Employment Rights Bill (Tenth sitting)

Laurence Turner Excerpts

Committee stage
Tuesday 10th December 2024 Public Bill Committees

[Greg Smith]

The hon. Gentleman is right about the unfair dismissal point. Nobody wants to see anybody unfairly dismissed, but it is impossible to see each measure in the Bill in its own silo or its own column; each is part of the cumulative impact of many measures reverting to day one rights. So, too, is the measure before us, and the Committee has heard direct evidence from representatives of real businesses out there that it could have a damaging effect.

I am not arguing against the principle of what the Government are trying to do here—to protect workers against unfair dismissal. I am trying to test the waters on the operability of the Bill, and on the unintended consequence that it may have in terms of overall numbers in the job market and the rate at which companies out there make new hires, or indeed choose not to. It is a worthwhile exercise for the Committee to really test these things to see how this measure will work out in practice.

[Laurence Turner (Birmingham Northfield) (Lab)]

Throughout these proceedings, we have talked a lot about evidence bases and the likely impact of particular measures on business. The clause might be short and to the point—I do take the points made by the shadow Minister that we will come on to more detailed discussions, and it is right to debate the general principles here—but it does have precedents. In terms of the dilemma or decision over whether the qualifying period should be two years, one year or, as in the Bill, day one—but with that important provision for a probationary period—the issue has been road-tested.

The period was set at two years for many years. Then it was reduced to one year in the late 1990s, and economic growth continued. When the qualifying period was raised from one year to two years in 2012, the impact analysis that the then Government produced said that one year was easily sufficient in the overwhelming number of cases. On this aspect of the Bill, the businesses I have spoken to in my constituency and in the general Birmingham area have told me that, in almost all roles, employers are not still talking about whether someone is suitable for the job 12 months in; it is usually apparent within weeks. That circumstance is still covered by the initial period of employment provided for in the Bill.

According to the impact assessment, the estimated saving to business across the entire the economy, after the familiarisation cost period, was relatively small—I believe it was around £2 million to £3 million in 2011 prices, so probably somewhere around double that today. I think my hon. Friend the Member for Worsley and Eccles used the word “grandiose”. We are really not talking about that, but about a relatively small number of cases that could fall under that initial period of employment provision.

Let me return to an argument that has been made previously in the Committee, but that is relevant here. One undesirable effect of that change in the qualifying period was that because a worker who faced detriment and unfair treatment in the workplace had no recourse to an unfair dismissal claim through the employment tribunal system until they reached their two years, they found themselves relying on equalities arguments instead—a day one right in law as it stands. The effect—another perverse outcome—has been to overload that part of the employment tribunal system.

This change is sensible. It will help with the undesirable effects in the court system as it stands. The Chartered Management Institute, which we heard evidence from, surveyed its members and found that 83% of managers agreed that improvements in family-friendly policies and day one rights, including in respect of unfair dismissal, would positively impact workplace productivity.

In some of the related provisions in the Bill, particularly around the initial period of employment, there is promise that we will see a light-touch regime, and we are all looking to see what the details will be. I know that the Government are due to come back on that.

[Chris Murray]

I promise that I will make a short intervention this time, Mr Stringer. The statistics show that one in 10 workers never spend more than a year in a job, so they are particularly affected by the lack of provision on day one. At any one time, one in five workers are within the first two years of their employment. Does my hon. Friend agree that we are talking about a group of people who need the security of these rights to improve their productivity, but who are currently completely excluded from them?

[Laurence Turner]

My hon. Friend makes an important and relevant point. The people who are most adversely affected are those who have the least and who are on the lowest incomes in the economy, and the social care sector is a good example of that. In the city of Birmingham, the average turnover rate for care workers is around 30% every year. An enormous number of people are concentrated in particular sectors. One of the difficulties in Committee is that we use overall, aggregate numbers when weighing the impact of policies, but they are felt particularly in certain sectors—that is a common point of agreement among Members on both sides. If we get this change right, the benefits will be felt most keenly in the parts of the economy, and by the people, that need these protections most.

Again, it is worth reflecting on what we heard in the evidence sessions. We heard from Professor Bogg, from the University of Bristol, that

“if you look at the OECD countries, we are the fifth least regulated on dismissal protection out of 38 countries, and we are the third least regulated on hiring on temporary contracts”,

and that the change

“just pushes the UK back into the mainstream of other…OECD countries with employment regulation that works effectively.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 143, Q147.]

There can be a lot of sound and fury about the individual measures that we are debating, but I want to reinforce the point that all the evidence we have had, whether that is written evidence from interested parties, evidence the Committee has heard or historical evidence—maybe not going quite back to the industrial revolution, but at least over the past 30 years of changes in the qualifying period—shows that the effect on the overall economy will be sensible and limited. However, it will be the lowest-income workers, whose living standards, rights and dignity of work we all want to improve, who will benefit most. The clause is extremely welcome, and I commend it to the Committee.

[Sir Ashley Fox]

It is a pleasure to see you in the Chair, Mr Stringer. I do not believe that unfair dismissal should be a day one right. I think this is a fundamental error by the Government. It is interesting that during the previous Labour Governments, under Tony Blair and Gordon Brown, the qualifying period was one year. There was a reason for that: by reducing it—by making it a day one right—we introduce an aspect of procedural unfairness to all small businesses. Small businesses might decide after a week that they do not want to keep someone in employment. They might not follow the letter of the law, and it might be procedurally unfair because not every t was crossed and not every i was dotted, and that will lead to an unfair dismissal case.

[Sir Ashley Fox]

Let me just make this point. My hon. Friend the Member for Mid Buckinghamshire asked what the rationale was behind the day one qualifying period. I think the answer is that it is a demand from the trade unions; it is one of a long list of demands from the trade unions. This Bill is payback for the trade unions’ support for the Labour party. Those demands continue to come in, and we know that because the Bill is not even properly written. It is half-written—

[Laurence Turner]

Will the hon. Gentleman give way?

--- Later in debate ---

[Jon Pearce]

It is a pleasure to serve under your chairmanship, Mr Stringer. Protection from unfair dismissal is already a day one right in respect of certain carve-outs from the two-year qualifying period, including for dismissal relating to a protected disclosure—whistleblowing—refusal to allow somebody to undertake jury service, or refusal to allow somebody to take family leave. That protection, and the principle of unfair dismissal, is already in statute as a day one right.

Let us look at other day one rights, which are worth exploring a bit further. As my hon. Friend the Member for Birmingham Northfield said, employees have a whole raft of day one rights, including most of the discrimination acts under the Equality Act and protections for whistleblowing. I want to continue my hon. Friend’s argument in order to try to give employees reassurance, which I think will come with guidance and the statutory probation period.

Certainty on this issue would help many employers. What I found in practice was that there would be a probation period in the contractual relationship, but smaller employers that I advised often did not have a policy; they just had a shortened notice period—often a month, rather than the three months after the probation period. There would be no structure in place. All too often, I found that many of those employers got themselves into difficulty because they believed that they did not have to follow any process whatsoever, due to the two-year qualifying period.

More often than not, those employers were dismissing people for reasons of capability: the employee had not got up to the necessary standard, and there was an issue with their work. In those circumstances, the employer often did not have much of a structure or procedure in place, and would eventually get to the point at which it would, in effect, give up and decide that the employee was never going to get to the standard that it wanted within the probationary period. The employer would dismiss people without any process or meeting—even without speaking to the employee at all—and without taking any evidence.

All too often in the cases that I dealt with, it would come to light that there was a reason for an employee’s lack of capability, which related to an impairment. Many of those impairments were protected under the Equality Act, and those employees had protections against discrimination on the basis of disability. They had a right to reasonable adjustments that the employer had not considered because it did not ask the question, and which had not been implemented. In those circumstances, the employer is exposed to uncapped discrimination claims, which are very serious and very difficult to respond to, because no process has been followed.

It is really important that we seek to reassure small, medium and large employers that having a light-touch, clear structure will mean that no employer falls into that trap again, and that we will save a lot of employers unnecessary litigation.

[Laurence Turner]

Does my hon. Friend agree that, in those cases where someone has ended up taking the equalities route because that is the only route available to them, it can be particularly reputationally damaging to the employer? Does he also agree that, because by the nature of those claims—particularly where they relate to disability discrimination—the system requires the claimants to stress an impairment of some kind, that process is also distressing for the claimant in a way that is wholly unnecessary? Making these changes would at least avoid those circumstances for both employer and employee.

[Jon Pearce]

I absolutely agree. Often, in those circumstances, it is extremely distressing for the employee, who, had the reasonable adjustment been in place to assist them with disability or to enable them to get to the required standard, would still be employed. They have to face the extra hurdle of declaring their particular impairment to the world.

Reputationally, these claims can often be hugely damaging for employers that had never intended to discriminate and would never have discriminated against an employee, but for the lack of process. As I say, there is nothing new in day one rights—protection from unfair dismissal is already, in certain circumstances, a day one right; Equality Act claims are a day one right; whistleblowing is a day one right—but the Bill will help employers not to fall foul of those day one rights that already exist and give a far clearer structure to the employment sphere. With those reassurances and with guidance, there is nothing for employers to fear from this legislation.