HC Deb 17 December 2001 vol 377 cc122-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

10.31 pm
Dr. Howard Stoate (Dartford)

Since 1997, the Government have adopted an approach to employment rights which recognises that individuals work best when they are properly rewarded for their work and able to achieve an effective balance between work, family and leisure. The introduction of the minimum wage, the right to a minimum of four weeks' paid holiday, improvements in maternity pay and leave, new regulations on part-time work and the implementation of the EU working time directive have, without doubt, significantly improved the quality of life of workers in this country. Millions have benefited from those policies. More than 1.5 million workers, around 7 per cent. of the work force, are better off because of the minimum wage, while more than 3 million people have benefited from the right to four weeks' paid holiday.

There is, however, strong evidence from trade unions and citizens advice bureaux that a large number of workers, many of them low paid, are still not receiving all the employment rights to which legislation brought in by successive Governments entitles them. Every year, citizens advice bureaux throughout the country deal with more than 650,000 cases of employment-related problems. Many of the cases that CABs handle concern contractual disputes between employer and employee or issues connected with redundancy or dismissal.

A great many cases, however, concern employers' failure to grant their employees' full employment rights. Many of those workers are in low-paid, low-skilled service sector jobs, are non-unionised and have been denied a full written contract by their employers. They are therefore in an extremely weak position to challenge their employer about their rights as employees. Routine abuses include the denial of the right to four weeks' paid holiday, the denial of statutory sick pay and the denial of full maternity or paternity rights, such as the right to maternity leave and pay and the right to time off for antenatal care.

Some employees have been pressured by their employer into opting out of the 48-hour limit on the working week, while others have been pressured into giving up their right to Government tax credits, such as the working families tax credit, because of the supposed extra administration involved for companies. Some employees have even had their hours cut below 16 a week to ensure that they do not qualify for tax credits or other benefits.

It is clear that many companies that fail to meet their statutory obligations to their staff are doing so deliberately, claiming, for example, that part-timers do not qualify for rest breaks, holiday pay or statutory maternity pay, or that the working time directive does not apply to every company. It is equally clear, however, that not every company that is falling short is doing so deliberately. Many companies are simply not aware of their full responsibilities as employers.

Some 95 per cent. of UK companies, a far higher percentage than in most European countries, are small operators that employ fewer than 10 people. As their budgets are tight, many companies of that size do not employ a personnel specialist. Consequently, most of them have no employee with an in-depth knowledge of employment law or human resources management. Although they want to do the best for their employees, they simply lack the requisite funds and knowledge to ensure, first, that they are up to date with legislation and, secondly, that they are able to implement it.

The problem that we face is that the mechanisms of enforcement that currently exist, such as the employment tribunals, are expensive to access and rely on the employee bringing a complaint against his or her company. As many employees are either unaware of their entitlements or unwilling to jeopardise their position in the company by making a complaint, only a small number of cases of employers evading their responsibilities are ever heard by tribunals.

The insignificance of most awards made to successful plaintiffs by tribunals—the median award in 2000–01 was only£2,700—acts as a further disincentive to employees with a grievance. A few thousand pounds and the satisfaction of proving the culpability of one's employer is a poor substitute for a broken career and long-term loss of earnings. The tragedy is that most of the people who are missing out on their proper entitlements are working long hours in low-paid positions and are precisely the sort of employee whose quality of life would be improved enormously by even a small increase in their hourly wage or a few days extra spent with their family.

Clearly, we need a more transparent, accessible and proactive system that is less reliant on individual employees bringing their case forward for consideration. Furthermore, we need a system capable of improving the lot of every employee in the company, rather than a system that is able to give redress only to the individual employee who chooses to bring his or her case before a tribunal. There are precedents. The minimum wage enforcement agency, recently set up by the Inland Revenue, is precisely the kind of practical enforcement agency that we need.

My suggestion—it has also been proposed by the Institute for Public Policy Research and the National Association of Citizens Advice Bureaux—is that we create a body that I suggest we call the national employment rights office, or NERO. This would ensure that employers were aware of their responsibilities to their staff and, hopefully, we would find far fewer problems. NERO is a particularly apt name because those employers who routinely fiddle the system, abuse the law and exploit their staff will end up getting their fingers burned.

As a first step, NERO should devote itself to ensuring that employees are given written statements of their terms and conditions and itemised pay slips, and that they are paid holiday and statutory sick pay and receive maternity and paternity rights. NERO should also commit itself to tackling inequality between full-time and part-time workers, to ensuring that the working time directive is observed and to ensure that employees receive the tax credits to which they are entitled.

The main role of the office would not be to penalise employers for non-compliance—although it would need to be equipped with the appropriate powers of enforcement—but to advise and guide employers and employees as to their responsibilities and rights. For the thousands of small companies who want to ensure that they are meeting all their obligations to their staff, a service such as this, funded by the state, would provide the means for them to do so.

Under the system, employers would be able to approach the service for cost-free information about employment law without the risk of incurring a penalty for past non-compliance. They would also be able to receive practical assistance, again cost-free, from trained support officers about how to comply with the law and advice on current best practice. When an employer was failing to meet its statutory duties, or where a firm did not have the necessary policies or procedures in place to allow it to meet its obligations, the agency would step in and provide the firm with advice on how to meet its requirements and a clear structured programme to follow.

There could be considerable productivity benefits for small and medium-sized employers. Properly funded, the service could instigate the replacement of many entrenched and inefficient management attitudes and workplace practices that are holding back growth in small and medium-sized businesses. After all, it is not in the interests of anyone—least of all the employer—to have tired, overworked, badly paid and demotivated workers, incapable and unwilling to do anything for their company beyond that stipulated by their contracts.

Employers would also benefit from the creation of a more level playing field. Responsible employers would no longer be undercut by less-scrupulous employers who can offer a cheaper product by neglecting their responsibilities towards their staff. NERO could also raise public awareness of the basic statutory employment provisions and encourage companies to take advantage of its services by issuing certificates of compliance, or even star ratings for the best employers. Potential employees would then be able to get some idea of the employment track record of a company before making the decision to join them. If employers are able to seek references from a potential employee, why should not a potential employee have access to an independent assessment of a company's suitability as an employer?

If we can get an idea of the relative quality of a school or college—or, indeed, a hospital—by looking at a league table, or if we can judge a restaurant or a hotel by how many stars it has, why should not the same be true for employers? It seems strange that while a hotel guest has a reasonable idea of the calibre of the hotel from the number of stars it has before deciding to stay there, a chef looking for a job at the same hotel has no idea what sort of employer the hotel is before deciding to work there.

There are some awards in place which recognise excellence in an employer, such as the investor in people standard, which acknowledges a company's commitment to supporting the professional development of its staff. But there is no single, universally recognised standard of excellence as an employer which encompasses everything from compliance with legislation on maternity rights to the calibre of training and professional development on offer. In a competitive labour market, an independently administered ratings scheme would provide a powerful incentive for employers to ensure that they complied with the latest employment legislation. Not only would a high rating prove beneficial to a company in terms of recruitment, but potential clients would be able to see that a company was meeting its obligations as an employer.

The creation of a national employment rights office would help to ensure that each and every employee was decently paid, had control over the number of hours that he or she worked and was not discriminated against or exploited in the workplace. After all, improving the quality of work experience of the working population of this country is a goal every bit as important as the goal of full employment. If we were to ask people of working age in the UK what it is that they most want from a job, the chances are that a friendly and decent working environment would be high on their list.

It stands to reason that employees who are well rewarded and respected by their employers are likely to be happier, healthier and more capable of making a full contribution to their communities and the companies that they work for than those employees who are treated with scant respect and decency by their employers. As Karl Marx, whose analysis of the sociology of work is still highly relevant today, said: What then constitutes the alienation of labour? First, the fact that labour is external to the worker, i.e. it does not belong to his essential being; that in his work he does not affirm himself but denies himself, does not feel content but unhappy; does not develop his physical and mental energy but mortifies his body and ruins his mind. Establishing an effective mechanism for enforcing employment rights would provide a means for tackling what Marx described as the alienation of the worker from the work they do.

With effective enforcement we would create a healthier working environment and enable employees both to engage with their work and to strike a better and more productive relationship with their employers. It is therefore high time that quality of work issues were placed at the heart of the political debate in this country. As Fidel Castro said recently, in a speech to the Cuban Young Pioneers at Jose Antonio Echeverria social club in Havana: En un país justo, no existe el egoísmo & o & explótacion. which translates as "In a just country, there is no selfishness or exploitation."

Mr. Bob Laxton (Derby, North)

Follow that!

10.43 pm
The Minister for Employment and the Regions (Alan Johnson)

I congratulate my hon. Friend the Member for Dartford (Dr. Stoate) on securing this debate and I am grateful to him for raising this important issue. I am not sure whether I can follow that and quote so eloquently from Marx and Castro, although if time allows I might have a go at the theory of surplus value. Perhaps it would be better if I addressed the major points of my hon. Friend's speech.

This Government took office in 1997 with a determination to improve employment rights for working people. Indeed, we had a determination to introduce basic, civilised minimum standards in this country in the workplace practically for the first time. In the past four years, we have introduced many important measures that have created a substantially better working environment for many employees. The measures in the current Employment Bill—which I urge my hon. Friend to read, because it addresses some of the issues that he raised—will continue to take that good work forward. However, while we must recognise that most employers happily comply with those measures because they recognise the link between good employment relations and success in the marketplace, we also have to accept that that is not always the case and that some workers are not receiving all the employment rights to which they are entitled.

The key question is how best to address that problem. It seems to me that my hon. Friend has identified two principal difficulties with the present system. The first is that some employees are not aware of their rights, and that some employers deliberately or through ignorance do not apply those basic minimum standards. Our approach to that is to try to help to build constructive employment relationships, and thus ensure that workers and employers alike are aware of their rights and responsibilities. Advice on employment rights is provided by a range of bodies, including ACAS, which has seen a step change under Rita Donaghy's chairmanship and a new chief executive. It is now committed to increasing the number of seminars that it conducts with businesses to help them to understand the complexities of employment rights.

Apart from ACAS, the Department of Trade and Industry, equality commissions, the Trades Union Congress, voluntary sector bodies such as the low pay units, and advice agencies such as citizens advice bureaux raise awareness as far as possible through publicity campaigns to improve understanding of specific employment rights. An ever-increasing amount of information is also available on the internet, including the Tiger website, which the National Association of Citizens Advice Bureaux has helped us to develop. That will continue to expand to cover a broader spectrum of employment issues.

Much guidance material is available from both the DTI and ACAS, which also runs conferences, seminars and employer workshops to raise awareness of statutory duties and rights. The Small Business Service provides employers, especially in small firms, with a single entry point for guidance on regulations on employment legislation from across Government. The Government and the bodies that I have mentioned are always reviewing the available guidance and advice to see how it can be improved and better publicised. It is clear that a wealth of guidance material is already available to employees and employers.

My hon. Friend argued that employment tribunals are expensive to access and that few employees think that the risks involved in taking an employer to a tribunal are worth the perceived benefits of winning a case. It is precisely such problems that the dispute resolution measures in the Employment Bill are designed to tackle. We are ensuring that all workplaces must have grievance procedures. The proposed steps are simple and easy to use. They will ensure that a dispute is tackled where it arises, in the workplace. Employers will have to take the process seriously, or they could find that any award made against them is increased by up to 50 per cent.

We are ensuring that all employees are issued with a written statement of terms and conditions of employment that lays down those procedural steps. At present, there is a requirement to do that, but companies employing fewer than 20 employees have no obligation to include disciplinary and grievance procedures. In any case, there is a problem with compliance. Mitigation awards of between 10 and 50 per cent. will apply in that respect. Everyone in the workplace will know where they stand and how best to approach a dispute. The use of such procedures should mean that far fewer disputes have to be taken to tribunal for resolution.

My hon. Friend mentioned the awards made by tribunals. Just under 50 per cent. of awards are for unfair dismissal, which is not relevant to this debate. It is true that the median award is not high, but we are not trying to create a compensation culture in employment tribunals, and awards are designed to compensate for actual losses. Tribunal chairmen assess the level of an award as they deem fair, taking into account the circumstances of the person against whom the award is made.

In addition to the measures in the Employment Bill, we have set up a partnership fund to promote understanding between employers and employees in the workplace. That is an important non-legislative measure aimed at improving work relations. The Government and business have invested £10.3 million in it.

My hon. Friend suggests that the answer to the difficulties that he raised would lie in creating a new body, to be known as the national employment rights office. That would act as an independent assessor of whether employers were meeting their legal obligations to their staff. I am aware that others, including the Institute for Public Policy Research and NACAB, have made the same suggestion.

I remain to be convinced that the formation of a single, over-arching body would be the best way forward. In many respects, it would duplicate work that is already being done. It is not clear to me that the creation of NERO would necessarily improve the volume and quality of information available about employment rights. It is entirely possible for us to improve that within the present system, and we are always looking to do so. Nor would NERO improve the way that employment tribunals work. Employment disputes often lead to complicated and intricate cases and would not naturally lend themselves to resolution through an investigative agency. Tribunals are structured as they are because the expertise of lay members combined with the legal knowledge of the chairman is required to reach a solution.

It is also not entirely clear how the new body would fulfil its role. How could NERO be seen by employers and employees as an independent adviser and conciliator on the one hand while also acting as the body responsible for enforcing employment rights? ACAS, for example, does vital work in both its advisory and conciliatory roles while maintaining its independence and integrity. It is difficult to imagine how NERO could continue as an independent body if it were to take on the dual role suggested by my hon. Friend.

The creation of a single body does not of itself resolve any of the difficulties in the present system. Indeed, it is even possible that, if not carefully handled, the body could create additional difficulties: effort and resources could be drawn into the creation of a new bureaucracy, rather than being used for the operation and improvement of the existing system.

As my hon. Friend pointed out, we made an exception in relation to the minimum wage: because of a service agreement between the DTI and the Inland Revenue, Inland Revenue officers are dedicated to enforcing the minimum wage and to taking cases through employment tribunals. That is fundamental because the matter relates to people's pay and because we introduced a minimum wage for the first time in 1999, whereas such arrangements are well established in other countries.

The Inland Revenue does an excellent job on our behalf, but other employment rights—such as weighing up part-time and full-time work in relation to the directive on part-time workers—are more subjective. To create a body to enforce all employment rights across the board would demand substantial resources, and I am not convinced that it would deliver a better result.

That is not to say that the Government are irrevocably opposed to the idea of NERO. Incidentally, there seems to be awareness of our minimum standards. Last week, it was reported that Madonna said that every worker on her new house knows that they are entitled to four weeks' paid holiday, to the minimum wage and so on. I do not know whether she intended that as an accolade for the Government, but we shall accept it as such.

We are not irrevocably opposed to my hon. Friend's idea. Although I am not convinced that it offers significant advantages at present, I should be happy to reconsider it at a later date. My hon. Friend has raised an important point. We do not intend to set up basic minimum civilised standards only to have them ignored by a minority—thankfully—of unscrupulous employers. We shall look at the proposal again, and I am grateful to my hon. Friend for initiating this important debate.

Question put and agreed to.

Adjourned accordingly at seven minutes to Eleven o' clock.