Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024.

My Lords, this order will allow the tribunal to apply an uplift to the amount that can be awarded where employers do not meet their collective consultation obligations when dismissing employees. The tribunal will be able to apply this uplift where an employer has unreasonably failed to comply with the code of practice on dismissal and re-engagement in cases where the code applies. A tribunal will be able to increase any award made in relation to affected employees by up to 25%, which will increase the deterrent effect of the code and strengthen protections for employees.

I will now set out how this is achieved through the order. A protective award is an award which can be made by an employment tribunal when an employer does not meet its collective consultation obligations. These obligations currently apply where an employer is proposing to dismiss 20 or more of employees within any 90-day period at a single establishment. Schedule A2 to the Trade Union and Labour Relations (Consolidation) Act 1992 Act sets out the list of claims for which an employment tribunal can make a 25% adjustment to compensation if one of the parties has unreasonably failed to comply with a relevant code of practice.

The code of practice on dismissal and re-engagement will be a relevant code of practice for this purpose. The change will mean that where an employment tribunal is making a protective award in a case where the code applies and it appears to the tribunal that the employer has unreasonably failed to comply with the code, the tribunal may increase that award by up to 25%, increasing the deterrent effect of the code. This is a fair and proportionate measure that will give the tribunal greater discretion to take individual behaviours into account when making an award.

Last year, the previous Government published the code and, alongside it, laid a previous version of this statutory instrument. However, it timed out in the pre-election period. This Government are committed to going much further and have brought forward the Employment Rights Bill within our first 100 days in government to put an end to unscrupulous fire-and-rehire practices that have no place in a modern labour market. In the meantime, before the Employment Rights Bill completes its passage and comes into force and to avoid disruption for workplaces, we decided to continue with the previous Government’s code of practice, which came into force earlier in the summer. This is also why we are re-laying this legislation. It will come into force in January 2025, subject to it being debated and approved in both Houses. It will at least provide an additional level of protection for workers as a stepping stone to the much-needed reforms set out in our plan to make work pay.

I move on to the Government’s ambitions to deliver the biggest upgrade to workers’ rights in a generation. The Employment Rights Bill is the first phase of delivering our plan to make work pay, supporting employers, workers and unions to get Britain moving forward. The Bill will support the Government’s mission to increase productivity and create the right conditions for long-term sustainable, inclusive and secure economic growth by giving the British public the work, wages, prosperity, security, dignity and living standards that everyone in Britain needs and deserves. In the Employment Rights Bill, this Government are bringing forward a measure that will end unscrupulous fire-and-rehire tactics that leave workers at the mercy of bullying threats. Employers will be able to use the practice only where they genuinely have no alternative or where they are in financial difficulties that threaten their business. This means that employers will be able to use the practice where necessary to save jobs and prevent redundancies.

Going further, the Government are gathering views on providing effective remedies against abuse of the rules on fire and rehire and collective redundancy. This is why we have launched a consultation to gain views on increasing the cap on the protective award for scenarios where employers have not complied with the collective redundancy rules and on adding interim relief to collective redundancy and fire-and-rehire scenarios. Increasing the protective award would mean that the small proportion of companies that flout the existing rules could end up paying significantly more per employee. It would also be likely to be much more costly for employers to buy off potential employment claims by offering employees settlement agreements.

The consultation also seeks views on whether interim relief should be available to employees who bring claims for unfair dismissal in fire-and-rehire scenarios and for breach of their collective redundancy obligations. We are considering whether this would provide an additional deterrent against abuse of the rules on fire and rehire and collective redundancy obligations.

I conclude my speech by focusing on the Government’s ambitions to make work pay. Labour’s Plan to Make Work Pay sets out an ambitious agenda to ensure that our employment rights are fit for a modern economy, empower working people and contribute to economic growth. The plan is designed to be pro-business, pro-worker, pro-family and pro-wealth creation. It will boost fairness in the workplace, ensure equality of treatment and opportunity and support low-paid workers. These reforms will strengthen the rights of workers, address the fragmented labour market enforcement framework and support workers in balancing responsibilities outside work. In so doing, the plan will help more people stay in work, make work more secure and family-friendly and improve living standards, putting more money into working people’s pockets. I beg to move.

My Lords, as noble Lords will know, this order—the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024—was originally laid by the previous Conservative Government. It is short, so I will keep my remarks brief.

This order will increase the protective award for non-compliance with collective consultation requirements, meaning that where an employer has unreasonably failed to comply with a relevant code of practice an employment tribunal making a protective award may increase the employee’s award by up to 25%. Conversely, where an employee has failed to comply with the relevant code, their award may be decreased by 25%. The policy context for this is to prevent fire and rehire, which attracted significant media attention during the Covid-19 pandemic. This order will ensure that employers take all reasonable steps to explore alternatives to dismissal and re-engagement and that they do not use this as a threat or pressure tactic when implementing changes to employment contracts.

His Majesty’s Official Opposition welcome this statutory instrument. We hope that it will improve working practices in the United Kingdom, particularly for those who find themselves in vulnerable or precarious employment situations and need all the help they can get.

My Lords, I am grateful for the noble Earl’s support for these amendments to the Trade Union and Labour Relations (Consolidation) Act 1992. As I have said, this order will add the protective award for non-compliance with collective consultation requirements to Schedule A2 to the 1992 Act. This will mean that, when a protective award is made against an employer for failing to comply with their collective consultation requirements, the employment tribunal may increase the protective award by up to 25% if the employer unreasonably fails to comply with the code of practice on dismissal and re-engagement.

As I said, the Government are committed to ending unscrupulous fire-and-rehire practices through the employment Bill; we will of course return to debate that in more detail. In the meantime, I commend this order to the Committee.

Motion agreed.