3rd Report - Make Work Pay: Employment Rights Bill

Without a reference period defined in primary legislation, there is a lack of certainty among workers, trade unions and businesses as to how the right to guaranteed hours will work in practice. To ensure certainty, the Government should define as soon as possible through regulations how many weeks the initial and subsequent reference periods should be. (Recommendation, Paragraph 13)

While the Committee welcomes the added security for workers that the Bill brings with measures to provide reasonable notice of shifts and compensation for cancelled, moved or curtailed shifts. But the lack of key details on the face of the Bill means that Parliament is at risk of signing a regulatory blank cheque for the Secretary of State without knowing the full impact it will have on workers and businesses. The Government must put in primary legislation through the Employment Rights Bill a definition of: a. what is meant by ‘reasonable notice’ of shifts in clause two of the Bill; and b. definitions of what is meant by ‘moved,’ ‘short notice’ and what groups of workers would qualify in clause three of the Bill. (Recommendation, Paragraph 17)

While the Committee understands that certain workers like the flexibility that comes with agency work and that it can be used as a legitimate short- term employment tool for many businesses, we are concerned about the impact long-term agency work could have on people’s security at work. We have heard evidence of misuse of agency workers’ contracts by some companies and believe there is a risk of unscrupulous companies side- stepping the reforms to zero-hours contracts by using agency workers. (Conclusion, Paragraph 23)

The Committee therefore urges the Government to use the delegated powers provided by the Bill to reform zero-hours contracts to enhance protections for agency workers as soon as possible. These reforms 36 should not be at the expense of the important need for flexibility that eight in ten temp agency workers told REC that their work provides. (Recommendation, Paragraph 24)

Defining what counts as low-hours creates a loophole that can be exploited by companies to avoid their obligations set out in the Bill. We echo Usdaw’s recommendation that the reference to ‘a minimum number of hours, not exceeding a specified number of hours’ under section 27BA (3) should be removed from the Bill. (Recommendation, Paragraph 27)

While the Committee welcomes the Government’s plans to reform worker status and bogus self-employment, it must proceed at pace to turn ambition into action. If it does not, it risks more companies adopting a ‘self-employment’ model for their workforces to side-step the measures in the Employment Rights Bill. In the words of the Director of Labour Market Enforcement, the Government can consult until ‘the cows come home.’ It needs to act now if it wants the Employment Rights Bill to succeed. The Government must prioritise its review of employee, worker and self-employed status immediately, and as a priority address false self- employment, so that these reforms are rolled out alongside commencement of the Employment Rights Bill. (Recommendation, Paragraph 39)

While compliant umbrella companies can have many benefits to workers, there have been longstanding concerns across governments that the lack of regulation in the umbrella company market can lead to exploitative working practices. The evidence is overwhelming of the need for the Government to properly regulate umbrella companies. The Committee therefore asks the Government, in response to this report, to set out how it plans to regulate the sector and tackle non-compliance in the umbrella market. (Recommendation, Paragraph 43)

To ensure long-term enforcement of the new duties on employers introduced in the Employment Rights Bill, the Government should revisit the regime for enforcing equality law and harm against individual protected characteristics, including setting out how the Fair Work Agency will work with the EHRC where their responsibilities overlap. As part of its implementation of employment rights reform, we recommend that Government review and consult on the future of equality law enforcement with a targeted focus on areas where enforcement may be improved to better protect workers from harassment and abuse on the basis of protected characteristics. This targeted review and consultation should consider areas including (a) resourcing, (b) the scope of statutory powers; and (c) the role of new enforcement bodies. (Recommendation, Paragraph 47) 37

We recognise that there are a significant number of new employment rights that employers will need to understand and implement. We therefore call on the Government to consider how they use networks of employment support, both statutory and voluntary, to support employers in the implementation. We recommend that the Government task Acas with leading an information campaign to raise awareness of and promote compliance with good employment practice. (Recommendation, Paragraph 49) Collective rights

The Government’s framework for industrial relations provides strong principles that can help to shape a future settlement based on productive engagement between trade unions and employers. To develop this ambition, we recommend that the Government develops a clear and long- term industrial relations strategy to ensure that implementation of those principles is credibly resourced and embedded through enforcement, policy and collaboration with unions, employers, Acas and other important stakeholders. (Recommendation, Paragraph 56)

More should be done to ensure that the new right of union access proposed in the Bill is protected against future changes to ways of working and the risk of non-compliance. We recommend that the Bill’s proposed definition of ‘Access’ should be expanded to make explicit mention of a union’s right of digital access. (Recommendation, Paragraph 59)

Given that an expected consequence of the Employment Right Bill may be greater recognition ballot activity within workplaces, it is essential that ministers amend section 27B of Schedule 1A of the Trade Union and Labour Relations (Consolidation) Act 1992 to provide longer than 24 hours for complaints about the conduct of recognition ballots to be heard and addressed. The Government should further commit to reform section 39(2) of Schedule 1A of the same Act to allow the Secretary of State for Business and Trade to significantly shorten the period of limitation covering proposed bargaining unit applications through regulations. The Secretary of State should agree to consult stakeholders on such changes as part of its future consultations on industrial relations reform. We further note that the right of access during statutory recognition ballots should be further supported by the development of (a) relevant access agreement templates and (b) better resourcing to support businesses, especially small businesses, and for enforcement and compliance information support to tackle the risk of non-compliance with the decisions of the Central Arbitration Committee. (Recommendation, Paragraph 67) 38

It is important that the impact of reform to industrial relations is both measurable and measured. We recommend that the Government bring transparency around industrial disputes in line with best practice elsewhere, including the United States, and requires parties involved in a recognition ballot to disclose spend on materials, consultants and other payments. In addition, we recommend the Government secures an effective and long-term replacement to the Workplace Employee Relations Survey (WERS). (Recommendation, Paragraph 68) International labour standards

Case studies reviewed by the Committee highlight a significant inconsistency in the transparency of Modern Slavery Statements. Although these statements may meet the requirements of the Modern Slavery Act 2015, the lack of standardisation hinders consumers from making informed purchasing decisions and assessing whether products are free from exploitative labour practices. (Conclusion, Paragraph 79)

The Government must review the Modern Slavery Act 2015 and make changes to Section 54 to improve transparency. In particular the Government should: a. Change provision 54(5) such that the areas of reporting in modern slavery statements become mandatory. b. Remove the provision in which companies are allowed to claim to have taken ‘no steps’ to address modern slavery. c. Introduce penalties and name and shame scheme for companies not disclosing Modern Slavery statements. d. Consider the creation of failure to prevent offences like those set out in the Economic Crime and Corporate Transparency Act 2023. (Recommendation, Paragraph 80)

The UK is at serious risk of becoming a ‘dumping ground’ for products made with forced labour if it does not keep up with our global partners on legislative reforms to tackle modern slavery. (Conclusion, Paragraph 85)

The UK Government must look to align with global legislation, prioritising the introduction of mandatory Human Rights due diligence, to avoid duplicated efforts for UK businesses. The Government should also consider newer levers such as import bans on products from regions where forced labour prevails, as being introduced in the United States and the European Union. (Recommendation, Paragraph 86) 39 Labour market enforcement

Laws are only as effective as those who enforce them. If the Government wishes to ensure workers are given strengthened employment rights, and that all firms benefit from a level playing field for labour standards, effective labour market enforcement must be prioritised. (Conclusion, Paragraph 94)

The Committee welcomes the Government’s focus on labour market enforcement to tackle non-compliance. However, if the Fair Work Agency (FWA) is to be given new powers it will also need more resource. Efficiencies made from combining current budgets will not be enough. The Government must set out to the Committee its target for funding the FWA so that our country reaches, as a minimum, the ILO’s benchmark of one labour market inspector per 10,000 workers by the end of this Parliament. The Government should set out a strategy and a timeline for delivering this resource. (Recommendation, Paragraph 95)

It is crucial that the creation of the Fair Work Agency does not result in a dilution of the powers currently held by the three existing enforcement bodies. (Conclusion, Paragraph 98)

The Government must ensure that the Fair Work Agency has the necessary powers to deter non-compliance. It must have the authority to investigate all forms of labour exploitation, up to and including modern slavery, and be adequately resourced to fulfil this remit. The Agency must build effective partnerships with the Police and the Home Office to tackle the most severe offences of modern slavery. We encourage the Fair Work Agency to make stronger use of the penalties it has across its remit to ensure better compliance. The Committee will be monitoring the effectiveness of the Fair Work Agency over the course of this Parliament. (Recommendation, Paragraph 99) 40