I beg to move, That the Bill now be read a Second time.
This Bill is about making Britain the best place to work. It is about levelling up and treating people fairly. It is about better regulation to govern fire and rehire. I am grateful to hon. Members on both sides of the House. I know that Fridays are an important time for us all to be with our constituents. That so many Members have chosen to be here is, I hope, not simply testimony to the power of the Whips, although I have my doubts. I believe it is because Members of all parties recognise that the practice of fire and rehire is creating hardship and real distress for hundreds of thousands of families across Britain. We can end that misery, and we must. I will set out my remarks in answer to four key questions: what the problem is, how we can solve it, what my Bill does not do, and what it does do.
What is the problem? I believe that every Member of the House would do all they could to stop a key worker in their constituency having their wages cut by thousands of pounds. Each of us would want to prevent a constituent who has done nothing wrong and has given loyal service from being fired. If we could, we all would.
These people are workers who have kept us all going through the pandemic and are now being fired and rehired. They are loyal workers who have served their companies for years, such as bus drivers who risked covid to keep the economy going; gas workers who kept the heating on in our grandparents’ homes; and teachers who kept our schools going. They are being told, “You are fired, and you can only get your job back if you sign a new contract on worse terms and conditions.” That is wrong; it should not be happening in Britain today.
Over the past months, I have visited workplaces all over our country. In Loughborough, I met a man who told me that he was watching Saturday night TV at home with his son when his phone pinged. It was email telling him he would be fired unless he accepted £15,000 off his annual salary.
In the village of Street in Somerset, I met a man at Clarks shoes who told me of his feelings. He has a two-bedroom flat because he is separated from his wife, and his children stay with him every second week. “If I have to sign that contract,” he told me, “I’ll not just lose my home; I’ll lose my family as well.” The man could not then have afforded that property and would have had to live in a bedsit. That is fire and rehire.
In Banbury, at Jacobs Douwe Egberts, one of the 291 workers who were threatened with the sack there told me that her family had given over 100 years’ service to the company. Her father had worked there, she had worked there for 34 years, her husband had worked there and now her son worked there. She felt that all of them had been treated with contempt.
The hon. Member is making some very important points and this is a very important debate. He set out right at the start of his speech that he wants the UK to be the “best place to work”, and I agree with that. Does he agree that the UK should also be the best place to start and grow a business, because that is what creates the opportunities for work?
I do agree with the hon. Gentleman, and that is why I was very keen to say at the beginning that this is about making Britain the best place to work. It can only be the best place to work if our businesses are thriving, and I believe our businesses can only be thriving if they have a well motivated workforce.
Does my hon. Friend agree with me that if we do not end this abhorrent practice, we the taxpayers pay instead? If people end up on lower wages, they are going to have to claim more universal credit, so instead of the companies paying their tax bill, it ends up being the taxpayer.
I am not sure whether I am glad that my hon. Friend has made that point, because I was going to make it myself later on in my speech, but it is a really important point. It shows that this is not just a human cost; it is an economic cost to the whole country as well.
In Manchester, a former bus driver told me that he was on three separate forms of blood pressure medication. The emotional strain on that man was heartbreaking. He was going to lose thousands off his pay, and the managers actually sent someone to his doorstep with the new contract, pressurising him to sign. That gives a whole new meaning to doorstep selling.
In Livingston, I met a delivery driver who was called in and threatened with the sack. He said his mind was in turmoil, but Tesco expected him to go out in a 40-tonne lorry and drive through a snowstorm to Elgin after receiving that news.
Will the hon. Gentleman give way?
I will in just one moment, particularly because that is the hon. Lady’s constituency. This was a complete breach of health and safety protocol. When news like that is given to an employee, the regulations say that the person should be given the rest of the day off on full pay to think through what they have been told and to seek advice. That was Tesco.
I thank the hon. Gentleman for visiting my constituency and meeting these Tesco drivers. I have also met them, and they have told me stories about the brutal fire and rehire tactics that Tesco has used, including people who have predicated their mortgages and their whole life plans on contracts that were given to them and have now been pulled from under their feet at a time when, exactly as he says, they have been keeping this country running. I commend him, and I commend his Bill.
I am very grateful to the hon. Lady.
Fire and rehire is happening all over our country. We must act. Sainsbury’s, Argos, Asda, Tesco—they are all at it. Profitable companies are doing this to hard-working people. For me, the most upsetting of all was when a worker’s eyes welled up and he started to cry, as he recounted how he felt telling his family that he was to be fired. His voice faltered when he said, “It was just so humiliating.”
The hon. Gentleman is being characteristically open and generous in the way he presents his Bill, but he just said that, “They’re all doing it”, which creates the impression that this is a widespread practice and that it is focused entirely on the private sector. In his speech, could he also address what I would argue are the limited number of circumstances in which this occurs, a large of proportion of which occur in the public sector? What are his thoughts on that?
I am grateful to the hon. Gentleman for his intervention, and let me tackle it head on. The survey by Britain Thinks, of 2,321 people, showed that 9% of workers said that in the previous nine months they had either been fired or rehired, or they had been threatened with being fired and rehired. If one were to extrapolate that 9% across the workplace, which I do not seek to do, it would be 3 million workers. Let us say it is half that number—we are still talking about 1.5 million workers. Let us quarter it—it is still three quarters of a million workers in this country. This is a serious problem.
I also want to address the other element of the hon. Gentleman’s remarks. I have been on a demonstration picketing with workers outside a Labour council. A Labour council has done this in Tower Hamlets, and shame on it. Wherever this happens, it is wrong. It does not matter whether it is the private sector or the public sector, it is wrong and families are suffering because of it. That is why it is incumbent on us all not to play party politics with this, but to act.
I think we should do something in this area. It is an unacceptable practice, and a good employer would not resort to it. But on quantum, the poll in the ACAS document shows that less than 3% of HR professionals reported this. The figures quoted by the hon. Gentleman are across the entire working population. Most employers are not making redundancies or downsizing. So the quantum is far lower than the numbers he quoted.
Again, I am grateful to the hon. Gentleman. I am sure he will also have noticed that that survey was sent out by the institute to 160,000 of its members, and it asked whether those members had ever engaged in fire and rehire, how they had used it, and how they had sacked people in the previous nine months. Does he recall how many people replied to the survey? It is there—
Two hundred and twenty-five HR professionals.
It was circulated to 160,000 members, and 225 wanted to reply. In my view, that says everything about the way this is being used by personnel departments.
Whether it is 1,000 workers, 20,000, 100,000 or a quarter of a million, in a sense it does matter. Does the hon. Gentleman agree that this is a point of principle? No employee should ever see their terms and conditions ripped up under threat of menaces or losing a job they may have had for decades.
I entirely agree with the right hon. Gentleman. It is a matter of principle. That is why I think Members across the House have said what they have about the evils of fire and rehire. The human cost of these tactics is acknowledged by everyone and every party in this House. I want to recognise the work and support of many colleagues who have long been battling against the inhumanity of the tactics.
May I say what a tremendous job you have done on this issue? The Bill is spot on. You mentioned the fact that people across—
Order. We have to get back to proper procedure in this place, even on Fridays, so please would hon. Members address other hon. Members as “the hon. Gentleman” or “he”?
My apologies, Madam Deputy Speaker. Does the hon. Gentleman agree that we have seen the Leader of the House, the Prime Minister himself and the Minister who is sitting there now—the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully)—all say how bad fire and rehire is and that it is an immoral practice? Why is it that we are sitting here this morning with the Government looking to oppose this Bill?
Madam Deputy Speaker, I have to say that that is the first time that hon. Gentleman has ever called this hon. Gentleman an honourable gentleman, so my congratulations to you.
I want to pay tribute to hon. Members across the House. The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) has fought as a constituency MP for the workers at Glasgow airport, where workers were facing new contracts that cut their take-home pay by up to 70%. He has long championed this cause, and I pay tribute to him. The right hon. Member for East Antrim (Sammy Wilson), the hon. Member for Edinburgh West (Christine Jardine) and the hon. Member for Bury South (Christian Wakeford) have all spoken out bravely against employers using this tactic and made sure that it is regarded as a moral issue rather than a party political one. I am grateful to them all.
I thank the hon. Member for mentioning me. Does he agree that when it comes to an issue such as this, on which we all agree that something needs to be done, not only is it the popular and moral thing to be done, but it is the right thing to be done?
Absolutely. I hope that the House will show its true colours and come to an accommodation to ensure that it is not just the right thing to be done but that it is done.
I must also pay tribute to my hon. Friend the Member for Middlesbrough (Andy McDonald), who is a dear friend. It might well be said that he has championed the issue of employment rights man and boy, except neither he nor anyone else can remember that far back. He will no doubt make his own excellent contribution, backed up by his technical expertise as an employment solicitor. Finally on this part of my speech, I thank Messrs Price and Torbitt in my team, who have been so helpful in supporting this campaign throughout the past month.
ACAS reported that recent survey that we discussed, carried out by Britain Thinks, which polled 2,231 individuals in England and Wales and recorded that 9% of employees had experienced the threat of fire and rehire in the previous nine months. Workers are vulnerable to the practice in almost every sector. The survey recorded particular patterns of discrimination against young workers between the ages of 18 and 24, workers who self-identified as being from a working-class background, and black and minority ethnic workers, who face the threat of fire and rehire at nearly twice the rate of white workers.
However, it would be wrong to think that fire and rehire is simply a social problem or an issue of morality; it is also an economic problem. Disputes around fire and rehire drag on, sometimes for months. During that time employees are often working to rule or refusing to do overtime. Where the dispute leads to strike action, there can be enormous loss of production. It is estimated that British Gas Centrica lost between £30 million and £40 million in productivity during the dispute. That is revenue that ultimately is lost to the country and to the Exchequer.
When I met British Gas workers and their GMB representatives, they were not against having discussions with British Gas about restructuring that might be needed, but they were against having a gun put to their heads. The Bill does not prevent companies from having discussions with unions on reasonable grounds; the Bill prevents companies from pressing the nuclear option. All we are asking for today is to be able to debate those options in Committee.
My hon. Friend makes a very eloquent point, both about the substance and the process. I entirely agree with him.
The Business, Energy and Industrial Strategy Committee took evidence from British Gas Centrica. Its concerns were that its workers were being paid 30% to 50% more than other people in that sector. There was a question about the viability of the business. What the company wanted to do was to increase working hours by two-and-a-half hours per week. Does the hon. Gentleman agree that businesses should have the opportunity to discuss changes in conditions to ensure that as many jobs are retained by businesses continuing to be competitive?
The hon. Gentleman is absolutely right to say we need to ensure that, from time to time, businesses can cope with the changes that they experience and can restructure appropriately. I think the point my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) was making is that, when they seek do that, it should be done through a proper process of consultation and negotiation, and not holding the sword of Damocles over the heads of their workers.
My hon. Friend may know that in Germany workers are much better protected from being fired and that productivity in Germany grew between 2015 to 2020 at twice the level it has in the United Kingdom. Does he therefore agree that, given the option of either firing someone or increasing their training, productivity and technology, Germany chooses to train people and raise productivity and Britain, if we allow this to go on, will choose to sack people and reduce productivity? So it is imperative to increased productivity that this is agreed.
My hon. Friend makes a very significant wider point about the productivity and the relative productivity of the UK. I think that is a matter of very deep concern to Members across the House.
Will the hon. Gentleman give way?
I saw that the hon. Lady wanted to intervene on the intervention, but now she can intervene on that substantive. Please.
I thank the hon. Gentleman for giving way. On the point made by the hon. Member for Swansea West (Geraint Davies), German productivity is high but that is because they cross-train and upskill their workers across different fields. That is why we are investing heavily in skills and uptraining for the future. [Interruption.]
The hon. Lady’s point was somewhat drowned out on the Labour Benches, but I think it was by people who were agreeing about the importance of training and skills.
Does my hon. Friend agree with the Productivity Institute report of March 2021 that
“The widespread, one-sided flexibility of the UK labour market has locked in a low productivity mode of work”?
People in the gig economy simply have not got the security or the money to invest in themselves. Employers need to and they will do it more in the event that they cannot simply fire and rehire people willy-nilly, which they cannot in Germany.
My hon. Friend has, again, touched on a really important point. It is about what sort of society we want and whether we want a society where work is an insecure fact of life.
I have a question on productivity. Over the summer, there were reports of the Labour party engaging in fire and rehire tactics. Hon. Members may say I have a self-interest in this, but will the Labour party be less productive in the future? [Laughter.]
We all enjoyed the hon. Member’s contribution. All I would say to him is that, at this time of day, one should never drink on an empty head.
I thank my hon. Friend for bringing this important debate to the Chamber today. Does he agree that it is a heavy, damaging and frightening environment for the public out there when they are being threatened and intimidated by unscrupulous bosses telling them not to go to their trade unions? They are being picked out individually and forced down that route because they are afraid of not being employed if they go to their trade union for support.
Again, I am grateful to my hon. Friend. I think we in this place often have a very poor understanding of just how insecure people in the workplace really are. Most of us here have the comfort and luxury of being Members of Parliament. The point that she makes about how important it is to have support in that environment from a trade union is absolutely essential.
Will the hon. Gentleman give way?
I will just make some progress, if I may. All too often, a new chief executive comes into a business and announces that they are going to drive up shareholder value. What they do is drive down workers’ wages through tactics such as fire and rehire and that money is then siphoned off to increase the shareholders’ dividends. Often, those employees are left as the in-work poor and they become dependent on universal credit, exactly as my hon. Friend the Member for Swansea West (Geraint Davies) said. That means that the rest of us in society are making up the shortfall in those employees’ wages. We as taxpayers are the ones forking out to increase that shareholder value. The chief executive has done what they promised. They go off to another company, but morale in the workplace has evaporated. All the good will that was once in the company is gone and productivity remains low. In the long run, the business suffers because the workforce has lost all motivation.
I am very grateful to my hon. Friend for giving way. Further to the points about the dreadful events at British Gas, my experience as a local MP speaking to highly skilled, long-standing employees who work for British Gas in Berkshire is that the mistaken policy of fire and rehire did exactly that: it damaged the morale of highly motivated, highly experienced people working for British Gas, who were highly trained in a respected business that traded on quality. The long-term effect of that was to harm the business. It damaged the reputation of the business and it may have also led to people leaving it. These are highly skilled staff who are often difficult to replace, so my hon. Friend is making an excellent point, and I hope he would agree that this is about the style of business in this country. As other colleagues have mentioned, we need a different approach that looks to the longer term for the good of the whole economy and the whole community, and not just the very short term.
I am grateful to my hon. Friend. He makes a very important point that was reinforced when I met the British Chambers of Commerce. The lady I met said that before she came to meet me to discuss these issues, she had conducted a thumbnail survey of its chambers. She said that what came back from the chambers was, “It never ends well for the business.” So the economic argument is critical, and we need to understand that this is not only immoral, as the right hon. Member for Dundee East (Stewart Hosie) outlined, but a serious economic failing of this country.
My hon. Friend is making a powerful speech, and an important one. Did not the researchers find that 70% of the companies deploying fire-and-rehire tactics were profit-making companies? They have not been driven to this as a last resort because of the pandemic; they are making profits, and healthy profits at that. Does my hon. Friend agree?
Not only do I agree with my hon. Friend, but I agree with the statistics. The statistics are very clear: 70% of the companies that have engaged in these tactics over the last month were actually making profits. That is why I say that this is not just an ethical problem of bullying and unfair tactics, but an economic problem that even the most hard-nosed Treasury official should recognise. As the Leader of the House has said,
“All companies operate best when their employees are working there with enthusiasm, and these types of tactics are very bad for morale in businesses”.—[Official Report, 25 March 2021; Vol. 691, c. 1103.]
And, as he also famously said, “Fire and rehire is no way to do capitalism.”
The hon. Gentleman has given examples of large companies and talked about shareholders. We had a discussion earlier in the week, and I understand that the legislation he proposes would apply to companies with 50 or more employees. Can he give us an example of how that might affect smaller businesses such as small and medium-sized enterprises, and has he found examples of smaller businesses practising fire and rehire? I think that we need to put this in context.
I am happy to respond to the hon. Lady’s question. We chose the figure of 50 employees, and the Bill refers to 15 or more employees being affected by these changes, because that marries up with the existing legislation on redundancy and other matters. Fifty is the figure that has been chosen by the Government in previous legislation. I have tried at all points to make the Bill technically proficient, so that it intersects with all the other legislation in this area.
The hon. Lady asked whether this was happening in smaller companies. Sadly, it is, and I would dearly like to see it outlawed there also. We have made the Bill commensurate with all the other employment legislation, which is why the figure of 50 was chosen.
May I pick the hon. Gentleman up on the point about capitalism? Throughout the past few years, before Brexit, we had an influx of European workers, and that undermined the wages of British workers. Does the hon. Gentleman not agree that companies will now have to value their workers better? If they do not pay them properly—if they try to undermine our British workers—there will not be 10 cheaper European workers in the line to take their jobs. There will not be a surplus of workers, and a rebalance of capitalism will therefore ensue.
May I just remind the hon. Lady that the comment about capitalism was not, in fact, mine but the Leader of the House’s? I understand her fundamental point, and from it I take that both she and I want to see wages in this country rise to an appropriate level so that every person and every family feels they can put a roof over their head and food on the table, and feels secure in their life—although she will have voted one way on Brexit, and I will have no doubt voted the other way, we would both welcome a move towards a society in which that is possible. The Bill is about levelling up and stopping the practice whereby, at the moment, many hundreds of thousands of workers in this country are seeing their wages levelled down, which is why it is so important that we get legislation.
I have set out that there is a problem of morality and economics. How can we fix it? Back in June, when I sat down with the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully), he made it clear to me that the Government were “not minded to legislate.” That was even after the ACAS report “Dismissal and re-engagement (fire-and-rehire): a fact-finding exercise” was published, which may appear surprising given that ACAS reported examples of what participants in its survey
“regarded as employers using the crisis opportunistically as a ‘smokescreen’ to diminish workers’ terms and conditions; and the use of fire-and-rehire as a negotiation tactic to undermine or bypass genuine workplace dialogue on change.”
ACAS made it clear in the report that, although the Government were happy for it to outline the findings from such a fact-gathering exercise,
“Acas was not asked to present recommendations to government.”
If not legislation, what? The Minister advised me that the Government are now asking ACAS to recommend how they might strengthen the guidelines to business. I am a believer in guidelines, and good businesses tend to follow them, particularly if they are clear and if other businesses are doing the same. The problem comes when unscrupulous businesses are not adhering to those guidelines and gain a competitive advantage from that non-adherence. There then often follows a race to the bottom in which the good company feels forced into bad practice.
I do not believe that any manager goes into work thinking “I am going to do something noble and fine this morning: I am going to tell my 300 employees that they will be fired unless they accept a pay cut of 20%, even though our company is making record profits.” That is why I believe guidelines are not a solution. Managers at Jacobs Douwe Egberts, the coffee people in Banbury, made record profits during the pandemic, when coffee consumption increased by 40%. While the managers awarded themselves large bonuses, they demanded wage cuts of up to £11,000 from 291 staff. The truth is that guidelines are not going to change the practice of such managers. Only by putting good practice into statute will companies be prevented from bullying their workforce by using the threat of fire and rehire, and only if those tactics are outlawed will good companies not feel the competitive pressure to behave just as badly.
The hon. Gentleman highlights a shameful example, and he is right to do so. As the road to hell is paved with good intentions, particularly in terms of legislation, I am interested in his intentions with this Bill. I have watched him talk about the Bill on television a couple of times, and I think he said on Sky yesterday that it does not outlaw fire and rehire but ensures that the right information is provided. Is it his intention that the Bill does not try to ban fire and rehire, because I think it does?
Let me reassure the hon. Gentleman that we are not skipping down what Hamlet called the “primrose path of dalliance” to hell together. I have no intention in this Bill of banning, and there is nothing in this Bill that would ultimately ban, fire and rehire. There is an important reason for that and I will come on to it in my speech.
There was a prime opportunity for a lot of colleagues to learn a bit more about this at the Conservative party conference, where the hon. Gentleman actually joined me on a platform. Does he agree that this policy is not anti-business, but anti bad business leaders? The main reason for that is that it is not banning fire and rehire; it is just saying that it is an absolute last resort and should only be used with that method.
I am grateful to the hon. Gentleman for that. It is important that we clarify that on both sides of the House. There are other ways of addressing—
Will the hon. Gentleman give way?
If the hon. Gentleman will forgive me, I am conscious that there is a statement in half an hour and at the rate my speech is going—
Will the hon. Gentleman give way?
Very quickly, then.
The hon. Gentleman is too kind. I wonder whether he would agree with me on something, in the spirit of the agreement with which we are reaching out across the Chamber now. He mentions competition between employers to do the right thing. Does he agree that the best way to make employers compete to keep staff and to treat them well is by growing the jobs market and the economy? Does he not also agree that the economy is now growing at the fastest rate in the G7 and employment is up to pre-pandemic levels?
Across the House, I think we can all agree that we want to grow our economy—there is no question about that. We want to grow jobs and the economy, but let us make sure that when we do grow those jobs, they are good, secure and well-paid jobs.
There are other ways of addressing this problem, one of which has been pioneered by a group of metro Mayors: using the procurement power of local authorities by scoring companies that seek contracts from local government on social as well as economic grounds. Councils are able to press local employers to engage with their good employment charters and to eschew bad practice. My good friends—some are former colleagues—my hon. Friend the Member for Barnsley Central (Dan Jarvis), Tracy Brabin, Andy Burnham, Dan Norris and Jamie Driscoll, have been particularly effective in using this form of community engagement and procurement power, and many other local authorities have followed suit. Mark Drakeford, in Wales, has shown just how effective this can be through his economic action plan, “Prosperity for All”, which has enabled the Welsh Government to develop a new and strengthened relationship with business and to drive inclusive growth and responsible business behaviours. I was delighted to talk to him recently about the success of that sort of engagement, but he was equally keen to say to me that it could never be a substitute for clear and effective legislation.
So turning to the proposed legislation, it is important to be clear about what my Bill does not do. I repeat that my Bill does not ban fire and rehire. It may surprise colleagues to know that there was a common view among the employers’ organisations I spoke with—the CBI, the Institute of Directors and the chambers of commerce—which was held equally right across the trade union movement, that banning fire and rehire outright could have perverse consequences and should not be attempted. It is essential that where a company is facing a collapse the law does not prevent what may be the only way of preserving those jobs and continuing the enterprise. Anything else would be a perverse outcome. I used to run my own business in the City. I entirely accept that businesses need to change and to adapt. In a competitive business environment, they have to restructure from time to time. My Bill will not stop that restructuring, it will not stop managers being able to manage the business and it will not burden business with new and additional bureaucracy.
I can understand the moral intent of what the hon. Gentleman is trying to do, but will he look at the practical circumstances? I refer to my entry in the Register of Members’ Financial Interests: I am the director of a number of companies. The hon. Gentleman should take himself back to the March last year, when the covid period started, and what was going through the minds of boards of directors and the timeframes they had to work with. Will he address the fact that, although it is not on the face of the Bill, as he has said, he wishes to ban fire and rehire? In circumstances like last year’s, many boards that faced the consequences of going through the process that the hon. Gentleman has mentioned would choose the option of fire and no rehire as the way to save their business.
I am about to address those points. If, later on, the hon. Gentleman feels that I have not done so, he should intervene on me again, because they are important points and I do not want to leave them unaddressed.
The point about good businesses and bad business is exemplified by Ryanair and Michael O’Leary. That company is often pilloried and criticised in the House, but it took the opportunity, throughout the covid crisis, to engage with the workforce and consult, negotiate and agree a temporary diminution in the terms, and it committed to restoring them in the fullness of time. Should not that sort of practice obtain throughout the economic sectors?
My hon. Friend speaks with such a wealth of experience on these matters and he is, of course, absolutely right. Good businesses need to be able to respond quickly to the pandemic, as the hon. Member for North East Bedfordshire (Richard Fuller) suggested, but they also need to maintain the good will of their workforce, to go with workers on that journey and not only to take the immediate measures necessary but restore the benefits in the long term.
Will the hon. Gentleman give way on a technical point?
I am just about to move on to the technical part of the Bill. Madam Deputy Speaker has caught my eye to suggest that I have been over-generous in giving way, so I shall defer to her rather than to the hon. Gentleman.
The Bill will enshrine good practice into law and penalise bad practice. It will put on a statutory footing the procedure that decent employers already follow. It will encourage both employers and workers to reach the best outcome, and will discourage bad employers from threatening to fire and rehire when no legitimate threat to the business demands it. If the restructuring of a company is required because it is at risk of becoming insolvent unless employees’ terms and conditions are substantially changed, my Bill will assist the speedy settling upon of an acceptable outcome.
Clause 1 would insert into the Trade Union and Labour Relations (Consolidation) Act 1992 a duty to consult employees in good time and to disclose to workforce representatives reasonable information about the risk to continued operation. That would make it easier for the employee representatives and the management mutually to agree, in good time, a variation of contract that represents the least disagreeable way forward. Such disclosures would be covered by confidentiality. If the employer failed to provide the necessary information or refused to engage in timely and genuine negotiations, the workers’ representatives would be able to apply to the Central Arbitration Committee for a declaration that identified the steps necessary to put right any such failures. They could also apply for a court injunction to compel the taking of those steps and for any downgrading of terms and conditions, or dismissal, to be rendered void.
The independence of the CAC cuts both ways, because if an employer had followed good practice, it would be entitled to pursue the dismissal and reengagement of employees even if the terms proposed were deemed unacceptable to the workers’ representatives.
Will the hon. Gentleman give way on that point?
I will not.
The CAC could also refer the matter to ACAS if it thought that conciliation might assist in settling the dispute.
One of the more disturbing aspects of my visits to disputes around the country are the stories I have heard about the way managers have increasingly opted to issue notices to terminate the contract very early on in the process. The issue of a section 188 notice used to be a last resort. Recently, it has become a first-strike nuclear option. ACAS has also remarked on that.
Employers will set out their package of changes to terms and conditions alongside a section 188 and effectively fold their arms and say, “That’s all the consultation you’re going to get.” They then begin to demand that workers come in for interview one by one, often without any union representative accompanying them. Workers are pressured into signing the new contract. Employers say, “How are you going to pay your mortgage if you don’t have a job? How are you going to put food on the table? How many children do you have? Two, three, is it? You really should sign because, you know, we have got 40 people lined up out here who would love to come and take your job. You are one of the lucky ones, you’ve got a job.” This is how the threat of fire and rehire is used in practice. No wonder the Minister himself has called it bully-boy tactics in the workplace.
To fight back against this early issue of a notice of termination is actually very difficult. It takes a trade union between four and six weeks to comply with the law on notification, balloting of members, notification again and then strike action.
Will the hon. Gentleman give way?
No, I am concluding this section, then I will happily give way to the hon. Gentleman. These points are important.
For this reason, I have amended section 19 of the Trade Union and Labour Relations (Consolidation) Act 1992 to relieve a union of those duties where there is a fire and rehire situation. Clause 2 introduces amendments to the Employment Rights Act 1996 to give enhanced protection to workers who are fired and rehired.
Another insidious practice I have come across is where companies have come to realise that fire and rehire can be an effective way of avoiding redundancy payments. The law currently allows an employee to be dismissed for refusing to accept a variation in contract. Employers now consider that, by making the new terms so unacceptable, they can effectively force the worker to refuse the new contract. The job is still there; the employee has simply refused to do it on the revised terms so there is no redundancy. For this reason, the Bill ensures that, where an individual worker or a small section of the work force refuses to accept the variations that have been agreed with other representatives in the workplace, and that person is dismissed for refusing to accept the variation, they will be entitled to claim unfair dismissal. This allows the rest of the business to move forward in harmony, and does not result in closure and loss of all the jobs.
The primary remedy for unfair dismissal is, of course, reinstatement or re-engagement, to which the Bill has precluded a defence of impracticability. But this does not present a problem, because section 117(3)(b) and (4)(a) of the 1996 Act allows the defence of impracticability to an employer who refuses to effect a reinstatement or re-engagement order, and precludes the additional penal award of compensation, which is the usual consequence of non-compliance. Thus, only normal unfair dismissal compensation would be payable to a refuser. Such compensation is, of course, all that the company would be liable to pay, even where an employee would otherwise have qualified for many years of redundancy payment. As such, I believe that it represents a reasonable and proportionate solution for those who genuinely feel that they cannot afford to accept the diminution of pay, terms and conditions that are proposed.
I have tried to set out for the House five things—that the Bill seeks to address a genuine social and economic problem; that a legislative vehicle is necessary and desirable, even though other mechanisms can partially address the problem; that the Bill is a reasonable and sensible measure that substantiates good practice and discourages bad; that the Bill is fair and proportionate in the remedies that it proposes; and that the Bill is technically proficient in connecting up with all the other relevant legislation.
There is one final question, which concerns the politics surrounding this Bill. Given all that Ministers have said denigrating the practice of fire and rehire, it is remarkable that the Government have imposed a three-line Whip against it today. Why? In politics, it is rare to find something that absolutely everyone agrees on, yet all the way from Len McCluskey to the Prime Minister himself, everyone agrees that fire and rehire is wrong, so why are the Government determined to block this Bill?
Normal practice would be to allow the Bill to pass Second Reading and go into Committee, where it could be amended and any perceived deficiencies ironed out. If that proved impossible, the Government could kill it in Committee or on Third Reading. Why are the Government intent on talking the Bill out this morning? The tactic of filibustering to talk the Bill out is cowardly. It seems that the Government do not wish to be seen actually to vote against the Bill. They would rather pretend, under the cloak of a closure motion, that they want to go on talking about it so that it simply runs out of time.
Today, the Government are set to vote against not the Bill, but the closure motion—the effect is the same. The Bill will die. Nobody is fooled. British workers will know that this Government would rather play politics than look after British families. There is another aspect to the politics of this Bill. The Government have told their Back Benchers, who are rightly concerned that they will be blamed by their constituents for voting this Bill down, that they have tasked the hon. Member for Newbury (Laura Farris) with bringing forward a Bill of their own. She has considerable experience as an employment barrister, and I hope that she does bring that forward. I doubt it will be substantially different from clause 1 of my Bill, although I doubt that the worker protections will be as comprehensive as mine in the subsequent clauses.
What does that say about our politics? The House knows that I have run a cross-party campaign to support this Bill. I have welcomed MPs from all parties, and I value their contributions to this campaign. That the Government believe they must brand any solution with their own party political colours is something I find sad. We began this week by remembering our colleague and friend and by praising the cross-party manner in which he had conducted his politics for so many years in this place. How good it would have been had we been able to conclude the week in the same co-operative cross-party spirit.
May I begin by saying what a pleasure it is to follow the hon. Member for Brent North (Barry Gardiner)? I am going to develop a number of points through my submissions, but it is important to say that in a number of regards, when I was listening to his speech, I found myself nodding along. He knows that I care about this issue as an MP because it has affected constituents of mine in Berkshire who were employed by British Airways and Centrica, and I care about it from a technical and legal perspective as an employment barrister.
There are a number of points on which I think we can all agree on both sides of the House. It is unacceptable for employers to use fire and rehire as a pretext to force through changes to long-standing workplace practice at a time when workers are vulnerable and less able to mount a challenge. We all agree that we saw some of that last year, and we all agree that there is scope to tackle the issue. Where I think we disagree is on how we do that.
I would like to pick up where the hon. Gentleman left off. One thing that we do not do enough of in this House is acknowledge that there is room for a legitimate difference of opinion on legal solutions. In fact, even outside the political domain, we know that there is a divergence of views on how to address fire and rehire, because, when the Department for Business, Energy and Industrial Strategy commissioned its call for evidence through ACAS earlier this year, one of the most striking features was how all the people who contributed to it did not agree themselves on how best to resolve the issue. I hope that what comment I have to make on this Bill will be understood and interpreted in that context.
My view is shared by other legal practitioners. I will develop these points, but I know that there will be an interruption in our debate quite shortly. I maintain the view that this Bill actually poses risk to workers’ rights. I also think that it exacerbates one of the deepest problems in industrial relations to have come about through this practice.
The wider point I want to make is that any opposition to this Bill today is not a Tory thing. It is not the Tory party against the Labour party. There is a body of professional legal opinion of mixed political persuasion that holds the same concerns that I do. I am grateful to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), to the Secretary of State and to all their officials for the way that they have engaged with me and my proposals. I can tell from the serious scrutiny that they have applied and the questions that they have lobbed back at me throughout the summer that they are thinking carefully about this and that there is scope to address this issue.
One thing that I think has not been acknowledged by any Member of the Opposition, including the hon. Member for Brent North in his opening speech, is that there is already some protection in common law against this practice. It is important to spend a moment looking at what the common law says, because we cannot sensibly say where the law is going wrong until we have a proper look at where the tribunals might be failing. When the issue was first considered by the Employment Appeal Tribunal in 1990, it said that
“you simply cannot hold a pistol to somebody’s head and say: ‘henceforth you are to be employed on wholly different terms’
“‘at 50% of your previous contract.’ We come unhesitatingly to the conclusion”—
that, when that happens, there has been a dismissal.
In what circumstances would an employment tribunal find that dismissal to be fair? First of all, the employer must show that they have a “substantial reason” for that practice within the meaning in section 98(1)(b) of the Employment Rights Act 1996—that is usually interpreted as “sound, genuine business reasons”—and also that they have acted reasonably in accordance with
“equity and the substantial merits of the case”
within the meaning of section 98(4). For any employer to meet those thresholds, they will have to go to the tribunal and show, first, that there is a genuine necessity for the changes—that the changes are there not just to swell shareholder dividends, but to lead to a determinable advantage to the performance of the business. Secondly, there is the reasonableness test, which is really a proportionality exercise.
I refreshed my memory yesterday of the well-known case of Garside & Laycock, which was the last significant appeal court decision that I could find on fire and rehire—it was 10 years ago. In that case, the employee brought a claim for unfair dismissal because he would not accept a reduction in his wages. What questions did the appeal court ask itself? First, it asked why had the employer done it—was it in genuine economic difficulty? The answer to that question was yes. What was the size of the cut that they were asking the employee to take? It was 5% of wages. Had there been a proper consultation with the staff? The answer to that question was yes. Had they balloted the staff? The answer to that question was yes. Had those who had participated in the ballot agreed to the cut? Everybody apart from this employee had agreed, and, in those circumstances, his dismissal was fair.
That is an important yardstick to have in mind in considering whether we need primary legislation to deal with this point. So, why is there an issue? I know that hon. Members across the House continue to believe that there is an issue. The answer was captured very well in one solicitor’s evidence to ACAS. I will quote it because I enjoyed reading that report.
“From an employer perspective so long as you have followed the consultation you will be ok. If it gets to Tribunal, no judge looks very closely behind the reasons why an employer is doing it. It’s all about the procedure.”
Judges do not necessarily ask all the same questions,
“so, in that respect, an employee is not perhaps so well protected.”
It is a fair observation. I mean that with no disrespect to employment tribunal judges, but some of them have not previously run their own business and do not have that direct experience, so they are not always best placed to test the strength of the employer’s explanation.
Clearly the status quo is not sufficient, hence the need for the Bill tabbed by my hon. Friend the Member for Brent North (Barry Gardiner), which many Members on both sides of the House support. That is the way to resolve it. Today, I should have been going to the funeral of my good friend Tony Murphy, who believed in fairness and doing the right thing. In the last conversation I had with him, not very long ago at the Bulls Head pub in Frodsham, we spoke about workplace bullying and the need for fairness. I ask the hon. Lady to do the right thing and support my hon. Friend’s Bill.
I am still in the fairly early stages of what I have to say. The hon. Gentleman’s point about fairness is important and I hope the solution that I have come up with, which is not dissimilar to that of the hon. Member for Brent North, meets that threshold.
Before I came into the House, patients came to me who were under the threat of being fired. For me, that pending threat seems to be the issue, and I would be interested to know how many times it is actually gone through with. Would the legislation put forward by the Opposition or by my hon. Friend deal with that threat, rather than the outcome?
I am grateful to my hon. Friend for the question, because that will inform some of what I have to say about clause 1 and the consultation obligations that the hon. Member for Brent North seeks to set.
I can see that we are going to stop shortly, but I will say that I found it striking, when engaging with constituents, that fire and rehire had been mentioned in their first consultation meeting. From the get-go, they did not feel that they had any reasonable opportunity to renegotiate their employment terms and conditions. They always felt that they had the sword of Damocles hanging over their head and that the alternative was the possibility that they would be dismissed.
The hon. Member will know the context in which we are having this debate. It is a time of great economic uncertainty. Thousands of aviation workers in my constituency have been affected by this issue, whether at Heathrow airport, British Airways, Dnata catering or others. Thousands of them are living on incomes reduced by up to £8,000 a year, which is having a massive impact. Other employers behave differently. Has she made an assessment of her proposals to come to a view about whether that practice, which has had an impact on my and her constituents, and those of others, will be prevented by her proposals?
I considered the aviation sector specifically when coming up with my proposals. In fact, it was probably the leading sector that I had in mind, although not the only one, when considering an alternative route. I will develop that point.
The question is, why should we not simply pursue the course of action in proposed new section 27C of the Employment Rights Act 1996? I separate from the hon. Member for Brent North here because despite what he said, my concern is that it will have the practical effect of banning fire and rehire. I will say why.
It came through strongly in the call for evidence that ACAS published that an inherent tension exists between the trade unions and the employer, because trade unions wish to see evidence that the business is visibly failing before they are willing to accept any reduction in terms, but the business wishes to remedy the defect before it is on the brink of collapse. My concern stems from proposed new section 187B of the Trade Union and Labour Relations (Consolidation) Act 1992, which says that the information to be disclosed by the employer is
“all information relating to the employer’s undertaking…which is in the employer’s possession…without which the appropriate representatives would be to a material extent impeded in carrying on consultation with the employer, and…which it would be in accordance with good industrial relations practice that the employer should disclose”.
Members can hear how wide that is.
I will just take a moment more, because I have only seconds until we break. There would be almost no circumstance in which an employee would not be in a position to say, “The employer did not consult me. They did not show me this. They did not show me that.” Employers would be at genuine risk of being dragged to an employment tribunal on every occasion.
Proceedings interrupted (Standing Order No. 11(4)).