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

Lord Browne of Ladyton Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a genuine pleasure to follow my noble friend Lord Sikka. It is not the first time his admirable forensic skills have made the House much better informed. He is, in my view, the antithesis to the widely held view that accountants are boring; he is certainly not.

I also commend my noble friend Lord Woodley and the ecosystem that supported him, not just for drafting this legislation but for the powerful, comprehensive and convincing speech he introduced the debate with. Mostly, I thank him for securing a Second Reading that helpfully coincides with the publication and laying of the Government’s feeble draft code of practice. It is remarkably easy, as all the speeches today have shown, to support this legislation. It is even easier to criticise and disaggregate the useless code the Government have come up with. I intend to spend a bit of my time trying to do that.

I have read almost every word that has been recorded in Hansard about the practice of firing and rehiring, and there seems to be a broad consensus on the unfairness of this practice. The debate is not a diagnostic one; we all know that this is a problem. It is rather a debate about solutions. While I recognise that recently the Government have fulfilled their commitment to publish and lay a draft statutory code of practice, I simply do not believe that it will have a material impact on removing the thumb on the scales that currently tilts the balance of power strongly in favour of unscrupulous employers. There is a catalogue of companies, and now, unfortunately, local councils, which have used this dreadful practice. There is no point in going through them; we all know that.

Given that the introduction of this code was first announced in response to P&O Ferries instituting mass redundancies in March 2022, I understand those who feel a little sceptical when the Government claim they wish to provide urgent redress. What can explain the slowness with which they have moved in this matter? The then BEIS Minister, Paul Scully, explained the Government’s commitment to introduce a statutory code of conduct in emotive and highly colourful language. He described the practice of firing and rehiring as “deceitful”, and “disgraceful”, labelled the actions of P&O “appalling” and “unscrupulous”, and vowed that the Government would “stand up for workers” against the “flagrant disregard” shown by companies that use sudden mass dismissal as a negotiating tactic. What has been the response to this clarion call—the Government’s own clarion call? We have seen the glacial emergence of a code of conduct over two years that will impinge on employers only at the point if a case were to reach a tribunal.

Given that, it may be worth examining the degree to which the tribunal system is currently calibrated to provide swift and effective redress for victims of this practice at all. Although backlogs have eased from pandemic levels, the average waiting time for claims to arrive at final hearing has increased, with some cases taking between 12 and 18 months from the date of issuing a claim. Furthermore, the Government have just begun a consultation on reintroducing fees for those who wish to bring a case before an employment tribunal. The last time this was tried, the Supreme Court ruled that unlawful in UNISON v Lord Chancellor 2017, and the judgment in that case was unambiguous. It cited the Leggatt report, which had identified the absence of fees as one of the three key elements that had made tribunals successful, and it concluded that levying fees was unlawful because

“it has the effect of preventing access to justice”.

The fees currently being considered by the Government are appreciably lower and accompanied by a fee remission scheme. They will certainly not encourage victims of fire rehire to have recourse to the tribunal system, and they will likely act as a further discouragement.

My final point on the tribunal system concerns the Government’s reasoning for introducing fees. The open consultation they have started explains that it is unfair for the taxpayer to bear the burden for the tribunal system while those who have recourse to it can access it without charge. Are they serious? There are some areas of policy in which this reasoning holds true, but this is not a question of repaying an investment or a discretionary activity; it is about access to justice for the vulnerable, which is a fundamental tenet of a civilised society.

Rather than reposing its faith in the forthcoming code of conduct, the Bill enshrines good practice into law and provides clearer lines of redress where appropriate standards are not met. Ultimately, the Bill is about justice and accountability. It protects workers from having their pay and conditions degraded under duress and ensures that, where companies or public sector employers, such as councils, choose to do this, they will do so only at the price of breaking the law.

Guidelines in the form of a non-binding code of conduct are simply inadequate. I do not believe that managers who threaten to fire several hundred employees unless they accept a pay cut do this without knowing that they are doing something wrong. They simply choose to do it anyway. The Bill prevents that, enshrining good practice into law. As my noble friend Lord Woodley told your Lordships’ House, the Bill would mandate appropriately deep consultation with unions. It would allow employees automatically to claim unfair dismissal in the absence of the best practice, and it would allow unions to do what they are designed to do and take rapid action where a reaction is needed to a fire and rehire threat.

Clause 2 speaks directly to the debate about equity between employers and their staff. First, it states that any change to an employment contract would be void if it was obtained under threat of dismissal. Secondly, it removes one of the arguments currently in the Employment Rights Act 1996 that an employer can make, in the case of fire and rehire, to show that such a dismissal was fair—namely, that there is “some other substantial reason”. Instead, the employer would be obliged to prove bad conduct, lack of competence, a threatened breach of the law or that the employee’s job had become obsolete. This specificity will ensure that fire and rehire will no longer be possible as a negotiating tactic.

Crucially, as my noble friend stressed and re-stressed, the Bill does not ban fire and rehire outright. There are cases where it is the only means of protecting jobs by preventing a company from collapsing altogether. The Bill is an attempt not to strangle enterprise but to ensure that those whose hard work has made an enterprise possible are protected from having their pay and conditions changed by managerial fear.

I began my remarks by saying that politicians of all stripes have acknowledged that the use of fire and rehire as a negotiation tactic is wrong. Granting that, the question that follows is about what solution we believe will be most effective: is it the passing of provisions that will explicitly prevent this practice, or placing our trust in adherence to a code of conduct that is not legally binding? My answer to that question is reflected in the support I offer the Bill and the support I will offer any similar measure that will come before your Lordships’ House.