Employment Bill

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Clause 44

dismissal procedures agreements

Question proposed, That the clause stand part of the Bill.

Mr. Hammond: What does the Minister intend to do with the power that the clause gives him?

The Minister for Employment and the Regions (Alan Johnson): There has been only one agreement in relation to the clause, which was in the electrical contracting industry. Both sides agreed to withdraw the agreement after discussion last year. Once we enact the legislation, which is compliant with the Human Rights Act 1998, and introduce the new measures that the clause allows, it will be up to that and other industries to decide whether they want to set up a similar scheme, the purpose of which is to resolve disputes in the workplace rather than at employment tribunals. Incidentally, the ACAS arbitration scheme is fully compliant with the new terms.

Clause 44 ordered to stand part of the Bill.

Clause 45

fixed-term work

Brian Cotter (Weston-super-Mare): I beg to move amendment No. 213, in page 47, line 28, leave out 'employees' and insert 'workers'.

The Chairman: With this we may discuss amendment No. 214, in page 48, leave out lines 37 to 39 and insert—

    '''worker'' means an individual who has entered into or works under (or where employment has ceased, worked under)—

    (i) a contract of employment, or

    (ii) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker's contract shall be construed accordingly.'.

Brian Cotter: Clause 45 will implement the European Union fixed-term work directive, which was introduced following negotiations between the social partners. The explanatory notes that accompany the Bill state:

    ''The purpose of the . . . agreement is to apply the principle of non-discrimination to those in fixed term employment and to establish a framework to prevent abuse arising from the use of successive fixed term employment contracts or relationships.''

The amendment would address that matter.

The Government have chosen to extend the directive also

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    ''to prevent pay and pensions discrimination against fixed term employees'',

which we shall address later. In one sense, the Government have gone further than the original fixed-term directive requires, but in another, it is questionable whether they will implement the directive correctly.

In the framework agreement, the social partners rejected the term ''employee'' and instead used the wider term ''fixed-term worker''. The employer's side had originally wanted to use ''employee'', but conceded that point. The Law Society briefing states:

    ''Clause 2 of the agreement states that it should apply to fixed-term workers who have an employment contract or employment relationship as defined in law, collective agreements or practice in each member state.''

On the basis of that framework agreement it seems that a proper implementation of the directive into UK law means that the rights should be extended to both employees, as defined in the Bill, and workers as defined in existing anti-discrimination legislation or the Employment Rights Act 1996.

11.45 am

By limiting the scope of the Bill to cover merely employees, the Government could create a number of difficulties and deny protection to those who may be likely to be discriminated against, such as casual or temporary workers. The TUC points to those who are employed in the hospitality industry and cites the case of an agency worker who is employed by an off-shore crewing agency but works on a P&O ferry that sails from Portsmouth. She is employed on a weekly basis, meaning that officially she is laid off once a week when she comes ashore. She has been employed on that basis for three years. She receives the same hourly rate as equivalent permanent employees, but as she is an agency worker she is paid only for the time that she is on the ship. That means that she receives just £9,000 while her permanent colleagues receive £18,500 a year. Because she is not legally defined as an employee, she will not benefit from the measures introduced in the clause, a seemingly unjust state of affairs.

Another union officer who represents workers from Park Lane hotel refers to the case of a banqueting waiter who has worked 40 to 50 hours a week for 23 years and has been employed as a temporary worker throughout that time. Under the clause he, too, would not be entitled to treatment equal to that of permanent full-time staff.

In addition, the TUC says that temporary work is becoming ever more widespread: 1.7 million people, including many women and part-time workers, are employed on a casual basis in the UK. Under the Bill, employers would continue to have no obligation to provide similar pay rates, sickness leave or holiday pay to temporary workers. According to the TUC, 50 per cent. of employers pay temporary workers on pay rates different from those of permanent workers.

It is argued that those employed on a casual basis accept the lack of equal treatment because of the flexibility that temporary employment gives them and that they get a fair deal in that respect. What use is that to those temporary workers who find themselves

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placed on temporary contracts in the same employment over a number of years? What rights do they have under the clause? The answer seems to be none. That needs to be rectified. In addition, by failing to apply the Bill to workers—which would be a correct interpretation of the EU directive—the Government are creating a situation in which decisions by the courts on the definition of an employee are likely to be overturned. That would create uncertainty for employee and employer.

Mr. Osborne: The hon. Gentleman is reading very well from the various briefs. However, he did not quote the excerpt from the Law Society brief that reads:

    ''We are concerned that provisions under clause 45 to introduce regulations outlawing discrimination against fixed term employees will not comply with the European Directive they are designed to implement.''

That is surely the key question. If the clause does not implement the European directive, it is pointless. Will the Minister make a clear statement that, in his view and in that of the Government lawyers, the clause complies with the European directive that it is trying to implement?

Brian Cotter: The hon. Gentleman is correct. I have made that point but he emphasised the concern that lies behind our debate. If the Government feel that this is not the right forum to solve that uncertainty about employment rights, I ask the Minister at the very least for a commitment today that the Government's overdue review of employment status, which was to have commenced by the end of last year, should be commissioned as a matter of priority, to clear up the situation for employers and employees. As my hon. Friend's intervention emphasised, there is grave concern about the rights of workers and about whether we will meet the directive. I hope that the Minister will consider the point carefully. We may wish to return to it later.

Judy Mallaber (Amber Valley): I welcome the proposals and their extension to cover discrimination in relation to pay and pensions. Fixed-term contracts are appropriate in some circumstances, but that is no reason why people with such contracts should be dealt with less favourably than if they were in permanent employment.

Such a problem can become endemic—in higher education, for example, where quality suffers because of the prevalence of fixed-term contracts, as pointed out in the Betts report; the relevant union has concerns about the draft regulations that I hope will be discussed with the Minister.

I am concerned about the worker-employee definition and think that clarification from my hon. Friend on several points would be helpful. As the hon. Member for Weston-super-Mare (Mr. Cotter) said, according to the labour force survey there are about 300,000 part-time casual workers in the UK. I have received differing interpretations of whether the proposals would cover such workers and enable them to claim the protection of the clause. It would be

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helpful to have clarification from the Minister about whether they are covered and, if so, about the extent of the coverage.

I have been told of several examples—such as that in the Park Lane hotel, mentioned by the hon. Member for Weston-super-Mare—in which there is confusion about the implementation of the law and the exact terms of the employment relationships. I ask my hon. Friend whether that would be clarified if the broader definition of worker rather than employee were used, which would enable the clause to deal clearly with slightly unusual employment relationships. I welcome the Government review on the inconsistencies and use of the definitions of employer and employee under the Employment Rights Act 1996; while I would prefer it if that were made clear in the Bill, I hope that the Government will look seriously at the worker-employee definition. We need consistency.

In the background documentation, the Government draw a parallel between the provisions affecting fixed-term workers and those affecting part-time workers. The explanatory notes specifically refer to part-time workers being protected by legislation, although fixed-term workers are not. In drawing up provisions related to fixed-term contracts, the regulatory impact assessment draws on the provisions concerning implementation of the part-time workers regulations.

My hon. Friend the Minister will recall that when he appeared before the Select Committee on Education and Employment in 2000 on the implementation of the EU part-time workers directive, we argued that if the worker definition is used for the minimum wage, sex discrimination and equal pay legislation and the working time directive, it was logical to use the definition to deal with the problems facing part-time workers. As highlighted by the hon. Member for Weston-super-Mare, we argued that the terms of the EU part-time workers directive were such that the wording should cover the broader definition of workers, not employees. At that time, I was pleased that the Minister accepted the force of the Select Committee's recommendation that the part-time workers directive should extend to workers.

In the background documents, the Government have made a clear connection between part-time workers and those on fixed-term contracts. I hope that the Minister will consider the worker definition. I realise that other European directives have the same wording as the part-time workers directive and the fixed-term workers directive, which have been transposed into UK law under the employee definition. That demonstrates some of the confusion that exists.

The Government have made a close connection between the part-time workers directive, in which they accepted the worker definition, and the directive in question today. There is some confusion on who would be excluded under one definition rather than the other, and I seek particular clarification on whether the vast number of casual part-time workers would be covered by the employee definition. If they are covered only by the part-time workers directive, is there any reason for allowing confusion caused by their presence

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in both directives? In several other cases, confusion is caused by the nature of their employment relationship. It would be better to clarify matters by including the worker definition. If the problem would not affect many people, and few would be excluded through use of the employee definition, would extending that create problems?

I understand that there is a problem concerning agency workers, for whom there is a complex three-way relationship, which might create problems for implementing the changes. It would be helpful to receive some clarification.

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