Employment Rights (Miscellaneous Amendments) Regulations 2019

Motion to Approve

Moved by

That the draft Regulations laid before the House on 17 December 2018 be approved.

My Lords, as well as the Employment Rights (Miscellaneous Amendments) Regulations 2019, I will also speak to the Agency Workers (Amendment) Regulations 2019 and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019. These three statutory instruments contain five measures to clarify and extend workers’ rights, taking forward the Good Work Plan—the biggest boost to workers’ rights in over 20 years.

The Employment Rights (Miscellaneous Amendments) Regulations contain three measures. First, they extend the right to a written statement of employment particulars to workers. Currently, only an employee is entitled to a written statement, and only after a month with the same employer. In his report, Matthew Taylor recommended greater transparency by extending the right to a written statement to workers. We agree that all workers should have the same clarity of information that employees currently benefit from.

The second measure amends the Information and Consultation of Employees Regulations 2004, lowering the threshold for a request to set up information and consultation arrangements in the workplace from 10% to 2% of the total employees. The Government agree with Taylor that voice and engagement is key to good work. Therefore, we are making it easier for workforces to request that employers be more open about what is happening in their workplace. It is important to note that this statutory instrument does not change the important rights that information and consultation representatives have, including paid time off and protection against detriment, the number of employers in scope of the regulations, which is staying at those with 50 or more employees, or the minimum of 15 employees required for a request to set up information and consultation arrangements. Good employers engage regularly with their workforce. To quote Taylor:

“Well-run companies recognise the importance of the people who work for them. They invest time and effort in good management relationships”.

The third measure increases the maximum penalty available to employment tribunals where there has been an aggravated breach of workers’ rights. From 6 April, a maximum penalty of £20,000 will be available, quadrupling the current amount. The current maximum penalty of £5,000 does not always reflect the higher value awards. The new maximum aligns with the current maximum penalty per worker for non-payment of the national minimum wage. It is important that all parties are aware of this penalty. We are providing guidance to increase awareness and highlight how tribunals can make use of these powers. This measure is targeted at businesses that breach the law in ways that are deliberate or malicious. Compliant businesses will welcome this deterrent against anyone seeking advantage by exploiting workers.

The second statutory instrument—the Agency Workers (Amendment) Regulations 2019—abolishes the “Swedish derogation”. At present, agency workers can opt out of the entitlement to equal pay in return for pay between assignments through a Swedish derogation contract. Taylor highlighted that Swedish derogation contracts can be exploitative, and workers sometimes do not receive the equal pay they are entitled to. Our consultation and earlier BEIS research uncovered cases where pay between assignments was not given. We concluded that agency workers are not benefiting from the Swedish derogation and we are therefore taking action. I think that this reform has been welcomed across parties.

The Joint Committee on Statutory Instruments drew the special attention of both Houses to this instrument on the ground that it required elucidation in one respect. The department provided elucidation to the committee. The instrument relies on powers in Section 2(2) of the European Communities Act 1972. The committee asked how the instrument would survive exit day, given that Section 2(1) of the European Union (Withdrawal) Act 2018 saves legislation made under Section 2(2) of the 1972 Act,

“as it has effect in domestic law immediately before exit day”,

and this instrument does not come into force until April 2020. The answer is that this instrument would be on the statute book immediately before exit day, and due to come into force in April 2020. The effect is preserved by Section 2(1) of the withdrawal Act so that the instrument will still come into force as intended. The committee accepted that this is one possible interpretation. It is the Government’s clear view that instruments such as this will come into force as intended. This can also be seen from the explanatory notes to the withdrawal Act, which confirmed that the legislation referred to in Section 2(1) of that Act includes legislation that has been passed or made but is not yet in force.

The repeal of the Swedish derogation will make a significant, positive difference to agency workers in the UK. We have listened to agency workers’ concerns and are taking firm action in response.

Finally, the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations introduce a “key facts page” for agency workers signing with an employment business. The Taylor review identified transparency of information as an issue in the engagement of agency workers. Different payment processes are often confusing, and Taylor noted the risk of exploitation. These regulations therefore introduce a key facts page, giving agency workers more clarity over pay and other key facts before signing with an employment business. Unions, businesses and workers alike welcomed this in our consultation. From April 2020, employment businesses will give all agency workers signing up a key facts page, containing a number of largely pay-related facts presented in a clear manner. If an agency worker is paid through a third-party umbrella company, the key facts page will reflect this, including information about any deductions the umbrella may make and how these are calculated. Agency workers will have more information about who is responsible for paying them and what they will receive for an assignment, enabling better-informed decisions before agreeing to take on work.

With the exception of the quadrupled aggravated breach penalty, the measures I have outlined take effect from April 2020. This gives time for employers to adapt their systems, and individuals to understand the increased transparency and rights. I commend the regulations to the House, and I beg to move.

My Lords, I am grateful to the Minister for outlining the main provisions in this suite of SIs. I have to say, it is a great pleasure not to be talking about Brexit, and to be talking about improvements in employment rights following the Taylor report. I record my thanks to the TUC for its briefing, although I do not necessarily agree with all its conclusions and comments.

It is very important that we move with the times, ironing out some of the unintended consequences of previous legislation and adapting to some of the issues developing through changes in the ways that we work. The Swedish derogation is one of the unintended consequences. I well remember introducing the Agency Workers Regulations 2010 when I was in another place. We introduced the right for agency workers to receive the same employment and working conditions as permanent staff after 12 weeks of service. The Agency Workers (Amendment) Regulations seek to remedy this loophole, which meant that some employers were getting out of giving full employment rights to agency workers by using Regulations 10 and 11 to waive the right to the same pay as a permanent worker if they signed a “pay between assignments”, also known as the Swedish derogation, which promised to pay in between assignments. Some employers were abusing this regulation, not paying material pay between assignments by keeping their staff on artificial, minimum hours contracts or deducting their “between assignments” pay from their “on assignment” pay. This Swedish derogation is to be revoked on 6 April 2020. Nothing good is lost—businesses will still be able to contract to pay agency workers between assignments after revocation. However, workers will not be able to opt out of equal pay rights after 12 weeks, which is a welcome protection for potentially vulnerable agency workers—so all good there.

The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 introduce the welcome reform that employment agencies must give the worker information before a contract is agreed—on pay, benefits, costs, deductions and fees. It must also include the minimum rate of remuneration payable to the work seeker and the nature and amount of any deductions made to their remuneration. It must also include a worked example of a payslip. The first payslip often comes as a bit of a shock to employees, let alone an agency worker, when they see all the deductions. This key information sheet should improve transparency around pay arrangements; it is very welcome.

My Lords, I raised the issue of care agencies earlier, regarding carers who do one hour in one place, one hour in the next and so on, all of them potentially quite far apart. There was a court decision, at a very high level, that they must be paid for their time travelling between places. I have followed this up, and have been told that, in general, they are not being paid. It is local authorities that pay for carers, but they do not seem to be paying them for this, which is very wrong, as there has been a court decision. Where in these regulations will this be covered? It seems highly relevant. I have had a great deal to do with the people who are not getting this money; when they point it out, their companies say they have no intention whatever of paying it. This is wrong since there has been a trial case. I hope the Minister can tell me where it will be covered in these regulations.

My Lords, the noble Baroness, Lady Gardner, raises an important point. I look forward to the Government’s response to her very pertinent question.

I give a qualified welcome to these regulations. They certainly aim to alleviate, or eliminate, some weaknesses in British employment law. I particularly draw attention to the proposed end to the so-called Swedish derogation in the agency workers’ directive. This has been a long-standing loophole, allowing employers not to provide equal pay to agency workers if the workers agree to a lower rate of pay when the agency cannot find them work. I am usually an admirer of the Swedish labour market, but I wish we had not taken this import from what is normally a very advanced country on employment rights.

Agency working is now a major feature of the British labour market and is being abused in some cases. I do not want to overstate the case—there are plenty of areas where it works well—but European law designed to regulate this area has been built up over a period. We used to refer to agency workers, and temporary workers in general, as atypical workers. We do not use that term any more, because now agency working is typical; in many parts of the country, it is the main offering. It is a rather insecure method of working, a method which I do not think too many people like. Some it suits, but many it does not. The EU certainly sought to bring atypical workers’ conditions in line with those of regularly employed people, and for them to receive equal treatment. That was a long-standing theme of European employment legislation. It is important that unscrupulous employers do not use agency working to undercut the terms and conditions of regularly employed workers.

The Swedish derogation is one weakness—I repeat that I welcome the action that the Government have taken on it—but one other loophole remains, which these regulations do not cover. An agency worker must work for 12 weeks before they become entitled to pay equal to that of a directly employed worker. There are many agency workers whose assignments never reach 12 weeks, and some employers who make sure they never do by rolling them on to a new assignment and a new contract. I ask the Government to re-examine this weakness in the regulations.

I turn briefly to another point concerning agency workers and the proposal to provide more information to the individual worker, so that they know their entitlements and their obligations. The extra information to be provided is welcome but it should not come out in dribs and drabs, in separate bits of paper and so on. At the moment, agency workers can be signposted to other sources of relevant information. The aim should be to put it concisely, perhaps on two sides of a sheet of paper, so that it is readily available without too many references at the bottom of the page to various websites and so on.

The regulations contain improvements to employment rights, too, which are certainly useful as far as they go. I draw particular attention to the changes in the information and consultation regulations. The 10% support threshold has proved a formidable barrier to workers and unions trying to use this European-derived law. No other country in the EU implemented it in such a restrictive way, making the process of information and consultation so difficult to achieve. It should be a universal practice: it is good practice that employers inform workers about change, consult them and seek their views on it before the change is effected. It should be standard practice but it has been a minority practice in this country and is nothing like prevalent enough.

These regulations are a step in the right direction and make it easier but there is also a missed opportunity in them. Could the Government not have been a bit more ambitious in extending the coverage to all workers, as recommended in the Taylor review? At the moment, agency and casual workers are excluded. Could there not be a provision for employers to agree collective and independent consultation arrangements when requested by a recognised union or, say, five workers in a non-union workplace? If we believe in employers informing and consulting workers about proposed change—I trust that we are all getting to that position now—we should make it a very easy and simple process by strengthening the obligations on employers.