Status of Workers Bill [HL]

Lord Hendy Excerpts

2nd reading
Friday 10th September 2021 Lords Chamber

Moved by

[Lord Hendy]

That the Bill be now read a second time.

[Lord Hendy (Lab)]

My Lords, Covid-19 has highlighted many of the failings in the law of the workplace in the UK. Working people have found that their workplace rights have not secured their jobs, their incomes or their health. One particular injustice is that many hundreds of thousands have only very few of the rights that Parliament has legislated that employees must have, such as rights to the minimum wage and to unfair dismissal protection. This is because “armies of employers’ lawyers”, to use a phrase used by the Court of Appeal in one case, have constructed contracts that seek to categorise these workers as something other than employees. The proper interpretation of such contracts has provided meat and drink to lawyers and judges for decades. The Bill is intended if not to remove then at least to narrow the grounds of contention by unifying the classification of workers into a single status, subject to an important exception.

Let me deal with a preliminary point on my use of the term “worker”. There is a definition in the Bill but, for the purposes of my speech today, I use the term loosely and generically: I mean a person who works for a living. This is close to the generic meaning in international law as used by the International Labour Organization, the Council of Europe and the European Court of Human Rights. The current problem is that there are subspecies of worker and this gives rise to the injustice that the Bill is intended to cure. Each subcategory—I identify six—is entitled to a different set of statutory rights. That means that employers, understandably, have an incentive to downgrade the status of staff so as to diminish the rights that they enjoy and hence the costs inherent in the provision of those rights. By creating a single status, this possibility is removed. In consequence, the effect of the Bill would be to give entitlement to all statutory employment rights to all workers from day one of their engagement, although I would gladly accept an amendment to remove or reduce waiting time for rights to be effective, such as for unfair dismissal. The Bill does not affect rights, such as to holidays, that increase over time.

I have said that there is an important exception in the Bill. This is my first category. Those who are genuinely self-employed, in business on their own account, with their own clients or customers, will be unaffected by the Bill. These are, by and large, the professionals. Examples are the owner-driver of the London taxicab or Hackney carriage—“mushers”, as they are known in London—the self-employed painter and decorator, the jobbing electrician, the gigging musician, the novelist, the barrister, of course, and many more. Their status and their rights will be untouched by the Bill. Some of these professionals have established a personal service company, a PSC, through which they find it convenient to work. This is a limited company in which the professional or a member of the family is the major shareholder and director. The professional is the sole employee and is content that his or her rights as an employee are exercisable only against their own company. Such genuine PSCs, my second category, will also be exempt.

The Bill is intended to stamp out abuse of these first two categories. It will therefore regulate my third category, bogus self-employed workers. These are workers whose arrangements are dressed up to look as if they are self-employed, but who are in reality employees. Unless they challenge their status in successful litigation, they are not entitled even to the national minimum wage or paid holidays—not even some health and safety protections. Bogus self-employment is rampant in the construction industry but by no means confined to it. Drawing the line between bogus and genuine self-employment is not easy, but the courts will be aided by the Bill placing the burden of proof on the employer who claims that the relationship is genuine.

The Bill will also regulate my fourth category: those forced into PSCs. This is where a worker is told by the real employer that if she wants to work, she must set up a personal service company to make a commercial contract with the real employer to supply her services and to make a contract of employment with herself. This contrivance is often arranged by the employer. On the face of it, the worker has full employment rights, but only against her own personal service company; the real employer is insulated against any responsibility for her rights. Such abusive PSCs are common in parcel delivery, construction and many other sectors. I will not dwell on the technicalities, but the Bill endeavours to draw a clear line between the genuine and the abusive PSC.

The fifth category are the so-called limb (b) workers. The term derives from the definitions in Section 296(1)(b) of the Trade Union and Labour Relations (Consolidation) Act 1992 and Section 230(3)(b) of the Employment Rights Act 1996. These are workers who have a contract but not a contract of employment. They are a subspecies of the self-employed. They get only some of the rights that employees have—for example, the national minimum wage and paid holidays. They do not get protection against unfair dismissal, parental leave and so on. This is the status that the Uber drivers achieved in their Supreme Court victory earlier this year. Limb (b) workers are common in food delivery, taxi driving and other service industries.

Finally, there are the employees. They are entitled to all the statutory rights that Parliament has provided, so long as they have been employed for long enough.

The Bill takes up issues identified in the Matthew Taylor report some years ago, but by proposing a single status it goes beyond Matthew Taylor’s recommendations. I wanted to give your Lordships a sense of the scale of the problem, but the statistics are limited. What can be said is that at present there are about 28 million employees, a figure that includes the single employees of up to some 700,000 personal service companies. In addition, there are just under 5 million self-employed, but the statistics do not distinguish between those who are limb (b) workers, those who are bogus self-employed and those who are genuinely self-employed. What is clear is that the number of those in PSCs and self-employment is proportionately greater and growing faster than elsewhere in Europe.

Though some opportunistic employers will not welcome the Bill, it would in fact benefit employers generally by preventing greedy or uncaring employers from undercutting good employers who are prepared to confer full employment rights on their staff. It would also stop the worst employers free-riding on the rest of us by using categories for their staff that avoid payment of national insurance, tax and pension contributions. The Bill is obviously intended to benefit workers and I am pleased to say that it is supported by the Trades Union Congress. It will, if passed, extend employment rights to hundreds of thousands who do not currently enjoy them. It will protect those who already have such entitlement from the danger of being degraded, downgraded to or undercut by workers with fewer rights.

I have one last point. Employers often try to persuade workers of the benefits of a lesser status on the basis that it provides flexibility for the worker, but this is a false argument, since legal status has nothing whatever to do with whatever flexibility employers confer on their workers. That flexibility can just as easily be enjoyed by employees if the employer is prepared to concede it. If the Minister supports the Prime Minister’s avowed levelling-up objective, here is a measure that he can and should support. I beg to move.

--- Later in debate ---

[Lord Hendy (Lab)]

My Lords, I am grateful for and humbled by the support around the House for the Second Reading of the Bill. I am grateful to all speakers who have contributed, particularly the noble Lord, Lord Moylan. Were it not for him, the heroic defence of the current situation by the noble Lord, Lord Callanan, would have stood alone.

It will be understood that I mean no disrespect by not summarising the elegant arguments put forward both for and against the Second Reading of the Bill, but I will take up just a couple of points. First of all, I would like to say how grateful I am for the support of the noble Lord, Lord Blencathra, and his reference to caring capitalism. Personally, I prefer caring socialism, but caring capitalism appears to be an achievable aspiration that is appropriate to aim for with this Bill.

I am grateful to the noble Baroness, Lady Greengross, for pointing out the particular vulnerability of young workers and older workers, and to the right reverend Prelate the Bishop of St Albans for expressing Christian support for the Bill and drawing to our attention the benefit to the state in increased tax and national insurance that would follow from the adoption of the Bill—a point reiterated by the noble Lord, Lord Balfe.

The noble Lord, Lord Holmes, raised a point about unpaid interns. I looked again at the Long Title of my Bill, and unfortunately I do think I would be able to persuade the authorities to include an amendment that dealt with unpaid interns—but I completely agree with him that unpaid internships should not be permissible except as a certified part of a formal educational course.

I loved the reference by the noble Baroness, Lady Wheatcroft, to the current law as a braying ass. That is a phrase I shall remember and cherish. She reminded us of the continuous struggle over centuries for the dignity and rights of workers to be protected by statute. This Bill is simply the latest attempt to achieve that.

The noble Lord, Lord Moylan, made an important point about the status of directors. Currently, directors may or may not be employees. Indeed, under this Bill they may or may not be workers; it will depend on the arrangements. I would be happy to accept an amendment to clarify the status of directors, but I am not prepared to accept Uber drivers having their contracts rewritten to make them all directors of some fictional Uber company. The noble Lord, Lord Moylan, pointed to the messy complexity of real life, but the noble and learned Lord, Lord Etherton, for whose judicial support I am grateful, pointed out that the messy complexity is in fact created by the state of the law and the exploitation of it by employers’ lawyers.

I indicated that I was not going to deal with those who kindly supported this Second Reading, but I must just mention my noble friend Lord Davies of Brixton’s intervention drawing attention to the way the Bill would protect pensions. The noble Lord, Lord Balfe, also drew attention to the fact that the protection of workers ought to be a cross-party issue; I agree with him on that.

The opposition to the Bill from the noble Lord, Lord Callanan, really boils down to an assertion that the current state of the law provides the right balance, which no other speaker apart from the noble Lord, Lord Moylan, accepts. He says that is based on the preservation of flexibility and the fundamental protections that currently exist for workers. So far as flexibility is concerned, I am afraid I cannot understand why it can be said that flexibility depends on the absence or restriction of employment rights. Flexibility is perfectly possible with full employment status and the rights that go with it. There are thousands, tens of thousands, hundreds of thousands—if not millions—of workers on flexible contracts who are still employees, so that argument simply does not hold water.

As for fundamental protections, I regard one of the protections of workers to be a right to complain if they are, or believe themselves to be, unfairly dismissed. I have not heard a justification for delivery riders such as those employed by Deliveroo, or the Uber drivers the noble and learned Lord, Lord Etherton, spoke about, being denied the right to make a complaint to a judicial authority that their engagement was unfairly terminated.

I did a case in the Court of Appeal a few years ago concerning a lap dancer, Quashie v I forget the name of the nightclub that engaged her. She worked three nights a week, week in, week out, over a period of years. An allegation was made that she was in possession of drugs; her engagement was instantly stopped. We tried to bring a claim for unfair dismissal but were met with the argument that she was not an employee but an independent contractor. We lost in the employment tribunal and won in the Employment Appeal Tribunal. Unfortunately, we lost in the Court of Appeal because of the complexity of the current law, as explained by the noble and learned Lord, Lord Etherton. I turn back to the fundamental point: why should she not have the right to say, “This allegation was false and unjustified, and my termination is unfair”?

In conclusion, I thank all noble Lords who have contributed to the debate.

Bill read a second time and committed to a Committee of the Whole House.

Status of Workers Bill [HL]

Lord Hendy Excerpts

Order of Commitment discharged
Wednesday 10th November 2021 Lords Chamber

Moved by

[Lord Hendy]

That the order of commitment be discharged.

[Lord Hendy (Lab)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Status of Workers Bill [HL]

Lord Hendy Excerpts

3rd reading
Friday 28th January 2022 Lords Chamber

Moved by

[Lord Hendy]

: Clause 1, page 2, line 44, at end insert “and any such regulations must be made by statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament.”
Member’s explanatory statement
This is a technical amendment to ensure (in order to comply with the recommendation of the Delegated Powers and Regulatory Reform Committee in HL Paper 101, 18 November 2021) that the Bill, which inserts identical provisions regulating the status of workers into the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996, provides identical mechanisms to allow the Secretary of State to exercise the additional powers given by the Bill to expand the categories of “worker” and “employer” (Clauses 1(6) and 2(6)). Currently, the 1996 Act requires such powers to be exercised by Statutory Instrument subject to the negative procedure but the 1992 Act does not. The proposed amendment would amend the 1992 Act so as to ensure consistency under both Acts.

[Lord Hendy (Lab)]

My Lords, this amendment is in my name and on a sheet marked HL Bill 14—TR(a). It is a technical amendment, so perhaps I can remind your Lordships of the context of the Bill and the purpose of the amendment. The context is that the Bill seeks to amend the two major Acts of Parliament regulating employment in the United Kingdom: the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996. It provides amended definitions of the concepts of worker, employee and employer.

In the Bill, the Secretary of State is given power to make regulations to deal with anomalous cases. The problem is that the 1996 Act provides a mechanism for the Secretary of State to do that by way of statutory instrument, subject to the negative procedure. However, the 1992 Act does not provide such a mechanism. Therefore, this amendment is designed to give effect to the democratic purpose by providing an equivalent power to the Secretary of State to exercise his regulatory power by statutory instrument, subject to the negative procedure. It is entirely technical and makes the provisions of both Acts, should the Bill be passed, equal.

I was not aware of this defect when drafting the Bill, which may be thought surprising, given that I spent almost my entire career arguing over bits of both pieces of legislation. However, the anomaly was drawn to my attention by the Delegated Powers and Regulatory Reform Committee’s report, which was published after that committee dealt with my Bill. I am sorry to say that I am a member of that committee, so it was particularly shameful to be rapped over the knuckles by it for my omission. I hope now to put the matter right. I beg to move.

Amendment agreed.

--- Later in debate ---

Moved by

[Lord Hendy]

That the Bill do now pass.

[Baroness Merron (Lab)]

My Lords, I speak in place of my noble friend Lord Bassam, who cannot be here today.

We on these Benches support my noble friend Lord Hendy and his Bill, which will create a single status of worker. I express my thanks to my noble friend for introducing the Bill and for his amendment, along with his great honesty about the need for it.

The Bill elegantly replaces existing employment categories, thereby removing qualifying periods for basic rights and protections. It gives workers rights in the job from day one, so all workers would receive rights and protections, such as statutory sick pay, national minimum wage entitlement, holiday pay, paid parental leave and protection against unfair dismissal, while the genuinely self-employed would retain their status. It is of course a shame that parliamentary time limits mean that the Bill may be going no further. I therefore hope to see it as a government Bill before too long.

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

My Lords, I thank the noble Lord, Lord Hendy, for moving his technical amendment in order to comply, as he said, with the recommendation of the Delegated Powers and Regulatory Reform Committee. While the Government are not convinced that the Bill is the right course of action, we agree with the importance of legislative scrutiny and consistency. The Government therefore welcome the amendment, which would ensure consistency under the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996—although, as I said, we cannot support the Bill.

I congratulate the noble Lord on bringing the Bill to the House and on enabling this debate on an important subject. I thank all noble Lords for their contributions during Second Reading, which allowed for what I thought was an insightful and important debate on this topic. I also thank the Delegated Powers and Regulatory Reform Committee for its expert contribution and the noble Lord, Lord Hendy, for tabling his amendment.

As I said at the start, the Government are not convinced that the Bill is the right solution to give greater protection to those in insecure work. We will continue to take steps to protect vulnerable workers, delivering on our ambition to make the UK the best place in the world to work and grow a business.

[Lord Hendy (Lab)]

My Lords, I am grateful to the Minister for his speech. I am grateful, too, for the other speeches made today and those which were made on Second Reading. I am particularly grateful that the Bill has enjoyed wide support across the House, on all sides. I of course understand the position of the Minister in being unable to support it, but he stands alone in this. If the Bill is passed it will, as the noble Lord, Lord Balfe, said, render great justice to hundreds of thousands of workers who are wrongly classified, and thereby deprived of the statutory rights which Parliament has bestowed on working people. It will also provide, in accordance with the Government’s policy, a levelling-up process by which all employers will stand on a level playing field in the engagement of their workforce.

Bill passed and sent to the Commons.