Employment Rights (Miscellaneous Amendments) Regulations 2019

Lord Henley Excerpts

Thursday 28th March 2019 Lords Chamber

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 17 December 2018 be approved.

Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

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

My Lords, as well as the Employment Rights (Miscellaneous Amendments) Regulations 2019, I will also speak to the Agency Workers (Amendment) Regulations 2019 and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019. These three statutory instruments contain five measures to clarify and extend workers’ rights, taking forward the Good Work Plan—the biggest boost to workers’ rights in over 20 years.

The Employment Rights (Miscellaneous Amendments) Regulations contain three measures. First, they extend the right to a written statement of employment particulars to workers. Currently, only an employee is entitled to a written statement, and only after a month with the same employer. In his report, Matthew Taylor recommended greater transparency by extending the right to a written statement to workers. We agree that all workers should have the same clarity of information that employees currently benefit from.

The second measure amends the Information and Consultation of Employees Regulations 2004, lowering the threshold for a request to set up information and consultation arrangements in the workplace from 10% to 2% of the total employees. The Government agree with Taylor that voice and engagement is key to good work. Therefore, we are making it easier for workforces to request that employers be more open about what is happening in their workplace. It is important to note that this statutory instrument does not change the important rights that information and consultation representatives have, including paid time off and protection against detriment, the number of employers in scope of the regulations, which is staying at those with 50 or more employees, or the minimum of 15 employees required for a request to set up information and consultation arrangements. Good employers engage regularly with their workforce. To quote Taylor:

“Well-run companies recognise the importance of the people who work for them. They invest time and effort in good management relationships”.


The third measure increases the maximum penalty available to employment tribunals where there has been an aggravated breach of workers’ rights. From 6 April, a maximum penalty of £20,000 will be available, quadrupling the current amount. The current maximum penalty of £5,000 does not always reflect the higher value awards. The new maximum aligns with the current maximum penalty per worker for non-payment of the national minimum wage. It is important that all parties are aware of this penalty. We are providing guidance to increase awareness and highlight how tribunals can make use of these powers. This measure is targeted at businesses that breach the law in ways that are deliberate or malicious. Compliant businesses will welcome this deterrent against anyone seeking advantage by exploiting workers.

The second statutory instrument—the Agency Workers (Amendment) Regulations 2019—abolishes the “Swedish derogation”. At present, agency workers can opt out of the entitlement to equal pay in return for pay between assignments through a Swedish derogation contract. Taylor highlighted that Swedish derogation contracts can be exploitative, and workers sometimes do not receive the equal pay they are entitled to. Our consultation and earlier BEIS research uncovered cases where pay between assignments was not given. We concluded that agency workers are not benefiting from the Swedish derogation and we are therefore taking action. I think that this reform has been welcomed across parties.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his introduction to these SIs. Many of the points that I intended to make have already been made by the noble Baronesses, Lady Burt and Lady Gardner, and my noble friends Lady Donaghy, Lady Drake and Lord Monks. The House will be pleased to hear that I shall therefore not repeat everything that has been said as well as the many questions that have been asked. However, there are a couple of issues that I want to highlight and reinforce, and a couple of questions I want to ask.

The greatest concern on this side of the House is that these regulations do not do justice to the, admittedly limited, Taylor report. When first published, my honourable friends in the other place warned that its recommendations did not go far enough, yet it seems that the Government are failing to meet even those basic suggestions.

There is also the issue of the considerable delay. After years of consultation and press releases, what has eventually been published amounts only to some minor tweaks and limited changes to employment laws. Ultimately, this is only further evidence of the Government’s failure to address the growing inequality in the quality of work, and increasing insecurity and low pay, across the UK. It will soon be three years since the review was first commissioned. Before I move on to the specific instruments at hand, can the Minister confirm that all 53 of its recommendations will finally be implemented by that milestone?

The crux of the Employment Rights (Miscellaneous Amendments) Regulations 2019 is to ensure that workers, rather than employees, are given a written statement of certain information relating to their position. The fact that a written statement will be given is welcome, but it is disappointing that that information is contained in separate negatives. Why has it been decided that this information would not be in this instrument? It is also questionable what a statement will achieve without the necessary routes to challenge the information given in the document. Regarding that, what exact mechanisms will exist for workers to challenge the information given in the statements, if they had understood the particulars to be different?

My noble friend Lord Monks has already touched on information and consultation. I support his points on that.

The Agency Workers (Amendment) Regulations 2019 seek to amend the loophole in the regulations which has meant that agency workers employed on permanent contracts with recruitment agencies can miss out on the right to equal pay, in return for a promise of pay when the agency cannot find them work. As the House has heard, these are known as payments between assignment contracts, or Swedish derogation contracts. The removal of the Swedish derogation is welcomed by this side of the House. The TUC has previously found that, as a result of this loophole, workers have been earning up to £4 an hour less than directly employed staff, even though they may carry out exactly the same work. Unfortunately, the changes will not come into force until 6 April 2020. Why will workers have to wait another year before they receive equal pay?

As a result of these regulations, there will be a significant burden on the EAS to enforce the changes. Can the Minister confirm that the inspectorate will be fully equipped to ensure that all businesses which exploit agency workers will be taken to task?

As my noble friend Lord Monks said, there is also the issue of other loopholes in the legislation, which could lead to the original purpose of the regulations being undermined. Have the Government considered fully removing the 12-week qualifying period, as that would help remove one of them?

Finally, I come to the conduct of employment agencies regulations. In a similar vein to the other regulations, this SI sets out new provisions in the conduct regulations, meaning that agency workers will be entitled to further key information about their assignments. It ensures that employment agencies provide agency workers with a key information document before signing the terms of employment. Any attempt to address issues of pay confusion are, and will be, welcomed, but it is unclear whether this new document will be in the most appropriate format. Will guidance be given to businesses on how the document should be formatted? In common with the other regulations debated today, it is important that provisions of enforcement have been considered. Unless enforcement is properly resourced, even the limited proposals announced will amount to very little. How does the Minister envisage enforcement taking place?

In conclusion, the limited regulations debated today are welcome and have qualified support, as my noble friend Lord Monks said. The issues that have been raised show that the problems lie largely with the fact that they are too timid. If the Government were serious about improving the lives of workers, they would be implementing a far more transformative set of policies rather than these tweaks, especially in the light of the recent prime ministerial statement attempting to woo the trade unions and Labour MPs to support her deal on Brexit. Are her offers of strengthening workers’ rights now gone, with her threat to resign? If not, how do the Prime Minister’s interventions fit with today’s SIs?

[Lord Henley]

My Lords, I thank all noble Lords who have spoken for their generally fairly positive response to the regulations. I will start by correcting myself, and trying to assist the noble Baroness, Lady Donaghy, who accused me of poetic licence in describing these as the most significant change in 20 years. I must make clear that I was not saying that these regulations were, in themselves, the most significant change; it was our Good Work Plan that was. I offer a small correction to her and say 19 years and 360 days, to allow her her 20th anniversary of the minimum wage, which the coalition Government and this one have continued. I think all parties agree that the national minimum wage, and the national living wage introduced by the Conservative Government, have made a great difference. The Taylor report was commissioned by this Government, and my right honourable friend came up with the Good Work Plan after it. The noble Baroness will be familiar with it; she will have gone through all the recommendations and noticed the large number for which the response is “Accept, accept, accept”, or “We will consult”, or “We will do this or that”. We have a good record and I will amend the 20 years to 19 years and 360 days. That obviously makes her happy.

It is important to remember that these are just one small part of that package. The Good Work Plan sets out a very ambitious programme of work to do, some of which will require primary legislation, some no legislation at all, and some secondary legislation of this sort. We are committed to bringing forward further legislation. The noble Baroness, Lady Drake, and others will obviously have to wait until we get that. We will continue in that vein.

The noble Baroness, Lady Drake, expressed her concern that we were going to fall behind Europe. As I have made clear on other occasions—she knows my views—we are well ahead of European provisions in many areas. One has to look only at paternity pay, which was introduced by this Government, and at where we are on maternity pay. I could go on, but will not because we are debating only these three sets of regulations at the moment. There is a proud tradition, in all parts of the House, of getting workers’ rights right. We regularly surpass UK standards and are leading the way internationally in tackling challenges to modernise the labour market, at a time when it is, necessarily, changing because technology and the way we work change.