Small Business, Enterprise and Employment Bill

Lord Stoneham of Droxford Excerpts

Monday 26th January 2015 Grand Committee

Finally, I also support the amendment that would establish a whistleblowing ombudsman, and I look forward to hearing the Government’s response to this innovative proposal. I wholly support the creation of an ombudsman, as there appears to be a gap in accountability between a whistleblower raising a concern and the response they then get from the regulator or the employer to the public interest issue. PIDA focuses only on the victimisation of the whistleblower. That is vital, but it does not deal with how the concern is then addressed. A body such as an ombudsman would complement the Government’s measures to produce regular information from regulators on whistleblowing by holding those bodies to account. With those remarks, I support all the amendments in this group.

[Lord Stoneham of Droxford (LD)]

My Lords, I apologise for being a little late for the beginning of the remarks of the noble Lord, Lord Wills, but I will say a few words in this debate. Generally on this side we are supportive of moves that provide extra protection for whistleblowers. Clearly, people who feel that they have to whistleblow must be protected and must have the remedy for being protected. Listening to the debate, I think that the idea of having some form of national code that would supersede the many codes that have grown up is on the face of it a good thing. I will say only that speed is always of the essence in these cases. If they are allowed to drag on, they become very bureaucratic —the individuals are put to huge inconvenience and stress while their grievances are dealt with. My only concern about setting up another regulator or ombudsman is about whether that would just create a bureaucracy that would add to the burden on those who try to deal with these issues, and would slow up the process in which grievances can in general be dealt with quickly. Obviously I will be very interested to hear what the Government have to say in response. We are broadly sympathetic to this tightening up of legislation in this area and the encouragement it should give to genuine whistleblowers.

[Lord Young of Norwood Green (Lab)]

My Lords, we support these amendments. I will preface my remarks by reminding us that in many circumstances this is a matter of life and death. Often the whistleblower finds that his or her life is turned upside down for a considerable period of time and they are put under enormous stress. The lives of the general public can also be affected, as we know from some of the first cases, for example that of the paediatric unit in Bristol. We know that when large organisations get it wrong, they put people and the public at risk, sometimes in extreme circumstances. It is right to remind ourselves of that, and of how much courage it takes for an individual in a large organisation to bring themselves to the point when they feel they have to whistleblow. They might have gone through the procedure of trying to alert their first line manager or even somebody further up the management chain, and still have failed to get any recognition that there was a real problem to be addressed.

We therefore think that the amendments proposed by my noble friend Lord Wills are reasonable; they are justifiable in trying to sort out whether a worker is in fact a whistleblower and is ensured protection. That is extremely important. The amendment enables workers who have been wrongly identified as having made a protected disclosure to be protected under PIDA. Trying to ensure that gagging clauses are finally rooted out is surely another important amendment, and I look forward to hearing the Minister’s response to it. The National Audit Office concluded that many individuals believed that they were gagged regardless of whether or not this was actually the case. Anything that makes that situation clearer and provides adequate protection surely is worth while.

I do not think I need to take much time over the question of whether or not we should include student medical professionals. It seems necessary and I hope that the Government will be sympathetic to it.

Amendment 65 deals with blacklisting. Although we believe that there should be a further inquiry into the general nature of blacklisting, my noble friend Lord Wills has suggested a very reasonable approach to what happens to an individual who, having already lost their job through no fault of their own, finds themselves in a situation where they are unable to gain any further employment, which is surely appalling.

Amendment 63 seeks to ensure that there is not a get-out clause where an employer can suggest that instead of something being a disclosure of information where there is a protected circumstance, that can be got round by considering that it in fact was an allegation, which does not give the employee protection.

I do not need to go into an awful lot more detail because my noble friend Lord Wills and the noble Lord, Lord Low, gave a very detailed analysis. But I will deal with the point about the whistleblowing ombudsman, if only to respond to the noble Lord, Lord Low. One can always make the point about another layer of bureaucracy but when somebody finds themselves in the position of being a whistleblower, we would like to think that these situations are dealt with speedily and promptly but all the evidence tells us that unfortunately these cases go on, in many cases for years, and surely at the end of the day what the individual wants is justice. Having somebody who is genuinely independent as the last port of call is a worthwhile suggestion.

For those reasons, we support these amendments and I look forward to hearing the Minister’s response.

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[Lord Young of Norwood Green]

My Lords, I shall speak to all the amendments in this group. It is as well to remind ourselves what an employee has to go through even to get to an employment tribunal.

The Enterprise and Regulatory Reform Act created a number of hurdles that people have to pass. First, they must go to early conciliation at ACAS. If that breaks down, they are issued with a certificate to say that conciliation has been unsuccessful and they must go into the employment tribunal system. An entry fee has to be paid to the employment tribunal service. If they want to take it to a full hearing, there is an additional fee. We do not believe that it is just or fair for a pregnant woman who has been discriminated against at work, for example, to have to pay £1,250 to enter the employment tribunal system.

After going through an incredibly stressful time, including an often expensive employment tribunal, someone might be given a compensatory award that says that they have been wronged at work. The employer must remedy that problem but might decide not to pay. There are a number of hurdles that someone has to get past to be paid, which is why we must try to find a way of remedying the problem, particularly in cases where an employment tribunal sitting in front of a judge has declared that the employee deserves to be compensated and the wrong must be righted.

Amendment 68ZH says:

“Any payments made under this section by the employer must be paid to the employee to the extent that the relevant sum has been fully paid before any sums are payable under the penalty notice”.

Ironically, fines might well be paid to the Government as a result of an employer failing to comply but the compensatory reward could remain outstanding. The Exchequer might benefit but the individual has been denied justice in that the compensatory award has been ignored by the employer. That is why we are recommending that in these circumstances that sum should be dealt with first. Again, I look forward to hearing the Minister’s response to this.

Then there is the question of naming and shaming. We already have a number of circumstances in other legislation where employers are named and shamed. With regard to the national minimum wage, the circumstances in which employers are actually prosecuted or even named and shamed are very few and far between. That is why we believe that this clause ought to include,

“a provision for the publication of the name and other particulars of an employer who does not pay the relevant sum as per the conditions of the notice”.

I beg to move and look forward to hearing the Minister’s response.

[Lord Stoneham of Droxford]

My Lords, I support the principle of these amendments. I look forward to hearing the Minister’s detailed response. It is right that the Government have introduced a number of reforms on employment tribunals, but in doing so they have introduced fees. I understand that the Government are in the process of starting an inquiry into the impact of those fees. We know that the number of people going to employment tribunals has fallen dramatically, so we need to know the reasons for that.

The principle of fees seems to be right in terms of deterring people from making frivolous claims, but we need to ensure that the integrity of the employment tribunal service is open to people with genuine claims, even if they have low means. Therefore, if we are tightening up on the fees, we should be looking closely at the payment of compensation so that the individuals who are awarded compensation get the money as quickly as possible, and preferably ahead of the fines that subsequently could be due on the employer for not having paid that money earlier.

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[Lord Stoneham of Droxford]

I thought that the Government were doing much more than the noble Lord, Lord Young, indicated to enforce the minimum wage. That has been led by the Secretary of State and the naming and shaming is an important element of it—there has been considerable publicity. The Minister should perhaps spell out a little exactly what the Government have been doing in this area and the Opposition should not take all the credit. They deserve the credit for introducing this measure, but the Government are committed to seeing it enforced, and seeing that people are paid appropriately.

Finally, it should be said that this is a Bill for small businesses and, as we saw in the previous discussion, there is a danger as to affordability when it comes to the paying of fines, particularly by small employers. Those should be appropriate, so I will be interested to hear what the Minister will say about enforcement. I hope she will confirm the Government’s commitment to making sure that the minimum wage is firmly enforced.

[Lord Watson of Invergowrie (Lab)]

My Lords, I was certainly in accord with the noble Lord, Lord Stoneham, on his last remarks, but I find it rather strange that he should pray in aid of his argument that any fines should be affordable by the small businesses concerned. Small businesses have no need to incur any penalties whatever; all they have to do is abide by the law and they will not be forced to pay a penny more than they are legally obliged to do. There is no merit to that argument. If you do not want the fine, pay the national minimum wage.

While I suspect that the Government will resist the move from £20,000 to £50,000, my point in respect of the amendment has two prongs to it. One is that I want to know why there should be an upper limit at all at £20,000. Why is there a need for an upper limit? In earlier parts of this clause, it says that the total amounts should be in respect of the amount owed to the individual. But if there is an upper limit of £20,000—and goodness knows what kind of employer would incur a debt of failure to pay the national minimum wage in excess of £20,000—why should we use that as a cap? What is the logic, first, for having a cap at all and, secondly, for that to be the figure? If £20,000 is not to be a sufficient disincentive, £50,000 might just about do the job, and for that reason this amendment ought to be accepted by the Government.

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[Lord Young of Norwood Green]

My Lords, I shall speak to a number of the amendments in this group as well as say a few words by way of a general introduction. The rise in the use of zero-hours contracts is a trend that should concern Members across the Committee. While a small number of people find this type of contract suitable, too many people from across the UK are at the mercy of unscrupulous employers who are exploiting this type of employment. The increasing reliance on this form of employment does nothing to promote the jobs that the country needs. For many employees, zero-hours contracts present huge drawbacks in comparison to permanent regular work. There is no guaranteed level of regular earnings to provide any certainty over meeting bills or planning for the future. By our very nature, we human beings need stability and certainty in our lives; these types of contracts do not offer that. The need to respond to calls to attend work, frequently at short notice, disrupts life outside of work and places a particular strain on families and on arranging care for dependants. One of the most concerning aspects about the explosion of such contracts is that women are likely to be disproportionately affected by them.

Zero-hours contracts by share of the workforce are most common in: the arts, entertainment, and recreation services—2.5% of the workforce; in accommodation and food services—2.2% of the workforce; and in healthcare services—1.2% of the workforce. Not surprisingly, they are most common among people in caring and leisure occupations, where it is 1.7%, and among the less skilled—1.4%. These industries have high percentages of female employees.

We welcome Clause 148, which introduces an exclusivity ban in zero-hours contracts. This is a welcome step forward from a Government who had to be dragged kicking and screaming on this issue, but they have fallen far short in bringing forward measures which tackle the exploitative use of such contracts. This does nothing to change the practices of companies that base their entire workforce management strategy on them. Our Amendment 68ZU would reinforce the powers of the Secretary of State. Amendment 68ZW, perhaps in time-honoured fashion, would delete “may” and insert “must”—I cannot think where I have encountered that before—while Amendment 68ZAB would extend the powers of employment tribunals.

This is a huge problem area, and we need to remind ourselves that workers in these circumstances find themselves in situations where they do not attract sick pay, holiday pay or national insurance contributions. While we would not deny that there are some circumstances where zero-hours contracts might be relevant and applicable, the numbers that we are currently encountering place a huge burden on the workforce. This disproportionately affects them in terms of the employment rights and benefits that the vast majority of the workforce would expect to be theirs as of right. In those circumstances, I beg to move.

[Lord Stoneham of Droxford]

This amendment is all very well but I am not quite sure where it is leading us. It is not very specific. The Government have included clauses to stop people being excluded from doing other work while on a zero-hours contract, which seems to go to the heart of one of the principal problems. Here we are talking in general terms about an obligation on an employer to offer a fixed-hours contract to a worker who has worked regular hours for a continuous period. I am not sure where that is leading to. It is very general, apart from saying, “What we really want is to get rid of all zero-hours contracts and put everyone on a permanent contract on a 40-hour week or 35 hours a week, or whatever it is”. That is not actually what zero- hours contracts are being used for.

I accept that there is some bad practice, which we want to see eliminated. Where there is discrimination or unfair practices, we should work at that. The principal source of exploitation is where people are excluded from doing other work by these contracts. Some of these contracts have worthwhile benefits, as we have seen during the recession. One thing that the recession has done is to enable people to share work around when it is limited. I suspect that as the work comes back, as it is clearly doing as we move out of recession, some of these problems will begin to fade in their severity.

[Lord Young of Norwood Green]

I want to make it clear that this is an attempt not to rule out zero-hours contracts but to introduce some reasonable ground rules. I shall give the Committee some statistics that it might find interesting. The Chartered Institute of Personnel and Development research last November noted that 83% of staff on zero-hours contracts had been engaged for longer than six months, and 65% had been engaged for two years or more. We have a situation in which 65% of staff on zero-hours contracts have been on them for two years or more; that is not a short-term need. If someone has been employed for that length of time, does the noble Lord really not think that they should be entitled to basic rights such as holidays, sick pay and pension contributions?

We are not embarked on a Don Quixote-like mission, tilting at windmills and hoping to abolish all zero-hours contracts, but we are on a mission to ensure that there is some fairness and reasonable ground rules. We are suggesting that if someone has been employed on a zero-hours contract for a reasonable period of time, it indicates that there is a permanent need for this type of employment. In such a case, they ought to have the employee rights that workers on full-time contracts would enjoy.

[Lord Stoneham of Droxford]

I thank the noble Lord for his speech and his intervention. I accept that there are issues here which we need to deal with but we are putting very general terms in here. One thing we do not want to do is to lose some of the flexibility which people have benefited from over the last couple of years, when work has been in short supply. One major problem is in the local authority area, where people are doing social care work. The Government should obviously look at and deal with this area, because they have the means to do so through their contracts, but I am not sure whether these general terms that are being looked for will actually do the job.