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

Lord Leong Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have contributed today, and especially acknowledge the contribution of the noble Lord, Lord Balfe, on the Conservative Benches.

I declare my interests as the director of several businesses and companies, as set out in the register. I have been in business for the past four decades and employed several thousands of people. One of the most important things I have learned from my time in business is that good employee relationships are absolutely vital for business success. My employees have worked hard to enable the business to succeed and grow, and several of them have become very close family friends. I believe that most businesses are good, responsible employers that do the best for their employees. This Bill is not targeted at businesses like those. No, the Bill will affect only a few bad apples in business, those who disrespect their employees and seek to exploit them. As already mentioned by my noble friends Lord Woodley, Lord Hendy, Lord Browne and Lord Davies, the Bill will not prevent any employer changing the terms of its employee contracts or arrangements because of an impending financial cliff edge.

I pay tribute to the dogged determination of my noble friend Lord Woodley, no stranger to long, drawn-out bargaining over employment rights, in bringing the Bill to the House. He has spent decades fighting for workers’ rights as a union official and a union general secretary, and now in this place he brings his Private Member’s Bill, the third attempt in recent years by Labour parliamentarians to seek to make this Government act and recognise that current employment law fails to address the injustice of fire and rehire. This omission, as others have argued, enables companies to threaten their workers with losing their jobs if the management decides it wants to weaken agreed terms of employment. Every year, such shameful bullying has a devastating impact on the security, lives and livelihoods of millions of workers in this country, and despite recent high-profile scandals, fire and rehire continues to be used. Naming and shaming does not work. Expecting bosses to do the right thing has not worked. It is long past time to change the law to make it work for workers.

When the most recent scandals appeared in the media, warm words from the Prime Minister were cold comfort to those who have suffered from the sharp practice of fire and rehire. It is not just the high-profile cases of well-known, iconic British companies that my noble friend Lord Woodley famously described as trading under this country’s name but not in this country’s interests. What is especially galling is that it appears that some of the companies that treat their workers so poorly in fact received financial support from the Government during the pandemic. The Government could have required that companies receiving assistance would not engage in such practices. They chose not to do so. Most shockingly of all, government departments, including local authorities and statutory bodies that really should know better, have offered procurement contracts to companies known to have threatened workers with fire and rehire tactics. Even with my low expectation of the Government, even knowing their heartless attitude towards hard-working people in the public sector, this came as a surprise to me.

There has also been an attempt to give the impression that fire and rehire has mainly been a last resort in the exceptional circumstances of the Covid pandemic. The thorough response from the TUC to the Government’s proposed code of practice demonstrates that this practice was being used before Covid, was used during Covid and has in fact gained prominence in negotiations during the years since the lockdowns ended. The TUC has estimated that one in 10 workers, almost 3 million people, have been subjected to fire and rehire tactics since the first lockdown. Young workers, women, black, Asian and minority-ethnic workers, as referred to by my noble friend Lady O’Grady, and those on low pay have been disproportionately impacted, which only exaggerates the inequalities that many of them already face. This alone is reason enough to consign fire and rehire to the history books by getting this Bill on to the statute book. Roads paved with good intentions, whether labelled promises, pledges or non-binding, just-published codes of practice, lead only in one direction. It is the workers, threatened with either losing their job or continuing to do it in worse conditions, who will always feel the heat. That is why so many of us support my noble friend’s Bill.

Labour’s new deal for working people recognises that outlawing fire and rehire means that workers can be safe in the knowledge that terms and conditions negotiated in good faith cannot be ripped up on threat of dismissal. They will be more secure and more able to plan and save for the future with legislation that gives them security in their pay and terms.

The Bill enshrines in law necessary improvements in consultation procedures where employers want to change employees’ contracts. It will make it illegal to dismiss workers for failing to agree to a contract that leaves them worse off. The Bill ensures that the highly restrictive trade union legislation introduced by this Government does not inhibit action to protect existing terms and conditions for employees. Recent experience shows that fiddling with a code of practice will not be enough. I agree with Unite the Union’s response:

“The idea that a ‘code of conduct’ is going to stop employers like P&O from doing this is just a bad joke”.


The TUC and lifelong veterans of the union movement, such as my noble friend Lord Woodley, know from bitter experience that in the real world, without legislation to prevent fire and rehire, workers will continue to be exploited.

The Bill offers the Government a chance, an opportunity to do the right thing to get ahead of the curve and outlaw this cruel and unjust practice, and to do it now. It will be a terrible irony if the issues addressed by the Bill are dismissed by the Government in favour of a non-binding code that offers weaker legal protections. The time is long overdue to put an end to fire and rehire with robust and binding legislation. My noble friend Lord Woodley’s Bill does just that.

Does the Minister agree that good industrial relations result in higher productivity? Also, will the Government bring forward the long-awaited employment Bill? I look forward to his response to my and other noble Lords’ questions.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I am, as always, extremely grateful to noble Lords for this debate. Before we begin, I direct Members of the House to my register of interests, although I do not believe there is any conflict relating to the Bill today. I am very grateful to the noble Lord, Lord Woodley, for bringing this Private Member’s Bill to this House. It affords us an extremely helpful debate, and I will go through some of the points shared by so many Members of this House who are rightly concerned that the primary function of a strong economy is a fair workplace regulatory framework.

I absolutely agree with the noble and wise comments of the noble Lord, Lord Leong, at the end of his address, that we should have strong relationships between the people who work in our industry and the people who employ them—with the shareholders, investors and consumers, and in fact with our entire habitat and environment. That is exactly the sort of harmony that this Government are trying to deploy.

I will talk about some of the technical elements around the Bill and dispel some misconceptions. The first misconception to dispel, if noble Lords will allow me, is that the P&O situation was a dismissal and re-engagement process. It was not. If I may, I will correct noble Lords who have conflated that situation—which in my view was absolutely abhorrent behaviour by an organisation with such lineage as P&O towards its staff, who had such loyalty to the company. It was strongly condemned at the time by the Government and is continually condemned by the Government today, and by me personally. I am aware that there is an inquiry by the Insolvency Service into P&O, on which it would be inappropriate for me to comment, but at no point should noble Lords conflate what P&O did with the concept of dismissal and re-engagement.

I will also touch on the principles around the proclivity of companies to use this practice to control their workforce. There is a great deal of anecdotal evidence, but there is not a great deal of specific evidence to suggest that this is as widespread as noble Lords may recommend. In fact, some of the high-profile cases—they tend to be so because they are relatively unique; this is important—often resulted in better outcomes for the employees post the relationship renewal with the unions. It is important to understand how big a situation we are dealing with here; it is not as significant as people suggest. The statistics vary significantly—from one in 10 to 3%, whatever that may be—which causes me concern. I am delighted to make a commitment to continue to do more work on how significant a so-called problem this is.

I will make two very important points about the principle of dismissal and re-engagement. First, for me, it is an extremely useful and powerful mechanism to allow employers to engage effectively with their workforce to create and establish new terms and conditions that may be appropriate for the modern age or for the needs of the company at the time. It is very important that we retain those flexibilities. The concept of dismissal and re-engagement is also very valuable in resetting and clarifying employment terms; I am sure that I am surrounded by people with far greater legal expertise on that than me. As I said, it is not simply a question of using this as a mechanism to bully staff; it is a very important legal process for the contractual relationship between the employer and the workforce.

My next point is something I think we are all agreed on. While I have great respect for the Bill of the noble Lord, Lord Woodley, and indeed for the noble Lord himself, we must have the flexibility to enable companies to manage their workforce in times of crisis. I am sure that, when we are faced with these situations ourselves, either as employers or workers, and we need to come together to respond to an economic crisis such as Covid, it is absolutely right that we have mechanisms to enable us to protect the workforce. This is about fairness, protecting workers and allowing us to have a flexible workforce. It will allow me and my friends, associates and children, and the rest of our citizens, to have the opportunity to work in a flexible environment that has not become too rigid or ossified to respond to economic volatility.

However, very importantly, this should never be used to bully the workforce. The code is very strong on this; it is extremely clear that it is not to be used inappropriately to try to force unacceptable terms on a workforce. Instead, what the code does is clarify the obligations of the employer to ensure that they have to consult with their workforce. For the first time, they have to—this is very important, when you look at the other reasons for dismissal and re-engagement—look at alternatives, not just to the overall plan but to how the individual workers themselves are treated.

There is the 25% uplift, and I take noble Lords’ comments, including those of the noble Lord, Lord Browne, on the tribunal service; I am very sensitive to that. I will come back to the noble Lord on his comments on the workability of that process, because it must be an easy-to-use process that is accessible; that is absolutely at the core of protecting workers’ rights. But we do have the 25% automatic uplift that can be fed into the process. There is an obligation—I believe the code advises it in every case—to consult ACAS when it comes to using dismissal and re-engagement. These are actually quite significant.

Clarity is very important. As we know from statutory codes—again, I defer to noble Lords who have greater legal experience than me—they are central in ensuring that we have a strong framework for navigating employment law and giving protections to workers, and, very importantly, also giving obligations to employers. Having been on both sides, and certainly as an employer, the more clarity I can have about how I can work with my workforce, the better. It is very clear from the tone of the document and this Government that it is the expectation that this is a last resort, that there is a significant degree of consultation and that every other option is exhausted before it is appropriate to use dismissal and re-engagement.

[Lord Leong (Lab)]

I thank the Minister for giving way. Does he agree that the Bill offers employers the flexibility to consult their workers before the terms of the employment are changed? It does not ban the practice; it is just a last resort that offers a consultation period with the employees.

[Lord Johnson of Lainston (Con)]

I am very grateful for that challenge. I will now turn to the Bill. As I said, many elements of its sentiment are wholly welcome, but its practical application would result in less fairness, wealth and job security than the noble Lord might wish. There are several reasons for that. First, the increased consultation becomes extremely onerous on companies. Often you have a very limited period of time to react to a significant economic circumstance. As I said, this is dismissal and re-engagement, rather than simply some type of long-term planning for a business. We must be extremely careful about the onerous conditions that we are placing on companies. I have looked through the Bill, and they are substantial and, I am afraid, heavily tilted towards union practices—maybe because every Member of the House who has spoken so far, apart from the Front-Bench spokesman opposite, is a member of a union. In many instances, not all companies have union bodies represented within them and not all workers are members of unions, so it is possible to conflate those two consultation processes, which is inappropriate.

It is also very difficult. While I have a great deal of sympathy with the principle of a so-called bankruptcy clause, it is not a position that those running a business want to be in that they can do something only if they are about to go bankrupt. The reality, as I think Hemingway said, is that you go bankrupt:

“Two ways. Gradually, then suddenly”.


You have limited time to act and have to be precipitous. You must try to prevent the point at which you go bankrupt, because otherwise all your staff will lose their jobs.

The principle of what we are discussing is how to protect as many workers as possible, in a difficult situation. The code does, but I am afraid that the Bill that the noble Lord, Lord Woodley, has put forward would put at risk the security of more workers than it would protect. Importantly, it removes the breadth and range of principles around which dismissal and re-engagement can be used. That is difficult, because businesses require flexibility and it should not be up to politicians to decide this on a case-by-case basis. That would cause enormous problems, reduce flexibility, make it far harder for businesses to operate appropriately, and reduce employment in this country and security for workers.

However—and I personally will be pleased to engage in this—before the code comes into force in the summer, there will be a full debate in both Houses. I have been very clear with my officials in the department and to my colleagues that we will keep this under review. It is right that we understand exactly how many companies are using this practice and to assess that more appropriately. As I said, I will look into the comments from the noble Lord, Lord Browne, around tribunals.

As the noble Lord, Lord Woodley, knows, I continue to be extremely desirous of continuing to engage with him on this important subject. Nothing is more relevant to this Government than strong relationships between investors, companies, the people who work in those companies, consumers, the broader citizenry and the environment to create the sort of harmony that gives us growth and security for the future.