Employers: Fire and Rehire Tactics

Lord Offord of Garvel Excerpts

Thursday 14th September 2023 Lords Chamber

[Lord Woodley]

To ask His Majesty’s Government what steps they are taking to prevent employers from using fire and rehire tactics.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

My Lords, earlier this year the Government consulted on a new statutory code of practice on fire and rehire. We are currently analysing responses to that consultation. A government response and the final version of the code will be published in spring next year. The code sets out employers’ responsibilities when seeking to change contractual terms and conditions of employment and seeks to ensure that dismissal and re-engagement is used only as a last resort.

[Lord Woodley (Lab)]

The code of practice as published is toothless, unfortunately. It contains no legal obligations on employers and adds only 25% to any compensation, no matter how small it may be—that is no solution. As we all know, what is needed is legislation—as there was in Australia this week—to end the scandal of fire and rehire; most decent people in this place and across the country support that view. When the Bill was proposed in the other place, the Government disappointingly ordered an unprecedented Friday three-line Whip and gerrymandered to filibuster and therefore embarrass a proper vote. I have been informed—

[Lord Woodley (Lab)]

With respect, I will continue. I have been informed that my Bill will not get a Second Reading. Can the Minister explain why the Government seem to be using every trick in the parliamentary playbook to prevent us even debating this much-needed change in the law?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for his follow-up question. The UK labour market is strong by historical and international standards. In fact, in all employment law we are trying to get the balance right between workers’ protection and employers’ flexibility. The employment rate is at 75% right now, and wages have gone up by just short of 8% in the last year, so we think we have the balance right. The Government are taking action to ensure that this practice is a last resort. We are not banning it outright. In the code, we have measures whereby employees’ compensation in certain circumstances, as the noble Lord alluded to, can be increased by 25% if the employer has unreasonably failed to comply with the code, which is quite a big disincentive for the employer. But we believe that there are certain circumstances in which flexibility is required, so we are seeking to get the balance right.

[Lord Watts (Lab)]

My Lords, when we left the European Union, the Government said that they would introduce legislation to protect workers and that it would be better than in the European Union. Can he name countries in Europe where this could happen?

[Lord Offord of Garvel (Con)]

As I said, when we look at the standards of employment law against our competitors in Europe, we have a strong labour market, a strong rate of employment and a long-established suite of protections for all our workers, employees and self-employed people.

[Lord Palmer of Childs Hill (LD)]

My Lords, what is the assessment of the Minister’s department of how much compensation would have been received if the proposed guidance had been in force when P&O sacked hundreds of its employees? As another noble Lord said, 25% of nothing is nothing; it is all smoke and mirrors.

[Lord Offord of Garvel (Con)]

I thank the noble Lord for raising that rather infamous case. What P&O did was illegal. It was not fire and rehire but dismiss and replace. It would remain illegal whether or not the code had been in place, and P&O has received considerable censure as a result. The code, which will come through in the spring, will give real guidance and protection to both employers and workers.

[Lord Kamall (Con)]

My Lords, we know that companies quite often have to close down or change their practices, either because of a competitive market or because they have been managed badly. In one-factory towns, for example, where one company is a major employer, when it has to close, are there any forums for the Government to work together with trade unions to retrain those workers who have lost their jobs to compete in the new global economy?

[Lord Offord of Garvel (Con)]

This is exactly why flexibility is required, because certain changes of circumstances require the workers and managers of a company to get together with the trade unions and the directors to solve the problem through consultation and consensus, and that is generally what happens in the UK. Indeed, as my noble friend will know, we have a number of measures to help employees back into work.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, is there a code of fire and rehire for Ministers in the Government?

[Lord Offord of Garvel (Con)]

I welcome the noble Lord back to Questions. I think that is a very good proposal; we can put it forward to the relevant department.

[Lord Whitty (Lab)]

My Lords, this Session has been plagued by thick Bills. To effect the change that my noble friend calls for would take only a very simple Bill. Can we expect it to be announced in the King’s Speech in November?

[Lord Offord of Garvel (Con)]

As we have said clearly, we are consulting and there will be a code of practice. This practice is used very rarely. Even the TUC in 2020 indicated that only 3% of employers had used fire and rehire and only 9% of employees had experienced it even as a threat. Therefore, the code is the right way forward in this case.

[Lord Forsyth of Drumlean (Con)]

My Lords, further to the question from the noble Lord, Lord Foulkes, does my noble friend not think it a disgrace that a third of our Ministers on the Front Bench are unpaid and that there are instances of paid Ministers being fired and then rehired on the basis that they do the job on no salary? Should the Government not tackle this in the interests of democracy and fair dealing to our Ministers, who do such an excellent job in this House in very difficult circumstances?

[Lord Offord of Garvel (Con)]

My noble friend raises an interesting question—this is going off on all sorts of tangents at this point. Those of us who are in this House consider it to be a great privilege, those who are asked to serve the Government consider it a great honour, and we continue to serve the country as best we can.

[Lord Brooke of Alverthorpe (Lab)]

I am sure the House has a great deal of sympathy for many of the new Ministers who have come in, especially as they are not being paid. They may not recall, although I hope the Minister does, that his Government gave a promise in 2019 that an employment Bill would become an Act during the course of this Parliament. I go back to the earlier question: will the Minister say whether an employment Bill will be in the King’s Speech in November, or is this another broken promise?

[Lord Offord of Garvel (Con)]

Throughout the course of this Parliament, commitments have been made around the manifesto commitments on employment given by the party on this side of the House. Over the last Parliament, six Private Members’ Bills have been brought through to enhance and protect workers’ rights. As I said, we are trying to strike the balance between workers’ protection and employers’ flexibility.

[Lord Fox (LD)]

My Lords, in answer to my noble friend’s question about P&O Ferries, the Minister rightly characterised its behaviour as an illegal act. However, P&O Ferries is now economically active and out there, doing what it always did. Will the Minister undertake to do an analysis of the turnover and profit of P&O Ferries now versus the sanctions it received? If those sanctions prove to have been insufficient, as I believe they will, will the Minister undertake to increase them to prevent a repeat of that disgraceful activity?

[Lord Offord of Garvel (Con)]

My understanding is that the P&O case is still under consideration with the insolvency authorities, so I cannot comment further on it. Further consultation is going on, taking account of this case and specifically the difference between dismissal and redundancy. That will also be in the code of practice. P&O has received censure. It continues to operate within the laws of the United Kingdom and should be allowed to continue to do so.

[Lord Leong (Lab)]

My Lords, good business leaders recognise that without workers they have no business. Valuing workers, treating them with dignity and respect, and mutual trust build a dedicated, motivated workforce. Unfortunately, some employers still adopt fire and hire practices with relative impunity, disrespecting their employees’ livelihoods and well-being. In turn, that damages the reputation and profitability of their business. Do the Government think it just for workers to be treated in this manner? Why will they not stop it?

[Lord Offord of Garvel (Con)]

As I indicated, only 3% of employers have ever used these tactics. The majority of good employers understand full well that the health of their company requires a happy and motivated workforce. This is a minority situation. The code of practice will give it greater clarity going forward.