Employment Rights Bill (Seventh sitting)

The Committee consisted of the following Members:

Chairs: Sir Christopher Chope, Graham Stringer, Valerie Vaz, † David Mundell

† Bedford, Mr Peter (Mid Leicestershire) (Con)

Darling, Steve (Torbay) (LD)

Fox, Sir Ashley (Bridgwater) (Con)

Gibson, Sarah (Chippenham) (LD)

Gill, Preet Kaur (Birmingham Edgbaston) (Lab/Co-op)

† Griffith, Dame Nia (Minister for Equalities)

† Hume, Alison (Scarborough and Whitby) (Lab)

† Kumaran, Uma (Stratford and Bow) (Lab)

† Law, Chris (Dundee Central) (SNP)

† McIntyre, Alex (Gloucester) (Lab)

† McMorrin, Anna (Cardiff North) (Lab)

† Madders, Justin (Parliamentary Under-Secretary of State for Business and Trade)

† Midgley, Anneliese (Knowsley) (Lab)

† Murray, Chris (Edinburgh East and Musselburgh) (Lab)

† Pearce, Jon (High Peak) (Lab)

† Smith, Greg (Mid Buckinghamshire) (Con)

Tidball, Dr Marie (Penistone and Stocksbridge) (Lab)

† Timothy, Nick (West Suffolk) (Con)

† Turner, Laurence (Birmingham Northfield) (Lab)

† Wheeler, Michael (Worsley and Eccles) (Lab)

Kevin Maddison, Harriet Deane, Aaron Kulakiewicz, Committee Clerks

† attended the Committee

Public Bill Committee

[David Mundell in the Chair]

Employment Rights Bill

11:30:00

Will everyone please ensure that all electronic devices are turned off or switched to silent? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sitting is available in the room and on the parliamentary website. We now move on to clause 3. I remind all Members of the rules about declaration of interests, as set out in the code of conduct. Clause 3 Right to payment for cancelled, moved and curtailed shifts

I beg to move amendment 30, in clause 3, page 18, leave out lines 7 to 19 and insert— “(b) in relation to the movement of a shift, or the movement and curtailment (at the same time) of a shift, notice given less than a specified amount of time before the earlier of— (i) when the shift would have started (if the shift had not been moved, or moved and curtailed), and (ii) when the shift is due to start (having been moved, or moved and curtailed); (c) in relation to the curtailment of a shift where there is a change to when the shift is to start (but there is no movement of the shift), notice given less than a specified amount of time before the earlier of— (i) when the shift would have started (if there had not been the change), and (ii) when the shift is due to start (the change having been made); (d) in relation to the curtailment of a shift where there is no change to when the shift is to start, notice given—”. This amendment has the effect of clarifying what “short notice” means for the purposes of proposed Chapter 4 of Part 2A of the Employment Rights Act 1996 in cases where a shift is both moved and curtailed and makes associated drafting changes to the definition of “short notice”. It is a pleasure, Mr Mundell, to see you in the Chair this morning. I start by referring to my entry in the register of interests and my membership of the GMB and Unite trade unions. Government amendment 30, alongside Government amendments 31 and 32, will ensure that employers are clear about their responsibilities where a shift is both moved and curtailed at the same time. Under the Bill as introduced, it may not have been clear to employers or workers when the short notice period in these cases would run until. Under current drafting, the calculation of the short notice period for a moved and curtailed shift could be done based on the rules for either a moved shift or a curtailed shift. This could produce two different outcomes. For example, if a shift were due to be worked from 2 o’clock until 6 o’clock, and it is moved and curtailed so that it must be worked from 4 o’clock to 7 o’clock, it is not clear whether the notice ends at 2 o’clock or 4 o’clock. The amendment clarifies that in cases where a shift is both moved and curtailed at the same time, the short notice will be the same as if the shift had been moved only. It will therefore run until the earlier of when the shift would have started before the change or when the shift is now due to start. In terms of what payment a worker will be entitled to when their shift is both moved and curtailed at the same time, we are committed to consulting on what that amount should be and will, of course, specify that in the regulations. The maximum amount, however, cannot be higher than what the worker would have received from working hours that were changed, as is the case for shifts that are cancelled, just moved, or just curtailed. We believe that compensation in these circumstances is only fair, given that the movement of a shift at short notice disadvantages a worker. It impacts their ability to plan their lives and can cause financial disadvantage such as excessive childcare costs. Our measures will ensure that workers do not bear all the financial risk of shift allocation and cancellation, and will compel employers to give reasonable notice. Through good leadership and planning, an employer is in a position to reduce the instances of short-notice shift changes, which the worker is unable to influence.

It is a pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the Minister for his explanation of Government amendment 30, but I gently suggest to him that starting by saying that he wished to be clear, and then going on to say that the Government will be consulting on it, possibly does not give businesses the clarity that they are seeking from this clause of the Bill. I would be grateful, when the Minister sums up the debate on Government amendment 30, if he could actually clarify what he believes, in plain English, to be reasonable notice, and, while not necessarily when future regulations will be laid, the window in which they will be consulted on. I posed a similar question about an amendment in our sitting on Tuesday. I cannot imagine that the Government will want to simply put out a blank piece of paper consultation—there will be a floor and a ceiling that is consulted on. It would be helpful for all Members, but more importantly real businesses out there in the country, to understand that as soon as possible, so that they can most fully share their thoughts formally when the consultation launches. Can the Minister give the Committee any clue about what employers will need to comply with, or was Allen Simpson, CEO of UKHospitality, right when he said that he understood that “the Government are intending to leave it to case law and employment tribunal systems to figure out what ‘reasonable notice’ means”?––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 43, Q39.] We will shortly come on to debate Government amendment 31, which is relevant to this discussion.

Will the hon. Member give way?

I will just finish this point. As the hon. Gentleman knows, I am not shy of taking interventions. Government amendment 31 will cap the compensation an employee can receive if the employer does not give reasonable notice of cancellation or curtailment of a shift to the remuneration they would have gained if they had worked those hours.

I draw attention to my declaration in the register of members’ interests and my membership of the Unite and GMB trade unions. We will of course see the consultation on the definition of reasonable notice in due course. Does the hon. Member accept that the meaning of reasonableness will be dependent on the circumstances of each case? What is reasonable in the case of, say, an early years setting might be quite different to that for an offshore oil rig.

The hon. Gentleman makes a perfectly sensible point. We will come on to that issue shortly. The central point that I ask the Government to reflect on, before any consultation—post-legislation or during the passage of legislation—goes live, is that it is reasonable that those who are expected to put in meaningful and thoughtful contributions to that consultation on how the measures will affect them, will be applied in the real world and will need to be complied with, have as much notice as possible, so that they can put their thinking caps on and, if necessary, bring in professional advice where that is practicable or affordable. In that way, when the Minister ultimately has the opportunity to read through every single consultation response with, I am sure, great attention to detail, before coming to a recommendation and drafting the necessary statutory instrument to bring about the exact regulations, the detail will be there. This should not be a rush job, but something to which the people out there in our country who actually run businesses, risk their capital and fundamentally create jobs and employ people are able to give as much thought as possible, so that the Government can come to a proper conclusion. While I am glad that remuneration will be capped, I am still worried that the provisions in the Bill are not necessarily as proportionate as they could be for businesses. Sometimes an employer will have to cancel or curtail shifts through no fault of their own. We went through that issue at length on Tuesday, on a different point. I will not repeat the arguments now, other than to remind the Committee of force majeure. Events outside any employer’s control can happen; that is a reality of life. It seems unfair in those instances that employers should have to bear the costs of not being able to complete the work on time, as well as having to remunerate employees for hours not worked. I stress, as I said on Tuesday, that that will be a minority of cases. It will be the exception, not the norm, but it is vital, when looking at this amendment and clause that there is an acceptance that those rare cases can and unfortunately will happen in the real world.

I refer the Committee to my membership of the GMB and Community unions. We had a lot of back and forth on this point on Tuesday. I want to clarify what the shadow Minister said on Tuesday. In the extreme circumstances where employers are not able to continue with their work, the shadow Minister made the point that it was not fair on the employer to bear the cost. He also said that it was not necessarily fair for the employee to bear the cost, and that the cost should be shared. If the cost is not being borne by the employer, who does the shadow Minister expect to share that cost, other than it being placed solely on the employee?

I do not want to repeat the whole debate that we had the other day as we might not hit the clause that the hon. Gentleman’s colleagues are trying to get to today. I fully accept his point that the situation is not fair on the employee, but equally it is not fair on the employer, given that those circumstances, events or eventualities are quite literally outside anybody’s control. I urge the hon. Gentleman and his Front-Bench colleagues to reflect on how to put in place a better and more proportionate system to share the burden. I accept that nobody wants or plans for those eventualities. I refuse to believe that any employer ever wants to have to turn somebody away at the door as they turn up for work. They actually want to make those products, provide those services, ensure people have a good night out or whatever it might be. That is the core of their business. That is how they make money. That is how they grow and create more jobs in the first place. I refuse to believe that any business wants to turn someone away and say, “Sorry, that shift isn’t available,” or, “Only half that shift is available today.”

I refer Members to my entry in the Register of Members’ Financial Interests and my membership of the GMB trade union. The hon. Gentleman makes a good point. The Association of Convenience Stores tells us: “90% of colleagues in the convenience sector report that they have never had a shift cancelled with less than 48 hours’ notice, reflecting a strong track record of responsible scheduling. Furthermore, 86% of retailers state that they always offer alternative hours to employees if a shift is cancelled or reduced, demonstrating the sector’s commitment to fair treatment and employee support.” It says that it “can be confident that this will support existing provision by employers across the sector”, and it welcomes amendment 30, which it says “provides clarity in relation to short notice for when the shift is both moved and curtailed.” It tell us that there is a counter-argument that the proposals may present challenges to convenience retailers and other small businesses, but that it has spoken to businesses and that “these businesses tell us that they are already doing what the Bill makes provisions for.” We are mindful of the impact on businesses, but there are a lot of businesses out there that are already doing what is proposed, and we have received representations from them welcoming the measures.

I am grateful to the hon. Lady for that intervention, because she underlines the fundamental point that I am making: most businesses do not want to turn people away. Convenience stores are a great example of that, and are actually some of the most flexible employers out there. My constituency, which is spread across 336 square miles of rural Buckinghamshire, has a lot of small convenience stores, and they are exemplary employers. I cannot think of a problem I have ever encountered with any of them. I come back to my central argument, which is that sometimes things happen. Nobody has planned for it, nobody wants it, and nobody is in any way happy in that situation, but sometimes these things happen. I fully accept the hon. Lady’s point that the vast majority of employers in this country are good employers. We should celebrate them, and not try to see them through the lens of some sort of Victorian novel. That is not what employers are in this country. They are responsible and want to look out for their workforce. We had a debate the other day about the symbiotic relationship between the worker and the business owner, which are two sides of the same coin: no successful business could have one without the other. I am not saying that there are not rogue traders out there who seek to exploit their workforce—there are, and there must be proportionate, proper and robust measures in place to combat poor behaviour—but that does not undermine the central point that there must be flexibility that accounts for the realities of the real world.

I am hearing this argument repeated again and again, but I am struggling. I need an example. Employers insure themselves against floods, fire and everything else. We talked on Tuesday about an empty restaurant giving notice if it was empty. So I am trying to find out what is the exceptional circumstance that the hon. Member is concerned about that he can see in real-life circumstances where the employee would have to lose out rather than the business.

11:45:00

I can think of businesses in recent times in my own constituency that are particularly affected by shipping delays, some as a result of the covid pandemic, which I accept was an exceptional period in our history, where we saw shipping delays of parts that businesses were waiting for to put their products together. Buckinghamshire has a proud manufacturing base as well as other business sectors. Businesses simply did not have the bits, the parts, to be able to put their products together. I accept that some of those businesses are quite well established brands that will carry insurance and reserves or contingency funds for such eventualities, but some of them do not. On Tuesday we talked about furniture manufacturers. Again, we are all creatures of our own experience. In my own constituency there are some very big furniture manufacturers such as Ercol and Hypnos and they face some great challenges. But I am also in regular contact with one, two or three-employee cabinet makers and kitchen fitters and other skilled trades businesses who would not be able to cope if they did not have the delivery to fulfil a particular order that has been placed. They are hard-working but very small businesses that might be working on one project at a time. They have to take one order on; if they cannot fulfil that, there is not the resilience to automatically just move on to the next.

I will just probe a little further. All those points are valid, but they are the responsibility of the business, not the employee—most notably because they have no shares in the business and will not benefit from any profit. Why should they have only the rough end where they end up without income? A company might have five shareholders in a small company. A cabinet-making firm is a good example—I have one in my constituency in Dundee where they all have a stake in it and can equally share the risks and the rewards. The problem with what the hon. Member is suggesting is that the employees are burdened with the risks without any of the rewards. I cannot see where there is a benefit at all. That in many respects insulates the employer and puts all the burden on the employee.

I do accept the point that the hon. Gentleman is making. It is helpful to have this debate to tease out the core issues. The point I would put back to him is that those small microbusinesses faced with that eventuality almost certainly will not have the reserves or contingencies in place to be able to weather such a storm. A catastrophic event that delays perhaps their biggest order of the year by six months, a year or longer—some of the shipping delays in recent years have been undoubtedly severe—means they might go bust. If they go bust, there are no jobs at all. Although I am in no way, shape or form advocating a position where an unfairness is felt by employees, there can in the real world sometimes be an eventuality where it is undesirable—I will concede unfair—but a reality.

Will the hon. Member give way?

I will finish this point and then give way —the hon. Lady knows that I am up for the debate. There could be a pretty stark choice: go bust and no jobs, or some short-term undesirable pain that requires flexibility in order to get the business back on track to secure jobs. The last thing I want to see in this economy is businesses being forced to the wall and ending up shedding jobs, and overall employment numbers in this country going down. I want to see the economy growing. I want to see the number of jobs being created growing every single day. That is how we get ourselves to greater prosperity for everybody. I really worry that if flexibilities are taken away, it could go the other way.

It is a pleasure to serve under your chairmanship, Mr Mundell. I refer to my entry in the Register of Members’ Financial Interests and my membership of Unison and of the Writers’ Guild of Great Britain. The hon. Member talks about shipping companies and furniture companies, and I would like to talk about my constituency of Scarborough and Whitby. As of last year, 4,500 people there—11% of the workforce—were employed in retail, and 8,000—20% of the workforce—in hospitality. Those sectors employ a lot of women, and those women—I was one myself—rely on childcare, which is extremely expensive. Does he accept that when shifts are cut short or curtailed at short notice, those women still have to pay for their childcare and are therefore taking on board an expense? It is not force majeure for them; it is a day-to-day struggle to pay the childcare bills.

I can assure the hon. Lady that I am intimately aware of the cost of childcare. It is something that challenges families—men and women, mums and dads, carers, grandparents and all sorts of people—on a daily basis. It is a very expensive reality of life. I do not want to get off topic, but the previous Government did a lot to increase the free childcare offer, and I fully acknowledge that the current Government are carrying through with that. We need more measures like that to ensure that people have the childcare arrangements in place to enable them to go to work. I fully accept the hon. Lady’s argument: there is a cost to going to work. There is a cost of travel, as we all know as Members of Parliament travelling in from and getting around our constituencies. There are the costs of getting to work, of childcare or, perhaps, if someone is caring for a relative or someone else, of ensuring that alternative provision is there while they are at work. I fully accept that point and in no way wish to advocate for people to be left in that place. I do not want that for anybody in this country. But as I said to the hon. Member for Dundee Central, there are sometimes circumstances—very few, exceptional circumstances—where it could be a stark choice for the business and jobs could end up being lost altogether if there is not a little bit of flexibility. We are dancing on the head of a pin here, and it is about exceptional cases, but I do not want to see exceptional cases suddenly reducing the overall employment numbers in this country.

In response to the hon. Member for Dundee Central, the shadow Minister struggled to come up with a concrete example of a business that might be in the situation he is describing, with very small margins and staff costs not meeting the demand. I can think of two examples from my experience before coming here and from my constituency. One is car washes, where we frequently see very low-paid employees being recruited on demand and very small margins. Another is nail bars, which we see on high streets across the country, where fluctuating demand requires small amounts of work to be done, so people are employed on very short contracts with hours cancelled at very short notice. The shadow Minister will also have noticed last week that the net migration figures for the last year of the Conservative Government reached almost 1 million. The point I am making is that we need to think about not just the impact on individual workers and businesses, but the bigger, broader impact on society as a whole. The problem we have seen with small businesses such as car washes and nail bars is that there is a high supply of labour, generally from exploited migrant workers. It is not a coincidence that the two industries I have just described are also where we see the highest incidence of modern slavery. That is because workers in those industries have very few rights, so they can be treated as almost expendable by their employers, and have their hours cancelled at very short notice, and they have absolutely no recourse. So, it is not a coincidence that it is the most exploited workers, or the most vulnerable workers, who have ended up taking such jobs. On high streets across the country we have seen the growth of multiple small car washes and small nail bars. The industries are not struggling, but the employers are deliberately working on incredibly small margins. The point is that the dynamic between employer and employee is unbalanced, which is what the Bill seeks to correct.

We just have get the balance correct between a speech and an intervention, if we can.

The hon. Gentleman makes a fundamentally good point about issues such as modern slavery. Actually, it was a former Conservative Prime Minister—I accept that we had a few in the last Government—my noble Friend Baroness May of Maidenhead, who did an enormous amount to tackle modern slavery in this country. Is it a case of job done? No, clearly not. However, we have made enormous strides and I encourage this Government to do all they can to continue the fight against modern slavery, which is a particularly evil crime that needs to be stamped out for good. The hon. Gentleman asked for concrete examples. I felt that I gave one, with the example of the two-employee furniture maker. However, I will give another example of where force majeure may come in. Let us take the example of a small business. In fact, let us take a bathroom fitter, where there is perhaps one business owner who has, say, two employees who support him or her in fitting those bathrooms. They take on a big job in a hotel to refit all the bathrooms. Let us say that it is a 25-room hotel; I can think of a couple of those in Buckinghamshire. However, that hotel goes bust. It is not the fault of the company whose owner thought they had just taken on a really lucrative contract to refit 25 bathrooms. Clearly, it is the fault of the hotel that, sadly and for whatever reason, has ceased to trade, or perhaps it has been taken over as an asylum hotel. Obviously, that order to refit the bathrooms would have fallen. What does that business do? It cannot suddenly magic up 25 bathrooms to fit in the space of a month, or a quarterly period, or whatever period it might be. However, it has probably already had to fork out for the parts, bathtubs, showers, toilet cisterns and everything else that goes into a bathroom. I gently suggest to the hon. Gentleman that that is a concrete example of where it is a lose-lose situation for the business owner and their employees, until they can get themselves back on track. Nobody wants to see that type of thing happen, but it does happen. It is a reality of trading, not only in this country but worldwide, that sometimes bad things happen. So, there has to be flexibility around such events. That is notwithstanding the good points that the hon. Gentleman made about modern slavery and businesses exploiting those who perhaps are less able than other workers to stand up for themselves in workplaces in this country. However, I accept the broad sweep of the points the hon. Gentleman made in that regard. I am conscious of how long I have been speaking about this amendment, but I am always up for a good debate. I will conclude by returning to the evidence that—

Will the shadow Minister give way?

I am tempted not to give way to the hon. Gentleman, since he seemed less than keen to take my interventions in the farming debate yesterday, but I will grant him an intervention today.

It is an honour to serve under your chairship, Mr Mundell. I refer to my entry in the Register of Members’ Financial Interests and to my membership of the GMB. I apologise to the shadow Minister for not taking his interventions yesterday. I did take two, if that assists. I wanted to build on the point that the shadow Minister was making. I actually agreed with some of the examples he gave, in that there are emergency situations where things do not work out for a business. I am interested in whether the shadow Minister would apply the same principle when the employee has an emergency, which builds on the point made by my hon. Friend the Member for Scarborough and Whitby. For example, an emergency for the employee might be childcare, the illness of a family member, or the death of a family member—actually that may not be relevant because that would be a different type of leave. In those emergency situations, there is a right to dependant leave, but that dependant leave is unpaid. Would the shadow Minister accept the principle in those circumstances that the employer should equally bear the cost and pay the employee?

00:00:00

I understand the point that the hon. Gentleman makes, and I fundamentally agree with his point about bereavement leave and dependant leave. As we heard in the evidence sessions, I have an enormous amount of sympathy for extending certain elements of bereavement leave, including to pregnancy loss before 24 weeks, which we will come on to later in the Bill. Those circumstances are arguably more about humanity than some of the practical realities of market failure, supply chain failure or whatever it might be. I think they should be kept in very distinct columns. One is a human response to tragedy and the facts of life with dependants, or people to whom individuals might have a caring responsibility, as opposed to the need for flexibilities to exist, such as with the example of the lost contract or supply chain problems. I accept that this is a slightly different point to being told, “No bookings today” in a hospitality setting, or whatever it might be. I accept the point made by the hon. Member for High Peak, but I see it as a distinct column as opposed to something that is all in the same category.

Will the shadow Minister allow me to clarify?

I will give the hon. Gentleman one more go.

The principle is, though, that with dependant leave in those emergencies, whether that is childcare or anything else, there is no right to pay; that is the point I am trying to make. The shadow Minister is saying that if there is an emergency for the business they should bear no cost of it. If there is an emergency for the employee, that employee will, under the statutory provisions on dependant leave, bear the cost of it. In both scenarios, the shadow Minister appears to be asking the employee to bear the cost. Is that correct?

I understand the point that the hon. Gentleman makes. Actually, at no point have I said there should be no cost to the employer; I have said there needs to be flexibility, as opposed to a hard and fast rule. On Tuesday I had an exchange with the hon. Member for Birmingham Northfield on the point around, “Okay, what else?” While I put that problem list back in the column for the Government to address, there are other safeguards; there are other things that the Government could look at so that the burden is more shared, as opposed to zero cost to the business. The key word here, which I have probably said 100 times this morning, is “flexibility”, as opposed to hard and fast rules. I will get back to my conclusion. Allen Simpson from UKHospitality made some sensible points when giving evidence to the Committee last week, so I pose his questions to the Minister. I should be grateful for a response on each, as I imagine employers throughout the country would be. Could a different approach be taken to what constitutes “reasonable notice” for different employers in different sectors? That goes back to the point made by the Opposition earlier. Will shift swapping still be allowed, and if so, how will the regulations account for it? If shift swapping will not be allowed, why not? What will be considered “reasonable notice” within shift-swapping provisions? If an employee wants to change their shift at the last minute, are they allowed to do so, and in what circumstances? What would happen if an employer were to put out a message saying, “There is a shift available right now. Does anyone want it?” Does that constitute an offer of employment? Will there be a time after which employers will not be able to do that, because it does not constitute reasonable notice? Those were very sensible, thoughtful questions from UKHospitality, and as this legislation progresses through Committee it is only right that the Government and the Minister give a clear and full answer to them.

Well done to the shadow Minister—he must have had his Weetabix this morning. He has clearly put in a great deal of time and we appreciate the way that he has engaged with the debate and some of the issues. He is taking a much broader look at the principles behind the legislation, rather than a quite narrow technical amendment about when shifts are moved or curtailed, but I am happy to address his points as far as I can. I understand that the shadow Minister accepts the principle that we are trying to create some additional fairness in the workplace. That is welcome to hear, and I can assure him that this will not be a rush job. We do not anticipate these measures being implemented until 2026, and he will not be surprised to hear that the reason is that we intend to engage deeply with business and workers’ representatives on the details. There will be a consultation, following which we will set out in regulations what periods of notice should be presumed unreasonable; we will also set out factors for tribunals to take into account when considering whether notices are reasonable. That will go a long way towards addressing some of the concerns he mentions from Allen Simpson of UKHospitality. I think it is fair to say he generally welcomed the approach, but clearly some of the detail is to be worked on. I do not think there will be any prohibition on workers swapping shifts, but if the employer, having been notified that worker B has taken the shift instead of worker A, then cancels the shift at short notice, we would intend that the regulations would then be engaged.

So that we are absolutely clear on the shift-swapping provision—[Interruption.] I correct the Minister on the Weetabix; it was the Tea Room black pudding. If worker A and worker B consensually decide that they wish to switch, worker B being the one who will take the shift and worker A the one whose shift is now displaced either to another time or not at all, and worker A being quite happy with that, will the employer be penalised?

I am grateful for the details of the shadow Minister’s dietary exploits today. We are looking in quite close detail at that situation, because there are a number of knock-on consequences, but we do not envisage that, in a situation where two workers agree of their own volition to swap shifts, the employer should in any way be penalised. We do not think that is in the spirit of what we are trying to achieve here. I return to the points that my hon. Friend the Member for Edinburgh East and Musselburgh made about particular workplaces. The Director of Labour Market Enforcement has undertaken quite a lot of work in respect of those issues; considerable evidence is emerging about concerns in those sectors, and I encourage him to undertake some further reading on that. There will be further consultation on what reasonable means. We all understand that there could be different factors applying, but what we want at the end of this process is for businesses to be clear about their obligations. That could mean a particular time period, but it could be different depending on the industry or the circumstances. It is right for us to take our time to consult and engage on that. The shadow Minister referred to the force majeure issue; there is a power in the Bill for us to provide for exemptions for short-notice shift cancellation—that is always a tricky phrase to get out—but in some of the examples he gave where a huge contract was lost, a notice cancellation payment was probably the least of the employee’s and the employer’s problems in that situation; there may be bigger questions about whether there is enough work at all. Those are the kinds of things we will be looking at, as the power in the Bill gives us that opportunity. Amendment 30 agreed to.

I beg to move amendment 31, in clause 3, page 19, leave out lines 5 to 18 and insert— “(a) where the shift is cancelled, the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the cancellation; (b) where the shift is moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the amount of remuneration to which the worker would have been entitled had they worked the original shift; (c) where the shift is moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the amount of remuneration to which the worker would have been entitled had they worked the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed; (d) where the shift is— (i) curtailed but not moved, or (ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift, the amount of remuneration to which the worker would have been entitled had they worked the hours that will not be worked because of the curtailment, or the movement and curtailment.” This amendment has the effect of clarifying the maximum amount of a payment that can be specified in regulations under proposed section 27BO(1) of the Employment Rights Act 1996 in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision.

With this it will be convenient to discuss Government amendment 32.

These amendments should be considered alongside amendment 30, because they clarify what happens when a shift is both moved and curtailed at the same time. The Bill provides a power to specify the amount that must be paid by employers when they cancel, curtail or move shifts at short notice. It cannot be used to specify a payment amount in excess of what the worker would have earned from working the original hours. However, the Bill was not clear whether the maximum payment due when a shift is both moved and curtailed at the same time should be calculated based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, the maximum payment could be based either on one or two hours of work, as the shift was moved by two hours but was curtailed by one hour. Amendment 31 clarifies what happens in such cases. The maximum payment in this scenario would be what they would have earned from two hours’ work, reflecting the maximum they would have earned had they worked their original four-hour shift. That will ensure that workers are compensated appropriately, and it will also provide clarity for employers. Amendment 32 clarifies for workers and employers how to calculate what amount of contractual payment can be offset against payments under clause 3 in cases where there is a combined short notice movement and curtailment of a shift. Again, the Bill is unclear whether the calculation should be based on the provisions on movements or on curtailments, which would create different effects. For example, if a worker’s shift was due to be worked from 2 o’clock to 6 o’clock, but is moved and curtailed to 4 o’clock to 7 o’clock, then after deducting the two hours in the shift that have stayed the same—4 o’clock to 6 o’clock—the remaining hours to be offset could be based on either one or two hours’ work. The amendment clarifies that the hours to be offset should be for two hours’ work, as the worker should be entitled to the payment under proposed new section 27BO of the Employment Rights Act 1996 for two hours. That will ensure that it is clear that an employer is not doubly liable for some hours in such scenarios. Although I appreciate that the amendments may appear complex, they will have the overall effect of simplifying the policy for employers and workers, so that it is very clear what happens when a shift is both curtailed and moved at the same time. They therefore prevent us from ending up with a whole load of litigation to decide what the correct outcome will be. I reassure the shadow Minister that the changes will not be rushed: they will not be implemented before 2026, which will give us time to consult further and provide some more information on how the measures will work in practice so that employers understand what is expected of them. We will provide clear guidance throughout. Many employers already guarantee hours, give reasonable notice of shifts, and make payments when they cancel shifts at short notice, so they will not need to alter their behaviour at all. In fact, data from the Chartered Institute of Personnel and Development suggests that around 33% of employers already pay some form of compensation for shifts cancelled with less than 24 hours’ notice.

I am grateful to the Minister for his explanation of amendments 31 and 32. As he said, these amendments clarify the maximum amount of payment and the hours to which a payment relates in cases where there is a cancellation, movement or curtailment at short notice of a qualifying shift that the worker has agreed to work for the employer. Amendment 31 establishes that the payment should be for the hours that would have been worked. The amendments make sense given the policy direction of the Bill but, once again, I gently suggest—as I will probably do multiple times during our discussions—that it is unclear why these provisions could not have been included in the Bill on its introduction. They seem like a fundamental part of the Bill. I would be grateful if the Minister could explain why it took so long to come to the conclusion that this was the way forward.

12:15:00

I will address that point, which I am sure we will hear on numerous occasions from the shadow Minister. He will be aware that it was a manifesto commitment to introduce the Bill within 100 days, which we are very pleased to have been able to adhere to, but that meant that not every element of policy was ready. As we have continued to consult, engage and develop our thoughts in this area, it has become apparent that it is possible to add to the Bill at this stage, to close some loopholes and provide some clarity. That is why the amendment was tabled. Amendment 31 agreed to. Amendments made: 32, in clause 3, page 21, leave out lines 3 to 13 and insert— “(a) where a shift has been cancelled, the hours that would have been worked if the shift had not been cancelled; (b) where a shift has been moved, or moved and curtailed (at the same time), and no part of the shift as moved, or as moved and curtailed, corresponds to the time of the shift (“the original shift”) before it was moved, or moved and curtailed, the hours that would have been worked during the original shift; (c) where a shift has been moved, or moved and curtailed (at the same time), and part of the shift as moved, or as moved and curtailed, corresponds to the time of the original shift (but part does not), the hours that would have been worked during the part of the original shift that does not correspond to the shift as moved, or as moved and curtailed; (d) where a shift has been— (i) curtailed but not moved, or (ii) moved and curtailed (at the same time) and the shift as moved and curtailed is to start and end within the time of the original shift, the hours that would have been worked if the shift had not been curtailed, or moved and curtailed.” This amendment has the effect of clarifying the hours to which a payment under proposed section 27BO(1) of the Employment Rights Act 1996 relates in cases where there is a combined short notice movement and curtailment of a shift and makes associated drafting changes to the amended provision. Amendment 33, in clause 3, page 21, line 26, leave out “three” and insert “six”. This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(a) of the Employment Rights Act 1996 from three months to six months. Amendment 34, in clause 3, page 21, line 31, leave out “three” and insert “six”. This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(b) of the Employment Rights Act 1996 from three months to six months. Amendment 35, in clause 3, page 21, line 36, leave out “three” and insert “six”. This amendment would increase the time limit for bringing proceedings under the new section 27BS(1)(c) of the Employment Rights Act 1996 from three months to six months. Amendment 36, in clause 3, page 21, line 40, leave out “three” and insert “six”.—(Justin Madders.) This amendment is consequential on amendments 33, 34 and 35.

I beg to move amendment 37, in clause 3, page 22, line 11, after “must” insert “— (a) make a declaration to that effect, and. (b) ”. This amendment and amendment 38 require an employment tribunal that finds a complaint under proposed section 27BS of the Employment Rights Act 1996 well-founded to make a declaration to that effect.

With this it will be convenient to discuss Government amendments 38 to 41.

Proposed new section 27BT of the 1996 Act makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that either was not given or was inadequate or untrue. Amendment 37 will require the employment tribunal to additionally make a declaration in cases where the employer failed to make a payment for a qualifying shift, confirming that the worker’s rights have been violated. The declaration will be accessible not only to the directly affected worker but to others, including those working for the same employer. That will ensure that it is clear to other workers where and how such payments should apply if they have a shift cancelled, moved or curtailed in a similar way. Amendment 38 will require the employment tribunal to additionally make a declaration where an exception applied and a notice was not given or where the notice was inadequate or untrue, confirming that the worker’s rights have been violated. Again, that will ensure that workers always receive a remedy in such cases, even where the tribunal decides that an award of compensation is not justified in the circumstances. That should ensure that it is clear to other workers where exceptions do and do not apply if they have a shift cancelled, curtailed or moved in similar circumstances. Mandatory declarations of that nature are a common remedy across employment law. The amendments are in line with other similar provisions that concern complaints to the employment tribunal. Proposed new section 27BT also makes provision for the tribunal to order an employer to pay a worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue. Amendments 39 and 41 will allow an employment tribunal discretion to award an appropriate level of compensation in cases where an exception applied but the employer either failed to give notice or gave an inadequate or untrue notice. That will remove the need for a tribunal to take an all-or-nothing approach by awarding the full, maximum amount or nothing. The amendments will instruct an employment tribunal to consider the seriousness of the matter when determining what payment to award the worker, which might include, for example, considering whether the employer had acted in bad faith. That is a more appropriate approach than under the previous drafting, and there may be cases where the maximum award is not reasonable. For example, if a worker has a shift curtailed by an hour and their employer relied on an exception but did not give notice of that, it would not be logical for their award to be greater than the amount that would have been owed for the curtailment of a single hour. The award itself is discretionary and it is appropriate that the payment amount should equally be discretionary up to a specified amount, which will allow employment tribunals to make awards that are just and equitable to all parties. On amendment 40, proposed new section 27BT makes provision for a payment to be made to the worker where an employment tribunal finds that the worker’s employer failed to make a payment for a qualifying cancelled, moved or curtailed shift, or where an exception was relied upon but notice of that was either not given or was inadequate or untrue. The amendment is minor and technical, correcting drafting so that the provisions do not make reference to a scenario that could never arise. An employer cannot be found both to have unreasonably failed to give a worker notice of an applicable exception in relation to a payment, yet also to have been liable to make that payment and have failed to do so: either no exception applies and payment is due, or an exception applies and a notice should be given as no payment is due. The amendment removes the potential confusion caused by the drafting as introduced. I apologise for that, but as the Committee will appreciate that we have been working to a very swift timetable. We hope that brings some clarity to the situation.

The word “clarity” is doing quite a lot of heavy lifting there, so I will probe it a bit. Amendments 37 and 38 concern provisions in the Bill about how employees may make a claim to an employment tribunal where they have not been paid or received reasonable notice of shifts, or the employer had purported to give notice in compliance with the rules on right to reasonable notice, but in a way that was inadequate. The amendments specify that if an employment tribunal finds claims to be well founded, it must make a statement to that effect. Why were these amendments, along with those increasing the time limit from three to six months, not included in the Bill when introduced? Those provisions do not seem like a loophole being closed or a minor technical drafting error; they seem fundamental to what the Government are trying to do here, so that was one of the bigger surprises. Why were they not locked into the Bill from day one? I understand the point about political priorities and commitments to publish something in 100 days, because sometimes these things take a lot longer than 100 days to get right. Whether one agrees with the principle and practicality of the provisions or not, it is tough on those in the civil service and those who are drafting the Bill to be able to deliver something of this complexity in 100 days, but these seem to be fundamental provisions. I would also be grateful for clarity from the Minister about how much the Government estimate that the provisions in these amendments, as well as in the wider Bill, will increase employment tribunal claims. On amendments 39 to 41, if an employee brings a claim to an employment tribunal for their employer breaching the duties imposed by the Bill, amendment 39 provides that the court can award compensation up to a cap to be set in regulations. We are back to our old friend: we do not know what those regulations are going to be. I have a set of what I hope will be straightforward questions for the Minister. What is the cap planned to be? I am sure that it will be open to consultation, but again, the Government must have a window in mind. That is a reasonable question that businesses up and down the land will be interested to know the answer to, so that they can start preparing their viewpoints and evidence base to present to the Minister for any future regulations. In our oral evidence sessions, we heard witnesses ask several questions about how the provisions on the right to reasonable notice of cancelled, curtailed or moved shifts will work in practice, because there is precious little detail in the Bill. Can we now have that detail? Will the Minister provide a timeline by which the Government intend to provide some information not just to this House, but to businesses up and down the country, about how the measure will work? When will we be able to see the draft regulations? It would be helpful if we could see them during the passage of the Bill, be it prior to Report, which would be the best case, or before it goes to the other place for consideration, so that the House of Lords can fully explore them, which would be better than nothing. Can the Minister explain why the clauses on award of cost are proportionate to the benefit that they may bring to employers?

Government amendment 37—sorry, Minister, I should allow you the opportunity to respond.

I am sure that the shadow Minister and the whole Committee are delighted that I have the opportunity to respond. The shadow Minister asked some perfectly reasonable questions. On the first issue, it is a well-established principle that employment tribunals have the right to make declarations in a whole range of claims. Again, I can only refer him to my previous answers with regard to why that was not in the original Bill—we were up against a tight timetable. It is also worth bearing in mind that the Bill will not become law until it has passed through this House and received Royal Assent, so when it finally appears before the public, all those issues will be ironed out. I give him the same answer about regulations, because—as we are doing as we go along—the Bill can be amended here, on Report and in the other place. It may be that the final Bill does not entirely reflect what we have before us, so it would be premature to draw up regulations at this stage. However, part of our ongoing dialogue with businesses, workers’ representatives and trade unions is about what regulations we will look at.

I understand the Minister’s point, but this is a Government Bill; I accept that it is derived from their manifesto and from their political priority. Notwithstanding the Minister’s perfectly correct point that the Bill can be amended before it receives Royal Assent, does he at least accept the point that as this is a Government Bill, they should at least give a starting point on any consultation or proposal that people could then work around, as a test of reasonability for business owners and the wider public? People around the country, as well as Members of this House, could then let their views be known as they seek to challenge and amend the Bill.

We are taking this approach because we want to be reasonable and engage with businesses and trade unions on what the shape looks like. That is why the full consultation, which will look at the broad range of issues, is not yet ready. It is not really in the spirit of that for us to nail down everything in the Bill. Most employment rights have their detail in secondary legislation. There are some clear principles about the levels of compensation that we will set out. Clearly, a worker should not be compensated for more than the number of hours that he or she has lost. If other heads of loss occur, there are already principles about wages, for example, whereby ongoing losses have to be compensated for. That is the kind of thing where the detail ought to be put into secondary legislation and consulted on fully, which is what we intend to do.

The one thing that businesses do not like is uncertainty. Unfortunately, there are so many gaps that need filling in the Bill that it makes it very difficult for businesses to plan for the future—for example, about how many people they will employ, what risks they will take on, and how to budget. Does the Minister accept that the Bill is so full of gaps that it causes more uncertainty for businesses and makes it harder for them to plan?

12:30:00

The hon. Member is trying to have it both ways. If we had set out too much detail in the Bill, he would no doubt have criticised us for not engaging and consulting, and for being too dogmatic in our approach. That is why we have taken the approach that we have. We want to engage, consult and get the detail absolutely right, because we are clear that the Bill will be effective only if it has buy-in from all concerned. That is why the detail will follow. Amendment 37 agreed to. Amendments made: 38, in clause 3, page 22, line 15, after “tribunal” insert “— (a) must make a declaration to that effect, and (b) ”. See the explanatory statement for amendment 37. Amendment 39, in clause 3, page 22, line 16, leave out “of a specified amount to the worker” and insert “to the worker of such amount, not exceeding the specified amount, as the tribunal considers just and equitable in all the circumstances”. This amendment has the effect of providing an employment tribunal with discretion, up to an amount to be specified in regulations, as to the size of a monetary award in respect of a complaint under proposed section 27BS(1)(b) or (c) of the Employment Rights Act 1996 (rather than there only being discretion as to whether a monetary award is made, but not the amount). Amendment 40, in clause 3, page 22, leave out lines 18 to 20 and insert “(2)(b) relating to a notice given in purported compliance with section 27BQ(2) if the tribunal makes an order under subsection (1)(b) relating to the same payment to which the notice related.” This amendment has the effect of removing from proposed section 27BT(3) of the Employment Rights Act 1996 reference to a scenario that could not arise (because an employment tribunal could not make an order under both section 27BT(1) and (2) if no notice had been given). Amendment 41, in clause 3, page 22, line 20, at end insert— “(4) In determining— (a) whether to make an order under subsection (2)(b), and (b) if so, how much to order the employer to pay, an employment tribunal must have regard, in particular, to the seriousness of the matter complained of.”—(Justin Madders.) This amendment supplements amendment 39.

I consider that the principles of the clause have been fully debated during discussion of the amendments, so if there is to be a clause stand part debate, it should be short. Question proposed, That the clause, as amended, stand part of the Bill.

Thank you, Mr Mundell. I am not sure whether that was directed at me, other members of the Committee, or maybe all of us.

It was intended to be helpful to you, Minister.

I am sure you always intend to be helpful, Mr Mundell. I will briefly go through the provisions of clause 3. I appreciate that we have covered a lot of the issues already, but I think it is important to set out what the clause does in the round, because after discussions on quite a few amendments, we may not have followed exactly where we are. It is obvious that predictability of income is a crucial part of a secure future. We need to address the scourge of insecurity at work. Equally, we understand that businesses want clarity about their obligations. The right to reasonable notice of shifts and of changes to them is important and will be enforceable at employment tribunals. While we regard the right to reasonable notice as appropriate, we also see a need for a rather speedier mechanism to provide some reimbursement to a worker when a shift is cancelled, moved or shortened at short notice. Of the 2.4 million people potentially eligible for these new rights, we estimate that around 600,000 have shifts cancelled at short notice. Clause 3 clearly sets out the obligations on both workers and employers, and I will go through the amendments that it will make to the Employment Rights Act 1996. New section 27BO of the 1996 Act outlines the new duty that will be placed on employers to make a payment to workers if they cancel, move or curtail shifts at short notice. The duty will apply to workers on zero-hours contracts and arrangements, and workers on contracts to be specified in regulations. When workers have the timing of their usual shifts set out in their contract but are sometimes asked to work extra or longer shifts, the duty will also apply to the additional hours. The new section also provides the power to set what period constitutes short notice; what the payment amount should be; how quickly the payment should be made; when notice is treated as having been given; and the maximum delay of a shift, or bringing forward of a shift, for which payment is not due. New section 27BP adds several supplementary details on the powers to make regulations provided in new section 27BO and therefore on the functioning of the right to payment. It restricts the period that can be set in regulations as “short notice” to no more than seven days, and it ensures that the payment due to a worker cannot be more than they would have been paid had they worked their original shift. It allows for regulations to vary the amount of the payment according to how short the notice of cancellation is. It also provides that the contracts in scope of the right to payment may be specified in regulations by setting an hours or pay cap. New section 27BQ provides a delegated power to make exceptions to the right to payment, and states that where an exception applies, the employer must notify the worker of it and explain why it is considered to apply. The section enables regulations to specify how the notice of the applicable exception should be given and when it is deemed to be received. New section 27BR ensures that a worker is not entitled to receive payment both under their contract and under new section 27BO in respect of the same hours. New section 27BS enables workers to complain to employment tribunals that their employer has failed to comply with the duties. New section 27BT establishes the remedies where a complaint to a tribunal is found to be well-founded. I commend the clause to the Committee.

Mindful of your comments, Mr Mundell, I will not speak at length to the clause, other than to underline the points that I and my hon. Friend the Member for Mid Leicestershire have made about certainty. I understand the political priorities of the Government, and I understand the principle of what they are trying to do. However, as my hon. Friend said, businesses need to be able to plan. I accept that not all legislation can give detail on everything to the nth degree, but I think it is reasonable and proportionate for businesses small, medium and large in this country to expect to be given at least a hint of what is coming down the line. That way, they can begin the process of planning and putting their thoughts together, so that when the consultations come they can give as full and frank an account of their circumstances as they can, and describe what the proposals will mean for them and their employees, so that the Minister can come to a reasonable judgment before laying any regulations. The Opposition are not opposed to the principle of the clause, but because of the holes in it, we cannot support it. Question put, That the clause, as amended, stand part of the Bill.

3|0|12|3|The Committee divided:|Question accordingly agreed to.||0|0

Clause 4

Amendments relating to sections 1 to 3

I beg to move amendment 42, in clause 4, page 23, leave out lines 34 to 39. This amendment is consequential on NC11.

With this it will be convenient to discuss Government new clause 11—Orders and regulations under Employment Rights Act 1996: procedure.

Amendment 42 is another technical amendment that concerns not the function of the Bill but parliamentary procedure, so if we want another dry, technical debate, we certainly have the opportunity. Clause 4 makes provision for new section 27BW to be inserted into the Employment Rights Act 1996. New section 27BW(3) would allow regulations made under part 2A of the 1996 Act, relating to the provisions concerning zero hours, that are subject to different or no parliamentary procedure to be included in regulations subject to the affirmative procedure. New clause 11 amends section 236 of the 1996 Act and makes the same provision to allow the combining of instruments, but applies to any orders and regulations made under that Act, rather than to only those made using powers in part 2A. This is a technical amendment intended to ensure that implementation can be undertaken as efficiently as possible. On what instruments might need to be combined, we will be setting out further details required to implement zero-hours provisions through secondary legislation, but existing powers in the 1996 Act, such as the power in section 10 regarding pay statements, may play a part in supporting implementation. It may be that it would be appropriate to exercise that power to prescribe that pay statements must specify where payment has been made under proposed new section 27BO for the short-notice cancellation, movement or curtailment of a shift. Should that be the case, this provision would allow that amendment to be made in the same regulations as others to be made under new powers being inserted by this Bill that are—I am sure that the shadow Minister will be pleased to hear this—subject to the affirmative procedure. That will mean that provisions to be detailed in regulations that would have been subject to the negative procedure, or no procedure, receive greater scrutiny from Parliament before becoming law. In the light of the amendment made to section 236, amendment 42 removes the provisions that apply only to part 2A of the 1996 Act, as they will be redundant.

As the Minister says, this is a very technical amendment—and who doesn’t love a dry, technical debate? However, I am not sure that anyone seeking a dry, technical debate over some hours is going to be happy. I gently suggest that the Government should reflect on the procedural nature of these provisions and their intersection with the Employment Rights Act 1996, which is very complex to unpick and fully understand, not necessarily for those who sit in this House, or indeed in the other place, but certainly for businesses out there, which will require a lot of professional services and advice to navigate it. On the particular, technical nature of the procedure, I heard what the Minister said about the affirmative procedure, but can he explain something to the Committee? This question could result in a very short answer or a very long one—I apologise for asking it if it prompts a longer one, although in some ways that would be better—but can he explain which powers in the new clause will not be subject to the affirmative procedure? Is there a list? And—it would be remiss of me not to throw this in—why could this not have been on the face of the Bill from day one?

I am afraid that I will not be able to tell the shadow Minister what will not be subject to the affirmative procedure. I think that the intention is actually for the amendment to bring everything that is in scope of the clause under the affirmative procedure, but I will endeavour to confirm that and come back to him, if that is okay. Amendment 42 agreed to. Question proposed, That the clause, as amended, stand part of the Bill.

I will not detain the Committee too long on clause 4. It contains amendments to the Employment Rights Act 1996 related to clauses 1 to 3, which we have just debated. Proposed new section 27BU defines various terms used in clauses 1 to 3, and the rest of part 2A of the 1996 Act, relating to zero-hours workers and other similar workers. In particular, it copies across the definition of “zero hours contract” from section 27A of the 1996 Act. A zero-hours contract exists where the worker undertakes to work for the employer when the employer makes work available to them but there is no obligation on the employer to make work available. While that might be quite a lengthy explanation, I think that we all understand what we mean by that. New section 27BU also defines “zero hours arrangement” as an arrangement under which an individual works when the work is provided but “the employer is not required to make any work available to the individual, nor the individual required to accept it”.

12:45:00

The two definitions are needed because zero-hours contracts are worker’s contracts because there is an undertaking to work, but zero-hours arrangements are not worker’s contracts because there is no undertaking to work. In turn, there is usually insufficient mutuality of obligation to form a contract. Those on zero-hours contracts are therefore workers, whereas those on zero-hours arrangements are usually workers only when they are actually working. Zero-hours arrangements are, in fact, more common than zero-hours contracts. That means that most people who are currently understood to be on a zero-hours contract are actually on a zero-hours arrangement.

It is worth noting that the definition of a zero-hours arrangement is an amended version of the definition of non-contractual zero-hours arrangements currently in section 27B of the Employment Rights Act 1996. It has been amended to ensure that it does not inadvertently exclude any individuals who are on zero-hours arrangements but have a contract with the employer. The contract does not in itself make them a worker because the zero-hours arrangement could include obligations that amount to a contract, albeit not a worker’s contract—for example, concerning confidentiality and training.

Proposed new section 27BV enables regulations to make provision that corresponds to, or is similar to, provision made by or under clauses 1 to 3, in relation to agency workers. As I mentioned, the Government have consulted on the application of the measures to agency workers to ensure that they are effectively and appropriately applied to that group. As Members know, that consultation closed earlier this week, and our intention is to respond to it to inform potential amendments later in the Bill. As we know, agency work is different from other employment relationships, as it involves a tripartite relationship. The proposal will therefore need to be adapted to take account of different relationships, and obligations will be placed accordingly to ensure that the application of the provision to agency workers is workable and that the employer has clear protections without perverse consequences.

Finally, proposed new section 27BW provides that regulations made under part 2A, on zero-hours workers and similar, may make provisions for different purposes or subject to exceptions. Given the novelty of clauses 1 to 3, this provides the flexibility to make different provision as is necessary and relevant to the circumstances. I am sure the shadow Minister will be pleased to hear that, given that he has raised the issue on several occasions. I commend the clause to the Committee.

I will not speak at length on this clause because, as the Minister said, it has a bit more clarity in it than many of the others. He has just outlined the new definitions, but perhaps I can put to him an example case showing how they would meet someone on what I believe he may describe as a zero-hours contract, but which also has some compensation for being a zero-hours contract. I will explain what I mean by that. This is a live example of someone who explained their working relationship with their contracted employer to me the other day. He is required to be up, dressed and ready to go at 5 am every day—perish the thought—and he will receive a call by 5.30 am about whether there is a number of hours to be worked that day. He receives a payment for doing that. Each week, he receives a payment for being up at 5 am and being ready to go if required, but of course if he is not required he does not receive anything further for the shift or the full day of work. There are probably not many such contracts in the economy, but that is a real-life one. I happened to be briefed on it by the individual involved the other day. The employee is happy. Not everybody is happy at 5 am, but he gets his payment for doing that. He accepts the quid pro quo that he may or may not get a full day’s work off the back of that. If he does not, he can go back to bed or do whatever he fancies with the rest of the day. How do the definitions in the Bill fit somebody who is quite happy with such an arrangement?

At the all-party parliamentary beer group’s reception last night, the shadow Minister and I talked about pubs. His question sounds perfect for a pub quiz for retired employment lawyers: it is the sort of thing that might end up getting taken to a group of KCs to understand the precise relationship. My best guess is that it would be classed as a zero-hours arrangement and would therefore be covered by the legislation. However, I do not wish to set a precedent inadvertently, so I will take further advice and come back to the shadow Minister. I hope he has some more interesting teasers like that: I am sure the entire employment law community are furiously scrabbling through their books to find the answer to his conundrum. Question put and agreed to. Clause 4, as amended, accordingly ordered to stand part of the Bill. Schedule 1 Consequential amendments relating to sections 1 to 3

I beg to move amendment 43, in schedule 1, page 106, line 8, at end insert— “In section 27 (meaning of ‘wages’ for purposes of Part 2 of the Act), in subsection (1)— (a) after the paragraph (ce) inserted by the Neonatal Care (Leave and Pay) Act 2023 insert— ‘(cf) a payment under section 27BO(1) of this Act (payment for a cancelled, moved or curtailed shift),’; (b) renumber the paragraph (ce) inserted by the Employment (Allocation of Tips) Act 2023 as paragraph (cg).” This amendment provides for a payment under proposed section 27BO(1) of the Employment Rights Act 1996 in respect of a short-notice cancellation, movement or curtailment of a shift to be treated as “wages” for the purposes of the provision about protection of wages in Part 2 of that Act. The right of a worker to bring a claim for unlawful deduction of wages is an important principle in employment law. It is right that payments for cancelled, moved and curtailed shifts are included in this provision. Although a worker can already claim through the employment tribunal that their employer has not made a payment for a cancelled, moved or curtailed shift, in some cases it may be more appropriate for workers to bring a claim under the unlawful deduction of wages provisions, for example if there are instances of non-payment covering a period of months or years; if they want to claim for financial loss as a result of non-payment, for instance because of bank charges; or if a claim covers non-payment of cancellation payments and other wages. The amendment will provide workers with an alternative remedy for non-payment, in addition to the new provisions in proposed new sections 27BS and 27BT of the Employment Rights Act 1996. That is in line with other statutory rights to payment, such as remuneration during suspension of work on medical grounds. I hope that that is a clear explanation.

I do not say so often in this Committee, but that was actually a helpful clarification. I can only come back to a point that I will make countless times in this Committee: why on earth could that not have been clearer at the start, when businesses up and down the land were submitting their written evidence, or indeed when they were providing us with oral evidence last week? I stress that it is helpful to have that clarity now. I take no issue at all with the Minister’s explanation, other than to gently repeat the point about certainty and planning going forward.

I am grateful for the shadow Minister’s support for the amendment. Amendment 43 agreed to. Amendments made: 44, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BD(5A) or (5B)”. This amendment is consequential on amendments 11 and 14. Amendment 45, in schedule 1, page 107, line 10, after “27BA(1)” insert “or 27BEA(1) or (2)”.—(Justin Madders.) This amendment is consequential on amendment 13.

I beg to move amendment 46, in schedule 1, page 107, line 16, at end insert— “(4A) A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by the worker’s employer done on the ground that— (a) the duty imposed by section 27BA(1) applies to the employer in relation to the worker and a particular reference period, or (b) the employer believes that that duty so applies.” This amendment ensures that a worker’s right not to be subjected to detriment includes a case of detriment on the ground that the worker is, or the employer believes the worker is, entitled to a guaranteed hours offer under proposed new section 27BA of the Employment Rights Act 1996.

With this it will be convenient to discuss Government amendment 47.

Amendment 46 will broaden the detriment provisions in respect of the right to guaranteed hours. It will ensure that a worker has a right not to be subjected to detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to an offer of guaranteed hours. The existing provisions protect workers from detriment only where a worker accepts or rejects an offer of guaranteed hours or proposes to do so; where the worker declines to work a shift, as they believe their employer has failed to comply with their obligation in relation to notice of shifts; or because the worker alleges the existence of such grounds to take a case to an employment tribunal. Amendment 47 is a consequential amendment that clarifies the definition of “reference period” in amendment 46. The amendments will extend the protections to ensure that detriment to the worker arising from the right to guaranteed hours can be addressed. The detriment experienced by the worker may include cases in which a worker’s contract is terminated. Whether a worker experiences a detriment on those new grounds will be a matter for the employment tribunal to determine in the usual manner.

I am grateful for the Minister’s explanation. The Opposition can clearly see that amendment 46 will ensure that a worker’s right not to be subjected to detriment includes a case of detriment on the grounds that the worker is, or the employer believes that the worker is, entitled to a guaranteed-hours offer under proposed new section 27BA of the Employment Rights Act 1996. The question—our old friend—is why that was not in the Bill in the first place. I would be grateful if the Minister explained what sort of detriment the Government are concerned about and are trying to prevent with the amendments. It is another point of clarity: it is about giving businesses an early understanding of where the Government are trying to go. This is one of the areas in legislation that could be widely open to legal opinion, if I may put it that way: a sort of lawyers’ charter, whereby if a bunch of lawyers are put in a room they could easily come up with many different interpretations of detriment and of the scope of amendment 46. We see uncertainty in legal opinion all the time on the legislation that passes through this House. Once the Bill, in some form, has become an Act—as undoubtedly it will, given the parliamentary arithmetic—and a case comes to court, it will be helpful for the judiciary to look back at the parliamentary debate and see the full meaning of this provision.

I am grateful for the shadow Minister’s question. I recall on one or two desperate occasions quoting Hansard in an employment tribunal. I always felt, “If you’re explaining, you’re losing,” as the old phrase goes. We are not actually creating a new category of detriment. Detriment is something that already applies across a whole range of employment rights, so we are not inventing something that is not already there. At the moment, there is quite a live academic debate about how far the extent of detriment reaches, which we may come to at a later point. To answer the shadow Minister’s points, the amendment will not create a whole new area of litigation about understanding what detriment means in this circumstance. It will still be the same detriment that would apply in other employment-related claims. Amendment 46 agreed to. Amendment made: 47, in schedule 1, page 107, line 29, at end insert— “(7) In this section ‘reference period’ has the same meaning as in Chapter 2 of Part 2A (see section 27BA(4)).”—(Justin Madders.) This amendment is consequential on amendment 46.

I beg to move amendment 48, in schedule 1, page 107, line 37, at end insert— “(2A) In subsection (2), for ‘and (6)’ substitute ‘, (6), (7) and (7A)’.” This amendment makes technical changes to section 49 of the Employment Rights Act 1996. The reference to subsection (7A) is consequential on amendment 49.

With this it will be convenient to discuss Government amendment 49.

The amendments will ensure that the provisions on the maximum compensation awarded by a tribunal for detriment cases will be workable for cases involving the termination of an arrangement that is not a worker’s contract. Where there is no worker’s contract in place, it may be very difficult to determine the individual’s termination date. Let me clarify what I mean by that, if I can do so in such a technical area. A zero-hours contract is a contract in which the worker undertakes to work for the employer when the employer makes work available to them, but there is no obligation on the employer to make work available. It is a worker’s contract because it involves obligations on the worker to undertake work. A zero-hours arrangement is an arrangement under which the employer is not obliged to make work available, and the worker is under no obligation to accept work when offered. Zero-hours contracts are workers’ contracts because there is an undertaking to work, whereas zero-hours arrangements are not workers’ contracts because there is insufficient mutuality of obligation. There are particular complexities in applying legislation that involves a particular effective date of termination to those on zero-hours arrangements. The worker’s exact termination date may be difficult to determine and the calculation of compensation will therefore be circumstance-specific, meaning that it is more appropriate for the employment tribunal to use its discretion in arriving at such sums. The amendment will ensure that in such cases, the amount that a tribunal awards will be left to its discretion. While there will not be a set maximum compensation for an individual on a zero-hours arrangement, as opposed to an employee on a zero-hours or low-hours contract, that maximum will be left to the discretion of the employment tribunal, which has the expertise to draw from the existing thresholds in compensation and apply them specifically to these types of cases.

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I have two questions for the Minister—hopefully simple ones—about Government amendments 48 and 49, which relate to the maximum award for a detriment claim. First, there does not seem to be a set limit for the maximum award. Can the Minister explain that? Can he give an indication whether a maximum award will be set further down the line, either via a consultation process or in regulations? My second question is possibly less straightforward, but it will be important as we look at the practical application of the Bill once it receives Royal Assent and comes into force. How much does the Minister envisage that tribunals may award under amendment 49?

I am grateful for the shadow Minister’s questions. They cannot be answered in the round, as all cases will be very fact-specific. The maximum that a tribunal awards will be down to the circumstances in which workers find themselves. With a zero-hours contract, there will be a whole range of issues relating to the kind of work that they would have expected if the detriment had not taken place. It is a well-established principle that a tribunal will award what is just and equitable in the circumstances. Tribunals are well versed in understanding the factors that they would need to take into account in making such awards. The shadow Minister tempts me to get into details, but as this is a Bill Committee and not an employment tribunal, I cannot give him the kind of detail that he is looking for.

I am grateful to the Minister for that answer. I understand the broad principle that he outlines, but there could be a mechanism, without putting a pounds-and-pence limit on any award, to bake in some formula that would cap an award according to proportion of original pay, contracted hours, length of service or some other factor. For the clarity of the record, is the Minister saying that no such framework is envisaged and that it will be a totally open-ended question for any employment tribunal?

The amendments relate to detriment claims only, whereas the shadow Minister’s question is a slightly broader one. The point about compensation in other situations would be far more detailed. As this is about people on irregular contracts who may have suffered a detriment that we cannot possibly predict in advance, it is normal to say at this stage that the usual principles of the just and equitable compensation that an employment tribunal would award will apply in those circumstances.

Does the Minister agree that if a cap of some sort were introduced, there would be a risk that, as we have seen in other cases, people who have been subject to a detriment may seek other routes, particularly under equalities legislation where damages are uncapped? That is an existing problem that has added to the strain in that part of the employment tribunal system.

There is a danger that we will get too prescriptive about this. There will be a relatively small number of cases in which there is detriment, but they are all going to be very fact-sensitive. That is why we have framed the amendment in this way.

The hon. Member for Dundee Central referred to how a lot of businesses will have insurance for various eventualities. As a maximum is not specified, have the Government considered the unintended consequences of such provisions on businesses’ ability to insure against such instances?

We are not talking about the general running of a business, with reference to shift notice and cancellations; we are talking about a very specific set of circumstances in which an employer’s act is considered to be detrimental to the employee and gives rise to an employment tribunal claim. I am sure that there are insurance products that cover all employment tribunal claims, but this is about individual acts of penalisation against employees or workers. This is not a departure from existing legal principles; it is well set out and understood by lawyers and HR practitioners. I do not envisage that this is a provision that will be greatly used, but it is an important principle to have in the Bill. Amendment 48 agreed to. Amendment made: 49, in schedule 1, page 107, line 39, leave out from beginning to end of line 11 on page 108 and insert— “(7A) Where— (a) the complaint is made under section 48(1BA), (b) the detriment to which the worker is subjected is the termination of the worker’s contract, and (c) that contract is not a contract of employment, any compensation must not exceed the compensation that would be payable under Chapter 2 of Part 10 if the worker had been an employee and had been dismissed for a reason specified in section 104BA.”—(Justin Madders.) This amendment relates to the maximum award of compensation by an employment tribunal in a detriment claim under section 48(1BA) of the Employment Rights Act 1996. The change achieved by the amendment is that the maximum award in cases involving the termination of an arrangement that is not a worker’s contract is at the tribunal’s discretion. Ordered, That further consideration be now adjourned. —(Anna McMorrin.)

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