Employment and Trade Union Rights (Dismissal and Re-engagement) Bill

Kevin Hollinrake Excerpts

Friday 22nd October 2021 Commons Chamber

[Laura Farris]

I am afraid the hon. Gentleman is incorrect. This concern was raised by my head of chambers and it is shared across the employment Bar. We cannot have a just and equitable jurisdiction in the law of unfair dismissal as it does not work.

The hon. Member for Feltham and Heston (Seema Malhotra) raised a point about the aviation sector. The conduct of British Airways was poor, but there is an important issue at stake. If in primary legislation the risks of fire and rehire are so great that employers are more inclined to lay people off, think what that would mean for airline pilots, for example. Airline pilots must fly within a two-year period to retain their flying licence. If they are sacked by British Airways at a time when the entire travel sector is struggling badly, they would be very unlikely to get a job and it could easily be two years. It is not just the loss of a job; it is the loss of an entire career. We need to tread very carefully when we consider primary legislation in the area of fire and rehire.

[Kevin Hollinrake]

My hon. Friend is making an excellent speech and some important points. She talks about the risk of moving to layoffs or redundancies, is there not also a danger that businesses will not recruit people in the first place or will not scale up because of the fear that employment legislation is so complex and is increasingly one-sided on behalf of workers? That would deter employment, which is the exact opposite of the situation we all want to see.

[Laura Farris]

We all know there is always a risk that we make employment relations so onerous that there is a temptation to engage consultants. What we are primarily looking at is employers that have larger, unionised workforces. I am not sure how many employers it would engage, but the short point is that Conservative Members want a solution that does not make an existing problem worse, drive redundancies or lead to more business failures. Fire and rehire must be a genuine option of last resort when a negotiated settlement cannot be reached, when the business is on the brink of insolvency and when the alternative is layoffs.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to speak after the hon. Member for Bradford East (Imran Hussain). [Laughter.] At least we have a Yorkshire heritage in common, which is always a pleasure.

It is quite daunting to speak after the eloquent speeches by the promoter of the Bill, the hon. Member for Brent North (Barry Gardiner), and by my hon. Friend the Member for Newbury (Laura Farris). They both made fantastic and constructive speeches. Prior to my being in this Chamber, my life was in business, and I feel like I am in some kind of mediation. We have heard the workers’ perspective, we have heard the lawyers’ perspective, and now, perhaps, we will listen to the business perspective, which is a very important part of the conversation.

It was great to hear the hon. Member for Brent North talk about the engagement that he has had with business, and about seeing the issue from their perspective. I can see why he has made sure that the Bill does not ban fire and rehire outright. I am not sure that all his colleagues would support that position, so he has taken a brave line on that. He said right at the start of his speech that he wants to make the UK the best place to work. I absolutely agree. We also want to make it the best place to start a business, because the relationship is symbiotic. The shadow Minister, the hon. Member for Bradford East, said that workers create the wealth and the chief executives and shareholders hoard it. I do not see it like that. It is a much more interdependent relationship than that.

Let me talk about a personal experience of mine. I have been in business for 30 years. I know that the situation would not have been quite the same, because my business would not have come under the legislation contained in chapter 1, but there are other elements that would have been the same. We entered the crisis of 2008 with a workforce of 200 people, so we would have come under this legislation in scale, although the legislation that covered our business would probably have been slightly different.

We were in the property sector, and we were faced with a 70% reduction in turnover that year. The first thing that happened was that all the directors of the company—all the people who ran the company—took a 50% pay cut. That was the first thing we did, before we made any redundancies whatsoever. Then, of course, we sat down and talked to our workforce about how we were going to get through this period. That was a very difficult period, because we had been in business for 26 years and a lot of those people had worked for us for over 20 years. We had to reduce our workforce from 200 people to 65. It was a desperate time. We were not trying, as was described, to coerce them into a certain situation; we were simply trying to get our business through a very difficult situation. We were under pressure from all directions.

The key thing for us at that point was pace. The bank was putting us under huge pressure. We did go through consultations. As part of the section 188 requirements—the 30-day requirement—we went through consultation with our workforce. The workforce were very supportive of what we did, and I think in many cases they felt more sorry for us than we did for them, although, as I say, the conversations were very difficult. However, if we had had to go through endless consultations and reviews, challenges through the committee and challenges through the employment tribunal, our business would have gone under. That is the reality behind that delay.

[Andy McDonald]

The hon. Member is making some excellent points. I do not think that anybody in the House is suggesting that the sort of practices that he engaged in, as a good and responsible employer, are the issues at play here. The issue that concerns us is employers that are making very significant profits using the cover of covid to deploy these dreadful tactics, not the sort of good practices that he is describing. He is making reasonable points about periods of consultation. If he finds that those are too onerous, we can address and debate those issues in Committee. We need to hear evidence directly from people, including his considerable experience.

[Kevin Hollinrake]

The hon. Gentleman makes a good point, and I should have clarified this. I am not a lawyer, but I can read, and subsection (1) of proposed new section 187A covers not just fire and rehire but, as set out in clause 1,

“reasons other than conduct or capability”,

which could cover a situation where someone was making redundancies simply to cut their coat according to their cloth. Is it possible to amend in Committee a Bill that is potentially so flawed? I defer to my hon. Friend the Member for Newbury, who said that guidelines and sanctions would be the better approach. It is only fair that we look at that. As legislators, it is important that we tread carefully when we legislate at all. Bill Shankly, a great Liverpool manager, said to his players before he sent them out on to the pitch that, “The score is 0-0, don’t let it get any worse.” Before we move down a path of legislation, we legislators have to think about whether there are unintended consequences—we must not make things worse, particularly for business, which is looking for stability, frameworks and certainty. I will also come to the retrospective nature of the Bill, which I am uncomfortable with.

I am of course totally opposed to fire and rehire where a profitable business that does not need to restructure is taking advantage of a particular situation. Opposition Members are trying to cover those situations, and who would not want to do that? Such conduct is absolutely wrong and a stain on business, and every Minister I have heard at the Dispatch Box has criticised it.

There is only one thing worse than fire and rehire, and that is fire and not rehire. That would be a concern if the Bill went through, instead of companies taking the opportunity to restructure in a way that keeps their business going and gets it through a difficult time. If the provisions were not in the Bill, companies would just make redundancies or dismiss staff in other ways.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

The hon. Gentleman says that there is only one thing worse than fire and rehire, and that is just fire. But if this is about the option of an offer of redundancy with a redundancy payment, as opposed to someone having a gun over their head and being told, “Take these worse terms or you won’t be able to pay for your housing. You can have no job at all, with no redundancy pay-off”, I am not sure he is right. And the situation may even be worse than that. He needs to remember the stress that our constituents were facing when they were faced with fire and rehire.

[Kevin Hollinrake]

The hon. Lady makes a good point, but all these matters are covered under employment law. Whether on wrongful dismissal, unfair dismissal—constructive dismissal—or redundancies, an employer has to follow due process.

[Laura Farris]

rose—

[Kevin Hollinrake]

My hon. Friend may be able to enlighten us better than I can.

[Laura Farris]

To pick up on the point about redundancy payments and that being a suitable alternative, does my hon. Friend agree that of course a business in financial trouble could dismiss in any case for “some other substantial reason”, which would not lead to a redundancy payment? It is all there in section 98(1)(b) of the Employment Rights Act 1996, and it would leave an employee as badly off as somebody who is subject to fire and rehire.

[Kevin Hollinrake]

I defer to my hon. Friend, who knows far more about this issue than I ever would. The principle behind our discussion is making sure that, where the question is a business’s survival, it can get through a very difficult time. There is no doubt that last year many businesses and many sectors were in a situation where there were question marks about their very existence, so in those times they must have the opportunity to sit down with their workforce and restructure, where that is the only way forward.

[Geraint Davies]

The hon. Gentleman professes to speak for business. My background is in business. I mentioned earlier that the productivity rate in Germany had been twice that of here because employers are required not to fire and rehire people easily, so they train people. Does he also know that the Government-commissioned research by the Department for Business, Energy and Industrial Strategy shows that, in terms of productivity, the return to training in Britain is about 24% compared with only 6% in Germany? In other words, they have done much more training but our returns are much higher. Does he not agree that this sort of Bill, which puts pressure on employers to train and tool up their workers instead of just firing them when times are tough, is very important for the economy? Will he not join hands with us and take this forward to Committee?

[Kevin Hollinrake]

I think that there are two separate things entirely. Who would not agree with skilling up our workforce? Of course we need to skill up our workforce and good employers will do that to enhance productivity, particularly if we move to a higher-wage, higher-skilled economy. It is absolutely right that we should do that. However, the key question on whether the Bill should go forward to Committee is: is the Bill in any shape or form amendable so that it can do what the hon. Gentleman wants? [Interruption.] I accept that Opposition Members may feel that it is, but there are cogent arguments from Government Members that it is not and that there are better ways to do this.

[Tom Hunt (Ipswich) (Con)]

I look to my hon. Friend for guidance, as a wise head. There are certain turns of phrase that I perhaps do not understand. The shadow Minister, the hon. Member for Bradford East (Imran Hussain), said that this about not banning the practice, but ending the practice. Does my more experienced colleague, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), understand what he means by that?

[Kevin Hollinrake]

I was not legally trained, so I am struggling. The key point is this: if we can find a way to meet the objectives of the hon. Member for Brent North (Barry Gardiner) without legislation, I would prefer to see that, and I think we all would because life is tricky enough when someone is trying to run a business, so if there are better, non-legislative ways to do it, we should absolutely look at them. The danger is that this becomes hugely bureaucratic.

[Shaun Bailey]

My hon. Friend the Member for Newbury (Laura Farris) is a lot more learned on this matter than we are, but as a general point, does my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) not agree that the way in which we make good laws in this place is by ensuring that they are operational? Does he not share my concern that the Bill is very much open to legal challenge in its current form and that, if we want to make sure that it works, it has to be operational on the ground?

[Kevin Hollinrake]

My principal concern is the amount of bureaucracy in and the interpretation of the Bill. I have many good lawyer friends—this usually has a “but” attached to it, doesn’t it?—but there are bound to be different interpretations of this kind of legislation. My hon. Friend the Member for Newbury (Laura Farris) set that out very clearly. Let us take just the phrase “all information”—that can mean virtually anything. A process can be subject to challenge all the way down the line and there can then be a claim for wrongful dismissal on the basis of a simple document that was not provided. Who would decide whether all the information has been provided? The appointed representative, at any point, could challenge the fact that all the information was not provided. It could be a very small piece of information that the employer never considered relevant to the discussion. Again, there is a huge opportunity for interpretation and bureaucracy. That cannot be positive for a good business environment.

There is also the issue of capacity. We already have issues about capacity for employment tribunals. This also brings in a whole new set of responsibilities for the Central Arbitration Committee and there is no understanding of whether that capacity can be filled.

[Barry Gardiner]

There is much in what the hon. Gentleman has said that I agree with. I just point out that the Bill does not actually ask for the disclosure of “all information”. It asks for the disclosure of

“all information…without which the appropriate representatives would be to a material extent impeded in carrying on consultation with the employer, and… which it would be in accordance with good industrial relations practice that the employer should disclose”.

That is not a catch-all. It is specifically about the information necessary to conduct proper consultations about the future of the business. He is being very fair in the remarks that he has made, but he must not misrepresent the Bill in that way.

[Kevin Hollinrake]

I certainly do not seek to do that. Proposed new section 187B(2) of the 1992 Act says:

“The information to be disclosed is all information relating to the employer’s undertaking (including information relating to use of agency workers in that undertaking) which is in the employer’s possession, or that of an associated employer”.

There is a double requirement, so “all information” does seem to apply.

[Kevin Brennan (Cardiff West) (Lab)]

On a point of order, Madam Deputy Speaker.

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[Madam Deputy Speaker]

I thank the hon. Gentleman for that point of order. Basically, a Second reading debate is very wide-ranging and hon. and right hon. Members are entitled to raise issues that they feel might be problematic if the Bill were enacted. This is a very wide-ranging debate that on another occasion I am sure the hon. Gentleman would appreciate enormously.

[Kevin Hollinrake]

The hon. Member for Cardiff West (Kevin Brennan) makes a very good point, and I have a lot of time for him generally. My point is a general point, but there are specifics underpinning it that we have to consider. The definition of “all information” is relevant, as is the definition of “less favourable” when considering whether an employment contract is now less favourable. That interpretation will be left for the courts and lawyers to decide. I am looking at this from a business perspective. How would it affect the likelihood of businesses wanting to employ people? That is a big commitment for any business.

[Clive Efford]

If we refused to send legislation into Committee because of how lawyers might or might not interpret it in future, we would not pass a single Bill. The hon. Gentleman is going into minute detail on the wording of clauses, and that debate belongs in Committee. It demonstrates that Government Members have lost the argument. This Bill should go into Committee.

[Kevin Hollinrake]

The hon. Gentleman makes a fair point, but in my view it is better to have no legislation than poor legislation. It is important that we look at the Bill and decide whether it should go into Committee.

As I was trying to say in response to the intervention by the hon. Member for Brent North, it is about capacity. We would be giving the Central Arbitration Committee huge responsibility, not only for taking on lots more cases but for making lots more determinations about information.

[Andy McDonald]

That’s its job.

[Kevin Hollinrake]

Yes, but it would require a huge scaling up of the role and there are no money resolutions attached to the Bill. [Interruption.] If I or any other person does not want to see this Bill passed, we have a perfect right to stand in this Chamber and express that opinion. That is exactly what I am doing. As I say, it is better to have no legislation than poor legislation.

The capacity of employment tribunals is another big issue. The ACAS document says that employment tribunals are under enormous strain today. The Bill would likely significantly increase the workload of employment tribunals. Additionally, it would require them to make all kinds of interpretations. The ACAS document observes that tribunals are not economists. Tribunals would consider the situation between businesses and workers and would have to make decisions that, in my view, they may not be capable of making. This might introduce undesired complexity, for example. There are all kinds of questions, not just about capacity but about the competence of employment tribunals.

I am also concerned about duplication, as it seems to me that there are provisions in the Bill about situations covered by redundancy.

[Simon Baynes (Clwyd South) (Con)]

Can my hon. Friend perhaps provide a little more information from his expertise about the additional costs, both financial and for staffing, that he estimates will result from the high number of employment cases that might arise from this situation?

[Kevin Hollinrake]

I would like to be able to, but I am not sure that is incumbent on anybody who opposes the Bill. It is right for somebody who introduces the Bill to state alongside it what extra capacity will be needed, and the cost of that to the taxpayer or the businesses concerned. To my knowledge, that work has not been done.

I am also concerned about clause 27D, on the unilateral variation of employment contracts. No doubt some of the evidence taken showed that some contracts of employment allow unilateral variation. That is not something I have never done in my business practice, but nevertheless the Bill seeks to make those provisions unworkable or not legal, meaning that employers will not be able to rely on that in future, and those elements of the contract will effectively become null and void. I do not blame the hon. Member for Brent North for seeking to do that. As an employer I would not involve myself in such a practice, but it seems to be retrospective legislation. It is bound to make businesses nervous if we legislate retrospectively about such matters, and I wonder whether he has considered that point.

[Barry Gardiner]

Indeed. The hon. Gentleman is right, and the courts find it disagreeable that such a clause, purporting to allow retrospective variation of the contract, should be embedded within the contract. I would support the hon. Gentleman’s objection if indeed it were retrospective legislation, but the precise point is that any such clause purports to give a right to one party in the contract, and in effect to dispense with the entire contract and simply change it at will. That is what is so objectionable about it, that is what the court found objectionable, and that is what the Bill seeks to change.

[Kevin Hollinrake]

It is an interesting point, and I appreciate the hon. Gentleman’s clarification. My final point is on clause 187E, which seems to say that in almost any circumstance where new terms are offered, the employee has an automatic right to go to a tribunal. That seems to me strange. If any of the things outlined in subsection (1)(a)(iii) happened and an offer has been made, the clause seems to give an automatic right for someone to go to an employment tribunal, without requiring the provisions in clause 187A or B. I might have read that wrong, but it is certainly seems to be the case. Admittedly, that kind of point could be picked up in Committee, but my overriding point is this that issue requires cross-party thought. I would much rather see the provisions become effective through guidelines, financial sanctions or other means, and I do not feel that I could support the Bill were it to be voted on today.

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[Kevin Hollinrake]

My hon. Friend’s points on capitalism were not totally accepted by those on the Opposition Benches. I think we all concede that capitalism is at times not perfect, but has the alternative ever been shown to work anywhere?

[Richard Fuller]

Certainly not, which is why Labour Members are on the Opposition Benches, and the Conservative party, which supports working people, is in government.

I should like to say a few more words about the detail of the Bill and to support some of the points made by my hon. Friend the Member for Newbury.