Employment Rights Bill (Fifth sitting)

Sarah Gibson Excerpts

Committee stage
Tuesday 3rd December 2024 Public Bill Committees

[Greg Smith]

I did not say that every business is offering flexible working. I said that, having visited businesses in my constituency, I am yet to find a problem around any business’s offering flexible working, or any employee or constituent with a complaint about an inability to get flexible working—quite the opposite, in fact.

If we consider the cumulative impact of all the measures in the Bill, they will certainly place a burden on business. The Opposition are trying to ensure that we take only those measures that will work—only those that will have a direct positive impact and will not be a burden on the HR department. Well, most small businesses do not have an HR department; often, it is the director or another member of the team who has to take on that additional job and understand the burden of regulation, on top of whatever their main contract has them doing. If we get rid of the measures that are simply not necessary, that will mean less of a burden on businesses, notwithstanding the point, which the hon. Member for Gloucester rightly highlighted, that the majority of businesses that I speak to do not have a problem offering flexible working—perhaps some businesses in other Members’ constituencies do.

The point of going through the Bill line by line in Committee is to metaphorically kick the tyres to ensure that its provisions are not a burden on business and will not have unintended consequences. As I said earlier, I cannot for one second believe that anybody in this House wants to see fewer jobs in the overall economy.

[Sarah Gibson (Chippenham) (LD)]

I draw the Committee’s attention to my declaration of interests. I have run a small business for the last 20 years. It would probably even be considered a microbusiness, because a lot of professional services are. In the south-west, acquiring and retaining professional staff is extremely difficult for small businesses—certainly, retaining them is. Does the shadow Minister not think that if we create a two-tier system, where someone working for a larger business has better rights than someone working for a small business, it will be even more difficult for small businesses to hire and retain staff?

[Greg Smith]

The point we have to look at, across the six amendments that we are considering in this group, is the reality of small and medium-sized businesses. I congratulate the hon. Lady on running her own business. I was self-employed for 15 years before I was a Member of this House, so I understand the challenges. Small and medium-sized businesses are the backbone of our economy but, by definition, because they are small or medium sized, they struggle—as she rightly says—not just to employ across the piece, but to obtain the legal advice, HR advice and professional services to help them navigate the panoply of regulations, rules and laws that this place has passed over the generations, as the current Government are seeking to do again through this Bill.

The way I look at politics, the best way to govern is to ensure as light a touch as possible on business and to limit the necessity of sourcing additional HR and professional services and so on that small businesses just cannot afford. If they are forced down the route of sourcing expensive professional services, that will have a knock-on effect on the real wages that they can pay to their staff and on the ultimate cost to the consumer of whatever service or product they are providing—that is a basic law of economics.

Although I would never advocate a two-tier approach in principle, there is a real difference between businesses in our economy that can simply have massive HR and legal services departments, without having to outsource them or bring them in at expensive rates, and businesses that cannot. If we accept that reality, perhaps we can look at the burden of additional regulations that might be necessary to help real people and real businesses to grow the economy, so that small businesses can become medium and then large businesses, and can be successful.

The Opposition tabled amendment 138 to exempt small businesses from the flexible working provisions. As I said, small businesses are being clobbered by the Government. Retail, hospitality and leisure relief has been cut, which has led to increased business rates bills, and employer national insurance contributions are going up, which Bloomberg economists estimate will cost 130,000 jobs. I cannot see the justification for putting those provisions in the Bill. We would be grateful if the Minister could provide a full and frank rationale for them—or, if not, support our amendment.

Amendment 139 would exclude businesses with fewer than 500 employees from the Bill’s duty on employers to prevent third-party—I stress third-party—harassment. Of course, harassment in any form is totally, deeply and completely unacceptable in our country, and I am in no way trying to say otherwise, but the RPC has said that the Government have not provided “sufficient evidence” of the prevalence of third-party harassment or its impact to justify the approach taken in the Bill. I genuinely believe that every hon. Member wants to ensure that nobody in this country is harassed in any way, but, through that lens, we need to understand the evidence for the necessity of this particular provision about third-party harassment.

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[Alex McIntyre]

If we are looking at the numbers, I am glad that somebody on the Opposition Benches is finally acknowledging that we have massively increased employment allowance, taking many small businesses out of paying national insurance contributions altogether. It is nice to finally have some recognition of some of the good stuff this Government are doing for small businesses.

To return to the point, though, there is a big difference between having four employees, which would allow somebody to employ people on the national living wage, and having 500 employees. It would be much easier for a large business to exploit the kind of loopholes that are being suggested by reorganising itself into blocks of 499 employees than it would be for a business of a couple of thousand employees to be split into organisations of four employees or fewer, so I think that that is what is much more likely to happen.

I will not name names, but I have been in the trade for a long time, and whenever there is employment legislation, businesses will be considering how best to deal with it, and some are more aggressive than others. In this case, aggressive employers would potentially exploit that loophole, as my hon. Friend the Member for Birmingham Northfield suggested. We are creating a level playing field, which is an important part of this Bill. We heard in evidence last week that many employers are already doing so many of the good things in this Bill. This is a levelling of the playing field, to stop people undercutting good employers with what are, quite frankly, shoddy employment practices.

To sum up, I fully support the Bill, and I do not support the amendment. We should not create a two-tier employment system, where instances such as those that I and my colleagues suffered, like others working on zero-hours contracts in small and medium-sized enterprises, are allowed to go unchecked. We should continue to create a level playing field, as the Minister has suggested. It is important that we encourage all small and medium-sized enterprises to be good employers because, as the hon. Member for Chippenham said, staff retention in small and medium-sized enterprise is difficult. Being good employers—offering flexible working and ensuring that people have regular hours, if that is what they are working—can only benefit small and medium-sized enterprises, as they grow and expand their businesses.

[Sarah Gibson]

As I have stated, I am concerned for small businesses and have spoken to many across my constituency of Chippenham that are extremely concerned about the cumulative effects of these measures on businesses without an HR department and about the huge cost they will impose. However, although I welcome the amendment, I am seriously concerned that if we create a system in which the rights of those who work for small businesses are curtailed, that will affect their ability to take on extra staff.

I feel as though I could have supported the amendment if it had been drafted for seriously small businesses, rather than SMEs of up to 500 employees. I struggle to think of a firm in my constituency with that many employees that does not have an HR department, because they would be struggling as a single employer—I used to struggle as the HR department of my own business with 15 employees. If the number of employees in the amendment could be brought down to around 20, it would be much more acceptable to those kinds of small businesses, but as it is, I would find it difficult to support.

[Laurence Turner]

I rise to make two brief points that have not been made in this debate. The first, which is narrow, is that we already have a legal definition of SMEs under the Companies Acts 2006, which defines the upper limit as 249 employees. I acknowledge that the previous Government’s position was to extend to new regulations the higher thresholds that those on the shadow Front Bench are seeking to put forward through these amendments. I am happy to be corrected, but I do not believe that any legislation incorporating that position was subsequently carried. There is a serious point here. These may be probing amendments—we will find out shortly—but this process is not the right point to introduce a new legal definition.

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[Greg Smith]

The hon. Gentleman is absolutely right that the previous Government set the reference period at 12 weeks. What we do not have clarity on is whether the Bill will change that. Will the new Government shorten it or lengthen it? It is about clarity. This is a rushed Bill, published in 100 days. We do not have the answers or the hard data that we need for debate and that individual Members need so that they can go to businesses in their constituency and take a view before they vote on Report or on Third Reading.

We heard from several witnesses that the length of the reference period needs to account for seasonal work. UKHospitality has put 26 weeks forward as a sensible length. That is not necessarily the Opposition’s position, but we would be foolish to ignore the evidence that the hospitality sector presented to us last week.

The amendment is intended to test what the Minister is planning and—ever the most critical question in politics—why. How will we ensure that the length will not be overly burdensome and that it will take account of the different needs of so many sectors?

[Sarah Gibson]

Like previous amendments, the amendment highlights a serious concern among quite a lot of local businesses to which I have spoken, especially SMEs, which is that a considerable amount of detail has not been included in the Bill and is being left to secondary legislation. Although consultation is highly welcome, it needs to happen as fast as possible, because the interim period between seeing the Bill and getting the detail is causing a huge amount of stress and uncertainty for businesses working in ever more complicated conditions.

[Sir Ashley Fox]

I want to talk about the reference period in relation to the hospitality and tourism industry, which is particularly important to my constituency of Bridgwater and to many other constituencies in the south-west of England. Clearly a lot of seasonal workers are employed, and although I would prefer there to be no reference period, the Government have a mandate to introduce one. Any reference period of less than 26 weeks will cause great difficulty for businesses that may start engaging people just before Easter and are looking for employment to end in September or October, according to their business need. The fact that that detail is left to secondary legislation causes concern to those businesses.