Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023

Lord Leong Excerpts

Wednesday 13th December 2023 Grand Committee

Other than that, I echo the points made by both the noble Lords, Lord Hendy and Lord Davies, on concerns about the reduction of workers’ rights more generally, which I believe we need to be concerned about.

[Lord Leong (Lab)]

My Lords, I thank the Minister for introducing the regulations, and all noble Lords who contributed to this debate. It is a pleasure to see my noble friend Lord Stansgate and welcome him to the chair.

As we have heard, this instrument does three main things. It reduces requirements under the working time directive, simplifies annual leave and holiday pay calculation and streamlines the regulations that apply when a business transfers to a new owner. This results from the retained EU law Act removing the interpretive effects of EU law on the UK statute book.

As my noble friend Lord Hendy mentioned, during its passage through the House, many of us on these Benches made it absolutely clear that the Act should never be a vehicle for the removal of important existing rights of British citizens. The Government seek to assure us that these changes do not amount to that, and that they simply remove extra bureaucracy. However, in my relatively short time in this place, I have learned to be wary of such assurances. It is said that the devil definitely lies in the detail. However, accurate records leading to accountability surely should not be seen as an evil in itself.

First, I turn to the change to the working time regulations. This represents the greatest risk to workers’ protection. It means that businesses will not have to keep records of their workers’ daily working hours if they can demonstrate compliance without doing so. Will the Minister accept that removing the requirement for accurate record-keeping, tilting the balance of power away from workers to the employer, in fact removes workers’ rights, not unnecessary bureaucracy?

The Explanatory Memorandum says that the instrument will “remove the uncertainty”, without quite explaining what this actually means. The Government argue that the obligations were disproportionate and could damage relationships between employers and workers. Can the Minister expand on how removing clarity could damage this relationship and do anything but actually increase uncertainty? Can he also explain how businesses will demonstrate compliance without records and how a lack of compliance could be evidenced or enforced? Can he expand on the implied relationship between recording working hours and reducing economic activity, or is he prepared to accept that such a correlation does not in fact exist?

Secondly, the instrument provides a simplification of annual leave and holiday pay calculations. In all my years of owning and managing businesses and employing thousands of employees, I have never seen such a complicated system—so much for reducing unnecessary bureaucracy. Can the Minister guarantee that, as a result of this regulation, no workers will lose out on the annual leave and holiday pay to which they are currently entitled?

Finally, I turn to rights under the Transfer of Undertakings (Protection of Employment) Regulations —TUPE. My noble friend Lord Davies of Brixton eloquently set out why this change is totally unnecessary. As TUPE transfers currently stand, employers must inform and consult with representatives from a trade union or, if there is none, other employee representatives. Employers can inform and consult directly with employees only if there are fewer than 10 employees in the organisation. This instrument will amend TUPE consultations so that they can take place directly with employees in the absence of existing representation, if either the company has fewer than 50 people or the transfer involves fewer than 10 employees. This clearly represents a reduction in the existing rights of workers in such organisations. Can the Minister confirm whether ACAS has been consulted on these changes? I look forward to his response.

[Lord Johnson of Lainston (Con)]

As always, I thank noble Lords for their valuable input in this crucial statutory instrument debate. I also join in the thanks to the noble Viscount, Lord Stansgate, and welcome him to his position.

I will try to go through the various points raised, beginning with those of the noble Lord, Lord Hendy; by answering some of his questions, I will have a chance to answer others as well. The point about rolled-up holiday pay is important because, if you are an irregular-hours contractor and you work for an employer for a very short period of time, for example, it would be impractical for you to take a fraction of a day’s holiday paid in that way. It is much more reasonable, useful and suitable for the employee to have their holiday pay rolled up into the work they are doing.

This is important, and we consulted on whether we should bring it in for all employees in the UK. We decided that that was very much not the right thing to do, precisely for the reasons raised by the noble Lord: it is essential, in many respects—in order to have a good and functioning workforce—that holiday is taken at the right time and that people have the right level of rest, let alone in relation to the implications for health and safety. As a result, this only applies to part-year and irregular-hours workers. Whether the employees wish to receive their pay in that way is at the discretion of the employer, in consultation with them. From my point of view—I have been an employer—this strikes me as eminently reasonable. It does not necessarily change anything significant; it just clarifies the important point about how that can be rolled up. We also brought in important clarifications between part-year workers’ holiday entitlements and irregular hours workers’ holiday entitlements, which now bring them into line. Again, this is about fairness, which I know that the noble Lord is keen on.

On record-keeping, it is relevant to mention the court case that has been referred to: CCOO v Deutsche Bank—I will use the acronym “CCOO”, rather than try to pronounce the full name. It is important to note that we are not changing anything at all. I am not sure whether noble Lords realise that this was never implemented in the UK, so the point is that we will not implement it in the UK and it is currently not implemented. Tomorrow morning, or whenever the statutory instrument comes into effect, there will be no change in employment systems for any company—no one would see any difference—because we are not implementing this necessity to track every minute of every worker’s day. Instead, employers will have the rights that they have today, so if we are comfortable—which we are—with the obligations that employers have to confirm under the working time directive, we should be very comfortable with where we are.

We believe very firmly that bringing in this necessity would in many instances be unnecessary. This does not relate to making sure that irregular-hour workers, workers in part-time roles or those who work complex shifts, and so on, have worked the right amount of time. In most instances, this is for regular office-hours workers who work roughly nine to five; to have them clocking in and out, and having complex systems monitoring them, is entirely unnecessary. We do not do it now and do not see why we should do it. We think that the cost to industry in this country could be much as £1 billion in terms of new systems and familiarisation.

The noble Baroness, Lady Brinton, mentioned Ukraine. The consultation referred to the fact that in a cost of living crisis, and with other global headwinds and challenges, it would seem unnecessary and wrong to impose burdens on businesses that we are not already imposing on them. There is nothing to lose. It is important to be reassured that employers’ obligations have not been changed. There are no changes as a result of this instrument. It simply ensures that we do not have to conform to unnecessary and restrictive paperwork-oriented activities.

The noble Baroness, Lady Brinton, also raised an important point about the use of AI and technology. I completely agree with her raising those points. I do not think it is in doubt that employers will want to use AI to ensure that they are conforming to their obligations and that their workforces are properly managed, but we should not forget that it is important that we respect small businesses in this country, which may not have the time or capital to invest in such systems. In most of these instances, we think it is unnecessary. I believe that, collectively, we are doing a sensible act in not implementing this judgment, by keeping things as they are and ensuring that workers are protected. Employers have obligations and we are allowing the system to function appropriately.

The third point covered by noble Lords was on TUPE. I know that the noble Lord, Lord Hendy, has been described as the barrister champion of the trade union movement, and it is a title of which he should be proud, but this relates to organisations with fewer than 50 employees—currently, it relates to organisations with fewer than 10 employees—who do not have a representative force in place. While he is indeed the barrister champion of the trade union movement, it may surprise him to know that some companies do not have trade union movements or representative organisations in them. We find ourselves in a bizarre situation where small companies with few employees are obliged to have elections for representative organisations that do not exist. Even in the world of the noble Lord, that would seem bizarre, unnecessary and indeed unkind to small businesses. It does not at any point derogate the rights of employers when it comes to TUPE transfers where there are representative organisations.

The noble Lord, Lord Leong—perhaps it was the noble Baroness, Lady Brinton, or the noble Lord, Lord Davies—rightly raised whether this can be used as a way round, so that large companies transferring small units to other companies could do it piecemeal, say 10 employees at a time. I do not believe that that would be the case. The obligations of an employer under TUPE regulations—the liabilities accruing to them—have not changed in any material way whatever. Tribunals where they could be found at fault would clearly see through such a plan. I am sure noble Lords know that when you buy businesses that are relevant in terms of team transfers to other companies, it simply does not work in that way, so I do not believe there can be an abrogation of rights.

Let me give an example, which I am sure noble Lords will agree is common sense: if you are transferring a small unit of two people, I understand that you are currently obliged to have an election and a representative for two people who are not members of a union and do not have a representative organisation. That does not mean they cannot receive external advice; of course, we would always advise people to receive the advice they need. In this instance, we are clarifying the situation, simplifying it and making it completely reasonable. At no point are we rolling back on any of the workers’ rights that we hold so strongly in this country and which we are committed to, either through trade agreements with Europe or any agreements that we have undertaken.

Genuinely, I have looked very carefully at each aspect of this statutory instrument and think it is a welcome tidying-up of paperwork and bureaucracy, alleviating burdens on businesses while at the same time simplifying the rights of workers and ensuring that the economy can function effectively. I commend this instrument to the Committee.