My Lords, earlier this year the Government consulted on a new statutory code of practice on fire and rehire. We are currently analysing responses to that consultation. A government response and the final version of the code will be published in spring next year. The code sets out employers’ responsibilities when seeking to change contractual terms and conditions of employment and seeks to ensure that dismissal and re-engagement is used only as a last resort.
The code of practice as published is toothless, unfortunately. It contains no legal obligations on employers and adds only 25% to any compensation, no matter how small it may be—that is no solution. As we all know, what is needed is legislation—as there was in Australia this week—to end the scandal of fire and rehire; most decent people in this place and across the country support that view. When the Bill was proposed in the other place, the Government disappointingly ordered an unprecedented Friday three-line Whip and gerrymandered to filibuster and therefore embarrass a proper vote. I have been informed—
With respect, I will continue. I have been informed that my Bill will not get a Second Reading. Can the Minister explain why the Government seem to be using every trick in the parliamentary playbook to prevent us even debating this much-needed change in the law?
I thank the noble Lord for his follow-up question. The UK labour market is strong by historical and international standards. In fact, in all employment law we are trying to get the balance right between workers’ protection and employers’ flexibility. The employment rate is at 75% right now, and wages have gone up by just short of 8% in the last year, so we think we have the balance right. The Government are taking action to ensure that this practice is a last resort. We are not banning it outright. In the code, we have measures whereby employees’ compensation in certain circumstances, as the noble Lord alluded to, can be increased by 25% if the employer has unreasonably failed to comply with the code, which is quite a big disincentive for the employer. But we believe that there are certain circumstances in which flexibility is required, so we are seeking to get the balance right.
My Lords, when we left the European Union, the Government said that they would introduce legislation to protect workers and that it would be better than in the European Union. Can he name countries in Europe where this could happen?
As I said, when we look at the standards of employment law against our competitors in Europe, we have a strong labour market, a strong rate of employment and a long-established suite of protections for all our workers, employees and self-employed people.
My Lords, what is the assessment of the Minister’s department of how much compensation would have been received if the proposed guidance had been in force when P&O sacked hundreds of its employees? As another noble Lord said, 25% of nothing is nothing; it is all smoke and mirrors.
I thank the noble Lord for raising that rather infamous case. What P&O did was illegal. It was not fire and rehire but dismiss and replace. It would remain illegal whether or not the code had been in place, and P&O has received considerable censure as a result. The code, which will come through in the spring, will give real guidance and protection to both employers and workers.
My Lords, we know that companies quite often have to close down or change their practices, either because of a competitive market or because they have been managed badly. In one-factory towns, for example, where one company is a major employer, when it has to close, are there any forums for the Government to work together with trade unions to retrain those workers who have lost their jobs to compete in the new global economy?
This is exactly why flexibility is required, because certain changes of circumstances require the workers and managers of a company to get together with the trade unions and the directors to solve the problem through consultation and consensus, and that is generally what happens in the UK. Indeed, as my noble friend will know, we have a number of measures to help employees back into work.
My Lords, this Session has been plagued by thick Bills. To effect the change that my noble friend calls for would take only a very simple Bill. Can we expect it to be announced in the King’s Speech in November?
As we have said clearly, we are consulting and there will be a code of practice. This practice is used very rarely. Even the TUC in 2020 indicated that only 3% of employers had used fire and rehire and only 9% of employees had experienced it even as a threat. Therefore, the code is the right way forward in this case.