Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

Lord Callanan Excerpts

Monday 18th July 2022 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 27 June be approved.

Relevant documents: 7th and 9th Reports from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I will also speak to the Liability of Trade Unions in Proceedings in Tort (Increase of Limits on Damages) Order 2022, which was laid before the House on 24 June 2022. The purpose of the regulations is to lift the current ban on employers bringing in agency staff to help them cope with industrial action. The other instrument makes long-overdue changes to the maximum levels of damages the courts can award against trade unions that take unlawful industrial action.

I will start by explaining why the Government are making these changes. Our trade union laws are designed to support an effective and collaborative approach to resolving industrial disputes. They rightly seek to balance the interests of trade unions and their members with the interests of employers and the wider public. While the Government continue to support the right to strike, this should always be a last resort. The rights of some workers to strike must also be balanced against the rights of the wider public to get on with their daily lives. Strikes can, and do, cause significant disruption. This is particularly the case when they take place in important public services such as transport or education.

It cannot be right that trade unions can, as we saw in the case of the recent rail strikes, seek to hold the country to ransom if their demands are not met. Some trade unions appear to us to be looking to create maximum disruption in a bid to stay relevant, rather than constructively seeking agreement with employers and avoiding conflict. In light of this, the Government have reviewed the current industrial relations framework and have come to the conclusion that change is needed.

The first change we are making is to remove the outdated blanket ban on employment businesses supplying agency workers to clients where they would be used to cover official industrial action. Of course, employers can at the moment already hire short-term staff directly to cover industrial action, but this change will give them the ability to work with specialist employment businesses to identify and bring in staff. This change does not in any way restrict the ability of workers to go on strike. However, it will give employers another tool they can use when trying to maintain the level of service they offer to the public.

This is a permissive change. It will not force employment businesses to supply agency staff to employers to cover strikes, agency workers will still be able to decline any assignments they are offered, and the right to strike is unaffected. This change is simply about giving both employers and employees more freedom and flexibility to decide what works best for them—a freedom that the current outdated regulations deny them.

I have seen some, frankly, rather overblown reports that this will somehow put workers or the wider public at risk. This is absolutely not the case. Employers will still have to comply with broader health and safety rules, and employment businesses will still need to be satisfied that the workers they supply are suitably qualified and trained.

Alongside this change, we are increasing the levels of damages that a court can award in the case of unlawful strike action. It has long been the case that employers can bring a claim for damages against a trade union that has organised unlawful strike action. The upper limits to the damages that can be awarded are set out in the Trade Union and Labour Relations (Consolidation) Act 1992 and are based on the size of the union that organised the unlawful action, but this damages regime has not been reviewed since 1982, so these limits are significantly out of date. As a result, the deterrent effect that Parliament intended has now been significantly reduced.

The Secretary of State is using powers granted to him in Section 22 of the Trade Union and Labour Relations (Consolidation) Act 1992 to increase the existing caps in line with inflation. In practical terms, this means that the maximum award of damages that could be made against the smallest unions will increase from £10,000 to £40,000, and for the largest unions it will increase from £250,000 to £1 million. This is a proportionate change because we are simply increasing these amounts to the levels that they would have been at had they been regularly updated since 1982. We are increasing the limits in line with the retail prices index, which is of course a well-understood measure of inflation.

By increasing the limits on damages in line with inflation, we are sending a clear message to trade unions that they must comply with the law when taking industrial action. Strikes should be called only as a last resort and as the result of a clear, positive and democratic decision of union members. The key point is that unions that continue to comply with trade union law will be completely unaffected by this change.

I am grateful to the members of the Secondary Legislation Scrutiny Committee for the time and care that they have taken in reviewing these regulations. I note their comments about the impact assessment for the changes to Regulation 7. This has now been published in line with our commitments to Parliament. As the committee noted, because this is a permissive change there is some legitimate uncertainty about the extent to which employment businesses will want to take advantage of their newly found freedoms. However, as the impact assessment shows, this change needs to lead to only a small reduction in the number of working days lost for it to make an extremely positive difference to the economy and society.

I have also noted the committee’s concerns in relation to Wales, specifically our commitment to repeal the Trade Union (Wales) Act 2017. In response, I simply say that there is nothing new about this commitment. The Government’s position on this issue has been consistent since the relevant Act was passed in 2017. Although we will of course engage further with the Welsh Government on this issue, it is very clear that labour markets and industrial relations are reserved matters.

The changes we are making will ensure that our trade union and agency laws remain fit for purpose. We are giving businesses the freedom to manage their workforce and we are empowering workers by giving them more choices about the kinds of assignments they can accept. We will continue to protect an individual’s right to strike, where proper procedures are followed, while ensuring that trade unions are deterred from taking unlawful industrial action. I therefore beg to move that both instruments are considered by this House.

Amendment to the Motion

Moved by

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I thank all noble Lords for their contributions to this debate—which, I have to say, was a bit shorter than I expected. I will start with the amendment tabled by the noble Lord, Lord Collins. I thank him for raising his concerns.

I repeat the point I made at the outset. This is very much a question of getting the right balance between, on the one hand, the right of individuals to strike, and on the other hand the rights of individuals to go about their daily lives, whether it be children taking an exam, people going to their hospital appointments or other workers wishing to go to work to do their jobs. These reforms will ensure that our laws strike the correct balance. In doing so, we are protecting the public from unwarranted disruption while, as I said, maintaining workers’ ability to go on strike, which, I repeat, will remain unaffected by these changes.

The noble Lords, Lord Collins, Lord Woodley and Lord Paddick, all referred to the consultation not having been carried out on the agency regulations since 2015. In response to those concerns, I would say that the consultation that we carried out in 2015 was extremely thorough. Given that, I struggle to see what a further consultation will bring up. Are there any new issues or objections that we are not already aware of? I think the response to that is no. As we said in response to the Secondary Legislation Scrutiny Committee, some things have changed but the fundamental issues remain the same. I think that in their hearts, Opposition Peers know that that is the case. This is about finding that right balance between the rights of individuals to strike and the right of the public to go about their lawful daily business.

The noble Lord, Lord Collins, also referred to the impact assessment. As I said in my opening remarks, it has been published, as we committed to do in the Explanatory Memorandum. As the impact assessment makes clear, this is a permissive change: employers will hire agency workers only if it makes sense for them to do so. There is no compulsion on them; it is permissive and their choice. Our assessment also shows that this change needs to lead only to a small reduction in the number of working days lost for it to have a positive effect on the economy.

The noble Lord, Lord Collins, went on to question why it was necessary to raise the damages cap for unlawful strike action when damages are so rarely claimed—in which case, Opposition Peers’ concerns are ill founded. We are simply restoring the deterrent effect that Parliament intended when the original amounts were set.

The noble Lord also suggested that the increase in the cap would inhibit the ability of unions to take legitimate strike action. He himself made the point that there have been no recent cases on this matter. I also respectfully disagree with the point he makes. As I said, this change applies only to action which a court determines to be unlawful. If, as he suggests, trade unions go to the maximum possible trouble to make sure that their action is lawful, they will have nothing to be concerned about. I am sure that no noble Lord would suggest that unlawful strike action is acceptable in this day and age.

Let me address some of the other points made in the debate. My noble friend Lord Balfe asked whether agency workers would be willing to cross picket lines given current labour shortages. Again, this is a permissive change; nobody is going to be forced to take an assignment that they do not want to take. The point is that the current regulatory framework actually prevents them having that choice, and that cannot be right. The noble Lord, Lord Woodley, raised concerns about the damage that this will do to the reputation of the recruitment sector, and the concerns of the employment businesses and others that have registered about this change. Nobody is being forced; nobody is being compelled; no employment businesses will have to supply workers to businesses facing industrial action. Again, it will be their choice to take part or not, as the case may be; no one is going to force them. We just do not see the point in having the blanket ban that we currently have.

The noble Lord, Lord Monks, drew some I think incorrect parallels with the P&O Ferries case earlier this year. This case is completely different. In the P&O Ferries case, the company has admitted deliberately choosing to ignore statutory consultation requirements when firing staff with no notice. All we are doing in the case of these changes is giving employers more flexibility to help them minimise the disruption that industrial action causes. Where proper procedures are followed, staff on strike should not lose their jobs; they will continue to have exactly the same legal protections that they already have.

The noble Lord, Lord Hendy, questioned whether these changes comply with our international legal obligations, including our commitments under trade and co-operation agreement. We have carefully considered all of these issues and we are confident that the changes are compliant with all of our international obligations—as, indeed, I told the noble Lord, Lord Collins, during Question Time last week. The ability of businesses to use agency staff does not affect individuals’ right to strike, and the protections those striking workers have in law remain unaffected. The Government are adjusting the balance between the right of workers to strike, and the rights of the wider public to go about their lawful business, and this falls well within our margin of appreciation when implementing international conventions.

The noble Lord, Lord Paddick, raised concerns about health and safety. Again, these concerns are not well founded, simply because this change does not change the broader health and safety rules that businesses still have to comply with. Similarly, the obligation on employment businesses to supply suitably qualified workers also remains in place. The aim of our trade union laws is to support an effective and collaborative approach to resolving industrial disputes, one that balances the interests of trade unions and their members with the interests of employers and the wider public. The changes we are making will, in my view, support that balance, and I therefore commend these draft regulations to the House.

[Lord Collins of Highbury (Lab)]

My Lords, simply asserting something does not make it true, and that is exactly what the Minister has done tonight. In fact, the reason why this debate was perhaps shorter than he expected is that not a single person supported his line of argument; that is the issue here. He talks about strikes as if there is somehow a desire on the part of workers to go on strike; there is no such desire. It is when they face intransigence; when they face Governments who are determined that negotiations cannot take place—that is what we have heard. I have not heard a single word tonight supporting the Minister’s assertion that this Government are in favour of a collaborative approach. When we were collaborative, as my noble friend said, during the pandemic, the TUC worked hand in hand with this Government to make sure that the economy did not suffer long-term distress—and what is the payback? As the noble Lord, Lord Balfe, says, it is simply to have a pop, to have a go, but with no evidence provided that it will achieve anything that the Minister suggests. It will entrench opinions and it will delay settlements.

The employers, the temporary agency firms—and there are many of them—provide a very necessary service. They provide flexibility in very difficult, tight labour markets, as we have heard, and this action will undermine and discredit them and make it more difficult for them to do their job. It has been a very interesting debate. I hope we will be able to read in Hansard what this Government really are about, because they assert something and do something else. I beg leave to move the amendment and divide the House.