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Redundancy Modification Orders

Volume 627: debated on Wednesday 12 July 2017

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

But not surprised, says the First Secretary of State. I am saddened by the speedy exit of large numbers of Members. If there are so many Members who wish to leave and who do not wish to hear the oration of the hon. Member for Linlithgow and East Falkirk (Martyn Day) on the subject of redundancy modification orders—a quite unaccountable departure on their part—I hope that they will leave the Chamber quickly and quietly so that the rest of us can listen to the oration of the hon. Gentleman.

Thank you, Mr Speaker. I am grateful to you for allowing me this opportunity to raise the issue of redundancy modification orders—or, to use the full Sunday name, the Redundancy Payments (Continuity of Employment in Local Government, etc.) (Modification) Order 1999.

As the name implies, the order acts to preserve continuity of employment where an employee moves between certain local government, and indeed some other identified, positions. Pretty much every type of job that once belonged to the local government family is covered by the RMO, with a wide range of bodies listed. To illustrate that, the list already includes bodies in my constituency, such as West Lothian Leisure Ltd, and others including the Scottish Environment Protection Agency, Scottish Water, the Scottish Commission for the Regulation of Care and the Scottish Social Services Council, to name just a few.

I refer Members to the order’s explanatory notes, which describe its effect quite clearly:

“The Order modifies certain provisions of the Employment Rights Act 1996 concerning redundancy payments, in their application to persons employed by certain local government employers or other employers in related sectors. The modifications have the effect that the employment of such a person by more than one such employer may be treated as if it were continuous for the purposes of those provisions; and re-engagement of such a person, or an offer of re-engagement made to such a person, by any such employer is treated as if it were re-engagement, or as if the offer had been made, by that person’s employer.”

In ordinary language, that means that the order deems certain successive employments as continuous, and the provisions of the Employment Rights Act 1996 would apply as if the individual had been employed by the same employer throughout the entire period.

If an employee under notice of redundancy receives a job offer from another listed body on the modification order and starts the new role within four weeks of the end of their old job, they are considered to have continuity of employment. If an employee decides during the first four weeks not to continue with the new job, they will be able to terminate the contract, and they would be entitled to receive any redundancy payments from the old employer. However, no continuous service accrued under the redundancy modification order applies to anything other than the redundancy payment. Such continuous service fails to entitle employees to any additional annual leave or other benefit over and above that of their contractual entitlements.

While the order treats certain types of successive employments as continuous, it does not preserve continuity if there is a break in service. The order has been amended a number of times to include new employments, with the last amendment being in 2015.

The crux of the issue, and the reason for this debate, is the lack of progress made on updating the order, and the impacts of this on employees’ rights and continuous service benefits—benefits such as pension and annual leave entitlement, as well as the calculation of redundancy payments. Many terms and conditions of local government employment are linked to continuous service, so the impact of changing employers extends far beyond redundancy rights, affecting other entitlements, such as sickness allowance and maternity pay.

The lack of an update to the order means that a number of organisations across the UK have yet to be included in the order, despite applying for inclusion—in some cases, several years ago. One such organisation is the Falkirk Community Trust, which applied for inclusion shortly after its establishment in 2011. Its application has been considered, and the trust has been approved for inclusion in the schedule of bodies in the order. To date, this inclusion has not taken place and has been beset with delays.

The Government stated in 2015 that the order would be updated in due course. As the House will be aware, the Department for Communities and Local Government administers the local government redundancy modification order on behalf of the UK Government and the devolved Administrations in Scotland and Wales. I have been told in answer to parliamentary questions that the Department is

“actively looking at options on taking forward the Redundancy Modification Order and will update relevant organisations in due course.”

My hon. Friend is making a powerful speech about this important issue for employees. Has he had any indication from the Government of why this is taking so long and when it will be resolved?

That is indeed a question that I shall be coming to, and one that I have asked by way of written questions and in letters to Ministers. I hope that this Minister will answer it tonight.

In November last year, I wrote to Ministers in the Department for Communities and Local Government asking them to set a firm timescale for updating the order. The response that I received was completely unsatisfactory: it gave no explanation for the delays, and made no firm commitment to updating the order within any definitive timescale. It is now 2017 and no updates have been made, which leaves many employees throughout the country in a kind of limbo, not knowing whether their continuous service will be recognised. Indeed, literally thousands of local government workers may be unaware that they could be affected by this lack of action if they were to move posts.

One such person is my constituent Jill Kernan, who first made me aware of this issue—and I am grateful to her for doing so. Jill has worked in local government for more than 20 years, and because she has transferred between employers on occasion, her case very much highlights the problem. In 2013 her employer at the time, North Lanarkshire Council, formed an arm’s-length company called North Lanarkshire Properties LLP. The small number of staff, and Unison, which was representing staff in the TUPE process, were assured that addition to the order was a formality, and would happen imminently. Given how relatively straightforward the process should be, that assurance did not seem unreasonable. Life, however, is seldom as straightforward as we would expect, and when Jill took up a new post with Falkirk Council early last year, she discovered that the arm’s-length company—and, indeed, many others—had still not been informed of the decision on addition to the order. Consequently, Jill has lost continuation of service. She and others like her need to know when a decision will be made, and whether it will be retrospective.

The right not to be unfairly dismissed and the right to a redundancy payment require two years’ continuous service, and workers affected by these delays in updating the order clearly risk losing those rights. While I hope that the situation can be resolved retrospectively, I am left wondering what happens to anyone who is made redundant during this limbo period. The redundancy modification order has undoubtedly had a huge impact on Jill’s continuous-service benefits, including pension and annual leave entitlement as well as other service-related conditions. Quite simply, that is not good enough: our public sector staff deserve to be treated better. There are more than enough challenges in the local government and public sector environment without managers and staff having to investigate and try to sort out staff conditions and benefits when people are changing jobs in such circumstances.

In recent years, local government has had to come up with many innovative and effective ways of making efficiency savings and streamlining the delivery of public services, and the creation of arm’s-length companies has been a regular feature of that process the length and breadth of the UK. Many Members will have, for example, culture or leisure trusts in their constituencies which have been set up in the last few years. I wonder how many of those are included in the current RMO, and how many are—as in my own local experience—still awaiting inclusion. The number of new companies of that kind, and consequently the number of affected workers, are likely to continue to increase.

The frequency of updates of the order to include new employments is simply not keeping pace with the reality of life in the public sector, and those affected are very frustrated by that. I share their frustration with the Government in this regard, and I have a number of questions to ask. Why is the process taking so long? When will it be resolved? What will be done to sort the problem out retrospectively so that hard-working constituents who have been affected by the delays do not potentially lose out? In particular, how can we ensure that those affected can reclaim any lost benefits when the RMO finally catches up with the new employments?

The redundancy modification order is a key instrument in protecting the terms and conditions of local government workers, and its timeous updating should be given a higher priority than it has been given by this Government. I also think that Ministers should consider the preservation of other length-of-service benefits such as annual leave and sick pay entitlements, and not just that of redundancy pay.

As I mentioned earlier, the Department for Communities and Local Government administers the order on behalf of the devolved Administrations. I therefore suggest that, given that legislative competency over local government is devolved to the Scottish Parliament, it might make sense to devolve the administration of the redundancy modification order to Scotland as well. I should like to hear the Minister’s opinion of that suggestion.

I look forward to the Minister’s response, and to his answers to my questions.

I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for raising this issue and for giving me the opportunity to respond. The redundancy modification order for local government is a statutory instrument that allows local government employees to carry over their employment service when they move between employers within the local government family. The order covers England, Scotland and Wales.

The redundancy modification order lists those bodies that provide local authority functions as associated employers for the purposes of statutory redundancy payments. For an individual working in local government, this means that their employment service with any body listed in the order can be used to calculate their redundancy payment, if the individual is made redundant. The order brings local government in line with arrangements for other associated employers under the Employment Rights Act 1996—for example the civil service, which the hon. Gentleman mentioned in his speech.

Employment matters under the Employment Rights Act would usually be administered by the Department for Business, Energy and Industrial Strategy. However, given that the redundancy modification order’s focus is on local government, it was decided in 2009 that the Department for Communities and Local Government would be best placed to take the lead on this matter. That is why I am responding to the House this evening.

The redundancy modification order generally enjoys broad support in the local government sector. It is part of the local government employment rights framework, and when seeking to outsource services and other operations, local authorities will often apply for the new body to be covered by the order.

The redundancy modification order has been in place since 1983, and it was last consolidated into one piece of legislation in 1999. Since then, a number of separate orders have added new bodies to the list of associated bodies. It is fair to say that over that time the order has become a rather untidy piece of legislation. It is unwieldy, and it is often difficult for people both in local and central Government to navigate or administer.

It is also clear that more could be done to ensure that the current criteria and processes used by the Government to add new bodies to the redundancy modification order are far more open and transparent. For those reasons, the order is under review. Any review must ensure that the redundancy modification order is not over-burdensome in processes or future costs. I would like to ensure that the order is focused on core local government services and functions, and that it delivers good value for money for taxpayers.

There are a number of outstanding applications for bodies that are waiting to be added to the redundancy modification order, including several Scottish bodies, as the hon. Gentleman mentioned. Many of those bodies have been waiting some time to know whether they will be added and therefore become an associated employer. I offer my apologies to those bodies for the delay in providing them with an answer. As I have already stated, however, the redundancy modification order is currently under review.

The hon. Gentleman described the effect on his constituent of the redundancy modification order and the review that is currently taking place. I would be grateful if he would write to me with more information about that case as I am very interested to hear more about it.

The hon. Gentleman asked whether the Government intend to devolve some of the redundancy modification order’s functions to the Scottish Government. As I am sure he will know, the Scottish Government have approached DCLG Ministers with a proposal that the functions be transferred under section 63 of the Scotland Act 1998. That would effectively remove the need for my Department’s officials to consider applications for inclusion in the order and also remove Ministers in my Department from the decision making.

I am alert to the fact that the Scottish Government have good reasons for proposing that change, and I understand that a number of other wide-ranging public sector reforms have been made in Scotland recently, such as the introduction of integrated health and social care partnership arrangements across Scotland. That is one of the Scottish Government’s flagship public sector reform policies, so I am sure they are keen to ensure that the transition to the new arrangements is implemented as smoothly as possible. However, Her Majesty’s Government have a clear position on employment matters—they are reserved. As such, the DCLG has no plans to devolve any functions of the redundancy modification order to the Scottish Government. That decision was communicated to the Secretary of State for Scotland just before the general election, and I am happy to write directly to Scottish Government Ministers to confirm it.

I thank the Minister for those answers, although obviously I am disappointed with the position on devolution. Will he address my point about how timeously the order can be updated? A wait of more than six years for some Scottish organisations is utterly unacceptable.

I will respond to the hon. Gentleman’s point in a moment, but first I would like to finish my point about the Scottish Government’s request for the matter to be devolved. I am keen to work with them to explore the matter further, and particularly to identify whether any other options are available to achieve a successful outcome for all parties. I therefore propose that, in the first instance, my officials and their counterparts from the Scotland Office and the Scottish Government meet as soon as possible so that officials can better understand the Scottish Government’s concerns.

Finally, I will respond to a couple of the hon. Gentleman’s points about the review. As I said, the order is still under review. I understand his frustration with that, but it is important that we get it right. He is right that the matter could have come before the House sooner, but we have just had a general election, and as a consequence my Department is dealing with a number of policies. In particular, we heard in the previous debate about some of the challenges that it has had as a consequence of the awful Grenfell fire. We are in the process of looking at the order, but we have to prioritise certain things.

The hon. Gentleman asked whether the updating of the redundancy modification order could be retrospective. That question will have to be answered through the review.

I thank the hon. Gentleman for taking the time to raise this important matter, and I would be grateful if he provided me with further details of the constituent he mentioned. As I have said, we will take forward the review in due course.

Question put and agreed to.

House adjourned.