Workers’ Rights

Vince Cable Excerpts

Friday 10th May 2013 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I congratulate the hon. Member for Harlow (Robert Halfon) on securing this Adjournment debate and on the very passionate and lucid way in which he set out his case. He has been an assiduous constituency MP when faced with a major closure and a lot of personal hurt. I very much admired how he presented his case and how he brought together the local community—the trade unions and the council as well as the business. He raises an important issue about a big international corporate, which in my role as Business Secretary I support in many of its overseas operations. Tesco is a big operation, making £300 million in profit, as the hon. Gentleman described. He has pointed to a big gulf between the nationally declared set of objectives and principles, which I am sure are sincerely intended, and the way in which the local management have applied them in an insensitive way and with poor communication.

What I found most appalling in what the hon. Gentleman said were the threats to individual employees. I sincerely hope that the transcript of this debate will be read by people higher up the company, who will then better understand what has been happening in Harlow. I hope that he will understand that, for the most part, this is an individual commercial decision, in which I cannot interfere as a legal process is involved, but he has left me with some basic issues of principle about the interpretation of the agency workers legislation. I will ask my officials to go away and reflect on whether any wider lessons are to be learned.

Let me take the hon. Gentleman’s points in turn. The loss of 800 jobs has, of course, been a big shock to his community. That is a lot of jobs, and difficult issues related to redundancy are involved. Those issues are not unique to this case, but it is a big closure, and I understand why he is concerned about it.

UK retail is a very competitive business. All retailers are constantly innovating, which, ultimately, is good for consumers. The current climate has required UK retailers to think again about the services that they offer, which frequently leads them to re-engineer their businesses and combine all the various retail channels so that they offer the consumer a seamless, integrated, flexible experience. As we have seen in the case of several of the leading retailers, that may involve the upgrading and relocation of distribution centres. I think that the hon. Gentleman indicated that there were other examples as well.

It does not always follow that there are staff redundancies. In many instances, employers are able to offer workers alternative jobs or the opportunity to relocate. The hon. Gentleman mentioned correspondence from which it appears that Tesco tried to relocate some jobs, although not in a way that he found very satisfactory. For some, however, redundancies may end up being the only option. Employers will have, or should have, made reasonable efforts to find and offer suitable alternative employment. In such cases, employees have a wide range of rights, including the right to be consulted about redundancies and the right to a minimum notice period, and ultimately they are protected under law against unfair dismissal.

While it is clearly desirable for employers to give their workers as much notice as possible of changes that might affect their employment, that cannot always be done. However—I am sure that the hon. Gentleman is aware of this, as he is clearly in close contact with USDAW—employers are under a statutory obligation to provide minimum periods of notice and to consult employees before they can be made redundant. I understand that a formal consultation is taking place in line with the statutory obligations, following which Tesco intends to serve notice on affected staff.

That brings me to the issue of the terms on which the contracts could be renegotiated, and the issue of pay. It is always open to either party to seek renegotiation of the terms of an employment contract, and there will be a variety of reasons for that to be done. I think it was acknowledged in the Queen’s Speech debate that has just taken place that in many cases workers have accepted lower pay as the price of keeping jobs. That is often what we mean by the rather bland word “flexibility”. The hon. Gentleman clearly feels that it has been unfair in this case, but it has frequently been a necessary part of adjustment to local labour market conditions.

We have been in touch with Tesco about this case. It has told my officials that its pay rates vary between distribution sites, and that—it says that this action was exceptional—it has offered to protect the pay of staff transferring to Dagenham at 100% for a year before implementing its existing company pay protection policy. I understand from what the hon. Gentleman said earlier that that does not cover future years or overtime, and that there are other exclusions.

An employer may not change the terms of any employment without the employee’s agreement. In most cases, responsible employers are already implementing good practice and complying with the law, but as the hon. Gentleman will know, the Government have developed a range of measures to resolve workplace issues as soon as possible, and to enable early conciliation and mediation to be sought. As a last resort, an employee can seek legal redress through the courts or by presenting a claim to an employment tribunal.

The hon. Gentleman raised a series of issues relating to inequalities of treatment. I noted what he said about the apparent favouritism given to management as opposed to less senior staff, and in particular, his point about agency workers who use the “pay between assignments” model which is often described as the Swedish derogation. The issues are complex because different categories are involved, but I shall try to deal with them in broad terms.

As the hon. Gentleman mentioned, workers in this category do not qualify for equal pay under the agency workers regulations. Instead they become permanent employees of a temping agency. Importantly, they are entitled to be paid between assignments at the rate of at least 50% of the pay they have received, usually in the prior 12 weeks of work. Pay between assignment contracts gives agency workers more certainty about their pay when an assignment ends. Just like other types of contract, such as part-time or fixed-term, they will not be suitable for all people. What is important is that individuals and businesses have a choice about the type of contracts available to them so we maximise the opportunities for individuals to find work suitable for their particular situation. He has, however, raised in trenchant terms the failure of this particular model, and we will look at the implications of that.

Turning to the issue of the disabled, the hon. Gentleman gave some moving and worrying accounts of the way in which individuals had been dealt with at the Harlow plant, and the reference to the threats was particularly troubling. Let me address the broad issue of disabled workers, however. Provisions to address disability discrimination are set out in the Equality Act 2010. Among other things, the Act aims to prevent discrimination against disabled people in employment, and in this particular case certain legal aspects will need to be pursued. One of the ways the Act aims to prevent discrimination is by requiring employers to make reasonable adjustments where a disabled person is put at a substantial disadvantage in comparison with non-disabled persons. The Act seeks to achieve a balance between the rights of disabled people and the interests of employers, and employers are therefore only required to make adjustments that are reasonable. Factors such as the cost and practicability of making an adjustment have to be taken into account. I trust that Tesco has taken the necessary steps to assist disabled employees to progress and remain within its organisation. Ultimately, it would be for an employment tribunal to decide whether an adjustment would be reasonable.

The Act also requires employers to ensure that any redundancy criteria and procedures do not indirectly discriminate against disabled employees. They must consider whether any procedures they adopt which apply to all employees might have a particularly adverse effect on disabled employees in general, and would place a disabled employee at a particular disadvantage. Again, I am sure Tesco has taken the necessary precautions, but an individual can, of course, seek the support of ACAS in resolving a matter or seek redress through a tribunal.

My officials have been in contact with Tesco over the closure of the Harlow site. The Minister of State for business and enterprise, my right hon. Friend the Member for Sevenoaks (Michael Fallon), wrote to the hon. Gentleman in March and told him that Tesco had accepted an offer of support through the rapid response service. This service is available to employers and employees facing redundancy, and draws together the various partner agencies. Since then, working with the local partner organisation and Harlow council, the response service has begun delivering presentations to all staff facing redundancy. Presentations took place this week, and a further session is scheduled for next week. Follow-up support in the form of a jobs fair will also be arranged at the end of May.

As I have said, a formal employee consultation is currently under way which is due to finish at the end of this month. It is, of course, important that this consultation is allowed to run its course without interference from the Government, and I am sure the hon. Gentleman will understand that I cannot interfere with that process. He has left me with some homework to do, however, in pursuing the particular issues around these laws as applied to agency workers, and I am sure he will acquaint the senior management of Tesco with what has been said in this debate, which reflects very badly on its national reputation. I am also sure that by achieving this Adjournment debate he will have taken a big step forward in helping these workers.

Question put and agreed to.