I have mentioned. Retailers may supply fireworks to the public outside of those periods only if they obtain a licence from their local licensing authority, so fireworks are less available to purchase outside those seasons. There are storage limits and strict rules around how and where fireworks are stored in business premises—the experience of my hon. Friend the Member for Brentford and Isleworth is not an example of how they should be adhered to.

[Sarah Owen]

I welcome the Minister’s thorough response. On the point about loosening the licensing laws to accommodate other sellers so that they can sell fireworks at times when people actually want to buy them—such as for fireworks night and new year—does that not seem a perverse way of doing things? If people are buying fireworks, they should be doing so from licensed, reputable sellers.

[Justin Madders]

I thank my hon. Friend for her intervention. I think I have already recognised and acknowledged that there is a slight incongruity about how it works, which is something we will consider as we move forward.

Local authority trading standards work with retailers to ensure that fireworks are sold safely, and they have powers to enforce. Again, we have heard questions about whether that is currently sufficient. Trading standards can also enforce against those selling fireworks without an appropriate licence—for example, outside the normal selling period. But it is clear from the debate that some Members feel the current legislation is not only inadequate but is not being enforced properly.

Some Members mentioned the issue of noise. We recognise the impact of fireworks on vulnerable people, including veterans and those with post-traumatic stress disorder, and animals. That, along with antisocial use, is a key concern, as I have heard on a number of occasions. This year I launched a fireworks campaign to provide guidance on minimising their negative impacts. The campaign was well received on social media and shared by our key enforcement partners. But of course those who were determined to cause trouble and those who do not have any respect for others will not take heed of that.

Various animal charities have published guidance on how to protect animals during the fireworks season. We will continue to work collaboratively with animal welfare organisations, alongside other charities, to ensure that the messaging reaches the public.

[Dr Arthur]

I thank the Minister for giving way when time is moving on. It is really good to hear about that campaign, but it would be good to get a commitment to publish any analysis of how it went. If the campaign has not worked, perhaps we need to go even further next year.

[Justin Madders]

This is the first time in several years that the campaign has taken place. Hopefully there will be a baseline of evidence that we can look to. I will commit to write to my hon. Friend to see what we can elicit from officials in that respect.

As I say, UK fireworks retailers support the voluntary fireworks code, which contains advice on safety and considerate use. Many lower-noise firework products—those around 90 dB or below—are already on the market, with consumers recognising that as an option. I hope that market continues to grow. Intelligence has been shared that shows that some considerate supermarket retailers are now stocking lower-noise fireworks, and some refuse to stock fireworks altogether. Testing commissioned by the Office for Product Safety and Standards found that consumer firework products have a very high compliance with the 120 dB limit set out in law, so the issue is not with the products but with where the law sets the limit.

Many Members raised concerns about the noise and disruption that fireworks cause, but acknowledged that displays have a contribution to make to community groups up and down the country as they often raise money for good causes. In 2019, the Petitions Committee noted that point and stated that

“these community displays have widespread local support and increase community cohesion.”

It also noted that a ban on fireworks could have unintended consequences, such as a “substantial economic effect” on the industry and the risk of a black market, which the National Fire Chiefs Council and the National Police Chiefs’ Council raised in their evidence to the inquiry. There is a lot to consider, but we recognise the strength of feeling about fireworks and their negative impact on some groups in society. I also recognise the need for effective regulation in this area.

We must recognise the place of fireworks in cultural and community celebrations and consider carefully any unintended consequences. I acknowledge that, as has been said, there is a paucity of evidence about the effectiveness of the current regulations. I am committed to engaging with all stakeholders, including businesses, consumer groups and charities, to understand the issues and inform any future decisions in this policy area. The safety of the public and the impact on people and animals will be paramount in those considerations. I hope this dialogue will continue.

Employment Rights Bill (Seventh sitting)

Justin Madders Excerpts

Committee stage
Thursday 5th December 2024 Public Bill Committees

[The Chair]

Will everyone please ensure that all electronic devices are turned off or switched to silent? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sitting is available in the room and on the parliamentary website. We now move on to clause 3. I remind all Members of the rules about declaration of interests, as set out in the code of conduct.

Clause 3

Right to payment for cancelled, moved and curtailed shifts

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

I beg to move amendment 30, in clause 3, page 18, leave out lines 7 to 19 and insert—

“(b) in relation to the movement of a shift, or the movement and curtailment (at the same time) of a shift, notice given less than a specified amount of time before the earlier of—

(i) when the shift would have started (if the shift had not been moved, or moved and curtailed), and

(ii) when the shift is due to start (having been moved, or moved and curtailed);

(c) in relation to the curtailment of a shift where there is a change to when the shift is to start (but there is no movement of the shift), notice given less than a specified amount of time before the earlier of—

(i) when the shift would have started (if there had not been the change), and

(ii) when the shift is due to start (the change having been made);

(d) in relation to the curtailment of a shift where there is no change to when the shift is to start, notice given—”.

This amendment has the effect of clarifying what “short notice” means for the purposes of proposed Chapter 4 of Part 2A of the Employment Rights Act 1996 in cases where a shift is both moved and curtailed and makes associated drafting changes to the definition of “short notice”.

It is a pleasure, Mr Mundell, to see you in the Chair this morning. I start by referring to my entry in the register of interests and my membership of the GMB and Unite trade unions.

Government amendment 30, alongside Government amendments 31 and 32, will ensure that employers are clear about their responsibilities where a shift is both moved and curtailed at the same time. Under the Bill as introduced, it may not have been clear to employers or workers when the short notice period in these cases would run until. Under current drafting, the calculation of the short notice period for a moved and curtailed shift could be done based on the rules for either a moved shift or a curtailed shift. This could produce two different outcomes.

For example, if a shift were due to be worked from 2 o’clock until 6 o’clock, and it is moved and curtailed so that it must be worked from 4 o’clock to 7 o’clock, it is not clear whether the notice ends at 2 o’clock or 4 o’clock. The amendment clarifies that in cases where a shift is both moved and curtailed at the same time, the short notice will be the same as if the shift had been moved only. It will therefore run until the earlier of when the shift would have started before the change or when the shift is now due to start.

In terms of what payment a worker will be entitled to when their shift is both moved and curtailed at the same time, we are committed to consulting on what that amount should be and will, of course, specify that in the regulations. The maximum amount, however, cannot be higher than what the worker would have received from working hours that were changed, as is the case for shifts that are cancelled, just moved, or just curtailed.

We believe that compensation in these circumstances is only fair, given that the movement of a shift at short notice disadvantages a worker. It impacts their ability to plan their lives and can cause financial disadvantage such as excessive childcare costs. Our measures will ensure that workers do not bear all the financial risk of shift allocation and cancellation, and will compel employers to give reasonable notice. Through good leadership and planning, an employer is in a position to reduce the instances of short-notice shift changes, which the worker is unable to influence.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the Minister for his explanation of Government amendment 30, but I gently suggest to him that starting by saying that he wished to be clear, and then going on to say that the Government will be consulting on it, possibly does not give businesses the clarity that they are seeking from this clause of the Bill. I would be grateful, when the Minister sums up the debate on Government amendment 30, if he could actually clarify what he believes, in plain English, to be reasonable notice, and, while not necessarily when future regulations will be laid, the window in which they will be consulted on.

I posed a similar question about an amendment in our sitting on Tuesday. I cannot imagine that the Government will want to simply put out a blank piece of paper consultation—there will be a floor and a ceiling that is consulted on. It would be helpful for all Members, but more importantly real businesses out there in the country, to understand that as soon as possible, so that they can most fully share their thoughts formally when the consultation launches. Can the Minister give the Committee any clue about what employers will need to comply with, or was Allen Simpson, CEO of UKHospitality, right when he said that he understood that

“the Government are intending to leave it to case law and employment tribunal systems to figure out what ‘reasonable notice’ means”?––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.]

We will shortly come on to debate Government amendment 31, which is relevant to this discussion.

--- Later in debate ---

[Greg Smith]

I understand the point that the hon. Gentleman makes. Actually, at no point have I said there should be no cost to the employer; I have said there needs to be flexibility, as opposed to a hard and fast rule. On Tuesday I had an exchange with the hon. Member for Birmingham Northfield on the point around, “Okay, what else?” While I put that problem list back in the column for the Government to address, there are other safeguards; there are other things that the Government could look at so that the burden is more shared, as opposed to zero cost to the business. The key word here, which I have probably said 100 times this morning, is “flexibility”, as opposed to hard and fast rules.

I will get back to my conclusion. Allen Simpson from UKHospitality made some sensible points when giving evidence to the Committee last week, so I pose his questions to the Minister. I should be grateful for a response on each, as I imagine employers throughout the country would be. Could a different approach be taken to what constitutes “reasonable notice” for different employers in different sectors? That goes back to the point made by the Opposition earlier. Will shift swapping still be allowed, and if so, how will the regulations account for it? If shift swapping will not be allowed, why not? What will be considered “reasonable notice” within shift-swapping provisions? If an employee wants to change their shift at the last minute, are they allowed to do so, and in what circumstances? What would happen if an employer were to put out a message saying, “There is a shift available right now. Does anyone want it?” Does that constitute an offer of employment? Will there be a time after which employers will not be able to do that, because it does not constitute reasonable notice? Those were very sensible, thoughtful questions from UKHospitality, and as this legislation progresses through Committee it is only right that the Government and the Minister give a clear and full answer to them.

[Justin Madders]

Well done to the shadow Minister—he must have had his Weetabix this morning. He has clearly put in a great deal of time and we appreciate the way that he has engaged with the debate and some of the issues. He is taking a much broader look at the principles behind the legislation, rather than a quite narrow technical amendment about when shifts are moved or curtailed, but I am happy to address his points as far as I can.

I understand that the shadow Minister accepts the principle that we are trying to create some additional fairness in the workplace. That is welcome to hear, and I can assure him that this will not be a rush job. We do not anticipate these measures being implemented until 2026, and he will not be surprised to hear that the reason is that we intend to engage deeply with business and workers’ representatives on the details. There will be a consultation, following which we will set out in regulations what periods of notice should be presumed unreasonable; we will also set out factors for tribunals to take into account when considering whether notices are reasonable. That will go a long way towards addressing some of the concerns he mentions from Allen Simpson of UKHospitality. I think it is fair to say he generally welcomed the approach, but clearly some of the detail is to be worked on.

I do not think there will be any prohibition on workers swapping shifts, but if the employer, having been notified that worker B has taken the shift instead of worker A, then cancels the shift at short notice, we would intend that the regulations would then be engaged.

[Greg Smith]

So that we are absolutely clear on the shift-swapping provision—[Interruption.] I correct the Minister on the Weetabix; it was the Tea Room black pudding.

If worker A and worker B consensually decide that they wish to switch, worker B being the one who will take the shift and worker A the one whose shift is now displaced either to another time or not at all, and worker A being quite happy with that, will the employer be penalised?

[Justin Madders]

I am grateful for the details of the shadow Minister’s dietary exploits today.

We are looking in quite close detail at that situation, because there are a number of knock-on consequences, but we do not envisage that, in a situation where two workers agree of their own volition to swap shifts, the employer should in any way be penalised. We do not think that is in the spirit of what we are trying to achieve here.

I return to the points that my hon. Friend the Member for Edinburgh East and Musselburgh made about particular workplaces. The Director of Labour Market Enforcement has undertaken quite a lot of work in respect of those issues; considerable evidence is emerging about concerns in those sectors, and I encourage him to undertake some further reading on that.

There will be further consultation on what reasonable means. We all understand that there could be different factors applying, but what we want at the end of this process is for businesses to be clear about their obligations. That could mean a particular time period, but it could be different depending on the industry or the circumstances. It is right for us to take our time to consult and engage on that.

The shadow Minister referred to the force majeure issue; there is a power in the Bill for us to provide for exemptions for short-notice shift cancellation—that is always a tricky phrase to get out—but in some of the examples he gave where a huge contract was lost, a notice cancellation payment was probably the least of the employee’s and the employer’s problems in that situation; there may be bigger questions about whether there is enough work at all. Those are the kinds of things we will be looking at, as the power in the Bill gives us that opportunity.

Amendment 30 agreed to.

[Justin Madders]

I beg to move amendment 31, in clause 3, page 19, leave out lines 5 to 18 and insert—

“(a) where the shift is cancelled, the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the cancellation;

(b) where the shift is moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the amount of remuneration to which the worker would have been entitled had they worked the original shift;

(c) where the shift is moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the amount of remuneration to which the worker would have been entitled had they worked the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed;

(d) where the shift is—

(i) curtailed but not moved, or

(ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift,

the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the curtailment, or the movement and curtailment.”

This amendment has the effect of clarifying the maximum amount of a payment that can be specified in regulations under proposed section 27BO(1) of the Employment Rights Act 1996 in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision.

[The Chair]

With this it will be convenient to discuss Government amendment 32.

[Justin Madders]

These amendments should be considered alongside amendment 30, because they clarify what happens when a shift is both moved and curtailed at the same time. The Bill provides a power to specify the amount that must be paid by employers when they cancel, curtail or move shifts at short notice. It cannot be used to specify a payment amount in excess of what the worker would have earned from working the original hours.

However, the Bill was not clear whether the maximum payment due when a shift is both moved and curtailed at the same time should be calculated based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, the maximum payment could be based either on one or two hours of work, as the shift was moved by two hours but was curtailed by one hour.

Amendment 31 clarifies what happens in such cases. The maximum payment in this scenario would be what they would have earned from two hours’ work, reflecting the maximum they would have earned had they worked their original four-hour shift. That will ensure that workers are compensated appropriately, and it will also provide clarity for employers.

Amendment 32 clarifies for workers and employers how to calculate what amount of contractual payment can be offset against payments under clause 3 in cases where there is a combined short notice movement and curtailment of a shift. Again, the Bill is unclear whether the calculation should be based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, then after deducting the two hours in the shift that have stayed the same—4 o’clock to 6 o’clock—the remaining hours to be offset could be based on either one or two hours’ work.

The amendment clarifies that the hours to be offset should be for two hours’ work, as the worker should be entitled to the payment under proposed new section 27BO of the Employment Rights Act 1996 for two hours. That will ensure that it is clear that an employer is not doubly liable for some hours in such scenarios.

Although I appreciate that the amendments may appear complex, they will have the overall effect of simplifying the policy for employers and workers, so that it is very clear what happens when a shift is both curtailed and moved at the same time. They therefore prevent us from ending up with a whole load of litigation to decide what the correct outcome will be.

I reassure the shadow Minister that the changes will not be rushed: they will not be implemented before 2026, which will give us time to consult further and provide some more information on how the measures will work in practice so that employers understand what is expected of them. We will provide clear guidance throughout.

Many employers already guarantee hours, give reasonable notice of shifts, and make payments when they cancel shifts at short notice, so they will not need to alter their behaviour at all. In fact, data from the Chartered Institute of Personnel and Development suggests that around 33% of employers already pay some form of compensation for shifts cancelled with less than 24 hours’ notice.

[Greg Smith]

I am grateful to the Minister for his explanation of amendments 31 and 32. As he said, these amendments clarify the maximum amount of payment and the hours to which a payment relates in cases where there is a cancellation, movement or curtailment at short notice of a qualifying shift that the worker has agreed to work for the employer. Amendment 31 establishes that the payment should be for the hours that would have been worked.

The amendments make sense given the policy direction of the Bill but, once again, I gently suggest—as I will probably do multiple times during our discussions—that it is unclear why these provisions could not have been included in the Bill on its introduction. They seem like a fundamental part of the Bill. I would be grateful if the Minister could explain why it took so long to come to the conclusion that this was the way forward.

[Justin Madders]

I will address that point, which I am sure we will hear on numerous occasions from the shadow Minister. He will be aware that it was a manifesto commitment to introduce the Bill within 100 days, which we are very pleased to have been able to adhere to, but that meant that not every element of policy was ready. As we have continued to consult, engage and develop our thoughts in this area, it has become apparent that it is possible to add to the Bill at this stage, to close some loopholes and provide some clarity. That is why the amendment was tabled.

Amendment 31 agreed to.

Amendments made: 32, in clause 3, page 21, leave out lines 3 to 13 and insert—

“(a) where a shift has been cancelled, the hours that would have been worked if the shift had not been cancelled;

(b) where a shift has been moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the hours that would have been worked during the original shift;

(c) where a shift has been moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the hours that would have been worked during the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed;

(d) where a shift has been—

(i) curtailed but not moved, or

(ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift,

the hours that would have been worked if the shift had not been curtailed, or moved and curtailed.”

This amendment has the effect of clarifying the hours to which a payment under proposed section 27BO(1) of the Employment Rights Act 1996 relates in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision.

Amendment 33, in clause 3, page 21, line 26, leave out “three” and insert “six”.

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

Amendment 34, in clause 3, page 21, line 31, leave out “three” and insert “six”.

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

Amendment 35, in clause 3, page 21, line 36, leave out “three” and insert “six”.

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

Amendment 36, in clause 3, page 21, line 40, leave out “three” and insert “six”.—(Justin Madders.)

This amendment is consequential on amendments 33, 34 and 35.

[Justin Madders]

I beg to move amendment 37, in clause 3, page 22, line 11, after “must” insert “—

(a) make a declaration to that effect, and.

(b) ”.

This amendment and amendment 38 require an employment tribunal that finds a complaint under proposed section 27BS of the Employment Rights Act 1996 well-founded to make a declaration to that effect.

[The Chair]

With this it will be convenient to discuss Government amendments 38 to 41.

[Justin Madders]

Proposed new section 27BT of the 1996 Act makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that either was not given or was inadequate or untrue.

Amendment 37 will require the employment tribunal to additionally make a declaration in cases where the employer failed to make a payment for a qualifying shift, confirming that the worker’s rights have been violated. The declaration will be accessible not only to the directly affected worker but to others, including those working for the same employer. That will ensure that it is clear to other workers where and how such payments should apply if they have a shift cancelled, moved or curtailed in a similar way.

Amendment 38 will require the employment tribunal to additionally make a declaration where an exception applied and a notice was not given or where the notice was inadequate or untrue, confirming that the worker’s rights have been violated. Again, that will ensure that workers always receive a remedy in such cases, even where the tribunal decides that an award of compensation is not justified in the circumstances. That should ensure that it is clear to other workers where exceptions do and do not apply if they have a shift cancelled, curtailed or moved in similar circumstances.

Mandatory declarations of that nature are a common remedy across employment law. The amendments are in line with other similar provisions that concern complaints to the employment tribunal. Proposed new section 27BT also makes provision for the tribunal to order an employer to pay a worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.

Amendments 39 and 41 will allow an employment tribunal discretion to award an appropriate level of compensation in cases where an exception applied but the employer either failed to give notice or gave an inadequate or untrue notice. That will remove the need for a tribunal to take an all-or-nothing approach by awarding the full, maximum amount or nothing. The amendments will instruct an employment tribunal to consider the seriousness of the matter when determining what payment to award the worker, which might include, for example, considering whether the employer had acted in bad faith.

That is a more appropriate approach than under the previous drafting, and there may be cases where the maximum award is not reasonable. For example, if a worker has a shift curtailed by an hour and their employer relied on an exception but did not give notice of that, it would not be logical for their award to be greater than the amount that would have been owed for the curtailment of a single hour. The award itself is discretionary and it is appropriate that the payment amount should equally be discretionary up to a specified amount, which will allow employment tribunals to make awards that are just and equitable to all parties.

On amendment 40, proposed new section 27BT makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue.

The amendment is minor and technical, correcting drafting so that the provisions do not make reference to a scenario that could never arise. An employer cannot be found both to have unreasonably failed to give a worker notice of an applicable exception in relation to a payment, yet also to have been liable to make that payment and have failed to do so: either no exception applies and payment is due, or an exception applies and a notice should be given as no payment is due. The amendment removes the potential confusion caused by the drafting as introduced. I apologise for that, but as the Committee will appreciate that we have been working to a very swift timetable. We hope that brings some clarity to the situation.

[Greg Smith]

The word “clarity” is doing quite a lot of heavy lifting there, so I will probe it a bit. Amendments 37 and 38 concern provisions in the Bill about how employees may make a claim to an employment tribunal where they have not been paid or received reasonable notice of shifts, or the employer had purported to give notice in compliance with the rules on right to reasonable notice, but in a way that was inadequate.

The amendments specify that if an employment tribunal finds claims to be well founded, it must make a statement to that effect. Why were these amendments, along with those increasing the time limit from three to six months, not included in the Bill when introduced? Those provisions do not seem like a loophole being closed or a minor technical drafting error; they seem fundamental to what the Government are trying to do here, so that was one of the bigger surprises. Why were they not locked into the Bill from day one?

I understand the point about political priorities and commitments to publish something in 100 days, because sometimes these things take a lot longer than 100 days to get right. Whether one agrees with the principle and practicality of the provisions or not, it is tough on those in the civil service and those who are drafting the Bill to be able to deliver something of this complexity in 100 days, but these seem to be fundamental provisions. I would also be grateful for clarity from the Minister about how much the Government estimate that the provisions in these amendments, as well as in the wider Bill, will increase employment tribunal claims.

On amendments 39 to 41, if an employee brings a claim to an employment tribunal for their employer breaching the duties imposed by the Bill, amendment 39 provides that the court can award compensation up to a cap to be set in regulations. We are back to our old friend: we do not know what those regulations are going to be. I have a set of what I hope will be straightforward questions for the Minister. What is the cap planned to be? I am sure that it will be open to consultation, but again, the Government must have a window in mind. That is a reasonable question that businesses up and down the land will be interested to know the answer to, so that they can start preparing their viewpoints and evidence base to present to the Minister for any future regulations.

In our oral evidence sessions, we heard witnesses ask several questions about how the provisions on the right to reasonable notice of cancelled, curtailed or moved shifts will work in practice, because there is precious little detail in the Bill. Can we now have that detail? Will the Minister provide a timeline by which the Government intend to provide some information not just to this House, but to businesses up and down the country, about how the measure will work?

When will we be able to see the draft regulations? It would be helpful if we could see them during the passage of the Bill, be it prior to Report, which would be the best case, or before it goes to the other place for consideration, so that the House of Lords can fully explore them, which would be better than nothing. Can the Minister explain why the clauses on award of cost are proportionate to the benefit that they may bring to employers?

[The Chair]

Government amendment 37—sorry, Minister, I should allow you the opportunity to respond.

[Justin Madders]

I am sure that the shadow Minister and the whole Committee are delighted that I have the opportunity to respond.

The shadow Minister asked some perfectly reasonable questions. On the first issue, it is a well-established principle that employment tribunals have the right to make declarations in a whole range of claims. Again, I can only refer him to my previous answers with regard to why that was not in the original Bill—we were up against a tight timetable. It is also worth bearing in mind that the Bill will not become law until it has passed through this House and received Royal Assent, so when it finally appears before the public, all those issues will be ironed out. I give him the same answer about regulations, because—as we are doing as we go along—the Bill can be amended here, on Report and in the other place.

It may be that the final Bill does not entirely reflect what we have before us, so it would be premature to draw up regulations at this stage. However, part of our ongoing dialogue with businesses, workers’ representatives and trade unions is about what regulations we will look at.

[Greg Smith]

I understand the Minister’s point, but this is a Government Bill; I accept that it is derived from their manifesto and from their political priority. Notwithstanding the Minister’s perfectly correct point that the Bill can be amended before it receives Royal Assent, does he at least accept the point that as this is a Government Bill, they should at least give a starting point on any consultation or proposal that people could then work around, as a test of reasonability for business owners and the wider public? People around the country, as well as Members of this House, could then let their views be known as they seek to challenge and amend the Bill.

[Justin Madders]

We are taking this approach because we want to be reasonable and engage with businesses and trade unions on what the shape looks like. That is why the full consultation, which will look at the broad range of issues, is not yet ready. It is not really in the spirit of that for us to nail down everything in the Bill. Most employment rights have their detail in secondary legislation.

There are some clear principles about the levels of compensation that we will set out. Clearly, a worker should not be compensated for more than the number of hours that he or she has lost. If other heads of loss occur, there are already principles about wages, for example, whereby ongoing losses have to be compensated for. That is the kind of thing where the detail ought to be put into secondary legislation and consulted on fully, which is what we intend to do.

[Mr Peter Bedford (Mid Leicestershire) (Con)]

The one thing that businesses do not like is uncertainty. Unfortunately, there are so many gaps that need filling in the Bill that it makes it very difficult for businesses to plan for the future—for example, about how many people they will employ, what risks they will take on, and how to budget. Does the Minister accept that the Bill is so full of gaps that it causes more uncertainty for businesses and makes it harder for them to plan?

[Justin Madders]

The hon. Member is trying to have it both ways. If we had set out too much detail in the Bill, he would no doubt have criticised us for not engaging and consulting, and for being too dogmatic in our approach. That is why we have taken the approach that we have. We want to engage, consult and get the detail absolutely right, because we are clear that the Bill will be effective only if it has buy-in from all concerned. That is why the detail will follow.

Amendment 37 agreed to.

Amendments made: 38, in clause 3, page 22, line 15, after “tribunal” insert “—

(a) must make a declaration to that effect, and

(b) ”.

See the explanatory statement for amendment 37.

Amendment 39, in clause 3, page 22, line 16, leave out

“of a specified amount to the worker”

and insert

“to the worker of such amount, not exceeding the specified amount, as the tribunal considers just and equitable in all the circumstances”.

This amendment has the effect of providing an employment tribunal with discretion, up to an amount to be specified in regulations, as to the size of a monetary award in respect of a complaint under proposed section 27BS(1)(b) or (c) of the Employment Rights Act 1996 (rather than there only being discretion as to whether a monetary award is made, but not the amount).

Amendment 40, in clause 3, page 22, leave out lines 18 to 20 and insert

“(2)(b) relating to a notice given in purported compliance with section 27BQ(2) if the tribunal makes an order under subsection (1)(b) relating to the same payment to which the notice related.”

This amendment has the effect of removing from proposed section 27BT(3) of the Employment Rights Act 1996 reference to a scenario that could not arise (because an employment tribunal could not make an order under both section 27BT(1) and (2) if no notice had been given).

Amendment 41, in clause 3, page 22, line 20, at end insert—

“(4) In determining—

(a) whether to make an order under subsection (2)(b), and

(b) if so, how much to order the employer to pay,

an employment tribunal must have regard, in particular, to the seriousness of the matter complained of.”—(Justin Madders.)

This amendment supplements amendment 39.

[The Chair]

I consider that the principles of the clause have been fully debated during discussion of the amendments, so if there is to be a clause stand part debate, it should be short.

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

[Justin Madders]

Thank you, Mr Mundell. I am not sure whether that was directed at me, other members of the Committee, or maybe all of us.

[The Chair]

It was intended to be helpful to you, Minister.

[Justin Madders]

I am sure you always intend to be helpful, Mr Mundell.

I will briefly go through the provisions of clause 3. I appreciate that we have covered a lot of the issues already, but I think it is important to set out what the clause does in the round, because after discussions on quite a few amendments, we may not have followed exactly where we are.

It is obvious that predictability of income is a crucial part of a secure future. We need to address the scourge of insecurity at work. Equally, we understand that businesses want clarity about their obligations. The right to reasonable notice of shifts and of changes to them is important and will be enforceable at employment tribunals. While we regard the right to reasonable notice as appropriate, we also see a need for a rather speedier mechanism to provide some reimbursement to a worker when a shift is cancelled, moved or shortened at short notice. Of the 2.4 million people potentially eligible for these new rights, we estimate that around 600,000 have shifts cancelled at short notice. Clause 3 clearly sets out the obligations on both workers and employers, and I will go through the amendments that it will make to the Employment Rights Act 1996.

New section 27BO of the 1996 Act outlines the new duty that will be placed on employers to make a payment to workers if they cancel, move or curtail shifts at short notice. The duty will apply to workers on zero-hours contracts and arrangements, and workers on contracts to be specified in regulations. When workers have the timing of their usual shifts set out in their contract but are sometimes asked to work extra or longer shifts, the duty will also apply to the additional hours. The new section also provides the power to set what period constitutes short notice; what the payment amount should be; how quickly the payment should be made; when notice is treated as having been given; and the maximum delay of a shift, or bringing forward of a shift, for which payment is not due.

New section 27BP adds several supplementary details on the powers to make regulations provided in new section 27BO and therefore on the functioning of the right to payment. It restricts the period that can be set in regulations as “short notice” to no more than seven days, and it ensures that the payment due to a worker cannot be more than they would have been paid had they worked their original shift. It allows for regulations to vary the amount of the payment according to how short the notice of cancellation is. It also provides that the contracts in scope of the right to payment may be specified in regulations by setting an hours or pay cap.

New section 27BQ provides a delegated power to make exceptions to the right to payment, and states that where an exception applies, the employer must notify the worker of it and explain why it is considered to apply. The section enables regulations to specify how the notice of the applicable exception should be given and when it is deemed to be received.

New section 27BR ensures that a worker is not entitled to receive payment both under their contract and under new section 27BO in respect of the same hours. New section 27BS enables workers to complain to employment tribunals that their employer has failed to comply with the duties. New section 27BT establishes the remedies where a complaint to a tribunal is found to be well-founded.

I commend the clause to the Committee.

[Greg Smith]

Mindful of your comments, Mr Mundell, I will not speak at length to the clause, other than to underline the points that I and my hon. Friend the Member for Mid Leicestershire have made about certainty. I understand the political priorities of the Government, and I understand the principle of what they are trying to do. However, as my hon. Friend said, businesses need to be able to plan.

I accept that not all legislation can give detail on everything to the nth degree, but I think it is reasonable and proportionate for businesses small, medium and large in this country to expect to be given at least a hint of what is coming down the line. That way, they can begin the process of planning and putting their thoughts together, so that when the consultations come they can give as full and frank an account of their circumstances as they can, and describe what the proposals will mean for them and their employees, so that the Minister can come to a reasonable judgment before laying any regulations.

The Opposition are not opposed to the principle of the clause, but because of the holes in it, we cannot support it.

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

--- Later in debate ---

Amendments relating to sections 1 to 3

[Justin Madders]

I beg to move amendment 42, in clause 4, page 23, leave out lines 34 to 39.

This amendment is consequential on NC11.

[The Chair]

With this it will be convenient to discuss Government new clause 11—Orders and regulations under Employment Rights Act 1996: procedure.

[Justin Madders]

Amendment 42 is another technical amendment that concerns not the function of the Bill but parliamentary procedure, so if we want another dry, technical debate, we certainly have the opportunity.

Clause 4 makes provision for new section 27BW to be inserted into the Employment Rights Act 1996. New section 27BW(3) would allow regulations made under part 2A of the 1996 Act, relating to the provisions concerning zero hours, that are subject to different or no parliamentary procedure to be included in regulations subject to the affirmative procedure. New clause 11 amends section 236 of the 1996 Act and makes the same provision to allow the combining of instruments, but applies to any orders and regulations made under that Act, rather than to only those made using powers in part 2A. This is a technical amendment intended to ensure that implementation can be undertaken as efficiently as possible.

On what instruments might need to be combined, we will be setting out further details required to implement zero-hours provisions through secondary legislation, but existing powers in the 1996 Act, such as the power in section 10 regarding pay statements, may play a part in supporting implementation. It may be that it would be appropriate to exercise that power to prescribe that pay statements must specify where payment has been made under proposed new section 27BO for the short-notice cancellation, movement or curtailment of a shift. Should that be the case, this provision would allow that amendment to be made in the same regulations as others to be made under new powers being inserted by this Bill that are—I am sure that the shadow Minister will be pleased to hear this—subject to the affirmative procedure. That will mean that provisions to be detailed in regulations that would have been subject to the negative procedure, or no procedure, receive greater scrutiny from Parliament before becoming law.

In the light of the amendment made to section 236, amendment 42 removes the provisions that apply only to part 2A of the 1996 Act, as they will be redundant.

[Greg Smith]

As the Minister says, this is a very technical amendment—and who doesn’t love a dry, technical debate? However, I am not sure that anyone seeking a dry, technical debate over some hours is going to be happy. I gently suggest that the Government should reflect on the procedural nature of these provisions and their intersection with the Employment Rights Act 1996, which is very complex to unpick and fully understand, not necessarily for those who sit in this House, or indeed in the other place, but certainly for businesses out there, which will require a lot of professional services and advice to navigate it.

On the particular, technical nature of the procedure, I heard what the Minister said about the affirmative procedure, but can he explain something to the Committee? This question could result in a very short answer or a very long one—I apologise for asking it if it prompts a longer one, although in some ways that would be better—but can he explain which powers in the new clause will not be subject to the affirmative procedure? Is there a list? And—it would be remiss of me not to throw this in—why could this not have been on the face of the Bill from day one?

[Justin Madders]

I am afraid that I will not be able to tell the shadow Minister what will not be subject to the affirmative procedure. I think that the intention is actually for the amendment to bring everything that is in scope of the clause under the affirmative procedure, but I will endeavour to confirm that and come back to him, if that is okay.

Amendment 42 agreed to.

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

[Justin Madders]

I will not detain the Committee too long on clause 4. It contains amendments to the Employment Rights Act 1996 related to clauses 1 to 3, which we have just debated.

Proposed new section 27BU defines various terms used in clauses 1 to 3, and the rest of part 2A of the 1996 Act, relating to zero-hours workers and other similar workers. In particular, it copies across the definition of “zero hours contract” from section 27A of the 1996 Act. A zero-hours contract exists where the worker undertakes to work for the employer when the employer makes work available to them but there is no obligation on the employer to make work available. While that might be quite a lengthy explanation, I think that we all understand what we mean by that. New section 27BU also defines “zero hours arrangement” as an arrangement under which an individual works when the work is provided but

“the employer is not required to make any work available to the individual, nor the individual required to accept it”.

--- Later in debate ---

[Greg Smith]

I will not speak at length on this clause because, as the Minister said, it has a bit more clarity in it than many of the others. He has just outlined the new definitions, but perhaps I can put to him an example case showing how they would meet someone on what I believe he may describe as a zero-hours contract, but which also has some compensation for being a zero-hours contract. I will explain what I mean by that.

This is a live example of someone who explained their working relationship with their contracted employer to me the other day. He is required to be up, dressed and ready to go at 5 am every day—perish the thought—and he will receive a call by 5.30 am about whether there is a number of hours to be worked that day. He receives a payment for doing that. Each week, he receives a payment for being up at 5 am and being ready to go if required, but of course if he is not required he does not receive anything further for the shift or the full day of work.

There are probably not many such contracts in the economy, but that is a real-life one. I happened to be briefed on it by the individual involved the other day. The employee is happy. Not everybody is happy at 5 am, but he gets his payment for doing that. He accepts the quid pro quo that he may or may not get a full day’s work off the back of that. If he does not, he can go back to bed or do whatever he fancies with the rest of the day. How do the definitions in the Bill fit somebody who is quite happy with such an arrangement?

[Justin Madders]

At the all-party parliamentary beer group’s reception last night, the shadow Minister and I talked about pubs. His question sounds perfect for a pub quiz for retired employment lawyers: it is the sort of thing that might end up getting taken to a group of KCs to understand the precise relationship. My best guess is that it would be classed as a zero-hours arrangement and would therefore be covered by the legislation. However, I do not wish to set a precedent inadvertently, so I will take further advice and come back to the shadow Minister. I hope he has some more interesting teasers like that: I am sure the entire employment law community are furiously scrabbling through their books to find the answer to his conundrum.

Question put and agreed to.

Clause 4, as amended, accordingly ordered to stand part of the Bill.

Schedule 1

Consequential amendments relating to sections 1 to 3

[Justin Madders]

I beg to move amendment 43, in schedule 1, page 106, line 8, at end insert—

“In section 27 (meaning of ‘wages’ for purposes of Part 2 of the Act), in subsection (1)—

(a) after the paragraph (ce) inserted by the Neonatal Care (Leave and Pay) Act 2023 insert—

‘(cf) a payment under section 27BO(1) of this Act (payment for a cancelled, moved or curtailed shift),’;

(b) renumber the paragraph (ce) inserted by the Employment (Allocation of Tips) Act 2023 as paragraph (cg).”

This amendment provides for a payment under proposed section 27BO(1) of the Employment Rights Act 1996 in respect of a short-notice cancellation, movement or curtailment of a shift to be treated as “wages” for the purposes of the provision about protection of wages in Part 2 of that Act.

The right of a worker to bring a claim for unlawful deduction of wages is an important principle in employment law. It is right that payments for cancelled, moved and curtailed shifts are included in this provision. Although a worker can already claim through the employment tribunal that their employer has not made a payment for a cancelled, moved or curtailed shift, in some cases it may be more appropriate for workers to bring a claim under the unlawful deduction of wages provisions, for example if there are instances of non-payment covering a period of months or years; if they want to claim for financial loss as a result of non-payment, for instance because of bank charges; or if a claim covers non-payment of cancellation payments and other wages.

The amendment will provide workers with an alternative remedy for non-payment, in addition to the new provisions in proposed new sections 27BS and 27BT of the Employment Rights Act 1996. That is in line with other statutory rights to payment, such as remuneration during suspension of work on medical grounds. I hope that that is a clear explanation.

[Greg Smith]

I do not say so often in this Committee, but that was actually a helpful clarification. I can only come back to a point that I will make countless times in this Committee: why on earth could that not have been clearer at the start, when businesses up and down the land were submitting their written evidence, or indeed when they were providing us with oral evidence last week? I stress that it is helpful to have that clarity now. I take no issue at all with the Minister’s explanation, other than to gently repeat the point about certainty and planning going forward.

[Justin Madders]

I am grateful for the shadow Minister’s support for the amendment.

Amendment 43 agreed to.

Amendments made: 44, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BD(5A) or (5B)”.

This amendment is consequential on amendments 11 and 14.

Amendment 45, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BEA(1) or (2)”.—(Justin Madders.)

This amendment is consequential on amendment 13.

[Justin Madders]

I beg to move amendment 46, in schedule 1, page 107, line 16, at end insert—

“(4A) A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by the worker’s employer done on the ground that—

(a) the duty imposed by section 27BA(1) applies to the employer in relation to the worker and a particular reference period, or

(b) the employer believes that that duty so applies.”

This amendment ensures that a worker’s right not to be subjected to detriment includes a case of detriment on the ground that the worker is, or the employer believes the worker is, entitled to a guaranteed hours offer under proposed new section 27BA of the Employment Rights Act 1996.

[The Chair]

With this it will be convenient to discuss Government amendment 47.

[Justin Madders]

Amendment 46 will broaden the detriment provisions in respect of the right to guaranteed hours. It will ensure that a worker has a right not to be subjected to detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to an offer of guaranteed hours. The existing provisions protect workers from detriment only where a worker accepts or rejects an offer of guaranteed hours or proposes to do so; where the worker declines to work a shift, as they believe their employer has failed to comply with their obligation in relation to notice of shifts; or because the worker alleges the existence of such grounds to take a case to an employment tribunal.

Amendment 47 is a consequential amendment that clarifies the definition of “reference period” in amendment 46.

The amendments will extend the protections to ensure that detriment to the worker arising from the right to guaranteed hours can be addressed. The detriment experienced by the worker may include cases in which a worker’s contract is terminated. Whether a worker experiences a detriment on those new grounds will be a matter for the employment tribunal to determine in the usual manner.

[Greg Smith]

I am grateful for the Minister’s explanation. The Opposition can clearly see that amendment 46 will ensure that a worker’s right not to be subjected to detriment includes a case of detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to a guaranteed-hours offer under proposed new section 27BA of the Employment Rights Act 1996. The question—our old friend—is why that was not in the Bill in the first place.

I would be grateful if the Minister explained what sort of detriment the Government are concerned about and are trying to prevent with the amendments. It is another point of clarity: it is about giving businesses an early understanding of where the Government are trying to go. This is one of the areas in legislation that could be widely open to legal opinion, if I may put it that way: a sort of lawyers’ charter, whereby if a bunch of lawyers are put in a room they could easily come up with many different interpretations of detriment and of the scope of amendment 46.

We see uncertainty in legal opinion all the time on the legislation that passes through this House. Once the Bill, in some form, has become an Act—as undoubtedly it will, given the parliamentary arithmetic—and a case comes to court, it will be helpful for the judiciary to look back at the parliamentary debate and see the full meaning of this provision.

[Justin Madders]

I am grateful for the shadow Minister’s question. I recall on one or two desperate occasions quoting Hansard in an employment tribunal. I always felt, “If you’re explaining, you’re losing,” as the old phrase goes.

We are not actually creating a new category of detriment. Detriment is something that already applies across a whole range of employment rights, so we are not inventing something that is not already there. At the moment, there is quite a live academic debate about how far the extent of detriment reaches, which we may come to at a later point.

To answer the shadow Minister’s points, the amendment will not create a whole new area of litigation about understanding what detriment means in this circumstance. It will still be the same detriment that would apply in other employment-related claims.

Amendment 46 agreed to.

Amendment made: 47, in schedule 1, page 107, line 29, at end insert—

“(7) In this section ‘reference period’ has the same meaning as in Chapter 2 of Part 2A (see section 27BA(4)).”—(Justin Madders.)

This amendment is consequential on amendment 46.

[Justin Madders]

I beg to move amendment 48, in schedule 1, page 107, line 37, at end insert—

“(2A) In subsection (2), for ‘and (6)’ substitute ‘, (6), (7) and (7A)’.”

This amendment makes technical changes to section 49 of the Employment Rights Act 1996. The reference to subsection (7A) is consequential on amendment 49.

[The Chair]

With this it will be convenient to discuss Government amendment 49.

[Justin Madders]

The amendments will ensure that the provisions on the maximum compensation awarded by a tribunal for detriment cases will be workable for cases involving the termination of an arrangement that is not a worker’s contract. Where there is no worker’s contract in place, it may be very difficult to determine the individual’s termination date. Let me clarify what I mean by that, if I can do so in such a technical area.

A zero-hours contract is a contract in which the worker undertakes to work for the employer when the employer makes work available to them, but there is no obligation on the employer to make work available. It is a worker’s contract because it involves obligations on the worker to undertake work. A zero-hours arrangement is an arrangement under which the employer is not obliged to make work available, and the worker is under no obligation to accept work when offered. Zero-hours contracts are workers’ contracts because there is an undertaking to work, whereas zero-hours arrangements are not workers’ contracts because there is insufficient mutuality of obligation.

There are particular complexities in applying legislation that involves a particular effective date of termination to those on zero-hours arrangements. The worker’s exact termination date may be difficult to determine and the calculation of compensation will therefore be circumstance-specific, meaning that it is more appropriate for the employment tribunal to use its discretion in arriving at such sums.

The amendment will ensure that in such cases, the amount that a tribunal awards will be left to its discretion. While there will not be a set maximum compensation for an individual on a zero-hours arrangement, as opposed to an employee on a zero-hours or low-hours contract, that maximum will be left to the discretion of the employment tribunal, which has the expertise to draw from the existing thresholds in compensation and apply them specifically to these types of cases.

[Greg Smith]

I have two questions for the Minister—hopefully simple ones—about Government amendments 48 and 49, which relate to the maximum award for a detriment claim.

First, there does not seem to be a set limit for the maximum award. Can the Minister explain that? Can he give an indication whether a maximum award will be set further down the line, either via a consultation process or in regulations?

My second question is possibly less straightforward, but it will be important as we look at the practical application of the Bill once it receives Royal Assent and comes into force. How much does the Minister envisage that tribunals may award under amendment 49?

[Justin Madders]

I am grateful for the shadow Minister’s questions. They cannot be answered in the round, as all cases will be very fact-specific. The maximum that a tribunal awards will be down to the circumstances in which workers find themselves. With a zero-hours contract, there will be a whole range of issues relating to the kind of work that they would have expected if the detriment had not taken place. It is a well-established principle that a tribunal will award what is just and equitable in the circumstances. Tribunals are well versed in understanding the factors that they would need to take into account in making such awards. The shadow Minister tempts me to get into details, but as this is a Bill Committee and not an employment tribunal, I cannot give him the kind of detail that he is looking for.

[Greg Smith]

I am grateful to the Minister for that answer. I understand the broad principle that he outlines, but there could be a mechanism, without putting a pounds-and-pence limit on any award, to bake in some formula that would cap an award according to proportion of original pay, contracted hours, length of service or some other factor. For the clarity of the record, is the Minister saying that no such framework is envisaged and that it will be a totally open-ended question for any employment tribunal?

[Justin Madders]

The amendments relate to detriment claims only, whereas the shadow Minister’s question is a slightly broader one. The point about compensation in other situations would be far more detailed. As this is about people on irregular contracts who may have suffered a detriment that we cannot possibly predict in advance, it is normal to say at this stage that the usual principles of the just and equitable compensation that an employment tribunal would award will apply in those circumstances.

[Laurence Turner]

Does the Minister agree that if a cap of some sort were introduced, there would be a risk that, as we have seen in other cases, people who have been subject to a detriment may seek other routes, particularly under equalities legislation where damages are uncapped? That is an existing problem that has added to the strain in that part of the employment tribunal system.

[Justin Madders]

There is a danger that we will get too prescriptive about this. There will be a relatively small number of cases in which there is detriment, but they are all going to be very fact-sensitive. That is why we have framed the amendment in this way.

[Mr Bedford]

The hon. Member for Dundee Central referred to how a lot of businesses will have insurance for various eventualities. As a maximum is not specified, have the Government considered the unintended consequences of such provisions on businesses’ ability to insure against such instances?

[Justin Madders]

We are not talking about the general running of a business, with reference to shift notice and cancellations; we are talking about a very specific set of circumstances in which an employer’s act is considered to be detrimental to the employee and gives rise to an employment tribunal claim. I am sure that there are insurance products that cover all employment tribunal claims, but this is about individual acts of penalisation against employees or workers. This is not a departure from existing legal principles; it is well set out and understood by lawyers and HR practitioners. I do not envisage that this is a provision that will be greatly used, but it is an important principle to have in the Bill.

Amendment 48 agreed to.

Amendment made: 49, in schedule 1, page 107, line 39, leave out from beginning to end of line 11 on page 108 and insert—

“(7A) Where—

(a) the complaint is made under section 48(1BA),

(b) the detriment to which the worker is subjected is the termination of the worker’s contract, and

(c) that contract is not a contract of employment,

any compensation must not exceed the compensation that would be payable under Chapter 2 of Part 10 if the worker had been an employee and had been dismissed for a reason specified in section 104BA.”—(Justin Madders.)

This amendment relates to the maximum award of compensation by an employment tribunal in a detriment claim under section 48(1BA) of the Employment Rights Act 1996. The change achieved by the amendment is that the maximum award in cases involving the termination of an arrangement that is not a worker’s contract is at the tribunal’s discretion.

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

Employment Rights Bill (Eighth sitting)

Justin Madders Excerpts

Committee stage
Thursday 5th December 2024 Public Bill Committees

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

I beg to move amendment 50, in schedule 1, page 108, line 34, at end insert—

“or the employer believes that that duty so applies, and”.

This amendment extends proposed section 104BA(3) of the Employment Rights Act 1996 (dismissal is unfair if done to avoid giving a worker a guaranteed hours offer to which the worker is entitled under proposed section 27BA of that Act) to a case where an employer believes a worker is entitled to such an offer.

[The Chair]

With this it will be convenient to discuss Government amendments 51 and 52.

[Justin Madders]

It is a pleasure to see you in the Chair, Sir Christopher. As is now our custom, I will start by referring to my entry in the Register of Members’ Financial Interests and my membership of the GMB and Unite trade unions.

Government amendment 50 will expand the existing protections for employees who are dismissed as a result of employers seeking to avoid the new duty to offer guaranteed hours. It will ensure that an employee who is dismissed because their employer believes that the right to guaranteed hours applies will benefit from unfair dismissal protections. As drafted, the provisions apply only if the duty to offer guaranteed hours actually applies. That could leave a loophole whereby an employee who is dismissed because their employer mistakenly believes that the obligation applies would have no protection from unfair dismissal. All employees deserve protection from unfair dismissal, whether or not they are eligible for guaranteed hours. The amendment will ensure that equal protection is in place.

Government amendment 51 is a small amendment that will remove wording in the Bill about when the termination of a worker must take effect in order for them to be regarded as unfairly dismissed for the purpose of proposed new section 104BA(3) of the Employment Rights Act 1996. The Government have concluded that there is no need to set out when the termination occurred. The amendment will make the Bill’s meaning clearer, as it is logical from its provisions that that would be during a reference period or the corresponding offer period. Remaining silent on the effective date of termination also follows the precedent set for other rights under the 1996 Act.

Government amendment 52 is consequential on Government amendment 51.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to see you in the Chair, Sir Christopher. I understand the Minister’s explanation of the amendment, which appears to be a logical consequence of the other provisions on guaranteed hours, although we have the old chestnut about why it was not in the Bill when it was first introduced. It seems a pretty straightforward measure that reflects where the Government have always said they are coming from, so it is peculiar that it is coming at this stage. I might go so far as to ask the Minister whether Government amendments 50 and 51 are in fact correcting mistakes, as opposed to adding to the original drafting of the Bill.

I have some specific questions about the amendments. How does the Minister envisage that it will be proven that an employer believes that a worker is entitled to an offer of guaranteed hours? Some clarification would be helpful, not just so that the Committee and the House can understand the scope of the amendment, but so that businesses can plan for what might be coming down the line.

May I also ask the Minister for clarity about what amendment 51 will mean for dismissal during the reference period? I am not sure that we have enough clarity on that point to satisfy the Committee. Given how the schedule and the amendments are drafted, there is a possibility of a legal opinion indicating that it is possible for employers to dismiss employees during the reference period. From everything else that the Minister has said, I would be surprised if that were the Government’s intent. When he sums up, it will be useful if he clarifies whether that is indeed his intent. Is that one of the many loopholes that he is seeking to shut down with the Government’s amendments, and does it need shutting down further? Or is it the Government’s intent that that should be possible for employers within the scope of the Bill?

[Justin Madders]

I am grateful for the shadow Minister’s questions. I feel that we are embarking on an employment law masterclass, although I am not sure that I consider myself a master.

The first point was about how an individual would demonstrate that an employer had believed that they were entitled to particular rights and therefore had reason for dismissal. It is akin to existing case law and legal precedents from other jurisdictions: a set of facts can be presented to the employment tribunal to determine its judgment. I accept that it is not the easiest thing to prove, but that is how the law is currently structured and there will be no departure from that.

On the second point, clearly we would not want this to have the unintended consequence of not relating to a dismissal during the reference period. Proposed new section 104BA(3) logically demonstrates that if there is a termination during the reference period, the same protections would still apply. I am happy to seek further advice, but my understanding is that the Bill, as drafted, covers that situation. Clearly we would not want a loophole of that nature. I hope that that deals with the shadow’s Minister’s questions.

Amendment 50 agreed to.

Amendments made: 51, in schedule 1, page 108, leave out lines 39 to 41.

This amendment removes a requirement about the timing of a dismissal from proposed section 104BA(3) of the Employment Rights Act 1996.

Amendment 52, in schedule 1, page 109, leave out line 1. —(Justin Madders.)

This amendment is consequential on amendment 51.

[Justin Madders]

I beg to move amendment 53, in schedule 1, page 109, line 30, leave out “last” and insert “latest”.

This amendment and amendment 54 concern the calculation of a week’s pay for the purposes of an award of compensation by an employment tribunal following a complaint under proposed section 27BF of the Employment Rights Act 1996. The amendments ensure that the rules work for all such complaints.

[The Chair]

With this it will be convenient to discuss Government amendment 54.

[Justin Madders]

Amendment 53 will ensure that the provisions in section 225 of the Employment Rights Act 1996 on the calculation date for the purposes of calculating a week’s pay will work in relation to the new right to guaranteed hours. It is a small amendment: it will replace the word “last” with “latest” to reflect the fact that the date of termination will not necessarily correspond with the final day of the reference period. It sits alongside Government amendment 54; combined, the amendments will ensure that there is clarity for employment tribunals on calculating a week’s pay for the purpose of determining compensation for a well-founded complaint brought under proposed new section 27BF. The maximum number of weeks’ pay that may be awarded by a tribunal for a claim brought under proposed new section 27BF is to be defined in regulations.

[Greg Smith]

This is a minor and technical amendment that brings, on this specific point, the clarity that we have been asking for on so many other clauses and Government amendments. It appears to be correcting defective drafting in the version of the Bill originally presented to the House.

The need for such amendments suggests that the arbitrary target to publish the Bill in 100 days has once again been found wanting. As I have said before, I understand the political imperative for the Government to have done so, but it brings little comfort to employers or employees, who need certainty and clarity on the Bill. At least with Government amendments 53 and 54, that certainty and clarity has now come. I urge the Government to apply the same rigour to their other amendments so that businesses planning for the future can do so—perhaps not with jubilant support for the Bill, but with an understanding of what the Government are legislating for.

Amendment 53 agreed to.

Amendment made: 54, in schedule 1, page 109, line 31, at end insert

“on which the worker was employed by the employer under a worker’s contract”.—(Justin Madders.)

See the explanatory statement for amendment 53.

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

[Justin Madders]

Schedule 1 will make various amendments to the Employment Rights Act 1996 and the Employment Tribunals Act 1996. Among those amendments, which are consequential on clauses 1 to 3, I highlight the insertion of proposed new section 47H of the Employment Rights Act 1996, to make provision for a worker not to be subject to detriment on various grounds relating to the right to guaranteed hours. The employer cannot penalise the worker for accepting an offer of a guaranteed hours contract, for example, or for challenging an offer that is not in compliance with the obligations on the employer regarding guaranteed hours.

Amendments have been made to extend these detriment provisions to situations in which a worker brings a claim or alleges the existence of a claim in relation to a breach of the duties relating to information rights and notice requirements. The detriment provisions are also extended to situations in which a worker suffers a detriment because they qualify for the right to guaranteed hours or the employer believes that they do. Whether a detriment has occurred in such instances will of course be for an employment tribunal to determine. Likewise, the employer cannot penalise the worker for declining to work a shift that the worker reasonably believed was offered with unreasonable notice. This is an important right that helps to address the potential power imbalance between an employer and a worker who is seeking to enforce their statutory rights.

Schedule 1 will also insert proposed new section 104BA of the Employment Rights Act, which makes provision for an employee to be treated as unfairly dismissed if the reason—or principal reason—for the dismissal is that the employee accepted or rejected, or proposed to accept or reject, an offer of guaranteed hours. Likewise, an employee will be treated as unfairly dismissed if the employer was under a duty to offer guaranteed hours but the employer dismissed the employee during the reference period to avoid having to comply with that duty. Amendments have been made to ensure that unfair dismissal protections extend to cases where a worker is dismissed because the employer believes they have a duty to offer guaranteed hours, even if that belief is mistaken.

[Greg Smith]

My argument is similar to the arguments that we have had in substantive debates on previous groups of amendments to the schedule. With this Bill, we have consistently seen an approach of legislating first and consulting second. I understand why that might be appropriate in some circumstances, but certainly for many of the schedule 1 provisions that the Minister has outlined, businesses will find it inadequate. They will find it too difficult to start making their business plans, their plans for growth, their plans for new contracts or their plans to expand in the next financial year, the year after, or even the year after that. It is not unusual for businesses to engage in medium and long-term planning, but too many aspects of the schedule mean that they cannot. Real businesses in the real world are trying to scope out where their next capital investment, their next expansion or their next acquisition of another business is coming from.

Because of those holes, the Opposition are deeply concerned that the Bill, which was incredibly rushed to meet an arbitrary 100-day political rather than legislative objective, will bring too much uncertainty to the economy and to business. At the end of the day, judging from the evidence that we heard in last week’s four sittings, it is having the net effect that businesses will simply take a deep breath and draw back from employing more people. They will not take the risk of taking on new hires. Given our debates on Tuesday, I am thinking particularly of that all-important risk of giving a second chance in life to a marginal candidate.

Sometimes an employer is not entirely convinced that a candidate is the best fit for their workplace, for any of a number of reasons—they may be a rehabilitated former offender or they may have had a number of struggles in life—but is willing to give them a chance. We heard from witnesses that those employers who were going to give people in those circumstances that chance in life—that chance to better themselves—might not now do so. That would be an absolute tragedy for the individuals involved and a travesty of justice when it comes to employment numbers in this country.

--- Later in debate ---

[Greg Smith]

I am grateful to the hon. Gentleman. There are clearly thousands of businesses in this country; I notice that he did not name a single business from his constituency. I actually know Northfield very well: my late grandmother worked in Walter Smith butchers in Northfield for many years, well into her 80s.

I fully understand the need for any Government to have ongoing dialogue with business, but I gently say to the hon. Gentleman and all Government Members that there is a big political cost when any Government legislate too swiftly without fully thinking things through and without clarity of thought and of objectives. Yes, there are principles—they are clearly Labour principles—running through the Bill, but there is not that clarity of thought as to many measures in schedule 1.

I say gently, perhaps from bitter experience in the four and a half years prior to the general election, that I know what happens when legislation is rushed. From the Nationality and Borders Act 2022 to the Illegal Migration Act 2023, there were multiple pieces of legislation, none of which hit the nail on the head. Perhaps they were a little bit too rushed. They failed to meet the objective that we, the previous Government, clearly set out to achieve of ending small boat crossings in the channel.

I raise that clearly very out-of-scope point only as a warning to the Government that if they insist on going too quickly and rushing the Bill through just to meet the headline of having published it in 100 days, it could turn out to be a very painful experience not just for them as a Government, but for the business community in this country. These are the businesses that will be the backbone of our economy and will actually create the jobs that I think the Government also want to see, but the Bill might have the unintended consequence of damping them down.

[Justin Madders]

My irony meter has reached overload. I think it is fair to say that in the last four years of chaos under the previous Government, uncertainty was brought to a new level. That was not about legislation; it was just about the way that the Government operated, or failed to operate, as the case may be.

Let me try to put the shadow Minister’s mind at ease about the process. We consulted extensively in opposition, we consulted in government before the Bill was published, and we are continuing to consult. The Bill will set out the broad powers that the Government wish to take in respect of employment rights. There will then be more detailed consultation as we get into the secondary legislation, where the detail—the real meat and veg of this law—will be dealt with. There is not going to be a rush for this provision to be enacted, because we understand that it is important to get the details right. Many of these measures will not come into force until 2026, because we want to get this right.

We want to make sure that we take businesses with us and listen to their concerns, to workers’ concerns and to trade unions’ representations. The impact assessment is clear that there is no expected impact on the number of jobs available.

[Greg Smith]

The Minister talks about further consultation. Can he give a commitment right here, on the record, to consultation on all the measures in schedule 1 and the rest of the Bill that go through to his 2026 deadline? First, can he commit that 2026 really is the deadline? Secondly, can he commit that consultation with trade unions and with business will have equal billing, and that one of the two will not outweigh the other?

[Justin Madders]

I think there was a suggestion there that we may favour one stakeholder group over another. I assure the shadow Minister that when we tot up the engagements that we have had so far, the number of businesses and business organisations is far in excess of the number of trade unions. Actually, we want to consult with everyone, broadly: we do not think that there should be an arbitrary limit on who we discuss this with.

On the time limits, the “Next Steps” document is very clear about the timetable. If it takes more time, it takes more time. We do not want to rush the Bill through and create unintended consequences of the type that the shadow Minister is rightly concerned about. We want to get it right. That is why we are committed to consulting as we go forward.

[Nick Timothy (West Suffolk) (Con)]

On the point about process: at the point at which the Bill came before the House for a Second Reading, how many of its clauses were already subject to revision within the Department?

[Justin Madders]

I was not privy to the drafting of individual clauses—the Office of the Parliamentary Counsel does that, and it is a separate organisation from the Department—but I can certainly write to the hon. Gentleman with details on which clauses we expected to be amended. It is fair to say that we expected a number of clauses to be amended when the Bill was published.

It is important that we get this right. The Bill is a Bill, not an Act, so it will continue to evolve; there will then be further detailed consultation on implementation and the regulations. That is why I believe that the shadow Minister’s concerns are ill-founded.

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

--- Later in debate ---

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

[Justin Madders]

Clause 5 is the first of several clauses that will repeal previous legislation, although it may not be the most controversial of our repeals. The clause will repeal the previous Government’s Workers (Predictable Terms and Conditions) Act 2023, which if commenced would have brought in a right for workers to request a more predictable working pattern. Requests could still be turned down by the employer. That approach is clearly different from the right to guaranteed hours that we have set out in the Bill. We do not want to confuse employers and workers with two different models, so the Bill will repeal the 2023 Act entirely. Nevertheless, the work that was done to develop the 2023 Act has been useful in the drafting of our new measures and will continue to be taken into account as we evolve and develop our policies.

We want predictability and security to be the baseline in all jobs, creating an economy that works for all. We think responsibility for offering guaranteed hours should therefore rest with the employer. Without guaranteed hours, workers do not have any form of certainty as to their earnings, making it difficult for them to apply for credit or a mortgage, rent a flat, plan for major events such as weddings or holidays, or even manage day-to-day expenses.

In addition, when people have a better idea of how many hours they will be working, it is easier for them to organise their family and social life, plan time together and organise travel and childcare—all things that are just so important for the wider welfare of our society. These provisions of the Bill will apply to all employers, levelling the playing field so that best-practice employers are rewarded rather than placed at a competitive disadvantage against employers who want to place risk wholly on the worker.

[Greg Smith]

On the one hand, the Minister says that he wants certainty. On the other hand, he is repealing legislation that is but a year old. I fully appreciate that a new Government will want go through the legislation that the previous Government put on the statute book: it is vital in our democracy that we maintain the principle that no Parliament can bind a future Parliament, and I fully acknowledge and accept that the Government have a mandate to deliver their manifesto. However, I gently put it on the record—I direct this point towards the Minister—that certainty does not come from abolishing year-old legislation that businesses have only just started thinking about, let alone implemented.

From the broad thrust of the Minister’s comments, I understand the direction that he is taking, but I say so with the same caveats that I have raised in previous debates. If certainty is to mean anything, it has to come with the detail. I think clause 5 is pretty clear, but if further changes or consultations are to come, they will not do anything positive for business confidence. They will only cause greater uncertainty.

[Justin Madders]

I think it is fair to say that we signalled our intention to repeal the 2023 Act shortly after taking office. It had not actually been implemented, so it is not a case of creating additional burdens. I am sure the shadow Minister will concede that if we had allowed it to take its course, it would have created a set of regulations, involving time and expense, that would only have been replaced in short order with another set of rules. The problem with the 2023 Act is that it would still create a huge power imbalance for the employer, as the Low Pay Commission recognised when it expressed its concerns.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Exclusivity terms in zero hours arrangements

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

[Justin Madders]

Clause 6 will amend section 27B of the Employment Rights Act 1996 to reflect the new definition of “zero hours arrangement” in clause 4, which will apply to the whole of part 2A. As has been discussed in relation to clause 4, the definition has been amended to ensure that it does not inadvertently exclude any zero-hours workers in cases where they have a contract with the employer but the contract does not, in itself, make them a worker. The definition of “zero hours arrangement” captures those who have an arrangement to work for their employer when work is provided but have no obligation to accept work, and the employer has no obligation to provide it. Such an arrangement between the employer and the individual could, however, include other obligations that amount to a contract, albeit that they are not a workers’ contract. The clause will ensure that individuals caught in that situation are also covered by the Bill.

On a technical point—I put this on the record for clarity—the definition of “non-contractual zero hours arrangements” in section 27B of the 1996 Act is amended by clause 6, but a new definition for the whole of part 2A will be inserted by clause 4. The definition of “non-contractual zero hours arrangements” in part 2A is being changed by clause 6, as well as being inserted by clause 4, which may well be commenced after clause 6 for the rest of the provisions. The changes in clause 6 will ensure that the definition in section 27B operates as intended before the commencement of other provisions on zero-hours arrangements. The definition in section 27B will then be repealed on commencement of the other provisions, as is provided for in schedule 1.

I hope that that was clear to everyone. I commend the clause to the Committee.

[Greg Smith]

I feel that we have gone over those details multiple times, particularly on Tuesday, so I will not take up a great deal of time. However, it is important to put on the record the Opposition’s concern about cases such as the one that I outlined in this morning’s sitting. The Minister conceded that it probably was a zero-hours contract, but it did have an element of certainty of pay as that individual was contracted to be up at a certain time of day to find out whether he had work that day, so there was payment for it but not necessarily guaranteed hours. Such cases still need an answer, whether from the Government’s legal counsel or within the Department. I take the Minister at his word: he said this morning that he would look into such cases and test how the Bill will apply. That is as relevant to clause 6 as it is to other clauses that we have discussed.

The worst-case scenario is that the Bill becomes too prescriptive and takes away arrangements that individuals enter into freely and want to enter into; perhaps it suits them to do so. I accept that that is probably not the majority of cases, but there will be people out there in the economy who perhaps do not need to work. Perhaps they do not need the money. There are such people, believe it or not—I am certainly not one of them. There are people who want to take on a zero-hours contract for something to do. I fully accept and place it on the record that that will be a very small number of people, but if they are completely wiped out by some of these prescriptions without flexibility, that will be a problem for the economy, much as it is if employers just take everybody on a zero-hours contract and offer them nothing further. That, equally, would be a tragedy.

I understand where the Government are coming from in clause 6. I understand the principles behind it. Again, however, I urge the Minister to double-kick the tyres and check that there will not be unintended consequences that have a negative impact on employment in this country.

[Justin Madders]

I am grateful for the shadow Minister’s comments. I have been reflecting on his scenario from this morning. Actually, the first thing I thought about over lunch was how the employer would be checking that the individual was up and dressed at 5 o’clock in the morning to make sure he had complied with the terms of his contract. However, the intention behind the Bill is to make sure that we do not get into lots of debates about whether someone is covered by this legislation or whether everyone who is in some sort of arrangement or contract is covered by it. Of course, if they do not wish to have an offer of guaranteed hours, they are entitled under the legislation not to accept it. I think that this clause will bring clarity and consistency across the board in that respect.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Right to request flexible working

[Greg Smith]

I beg to move amendment 136, in clause 7, page 25, line 5, at end insert—

“(1AZA) But where the employer is—

(a) the Security Service;

(b) the Secret Intelligence Service, or

(c) the Government Communication Headquarters,

the test of reasonableness in subsection (2)(b)(ii) does not apply, and the notification under subsection 1(aa) need not explain why the employer considers that it is reasonable to refuse the application on that ground or those grounds.”

This amendment would exclude the security services from the Bill’s provisions on flexible working.

Amendment 136 is essentially a probing amendment—I make that clear from the outset—but one that should go to the nub of exactly where the Government want to go with this measure, not least bearing in mind the Minister’s comments at the end of the last debate about ensuring that everybody falls under the same set of rules. There may be organisations where it is impractical for their employees to be under the same set of rules. The amendment seeks to probe the matter of exempting those working in the security services from clause 7. We define the security services as MI5, GCHQ and the Secret Intelligence Service.

The Regulatory Policy Committee has explained that the Government have not proved that the measures on flexible working are necessary or undertaken any proper assessment of the costs to business. We therefore want to probe the Government’s thinking on how the provisions might apply in practice. There may be certain occupations, such as the security services, where it is harder for the employer to agree requests for flexible working. I am sure that everyone can see the practical realities and the potential consequences for national security and the safety of everyone in our great United Kingdom if the security services were to suddenly have flexible working arrangements.

Has the Minister given any consideration to which sectors may find these provisions either more difficult or completely impractical to comply with? The amendment takes the example of the security services, where irregular hours are worked. I am sure that hon. Members can think of other occupations, such as policing—and perhaps ours, if I may be so bold, Sir Christopher—where irregular hours are more than commonplace.

We would like to understand how the provisions of the Bill will apply to the security services and to understand the Minister’s thinking as to why. That is the critical question in politics—my early mentor in politics, the late, great Eric Forth, was clear that it is the only question that matters in politics—so I put it to the Minister. We want to understand the balance between the right to request flexible working and public protection. Again, I do not believe that any Member of this House wants to undermine public protection and the safety of our nation. The first duty of Government is the defence of the realm and the security of its citizens.

The security services will not be the only profession that might find the requirements difficult to administer. Will the Minister let us know, when he responds to what I repeat is a probing amendment, where the Government stand? What is his assessment of those areas that simply will not be able to comply with the provisions of the Bill? What safeguards will the Government put in place for them? We seek to understand the practicalities of the requirements that the Government are seeking to impose.

--- Later in debate ---

[Alex McIntyre]

Sadly, I am not very funny. Would M’s HR adviser not say, “That might have a detrimental impact on your performance, Mr Bond”? That flexible working request could therefore be reasonably denied.

[Justin Madders]

I am sure that was in “GoldenEye”!

[Greg Smith]

I think that has probably been a plot line already. The hon. Member for Gloucester understands the point that I am making here within certain elements of employment in this country. This was a probing amendment, and we will come back to the principle of this discussion—although maybe not the detail of the Bond example—later in the Bill’s passage. For the time being, I urge the Minister to have those conversations with colleagues in other parts of Government to double-check that they are fully appreciative of the measures in this Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

--- Later in debate ---

[Justin Madders]

Clause 8 provides for the removal of the waiting period from the statutory sick pay system, meaning that all eligible employees are able to access statutory sick pay from the first day of sickness absence. The current system of waiting until the fourth day of sickness before SSP is paid means that many people are forced to make the difficult choice between going into work when they are unwell or receiving no income. That is bad for individuals but also bad for business.

Removing the waiting period will support employees in taking the time off they need to recover from illness and reduce the spread of infection. Under the current rules, the system encourages workers to drag themselves into work when they are unwell. The TUC gave an example of workers in a mental health hospital in Blackpool who had to go on strike because they did not have access to day one sick pay and could not afford to take the day off. Those NHS workers felt that they were being forced to go into work. Obviously, they work in a clinical environment, so they were also putting patients at risk.

--- Later in debate ---

[Uma Kumaran]

I would like to highlight a few examples in addition to those mentioned by my hon. Friend the Member for Birmingham Northfield.

According to the Nuffield Trust, these changes will greatly benefit social care workers and workers on zero-hours contracts who, as has been highlighted, have inconsistent access to statutory sick pay, let alone occupational sick pay schemes, to cover costs such as rent and bills. As we have heard, and we have seen in our constituencies, many of those workers worked through the pandemic, risking their own lives and risking infection, putting themselves in harm’s way, because they did not have a fallback—they did not have statutory sick pay.

A more generous system of statutory sick pay should be seen not only as a right for workers, but as part of our national defences, including against pandemics. In particular, the changes will benefit low and outsourced workers such as porters, cleaners and housekeepers. I recently visited Newham General hospital in my constituency, where I saw at first hand the impact that porters and cleaning staff are having. I heard from the hospital’s chief executive officer how the hospital is unable to function without those essential staff.

Health Equals found that 28% of employees are reliant on statutory sick pay, one in 10 workers get nothing at all if they are sick and 82% of workers reported that flexible working arrangements allowed them to maintain a good level of personal health and wellbeing. I spoke earlier about mental health provisions. Evidence from Mind has shown us that employees with mental health issues are reliant on SSP. Without access to it, they are forced into debt, increasing the strain on their mental health.

The Centre for Progressive Change highlighted a recent study that shows that the cost of presenteeism for the private sector for mental health alone is around £23 billion a year to our economy, which is more than the cost of absenteeism, which is around £5 billion a year. The Institute of Public Policy Research has shown that workers in the UK are among the least likely to take sick days and that the presenteeism culture costs our economy £25 billion annually, due to the impact on productivity. We are speaking about workers today, but highlighting the impact on business and our economy helps to demonstrate why these measures are so important.

I will finish with one final statistic. The Centre for Progressive Change highlighted modelling by WPI Economics that shows that the implementation of an increased SSP rate, alongside other changes put forward in the Bill, such as the removal of waiting days and lower earnings limits, would deliver substantial economic benefits to the UK, including net gains of up to £800 million for businesses. That is £1.7 billion for the Treasury and £2.1 billion for the wider economy. Those are not small sums of money. Those would have a huge impact on our economy, through measures that put workers at the heart.

[Justin Madders]

We have had a good debate. Most Members have spoken positively about the need for this change. Obviously, this was a measure brought in temporarily by the previous Government, during covid. They recognised the particular issue at the time.

Before I turn to the shadow Minister’s comments, I wish him the best of luck in the Mid-Buckinghamshire pantomime. I hope he does not become the George Lazenby of the Conservative party as a result. He raised two perfectly reasonable questions. The first was on Northern Ireland. I can assure him that it was not an oversight. It has been introduced as an amendment because, as this is a transferred power to Northern Ireland, we need their consent before it can be included. I think he will understand that putting it in without getting that agreement might have been counterproductive.

On the second point that the shadow Minister made, about abuse of the provision, of course employers already have the power to deal with employees whom they feel are falsely taking time off sick. Whether that is day four or day one, those powers are already there.

My hon. Friend the Member for Scarborough and Whitby made a very powerful speech to highlight the impact on particular groups. The evidence we heard from the Women’s Budget Group last week was particularly important in that respect. Other Members who spoke, my hon. Friends the Members for Birmingham Northfield and for Stratford and Bow, raised a whole plethora of examples with pieces of evidence in support of the policy. I think it is one that is generally supported.

To deal with the point made by the hon. Member for Dundee Central about the level of statutory sick pay, he may not have seen my opining on SSP at the evidence session last week, or the famous comments from the former Health Secretary about it not being enough to live on. I recognise that. Unfortunately, however, I have to give him the stock answer, which is that the actual level is set by the Department for Work and Pensions. He made a fair point about people on long-term sick, because there is a huge interplay between people on long-term sick and the benefits system, but it is in the Department’s gift to set the rate and to look at how it interplays with accessibility to other benefits, which of course depends on people’s individual circumstances.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Statutory sick pay: lower earnings limit etc

[Chris Law]

I beg to move amendment 158, in clause 9, page 26, line 17, leave out “the prescribed percentage of”.

--- Later in debate ---

[Justin Madders]

I am grateful to the hon. Member for that helpful run-through of some of the issues that we are actively considering. He will be aware that a consultation on the issue closed only yesterday, so I would not want to pre-empt the outcome by accepting the amendment today. We understand the various arguments he has advanced that the level should be higher. He will not be surprised to hear that contrary arguments are put forward by some groups around having an incentive to take sick days when they are not needed.

Some of the modelling figures that the hon. Gentleman has come up with do not quite fit with the ones we have on where people would lose out at certain rates, but that will be considered in the round when we formally respond to the consultation. We hope to do so early in the new year, because we wish to put this into the Bill before it finishes its progress. It is something we are actively considering at the moment. I should be grateful if he would withdraw the amendment, so that we can take full account of the consultation that we have just completed.

[Chris Law]

I have listened with great interest to the Minister. I thank him for his comments and for the consultation that concluded yesterday. It would be helpful to hear today what the conclusion of the consultation is. I have made it crystal clear that none of us present want to see those at the lowest end of earnings worse off than they currently are. The Bill has been brought forward in good faith and good will, I am sure, by the new incoming Government to improve the lives of everyone, most of all those at the most vulnerable end. I have spoken to employers and employees quite widely about this, and the feeling I hear constantly is that this is a no-brainer. Delaying would be very difficult.

[Justin Madders]

I understand the point the hon. Member is making, but he will understand that when a Government Department—in this case the Department for Work and Pensions—undertakes a formal consultation, it is obliged to consider all responses before coming to a conclusion. That is why it is premature to agree to his amendment.

[Chris Law]

I thank the Minister for his intervention, but this is not a DWP issue. We are not talking about the level of SSP. We are talking about a sentence in the Bill that puts in a threshold that will make people on the lowest incomes worse off. That is an issue for the Minister for Employment to address rather than DWP. The level of SSP more widely has been discussed, and that may be an issue for DWP to consider. I think there will be disagreement over what that level should be. I have already quoted the TUC’s £320 a week, and I have suggested the national living wage. I look forward to that consultation, but this amendment seeks to strike a sentence out, nothing more.

[Justin Madders]

The very issue that the hon. Member is putting forward in his amendment is the issue that the Department for Work and Pensions is consulting on at the moment, which is why it would be premature to make a decision at this stage.

[Chris Law]

I need to ask for your advice, Sir Christopher, because at this point I would press the amendment to a vote but I want to be charitable and open to understanding what we are expecting from this consultation and when we would be able to bring this issue back—perhaps even during this Committee.

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 6—Statutory sick pay in Northern Ireland: lower earnings limit etc.

Government amendment 107.

[Justin Madders]

Clause 9 provides for the removal of the requirement for an employee to earn at or above the lower earnings limit to be eligible for SSP. This requirement means that currently up to 1.3 million people, primarily women, are not entitled to receive SSP from their employer. This group are some of the lowest-paid in society, meaning that they and their families are most at risk of financial hardship if they cannot work. The clause ensures that all eligible employees can access statutory sick pay and the peace of mind it brings when they need to take time off due to illness.

However, we do not want to create a situation where anyone is entitled to receive more through SSP than they would otherwise earn. The clause therefore provides that an employee will be entitled to a certain percentage of their average weekly earnings or the current flat rate of SSP, whichever is lower. The clause therefore includes a power for the Secretary of State to determine that percentage rate by secondary legislation. However, it is our intention that the percentage rate is enshrined in primary legislation. I hope that gives the hon. Member for Dundee Central some comfort. We therefore published a consultation, which closed on 4 December, asking respondents what that percentage rate should be. We will now take time to carefully consider the responses we have received, before tabling an amendment to the Bill.

The changes that we are bringing in through the Bill will mean that up to 1.3 million low-paid employees will now be entitled to statutory sick pay and all eligible employees will be paid from the first day of sickness absence irrespective of their income, which will of course benefit millions of employees.

It is important to highlight that many employers choose to go further and provide more financial support to their employees during a sickness absence, with around 60% of all eligible employees being entitled to contractual sick pay. Those who need additional financial support while off sick are able to claim additional benefits through the welfare system, depending on their individual circumstances.

New clause 6 extends to Northern Ireland the benefits of strengthening statutory sick pay by removing the requirement to earn at least the lower earnings limit and creating a new percentage rate. These measures will ensure that all eligible employees have access to statutory sick pay irrespective of their income level, with the peace of mind that this brings when they need to take time off work due to sickness. The clause includes a power for the Minister for Communities to determine that percentage rate by secondary legislation.

Statutory sick pay is, as we have discussed, a transferred matter in relation to Northern Ireland. However, Northern Ireland has historically maintained parity with Great Britain on social security matters, including statutory sick pay. The Minister for Communities, Gordon Lyons MLA, has agreed to ask Westminster to legislate on the Northern Ireland Assembly’s behalf and to seek a legislative consent motion for the proposed changes in order to maintain parity in relation to statutory sick pay.

Finally, amendment 107 is consequential on new clauses 5 and 6; it limits the extent of the new clauses to Northern Ireland only.

[Greg Smith]

I shall be brief. On the Northern Ireland issues, I accept the Minister’s earlier explanation.

I have one straightforward question. The Minister says he has consulted and will consider the responses around the percentage rate going forward, and has said he will seek to amend the Bill to lock the percentage rate into the face of the Bill. The question remains when that amendment is likely to come. I appreciate it takes time to go through responses; it is unlikely to be done overnight, and potentially with Christmas coming up that will get in the way of any chance of the matter’s being considered by this Bill Committee. Therefore, is the Minister envisaging such an amendment on Report? Does he anticipate that it may come forward when the legislation is in the House of Lords? At what point will we see the detail? I do welcome the Minister’s commitment to get it into primary legislation, because that is important and is consistent with some of the things that I have been arguing for in relation to other amendments, but in order for Parliament to take a considered decision, it is important that we know when the amendment is likely to come—later in Committee, on Report in the House of Commons, or in the other place.

[Justin Madders]

That is a reasonable question. It is another Department’s consultation so there are only so many levers I can pull, but I envisage that the amendment will be tabled at Report stage at the latest. I hope that is sufficiently clear.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

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

Employment Rights Bill (Fifth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Greg Smith]

It is a pleasure to serve under your chairmanship, Ms Vaz, on this bright and breezy December morning. It will be the new year by the time we finish our consideration of the Bill—let us see whether we are all as fresh after Christmas as we are today.

I shall briefly talk through the Opposition’s rationale for each of the grouped amendments. The lead amendment, amendment 137, seeks to exclude small and medium-sized enterprises from the Bill’s provisions on zero-hours contracts. The amendment is part of a set of amendments in my name intended to ameliorate the burden of the Bill for small and medium-sized businesses, defined as those with 500 or fewer employees.

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

Will the shadow Minister give way?

[Greg Smith]

I know where the Minister is going.

[Justin Madders]

I refer to my registered interests and my trade union membership.

The shadow Minister might well have anticipated my question. Obviously, we acknowledge that the Bill is being brought through at good pace, which means that sometimes mistakes occur. I cannot help but notice that the amendment on today’s paper is slightly different from the one that appeared in previous weeks, which excluded businesses with 500 or more employees, rather than 500 or fewer. Will he clarify whether he is seeking to cosy up to big business or that was indeed an error?

[Greg Smith]

I am almost grateful for the Minister’s intervention. He was very perceptive to note the minor clerical error in the amendment that was previously submitted. That has now been corrected. Of course, the Conservative party stands with all business, but particularly with small and medium-sized enterprises, which, I can clarify for the record, we define as those with 500 or fewer employees.

The Regulatory Policy Committee has rated as red the identification of options and the choice of the policy in the Bill on zero-hours contracts and guaranteed hours. That means, in effect, that the Government have not justified the provisions in the Bill, the problem they are trying to solve, why they are needed or why they would work. The provisions on zero-hours contracts will create additional burdens on all businesses. The Opposition are particularly concerned about smaller businesses, which have less resource and resilience to cope with the measures: they do not have large HR or legal departments to help them navigate the additional requirements that will be placed on them. The Institute of Directors told us in its evidence that

“crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal.”––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 11, Q4.]

I am confident that the Minister will try to refute these points and somehow paint the amendment as creating a two-tier workforce, which it would not. I urge the Government to recognise the bureaucracy burden and risk that the zero-hours contract provisions will create for smaller businesses in particular. Providing for guaranteed offers of hours after 12 weeks would create a lot of additional administration for our small and medium-sized enterprises. I gently ask the Minister how credible he thinks it is that employees will reject offers made and that the process will have to start all over again.

Amendment 138 is similar to amendment 137 in what it seeks to do, but excludes small and medium-sized enterprises—again, defined as those with fewer than 500 employees—from the Bill’s provisions on flexible working requests. The RPC has said that the Government have presented “little evidence” that employers are refusing requests for flexible working unreasonably. When I talk to businesses in my constituency, I do not come across any complaints that flexible working is being refused unreasonably; I find many businesses that have, certainly in the post-covid era, made huge offers to their employees of working from home, mixed hours and working around the school run, or whatever it might be. It does not seem to me to be a particular problem in most businesses that I speak to. I want to give the Minister the opportunity to present some of his evidence for the necessity of these provisions. What led to the decision that these flexible working clauses are needed? If they are not, I urge the Government to accept our amendment to exempt SMEs from them.

--- Later in debate ---

[Greg Smith]

I am grateful to the hon. Gentleman. I will not seek to mislead the Committee by saying that I am across the Presidents Club case, but I am aware of the Manning case. Undoubtedly there are holes in the law, because harassment does take place in workplaces and outside workplaces up and down the land. Conservative Members categorically want that stamped out and want those guilty of those offences to face justice. However, as we go through the Bill line by line, we need to ask ourselves, “Does this proposal work, or are there other laws—criminal laws if necessary—to ensure that the authorities have the absolute ability to bring such prosecutions and ensure that those guilty of these horrible crimes are brought to justice?”

Amendments 141 and 142 are part of the set of amendments around ensuring that SMEs are not given undue burdens. These are about excluding employers with fewer than 500 employees from the removal of the qualifying period for the right not to be unfairly dismissed. RPC, which has had a lot to say about the Bill, has said that the day one unfair dismissal rights are estimated to cost businesses around £43.2 million per year.

[Justin Madders]

The shadow Minister may be familiar with this line of questioning, because it is basically the same issue as earlier. I may have misinterpreted the way that amendment 141 interplays with the Employment Rights Act 1996, but the amendment refers to

“an employer with 500 or more employees,”

although the explanatory note then says 500 or fewer. Will the shadow Minister clarify what the intention is?

--- Later in debate ---

[Laurence Turner]

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

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

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

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

[Justin Madders]

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

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

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

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

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

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

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

[Justin Madders]

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

[Chris Law (Dundee Central) (SNP)]

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

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

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

[Justin Madders]

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

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

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

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

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

[Jon Pearce]

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

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

[Justin Madders]

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

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

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

--- Later in debate ---

[Michael Wheeler]

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

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

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

“not exceeding a specified number of hours”,

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

[Justin Madders]

I am grateful to the shadow Minister for clarifying that this is a probing amendment, and possibly also that it is a ridiculous amendment, although I am not sure that that is the best way to persuade us to accept it. He will not be surprised to hear that we will not accept it.

An important point has been raised, and my hon. Friend the Member for Worsley and Eccles has asked a number of questions about what the amendment is trying to achieve. As I understand it, the amendment would mean that only workers on zero-hours contracts or arrangements, and those with two hours or fewer guaranteed per week, would be covered by the regulations. It would also remove the power to make regulations setting the maximum number of hours for those low-hours contracts to be in scope of the provisions.

The low-hours concept will be crucial in determining how many workers end up in scope of the right to guaranteed hours. That is partly intended as an anti-avoidance measure, to prevent employers from avoiding the duty to offer guaranteed hours by moving a worker on to a contract guaranteeing a very small number of hours. I think we can all see that, if the shadow Minister’s amendment were accepted, we would soon be talking in the lexicon about two-hours contracts, rather than zero-hours contract, and that would not deal with the questions of stability and security that we are trying to address.

We will consult on what we mean by low hours. We think it is very important to get this point absolutely right, and we understand that pitching it at a level that works for both the business and the worker will be absolutely critical. We are committed to working in partnership.

We are looking to clarify the provision in regulations. We understand that there are arguments about the detail being in the Bill, but the counter-argument is that putting the details in regulations gives us more flexibility to review the provisions as we move along. It is fair to say that we do not expect the number to end up being two hours. I do not think there has been any evidence put forward for that.

[Greg Smith]

As I said to the hon. Member for Worsley and Eccles, sometimes something a little obscure is needed in order to get noticed and to get an answer.

There is a serious question on what constitutes a low-hours contract. The Minister has just said he will consult, but presumably he will consult on a range—the consultation document will not be a blank piece of paper inviting people to say exactly what they think. What is the range in which the Government believe a low-hours contract should be defined, which will be within that consultation he has promised?

[Justin Madders]

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

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

[Chris Law]

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

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

--- Later in debate ---

[Justin Madders]

The hon. Gentleman asked so many questions that I did not have a chance to make a note of them. A lot of the issues he raised will be dealt with by amendments that we will debate today or later in the Bill’s passage, but I take his points. We are trying to legislate in a way that prevents unintended consequences and loopholes. I would say to the shadow Minister, “Watch this space,” and encourage him to take part in the consultation, but we cannot accept his amendment.

[Greg Smith]

It is no surprise that the Government are unwilling to accept the amendment; it is a probing amendment, so we would probably have been quite upset if they had. The fundamental point I still want to get at, while making clear the probing nature of the amendment and that we will withdraw it, is that while I am half reassured by the consultation, it is critical that there is clarity and definition for businesses out there that want to understand what is coming down the line in this piece of legislation. Everyone knows the parliamentary arithmetic at the moment; this will become law at some point during this Session.

While it is never an ideal scenario to legislate first and consult second—it is far better to do it the other way round—we need greater clarity, as soon as is humanly possible, on how the Government intend to define low-hours contracts as they go to consultation. I cannot accept that there will not be some floor and ceiling within the range that the Government seek to consult on, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Greg Smith]

I beg to move amendment 152, in clause 1, page 3, line 2, after “not” insert

“on a fixed-term contract or”.

This amendment will exempt a worker on fixed-term contracts from being categorised as a “qualifying worker”.

This too will hopefully be a relatively straightforward debate. The amendment seeks to exempt workers on fixed-term contracts from being categorised as qualifying workers. This is a probing amendment in my name, on behalf of the official Opposition. We would like to understand why it is proportionate, particularly for small and medium-sized enterprises, for the provisions on guaranteed hours to apply to workers on fixed-term contracts, given that we still do not know the length of the reference period. Is it proportionate for a business to have to make an offer of guaranteed hours to a worker whose contract will in any event come to an end just after the reference period? In last week’s evidence sessions, some witnesses talked about workers who are perhaps on a very specific construction project with a definite end point—when the railway station is built, there is nothing left to build on that project—so it is not possible to escape the fixed-term nature of some contracts. Without knowing the length of the Government’s proposed reference period, it is impossible to make a judgment on the effect of extending guaranteed hours to workers on those fixed-term contracts. I should be grateful if the Minister would provide clarity on that, so that this probing amendment can be put to bed, or further questions can be asked down the road.

[Justin Madders]

The shadow Minister will not be surprised to hear that we will resist the amendment. First, it is important to note that the Bill does not ban the use of fixed-term contracts, or seek to force employers to make workers on fixed-term contracts permanent. That is not our intention. We recognise that in some cases, a fixed-term contract will be the most appropriate one for both worker and employer. For example, under the Bill’s provisions, it would be reasonable to enter into a limited-term contract where the contract is entered into for the worker to perform a specific task, and the contract will end once that task is completed. Many fixed-term contracts also already have clearly stated guaranteed hours within them.

However, where a fixed-term contract is used, we think it is important that within that fixed-term period, workers have the same right to guaranteed hours as those on permanent contracts. For eligible workers, if the fixed-term contract does not guarantee more hours than what are considered to be low hours as set out in the regulations—which we will come to in due course—and is longer than the anticipated reference period of 12 weeks, which we will continue to work on, then employers will be required to offer a guaranteed-hours contract for the remainder of the contract, reflecting the hours worked regularly over the reference period. The amendment would create a serious loophole in the legislation, allowing employers to use fixed-term contracts to evade the purposes of the legislation entirely. There would be no mechanism to prevent the use of a fixed-term contract for 12 weeks or longer, so eligible workers would not have certainty of their hours. We would open up a serious loophole, which I am afraid unscrupulous employers would exploit. I therefore ask the hon. Member to withdraw the amendment.

[Greg Smith]

I accept the points made by the Minister, but I still think there is a relative concern. We in no way, shape or form want to create loopholes—certainly not for any unscrupulous employer, and I want that to be very clear and on the record—but we do totally accept that there are some very legitimate fixed-term contracts out there, such as certain construction projects.

[Justin Madders]

indicated assent.

[Greg Smith]

I hope, from the nodding coming from the Government Front Bench, that Ministers agree with this. We will withdraw the amendment, but this point needs considerably more debate as the Bill progresses to ensure that while no loopholes for the unscrupulous are created, and that protections are there for employers around fixed-term contracts.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Greg Smith]

There are just a couple more Opposition amendments to go before we get to some Government ones. Amendments 150 and 151 propose to exclude agency workers from the provisions on the right to guaranteed hours. The provisions in the Bill relating to agency workers are another example of the Government’s not having done proper policy work before introducing the Bill. I fully understand their desire to get it out within 100 days, but sometimes, if a Government have a mandate for five years, 100 days can seem quite quick.

The Bill specifies that the right to guaranteed hours with reasonable notice of the cancellation of a shift does not apply to agency workers, but it includes a Henry VIII power to extend those provisions to agency workers at a later date. I therefore ask the Minister the following questions. Why is it not straightforwardly on the face of the Bill that those provisions apply to agency workers? Why the Henry VIII power? What is the policy decision? In the Government’s mind, are agency workers included in the principle, as well as the letter, of this legislation? We have concerns about these provisions, which could be extended to agency workers. How would the employment relationship then work? Who would dictate the hours? If it is the end user rather than the agency, surely they become the employer? It all becomes rather confusing.

Is this measure an attempt to ban agency working by the back door? I think everyone would accept that agency workers are sometimes some of the biggest heroes in our economy, as they fill gaps when full-time workers on contracts are unable to get to work that day, for whatever reason—be it sickness or anything else—particularly in key professions such as nursing, healthcare and teaching.

Until the Government can explain their intention, the Opposition do not believe it is responsible for the House to give them the powers to entirely change at a later date the policy position set out on the face of the Bill. We need clarity right now, so that this Committee, and the whole House later in the Bill’s progress, can come to a proper, informed decision.

[Justin Madders]

I am grateful to the shadow Minister for tabling these amendments. He will again be unsurprised to learn that we will not be accepting them.

The Bill fulfils our pledge to end exploitative zero-hours contracts. We are introducing a right to guaranteed hours to eligible workers on zero and low-hours contracts, to give them the greater security and stability that all workers deserve. Although workers may choose agency work because they value flexibility, they can also experience the one-sided flexibility and insecurity that we have talked about already. If we do not include a power to include agency workers, there is a risk that employers wishing to evade the Bill will simply shift their workforce on to agency work to avoid giving them rights.

[Sir Ashley Fox]

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

[Justin Madders]

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

[Laurence Turner]

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

[Justin Madders]

I am grateful to my hon. Friend for his intervention. Much employment law, particularly in relation to agency workers, is dealt with by regulations; that is appropriate because of the detail required. It is not a break with the past, albeit I accept the criticisms that we may be seen to be taking part for ourselves; I think it is entirely consistent with the way this has operated previously. It is something that we shall now consider in terms of the responses to the consultation. For those reasons, I think the hon. Member for Mid Buckinghamshire should withdraw his amendment.

[Greg Smith]

I accept many of the Minister’s points about the consultation, but as my hon. Friend the Member for Bridgwater has made clear, there is a Henry VIII power here. When legislation as wide as this is proposed, it is a big problem to have such a lack of clarity about where it will lead for agency workers, who are such a critical part of our economy and our workforce across many sectors. Given the Henry VIII element, we seek a Division.

Question put, That the amendment be made.

--- Later in debate ---

[Sir Ashley Fox]

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

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

[Justin Madders]

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

--- Later in debate ---

[Justin Madders]

I am grateful to the shadow Minister for intervening, but there is not a total lack of clarity. We have been clear all along, including when we were in opposition, that the reference period should be 12 weeks. However, we want to continue dialogue with businesses to ensure that we get the right answer to the question of how long the reference period should be for guaranteed hours. As we heard, it is an established period that has been used in the previous Government’s legislation, in the workers’ predictable terms and conditions provisions and under the Agency Workers Regulations 2010. It is an established principle in law that 12 weeks is about right for a reference period. Nevertheless, we will continue to consult and engage with businesses, trade unions and all employers’ organisations about whether it is right.

At the moment, our considered view is that 12 weeks is the right period; we certainly do not believe that 18 months is. [Interruption.] I think the shadow Minister is nodding. We do not think that 18 months is a realistic proposition. I understand the point about seasonal work, but 18 months would take us through half a dozen seasons. He will probably accept that that would not necessarily work.

As for why this measure is needed, the shadow Minister said that the Opposition do not presume that all employers set out to exploit their workforce. I make it clear that the Government do not presume that either; we believe that good businesses are good for their workers and good for the wider economy. We heard plenty of witnesses give evidence last week about the good industrial relations that they practise and the benefits for their workers. The point of the Bill, however, is that we know that not everyone is a good employer. We need to weed out bad practice, because we believe that all workers deserve the same protections in the economy.

The shadow Minister asked whether zero-hours contracts will still be available for those who might not want to work guaranteed hours. He will be aware that the legislation does not compel an individual to accept an offer of guaranteed hours; it has been set up in that way for the individual. There are examples of people—possibly including my hon. Friend the Member for Gloucester in his earlier years—whom zero-hours contracts suit better. If that is what he genuinely wants to continue working on, he is entitled to do so.

The hon. Member for Chippenham asked about the speed at which we are operating. I think she wants us to go faster, so she might need a word with the shadow Minister, who wants us to go a little slower. We are clear that we will take our time before we introduce a lot of the provisions, because we want to get the detail right and we want to engage with businesses. An awful lot of the press coverage is understandably raising anxiety levels, but a lot of it is based on speculation rather than on the law, because the law has not yet been set: the Bill has not been passed, and the regulations and the codes of practice that will follow have not been produced. It is important that we take our time, because we want to work with businesses as we produce information going forward.

The hon. Member for Bridgwater made a point about seasonal work that we heard on various occasions during our evidence sessions, but I think my hon. Friend the Member for Gloucester has answered it: if an employer knows that they will be busy for particular parts of the year, a fixed-term contract is the answer.

On the question of business experience, I can claim to have set up my own business when I was 17—I am not saying that it was a FTSE 100-listed effort or anything—and before I was elected I worked in the private sector for 20 years.

We do not think that the shadow Minister’s amendment would deliver the policy outcome that we seek. I suspect he recognises that, too, so I invite him to withdraw it.

[Greg Smith]

Of course we will withdraw the amendment, but the critical question is why the Minister has referred to 12 weeks, but it is not in the legislation. As he considers tabling amendments of his own in Committee or on Report, I urge him to lock that in, so that certainty for business is on the face of the Bill, rather than things being left open.

--- Later in debate ---

[Justin Madders]

If we put 12 weeks on the face of the Bill, would the Opposition support it?

[Greg Smith]

Our own legislation last year cited 12 weeks. There is clearly a lot in the Bill that we oppose because we just do not think it works in the interests of British business or workers, but 12 weeks would at least give us some certainty that would be consistent with the previous Government. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Employment Rights Bill (Sixth sitting)

Justin Madders Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

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

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

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

[The Chair]

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

[Justin Madders]

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

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

Amendment 6 agreed to.

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

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

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

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

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

“(or has most recently been working)”.

This amendment is consequential on amendment 10.

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

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

(a) the relevant reference period,

(b) the offer period, or

(c) the response period,

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

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

[Justin Madders]

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

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

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

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

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

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

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

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

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

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

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

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

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

[The Chair]

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

[Justin Madders]

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

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

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

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

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

[Greg Smith (Mid Buckinghamshire) (Con)]

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

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

[Justin Madders]

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

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

Amendment 11 agreed to.

[Justin Madders]

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

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

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

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

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

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

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

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

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

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

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

[Greg Smith]

Amendment 12 states that it is to be presumed by tribunals

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

if the work done

“was of the same or a similar nature”

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

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

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

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

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

--- Later in debate ---

[The Chair]

Minister, would you care to respond?

[Justin Madders]

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

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

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

Amendment 12 agreed to.

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

“Information

27BEA Information about rights conferred by Chapter 2

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

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

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

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

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

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

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

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

Enforcement”.

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

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

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

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

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

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

This amendment is consequential on amendment 11.

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

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

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

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

This amendment is consequential on amendment 13.

[Justin Madders]

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

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

[The Chair]

With this it will be convenient to discuss the following:

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

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

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

Government amendments 108 and 109.

--- Later in debate ---

[Justin Madders]

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

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

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

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

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

[Greg Smith]

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

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

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

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

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

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

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[Nick Timothy (West Suffolk) (Con)]

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

[Justin Madders]

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

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

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

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

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

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

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[Greg Smith]

indicated dissent.

[Justin Madders]

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

[Jon Pearce]

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

[Justin Madders]

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

Amendment 16 agreed to.

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

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

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

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

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

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

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

This amendment is consequential on amendment 14.

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

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

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

This amendment is consequential on amendment 15.

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

This amendment corrects an incorrect section reference.

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

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

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

This amendment is consequential on amendment 20.

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

[Justin Madders]

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

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

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

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

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

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

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

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

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

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

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

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

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

“proportionate means of achieving a legitimate aim.”

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

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

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

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

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

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

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

[Chris Law (Dundee Central) (SNP)]

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

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

[Justin Madders]

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

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

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

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

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

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

[Greg Smith]

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

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

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

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

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

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

[Sarah Gibson]

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

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

[Justin Madders]

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

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

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

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[Greg Smith]

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

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

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

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

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

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

[Justin Madders]

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

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

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

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

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

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

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

[Justin Madders]

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

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

--- Later in debate ---

[Justin Madders]

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

[Greg Smith]

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Justin Madders]

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

“from what time on which day”

and insert

“when the shift is to start and end”.

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

[The Chair]

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

[Justin Madders]

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

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

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

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

[Greg Smith]

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

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

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

--- Later in debate ---

[Anneliese Midgley]

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

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

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

Jane Gratton from the British Chambers of Commerce said:

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

Allen Simpson from UKHospitality said:

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

[Justin Madders]

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

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

--- Later in debate ---

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

[Justin Madders]

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

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

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

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

[Greg Smith]

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

Question put and agreed to.

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

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

Employment Rights Bill (Third sitting)

Justin Madders Excerpts

Committee stage
Thursday 28th November 2024 Public Bill Committees

[Greg Smith]

Q There has been a lot in the media, and I have seen this in my constituency, about workers in retail and convenience stores facing unacceptable abuse. Shoplifting is particularly problematic in many places at the moment. Do you think that some measures in the Bill will add to the difficulties in recruiting to the sector, because people are that bit more nervous about coming face to face with an abusive customer or shoplifter?

James Lowman: There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.

There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.

I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.

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

Q Good morning, everyone. Like a number of other witnesses who have spoken, I think you are generally supportive of and positive about the impact of the Bill. Do you feel that it will help to raise standards across the board and create the level playing field that we are trying to achieve?

Claire Costello: As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.

Helen Dickinson: I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.

At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.

James Lowman: I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.

It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.

Helen Dickinson: So does sickness.

James Lowman: And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.

[Justin Madders]

Q Claire, you have said that a lot of the things in the Bill are things that you do already. Could you expand on why these are things that you have done already, above and beyond your legal requirements? Is it about improved worker wellbeing? Retention? Productivity? What are the benefits that you see from taking these steps?

Claire Costello: All of the above. We pride ourselves on being as forward thinking as we can be. There is always an affordability in there, but we tend to listen very clearly to our colleagues. We work closely with our unions as well. We have focused on areas that our colleagues have told us are important to them. If I look at the bereavement policy in the Bill, for example, we built that in. We worked with Cruse, a charity that is significant in that sector, and have done something pretty unique in terms of support.

The Bill is a great development for industry. There are things that we have done, which were already quite different, in there. We do not insist that it is within the first 50 days; we ask for them to use it flexibly, because it could be a significant birthday or date. We also do not limit it to direct family members because, in today’s modern family and society, it is not always your parents who are the closest to you. We have made it based on the relationship that you have with the person that has passed, and therefore what bereavement means to you may be different.

You might want to take a week off at the beginning. It may be that you want a couple of days, and then four or five weeks later you need a couple of days, or even a year later you need to take time off because it is an anniversary and you need to support people. Things like that are where we have written policies and worked with our colleagues to do something that works for them. It is to drive retention. It is to drive engagement. It does mean that we have, hopefully, a happy group of people who want to work with us. As a member-based organisation, that is important to us.

Another good example on the bereavement policy is that I noticed that it did not cover pregnancy loss. Again, that is a policy that we have worked really hard on and I think that is an opportunity to put something slightly different into the Bill, because bereavement is bereavement. How do we make sure that it covers all aspects of it in the right way?

[Justin Madders]

Q Thank you. Helen and James, is there anything you want to add to that?

Helen Dickinson: No, the overarching point is exactly as has been said. The most successful retail businesses are ones that have highly engaged workforces that are aligned to the objectives of the business and feel part of the success of a company. People who feel like that are going to work harder and the business is going to be more successful. It is all part of a reinforcing system. If it is done well, from an individual company point of view, the exemplars are the more successful businesses. It comes back to ensuring that the Bill targets those at the bottom of the pile, those that are not engaging in the right way in having forums for employee engagement or having a two-way dialogue on flexible working or whatever it might be. It should be a win-win, but I think the risk is big in terms of making sure that we do not end up with those unintended consequences.

James Lowman: Retail is based on respect for colleagues and customers. That is how businesses work, and I think that the Bill and the principles here are very much in line with that.

[Steve Darling (Torbay) (LD)]

Q I know from conversations that I have had with businesses in my community that the Budget is set to have a significant impact on employers. Although there is a lot to welcome, broadly, in the Bill, would taking a more staged approach to its implementation be of help, or are you confident that your businesses could take this in one big bang?

Helen Dickinson: That would help. I am jumping straight in, because I feel quite strongly about this one. I do not want to rerun some of the challenges of the Budget, but the pace of additional costs that have come in for every business—particularly for retail, because of the nature of flexible work, with a lot of part-time contracts and the changing of the threshold—means that every single retailer in the country needs to look very hard at their investment plans and workforce plans, and everything that sits around that.

I think that everybody sort of breathed a sigh of relief with the clarity that the timetable was for 2026, but even now, looking at the scale of the proposals, it would be great to have more visibility over the sequencing of the different consultations, so that the industry can gear up in the right way to be able to respond effectively to them, and to make sure that we have longer than six-week periods to respond, with four consultations all going on at the same time, because that all makes it quite a challenge.

Coming back to the direct point of your question, in terms of implementation, if there are changes that need to be made in companies, I think that a run-in, or an implementation period that is workable and that gives those companies the chance to make any changes to processes, is a necessity for ensuring that the Bill lands in the right way and that we do not again end up with some of those unintended consequences. I think the Budget has unfortunately made the backdrop that much more challenging, just because of the things that people already need to deal with now and over the next six months.

Claire Costello: I will add to the piece around implementation timing: it is really easy to think of this as, “Oh, it’s straightforward; it’s about writing a policy, then, once you are in a business, sharing that with your colleagues, making sure that your line managers know what is expected of them, and landing it.” Much of what we are talking about here will require businesses, certainly larger businesses, to think about how their systems are set up as well. It changes your payroll system; it changes your workforce management system. All that is doable, but it is at the same time as other changes that organisations will be working on in the background as well. That is what we need to factor in.

On top of that, where we then have colleagues who are themselves impacted by the changes, it is about making sure that you have time to make sure that they understand that and what it means to them. It is about that run-in. It is about more than the cost; it is quite significant from the point of view of process, understanding and implementation. That is the ask, really—it is the detail and the time.

Helen Dickinson: I am sure that James will have points from a sort of one-establishment type business, but, for multi-site businesses, you could be talking about 10, 100 or 1,000 stores and distribution centres up and down the country, so we should not underestimate the significance of the need for up-front visibility of the changes.

James Lowman: The other change that has happened with the Budget and those additional significant costs on businesses is about how retail businesses respond to them. In maybe a medium-sized business—among our medium-sized members—they might have had to take out layers of management. That might include, for example, HR functions and things like that, and losing that support. In an individual store, with an independent retailer, that retailer is probably working more shifts behind the counter and in the store themselves, rather than working on the business and managing the business. That will be a consequence.

Decisions are being made to cut back shifts to compensate for those significant additional costs, so the ability and the time available for businesses of all sizes—particularly some of the smaller and medium-sized ones —to implement these changes is less than it was before the Budget, or before April. That is the reality of it.

Again, yes, it is partly about timing—that is very important and I align myself with what Helen and Claire have said about that—but that also makes it even more important that the guidance and regulations are absolutely right, so that those already increasingly and additionally stretched businesses are not spending more time in employment tribunals and having to deal with complex interpretations with their colleagues, or struggling to fill shifts and therefore having to work more hours themselves.

--- Later in debate ---

[Greg Smith]

Q On Tuesday, we heard a witness from a different trade union say that the Bill will lead to the re-unionisation of the economy. Do you concur with that assessment? If you do not, or perhaps even if you do, are there any areas in which your unions feel the Bill should actually be going much further?

Liron Velleman: At Community, we are confident that the Bill would represent a positive step for our existing members and would allow for greater coverage of trade union membership across the sectors we work in. For example, in the third sector or in education and early years—especially in early years, where, in some of the private provision of nurseries and early years settings, there is not currently as much trade union coverage—the Bill would make it easier for people to join a trade union and see the benefits of membership. On whether it would bring full unionisation of the economy, I am not sure it would necessarily go that far, but some of the onus is on trade unions to make sure that we are delivering, in a modern way, the best way for working people in this country to understand the benefits that they could receive by joining one of our unions.

Joanne Cairns: I agree with Liron. We have good relationships with a number of major employers where we are recognised. You heard earlier from the Co-op. We are recognised there and by a number of other major employers. However, across the retail sector, trade union membership is currently at around only 12%, which is a similar level to the rest of the private sector. Very often, the reason people have not joined a union is simply that they have not had the opportunity to find out about what a union does—nobody has ever asked them to join a trade union. We think that the rights that the Bill will bring in around access to workplaces will be particularly important. The Bill will also simplify the statutory framework around recognition, which is currently extremely burdensome and makes it very difficult for trade unions to gain statutory recognition, particularly with larger employers.

[Justin Madders]

Q Good morning. One of the issues the Bill is trying to tackle is the level of insecurity at work. Could you explain a little bit about how the current framework impacts your members in terms of insecurity?

Joanne Cairns: Across the whole economy, precarious employment is a major issue. There is clearly a need for policy intervention in the labour market. The TUC estimates that one in eight people are in precarious employment, and that has risen by 1 million people since 2011. It has risen nearly three times faster than secure employment. That is certainly backed up by what we see with our members. Living standards have fallen quite significantly, and the impact of insecure work on our members is significant.

Of our members, 40% tell us that they have missed meals to pay their bills, 73% cannot afford to take time off work when they are ill, 15% struggle to pay their bills every month, and more than half have told us that financial worries are having an impact on their mental health. The level of statutory sick pay and the three waiting days for it is an issue of major concern for our members, as is having contracts that do not reflect the hours that they normally work. We welcome the Government taking action in those areas.

[Steve Darling]

Q I have one short question. How do you see the Bill impacting the United Kingdom’s productivity?

Liron Velleman: The Bill should have a positive impact on productivity. Following on from Joanne’s previous answer, when people are in insecure work, they are worried about whether they are going to lose their job tomorrow, whether they will lose some of their benefits or pay, and whether they will have the security of knowing what shifts they will be working. Tightening up lots of parts of employment legislation currently on the statute book should give workers extra confidence, so that they will be able to be happy at work and work more flexibly, representing the current state of the economy rather than keeping to how things were. That should, in totality, result in greater productivity for businesses as well as for individual workers.

--- Later in debate ---

[Greg Smith]

What do you base that on?

Nye Cominetti: Internationally, we can draw scatter plots of the employment level in a country and the extent of employment regulation, and basically those lines come out flat. You have some countries with very high employment and very high levels of regulation, and some countries with lower employment and high regulation, so there is no clear relationship with the employment levels across countries. That is confirmed by the OECD, which has done lots of detailed work looking into the impact of periods when countries have either rowed back on reforms or expanded them.

What we do see in the employment data is that when you beef up the reforms around dismissals for individual or collective workers, you tend to see lower hiring rates. So the rate at which workers move around the economy will probably slow down if you make it significantly harder for employers to fire workers, and that gives rise to potential implications for productivity growth. Now, I still think those effects will be small. When the Office for Budget Responsibility, in one or two years’ time, starts putting the numbers into its forecasts, I expect them to be very small indeed. My expectation is that the employment level will be very, very narrowly lower if anything.

To give you some sense of scale, the OBR said it thinks that the employer national insurance contributions bill will be about £25 billion, and that that would lower the employment level in this country by 0.2%. The DBT said that it thinks the direct costs of the measures, including sick pay, are in the order of magnitude of £5 billion. If you compare those numbers, that starts to give you a sense of the scale of potential employment effects that we are talking about. I am sorry not to give you a more exciting answer, but my best guess is that the impact on employment levels will be small.

[Justin Madders]

Q What is your assessment of the current landscape, in terms of security and income, for lower and middle-income earners?

Nye Cominetti: It is a good question. One of the ways that I like to think about this package of reforms is that it extends to low-paid workers the kind of everyday flexibilities and dignities at work that people in professional jobs such as me and you take for granted. It is not the case that all low-paid workers hate their job or face the risk of losing their job every week, but it is the case that they experience a higher level of insecurity than higher-paid workers do.

You can look at that in various ways. In recessions, low-paid workers are more likely to lose their job, so they face a higher risk of losing their job in downturns. They are also more likely to rely on statutory sick pay if they fall ill, so for many low-paid workers, falling ill comes with an income shock. That is not the case for someone like me: if I fall ill, I go home and pick up an online meeting or two if I can, but if I cannot, I will get paid as normal. That is not the case for many low-paid workers, so that is a real insecurity.

Obviously, there are zero-hours contracts as well. For low-paid workers, I think roughly one in 10 is on a zero-hours contract. For higher-paid workers—the top fifth in the hourly pay distribution—it is a vanishingly small number and very uncommon indeed. I am sure that you have heard plenty of evidence about the kind of impact on security that zero-hours contracts can bring to some—not all—workers.

The most illuminating statistic is probably that 2 million workers say that they are fairly or very anxious about unexpected changes to their hours of work. You might think that that is because that comes with not just an impact on their life—“I do not know which days I’m going to be working next week, and I have to make it work alongside childcare”—but a potential income risk as well. In many respects, the working lives of low-paid workers are less secure than those of higher-paid workers. My hope is that some of these measures will go some way to redressing that balance.

[Justin Madders]

Q I assume that it would be quite difficult to quantify in economic terms the impact of removing that anxiety for 2 million workers, but if you were able to have a go at that, I would be interested to hear it.

Nye Cominetti: I would not want to try. It is not quite the same, but the closest that some studies have tried to get is saying to workers, “Would you consider this alternative job, which would improve your terms and conditions in these respects, but offer you lower pay?” That tries to get at the question of how much pay people would be willing to trade off for those other benefits, such as a more stable income or a better relationship with management.

It does not directly answer your question, but there was a study in America of Walmart workers which found that they would accept a 7% pay cut in exchange for being treated with better dignity by their managers, including things such as better advance notice of their shifts and not getting messed around late in the day to come in and pick up extra hours. I definitely cannot quantify it, but more ambitious researchers might be able to.

[Steve Darling]

Q My constituency, Torbay, is sadly in the upper quartile of the most deprived constituencies. I would welcome your reflections on how the Bill could have an impact on constituencies such as mine where there are high levels of deprivation.

Nye Cominetti: Well, I have a few caveats. First, overall employment rates are lower in high-deprivation areas, so we need to remember that all these measures will have an effect on workers, rather than those who are not working. If you want to improve income levels, this is not the place to do it. As I was just saying, however, we know that low-paid workers experience those issues of insecurity at higher rates than high-paid workers.

You also need to remember that there is not a one-for-one overlap between high pay and high income and low pay and low income. Some low-income households will have higher-paid individuals in them, but because of having a large family or having only one earner rather than two, they will still end up in that low-income category. That caveat aside, it is still the case that any measures that improve working lives for low-paid workers will have the biggest impact on lower-income households.

There are questions about what the knock-on effects are going to be. If you were really optimistic, you might say that some of these measures to improve job quality could even have a positive labour supply effect. We know that, in the 2010s, that was a big driver of improved income at the bottom and massively increased employment among low-income households. So an optimistic take on these measures might be that you could trigger some of those kinds of effects, but that is much more uncertain.

Employment Rights Bill (Fourth sitting)

Justin Madders Excerpts

Thursday 28th November 2024 Public Bill Committees

[Greg Smith]

Q You mentioned the 20% unionisation rate. Do you have a target that you want to see?

Andy Prendergast: They key thing for us is that everyone who ultimately wants to join a trade union has the option to do so. It is important that people are aware of their rights, aware that they can join trade unions, and aware that they have a right to, for example, SSP on day one, statutory holidays and the minimum wage. Rights that people do not know about and that cannot be enforced are ultimately no use. This is shamelessly partisan, but I would like to see union rates being far higher, and I think that the economy as a whole would benefit from that.

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

Q It is a pleasure to see you in the Chair this afternoon, Sir Christopher. Good afternoon, gentlemen. Generally speaking, do you think that the Bill will improve working conditions, particularly for those in low-paid and insecure work?

Andy Prendergast: I think the Bill is a major step in the right direction. One of the big problems that we have seen, certainly over the last 30 to 40 years, is the huge increase in insecurity in the workforce. That tends to have a massive impact on the individual concerned and their ability to fully partake in the economy, and to make long-term commitments through mortgages and loans—the kind of stuff that drives the economy. Ultimately, we have seen that as they have lost their guaranteed hours—in zero-hours jobs, for example—and there has been the removal of their employment rights, those people are less able to exercise those rights. So we see the Bill as a major way of moving industrial relations forward.

We would also point to the work around the pandemic. In the last 14 years, we were very much locked out of Government in most areas, yet when the pandemic came around, there was a fantastic bit of work between the CBI, the TUC and the Government, with Rishi Sunak standing on the steps of No. 10 talking about the fantastic work that led to the furlough scheme, which saved millions of jobs and millions of people from poverty. What surprised us is that that great work was then stopped virtually as quickly as it happened. If we look at other G7 countries, a tripartite system is what drives higher levels of productivity, lower levels of inequality, and ultimately, higher levels of investment and economic outcomes. We think that the Bill is a long overdue step in the right direction of moving some power back towards workers and away from businesses, too many of which exist for exploitation.

Mike Clancy: I echo those comments. If we look at the responses from the business community, yes, there is going to be some anxiety about the detail and how it will work—again, I reference my experience not just in ACAS, but from working with employers more generally—but we find ways to do this and operate in practice successfully. Good employers have nothing to fear in the Bill. That is not just good employers that are larger, and we think that with the right degree of consultation, which the Government have committed to, we will be able to address those areas where there are a few wrinkles and things to ensure work in practice.

We have to reflect on what the alternative was. The deregulatory, more de minimis approach to employment regulation applied previously, and if that trajectory had continued, we would not have addressed the issues of precarious work and productivity, and we would not have been able to do that in a way that looks at the workforce of the 21st century, as opposed to looking backwards.

There is a lot in the Bill, but that is not surprising. There will probably be a long period of adjustment. With the right consultation, I think we will get to a position where we look back at this as a milestone in changing how we do things, a paradigm shift in relations. I think that it will drive better engagement not just for unionised workforces, but for workforces more generally, because that is where employers will see that they can answer the challenges on the next generation of technology insertion and organisational design, and make sure that they can get the talent that they need.

[Sarah Gibson (Chippenham) (LD)]

Q I am curious about whether you feel that the Bill’s provisions will encourage and support those who have been long-term unemployed, or those who find it difficult to get back into employment. Are the flexibilities embedded in the Bill going to help people back into work, as opposed to helping only those who are already in work?

Andy Prendergast: As a union that represents a large number of relatively low-paid people, we regularly come across the barriers to getting back into employment. One of the big ones we have seen is the expectation of flexibility, and specifically one-sided flexibility. We have a lot of people who are on benefits and want to work; unfortunately, often the only jobs they are offered are zero-hours jobs. It is difficult for people on benefits, because it is a bureaucratic nightmare to get on them, and people need to be supported to come off them to a guaranteed wage in a guaranteed job. Too often, they are offered zero-hours contracts, which replaces the guarantee of certain levels of benefit payments with uneven levels of reward. We want to get people back into meaningful work.

There are clauses in the Bill on removing exploitative zero-hours contracts—and the point there is “exploitative”. We look after thousands of Uber drivers, for example, and for them flexibility is very much the driving point. In the same way, a number of people benefit from being on genuine zero-hours contracts. At the same time, organisations such as McDonald’s and Wetherspoons have 80% to 90% of their staff on zero-hours contracts. There is no excuse for that. We find that the moment an individual chooses to exercise their flexibility is the moment they stop being offered shifts. That is a major block on people coming back to work, particularly when they are on universal credit.

We want to be able to give people genuine offers of employment so that they can better themselves, fully take part in the economy and deliver for them and their families. The Bill goes some way towards addressing that.

Mike Clancy: I should make a general point before addressing more specifically the part of the economy your question focuses on. A failure of our economy for many decades now—in contrast with other economies with high levels of unionisation, collective agreement and partnership—is that we have not taken the fear out of change in the economy. That can mean that people’s reaction to change, and their ability to operate in the labour market, is correspondingly reduced. A lot of economies are able to ensure that if people lose employment, they are able to come back into employment much quicker—there are either statutory minima or collective agreements between employers, trade unions and others to make that happen. The Bill asks some fundamental questions about how we want to organise ourselves in the economy and says that, actually, it is better to have places where we convene and talk about the challenges than to do it company by company and enterprise by enterprise, and have an atomised conversation.

Andy touched on zero-hours contracts; we represent a lot of self-employed people, many of whom value their self-employment. Indeed, it is part of the process in film and TV production. They have experienced the precarity of that environment in recent years, particularly in relation to covid, and subsequently there have been other issues in respect of production. The legislation needs to look holistically at the economy. It is important to talk about flexibility in a way that engages all types of worker, not just those who may be able to work hybrid or remotely. The fact that the Bill makes employers, unions and others think about the flexibility proposition has got to benefit people’s ability to come back into the workplace.

--- Later in debate ---

[Greg Smith]

Q My final question is off the back of that. On Tuesday, Mick Lynch—let us name him—told us that the Bill will lead to the re-unionisation of the economy. Is he getting overexcited?

Professor Simms: We have to be realistic about the resource capacity of our trade union movement at the moment. There are certainly things in the Bill that will make life simpler for trade unions—not necessarily easier, but it will require less resource to, for example, organise for a ballot, or to organise a re-balloting during a period of industrial action. At best case, that frees up some capacity to get on with the nitty-gritty of representing workers in the workplace and solving workplace problems. I cannot prove that that is going to happen, obviously, but that is certainly more than possible. But will it free up sufficient capacity to try and organise in the breadth of the retail sector, for example—lots of small employers? Personally, I think that is unlikely. I do not think that the UK trade union movement has that resource capacity at the moment.

Professor Deakin: Historically, what drives unionisation and strike levels is the economy. High inflation drives strike action and tends to drive union membership. Union membership, union activity and strike activity are highly sensitive to the wider economic context, which at the moment probably does not favour a massive increase in union membership. I would be very surprised if this particular measure moves the dial much on membership, and I do not think it will move the dial much on industrial action either.

What could happen, especially with the arrangements for sectoral pay bargaining, is that many workers, whether or not they are in a trade union, would benefit from sector-wide collective norms. That would be the case where the arrangements come in for two sectors that are mentioned in the Bill, and hopefully that is just the start. Other European countries and many countries outside Europe have sectoral collective agreements that, in effect, set a floor for an industry or sector. I am not sure whether you would call that re-unionisation, but I think the coverage of collective agreements is perhaps more important than simple membership, although unions depend on membership for their finances. The economic effects will turn very much on coverage.

Professor Bogg: As I said, the reforms to strike law are fairly modest, and I think that is true of collective bargaining laws. There are two incremental nudges towards sectoral institutions in two sectors, and there are some very modest tweaks proposed to the statutory union recognition procedure—lowering the preliminary membership threshold, potentially, and removing the majority support likely threshold—but it is difficult to see. I do not know what re-unionisation means, I must confess, but I will be very surprised if you see a radical upsurge in union recognition as a result of these very sensible but cautious changes in the legislation.

[Justin Madders]

Q Just to aid the witnesses, it was the shadow Minister who used the term “re-unionisation” in the evidence session on Tuesday, rather than one of the witnesses. That may be why it is not something that is particularly resonating with you.

I want to ask you in particular, Professor Deakin, about the impact of the regulations on increased productivity and innovation—the general economic benefits. Do you think that that will have a positive impact on such issues?

Professor Deakin: I think so. The evidence internationally is that there is a strong correlation between stronger labour protection and both productivity and innovation. I think that sentiment in the research community has shifted very much in the past 20 years. That is partly because we have better data and probably better methods. Certainly, a generation ago, the World Bank was quite hostile to the idea of labour law and said that labour laws, in aiming to help workers, might harm them. That, however, is no longer the World Bank’s position. The World Bank has said that there can be too little labour law in an economy—too little protection for innovation and productivity.

Of course, productivity has many causes, and the way we regulate labour is only one issue. If we are talking about labour law, though, these reforms are essential to help improve the productivity position. Will this law on its own lead to an improvement in UK productivity? Not necessarily, because that depends upon how we regulate other areas of the economy, and that is affected very much by the way corporate governance works and also by training and other aspects that are not all covered by the Bill. But is this Bill essential in the area of labour law for improving economic performance? Absolutely. Does it go in the right direction? Yes, it does.

The research we have done in Cambridge, which I mentioned in my written evidence, shows that, on average, strengthening employment laws in this country in the last 50 years has had pro-employment effects, for various reasons. That is, as I said in my notes, not a predication or a forecast, but historically in this country, stronger labour laws are not associated with unemployment.

Professor Simms: Could I chip in as well and emphasise the point that Simon has just made about skills and training? Skills and training of managers—the professionalisation of managers—and of our workforce are really crucial ways of shaping productivity and innovation. They intersect very strongly with some of the issues in the Bill.

In general, the push to professionalise management of work—the managerial decisions—is a really important part of that more complex story that Simon has just spoken to. The signals through the law, but also through other areas of policy, to managers, organisations and employers about the professionalisation of their management are a really important thing that the state can do to support that general up-tick in productivity and innovation in general.

[Justin Madders]

Professor Bogg, do you want to add anything?

Professor Bogg: I am just a simple lawyer; I would not like to offer any views on the economics of it all. I will defer to my expert colleagues.

[Justin Madders]

Q I am a simple lawyer, too. Could I ask you, Professor Bogg, how you feel the fair work agency will help improve the employment landscape?

Professor Bogg: This is really the most critical point of all. We can enact shiny rights and put them on the statute book, and if they are not enforced, there is not much point to the entire exercise. What will be critical is the proper resourcing for a new body. The right direction of travel is for that to occur through a new agency, rather than having to co-ordinate across different agencies. I think that will make things more efficient.

It is also important that the employment tribunal system is properly resourced. I saw the welcome announcement that the time limits will move from three months to six months, in line with the earlier Law Commission recommendation. As the Lady Chief Justice said, the rule of law costs money in order for it to be done properly, so the tribunal system will have to be properly resourced. There needs to be a commitment to a principle of effective access to dissuasive remedies. That is absolutely central to all of this working or not working.

Professor Simms: Can I pick up on the enforcement case? It is important for the Committee to properly understand that the organisations that will be merged into a new agency have had to cut back, to some extent, on their advice and guidance to employers and employees because of the challenges of resourcing over the last years. They still work in those spaces, but they cannot do it at the scale that they have previously—ACAS in particular. Re-resourcing that expertise to support both employers and workers’ unions to make good decisions that never become a breach of any rights is really important.

[Justin Madders]

Professor Deakin, anything to add?

Professor Deakin: Enforcement is really critical. We do not have an effective enforcement regime in this country. Recent research on the minimum wage, for example, shows that on the whole, employers that do not comply with it can actually save money by not doing so. They are rarely punished, fined or required to pay wages back in a way that even covers the gains they make by not paying the minimum wage. We are not effectively prosecuting minimum wage breaches. We treat breaches of the criminal law involving theft in a supermarket, for example, and in other contexts extremely seriously. We do not treat wage theft with anything like the same seriousness.

There are hardly any company director disqualifications in cases of non-payment of the minimum wage. The message being given, or the one that has been given, is that compliance with the legal obligations is in some sense optional, and not complying can be profitable for firms. We are not the only country in that position. It is also an issue in the United States.

However, we can do more. We can certainly resource the inspectorate. In my note, I suggested that we can also facilitate collective remedies in addition to individual employment tribunal claims. It is difficult for an individual to take a claim to a tribunal, and it can also be costly for employers, who will, in many cases, have to organise a legal team to fight a case, and they will not get their costs back. It seems to me that neither side is necessarily happy with the way the employment tribunal system is working.

I believe that collective remedies, particularly through arbitration, which can be brought by trade unions—hopefully in future to the Central Arbitration Committee —are more effective than individual claims in many cases. It is not just a question of resourcing the new fair work agency. I think there should be a greater role for collective arbitration, and in my note I made some suggestions based on precedents from the 1970s, which could easily be used again.

[Sarah Gibson]

Q Interestingly, earlier today, the Resolution Foundation mentioned that small businesses without HR departments will struggle without clearer legislation and guidance if the Bill is passed. Many retail businesses in my constituency are closed because of flooding this week, so we had a lot of time to discuss the Employment Rights Bill while scrubbing floors. People from those businesses joked that they would not be able to understand it. They also saw themselves in lengthy tribunals, with the tribunals not sitting. Of course, a lot of their employees are not unionised. A huge percentage of the population, especially in rural areas, have no union representation. Both sides are in a difficult situation. Are there elements of the Bill that lack clarity and that will lead small businesses into trouble and, therefore, their employees into difficulty? Or is that something that should be picked up elsewhere?

Professor Deakin: There is a difference between a complex measure, written initially for lawyers to implement, and communication about that measure once it is enacted. I believe that the essential changes being made by the Bill can be effectively communicated. However, I entirely understand the problem faced by many smaller firms, which often lack resources when confronted with a legal claim. They may be able to take out insurance to cover their costs, but often it is the time spent in dealing with the dispute that is the real issue. I researched that about a decade ago, but I do not think the issues have changed. Often, litigants—claimants—feel unhappy about the way the employment tribunal system is working. Employers also often feel unhappy, even if they win a claim. Since that time, there has been an enormous growth in delays before employment tribunal claims are heard. It is an important issue.

Communication from the Department to all employers will be essential. However, I also think that there is scope for collective remedies, and to reassure smaller enterprises that other firms are complying with the law, so they do not feel under that much pressure not to comply because they see other employers not complying. I very much hope that we are moving towards a system of labour law in which we need less enforcement and litigation, with an inspectorate that is trusted by both sides. Countries such as Japan and Sweden, for example, have extremely low litigation rates. That is partly because they have highly effective inspectorate systems, and also because employers of all sizes have come to accept the importance of labour standards.

Professor Simms: I think that returns us to my point about the importance of agencies such as ACAS being able to advise in a way that is accessible. ACAS runs a free-access telephone service to support anybody with a problem at work, whether that is a small business owner or manager, or an individual employee. That kind of service, which people can use to ask questions, is an incredibly important part of any change. We know that a lot of the enterprise agencies also offer a similar kind of support. It is those support mechanisms, as well as the communication, that I think are really important. Just because the law is complex does not mean that we have to explain it in a complicated way.

Professor Bogg: These are real concerns, and they obviously need to be taken seriously. I can see that the day one dismissal protection may well cause real anxiety for small firms. I think the point has been made that you would not expect a small business owner to look through the Employment Rights Bill. I was up at 5 o’clock this morning feverishly sweating as I read my way through it, and it would not be reasonable to expect people without legal qualifications to do that. What will be crucial in later phases of this roll-out is having guidance, such as codes of practice, that are written in accessible ways for employers to be able to do the right thing, which most employers actually want to do. I think that is really important.

The area that will require a little bit more thought is the guaranteed hours provisions, which are complex. Some of that complexity is inevitable because this is a fiendishly difficult issue, given the range of different contractual arrangements that we have in labour markets, but I do not think that is beyond the bounds of smart legislators dealing with this as it goes through the process.

--- Later in debate ---

[Greg Smith]

Q I certainly recognise the picture you paint of Banbury; it is very close to my constituency and I am sure you have people from Buckinghamshire on your payroll. What modelling and projections have you done—on the presumption that the Bill becomes law and obtains Royal Assent at some point next year—on employment numbers in your businesses?

Luke Johnson: We are still grappling with the fallout from the Budget. There are millions of pounds of additional tax that some of my companies will have to pay, and a 6.7% increase in the national living wage, when average inflation is 2% or 3%. As for the idea that many businesses have already given deep thought to this new piece of 150-page legislation—when we already have such things as the Employment Rights Act 1996, the Equality Act 2010, the Health and Safety at Work etc. Act 1974, and many other pieces of legislation—I dare say that large companies have given it some thought, but most of the businesses I am involved with are not so big. I think they will wait and see what the final result is before trying to measure whether it leaves the business smaller.

With any piece of legislation like this, we have to remember that it is not just the current jobs affected, but the unseen jobs and opportunities that were never created. I urge you to look at the fact that, for the first time in many years, the number of businesses being created in this country has been falling or stagnant for five years. That is more or less the first time in decades. If we lose the full employment we have enjoyed and the enterprise economy that we have managed to create—I believe it to be much more fragile than some might believe—it will be incredibly hard to get back. Jobs do not just fall from the sky. They appear because companies are created by risk takers, and they take a risk with every job they create. Jobs only exist because they are helping that business to progress, and 80% of jobs are nothing to do with the Government—they are private sector. If you crush the private sector, you crush jobs. All the research shows that the single most important ingredient for a happy society is jobs. Without jobs, you do not have civilisation.

Michael Lorimer: Our turnover is in the public domain, so I can share it with you. We will probably turn over about £370 million this year. We are in a high-turnover, very tight-margin business, so if we make £10 million net, that is about the height of it. It is very difficult to estimate the increased cost of national insurance contributions and the national living wage, because not all the details are yet clear, but we think it will be somewhere between £1.5 million and £1.8 million. That is quite a big chunk out of our net profit.

We do not have a huge problem with it. We are a company that believes strongly in creating prosperity. The national living wage is something that our hearts have no problem with, because we would like to see people getting paid correctly, but we have to mitigate that. That is something that we just have to get on with. Our company has grown successively every year since it started 30 years ago, in top line, bottom line and people numbers.

I need to stress this again to you: the passion that we have is growth and job creation. When we see people coming into the business, working their way through it, earning more money, developing their career and prospering, that is what brings us the greatest joy of all. My concern, which I have to repeat, is that businesses smaller than ours—following on from Luke’s point, we were a small business at one stage—are going to find it very hard to get on that growth trajectory.

[Justin Madders]

Q Good afternoon. A number of witnesses, including many from the business community, have welcomed the intention behind the Bill to increase workplace protections. Do you feel that the current employment law landscape is too favourable to employees, too difficult for employees or about right?

Michael Lorimer: From my perspective, there is a pretty good balance between employer and employee at the minute. I am sure you could unpick that, and there could be cases for either side, but as somebody who runs a business in, quote unquote, a “fast-moving environment”—in fact, Luke Johnson’s business is much faster-moving even than ours—where you are focusing on driving your business and trying to get results, I think that there is actually a good balance. I am not particularly in favour of tinkering too much with it. That is my personal view.

Luke Johnson: I would slightly differ, in that I think some areas are increasingly onerous for employers. Increasingly, when I talk to entrepreneurs, they are looking to outsource, offshore or automate rather than employ people. Not all of that is legislation and regulation; post furlough and lockdowns, there is a vast amount of talk among employers and owners of businesses about workforce motivation. That goes back to a point that Michael made earlier about the number of people not in work who are of working age and able-bodied. I think this is an issue for society as a whole, and I think a happy society is one in which people are productively occupied.

I am surprised that you say that many employers want greater protections for their staff. They are very entitled to give them to them if they want. They do not need to rely on the Government for that; they can just give them better contracts if they want.

There are a number of concerning aspects to the Bill, which could be counterproductive if the objective is higher living standards. As I understand it, this Government’s priority is wealth creation, prosperity and jobs. Ultimately, although I do not believe that this legislation will be devastating to employers, I think it will be damaging for job creation and therefore counterproductive to wealth creation and to achieving higher standards of living.

[Sarah Gibson]

Q I am glad to hear that you share my concerns for small and medium-sized enterprises. As you have probably all noticed—it is in my declaration of interests—I have run a small business both here and on the continent for most of my adult life, so I feel for them. It was the first thing that came up once I started to read the Bill.

You mention that you are concerned about day one rights. I wonder about the changes in the probation period. We seem to be in agreement that it might affect where you draw your prospective employees from. Can you suggest any amendments to the Bill that might encourage the entrepreneurial small businesses we so rely on to continue to take on staff from areas of deprivation or the long-term unemployed—those who currently struggle to get work?

Michael Lorimer: I was at a breakfast yesterday morning for the launch the Jobs Foundation’s report, “Two Million Jobs”. A chap from Sheffield spoke who runs an organisation that gets young people into work. He gave the example of a kid—I cannot remember his name—who would not normally find it easy to get a job interview. They trained him and helped him to get the right attire to get him into a job. The point was that this guy looked very risky—he had not worked, and he came from a long line of people who had not really seen any value in work—but he got the job because the people interviewing him saw something that they thought was worth working with. They knew they were taking a risk; they did. He has turned out to be an absolutely superb kid and is now progressing well.

Equally, yesterday I spoke to a friend of mine, a CEO of a business, who had somebody who interviewed incredibly well, did very well for the first 12 months, got promoted and at month 13 or 14 became an absolute monster to manage. Under the two-year rights, they were able to sort that out.

As we all know, you can get the interview stage right or wrong with hires. For SMEs, you just need to give comfort and space that hopefully they will get the right hires, but that if they do get the wrong hires and it is not the right fit, there is an escape route. Personally, I do not want to put a time on that. Our system works well for us at the minute, but I am sure Luke might have an opinion.

Luke Johnson: I find this a big piece of legislation, by my standards: 150 pages is probably what you are used to, but as someone running a business who has 1,000 other things to do than read a 150-page piece of legislation about employment, I find the whole thing rather a surprise. The Prime Minister said that he wants to

“rip out the bureaucracy that blocks investment”.

If there is a genuine belief in the Government that this legislation will boost investment, I have a bridge to sell them.

--- Later in debate ---

[Greg Smith]

Q I appreciate that, from the perspective of the Department of Business and Trade, there might be a more clearcut answer, but from your perspective, Mr Kirkpatrick, given your answer earlier, do you think there is a high risk that the measures in the Bill could reduce the number of jobs in the UK economy?

John Kirkpatrick: The answer is that it is hard to tell. You have already heard evidence on that—I heard some of the evidence this afternoon and you have heard other evidence in other sessions—from others who are arguably better qualified to answer the question than I am. As I say, I encourage you as a Committee to encourage the Government to ensure that it thinks that point through carefully, as you consider the Bill, and to bear that advice in mind as you scrutinise it.

Margaret Beels: My office has not done that analysis and I would be guessing if I answered the question.

[Justin Madders]

Q May I ask you, Margaret, for your views on how the fair work agency might help in the enforcement landscape?

Margaret Beels: I took on this role in the expectation that there was going to be a single enforcement body, which the previous Government had referred to but did not bring about. I was strongly supportive of the creation of a single body and accordingly I am supportive of the creation of the fair work agency.

From my perspective, which involves looking at what has worked under the existing arrangements and what could work better, I went back and looked at the recommendations in the strategy that I most recently published, on 11 November, and it had 12 recommendations. I looked at them and considered how things are working out now under three bodies with different governance, different plans and different ways of doing things, and whether I think that under a fair work agency regime those things would be done better. A fairly quick assessment is that half of them would definitely be done better; the other things would probably be done much the same. The ones that relate to having a better joined-up approach, to greater efficiency and to better sharing of information among bodies are the things that I think the fair work agency will do a lot better.

[Justin Madders]

Q Could you give us some examples of the sorts of areas or issues that might benefit in that way?

Margaret Beels: One of the things I found it hard to do was to assess the impact of the different bodies, because they all have their own governance arrangements. I have a statutory responsibility to decide whether more should be spent in one body or in another. In practice, however, because they run under their own governance, it is really hard to do that and assess whether spending a bit more on national minimum wage enforcement or a bit less on employment agencies would be better value for money, because value for money for the public purse is really important. We are all public servants: we are all accountable to you as parliamentarians and to the public. I have found it really difficult to answer that question about the effectiveness of the different activities.

[Justin Madders]

Q Do you both feel that the Bill and the fair work agency in particular will help to protect people with protected characteristics at work?

John Kirkpatrick: It is clear, Minister, that a number of people with protected characteristics are particularly vulnerable to the sorts of practice or exploitation that the fair work agency would devote itself to being concerned about. I would defer to Margaret on whether the unification of the existing authorities will make for improved enforcement. If it does, it will clearly be of benefit to those people.

I suppose the one thing I would add is that it is really important in this kind of area and these parts of the labour market that there is clarity on both employers’ obligations and employee’s rights, and what their sources of redress might be if those rights are breached. Real clarity and distinction of who enforces what seems to me very important. There is no difference between us on this, nor anything in the Bill that would confuse that. The maintenance of that clarity, so that people can understand what their rights are and how to exercise them, seems to us an important precondition to the Bill being successful in that aim.

Margaret Beels: The research I referred to, which is being published tomorrow, demonstrates that the workers more at risk of precarious work are female workers and younger workers, as well as workers from a lower-working-class background. The industries in which they work that are most at risk of being precarious are hospitality, retail, agriculture and construction. I think, to the extent that the Bill will address some of the issues affecting more precarious workers, that will be of benefit.

[Sarah Gibson]

Q Quite a few witnesses have said of the improved employee rights that, in fact, the existing employee rights are often not exercised because the tribunals are slow and expensive—they prove expensive for both sides. We have poorer enforcement than most of our OECD colleagues around the world. That is particularly true for industries that, as you just highlighted, are not necessarily unionised, such as hospitality.

Are there any specific areas of the Bill that you think could be simplified? Obviously, we have been discussing other things outside the remit of the Bill, but within the Bill itself are there any specific areas that, if they were simplified, would make enforcement easier and more effective?

Margaret Beels: I have responsibility for the national minimum wage team, and when I talk to them about what they do, they often refer to the fact that the complaints that come to them are not valid. They are made without full understanding by the workers of their rights around the national minimum wage. The teams talk about training their inspectors for six months, and it troubles me that that is an area where it is difficult to know whether you are being paid correctly.

From my point of view, I would favour arrangements that are better at communicating with workers as to what their rights are. I know that ACAS does a brilliant job, and the national minimum wage team themselves and the other agencies all try to communicate better, but I think there is an issue with the national minimum wage. If you pay a worker the national minimum wage, the chances are that they are not being paid the national minimum wage. To play it safe, businesses should be paying comfortably above it to ensure that they are okay.

John Kirkpatrick: I do not have a huge amount to add to that. I recognise that most enforcement of the Equality Act 2010 comes through the tribunal system, which imposes a burden on the individual to understand their rights and have access to appropriate advice, redress and so on. We can do a certain amount of enforcement ourselves.

The other thing that we will do, as the enforcer of the Equality Act, is try to provide as much clarity of guidance as we can. In a sense, that is the first step in an enforcement process. The most recent example, I suppose, would be the guidance that we consulted on and published on the Worker Protection (Amendment of Equality Act 2010) Act 2023, which came into force only a few weeks ago. We felt it desirable and necessary to put quite a lot more guidance into the public domain to help both employers and employees to understand their rights.

In a sense, the lesson from that is that yes, that is something we can own the responsibility for doing in our area of work, as others do in other areas—ACAS does work on this, as do others. The important thing is that the initial law is as clear and straightforward as it can be. I urge the Committee to have that in mind as it thinks about the legislation before it. The clarity and simplicity of the underlying law is the thing that makes it easier to enforce.

--- Later in debate ---

[Justin Madders]

Q The shadow Minister was right: your response to the initial question was a comprehensive critique of the Bill. I will ask you a bit more about sexual harassment and the issues with preventing that and dealing with third-party harassment. Have you been concerned about that?

Dr Stephenson: We have not done as much work in this area as organisations such as the Fawcett Society or some of the trade unions, but we are very conscious that for women working in the hospitality sector, for example, third-party harassment can be a really serious issue. We think it is important that women have those rights and protections, but beyond that it is more that we would support them than that we have done much detailed work.

[Sarah Gibson]

Q Do you think that the measures in the Bill go anywhere in the way of supporting those with family or carer responsibilities?

Dr Stephenson: Obviously, the provisions about paternity and parental leave as a day one right will benefit those with caring responsibilities. We are pleased to see that there are plans to review carers’ entitlement. The problem with leave for carers is that it is one of the lowest-paid benefits that we have in the UK. Very many carers end up in poverty as a result. We know that there are higher rates of physical and mental health problems among carers because of the poverty, the strains caused by caring and the difficulties of balancing caring work with paid work. Obviously, the flexible work provisions will go a long way to helping people with caring responsibilities, and we think that is a very good thing.

Draft Information Sharing (Disclosure by the Registrar) Regulations 2024

Justin Madders Excerpts

Wednesday 27th November 2024 General Committees

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

I beg to move,

That the Committee has considered the draft Information Sharing (Disclosure by the Registrar) Regulations 2024.

It is a pleasure to see you in the Chair, Dame Siobhain. The draft regulations were laid before the House on 22 May and are part of a programme of statutory instruments that implement reforms under the Economic Crime and Corporate Transparency Act 2023, which I will hereafter refer to as the 2023 Act. The new Government are committed to holding accountable those who abuse our open economy, and to enhancing the UK’s reputation as a hub for legitimate businesses. Our vision is to create a more transparent and accountable corporate environment that not only fights economic crime but fosters trust and integrity within our financial systems.

The 2023 Act reforms the role of Companies House and increases the transparency of UK companies. The reforms will create a more reliable companies register and instil confidence in our business environment, safeguarding rights and the safety of individuals. The reforms, which, it is only fair to acknowledge, begun under the previous Government, will not only strengthen our business environment but support our national security, enhance our international standing and contribute to the UK’s economic growth. As we know, the reforms are already under way; stronger rules and checks introduced since March have already helped to cleanse the register and disrupt organised crime. Companies House is also undergoing a full organisational transformation to implement those changes.

As we embark on this journey, we recognise that although significant progress has been made, more remains to be done. The Government are committed to ensuring that the 2023 Act not only meets but exceeds expectations, establishing a transparent and secure economic system that protects citizens and businesses from the harms of economic crime.

A key priority for Companies House is increasing its intelligence capabilities and embedding that further into the law enforcement ecosystem. There has been significant progress in this area already; Companies House has introduced extensive legal gateways for data sharing with law enforcement, other Government bodies and the private sector. That has led to a more efficient sharing of suspicious activity with law enforcement agencies. Additionally, feedback mechanisms have been established with other Government bodies and businesses in the anti-money laundering regulated sector, to enhance the quality of the information being shared.

We are here today to move further on that progress and discuss the draft regulations, which will amend the Companies Act 2006 to give the registrar of companies greater powers to share non-public information with enforcement agencies and other bodies, for the performance of their functions. The 2023 Act amended the 2006 Act to give the Secretary of State the power to make regulations that allow the registrar to expand the information sharing to specified persons for specific purposes. For instance, there may be circumstances where it is beneficial for the registrar to share information with certain office holders involved in administering insolvency proceedings. Such office holders will most often be insolvency practitioners, but may also be the official receiver, or in Scotland the accountant in bankruptcy.

Although the registrar has the power to share information with public authorities, under the 2006 Act, the functions undertaken by office holders relate to private matters, due to the nature of insolvency proceedings. As such, they also involve the identification and realisation of assets in insolvency proceedings. Therefore, the registrar is not currently able to share information with such office holders for those purposes. 

The functions can often go beyond the sale of property or personal belongings, into applications to the court to reverse transactions that were made prior to the insolvency proceedings and were not in the best interests of all the creditors. The functions might even extend to asking the court to make directors of the company personally liable where they have allowed the company to continue to trade beyond the point at which insolvency was inevitable, causing further losses to creditors.

For those kinds of actions, the office holder could benefit from information that the registrar’s current powers do not allow her to share. The draft regulations will allow the registrar to share relevant information that the office holder needs to perform their functions and provide the best returns for creditors in insolvency proceedings.

The regulations are fairly straightforward. I would like to emphasise that they are important for strengthening the information-sharing network within the economic crime space. They will enable Companies House to support the Government’s efforts in fighting economic crime and in ensuring that creditors in insolvency proceedings are able to get the best use of the tools available to them to secure the best return. I commend the regulations to the Committee.

--- Later in debate ---

[Justin Madders]

I thank the shadow Secretary of State for his welcome. I also welcome him; I think this is the first time we have appeared opposite each other. I will have to correct him. I am not actually the Minister responsible for small businesses, but his points are important. There is a range of economic levers within my portfolio, and we take an interest in all the matters that affect the economy. He will know that it is incumbent on the Opposition to suggest alternative propositions. However, we note the support for the draft regulations. It is important that we have constructive dialogue in this area. It is an important space where parties should be able to work together.

Question put and agreed to.

Employment Rights Bill (First sitting)

Justin Madders Excerpts

Tuesday 26th November 2024 Public Bill Committees

[The Chair]

If nobody objects, we will not sit in private before we start hearing from witnesses. Do any Members wish to make a declaration of interests in connection with the Bill?

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

I refer to my declaration in Register of Members’ Financial Interests as a trade union member.

[The Chair]

Thank you. It looks like we have a host of interests.

--- Later in debate ---

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

I also refer to my declaration of interests. I am a member of the Unison and Community trade unions.

[Justin Madders]

Mr Stringer, I do not think that I actually mentioned my trade union memberships. For the record, the individual unions are Unite and GMB.

[The Chair]

Thank you, Minister. If any interests are particularly relevant to a Member’s questioning or speech, they should declare them again at the appropriate time.

Examination of Witnesses

Matthew Percival, Jane Gratton and Alex Hall-Chen gave evidence.

--- Later in debate ---

[Greg Smith]

Q I want to come back on this point, as it goes to the nub of any change to employment law. This does not mean that I am against employment law—I want to make that clear before anyone suggests otherwise. Alex, you mentioned the net impact of this legislation on the number of people in the United Kingdom in employment and the number of new jobs that will be created—or not, as the case may be—and you gave clear data from the 700 business leaders you spoke to. Could I ask the other two witnesses about your research among your members? What is your assessment of the likely impact of the Bill on job creation and job losses? Matthew, you talked about the risk of redundancy actually becoming greater as a result of some of the measures on fire and rehire. What is your assessment of the Bill’s impact on job numbers?

Matthew Percival: It is very difficult to put a number to it, because there are so many unanswered questions in areas where details are intended to be put into the Bill at a later stage. That leads to a wide range of potential estimates about the impact of a number of the measures. Work we are doing at the moment will give us updated figures on sentiment around a number of measures. We are looking to publish that soon, and I will make sure that we include those numbers in our written evidence.

Jane Gratton: The feedback we have had from members has been concern about increased cost, complexity and lack of flexibility to manage the workforce in the way that a business needs to. Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights, unless there were at least a nine-month probation period with a light-touch approach. There would be a preference for contractors and temporary staff, again to reduce the risk and avoid legal complications. To give some figures, 38% said that there would be a hiring freeze, 25% said that the Bill would result in less pay, and 30% spoke of less investment in their business. There would be significant risks and costs, particularly to small and medium-sized enterprises.

Alex Hall-Chen: In addition to considering recruitment levels at the higher level, we are also getting feedback about types of recruitment and the impact that the policies will have on that. We have had a lot of feedback, particularly with respect to day one protection against unfair dismissal, that essentially boils down to the fact that, under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher. I think there are really important questions about what that means for people on the fringes of the labour market, especially as those are precisely the people the Government need to get back into work to meet their 80% employment rate target.

[Justin Madders]

Q Good morning, everyone. You have mentioned quite a few surveys, but there are other surveys available that show high levels of support among managers and senior decision makers in businesses, with up to three quarters of managers supporting the measures in the Bill. Matthew, a number of the concerns you raised are the subject of live consultations, so I am sure you will be responding to those.

On a more general point, Jane in particular said that a lot of the businesses you represent do a lot of the things in the Bill already. Do you think it is important that we have a level playing field so that good businesses are encouraged to treat their staff properly?

Jane Gratton: Yes. There has been a cautious welcome for some of the measures in the Bill—lots of businesses agree with the sentiment that it is about fair pay, security and non-discriminatory workplaces—but the question is around the proportionality of the changes that are being introduced in relation to the problem that the Government think needs to be addressed. From a business point of view, it is about the additional complexity and, in respect of some of the detail of the measures, the restrictions that the Bill will impose.

For example, on changing the “one establishment” rule, the feedback from members has been, “For every change, will we have to consult all our employees across all of our businesses, even if they are doing completely different things at different ends of the country, with different levels of skill and job role? It is disruptive for the business and unsettling for every employee.” It is about the detail. In principle we all want these things, but the detail of some of the measures and the impact they are likely to have is causing a lot of concern.

Matthew Percival: You are right to say there is a live consultation on a number of measures, and the consultations on a number of things are promised to come but have not started yet. That is why I resisted putting a figure on what it would currently cost, because there is a wide variance in what that could end up being. We are committed to trying to find a landing zone for the Bill that means that the Government can deliver their ambitions, which include the Bill not having a negative impact on the ambitions around growth or the focus today, outside this room, on the “Get Britain Working” agenda and an 80% employment rate. We want to stitch all those things together and find that landing zone.

It is a credit to you and to colleagues that the engagement we have had up until now has led to things like some movement on the recognition of the importance of a probation period. There is so much in the Bill and we have only really scratched the surface in terms of what we have been able to get into the detail of so far. We are hoping that through this process, and as the Bill progresses through Parliament, we are able to give the same amount of attention to the rest of the Bill.

[Justin Madders]

I can assure you of that, do not worry.

Alex Hall-Chen: I echo Jane’s point about there being quite significant support in the business community for parts of the Bill. A good example is fire and rehire: two thirds of IOD members agreed with the principle of outlawing fire and rehire. Where we have concerns is, as others have said, around not only proportionality but the detail. On fire and rehire, for instance, there is concern that it will make any changes to contracts, whether or not they are actually net positive for both the employee and the employer, much more difficult to achieve.

[Justin Madders]

Q Jane, you have said quite a lot in the past about the link between good employment protections and productivity, and the CBI has also said there is a case to be made for better security at work increasing productivity. Do you agree that the Bill has the potential to deliver on the idea that an increase in protections at work can help to increase productivity for employers?

Jane Gratton: Employers know that a happy and engaged workforce is more productive. It is in their interest to make sure that they look after their workforces, and most businesses are good, caring employers. The worry with the legislation is that in trying to address bad behaviour by a tiny minority of businesses—of bad actors—the cumulative impact and cost of all this will have a negative impact on the majority of very good businesses. Again, it comes down to the proportionality. These are huge changes, and one concern is that they have been brought in at such pace—although we are very grateful to the Minister and the Department for the time they have been able to give us in terms of consultation—that there are things written into the Bill that our members do not feel they have had sufficient time to be consulted on, because of the pace of change.

I think we need further engagement on some of these key aspects, including the reference period for offering guaranteed hours and extending those things to agency workers. There is a lot of disquiet around how that would work, particularly for companies that offer seasonal work, such as Christmas and holiday periods. How does a 12-week reference period equate to that? It does not seem to work. It would be better to have a 26-week period, for example. There are a lot of things.

The other thing that has come up often is a real nervousness around removing all the waiting days for statutory sick pay. Again, employers are really on board with supporting people who have a long period of illness, but some of the feedback from members has been that it is the single day of sickness absenteeism that causes the most disruption and impact. Rather than its being day one, a lot of employers have said, “Could it be from day two? Can we pay from day two, so the Government meets us halfway?” The overwhelming response from businesses has been, “Can Government please minimise the additional cost of these regulations on all businesses, but particularly on small and medium-sized companies?”

Matthew Percival: Yes, there is a lot of confidence in the idea that employee engagement helps to boost productivity; that is why businesses make it a priority. I am not sure they believe that much in this Bill is going to increase productivity, though, because they are not convinced that much in this Bill is going to improve employee engagement.

To take a couple of practical examples, I already mentioned in the industrial relations space the importance of the recognition process, where there is a great deal of concern that, if you recognise a trade union that does not speak for much more than a tiny proportion of your workforce, and you elevate that voice ahead of the voice of the actual workforce, that is not going to boost employee engagement. Employers are happy to work with trade unions who are the representatives of their workforces, and it is right that they should do that, and it is right that, if there are any employers who will not do that voluntarily, there is a statutory process that can force them and bring them to the table. But in the same way that we have employment law not because every employer has negative intentions, but because there are a small minority who have the potential to abuse their power, it is also appropriate to regulate the actions of trade unions in the industrial relations space.

Another quick practical example within the zero-hours contract aspect of this regulation is that crafting the requirement for accessing guaranteed hours as something that employers need to be constantly calculating for all employees whenever they work beyond their fixed hours, and then making offers to people, some of whom would want to receive those offers and some of whom would not, seems to us the most administratively complex and costly way of delivering on the proposal. We think there could be two other constructions worthy of consideration.

One of those constructions could be a right to request framework, where there are good tests on when an employer needs to accept a request versus not, just as we have around flexible working currently. Or you could call it a right to have, if you like, but at the moment I have not seen a difference between a right to request that an employer has to accept other than in limited circumstances, and a right to have that you do not have the right to have if an employer meets the same test for limited circumstances. What really matters is not whether you call it a right to request or a right to have, but what the test is for when an employer accepts the request. That would minimise significantly the administrative burden, rather than calculating lots of offers for people who will not want to accept them.

A number of individual businesses have told us that, if the Bill is to go with the grain of the good practice that already exists within industry, they will monitor people’s hours where they already have mechanisms to do so, and there will be a trigger for a conversation between the individual and their line manager in the event that their hours regularly exceed the hours guaranteed in their contract. Those who have that policy in place tell us that, most often, that leads to no change in contract. The hours are picked up as extra hours, and the individual does not want to guarantee them in their contract. There will be occasions when the individual does change contract, but those businesses say that the majority of people in that situation do not want to change their contractual arrangements, so we are hoping to minimise the admin burden.

Alex Hall-Chen: I just want to emphasise that employers absolutely recognise the link between the two. That is why, in many cases, they are ahead of the legislation. A good example of that is flexible working: 90% of IOD members’ organisations already offer at least one form of flexible working to their employees.

The concern is about the scale of the changes and the costs associated with them. We know from the Government’s impact assessment that that may be as high as £5 billion a year, with the cost disproportionately falling on small and medium-sized enterprises. A frequent piece of feedback that we get from members is that they feel that the Government do not understand how difficult it is to run an SME at the moment and just how tight profit margins are. That is primarily where we are coming from. These changes are huge—to an extent, they are unprecedented—and will impact on those already very fine profit margins.

[Steve Darling (Torbay) (LD)]

Q I have a series of short questions. First, if the panellists were to put a stake in the ground on probationary periods, what timescale would you choose? What is a reasonable approach?

Jane Gratton: It is really important that there is a probationary period, and it should be at least nine months. Businesses ideally want a 12-month probationary period, not least because some individuals are required to undertake mandatory training, which takes 12 months or more. We could live with a nine-month probationary period.

The key thing is that there should be a light-touch approach during that period so that businesses are not discouraged from taking a risk on employees. Employers should not have to introduce very stringent performance monitoring from day one, which helps neither the employee nor the business. Having structure during the probation period is good, but businesses need to be able to end the relationship on the basis of ability or performance, as we do now. There should be no greater risk to an employer of an employment tribunal than there is currently during the probation period.

Matthew Percival: Typically, a business’s standard probation period is no longer than six months. However, that does not mean that it is appropriate to set in regulation a limit on probation periods of six months. That is important for us, because a common response of an employer who sees that an individual is not performing quite to the level that they would want to be able to confirm them in post is to say, “Okay, we have gone through our standard probationary period, but we are willing to continue to invest in you, offer you more support and training, and extend that probation period, rather than rush to a firm yes or no decision for confirming employment.”

It is important that the regulations do not prevent the employer good practice of being willing to extend someone’s probation and give them more time to adapt to work, particularly if we are thinking about the challenge of getting people back into work who have had a period out of work. That is a big public policy and economic priority at the moment. We are in the same camp: certainly no less than nine months, so that there is that extra time before an employer is forced to make a firm yes or no decision on confirming employment, but preferably 12 months.

Alex Hall-Chen: Similarly, the feedback we have had from members is that their probation periods tend to be between three and six months, but as the other panellists have said, given exemptions around training and the potential to extend probation periods, nine months would be the minimum and 12 months would be preferable. As to the specific process, the lighter-touch dismissal process is better. We have done research that suggests that even a light-touch dismissal process, as defined by Government at the moment, would not solve the issue. A third of our members said that it would not mitigate their concerns around this policy at all, and half said that it would only partially mitigate their concerns, so we remain worried about the impact that this policy will have.

--- Later in debate ---

[The Chair]

Minister.

[Justin Madders]

Q I have some questions for Mr Hale. Previously, the Federation of Small Businesses supported the removal of the lower earnings limit for statutory sick pay, which is in the Bill. Do you support that today?

David Hale: To go back to the previous question, what I hope you will support is the introduction of a statutory sick pay rebate in the Bill. We have always been very clear that a rebate is important with any changes that increase SSP costs, because if you do not have a rebate, you systematically disadvantage the firms that take on people who are sick or likely to get sick, and those firms are already not supported enough by Government policy.

If you want to make changes to statutory sick pay, as the Bill proposes, you should put in a statutory sick pay rebate to cater for the risk to small firms. Say a firm has six staff members and two are off at the same time, that is 33% of the workforce. It would be very useful if the Government stepped up and actually supported firms that are taking on the people they are talking about. So it is a question more for you than for me: will the Bill include a rebate or not?

[Justin Madders]

Q As you are the one giving evidence, we are questioning you today. There will be plenty of time to go into detail. I want to touch on what you said about the process not being a good one. Is it about the level of engagement you are getting with Government officials? What is the issue? You mentioned that it has all been rushed. You will be aware that everything is being phased in over a couple of years. Could you expand on what the difficulty is with the process?

David Hale: It is a good question. It partly goes back to the overwhelm. We can talk to only so many small businesses at a time, and we can talk to them about only so many things. We can say, “If the changes to unfair dismissal come in, how will that change your recruitment?” We can have that conversation, or we can say, “If there are changes to zero-hours contracts, will that mean you have to ban swapping shifts in your business, just to cater for your regulatory risks?” We can explore those things, but only one at a time. We have 40 minutes today. We will spend less than a minute talking about each of the measures in the Bill. That overwhelm has a time consequence for good engagement and good exploration.

I do not want the officials who have engaged with us about the Bill to feel that that is not appreciated, but I do think there are process problems. This Committee is taking evidence from different groups in turn to explore the Bill over a two-day period, I think, but that is not the approach that the Department has taken, and that is a problem. At the Department level, each measure would have to be explored in turn, with different groups coming together. At the moment, the way in which the process has worked has created more division than is necessary. It has set up two sides—worker representatives and business representatives—and set them in opposition, without providing a voice for those at the biggest potential risk, which is the people who are out of work.

That is on the broad scale, but there are a lot of practical things, too: can we have regular meetings, organised at the same time each week, rather than them coming in and out of diaries, and that sort of thing? That is a practical issue, but those issues are important.

[The Chair]

Dom, do you have anything to add?

Dom Hallas: Just on the process point. People sit here on our side of the table and say, “Things aren’t being communicated well,” when the problem—let us be honest—is with the policy.

One of the broad challenges here, especially for small businesses, which David and I work with, is that, with an impactful piece of legislation, even communicating to them what is going on is difficult. They are a disparate group; we certainly cannot sit here and claim to represent the entirety of the tech start-up community, even if we work with a big community of businesses.

I am mindful of two things: the length of the implementation period is absolutely important, but the way the Government go about it and choose to operate in that period is also important. What does it mean, frankly, to explain to employers what their obligations are? How are we going to go through that process? We need to think about that coherently now, so that we do not get to that period later and, suddenly, it is panic stations. That will be really important.

--- Later in debate ---

[Greg Smith]

Q I have a final question on the upskilling of professionals, which Cathryn just mentioned, so that they can advise on the new measures coming in through both the Bill and the secondary legislation that will follow. What would be the cost burden and the impact on the whole sector to get into a position where it can give accurate and good advice when the Bill finally reaches the statute book? We can see the parliamentary maths: it will become an Act.

Cathryn Moses-Stone: I cannot talk to the specifics of the Bill’s initial cost implications, but I can talk to the cost implications of having really highly trained managers in the workplace. When thinking about general management training, we know that chartered managers, on average, boost a business’s revenue by £59,000. We know that the average pay rise of a chartered manager is £13,000. We see in a lot of our data that there is a direct productivity impact on an organisation from having highly skilled, highly trained managers who are able to implement policies that increase retention, retain talent, boost morale and create a more positive workplace culture, which prevents turnover, which saves a business from losing money.

It probably also comes back to the point that managers need time to get it right and to understand it, so that the burden on their business in the long run is not huge because they have the right amount of time to understand how they will work with their employees so that they do not have to escalate everything to tribunal. The early training period is crucial for the wider cost savings, because we know that there are lots of concerns from businesses on these issues, as well as the broader sentiment of being in support of the Bill.

Ben Willmott: One of the challenges for a business looking to upskill its managers is that that will incur a cost. If we look at the proposed increases in employment costs overall, we see those from the different measures in the Bill and those from the changes in the Budget, which also need to be taken into account. Businesses will have to find the money to upskill and train their managers. That is one reason why we are saying that ACAS needs to be resourced, particularly to help those smaller businesses that are more resource-challenged and have less knowledge and capability around the HR and people-management side of the business, which is so important to this.

Carly Cannings: Ben made a really important point about making sure that small businesses are adequately resourced to deal with the changes. I am, as many employers are—as the statistics bear out—very supportive of raising the standards of employment, and the Bill certainly takes a step in the right direction towards raising standards. The balance that needs to be struck is about making sure that employers, and particularly small employers, are able to cope with the changes.

There are lots of businesses out there already doing really good things, and some of the things in the Bill will be measures, practices and policies that lots of employers already have in place. That is not the case for everyone and, in particular, that might not be the case for small businesses. Echoing Ben’s point, small businesses are more likely to fall foul of the legislation accidentally, rather than intentionally, because they do not have the right access to support and advice in the same way. That is an important point that must not be missed.

Cathryn Moses-Stone: Would it be all right if I added a point? It is true, obviously, that there is a cost to training managers, but that is why we are also really concerned about the proposed defunding of the level 7 apprenticeships, because there will be a huge knock-on impact. Potentially, a huge skills gap could open up in highly trained management across the UK, at a time when businesses are going to be required to know their staff and to implement the legislation in the right way. We are concerned about how that aligns with the development and delivery of the Bill.

[Justin Madders]

Q Good morning, everyone. To pick up on the points you just raised, I reassure you that there will be continued dialogue before implementation.

I have a more general question about what you see as the current weaknesses in the employment rights sphere. What do we need to do to give people more protection and security at work? Do you think the Bill addresses that?

Ben Willmott: The introduction of the fair work agency—a single enforcement body—is a positive step forward, but there needs to be further thought about how to improve the labour market enforcement system. We need a long-term strategy to improve labour market enforcement that includes not just a fair work agency but the Equality and Human Rights Commission and the Health and Safety Executive, not in a single enforcement body but as part of the strategy. We need measures to improve the efficiency of the employment tribunal system, which we know is swamped, and we need to increase the overall number of labour market inspectors—by international standards the UK is under-resourced on the number of inspectors.

As I have said before, we also need to significantly increase ACAS’s budget so that it can help small firms to comply. If labour market enforcement is about getting the carrot and stick balance right, that is why it is so crucial that ACAS can play that role in helping to raise employment standards. Businesses that are not bad employers—those that are poorly resourced, or might be knowledge-poor or time-poor, particularly micro and small firms—tend to fall foul of legislation because of those issues, not because of any malicious intent.

Cathryn Moses-Stone: I will start with the latter part of the question. We have a lot of data showing the impact of good management practice on both productivity and an improved workplace culture. Much of the Bill falls into that camp. For example, we know that one third of employees have cited negative work culture as a driver for leaving their organisation. That is obviously driven by ineffective management. We know that when managers in organisations have mutual trust and respect with their direct reports, they find that productivity rises. Poorly managed teams have lower motivation, satisfaction and retention. We believe a lot of the elements of the Bill are tied up in driving much of that in a positive way.

The things we are worried about, which echo what I have said before and what Ben has said, come down to implementation—that is, what the fair work agency looks like, how it behaves, how it supports, and how it gives space for managers to upskill. We know that 40% of our managers have expressed some concern about the detail of some of the policy, such as the right to disconnect. For example, what defines business-critical comms, versus just maintaining team comms?

We know that with high-quality management training—helping people to understand how to have difficult conversations, prioritise and have emotional intelligence—people can navigate those things much more effectively in the workplace. Our worry is about what the implementation will look like and about how managers and leaders will be supported in respect of the fair work agency.

Carly Cannings: I think the Bill is about raising minimum standards. As I said previously, a lot of employers are doing a lot of good things. Let us be realistic about the impact of the Bill: it is about raising minimum standards. Cathryn alluded to the bigger picture of creating happy, thriving workplace cultures, and it goes far further than that. This is not a call for further legislation; for me, legislation is about raising minimum standards. There is so much more outside and beyond legislation that makes a real difference to whether somebody has a happy, thriving workplace culture, and the benefits of that culture.

Thank you, Cathryn. You have done a very good job of outlining the things that I see in reality and when working with my clients—the factors that play a part in creating a workplace culture. Like I said, for me the Bill is about raising minimum standards.

[Justin Madders]

Q Thank you. I have a specific question for Cathryn, and the other two witnesses could also respond to it. First, though, I should say that the right to disconnect is not in the Bill.

Cathryn, you spoke about surveys with your managers and about the strong support for the Bill, and you said that there is nothing in the proposals that should alarm a responsible business. Given what you also said about the pace of implementation and the need to continue dialogue, if we get that right, would you still say there is nothing in the proposals that should alarm a responsible employer?

Cathryn Moses-Stone: First, the right to disconnect was just a useful example of the sort of concerns we hear.

We are not saying there is nothing for businesses to be alarmed about. One of the challenges that managers and leaders face is implementing and managing change across their organisations, and that is a complex thing. That comes back to our point that we have a whole suite of data on the impact that highly skilled managers have on managing change in their organisations, and the knock-on impact that has on recruitment, retention, productivity and the success of a business. It does not mean it is easy and straightforward; I do not think many things that managers and leaders do are easy and straightforward. Again, it comes back to the core principle of having the right amount of time and being able to support managers to skill up. That at least gives them the tools to be able to tackle these complicated things head on, because they will be complicated.

Ben Willmott: I absolutely agree that there is a significant role for well-designed, effectively enforced employment regulation to support overall improvement in employment standards and to support efforts to improve employee engagement and productivity. The key is that it has to be well-designed regulation. If it is excessive or too complex to implement on the ground, it will lead to increased costs, and that will undermine the ability of businesses to improve job quality, invest in recruitment and skills, and support technology adoption and things that will drive productivity. That is why, as we move forward, the consultation is so important.

An example of a measure in the Bill is around the reference period for workers to have the right to guaranteed hours. It is not set out in the Bill, but in “Next Steps” it is set at 12 weeks. In our view it is crucial that there should be consultation on the 12-week reference period. The Government have set out their principles for a modern industrial relations framework: accountability, proportionality, collaboration and balancing the interests of business and workers. Those principles need to apply as we roll out and implement the proposals, so 12 weeks is a test that should be subject to consultation, because it is so important to the functioning of that right. That is the sort of thing where we want to see consultation—where it would help to decide that the ultimate regulation is effectively designed and can work.

[Steve Darling]

Q From Torbay to Tyneside, productivity in the British economy is the biggest challenge that we face. Cathryn has alluded to productivity a number of times during evidence. What opportunities do you see in the Bill for driving productivity and the culture change needed to drive that agenda through our workforce?

Ben Willmott: The Bill is focusing businesses’ minds on how they recruit, manage and develop their people. I will refer to comments I made earlier. If the measures in the Bill are designed the right way, they can support improvements in overall employment standards. But if consultation is not effective and measures are introduced that are not workable, it will have the opposite effect. It is about finding the right balance.

Cathryn Moses-Stone: Similarly, we have a lot of data that shows that policies like flexible working, enhanced family-friendly rights and day one rights make employees feel valued and supported, which in turn drives better performance.

We did a study last year looking at the impact of trained managers in effectively delivering hybrid working. By way of example, 68% of our managers said that hybrid working made it easier to increase their work productivity, and that was a result of managers being trained to manage teams that work in a hybrid way. We know that where managers trust their direct reports—this is what our evidence shows—they find that productivity rises. As I have already said, poorly managed teams face lower motivation, satisfaction and retention, and ultimately impact on business delivery. So really good management in designing work that allows employees to thrive is important.

We must remember that managers are employees themselves. Managers want it to work for themselves as much as they want it to work for employees. That in turn will boost productivity at the higher levels of the organisation as well. We have lots of data that backs that up. Again, it is all about how the legislation is implemented and all about the time and space that is given to support managers to do that.

Ben Willmott: The other thing I would add is that our members are certainly supportive of the ambition behind the Bill. Our member survey shows that there is significant support for changes to improve statutory sick pay and to improve parental leave.

There are definitely areas of the Bill that have support, but I will give an example of an issue. When talking to members in sectors that might bear more cost from changes to statutory sick pay, we found they were much more sanguine in September than they were after the Budget, because they are now thinking about it in the context of broader changes. The cumulative effect of changes and increases in employment costs needs to be taken into account when we think about individual measures.

Carly Cannings: On the point about productivity, if you look at what makes a workforce productive, there are lots of things that go in the mix, such as feeling engaged in the work you are doing and valued by your managers, as well as having an environment around you that offers things such as flexibility. The factors that lead to productivity are broad. We need to be realistic about the measures in this Bill and how far they will go to support productivity, given that lots of employers are probably already meeting lots of these minimum thresholds.

It is a step in the right direction. It raises the profile of things such as flexible working, so hopefully more businesses will adopt it—it is now a day one right anyway. It definitely moves in the right direction in terms of creating that happy, engaged workforce who feel valued and able to work in a way that works for them and their employer. Again, it is back to that point about raising minimum standards. There is more to this element about workplace culture and productivity than just minimum standards of employment legislation.

Cathryn Moses-Stone: Echoing that, it is important to acknowledge that lots of forward-thinking employers are already doing a lot of this stuff anyway. They are doing it for a reason, because they are seeing the impact on their business. That must not be forgotten.

Employment Rights Bill (Second sitting)

Justin Madders Excerpts

Committee stage
Tuesday 26th November 2024 Public Bill Committees

[The Chair]

I remind Members that questions are not limited to what is in the brief, but your questions must be within the scope of the Bill. In line with this morning’s session, for each panel of witnesses I propose to call the shadow Minister to ask the first question, then the Minister, and then the Liberal Democrat spokesperson. I will then go back and forth between the Government and Opposition sides. Anyone who wants to ask a question should catch my eye. We must stick to the cut-off times specified in the programme order, so I will interrupt questioning if necessary. I remind Members that they must declare any relevant interests both when speaking in Committee and when asking questions. We are being broadcast.

Before we start hearing from witnesses, do any Members wish to make a declaration of interests in connection with the Bill?

[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 to my membership of Unite and the GMB.

[The Minister for Equalities (Dame Nia Griffith)]

I refer to my entry in the Register of Members’ Financial Interests and my membership of USDAW, the Union of Shop, Distributive and Allied Workers.

--- Later in debate ---

[Greg Smith]

Q Mr Carberry, if I can come to you, looking at those you represent, what is it in the Bill that you think is right, wrong or needs amendment?

Neil Carberry: I will not repeat what Allen said about the aggregate cost of the Bill, but clearly it is an enormous piece of legislation, coming at a time when businesses—particularly consumer-facing businesses—have been through the pandemic, are carrying more debt and are struggling to drive the growth that the Government want. Among my members, as with many business organisations, the tone of the debate about the Bill was changed by the Budget. That was particularly around the shift on the threshold, which directly pushes up the costs of all of the people for whom an employer’s decision to hire is maybe more marginal. I associate myself with Allen’s comments on that.

More specifically, for those who are not familiar with it, our sector places 1 million people into new permanent jobs every year, but it placed 1 million people as temporary workers into workplaces today. So I come at this from the point of view of what do those people need to have good, positive, healthy working lives. Colleagues may remember the attempt to change the conduct regulations to allow agency workers to replace striking workers, which we opposed, because at the REC we believe in protecting temps and putting them in the right space.

The most important thing for our sector is the proposal to apply the same tests and rules on zero-hours contracts to agency workers as to directly employed workers. I will be really frank about that: there is a power in the Bill, we have been through the consultation, and we cannot see how any of the approaches in the consultation work. For some of the reasons that Allen has set out, agency workers are well protected. They benefit from the Employment Agencies Act 1973, from their own set of conduct regulations—the Conduct of Employment Agencies and Employment Businesses Regulations 2003, passed by the last Labour Government—and from the Agency Workers Regulations 2010.

There is a lot we can do to deliver the Government’s commitment to more certainty for agency workers—it is just not by applying the powers in the Bill. We fear that the Government are trying to avoid direct employers moving to agency to avoid the powers in the Bill. A few direct employers doing that is not worth damaging the employment prospects of 1 million people. For instance, if a supply teacher in a school has worked the autumn term to cover a sickness absence, and then the absent teacher comes back, we cannot see how giving that supply teacher a right to a contract from that school is good for the school or the supply teacher. Ultimately, we think that we will just see a move to using more overtime and lengthening the working hours of existing staff. That will be net negative for the workforce.

I think there are things that we can do on the zero-hours rules to protect agency workers, but it is not applying the proposals in the Bill. More generally, I think our members would say that the Bill feels a little undercooked in its thinking. I think it is a very quick Bill, and that there is quite a lot in it that employment lawyers and our members are looking at and thinking, “How would that work?” A classic example would be the collective consultation sections of the Bill. I do not think it is in anyone’s interests for large companies employing thousands of people to be stuck in perpetual collective consultation when they are shutting down one site with 20 people in it. That is just an example of one of the things that maybe need to be worked out through regulation—lots of this is in regulation—but we need to ensure that we are not putting up barriers to employment with the Bill.

[Justin Madders]

Q Mr Simpson, can I take you back to your traffic light? We will go to amber, because you mentioned the notice of shift as an issue in the amber section. I am aware from the UKHospitality workforce strategy that there is a general view that the hoteliers charter is a model of good practice, which does require reasonable notice of shift. Could you explain a little more what your concerns are on that?

Allen Simpson: It is more about the unknown. Again, reasonable notice is an important principle and there should be protections. I think that the challenge will be—I notice, by the way, from what I understand from having read what is, again, a complex and lengthy piece of work, that the Government are intending to leave it to case law and employment tribunal systems to figure out what “reasonable notice” means. In general, with different sorts of work, it is reasonable to say that there are different versions of what “reasonable notice” means. If I were going to go and work on an oil rig for three months, I would want more notice of a change of shifts than if I was going to work in the local pub. Therefore, I think it is partly about figuring out what the right starting position for notice is. It is partly about reflecting differences in things, such as whether it comes with a residential element; there are questions around that.

Then there are some practical things that I think will come out in the wash, but do need considering, such as shift swapping. What if two chefs say, “Do you mind covering Saturday, because I want to go out with my friends?” “Yes, of course; that’s fine.” Is that allowed, or can that decision only be taken outwith that notice period? There are also questions around other things. What if you put out a message saying, “There is a shift available; does anybody want it?” Have you made an offer of employment to everybody you have put that message out to? Is there a time after which you are not allowed to do that? One last thing: what if somebody agrees to move their shifts around—so you say on the Friday, “Do you mind coming in this Saturday and you can have next Saturday off?” “Yes, absolutely. Fine.” Is that acceptable?

Therefore, there are there are some practical questions about, first of all, the principle of different suitable notices of shifts depending on different forms of work, and about some practicalities, which I am sure are solvable, around the management of it.

[Justin Madders]

Q That is helpful; thank you. I appreciate that we have not got much time, so I will ask just one more question, if that is all right, of Mr Carberry. Obviously your organisation prides itself on having members who absolutely comply with the standards set by law. Do you feel that the fair work agency will be a good vehicle to help drive up standards, and is there anything in particular that you would like to see it focus on?

Neil Carberry: I think it is reasonably well noted that we were disappointed that an employment Bill was not brought forward in the last Parliament. It is time to raise enforcement standards. One of the most common worries that I hear about this Bill, for which I will not hold you accountable, Minister, is the experience that businesses have had of being the ones who comply and take on the on-costs—there are quite significant costs associated with this Bill—and then watching people flout the law and not face enforcement, so a fair work agency is a good idea.

If I may, I have a couple of guide points that we have heard from our members. One is that we are great fans of the Employment Agency Standards Inspectorate. We think it does excellent work as our regulator. It sometimes annoys the hell out of me, but that is what it is for. The team there are deeply expert, and, in the creation of the fair work agency, I would be—if you would forgive a Scottishism—scunnered if we lost that expertise. Maintaining expertise as we move into the FWA is really important, and that goes with properly resourcing the FWA and giving it the capacity to maybe draw down some of the claims that currently take two years to go to employment tribunal.

The other thing, which is maybe a bit more challenging, is that, when we have done this in the past, success has been delivered by making these bodies of the labour market, not of the Government. If you go back to the 1970s, the Health and Safety at Work etc. Act 1974 was guided into existence for its first two decades by the Health and Safety Commission.

As a former low pay commissioner, I will say that we hear a lot about businesses’ views of the minimum wage in the ’90s; they were against the minimum wage at £7.20 an hour in 1999, and that is why it was not introduced. They were in favour of one at the introductory rate, which was developed by the Low Pay Commission. I would really like to see the FWA have that kind of tripartite guiding force to make sure that it is as much of us and our union colleagues as it is of the Government.

--- Later in debate ---

[Greg Smith]

Q We heard from witnesses in previous sessions that they worry that some measures in the Bill—on zero-hours contracts and some of the fire and rehire potential unintended consequences—will make some employers more reticent to take on a new hire, or to take a gamble on someone who might need a chance or second chance, or whatever it might be. Is that reflected in either of your sectors?

Jim Bligh: Unfair dismissal and the probation periods are a concern for us. Most of our sector uses three or six-month probation periods now. About 85% of our members have told us that that is what they will use. About 6% use 12 months. There would be, I think, a concern about a nine-month period—the reduction from two years. It is critical that performance management from day one does not put a significant burden on SMEs in particular, and it is important that we keep the flexibility. If something is not right for the employee and not right for the employer—that performance is not there, that quality standards or whatever are not met—there should be flexibility in ending that employment relationship, on both sides.

What concerns us about the Bill’s proposals is that young people or people re-entering the workforce—which rightly is a priority for Government as well, and I note that Liz Kendall is speaking about this in the House at the moment—could be shut out under the changes that are coming through in the Bill. Our proposal would be to revert to a 12-month probation period. Obviously, people automatically qualify for unfair dismissal on some elements. It is right that those elements are retained, but it is important to us that you keep that flexibility from 12 months, that you have a light-touch approach and a process there as well, but also that we have enough time to implement.

What concerns us is that we are talking now about changes that will come in, I think, in two years’ time—that is a commitment from Government. That period is welcome, but we are not certain what the final provisions of the Bill will be. There is a long commitment to consultation, which we also welcome. Our proposal would be to implement two years after Royal Assent, to make sure that that concrete security and guarantee is there and that the goalposts are not shifted for employees and employers as they start.

Jamie Cater: I would echo that and agree with those comments. Stepping back slightly to look at the bigger picture, it has become difficult for us, with members, to separate out the impact of the legislation and the impact of the autumn Budget—the increase in employer NICs in particular, but in general the tax burden on businesses. That, taken together with the measures in the Bill, increases the cost and the admin associated with taking on people. There is a risk that that disproportionately impacts people on the edges of the labour market, I suppose.

It is very welcome that the Work and Pensions Secretary is today talking about how to reduce economic inactivity, particularly focusing on skills and health. We really support that focus, but there is a danger that the measures in the Bill, combined with the total cost impact, will make employers less likely to take that risk on someone.

On the protection for unfair dismissal in the statutory probation period, we typically hear from members that the usual approach would be to have a six-month probation period in an employment contract. They might then have a bit of additional flexibility for someone who is a borderline candidate if they need to be kept on probation for a bit longer, perhaps if they need a bit more skills training, experience or additional guidance in something before a firm decision is made about permanent recruitment.

Members often talk to us about effectively a six plus three model, where there is a contractual six-month probation period with the flexibility for an additional three months’ probation if there is a bit of uncertainty. The Government’s stated preference for a nine-month statutory probation period feels about right. That is probably the minimum; we would not want to see it go any lower than that. I think our preference would be 12 months, just to give that additional leeway, but nine months is probably about right for what we see reflected in standard practice from our members.

[Justin Madders]

Q Good afternoon. I think you have generally been positive about the Bill, albeit with some caveats. How do you see the implementation of the Bill being of benefit to the businesses that you represent?

Jamie Cater: To come back to the impact of things like statutory sick pay, I think that will help with productivity and retention. We see a huge amount of feedback from member companies about their own investment in health and wellbeing, and the positive impact of that in keeping people in work, helping with productivity and reducing presenteeism. I think the measures on statutory sick pay will help with all those things, including reducing long-term sickness absence, reducing presenteeism and improving people’s productivity. I think all those measures are really positive.

However, what we need to be careful of, and what we are concerned about—going back again to the impact of the Bill alongside the autumn Budget—is that it does not reduce or restrict employers’ ability to continue to invest in all those other things that also improve productivity. We have heard concerns about impacts on training budgets, internal budgets for things like occupational health and wellbeing, and investment in technology and new machinery that can help workers to become more productive and efficient. There is a risk that some of the costs associated with the Bill and the autumn Budget mean that those internal investment budgets will be squeezed. There is an opportunity, through some of the measures in the Bill, to improve productivity and improve security for people in the labour market, but we need to ensure that some of those other measures are not undermining those benefits.

Jim Bligh: I agree with that as well, and I endorse everything that Jamie just said. I think that the statutory sick pay clarifications are particularly helpful, and the clarity on parental leave should be helpful too. Flexibility is also important, and we need to ensure that the flexible working practices that are already widespread in our sector, as I know they are in other sectors as well, are protected and clear. I think there are concerns that potentially outweigh some of those benefits, which we are very keen to explore with the Government through the consultation periods.

[Justin Madders]

Q You have both talked a little about the statutory probation periods, and I think you are more or less in the same place as us on how long they should be, albeit there is a bit of argument either side. Based on that, can I take it you agree that, as a matter of principle, removing the qualification period for unfair dismissal from two years is a good thing?

Jim Bligh: I think we would accept that your manifesto had a pledge to remove it from two years and take it back down. We are aware, and we are grateful for the fact, that Government have moved it from day one up to nine months—I think that is really important. Pragmatically, we should look at a 12-month window instead, which worked well before and we think could work well again in future.

Jamie Cater: This depends on the detail of what comes in secondary legislation and on further consultation about exactly how that statutory probation period works, particularly the light-touch process for fair dismissal during the nine-month period.

From our perspective, the lighter touch the better. Businesses will want to know that they will have what they need in terms of following the correct process. I am thinking about ACAS having the capacity to update things like their disciplinary and grievance procedures. If and when there are claims going to an employment tribunal around unfair dismissal, the tribunal system must have the resources to deal with the potential uptick in the number of claims going through that system. So it is about how that fair dismissal process works following the consultation process, and then ACAS and the employment tribunal having the right resources to cope with that.

[The Chair]

I call the Liberal Democrat spokesperson, Steve Darling.

--- Later in debate ---

[The Chair]

I call the Minister, Justin Madders.

[Justin Madders]

Q Thank you, Ms Vaz. Good afternoon, everyone. Obviously we were all horrified at the way people were treated by P&O, and I think we share your critique that the previous Government’s response to that was not sufficient. Clearly, we are trying to address those issues in the Bill. Do you feel that it will be a good deterrent against employers basically calculating a financial issue as a way of trying to avoid their legal obligations on consultation?

Mick Lynch: I am hoping it will be, Minister. I am hoping that bad employers will have to think twice about being badder again, in P&O’s terms. I have to emphasise that we were on good terms with P&O. We— both unions—were negotiating their new vessels. They deceived us deliberately. They took legal advice that, rather than negotiate with us the new-technology vessels that were coming in, they would rather sack all their people and break the law, and use security guards to get our people out.

We need good enforcement, a powerful agency that knows what it is doing and has a clear remit, and the right deterrents. I think that goes into company law in some ways. I do not think any of those people were worried about being disbarred as directors, as fit and proper persons and all the rest of it, and I do not think they were worried about their profits being affected by any fine they would get. As it happens, I do not think anything has happened to them at all. As a director, you have got to think about whether you are going to pay your VAT, whether you are going to pass on the national insurance, and whether you are going to pay the rates and all the bills from your suppliers. You should be thinking very seriously about the consequences for you in employment law, and other laws related to employment.

But as trade unions—as representatives of the workers —we have got to have the power to intervene where we know employers are breaking the law. That is a real shortcoming. The power is all with the employers. They can injunct me personally. They can injunct my trade union. They can close us down for making clerical errors on ballots—just misnaming or misbranding the grades in a dispute—and they will do it if they get any chance. We have no power to injunct them on behalf of our members, it seems. I think that needs to be considered. The fair work agency and its enforcement powers should be at the level of injunction to stop these rogues getting away with it in the future.

Martyn Gray: I agree with that. I would add that what is quite helpful is the Bill’s removal of vessels being treated as individual establishments. That is particularly helpful when it comes to redundancy consultations, and what we saw with previous case law under previous legislation. In the case of Seahorse Maritime v. Nautilus International it was determined that each individual vessel had to be treated as a single establishment. That removed the right for operators with significant GB links anyway—in those particular circumstances—to circumvent the need to consult with recognised trade unions on what amounted to mass redundancies. There were more than 20 people being made redundant from that particular employer, but they were able to circumvent that, because each individual vessel was treated as a single establishment. That is a really helpful feature of the Bill, and something that I think should be celebrated and praised. It is going to be very helpful in our being able to defend our members’ rights and hold companies to account for their responsibilities when going through a redundancy process or collective consultation on business restructuring in organisations.

Linking that point to P&O Ferries, it would not have made a difference there; each of the P&O Ferries establishments was more than 20, so there would have been a requirement for the collective consultation anyway. Indeed, two of the P&O Ferries operations would have been more than 100 people, so they would have required slightly lengthier consultation periods under the legislation. However, this Bill will be helpful in a wider maritime context, where there are smaller numbers of seafarers engaged, in being able to defend their rights and interests and really hold a company to account over the need to make those redundancies. The change to fire and rehire is quite helpful as well, with businesses needing to demonstrate a clear and identifiable need instead of seemingly being able to operate on a whim.

Gemma Griffin: I do not disagree with any of that. Talking about significant ties to the UK, this is something that you have to keep in your mind. Often in shipping there are myriad different employers based outside the UK—the flag of the vessel can be EU, in many cases, or UK or whatever. When you look at the Dover straits, yes, DFDS has both UK and French flagged vessels, but our vessels are doing 42 sailings a day in and out of Dover port, and up to 54 in the summertime. Other operators are doing more or less the same. If that is not a clear link to the UK, I would like to know what is. It is not the same as one sailing every day out of a port in the North sea.

As an operator that holds our seafarers in good stead as the absolute backbone of our organisation, I would like to be able to see a way of capturing that in UK law, so that we will not find yet another loophole, with the flag state being responsible but doing nothing and the port state, in this case the UK, wanting to do something but not capable of doing it. That sounded like a bit of a riddle—I do apologise.

[Justin Madders]

Q No, it is all very useful—thank you.

Let me pick up on something you said earlier, Mick, though others can answer as well if they want. You talked about injunctive relief as a potential solution to the threat of fire and rehire. We are consulting at the moment on measures including interim relief as a potential action that unions can take on behalf of their members. Can you say a little bit about why you would prefer injunctive relief, rather than interim relief?

Mick Lynch: Interim relief can take time, and I am not convinced that tribunals will have the power and the kudos to achieve it. I am not a lawyer, as you know, Minister, but I want the ability for unions to make an intervention on behalf of workers. It would have to be based on law and something that the company has done wrong, but it seems to me that injunctions are immediate and carry the weight of a higher court. When we get injuncted under the anti-trade union laws, it is at the High Court and it is immediate, and there is no doubt about the effect of that injunction. If you want to defy it, it is on your organisation’s head, whether that is a trade union or a multinational company.

If it is not called injunctive relief, I do not mind—I do not mind whatever way the Bill comes out—as long as it has the power of immediacy and enforceability through proper channels. That is what we want to see. We do not just want a slap on the wrist that the company factors in; if you have added another £10,000 to the fine, but they are sacking 2,000 people, they do not really care. What we want is for them to be forced to stop the activity, subject to the full force of the law, not just a minor blip on their spreadsheet. Whether it is called an injunction or interim relief, I do not mind. If the tribunals are beefed up so that they can do that, that is fine, because that can be a good channel as well. I am open to suggestions on that, but I hope we get the power to do it.

[Justin Madders]

Does anyone else want to respond?

Martyn Gray: We have spoken about unintended consequences, but an intended consequence of this Bill is addressing an imbalance between the rights of employers and of employees and workers in the UK. As a trade union, we are subject to much higher bars and thresholds when it comes to being prevented from enforcing the rights of our members or the rights of workers, and from standing up for what is right, what is appropriate and what is fair. It would be good to have a mechanism where an employer can be held to the same scrutiny, can be held to account in the same way and with the same preventive immediacy, without the consequences that we would have to face—because employers do not face the consequences if that injunction is granted and it then turns out not to be fair or appropriate, or if it is done on appeal; that is just dealt with.

This measure is about fairness and being appropriate. It is right that unions can make interventions on behalf of the members they represent, and can do so without needing to worry about having to put significant amounts of members’ money at risk. Should that then turn out to be something that needs to be resolved at a later date, unions tend not to pick those particular fights and arguments without having first looked very carefully at what is within the realms of the law and what is not. It would be extremely unusual that that mechanism would be abused, should it be granted. It is really important to ensure that the intended consequences of placing the rights of workers and of employers, and of trying to increase the rights of workers to a point at which they can address some of the imbalance, are supportive here. That would be a big help in being able to defend the rights of workers.

Gemma Griffin: I agree. The very nature of the thing is that employers and organisations are larger than employees. If employees are not able to collect themselves to a sum total where their voices can be heard, then they have no chance. There is something fundamentally wrong in this day and age that a union agreement can just be put to one side and actions taken—just completely and utterly taking the voice away from employees. When we look at how the United Kingdom operates on an international level, we are quite happy to sit with the unions and employers to negotiate at International Labour Organisation level and International Maritime Organisation level and so on—but when we come home into our own shores, those rules do not apply. The unions are not the enemy of our organisations.

It is a really poor message that we are sending out: that organisations that do the right thing and, like DFDS, recognise employees’ rights are disadvantaged, because before we sell a single ticket to a passenger, we are already hugely more costly than our operators in the same field. But we make the choice to start a race to the top instead of joining that race to the bottom.

[The Chair]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[Greg Smith]

Q This is a question to all of you, off the back of the last answer. It was suggested during the last evidence session that this Bill does not go far enough. It is evident from the declarations made at the start of the sitting that the relationship between the trade union movement and the Labour party is symbiotic, so what more have you asked the Government to put into the Bill? Where do you want it to go further? Mick Lynch gave a very clear answer in the previous session. What are your respective unions’ greater asks of this Government?

Paul Nowak: Can I make a point first about the symbiotic nature of the relationship between Labour and the unions? We certainly have a shared history and shared values, and in some cases we have unions that are affiliated to the Labour party. The TUC represents those 5.3 million workers regardless of who is in government, and it does not have a formal relationship with the Labour party. Our job as trade unionists is always to want more and better for working people. I think it is important to recognise that this will be the biggest upgrade to workers’ rights in decades—I was going to say in a generation, but it is more than that. It will directly benefit millions of working people.

I came in at the end of the last panel, and Mick was talking about sectoral collective bargaining. The Government have indicated that the first fair pay agreement will be in social care. We would love to see that approach—those fair pay agreements—rolled out to other sectors of the economy. That is a point that we will make going forward.

It would be churlish not to accept that the Bill is a big upgrade to workers’ rights and to union rights. This will be the first time that a Government have repealed anti-union legislation in my 35 years as a union activist, and I think it is really important that they do. If we take the minimum service levels legislation as an example, we always warned that it would be unworkable. It was red-flagged by the Regulatory Policy Committee and by the Government’s own impact assessment when it was introduced, and not a single employer has ever used the legislation. We will be positive; there will always be more that we would like any Government to do on behalf of working people, but this is a really important piece of legislation.

Maggi Ferncombe: I agree. To be frank, as the largest trade union in the country, the political stripe of the Government does not matter to us; we will obviously do what we can to improve public services and the terms and conditions and salaries of workers in those public services. You asked what more we would want, but, to be honest with you, we want an extension of what is already in the Bill: the opportunity to have some sort of legal mechanism for collective claims. Individual workers, unions when they are involved, employers and employment tribunals spend hundreds and hundreds of hours trying to deal with individual claims from individual workers. An unintended consequence would be the savings to employers from not having to deal with individual claims that take years to go through tribunals. If there was an opportunity to have a mechanism to deal with it collectively, it would save everyone time and money, including employers.

Dave Moxham: We have a disproportionate number of zero-hours contracts in Scotland, probably because we have proportionally more small businesses as part of the UK economy. We welcome the moves in the Bill to address that. I heard the evidence given by the last panel, and from our perspective the majority of employers do not use them but they have an intensive impact. For the last 10 years, the STUC has run a campaign called BetterThanZero, which goes out daily and talks to these workers, who are predominantly, but far from all, young workers. The impact on their lives—ergo the impact on the economy because of their lack of stability, certainty and security—has a far wider effect than on just the individual and cannot be overestimated. When we look at the provisions currently in the Bill, we certainly believe that what defines a short-hours contract and some of the other things that have yet to be decided need to be quite strong. If you go on to the internet, you can already see discussions among employers about how they will circumvent the proposals, so that will be one area where we will be looking for strength.

Hannah Reed: There is an awful lot to welcome in the Bill, and I will not take up the Committee’s time by listing it. We can submit evidence to you on equality rights, trade union rights and so on.

Like all Committee members, I am sure, we are keen to ensure that the Bill comes out as watertight legislation that makes a real difference to people’s rights. There are some elements of the Bill where we would want to continue working with you as a Committee and with the Government to tighten up what we consider to be potential loopholes, and I will briefly name three areas.

The first is the provisions on fire and rehire. Unite’s concerns are that some of the uses of heavy-handed tactics by employers that we saw during the pandemic and since could still be lawful under this Bill. We are concerned that employers may be able to justify fire and rehire in certain circumstances, and our view is that there needs to be a total ban. We are not confident that the employment tribunals will look behind the corporate veil or question an employer’s arguments for why they needed to use fire and rehire tactics, so we do not think it goes far enough. Importantly, there is nothing in the Bill at the present time that stops the employer from sacking the workforce. While we welcome the Government’s consultation on interim relief, we, like previous participants. would like to see some measures before that that stop the employer and require them to open their books to demonstrate to forensic accountants that changes are needed, and to provide a genuine opportunity for negotiation with trade unions. We are very equipped; we know what needs to be done if changes are needed.

Secondly, we would like to see further measures in the Bill to extend collective bargaining. Very briefly, we recognise that there are important measures on statutory recognition in the Bill, but we would like the Government to consider going further, particularly to ensure that laws prevent the abusive practices seen in the recent Amazon campaign. We would also like faster routes to recognition. Workers often have to wait for six months and are repeatedly asked, “Do you want statutory recognition?” They repeatedly say, “Yes, we want statutory recognition,” but employers are given time to fight against the workers’ will. We think there should be a faster route to automatic recognition.

The last point I would raise is on access. I have already talked about the benefits of working people having the opportunity to meet with trade unions in the workplace, to tackle discrimination and press for better pay and conditions through negotiation. We would like to ask the Government to look at the access measures, to see if there are ways of having a default or free-standing right of access so working people have a genuine right to democracy and representation at work.

[Justin Madders]

Q Good afternoon, everyone. I want to start with a question to you, Paul. You have referenced this £13 billion benefit, which I think is from some recently published research by the TUC. Could you tell us a little more about what that will look like in terms of benefits to individuals?

Paul Nowak: The research was based on a very modest estimate, taken from the Government’s own suggestions that there would be improvements on things like productivity, reducing absenteeism and bringing back into the workforce people who currently find it difficult to access the workforce, for example because they have caring responsibilities or a need to balance work and family life. We assumed a 1% uptick across those measures —as I say, a very modest assessment—which meant £13 billion-worth of positive impact on the UK economy.

In many ways, this just reflects what already happens in unionised workplaces. One of the things I do as the general secretary of the TUC is to visit places up and down the country, large and small. Some of the most successful and most productive employers in this country —whether it is Airbus, Jaguar Land Rover, Rolls-Royce or, indeed, our largest private sector retailer—are employers who have close working relationships with trade unions and treat their staff with respect.

This legislation is really important, Minister, because it does what it says on the tin. It is about making work pay, and for far too many people in this country, work does not pay at the moment. We have a problem with low-paid, insecure employment, with over a million people on zero-hours contracts. Overwhelmingly, when you ask those individuals if they would like the right to guaranteed hours, poll after poll shows that 80%-plus say they would. When you play that out in practice—I know that the Work Foundation did some work with Wetherspoons. When Wetherspoons offered their staff a choice between zero hours and guaranteed hours, 99% of their staff took the guaranteed hours. That is good for those workers, but it is also good for employers, because workers who are securely employed, who feel good about their work and who are supported at work are more productive, and employers are more likely to invest in them. I genuinely believe that this legislation is win-win—it is a win for employees and workers but a win for employers as well, and it is good for the UK economy overall.

[Justin Madders]

Q Thank you for that answer. You have certainly been able to quantify a lot of the evidence we have heard today about the benefits of the Bill. Does anyone want to add anything on the benefits to the economy and wider society?

Maggi Ferncombe: Let us take a sector within Unison such as the care sector, where you have low-paid workers who, some of whom are on zero-hours contracts or working away from home, potentially for 10 or 12 hours a day, but only getting paid for five of those. The amount of money they put into their local economy will be a lot smaller than if you had a fair pay agreement with proper regulation, where people were paid adequate salaries and had better opportunities to train.

We must bear in mind that the care sector has one of the largest vacancy rates, with 130,000 vacancies at the moment. That is simply because care workers are either taking on additional part-time jobs in the evening or morning—I do not know when they have time—or taking on jobs in supermarkets or call centres because they can get paid far more. If they were paid a better salary, they would put more money into their local economy and would pay more tax. Ultimately, that would be the benefit for the economy from that particular sector. Those 130,000 vacancies are a growing problem; we are an ageing population, and having a properly remunerated workforce in social care will bring nothing but benefits. It is very hard to quantify how much that will be; it all depends on what the fair pay agreement comes out with.

Dave Moxham: I will just quote a number of different quantifications. I know that small businesses, particularly in hospitality, have been a large focus for this Bill and more generally. The estimates made by hospitality businesses of the cost of staff turnover are anything from £5,000 an employee to £15,000 an employee, although none of those are my estimates. Then consider that it is an industry with incredibly high turnover—we are talking a 30%-plus turnover. I have not done the sums, because there are various estimates, but you can work out how a relative improvement in retention would impact the hospitality sector. Some of the measures here that we believe would encourage lower-paid hospitality members to stay in the workplace would have an incredible impact.

Hannah Reed: We do hope that the Bill will lead to an expansion in collective bargaining, because it is the tried and tested method and internationally recognised as the best way of improving pay and conditions and reducing staff turnover. We know that there is a skills shortage in this country; reducing turnover and investing in skills, which is what trade unions work with employers to do, will have significant economic benefits, including improved productivity.

I must confess that today I quickly read the Regulatory Policy Committee report, which raised questions about whether the measures in the Bill are justified. Speaking as a trade unionist who speaks on a daily basis to working people, there is not a single measure in the Bill that is not needed. One of the risks with impact assessments carried out by the Government—we hope that the Government will look at this—is that often they capture quantitative data but do not look at the qualitative data. What is the actual experience of working people in the workplace? Where is the harm and what needs to be addressed? We know that in hospitality, for example, one of the big issues our members face is a lack of security or certainty over hours. The costs of childcare for hospitality workers are huge, and the inability to pay rents or even dream of saving for a mortgage is a very significant problem.

There are also real problems of sexual harassment. One of the things that really surprised me was that the RPC said that it could not see a justification for further regulation of third-party harassment. To give some statistics, the NHS staff survey this year showed that 8.67% of NHS staff experience some form of harassment by either the public or patients every year. We know that there are major staff shortages in the NHS. Exposing our workforce to harassment by third parties is a major problem.

In hospitality, it is far more rife. Unite did our own survey that showed that 89% of our members reported being subject to some form of sexual harassment in the last year. Many of them—56%—said that that was from customers, and at least half our members said that they were considering leaving the workplace because of the sexual harassment they have experienced. There are many rights in the Bill that we believe will help to deliver better employment and support businesses to become more productive and more profitable.

[Justin Madders]

Q It seems clear that the RPC did not talk to any of you before producing its report. Can I ask you about something that came out in the evidence this morning? Some concern was expressed that where there is a recognition ballot and the numbers voting in it do not demonstrate a majority of workers in the workplace—it may be a simple majority of people who voted, but it is not an actual majority of workers—it may not be a true voice of the workforce. It was almost implicit that there will be another mechanism for that voice to be heard. I wondered if you had anything to say about those concerns.

Paul Nowak: I think it is a misplaced concern. Union recognition ballots are the only democratic test that we have where we would expect not only to get simple majorities, but to have 40% of those who are eligible to vote voting in favour. I think it puts a barrier in place towards unionisation. We would not use that democratic test in a parliamentary election, a local council election or the election of a leader of a political party, and it seems perverse to put that obligation on unions and workplaces.

Unions derive their credibility and their ability to represent people from being genuinely representative of the workforce, and it is in nobody’s interest to have a union that only represents a minority of the workforce. Unions are always striving to represent the majority of the workforce in workplaces, and I think we do that and prove that very effectively in workplace after workplace.

At the moment, the system is effectively gamed towards hostile employers to frustrate the will of people to join a union. We effectively count abstentions as no votes. Again, that is not a democratic test that we would put up anywhere else. Taken alongside the other provisions in the Bill, including the union right to access the workplace, the simplification of the recognition procedure is really important in representing the democratic view of the workforce.

Going back to a previous point, I think it is important to say this, Minister. No piece of legislation requires people to join a union or requires a workforce to vote for union recognition. All those decisions rest with the workers themselves. That is a really important underpinning point for the way we do trade unionism in this country. With this change in legislation, we get a level playing field for unions.

[Justin Madders]

Does anyone else want to come back on that one?

Maggi Ferncombe: Can I just make a point? It is almost like unions are the enemy, when you hear certain businesses talk. Unions have a common goal with every employer where we organise, and that is for the organisation to do well, because that means that the staff and the workers will do well as well. Especially in the sectors that I represent, we have an absolute common goal with all the public sector bodies. We want good-quality public services. Working with trade unions is the best way to achieve that, and good employers know that. Good employers know that working with us will save them time, money and energy. They will have a workforce that are much happier in what they are doing, and they will be more productive, with less sick days. The statistics are all around. Putting additional barriers in place where workers cannot undertake the fundamental right of joining a trade union—I think it is a false barrier, to be perfectly honest with you, because if workers really want to join, they will.

Dave Moxham: Very briefly on the access issue, individual workers should have the right to say yes or no, but in order to exercise their right, they need to know the possibility. The possibility comes from very simple, but hopefully very straightforward and not bureaucratic, arrangements that expect an employer once in a while to provide access for a union to speak to those workers. It should be really simple. You do not get to exercise the right to say yes or no if you do not know in the first place.

Hannah Reed: I have one quick comment. I totally agree with the points on access. Trying to think about it from an employer’s perspective, if a substantial number of workers within your workplace are saying, “We want trade union recognition,” ignoring that—saying no to those requests—must have an impact on staff morale.

Another point we would add is that our concern is that the statutory recognition provisions are not balanced. All the provisions at present tend to be weighted too much towards the employer, because the employer can delay the process, providing them with more and more time during statutory recognition to invest resources and put pressure on workers not to vote for recognition.

We welcome the consultation from the Government, and we want to work with them to strengthen the provisions to provide much earlier access, so that it becomes the norm in the workplace that the trade union is present and that workers can ask questions, but also that there are stronger unfair practice provisions. I know that we look at international practices, and I noticed in the States just last week that the National Labour Relations Board actually made it unlawful for employers to hold meetings with staff for the purpose of trying to convince them not to support recognition.

Could you imagine a law within the UK—we hope we could get to this point—where there is actually a level playing field, and where employers cannot create a hostile environment and say to workers, “You cannot have a democratic right. You cannot have your choice to have a say”? That is what collective bargaining is: giving workers a say over their own pay and their own terms and conditions. That is not something that is foreign; it is just about empowering workers to have their voices heard by their employers.

--- Later in debate ---

[Greg Smith]

Q Thank you for being with us. Can you give us your view on whether the Bill goes far enough to combat the issues that you campaign on, particularly women’s rights at work? Where would you like to see elements of it amended, either to make it stronger or to get rid of things that might have unintended consequences, and are you concerned about any particular areas of the Bill either not delivering what they say they will or delivering something completely different?

Jemima Olchawski: At Fawcett, we really welcome the Bill. Overall, we still have an economy and workplaces that consistently disadvantage and exclude women. That means that they are much more likely to be on zero-hours contracts, to be in low-paid work and to be held back by a lack of access to quality flexible part-time work. Each of those issues is intensified for most black and minoritised women, and for disabled women. The situation results in serious consequences for individual women. We have a gender pay gap of just under 14%. On average, women take home just over £630 a month less than men. It also has a detrimental impact on our economy, because it is a marker of the ways in which women are not fully participating or contributing to the economy at their full potential. Estimates indicate that that means we are missing out on tens of billions of pounds of GDP.

We strongly support the measures as an important step towards redressing that balance. In particular, we are pleased to see the inclusion of equalities action plans as an important way to get employers to drive forward progress on the gender pay gap. We are glad to see the emphasis on the importance of flexible working and the day one right to statutory sick pay, which will have a disproportionate beneficial impact on women, as well as further protection from sexual harassment in the workplace. Some 40% of women experience sexual harassment at some point during their career.

There are areas where we would like to see additional inclusions or things going further. Flexible working is incredibly important for women who have caring responsibilities and continue to do the majority of unpaid care, and having access to flexible work is vital to enable them to progress and earn to their full potential. We would like to see a duty on employers to advertise jobs as flexible, rather than a situation where women have to wait until they are in a job before they can begin that conversation. You cannot move into a new job if you are not sure whether you will be able to replicate the flexibility that you have in an existing role. That leads to women being under-employed and their skills underused.

The day one rights to maternity, paternity and parental leave are important, but they have to be remunerated. There has to be a day one right to pay if we actually want people to take it. Particularly if we want men to take on more caring roles, we need to make sure we have a refocus on remunerated leave, and that includes parental leave. We welcome the fact that there will be a review, but we need to think about this as part of those measures.

I would like to see more around equal pay in the Bill. Measures could be taken that would support women to access fair pay, such as pay transparency and ending salary history questions. The last thing I would like to see more on is making sure that there is proper enforcement of those rights—that the enforcement bodies are properly resourced and have the teeth to ensure that the rights really hold.

Joeli Brearley: It is a big question that you have asked. I support everything that Jemima has just said. We are very supportive of the Bill, but I think there is a lack of clarity on some of the areas that we are particularly interested in. On flexible working, we are really pleased to see that the Government want to make it the default way of working. That is really important, but we need to know exactly how, and what mechanisms will be in place to do that. The current law on flexible working isn’t working. We want to see an advertising duty as well, which I am sure we can explore in a bit more detail later.

We are also very supportive of parental leave being moved to a day one right. It is kind of amazing that that is not in place already. But without it being remunerated, take-up will be very low. We would have liked to see more on parental leave. We have a shockingly low rate of pay for maternity. We have the worst paternity benefit in Europe. This is causing huge problems for families, particularly new families that have just had a baby. They are getting themselves into terrible amounts of debt. Also the way that our parental leave system is structured means that women are responsible for the care of a baby. They tend to take long periods of time out of work, whereas men tend to go back to work very quickly. They fall into the role of breadwinner, and the woman falls into the role of caregiver, and that continues for the rest of their lives—which is why there is such a large gender pay gap.

The redundancy protections are great. Again, we are very pleased to see that, but we need specifics about what it means. We would like to see that pregnant women and new parents can only be made redundant in exceptional circumstances. By that we mean when a business is closing or perhaps when a service has stopped being delivered. It is very difficult, if you are made redundant when you are pregnant or have just had a baby, to get another job. Often you are made redundant and then cannot access statutory maternity pay. These are very particular circumstances. We know that many women are still being made redundant when they are pregnant or when they are new mums; 17% of calls we get to Pregnant Then Screwed are related to redundancy, so it is a big problem.

What we do not have at the moment, but really need, is data that shows us what is happening on the ground. A report was done by the Equality and Human Rights Commission under the coalition Government that found that 54,000 women a year are pushed out of their jobs for getting pregnant or for taking maternity leave, and 77% of new mums experience some form of discrimination. That report was done in 2016, and there was a guarantee at that point that the report would be done again five years later. It is now nine years later and we still do not have any new data to show us exactly what is happening on the ground. Without it we are making decisions in the dark, so we would really push for that report to be done again.

We would have liked to see something in the Bill on non-disclosure agreements. Our research found that 435,293 mothers had been gagged by non-disclosure agreements when experiencing some form of discrimination. It is a serious problem. Again, we do not know what is happening in companies across the country. Women tend to experience this form of discrimination and are then forced to sign these agreements and are given a low amount of compensation. They suffer mental health consequences because of that. We want to see the UK follow what Ireland has recently done, so that non-disclosure agreements cannot be enforced unless the claimant wants them to be. We would also have liked to see something in the Bill on miscarriage leave, because at the moment there is no right to any leave or pay if you miscarry before 24 weeks. We would have liked to see something on fertility treatment. As many of you will know, we have a baby crisis in the UK—we are not having enough babies. We want to encourage people to have fertility treatment, so we need a legal right to time off.

We would like to see something on reasonable adjustments. There are currently reasonable adjustments if someone has a disability, but not if they have a dependant with a disability. Many mothers of disabled children are struggling in the workplace because they need time off for appointments, or whatever it may be. We would like to see a requirement for all employers to publish parental leave policies.

[Justin Madders]

Q I have just one question, mainly for Jemima, but you are welcome to chip in, Joeli. The Regulatory Policy Committee has suggested that there is no evidence base for third-party harassment. Do you have any thoughts on that criticism?

Jemima Olchawski: There is strong evidence that the majority of sexual harassment experienced in the workplace comes from third parties. This is where someone experiences harassment from a client, customer or patient. Some of those who are most vulnerable would include those working in retail and hospitality. It is essential that anyone working in those environments is as safe as they can be and respected in their workplace. We would consider it essential that employers’ responsibility to take reasonable steps to prevent harassment includes third parties, because as a victim, it is not relevant that the person was not a direct co-employee. What matters is the harm experienced. It is absolutely within the bounds of good practice and reasonable steps for employers to address that.

Joeli Brearley: Nothing from me. It is not my area.

[Steve Darling]

Q I visited Torquay girls’ grammar school in my constituency of Torbay some time ago, and met the head and some of the sixth-form students who were experiencing sexual harassment in the workplace throughout Torbay. Does the proposed legislation go far enough? I am particularly thinking of young people who may lack confidence. What could be built in to support them to call it out, so that it is not just seen—as other people might call it—as a bit of a banter or something like that? It is deeply hurtful and painful for those individuals, and the sooner we give them support the better. I welcome your reflections on how the Bill could be strengthened in this area.

Jemima Olchawski: It could be strengthened by having clear guidance and expectations around the reasonable steps that will prevent. That should include multiple reporting routes, which might be anonymous if that feels more appropriate, and training for managers. Our research shows that managers want to respond appropriately, but often when those conversations come up, they do not know what the right thing to do is. Consequently, lots of those conversations end up going badly, and young people or employees do not get the support they need.

It is also important that enforcement agencies have the resource to investigate whether policies and procedures are in place, so that we can embed a culture of prevention rather than just respond decently when incidents happen. That is in the interests of employers too, because cultures where there is bullying or harassment are bad for productivity and staff turnover. It is in everyone’s interest to ensure we address this and cut it off at the pass.

Joeli Brearley: The only thing I would add is that when women experience sexual harassment or any form of discrimination and want to access justice, the justice system is currently failing them—it is not working. We know, certainly in cases of pregnancy and maternity discrimination, that fewer than 1% of women who have that experience even raise a tribunal claim. Part of what we need to do is extend that time limit to raise a claim. It is currently three months. It needs to be at least six months, so that women have the opportunity to recover from their experience before they start to go through that onerous, difficult process of raising a tribunal claim.

--- Later in debate ---

[Greg Smith]

Q Do you have a view on how it would be best to structure change around specific single projects like the building of a railway station, which might take two, three or four years and then that is it; there is a cliff edge and the project is over? How would you best structure that?

Alasdair Reisner: It is an interesting question. There is the notification element and the consultation element. I suppose we have to ask what the policy is trying to achieve. If it were trying to avoid people almost hiding redundancies by doing them in small units, I do not think we would have any complaints about ensuring that notification was still required. It is where you are forcing people into consultation who are never going to be made redundant, yet they find themselves under the scope of that. Splitting those two things apart—so you would still have the notification, but you would not necessarily have the consultation for those who are unaffected—is something we are exploring. I do not want to say that that is the silver bullet that will solve things. We have not even discussed that collectively as an industry; we are just trying to consider what options might be on the table.

[Justin Madders]

Q I think you said you had the largest collective agreement in the country—congratulations on that. Could you tell us a bit more about what your members see as the advantages of that?

Alasdair Reisner: It is a cliché, but we rely on the people we work with, and they must be represented. Having good, positive relationships with the employees’ representatives is crucial. The CIJC has for decades provided us with that vehicle—I should say that it is not the largest overall; it is just the largest in the construction sector. I think back to covid, when we needed a relationship with the workforce that provided us with the independence —I have to say that Unite was brilliant at that time—to engage with the rest of the industry to say, “We’re all working collectively towards a common good.”

From discussing the Bill with members over the past few days, I know that one of the potential concerns is that it might in some way undermine existing collective agreements. I do not think that is written in the Bill; it is more in the discussion that has happened prior to the Bill. That is something we would like to protect. I am not going to pretend it is all sunshine and roses—sometimes it can be quite challenging—but I think we would want to ensure that whatever the outcome of the Bill, there is a strong, positive partnership between the employers’ representatives and the employees’ representatives.

[Justin Madders]

Thank you.

[The Chair]

I call the Liberal Democrat spokesperson.