Employment Bill

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Rob Marris: I confess that I am unclear as to whether the hon. Gentleman is arguing that the schedule 2 minimum procedure should not apply to micro-businesses, as he termed them, or whether it should apply, but that those with fewer than six employees should not tell the employees that it did so. Could he clarify his argument?

Mr. Prisk: The amendment is clear to me, although I do not have the legal training that the hon. Member for Wolverhampton, South-West enjoys. It would exempt organisations that employ fewer than six people, so it does not have the dangers that the hon. Gentleman seems to expect.

The 900,000 micro-businesses to which the Minister has referred several times would find the burden onerous and disproportionate. It would be bad for those that they might employ or want to employ. For both those reasons, I strongly support the amendment.

Mr. Mark Simmonds (Boston and Skegness): I apologise to the Committee for my voice, which seems to be deteriorating rapidly this morning. I will make it last as long as I can. In the excitement of making interventions on the first Standing Committee on which I have served, I forgot to declare the fact that I am an employer. I hope that the Committee will accept my apologies.

I have consulted widely with small and micro-businesses inside and outside my constituency. I am sure that many other hon. Members visit small businesses and find that a consistent golden thread runs through the points made by all small business men. They all ask us to remove existing regulations and not to apply further ones to their businesses. No one has said, ''Please, Mr. Simmonds, go and talk to that nice Mr. Johnson and get him to increase the employment legislation on my small business. Get him to make more regulation to create an even more inflexible labour market.''

As my hon. Friend the Member for Wealden said, many small businesses struggle to survive even in what is now a generally healthy economic climate. The great thing about small businesses is that they grow into medium-sized businesses and large businesses, thereby

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creating employment, moving from one status to another and generating wealth to be distributed among their employees.

Even before the Bill has been enacted, many small business men are reluctant to take on additional staff. Existing legislation makes them nervous that if a member of staff proves inappropriate for the business and does not behave properly in some way, they cannot get rid of him quickly enough. One of the benefits of small businesses is that they are quick on their feet and can react to economic and social circumstances at any time. That will change.

Government policy and legislation has some serious contradictions. Under stakeholder pension legislation, companies with fewer than five employees rightly did not have to implement stakeholder pensions. Some small companies and micro-businesses in the economy deliberately keep the number of employees below that level so that they do not have to implement them. Ladies returning from maternity leave are not affected by the same regulations in companies with fewer than five employees. The amendment is consistent with some existing Government legislation.

The Federation of Small Businesses has said that small businesses cannot take any more regulation without their ability to hold on to jobs, or to create new ones, being compromised. To my mind, that is the crux of the clause. It negates the ability to create new and additional jobs.

Rob Marris: Perhaps the hon. Gentleman could rest his voice a little. I pose the question that I asked the hon. Member for Hertford and Stortford. Is he making a speech about clause 30, which he should have done when we debated that clause, the first part of which states that every contract of employment shall have the statutory minimum procedure from schedule 2? On the other hand, is he saying that the schedule 2 procedure should apply to all employers, regardless of how many employees they have, but that employers should not tell their employees about the application of that schedule 2 minimum procedure if they employ fewer than six people?

Mr. Simmonds: I refer the hon. Gentleman to the answer given by my hon. Friend the Member for Hertford and Stortford. Businesses with fewer than five employees should be exempt from the raft of regulations in the Bill. I am not advocating a pick-and-choose situation. In a very small business, a small number of people work closely together—more closely than those in a medium-sized or large business. The additional procedures may create an atmosphere of animosity and tension that does not exist at present, which cannot be constructive if we aim to allow successful small businesses to fructify.

I have some questions for the Minister. First, how will a small business deal with a persistent applicant, given the bureaucracy and work load that will be placed on the employer?

Secondly, what impact will the clause have on temporary workers, especially those on fixed contracts—bearing in mind clause 45, which we have yet to debate? In my constituency, around Boston,

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many jobs are tangentially or directly involved with agriculture and are on either fixed contracts or a less permanent basis. In Skegness, a large number of employees work in tourism. I am concerned that, to avoid being caught by the provisions in clause 45, employers will avoid giving fixed contracts, and people will be employed on a daily rather than a longer-term basis. We will return to the situation of 100 years ago on the docks in London: people will turn up to find work on a daily basis because the small employer will not be prepared to employ them on a longer-term basis.

Thirdly, how will the collective dispute that circumvents procedures in clause 29 operate in practice in a small business? Will two employees with the same disgruntlement become a collective? Is there a de minimis number that needs to apply?

From my understanding of earlier debates, it seems that for small businesses caught by clause 34, after a minimal procedural fault by an employer, not only does dismissal become automatically unfair but the fines are increased. That may have a dramatic, if not fatal impact on the future of the small business.

The Chairman: Order. May I point out to the hon. Gentleman that he has gone a little wide of the amendment?

Mr. Simmonds: Thank you for your guidance, Mr. Benton. My final suggestion is that the small code for small businesses should exist on a voluntary and informal basis, because small businesses must retain their flexibility to enable them to react to circumstances.

Mr. Lloyd: I cannot resist intervening—my hon. Friend the Member for Dudley, South (Mr. Pearson) will probably devastated by this, but I am astonished. We had a wonderful piece of nagging from the hon. Member for Runnymede and Weybridge, who spoke of this carefully crafted Bill that we all grudgingly accept is just about right. However, Opposition Members are now trying to unpick the whole thing by introducing one, narrow amendment, in order to do away with almost all industrial relations applying to firms employing fewer than five people.

I hope that my hon. Friend the Minister will resist this very silly amendment. To talk about this being part of the inflexibility that so ties up small firms as to prevent their growth is nonsense. It is narrow in scope; it is about the need to inform employees of their rights—it is about information. It is interesting that nobody has picked up the valid point made a number of times by my hon. Friend the Member for Wolverhampton, South-West that it is not about exempting such people from the provisions of the Bill as a whole, it is solely about publicising it. In fairness, the hon. Member for Wealden seems to know that. I am not sure that his colleagues do.

The hon. Member for Boston and Skegness (Mr. Simmonds) argued that there is disincentive to grow from five to six. The same would apply if we built in this cut-off. It is anti-competitive between the slightly larger firm and the small one. That is an inflexibility and an unfairness and we should not include it in

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legislation. However, not all small firms are destined to become the great and the grand. The little corner shop will remain a little corner shop, and it is true that the majority of small businesses stay small, want to stay small and do not intend to grow beyond the small employment limits.

Mr. Hammond: Given that this is a probing amendment to address the impact of legislation not on small businesses but on micro-businesses, does the hon. Gentleman accept that the biggest hurdle to be cleared is that of going from zero to one employee? At that point, under what is proposed, the whole panoply of employment protection legislation and the requirement to follow procedures comes down on the new employer. I am sure that he will recognise that that is a very real and frightening barrier for a person who has been used to working alone, as a sole trader, to break through. That is the issue on which my hon. Friends and I are anxious to draw the Minister.

Mr. Lloyd: There is a general argument about the ''burden of regulation''. However, Conservative Members will probably not be surprised if I say that we hear that on every occasion, whether the legislation is good, bad or difficult. The plea is always that small businesses cannot take one more step. However, small businesses have responsibilities as well as rights. They have a responsibility to operate as part of society. They incur responsibilities by taking on the right to employ, because that right has duties attached. Within that, giving minimal information to employees is not such a terrible thing.

A number of businesses have fewer than five employees. They are not little micro-businesses, just out of the incubator. Some of them are well-established businesses of many years' standing. Some of them are very dynamic businesses that enjoy considerable turnovers and make extraordinary profits. The small business sector is often highly efficient in specialised areas. To say that in industries as diverse as print and information technology, firms will never grow and should be permanently exempt from the need to demonstrate their obligations to their employees is ridiculous.

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