Employment Security (Wages and Protection) Act

[Steve]

 

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Employment Security (Wages and Protection) Act

Section One: Minimum Wage

1. The National Living Wage shall apply to all workers aged 18 and older by April 1st, 2020. This increase shall be gradual based on the following guidelines:

   1. The National Living Wage shall apply to all workers aged 23 and over beginning April 1st, 2018. 

   2. The National Living Wage Shall apply to all workers aged 21 and over beginning April 1st, 2019. 

   3. The National Living Wage shall apply to all workers 18 and over beginning April 1st, 2020. 

2. The National Living Wage will increase to at least £10 per hour by April 1st 2020, or more if:

   1. The living wage (as defined by the needs based calculation performed by the Living Wage Foundation and assessed by the Low Pay Commission) is higher than £10 by 1 April 2020; and

   2. The Secretary of State sets it at a value greater than £10 by order affirmed by both Houses of Parliament

3. The Low Pay Commission shall report annually up to that date on its recommended transition to that rate and the appropriate rate (if more than £10).

4. After April 1st 2020, the Low Pay Commission shall continue to recommend increases to the rate of the minimum wage to Ministers as before.

5. After April 1st 2020, Ministers may not set a rate for the minimum wage by secondary legislation that is not equal to or more than the prior year’s rate plus the annual rate of price inflation.

Section Two: Ending Employee Misclassification

1. For the purposes of employment law, a worker is presumed to be an employee. A business alleging that those performing work for it should be considered an independent contractor (or self-employed) for the purposes of employment law shall have to demonstrate all three of the following:

   1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

   2. The worker performs work that is outside the usual course of the hiring entity’s business; and

   3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Section Three: Banning Zero-Hour Contracts

1. Within five days of a worker being hired by an employer, the employer must detail the basic terms of employment to that worker, including the number of hours and days a week the worker can expect to work, the employees wage, other benefits afforded to the employee, and outline expectations 

2. Prohibits zero hour contracts except in situations of genuine casual employment and where they are essential to allow employers to provide cover in emergency situations or to cover short-term absence

Section Four: Employment Protection Rights

1. From day one, all employees and workers now have a right to:

   1. be paid if suspended on medical grounds (currently one month)

   2. be paid statutory lay off pay (currently one month)

   3. a week’s notice of dismissal (currently one month)

   4. request flexible working (currently 26 weeks)

   5. a writen statement of reasons for dismissal (currently two years) 

   6. paternity and maternity leave (currently 26 weeks)

2. An employee or worker may bring a claim for ordinary unfair dismissal after three months (currently two years)

3. Employment tribunal fees are abolished and the Chancellor shall establish a scheme for the refund of tribunal fees incurred since 2013.

Section Five: Third Party Harrassment

1. An employer shall have liability under the Equality Act 2010 for harrassment of an employee if:

   1. the employee is harassed by a third party;

   2. the employee has previously be harassed at work, and the employer was aware; and

   3. the employer thereafter failed to take reasonable steps to prevent the harrassment.

Section Six: Preventing Undercutting

1. An employer may not:

   1. advertise a job abroad; or

   2. contract a recruitment agency to advertise a job abroad

to be paid a wage lower than the employer currently employes, advertises, or has advertised in the last year, for equivalent roles in the UK

Section Seven: Unpaid Trial Period Prohibition

1. If an employer requires a prospective worker to work a trial period, that employer must clearly provide, prior to the trial period, information in writing as to how long the trial will last, how the prospective worker will be judged, what feedback the prospective worker will get, and the number of positions available for those who qualify.
2. An employer who engages a prospective worker for a trial period must pay such worker a rate not less than the National Living Wage or National Minimum Wage that they would ordinarily be entitled to.

Section Eight: Implementation

2. Section one shall be implemented in line with the details of that section

3. Section two will be implemented from April 2018 for new employees, with a further six month grace period for existing employees and contracters.

4. Sections three to six will be implemented from April 2018.

 

2.  

 

[Steve]

Mr Speaker

I move that this Bill be read a second time.

As I said in my speech earlier this week, ending austerity means more than just ending cuts to public spending. It also means transforming the broken economic model that led us here in the first place.

One tenet of that model, Mr Speaker, are so-called flexible labour markets. “Flexibility”, Mr Speaker, is a euphemism for “insecurity”. Proponents of this approach on the opposite side of the house have, funnily enough, never been interested in doing a great deal to achieve real flexibility: highly skilled workers, supported by a robust social security, with sufficient savings. No, the argument has always been instead that workers must accept less security, lower wages, fewer rights.

Those days are over, Mr Speaker.

We will build a high-wage, high security economy where genuinely flexibility is achieved not by holding workers down, but by lifting them up.

This Bill does that in several key ways.

First, it fulfills our pledge to make the minimum wage a genuinely living wage, and increase it to 10 pounds an hour by 2020. That will be worth more than 5,000 pounds every single year to full time minimum wage workers. 

Increasing the minimum wage will also save the taxpayer money, too - from higher taxes and lower social security spending. Some studies put that as high as 1.7 billion pounds every year. Money that we will invest in supporting our small businesses to grow and adapt.

Second, it clarifies the boundary between self-employment and employment by requiring employers to correctly classify their employees. The pernicious growth of disguised employment robs employees of their rights, costs the taxpayer, and undermines the security of employees who are unable to say no for the sake of a wage.

Third, it bans zero hour contracts except in cases of genuine casual employment and emergency cover. The number of employees on these contracts has exploded from around 200,000 in 2010 - a number that had been relatively consistent over time - to nearly a million today. In the bill, genuine casual employment will cover those situations in which zero hours are appropriate, such as seasonal work - such as surges during christmas holidays, event work, and other extreme demand driven casual employment. Our expectation is that this would bring the use of zero hours contracts down to pre-2010 levels.

Fourth, it ensures that employees are entitled to core employment rights from day one, and for protection from unfair dismissal from three months. The latter was arbitrarily and unfairly extended to two years by the last government - meaning that people fired unfairly from their jobs had no recourse for two whole years.

This section also abolished employment tribunal fees - an unfair tax on ordinary working people trying to protect their rights. Claims to employment tribunals fell by a shocking 66% after the introduction of this unfair tax on working class justice, and proposals have since been struck down by the Supreme Court. We expect the abolition of fees to cost around 8 million pounds directly, and around 20 million in extra cases brought. The Government will announce details at Budget of a scheme to refund the fees of whose who brought cases.

Fifth, the Bill re-introduces protections for employees from third-party harassment, shamefully abolished by the parties opposite. Numerous stakeholders have since called for its reintroduction. And it is surely right, Mr Speaker, that employers - alerted to harrasment and potentially unlawful activity - are expected to act to protect employees at work. 

And finally, Mr Speaker, the Bill effectively bans the practice of undercutting wages by advertising abroad, or using a recruitment agency to do so, at a substantially lower wage than substantively similar roles they either employ or advertise locally.

Mr Speaker, this Bill is the beginning of the end of a sorry chapter in British economic history. The chapter of insecure work and low wages is coming to an end. This revolution in workplace rights will mean greater security and prosperity for millions - and I commend that fact to this House.

[Blakesley]

Second reading!

[Richard]

Mr. Speaker, time will be allocated for debate on this bill.

[Sir Peregrine Messervy]

Mr Speaker,

May I commend the Chancellor of the Exchequer for bringing forward the government’s first piece of legislation in this Parliamentary term. The Prime Minister may be nowhere to be seen; the government may be unable to lead on the big issues; and the Labour Party may be completely unable to set the agenda; but after only three months, we have a government bill before the House. At the current rate of progress, we will see another such bill in the new year. I’m sure the whole House joins me in rejoicing at that news.

Mr Speaker, the bill before the House today is clearly well-intentioned and on a serious note I would like to commend the Chancellor for his personal commitment to improving the lot of workers in this country. It is disappointing that he gives with one hand and takes with another; committing to abolish the married tax allowance, refusing to rule out a £1.3 billion tax hike on farmers; and refusing to adopt the Conservative policy of lifting minimum wage workers out of income tax altogether. But he has presented a bill today which is aimed at improving the economic security of some of society’s most vulnerable people.

Intentions aside, however, this bill does leave some serious questions unanswered. I will endeavour to look at each section of this legislation in turn, and raise constructive questions and concerns where they arise.

I turn first to provisions on the minimum wage, and let me be clear that my party is always in favour of raising wages for hardworking Britons. It is my party that first introduced the national living wage; it is my party that almost doubled the personal allowance; and it is my party which oversaw in government a dramatic decline in unemployment to give more families than ever the security of a well-paying job. Efforts to raise the minimum wage are commendable, provided they are affordable for businesses. I therefore ask the Chancellor: was the increase in the living wage to £10 an hour by 2020 recommended by the Low Pay Commission? Is the Chancellor confident that it can be afforded by employers?

I note with mixed feelings the government’s decision to equalise the minimum wage rates for all over-18s. Whilst we all surely agree in principle that people should receive the same rate of pay for performing the same tasks, it is a fact self-evident that those aged 18 have less work experience than those aged 25, and are often less intrinsically appealing to employers than those older. Is the Chancellor confident that raising the minimum wage for 18-21 year olds will not result in a situation where people in those age groups are disproportionately overlooked for employment opportunities in favour of more experienced peers?

I would also ask, Mr Speaker, why the government is not making any commitment to raise the minimum wage for 16-18 year olds, or indeed the apprentice rate. Whilst we know that 16-18 year olds cannot vote for the Labour Party, and that apprentices represent an often-neglected non-graduate constituency, I am concerned that the government has chosen to pursue a dramatic rise in the minimum wage which specifically excludes these groups. Can the Chancellor elucidate his reasoning on this matter?

Turning to section two of the bill, I am inclined to ask what effect tougher restrictions on the classification of employees would have on businesses such as Uber, Just Eat or AirTask, which are not generally recognised as employers and yet which do subject those paid by them to a degree of supervision and control? My grave concern is that the government’s proposed changes to the law around contracted and self-employment will render these businesses unviable in the United Kingdom, and thus drive investment, innovation and opportunity away from these shores. 

Mr Speaker, a proposed complete ban on zero-hour contracts excepting very specific exemptions runs the risk of decimating sectors of the economy such as healthcare, with social care in particular relying heavily on “bank” staff with no fixed hours. I would also submit that many people in Britain choose to be employed on a zero-hours basis, giving them more flexibility and freedom to choose their own working arrangements. Would the Chancellor recognise as friendly an amendment to scrap any proposed ban on zero-hours contract, and replace it with an inalienable right for any zero-hours employee to request and be granted a contract including set working hours, in line with Conservative policy?

I have no particular issues with section 4 of the bill, or section 5. With regards to section 6, my question would be how the government intends to enforce restrictions on activities taking place overseas?

 I look forward to the Chancellor’s customarily candid responses to my concerns.

[Steve]

Mr Speaker,

I thank the Shadow Chancellor for his response and questions. 

As it concerns the minimum wage, the Government made an election commitment to raise it to £10 an hour, which is what we expect the real living wage- not the so-called on introduced by the previous government - to be by 2020. Consequently - no, this is not an increase that has been recommended by the Low Pay Commission. As the Shadow Chancellor will know, the introduction of the National Living Wage was not itself a recommendation of the Low Pay Commission. I value their work and their research, which forms a key input into the decisions that Government makes. But it is the Government that sets the parameters and the Government has made a decision, which was put to the people at the last election, that the minimum wage should afford a minimum standard of living as per the real living wage.

I appreciate that increases in the National Living Wage do cost employers money. But we should put that in the perspective of significantly growing corporate profits over time. Excluding banks and oil, profits in the economy have grown by over £60 billion by 2010. I accept there will be businesses that struggle with the cost, which is why we have committed both to a transition period and to recycling the fiscal benefits of this change into support for small businesses, which I will set out at the Budget.

As to the question of age eligibility, I understand his concerns as those that originally motivated the differential rates. However, the Government has taken this call because as a general principle it believes that anyone above the age of 18 should earn a living wage. The evidence, as I am sure he will know, that a reasonably set minimum wage has any impact on employment prospects at all has been consistently shown to be lacking, particularly in the presence of largely benign economic growth. Indeed, this was often the view of the Low Pay Commission itself, which consistently recommended lowering the age for full eligibility to the minimum wage from 21. Therefore, our judgement is that the evidence on negative impacts does not justify a different minimum wage structure for those over 18.

I do, however, consider the case for under-18s to be different given the requirement that they are in some form of education or training which may be provided by employers, and intend to ask the Low Pay Commission to report on reforms to that part of the minimum wage system. The current system is relatively patchwork, with a 16-18 rate and an apprenticeship rate; the former of which was introduced before mandatory post-16 training or education was introduced. In any event, the Low Pay Commission will continue to recommend annually on the rates to set for apprentices and for 16-17 year olds.

On section two, I am afraid I do not share his concerns that this will somehow drive Uber or Deliveroo from the country. These businesses clearly fulfill a demand in the market. I welcome their technological innovation, which adds greatly to convenience and ultimately to prosperity. What I do not welcome, Mr Speaker, is the suggestion that we should celebrate or encourage the kind of innovation that looks for clever ways to circumvent or undermine hard-won workplace rights as a legitimate business strategy or model. That simply isn't fair: not on the workers in those industries, not on the small business owners they compete with or the workers they employ, and not fair on the taxpayer. This change puts people on a level and businesses on a playing field, and has been welcomed broadly by employees in those industries.

On zero hours contracts, no Mr Speaker I am afraid I will not accept an amendment that would gut our promise to the people to ban exploitative zero hours contracts. We all know that a request for hours can be rejected, and that the kind of employers illegitimately making use of those contracts would simply reject such a request. I accept there is a place for flexibility on hours in certain situations and industries: but that simply cannot explain why Britain has gone from less than 250,000 zero hour contracts in 2010 to nearly a million today. The Bill does not ban flexible working arrangements if those need to be put in place, and it specifically allows for emergency cover situations. It simply requires that people do have set contractual hours to protect them from exploitative behaviour. I'm afraid that the evidence also does not bear out his claim that the employees on these contracts want to be on them: while a minority appreciate the flexibility - and I stress nothing in this Bill bans flexible working arrangements, simply one-sided exploitative zero-hours ones - the majority in relevant surveys want guaranteed hours and pay and rights. Which is exactly why when put under the microscope, employers like Sports Direct, or McDonalds, or JD Wetherspoons have all felt compelled by the anger of their own workforces to make change for the better. The Government is simply moving with the same tide, and putting the power and rights back in the hands of workers - rather than their employers.

[Addie]

Mr Speaker, 

I'm glad to see the Government move forward with all the important proposals in this legislation. These provisions are all ones the SNP has pushed for in Scotland- and that the Scottish people have long wanted and voted for. However, we in Scotland have had to wait for a Labour Government to deliver these proposals as Labour did all they could to block devolution of employment law. 

In some alternative universe where the Tories won a majority in 2017, we'd be suffering from backwards employment rights and labour policies. And still with zero ability to actually change those laws in a way that has helped people. 

Not that we haven't tried in Scotland- and our businesses have gone along with us. Some 25% of all living wage accredited businesses are based in Scotland- about 1800 total employers. Scottish government staff, including NHS staff, all make at least the living wage, as do all or social care providers- thanks to support that we have pushed to provide. 

But still we are stuck with an archaic set of employment laws that we are- until now- powerless to change. So we are glad to see movement here, and we support the provisions of this bill. Banning zero hours contracts, providing meaningful support to gig workers who have no rights while companies that engage them make millions in profit because of it. Providing wage support for all those over the age of 18 and continuing to support 16- to 18-year olds and apprentices through higher wages. 

There is another practice that this Government should consider banning: trial shifts. These shifts are used by employers to determine- ostensibly- if a potential hire has the right skills for a position. They're often used to cover for missing employees, with trial shifts being unpaid and lasting for just as long as an employer needs to get free labour. The regulations around the current minimum wage allow for these trial periods to be used with little oversight and with little protection for workers who are often those who would not make as much and may even be younger. 

Therefore I move to amend this legislation to add the following language as a new section, and ask the Government to consider this amendment as a friendly one:

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Section Seven: Unpaid Trial Period Prohibition

1. If an employer requires a prospective worker to work a trial period, that employer must clearly provide, prior to the trial period, information in writing as to how long the trial will last, how the prospective worker will be judged, what feedback the prospective worker will get, and the number of positions available for those who qualify.
2. An employer who engages a prospective worker for a trial period must pay such worker a rate not less than the National Living Wage.

We should continue to do more to protect workers and employees from being taken advantage of just because an employer has a job to offer. 

This bill is a good first step. I hope that this Government will consider devolving employment law so that Scotland- and other devolved governments- can lead on protecting workers' rights as we want to do instead of waiting for the Government to put together a bill. But until that happens, this is an improvement to the quality of life for all workers and we are happy to support this bill. 

[Steve]

Mr Speaker,

I thank the member for Aberdeen North and am willing to accept his amendment as friendly with a minor amendment as below.

Section Seven: Unpaid Trial Period Prohibition

1. If an employer requires a prospective worker to work a trial period, that employer must clearly provide, prior to the trial period, information in writing as to how long the trial will last, how the prospective worker will be judged, what feedback the prospective worker will get, and the number of positions available for those who qualify.
2. An employer who engages a prospective worker for a trial period must pay such worker a rate not less than the National Living Wage or National Minimum Wage that they would ordinarily be entitled to.

Edited October 26, 2022 by Harry West

[Addie]

Mr Speaker, 

In order to see this important provision move forward, I accept the amendment from the Government as friendly.

[Nathan James]

Mr Speaker

Given that minimum wage legislation already exists, how exactly can this piece of legislation go through and create two pieces of legislation covering exactly the same thing.

Minimum wage increases are already covered by the National Minimum Wage Act of 1998, in which his own party legislated 

In terms of section three, Mister Speaker, generally a contract of employment supplying details of pay etc will be given straight away.

In terms of zero hour contracts is it not a bit rich coming from the party that saw many councils use zero hour contracts as well as current and former Labour members Andy Burnham, Ed Balls and the current member for Doncaster North

[Axon]

Mr Speaker

With the amendment from the Member from Aberdeen North, amendment further by the Member for Coventry South accepted as friendly, the bill text is updated, sections renumbered accordingly and will be distributed by the Clerks of the House before division.