Employment Bill

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Mr. Tony Lloyd: I am tempted to ask whether the debate on the minimum wage was academic, as the hon. Member for Runnymede and Weybridge said. I freely confess that I did not sit through consideration of the Bill in Committee, but I am well aware that tortuous debates took place. I could ask whether that was a valuable use of parliamentary time, but let us move beyond that.

The Opposition are often characterised as being hostile to those in the work force, whether they are called employees or workers, as they seek to offer levels of protection to those in an employment role. I do not want to get involved in the legal definition of ''employment role''. We are making progress this morning, and it is helpful to place that on the record.

I concede that there is an argument about how we maintain flexibility in the work force and what is the right balance. In what circumstances would the hon. Gentleman consider it right and proper for someone, who by all reasonable definitions has an employment relationship with someone who seems to be an employer, to buy access to adequate disciplinary and grievance procedures? That is a worrying issue. Disciplinary and grievance structures are fundamental

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to the workplace, as is the right to protection against abuse, whether someone is well paid or badly paid, flexible or inflexible.

Mr. Hammond: The hon. Gentleman makes an interesting point. I have no doubt that we will have the opportunity to debate it in some depth. One would expect a self-employed contractor—for example, an information technology specialist—to have a contract that gave him the protection that he needed and that defined his obligations. That contract would not be a contract of employment, but would give him appropriate remedies. Those remedies would not be available through an employment tribunal, unless the Minister were to use the powers under discussion to broaden dramatically the scope of the definition of employee, but they would be available to him through the usual operation of contract law.

Opposition Members may not have argued the case in the past, but we have reached a consensus that where the contract is a contract of employment, it is proper for the general law to underpin the standards and procedures that will be followed in that relationship. In other words, there is a broad acceptance that statute law should intervene and override the contract between the employee and the employer. The Bill also implies something that is defined in a statute into the terms of a private contract between employer and employee. I hope that we will not start implying all sorts of general law into the terms of other types of contracts.

I am not a lawyer, and I stand to be shot down, but my perception is that where our continental colleagues have gone wrong is in the introduction, through the commercial codes that many European countries have as part of their civil law, of certain implied conditions and rights into contracts that are in this country freely negotiated between parties—for example, by the supplier of a specialised service to someone who wishes to contract that service. I have worked in Germany, and on one occasion benefited from the fact that the German commercial code in civil law gave me rights that I had not negotiated in my contract, but I do not think it is a helpful route to follow.

I should be happy to have a debate with the hon. Member for Manchester, Central about where the boundary should be between employee-employer relationships that are properly regulated by statute, and relationships that should not be invaded by statutory interference in terms of the right to enter into a private contract bargain. I suspect from the tone of our exchanges this morning that that debate might not be as acrimonious and adversarial as some might expect.

Mr. Lloyd: Let us put it to the test, as this is a good time to have that part of that debate. Most people would understand intellectually what the hon. Gentleman said. I suppose that his defence of amendment No. 79, which I accept is a probing amendment, would be that it is an objection in

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principle to widening arbitrarily the scope of the law, not necessarily specifically about schedule 2 and grievance and disciplinary proceedings.

The hon. Gentleman makes an important statement on behalf of the Opposition in the reasonable tone that he has used throughout our proceedings. Is he saying specifically that he would accept—this is the nub—that a minimum grievance in disciplinary procedure should be there for all people in the workplace who have something that looks like an employee-employer relationship, whether that is defined by law or otherwise? Should that be one of the minimum basic standards? That is not a trick question, and the hon. Gentleman may want to reflect on it and answer it on Third Reading. It would be an important part of progress because my experience is that Conservative Governments were not of that benign view. There was a concerted attempt to erode standards, and disciplinary and grievance processes were open to erosion like everything else. It would be helpful to all sides of the political debate.

Mr. Hammond: The hon. Gentleman is asking one question that is easy and one that is difficult to answer. The easier question is whether people who are employees have certain minimum standards of protection, and the answer is clearly yes. There is consensus on that issue. The more difficult question is where is the boundary. When the hon. Gentleman talks about people in the workplace who have the characteristics of an employee, we may be in some difficulty.

I said during the National Minimum Wage Bill debates that having been a self-employed person, I am acutely aware that the body with the greatest and most penetrating interest in where the division lies is the Inland Revenue. It was difficult for Ministers during the passage of that Bill to argue that a person whom the Inland Revenue was prepared to regard as a self-employed contractor was, for the purposes of that Bill, more akin to an employee. I know from experience that the Inland Revenue is fairly aggressive in seeking to define out self-employed people if it thinks that they have the characteristics of being employed. The Inland Revenue has a fairly long checklist that one is supposed to use to test whether the relationship is one between employee and employer or pertains to a self-employed contractor.

My starting point would be that of the Inland Revenue, which has clear fiscal self-interest in defining people as employed. If it concludes that a person is self-employed, it would be difficult for the Minister or the hon. Member for Manchester, Central to argue that he should be treated as an employee. IR35 notwithstanding, the Inland Revenue has sought to extend that boundary for reasons related to national insurance contributions.

Mr. Prisk: For people who are earning a living to have the best standards, the challenge must be to improve best practice, not seek more legal processes. The Industrial Society says:

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    ''The best means of ensuring management improves its performance is to promote awareness of the cost benefits of good management and to provide guidance on good practice especially among small employers.''

Does my hon. Friend agree that promoting best practice is often the better way?

Mr. Hammond: My hon. Friend makes a good point that applies across the piece. On Second Reading, the Secretary of State told us that business should not worry about the new procedures because they would be good for business, despite the fact that they resembled burdens. That is patronising. It is incumbent on government to persuade. I am sure that my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), who has knowledge of small business, will agree that changes in management practice beneficial to employers and employees create a win-win situation. The Industrial Society is dedicated to promoting those changes and we welcome that.

Mr. Benton: I have gone on at some length—

Mr. Ian Pearson (Dudley, South): Yes.

Mr. Hammond: It is disappointing to hear the Government Whip say ''Yes'' in such a grudging tone when I make self-deprecating remarks.

I say to the hon. Member for Manchester, Central that we have started the debate on a sensible basis and that I look forward to furthering it without relying on the dogmatic positions that have characterised debate in the past. I hope that we can find a solution that deals with the mischief of employees being otherwise categorised for dishonourable purposes. Furthermore, I hope that we can do so without creating inflexibility in the economy, which I have experienced elsewhere in Europe. I shall withdraw the amendment so that we may debate that later.

Alan Johnson: My very good and hon. Friend the Member for Dudley, South (Mr. Pearson) was being mean-spirited. That is a prerequisite of working in the Whips Office, so we do not blame him for that. It was an interesting debate. For a moment, I thought that if we could lock the doors and carry out the review of employee versus worker, we could reach a good settlement. Unfortunately, we cannot.

The hon. Member for Runnymede and Weybridge will be aware that the law of contracts predates the Inland Revenue, and taxation itself, by several centuries. The Inland Revenue is not going to help us in that area. My hon. Friend the Member for Manchester, Central raised a crucial issue in relation to the grievances and discipline procedure. Previously, groups of workers have been treated like second-class citizens in the workplace. This applies to both sides. My former union categorised part-time workers as class B members. Full-timers were class A; that is a message about how much those workers were valued.

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11 am

Mr. Hammond: As the Minister is talking about the recategorisation of workers, perhaps he would like to say something about the Post Office's proposal that some of its employees should become self-employed if they wish to remain in service.

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