The Employment Rights Bill is a gargantuan piece of legislation, running to 191 pages; even its title comes out at 125 words, with a challenging obstacle course of semi-colons. It covers an astonishingly wide range of topics, from the Seafarers’ Wages Act to the School Support Negotiating Body, from statutory sick pay to arrangements for the allocation of restaurant tips, from flexible working to unions’ political levies.
Bills of this scale rarely get the scrutiny they deserve. They necessarily have lacunae which rely on giving ministers the power to make regulations to cover gaps in the statute law. This Bill is no exception. This week, Jonathan Reynolds, the Business Secretary, tried to clarify the Government’s intentions by reporting back on consultations about the detail of some provisions.
One concerned the application of zero-hours contracts to agency workers, with a proposed amendment to stop recruitment agencies exploiting loopholes to prevent zero-hours workers from receiving offers for permanent fixed-hours contracts and payment for cancelled shifts. However, the question of who should pay for cancelled shifts – the agency or the end hirer – turns out to be so complicated that a detailed rule still cannot be provided. So once again, we are going to have written in law a power for the Secretary of State or relevant minion to sign off some cobbled-together solution in a year or two’s time when office-holders have changed and everybody has forgotten the arguments.
I suppose we should be grateful that zero-hours contracts have not been completely abolished. It should still just about be possible to employ some workers on these arrangements. However, they will now be so hedged around with conditions – such as apparently having to offer fixed contracts every twelve weeks, even if the worker doesn’t want them – that firms will fear inadvertently creating obligations which they did not intend to. So they’ll steer clear, and we will probably see a lot less use of this type of arrangement. This would be a pity. Zero-hours contracts are certainly not for everyone, but they have offered opportunities to some groups of people unable to work regular hours, including students and those with caring responsibilities. At a time when we are all worried about falling economic activity rates, cutting some people off from contributing to the economy is daft.
Several amendments to the Bill’s provisions about industrial relations are proposed. The Government wants to make it easier for unions to recruit and to gain recognition for collective bargaining.
On the recruitment front, it was already known that union officials will be given the right to enter workplaces to try to persuade workers to join up. But this is of limited use now many employees are working remotely, and in any case unions would find it difficult to visit individual plants or offices very often. Thus an amendment is to cover ‘digital access’. This is a whole new ball game. It could involve relentless emails to staff. The template for access, presumably to be produced by Acas, will need careful watching. There are to be ‘robust penalties’ for non-compliance by businesses, but there is no mention of penalties for abuse by unions.
The details of a promised ‘streamlining the trade union recognition process’ are not spelt out. Some rumours suggest that the process could be started by as few as 2% of employees wanting a union. Reynolds’ intention to penalise ‘unfair practice’ by employers resisting recognition – practice which seemingly doesn’t even require evidence of its effect – is still lacking in detail.
Turning to strike ballots, the Government is already committed to scrapping the Minimum Service Level obligations and the hurdles for turnout and share of the vote. It has also agreed to abandon the Tories’ ban on electronic balloting. It now proposes that unions only need to give notice of a strike ten days in advance, instead of a fortnight, and will allow a strike mandate to be extended to 12 months (at the moment it must be renewed by a new vote after six months).
Following these changes, I don’t expect a massive increase in private sector recruitment, though it seems likely that unions representing a small number of employees will have rather greater power. This may mean more strikes, but not necessarily. The threat of strikes is itself often enough to boost bargaining power and induce employers to make higher pay offers – which may be inflationary and/or discourage the expansion of employment. Unions will be better able to dig heels in to resist change – for example, on our about-to-be-nationalised railways, where the productivity record is already abysmal and there is chronic overstaffing in some areas.
Another minor amendment concerns unions’ political levies. The main Bill already specifies that, in the future, union members who don’t want to support the political fund will have to opt out: at the moment, those who wish to contribute must opt in. Behavioural economics suggests that this way of framing the question will lead to many more members contributing. A further amendment is now proposed to remove the requirement for a renewal ballot after ten years looks like giving unions a permanently larger pot to play with.
Reynolds also proposes a number of other amendments to strengthen rules on collective redundancy and ‘fire and rehire’, which by penalising firms which are already on the rocks are likely to precipitate complete closure of businesses. There is also to be an amendment to control the use of ‘umbrella companies’ which come between workers and ultimate hirers, an issue which the previous government – possibly rightly – consigned to the ‘too difficult’ or the ‘too trivial’ piles.
The Bill itself will require statutory sick pay (SSP) to be paid from the first day of sickness absence. An amendment will now introduce a new rate of 80% of normal pay for the lowest earners, who were not previously entitled to SSP. This, while no doubt beneficial to the low-paid, will be a further addition to the cost of taking on minimum-wage workers.
The Employment Rights Bill is no doubt well-intentioned, but it seriously risks damaging businesses which are already under pressure and stifling economic growth, while sometimes hurting the very workers the Bill is intended to protect. This week’s amendments do not alter this and show a government determined to press on, despite the objections raised by employers and many economists.
Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.
CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.
