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Workers’ Rights

Volume 563: debated on Friday 10 May 2013

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

I am particularly grateful to Mr Speaker for granting me this debate, which relates to the closure of the Tesco distribution centre in Harlow. I appreciate the help I have received from Councillor Jackie Cross, Councillor Phil Weight, David Foreman from Harlow trades council and, in particular, Simon Vincent, the Union of Shop, Distributive and Allied Workers representative, who has been working day and night to champion Harlow depot workers’ rights. I will concentrate on three issues: equal pay, the treatment of disabled workers, and what the Government can do.

In 1919, war veteran Jack Cohen began to sell groceries on a small market stall in the east end. By 1929, he opened his first store in north London, and by 1979 his chain of stores had expanded so much that sales topped more than £1 billion. That success has continued. It now has more than 3,100 stores in the UK, with successful operations across Europe and Asia. It made a pre-tax profit last year of £3.5 billion. Mr Cohen’s market stall has gone on to spawn the global supermarket chain we all know as Tesco. Despite its size, however, Tesco always argues that it is a responsible employer. Its mission statement says:

“We treat people how we like to be treated.”

I have seen that demonstrated in my own constituency of Harlow, where Tesco employs 750 staff in its stores alone, and often makes valuable contributions to the local community. Only recently, it generously donated equipment to four schools in Harlow. Indeed, I regularly shop at Tesco myself, and I have to say that the staff are second to none. I have absolutely no grievance with Tesco workers; this is about decisions made by senior people in relation to the workers in Harlow and the distribution centre.

It came as a shock to the whole of Harlow when Tesco announced that it would be closing its depot, affecting approximately 800 workers. This has been exacerbated by how Tesco has treated its staff, in particularly in three areas: the notice staff were given, the reduced pay and conditions offered to those able to transfer to an alternative site, and its treatment of disabled workers.

When the new Dagenham site was announced, staff in Harlow were assured that the extra distribution site was in addition to the depot in Harlow, to allow further expansion into London, rather than a replacement. The hon. Member for Dagenham and Rainham (Jon Cruddas) also thought that that was the case. Representatives from USDAW were continually reassured, at director level, by Tesco that the Harlow depot would stay open, and those assurances were passed on to workers. That continued to be the case just a week before they announced that the Harlow site would be closed. Naturally, workers feel aggrieved that Tesco was not upfront about its intentions, and they feel that it was making plans to close the site behind the scenes. Harlow workers are particularly upset that their hard work has made the Harlow depot one of the best performing sites in the country. Tesco has chosen to reward that hard work by closing the site and making them redundant.

I have raised the issue in letters to the chief executive and UK distribution director of Tesco, but I am disappointed that their response does not appear to address it. Tesco’s “Values & Promises” state that it has created a “great place to work” that is “based on trust”, and that customers receive great service by “motivated staff”. Tesco’s treatment of its workers in Harlow does not do justice to that statement.

The dedicated Tesco staff in Harlow, including roughly 100 who have worked there for the whole 24 years that the distribution centre has been open, now feel betrayed, no longer trust the Tesco directors and feel demotivated by their treatment. I recognise the provision Tesco has made to offer alternative employment to some of the workers from the Harlow site. In a letter to me on the 19 April, Tesco restated that, saying that it remains

“committed to keeping as many of our colleagues in Harlow in work as possible”.

That is the right thing to do, but there remains a serious number of problems. The offer only applies to workers who are employed permanently by Tesco—504 are affected. Tesco’s commitment to allow colleagues to transfer to Dagenham and to help them to find other opportunities within the company does not apply to agency workers or support workers such as catering teams. In an e-mail sent to me by Tesco on 21 March this year, I was told that

“it is not possible for the”

agency workers

“to apply as internal candidates for roles. However, the personnel manager on site is offering them support and they will be able to access the training offered by Seetec and Job Centre Plus”.

This brings the total number of people affected by the closure of the Harlow site to more than 800.

Tesco’s offer to employees regarding payment if they transfer to the Dagenham site is unjust and, I would argue, unethical, and unacceptable. This is an issue about which I have been in constant contact with USDAW, Tesco management and workers. Despite having to commute to Dagenham each day, and workers having spent years loyally working for Tesco, their pay will be slashed. Tesco disputes that, stating that it has a pay protection policy, which means that colleagues transferring from Harlow to Dagenham will have their pay protected for the first year that they are in their new role. Workers will then be paid 25% less each year over the next four years until they reach the base rate of pay for Dagenham. In a letter to me on 30 April, Tesco tells me that this corporate pay protection policy has been

“in place, agreed and developed with USDAW, for 15 years”.

Harlow USDAW reps disagree. They point out that that will leave Tesco workers significantly out of pocket, especially as contractual overtime is not included.

For example, one worker will lose nearly £10,000. His current salary is £29,500 a year. That will be protected in year one but, because Tesco does not include contractual overtime, he will actually lose £3,500. His pay will then be cut by 25% in year two and continue to decrease over the next two years until it reaches the base rate in Dagenham of £20,844. A drop in pay of such a scale for doing the same work is completely immoral, and we must not forget the extra travel costs. How is it right that local Harlow residents are offered the same jobs with the same hours and are forced to take a substantial wage cut that may leave many with difficulties paying their mortgage, or putting food on the table for their families?

The Tesco depot workers feel aggrieved that managers from Harlow will be transferred and allowed to take their pay and conditions with them. Of course, I have no problem with managers transferring with existing pay and conditions. That is the right thing to do. But if it is right for the managers, it should be right for the workers too. Is it fair that Tesco is following a divisive policy of ignoring the hard work and years of service of their workers? Tesco says that its staff work as a team. Its actions suggest otherwise.

Tesco claims that

“pay rates at each distribution centre are benchmarked against the local market”.

Although I understand that, USDAW states that the Tesco Thurrock distribution site, three miles from Dagenham, pays more than £10 an hour for warehouse staff, while the Dagenham rate of pay is £8.72, which is kept low due to the use of agency workers. That is unfair for both agency staff and permanent Tesco workers. Employees have told me that when Livingston staff transferred to a new depot, Tesco allowed them to retain their pay. I simply ask Tesco to allow its Harlow staff to do the same.

I have been shocked at Tesco’s treatment of its disabled workers. Let us take John Waters, for example. John is 60 years old and suffers from epilepsy and arthritis. He has worked hard for Tesco over the last 24 years. Tesco has rightly made adjustments at the Harlow depot to allow him to complete a day’s work. However, if John is to transfer to Dagenham, he will not be allowed to take those adjustments with him. Or let us take Richard Waite, who has 17 years’ service with Tesco. He unfortunately suffers from tuberous sclerosis. In Harlow, Tesco has recognised the difficulties he faces by lowering his performance target on its performance indicator.

Worryingly, one disabled employee I have spoken to—he does not want to give his name—who has a degenerative back condition has allegedly been threatened by Tesco and told not to continue his grievance with me about taking his adjustments with him to Dagenham. In a recent meeting, he was told by a Tesco manager that if he continued talking to his MP about his case, he would be made redundant, instead of being allowed to transfer to Dagenham. That is unacceptable. It is absolutely outrageous that my constituent should come to talk to me about the problems that staff face and then be threatened by Tesco managers that if he talks to his MP, he might be made redundant. That is not the way that a company such as Tesco, with its rich history, should be behaving.

It appears that Tesco is not allowing disabled workers who have received adjustments in Harlow to have them transferred to Dagenham. These are often people who have given years of service to Tesco. They will be expected to hit new performance targets—on a performance indicator of 100—that are often significantly higher than those they have to meet in Harlow, which has a performance indicator of 85, with many disabled people having reduced requirements. The system will be tested during a compulsory eight-week trial period that is compulsory only for workers who are disabled. It is absolutely unbelievable that this is going on. USDAW estimates that around 30 members of staff from Harlow will be affected. By not being allowed to take their adjustments with them, these workers—people who have worked hard for Tesco for a number of years—will be unable to fulfil a new role in Dagenham and will be left unemployed.

Clearly this is a concerning time for those affected. Although I have raised these concerns with Tesco on a number of occasions, I have received nothing that reassures me. It is only right that Tesco acknowledges the anxieties that those workers are feeling—they are deeply worried that they are being forced out of a job—and takes steps to reassure them. I ask Tesco to honour its role as a responsible employer and allow workers to transfer to Dagenham with their current adjustments.

There is also a problem with agency workers. In the Harlow depot there are two types of agency workers. Some are contractors who deal with things such as catering. The other agency workers are based in the warehouse in Tesco, doing the same jobs as permanent workers. Tesco says it cannot allow either type of agency worker to transfer to another Tesco site. However, there is an issue about the agency workers who work in the warehouse doing the same work as permanent Tesco employees. There are around 140 such workers, many from eastern Europe, who also work extremely long hours, despite being paid less for doing exactly the same work as permanent Tesco colleagues, many of whom are long-standing Harlow residents. Tesco manages to do that by employing the Swedish derogation of the agency workers regulations. This allows an agency to employ staff on a minimum contract, which means that they continue to be paid between assignments, but also that they waive their rights to equal pay. It is also worth noting the impact that this has on the local economy. In today’s difficult economic climate, is it right that an employer such as Tesco should replace its full-time staff, often with workers from overseas, and use the Swedish derogation to get around offering them equal pay? I believe that Tesco is wrong to do that, as it leads to discrimination against giving jobs to local people.

I call on the Government today to look into the Swedish derogation and its effect on employment in Britain as well as its effect on the particular workers concerned. This has to be an issue of fairness. It cannot be right that companies get away with paying agency workers much less for doing exactly the same job, as well as discouraging firms from employing full-time local staff on permanent contracts.

It is wrong that Tesco depot employees should be facing such anxiety. I believe that the Government should send a strong message to Tesco that its treatment of Harlow workers is unacceptable and not in the tradition of the company’s values. In some areas, Tesco receives grants from the British Government—for example, in Bolsover, where Tesco received money to set up its distribution factory, which it is now closing, too. Any type of supportive grant should be stopped unless Tesco can guarantee fair treatment for its workers.

I mentioned that Tesco’s philosophy states on its values statement that it will

“treat people how we like to be treated”.

Let me repeat that—to

“treat people how we like to be treated”.

As MP for Harlow, I, alongside many local residents, feel that Tesco is not living up to those values. We all understand the need for economic efficiency, particularly in the light of Tesco’s commercial failure in the American market, but it is wrong that hard-working Harlow workers who have given years of their lives in service to a multi-billion pound company are paying for Tesco’s corporate mistakes. These are the people who made the Harlow depot one of the most productive distribution centres in England, yet they are being rewarded by either losing their jobs or having their wages slashed.

Some people tell me that I am a Conservative so I should support Tesco’s corporate position, but it is precisely because I am a Conservative that I am opposed to how Tesco is treating its workers. Conservatism is never meant to be about big corporations running roughshod over ordinary people. I should say that I am also a proud trade unionist, and I thank God for the work of the Union of Shop, Distributive and Allied Workers. Without USDAW, the Tesco workers would have suffered even more.

Although Tesco founder Jack Cohen famously said:

“Pile it high, sell it cheap”,

I doubt whether he would ever have meant to sell the workers cheap. I ask Tesco to live by its philosophy of treating people how we like to be treated by minimising the number of staff it makes redundant, by allowing workers to transfer on the same pay and conditions as they receive in Harlow, and by allowing disabled workers to take with them any pre-existing adjustments they already receive. That would be a good decision for Tesco, allowing the company to keep motivated and dedicated staff, and good news for their staff and their families who are currently under immense pressure. The people of Harlow have respected Tesco; all I am asking is that Tesco treat the people of Harlow with the same respect. It has deeply damaged our community and needs to repair it as soon as possible.

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.

House adjourned.