Employment Bill

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Alan Johnson: The whole argument revolves around several issues, some of which were mentioned by the hon. Member for Weston-super-Mare. I want to cover them to explain why we believe that the amendment is misguided and should be withdrawn.

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The first point, which was made by the hon. Gentleman, is that we are not interpreting properly the European directive. We are clear that we are. The directive requires us to legislate in respect of

    ''fixed term workers who have an employment contract or employment relationship as defined by national law and/or practice''.

The Law Society says that we are following an incorrect interpretation of the directive. We used the same words in the parental leave directive that applied only to employees. The point made by the hon. Member for Runnymede and Weybridge was not about that aspect of our sensible settlement out of court, but about children born before 15 December 1999. We are implementing the legislation in the same way in which we implemented a directive almost three years ago, and we are sure that it covers the directive. I would love to chat with the man in the hotel on Park lane, as he has been mentioned so many times in dispatches. We should all troop up there afterwards to talk to him, like a jury that goes to the scene of a crime.

12.15 pm

The hon. Gentleman gave the example of an agency worker. We must be clear that the directive not only used the wording that I quoted about the interpretation of national law, but specifically excluded agency workers, half a million of whom are, by definition, on fixed-term contracts. Many Government Members were brought up to believe that agreements are always abided by once they have been made. The social partners' framework agreement states:

    ''This agreement applies to fixed-term workers with the exception of those placed by a temporary work agency at the disposition of a user enterprise''—

in other words, agency workers.

    ''It is the intention of the parties to consider the need for a similar agreement relating to temporary agency work.''

The social partners considered what they classified as atypical workers: part-time workers, agency workers, and fixed-term workers. Agency workers were specifically excluded. Pay and pensions were specifically excluded but are included in the Bill. It would be foolish for us to include employment agency workers with all the problems that that would bring when another directive will address the issue. Negotiations broke down between the social partners, but the European Commission is taking it forward. The amendment would include agency workers.

Mr. Hammond: I do not disagree with the Minister, but does he not see a problem? The NHS is trying increasingly to hire short-term cover staff directly rather than going through agencies, to avoid paying enormous sums. Is there not a danger that such sensible moves will be undermined and that employers will be tempted to pay agencies' sometimes large margins to have fixed-term staff who are clearly outside the scope of the legislation?

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Alan Johnson: I do not see such a danger, but I will come to the NHS shortly. I confirm that the legislation complies with the directive, which specifically excluded agency workers. On the question of whether there is a problem, we all believe that no one should be exploited just because of the category in which they work, as my hon. Friend the Member for Amber Valley (Judy Mallaber) elegantly put it. In all our consultations on the issue, there was no evidence of that sort of abuse. The numbers of fixed-term workers are lower in this country than in most other European Union countries. Only 7 per cent. of workers in this country are on fixed-term contracts. The figure is double in France and is around 33 per cent. in Spain. Most employers use fixed-term contracts as they should be used, and do not abuse the system. Nevertheless, the purpose of the directive is to stop abuse—one is too many—where employers are using fixed-term contracts as a substitute for permanent employment. We are addressing the problem of employers repeatedly extending fixed-term contracts to deny individuals the rights that they would receive as permanent employees.

We have found no evidence of the problem that the hon. Gentleman describes. When we examined the use of casual workers—for instance, in agriculture—those workers were employed on a daily or hourly basis, with no obligation on the worker or hirer to work or provide work beyond that day or hour. They should be regarded as employees and covered by the directive, in the same way that Christmas casuals would be.

Norman Lamb: Does the Minister accept that grey areas, such as the description that he just gave, cause concern? A legal argument could be made that a mutuality of obligation sufficient to constitute a contract of employment exists between the employer and the worker. It would be more sensible to use the term ''worker'', which would clarify whether such a person came within the scope of the legislation. One could still exclude agency workers if they were subject to a separate directive.

I do not understand the Government's thinking on the terms. In the national minimum wage legislation, and the working time regulations, the Government used the description ''worker''. In this case, they have used ''employee''. Using different terminology simply adds to confusion for worker and employer. I realise that a review is under way, but it would make sense to simplify the Bill by using the same term.

Alan Johnson: With respect, that added nothing to the debate. I have said repeatedly that there are complexities, and that is why we introduced section 23 of the Employment Relations Act 1999 to review the whole area. Maternity leave applies to employees and not workers. The taskforce that we set up recommended that flexible working arrangements should relate to employees and not workers. Different regulations and directives require different definitions. I agree with the hon. Gentleman that we need clarification in this case, but I am sure that the review will assist that process.

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Judy Mallaber: Is the issue of agency workers the only reason that the legislation is being implemented with a different definition? Is that why the worker definition is not included, as the Minister conceded when we were arguing about part-time workers?

Alan Johnson: That is a substantial reason—it is not the only one—but hon. Members can see the logic of not including agency workers when they are specifically excluded in the preamble, and a directive and review of the terms ''worker'' and ''employee'' are on the way. That is why the amendment is not feasible.

I appeared before the Select Committee when we were in consultation and suggested that the part-time workers directive ought to apply to employees and not workers. My hon. Friend the Member for Amber Valley made a powerful case, as did other members of the Select Committee, including a Conservative Member—I cannot remember his constituency, but he was one of the most eloquent on the issue. We were persuaded by the argument, first because of the clear overlap with sex discrimination: 80 per cent. of part-time workers are women and we would exclude all of them if we did not have the definition of worker. Ironically, the 200,000 or 300,000 casuals do not need the protection of these regulations because they are already protected by the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000. That is another reason why we would be wise to stay with the definition in the Bill.

Another argument is about the review. I gave an assurance, as did my right hon. Friend the Secretary of State on Second Reading, that that review would be under way early this year. The mechanics for it are under way as we speak. Hon. Members on both sides have made valid points. The review is the place to look at this matter, not a debate on the back of an amendment. I think that I have covered most of my hon. Friend's arguments.

The hon. Member for Runnymede and Weybridge made the point that, in a way, we are all on fixed-term contracts in a way. Ministers have another fixed-term contract—

Mr. Hammond: Not so fixed.

Alan Johnson: Indeed, and of indeterminable duration. One of the reasons why many Conservative Members did not have their fixed-term contract renewed in 1997 was their approach to these issues. They refused to sign up to the social chapter as a matter of principle. They abolished wages councils and any protection for young workers. Those are serious issues. Perhaps I am in tune with the hon. Member for Buckingham (Mr. Bercow) in feeling that the Conservatives were simply not on the side of vulnerable workers.

The further and higher education sectors cannot be lumped in with the public sector. Although they receive public funds, they are self-governing and would not qualify as public sector institutions in the strictest sense. Some 5,560 people in the civil service, including specialists, economists and senior officials, are on fixed-term appointments, which are often for two to five years. When we came into office the figure

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was 11,817. There are 12,260 casuals and there were 19,320 when we came into office. All those casuals and all those on fixed-term contracts are covered by this legislation. We have more than halved the number of people on fixed-term appointments and considerably reduced those on casual appointments.

Mr. Hammond: Could the Minister remind the Committee by how much his Government have increased the total establishment of the civil service? It may be that rather than reducing the level of casual and fixed-term appointments they have established those posts in their massive expansion of Government bureaucracy.

Alan Johnson: No. The fact that we are so superbly governed has a lot to do with the skills and numbers of the civil service. I am not talking about percentages here.

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