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

Sam Tarry Excerpts

Friday 22nd October 2021 Commons Chamber

[Laura Farris]

I will return to that point when I address British Airways in a bit more detail.

As I have said to the Minister, we need more than ACAS guidance. I want to see the rules on dismissal and re-engagement set out in an ACAS code of practice, with financial sanctions to back them up. Parliament specifically envisaged the possibility of doing this when it passed the Trade Union and Labour Relations (Consolidation) Act 1992. Section 207 gives the Secretary of State the power to introduce a code of practice in respect of anything in that Act. Parliament also considered and welcomed the possibility that the Secretary of State would have the power to impose legal teeth. Section 207A addresses the possibility that any compensation can be increased by up to 25% if the employer does not comply with an ACAS code of practice.

We know that ACAS codes of practice can be effective. The hon. Member for Middlesbrough (Andy McDonald) is an employment lawyer and will know that when we think about, for example, the ACAS codes of practice on disciplinaries or grievance procedures, it is vanishingly rare to get into an employment tribunal nowadays and find that the employer was oblivious to those codes of practice. Why do employers know about them? Because there is risk—financial risk. If they go down in the employment tribunal, there could be an uplift on compensation, and they want to avoid that, so we know that it is has the right effect.

What should the code of practice say? We have some of the answers already. The BEIS call for evidence, which was published through ACAS, gives us some clues. I think practitioners made such suggestions very well, including, in relation to paragraph 56 of that report, that employers should provide an analysis of whether changes are anticipated to last for more or less than five years with evidence to substantiate that answer, and, in relation to paragraph 76, that they should provide evidence of reasonable alternatives they have explored and evidence of their financial position.

Another point comes out of the excellent work of the Transport Committee, and I want to pay tribute to the very impressive session it had with Willie Walsh on 11 May 2020. Anyone who has read the transcript will recall that he was asked repeatedly by the Chair, my hon. Friend the Member for Bexhill and Battle (Huw Merriman), whether, if British Airways returned to full profitability, he would restore workers’ wages to their previous levels, and he declined to confirm that he would do so. That created huge exposure for British Airways, and I do not think it is any surprise that, when Alex Cruz appeared before the Select Committee six months later, he gave a rather different explanation.

BEIS would then have the opportunity to require employers to set the criteria that they would exercise in deciding when to restore workers’ pay. I think it would enable the Government to give guidance on this distinct category of dismissals, how they should be treated and what the employment tribunal should be looking for. My final point on this is that it would give the Government real teeth, and it would incentivise employers to do the right thing and give employees more power to enforce their existing rights.

The point has been made, but most of the employers we have cited in this House are considering fire and rehire in relation to large proportions of their workforce. With British Airways, 12,000 people were at risk. If every single one of those people could get an uplift in a compensatory award of 10% to 25%, then—let us be realistic—that might be £10,000 or £20,000 times 12,000. That creates a huge incentive for the employer to do the right thing, because there will be a very significant financial penalty if they fail. That will mean that consultations are entered into with legal advice, which is a good thing, as well as with an open mind and an open spirit.

By the way, consultation is not a meaningless word, as all hon. Members will know. When it is approached in the right spirit, it can often lead to alternatives to the thing that is most feared by the employee. That is the suggestion that I have made to Ministers.

[Sam Tarry (Ilford South) (Lab)]

I was one of the members of that Select Committee, and I remember there was very much cross-party agreement that it was such a disgrace for that to happen that the company should not carry the British flag. The point is that the parent company, IAG, had profits in the region of £3.5 billion-plus, there in stages, that it could have used. IAG’s agenda—and this is why I am concerned that what the hon. Member is suggesting may not go very far in discouraging companies—was about driving profits, not about saving the jobs and livelihoods of people, particularly women in their 50s and those towards the end of their careers. It was a restructuring brought in under the guise of fire and rehire.

[Laura Farris]

The hon. Member makes an excellent point, and I just want to pick up on what he said. He points to the fact that the parent company had substantive profits, and that point was made by the Unite representatives who contacted me. I do not think that that case would have survived the employment tribunal in its early stages, as I do not think that it would have crossed the threshold of a sound, genuine business reason. I think the reason why Alex Cruz appeared before your Committee five or six months later and spoke very differently about his plans for pilots, cabin crew and everybody else was because the company was on thin ice, and I think some damaging concessions were made in that session. I think you are right, but I do not think that my solution fails to capture it.

--- Later in debate ---

[Richard Fuller]

Well of course I do. Who would not agree with my hon. Friend? He will accept that, should we as a House decide that the better approach is through a code of practice, that places great responsibilities on boards of directors and chief executives to abide by that code of practice. It is a better approach. When pressures require extraordinary measures to be taken, time is critical, and everyone is busy—not just within the business, but the advisers and so on, too. That is why the legal approach proposed by the hon. Member for Brent North would in those circumstances be too bureaucratic, not flexible enough and would end up with a worse outcome for employees than is his honourable intention. A code of practice gives those entrusted to make those decisions the right set of things that might otherwise miss their attention. Directors are absolutely aware of their responsibilities under certain aspects of law, but also of their responsibilities under a code of practice.

[Sam Tarry]

Does the hon. Gentleman agree that it is beyond belief to think that a code of practice is enough? We are talking about firms such as Clarks, where workers who make kids’ shoes are currently on strike. It was recently bought up by a Hong Kong-based private equity firm. Are such firms going to pay any attention whatever? It is just the same as BA. Its parent company IAG had £3.5 billion in the bank and it did not pay any attention even to British laws at that particular time. It was trying to circumnavigate them. It seems to me that a code of practice will not even be worth the paper it is printed on. Does he agree?

[Richard Fuller]

The hon. Gentleman makes a fair point. I am not particularly aware of the particular circumstances to which he has spoken, but the intention of the suggestions of my hon. Friend the Member for Newbury is that there would be some form of power behind that code of practice to encourage businesses so that we can eliminate those limited examples where companies are misusing fire and rehire. Perhaps the hon. Gentleman would like to speak to the junior—sorry, the Minister, my hon. Friend; I should never call him junior, he is very senior. The hon. Gentleman may wish to raise that point directly with the Minister, if he has not already.

In closing, I say to the hon. Member for Brent North and the SNP spokesperson that through their diligent efforts, they have raised an issue where some measured change is required. The hon. Member for Brent North might find that the approach of my hon. Friend the Member for Newbury is a better approach, but with the dignity with which he has proposed this Bill today and the way in which he has shown his willingness to speak to others, there is no dishonour in proposing and pushing something if ultimately there is a different way for us to achieve that objective.