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17 Dec 2001 : Column 122

Employment Rights

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

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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

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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.

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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:

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:

which translates as "In a just country, there is no selfishness or exploitation."

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