Official Report: Minutes of Evidence
Committee for Employment and Learning, meeting on Wednesday, 18 February 2015
Members present for all or part of the proceedings:Mr Robin Swann (Chairperson)
Mr Thomas Buchanan (Deputy Chairperson)
Mr S Anderson
Mr P Flanagan
Mr David Hilditch
Ms A Lo
Mr Fra McCann
Ms B McGahan
Mr P Ramsey
Ms Claire Sugden
Witnesses:Mr Tom Evans, Department for Employment and Learning
Mr John McKeown, Department for Employment and Learning
Ms Deirdre Walsh, Department for Employment and Learning
Zero-hours Contracts: Department for Employment and Learning
The Chairperson (Mr Swann): From the Department for Employment and Learning (DEL), I welcome Mr Tom Evans, who is the deputy director of strategy in the European and employment relations division, Mr John McKeown, who is the head of the employment relations policy and legislation branch, and Ms Deirdre Walsh, who is also from the employment relations policy and legislation branch.
I would be failing in my duty as Chairperson if I did not point out that we would have appreciated a more timely presentation of the papers, because the zero-hours regulations form quite weighty legislation. We received them only at the start of this week, which has given us a couple of days to read them, but we would have appreciated having them in last week's pack. We are happy enough to move on at this stage and take your briefing, but, for future reference, you know how I feel about papers, Tom.
Mr Tom Evans (Department for Employment and Learning): We were trying to get the papers out for the Minister, but there were certain pressures with Executive papers. We are aware of the time constraints and the need for the Committee to get papers as early as possible.
You have a paper, and we appreciate the opportunity to talk to you about it. I will make a general presentation, and John, Deirdre and I will then field any questions. When we were with you last November, we gave you an overview of the responses to the public consultation. Since then, the Minister has been considering those responses and looking at the qualitative and quantitative research that has been happening in parallel. At the same time as the paper was issued to the Committee, the Minister wrote to Executive colleagues in the same terms as in the paper, seeking views on a range of legislative and non-legislative measures that he is minded to put in place.
Today, I want to give you an overview of the Minister's proposals. Among the issues that emerged from the consultation, it became very clear at an early stage — it happened through some of the face-to-face engagements that we had with stakeholders, both from an employer and employee perspective — that a clear and unambiguous definition of zero-hours contracts is needed. It has been difficult to quantify that, and the Office of National Statistics (ONS) also found that. There seems to be consensus on that.
Another issue is the potential adverse impact that these types of contracts can have on vulnerable employees and workers, particularly in accessing benefits and credits. It is about people being able to fulfil not just their work commitments but their domestic commitments. The issues explored are relevant not just to zero-hours contracts. We ran a workshop in Belfast, and even employers had different definitions for an understanding of that. That was particularly the case for employers in the small and medium-sized enterprises (SME) sector, who used a different language for it. It was about a range of flexible contracts whereby no weekly hours were guaranteed at that stage. Of all the proposals that we were talking about, the Minister is minded that they should have applications to a wider range of flexible contracts to include minimum hours, non-guaranteed hours and zero-hours contracts.
When the consultation was launched, there was a great furore about exclusivity clauses with the zero-hours contracts. That seemed to hit the headlines, and much of the commentary from businesses and employers was that there are few circumstances in which you can justify exclusivity contracts. In those circumstances, they need to be justified and reasonable. The Chartered Institute of Personnel and Development (CIPD) analysis puts it in context. Through its survey work, it assessed that only 9% of zero-hours contracts contain exclusivity clauses, so it is a small issue. The Minister said that the review was much wider than the consultation, because he wanted to impact on more than 9% of the population that was involved in those contracts.
The Minister has looked at the issue in detail, and he recognises that zero-hours contracts and non-guaranteed hours can support business flexibility, make it easier to hire new staff and provide pathways to employment for young people and other jobseekers, and that an outright ban on zero-hours contracts would have a disproportionate impact on flexibility in the economy and could remove employment opportunities. However, the Minister recognises that, in common with many other economies, Northern Ireland is witnessing a more flexible set of contracts, and you could regard it as a casualisation of the labour market. There has been public concern, and that was raised at our consultation events. The Minister believes that it is incumbent on the Executive to put in place proportionate measures that afford employers the necessary flexibility to respond to unforeseen business pressures to protect the rights of workers, particularly those who have little choice. Where the Minister is coming from is that it is about the balance of power in the contractual arrangement to equalise that and to give workers the ability to work in a reasonable environment.
We have been keeping a close eye on the current position in GB. The Small Business, Enterprise and Employment Bill is going through the very late stages of its passage. There are provisions in the Bill to ban the use of exclusivity clauses in zero-hours or non-guaranteed hours contracts. They have gone beyond the definition to extend it to other contracts.
The Bill also contains extensive enabling powers that allow for the introduction of anti-avoidance measures and enforcement provisions through employment tribunals. We are waiting for further announcements on that. We will keep a close eye on that.
I will move on to the proposals that the Minister wants to take forward. The Minister wants to remove the uncertainty about zero-hours contracts and similar types of contracts and is considering the inclusion of provisions in the employment Bill that is being drafted on the wider employment law review to establish in law clear and unambiguous definitions for zero-hours contracts and non-guaranteed hours contracts.
With exclusivity clauses, the Minister feels that a total ban could be a fairly blunt instrument that could be easily circumvented. He is also persuaded that a total ban might compromise existing good practice on restrictive covenants and confidentiality clauses. These are usually used in fairly high-value contracts that are commercially sensitive and are to do with not being able to work for a competitor. Those are already covered by common law provisions, but we are taking legal advice to see whether a total ban can happen or whether we need a total ban with some exceptions. As I said, we are taking further legal advice, and we will continue to do that.
GB went with a Bill that banned exclusivity and then realised that some employers might use avoidance measures by offering a one-hour contract, so, similarly to GB, the Minister is considering the inclusion of provisions in the Department's Bill not just to ban them but to establish enabling powers that would allow for the subsequent making of regulations dealing with anti-avoidance and enforcement measures. If the Bill passes, the regulations will come back to the Committee and the Assembly with the detail of those anti-avoidance measures.
We consulted on the automatic right to a fixed-hours contract, and, in the Minister's view, the arguments against an automatic right were quite persuasive, particularly given the potential to generate unintended and negative behaviour from employers, who could look to develop some anti-avoidance measures. It could also lead to the laying-off of workers, which might not otherwise have taken place, so it could be about reducing job opportunities. The Minister has, therefore, decided not to progress that proposal.
We consulted on the right to request, and the Minister sees value in that. We have a right to request flexible working, and the process is well established in employment legislation. In thinking about taking forward a right to request, he recognises the genuine concerns expressed that vulnerable workers may feel compromised in raising that right to request. We consulted with some stakeholders, and they came up with a very positive idea, which was a twin-track approach. At a particular point in time, a worker can exercise the right to request and move to fixed hours, but the Minister is minded to explore a twin-track approach, which would require employers, at a certain trigger point, to review the sustainability of the existing zero-hours contract and be able to demonstrate that they have an objective justification for continuing with it. It may be that they then decide, because of work patterns, that they may want to move to a more fixed-hours arrangement. The Minister is, therefore, considering including in the Department's employment legislation enabling powers that would allow for the subsequent introduction of a right to request and placing a requirement on employers to review a worker's contract once a specified threshold has been achieved. We have not determined what that would be, but we will look at it.
Compensation annualised hours were considered as part of the consultation. The Minister is not minded to proceed with those measures. Formal compensation is provided for in the legislation in the Republic of Ireland, but, as I have said previously, it is quite complex. The whole issue of zero-hours contracts has been reviewed in the Republic, and there have been some fairly public trade union demonstrations that it has not worked, so the Minister felt that there were compelling arguments about its negative impact, which were to do with flexibility and increased regulatory costs. The Minister considers that a more appropriate response is to explore the right to request, with a parallel requirement for employers to review contracts and that that is a more robust way to move forward.
Transparency and accountability have been issues with zero-hours contracts . There was universal consensus that not just workers but small employers are not sure of the basis of the employment status and legal entitlements of workers on those contracts. The Minister believes that there is a strong case for the introduction of a statutory code of practice that would be for use by employers and workers, and it would set out what employers are required to do and workers' entitlements. It would also have a statutory basis. The Minister believes that that would be a more robust vehicle for securing compliance. If a case ended up in a tribunal, it would give the tribunal a framework for considering the behaviours of the employer and the worker. The Minister proposes that the enabling provisions that he is suggesting for anti-avoidance measures would apply to the code of practice and be drafted in the employment Bill.
We shared the issues with access to benefits with you at our last presentation. Commentary has been provided on the potential impact of universal credit, but, under the existing system, some vulnerable workers who have uncertain work patterns have difficulties. It is interesting that, as some suggested, the introduction of universal credit could make it more difficult. We have listened to the Resolution Foundation, which suggests in its report, 'A Matter of Time', that universal credit might bring about some improvement for real-time assessment, but I think that, whatever the system, it is about improving the process.
The Minister has just written to the Social Development Minister asking for his support to set up a joint project group to look at that issue. We cannot do it just in the context of DEL, because, when you think of jobs and benefits, two Departments are responsible. It is about looking to see the user's experience and whether we can improve, under the existing legal arrangements, the responsiveness of the service so that people on low-hours contracts can access their benefit entitlements? This is something that the Minister is quite hopeful about. We will wait to see how the Social Development Minister responds to it. That is basically where we are.
The Chairperson (Mr Swann): Thank you, Tom. There is so little coming forward from the consultation regarding actions that are going to be taken. From some of your comments, it seems that you are concerned, if we did legislate, that there are ways of avoidance, and that you are not willing to tackle the difficulties of zero-hours contracts head-on because people will find a way around it. Is that a concern?
Mr Evans: There are business models out there, and it is for employers to operate their own recruitment business models. Banning this one exclusively would mean that they would then introduce other recruitment business models.
The Minister is saying is that these types of contracts have value in a modern economy, in that they give flexibility, and he believes that no single measure can be brought in that will have the desired effect of balancing employment relations so that they are equitable for the employer and the employee. That is why there is an issue around the right to request, placing a requirement on employers to review the sustainability of whatever the contract is at a particular point in time, and developing codes of practice about the rights and responsibilities of an employer that have the ability to improve the operation of those contracts, which are an essential feature of a modern economy. By banning zero-hours contracts, you would have the real potential to adversely impact the competitiveness of other economies.
The Chairperson (Mr Swann): That is what I was getting at. You used the term "casualisation of the labour market". Some of the presentations we have had viewed zero-hours contracts as being an abuse of the labour market. That is where I thought we were going with some of this work. It is goes back to the balance of power. It is not about 9% exclusivity clauses because people are legal consultants and things like that. It is about those at the lower end of the labour market. The Committee is concerned about ignorance of rights. How are you going to make this useable for the lower end of the workforce?
Ms Deirdre Walsh (Department for Employment and Learning): The measures are focused on that end, the low-value contracts and the people who do not have an awful lot of choice around their employment opportunities.
We see the statutory code of practice in the proposals as being a very comprehensive piece that will provide guidance for employers and workers around all the issues we know workers have experienced, particularly those not having any notion of what type of contract they are on or understand their employment rights as a worker or employee. I think that the focus of the proposals is very much on the vulnerable end of the labour market so that, where zero-hours contracts are appropriate and are being used responsibly, and where they make commercial sense, they can remain in place.
Ms Walsh: We are proposing that it will be a statutory code, as opposed to a non-statutory code that would not be legally binding. We do not have the details of that. It is not that we have not thought it through; we have not worked it through. It is something we need to take legal advice on. However, it would be a statutory code of practice that would be legally binding.
Mr Evans: The key thing with a statutory code of practice is that it sets out what a person is entitled to and what an employer should do according to the law. If, subsequently, an issue comes in front of a tribunal, that tribunal can consider the actions of the employer and worker as set against the statutory code of practice. That happens in other jurisdictions.
The Chairperson (Mr Swann): I have one last point before I open the meeting to others. It concerns your parallel process and the right to request an employer to look at the matter. Is there not a simple anti-avoidance measure that can be used? An employer can go to a certain stage — should it be 12 months — when the review is going to be triggered, and he can simply use another zero-hours contract worker at 11 months and so never reach the trigger point.
Mr Evans: I think that where the Minister is coming from is that this is about treating the employer and the worker with respect and putting an ethical framework in place. The threshold at which employers should carry out the review is still to be worked out.
This idea did not come from the employers' sector; it came from people who were very strong advocates of employees and workers. They felt that this was quite a powerful way in which an employer would have to review the sustainability of continuing with whatever zero-hours contracts they had and would have to demonstrate to themselves that that was justified objectively. Objective justification is a legal term that is used in a whole range of employment jurisdictions when a tribunal is considering whether somebody has acted reasonably.
What people were saying was that if someone has been working for a significant period of time, and averaging a significant number of hours, then some day the employer might realise that that was not sustainable and that he actually needed the people and should put them on fixed hours.
Some of this happens not out of design; employers can be busy with their business, and it is just that the thing is working OK. The argument for having the twin-track approach is that although it is still within the gift of a worker, at any stage, to request a move to fixed hours, some may feel compromised in that if they do so they may not get a job. The employer will, at least, be required to do it. It is about asking them to justify the continuance of that contract.
Mr Evans: At this stage, the Minister wants to put the enabling powers in, do further work on that, and be able to bring back to the Committee what is considered to be the most efficient threshold. We would have to carry out a consultation on that.
Mr Flanagan: Thank you for the presentation. I am genuinely disappointed in the proposal outlined here. I was under the impression that you were going to do something to address the issue rather than skirt around its periphery.
Running through this document is an acknowledgement that flexibility is code for the casualisation of workers' rights. That leads to underemployment and low pay and is not a good thing. The document acknowledges that zero-hours contracts cause problems for low-paid workers and their benefit entitlements yet takes no legislative action to address that. In your paper, you state:
"in regard to zero and low hours contracts, it is clear that the balance of power in many zero hours contracts is too heavily weighted on the side of the employer and this is particularly the case where low paid, vulnerable workers are involved."
What do you intend to do? You intend to make employers review what they are doing. That is nowhere near good enough, if you are serious about protecting and enhancing workers' rights. The consultation was to consider the whole issue of zero-hours contracts, but all you have looked at are the peripheral issues, and the substantive issues have been duked. You have not gone near the actual issue of zero-hours contacts and what we are going to do about them.
You have also made a claim in your document that I want some evidence to back up. You cannot make a claim without backing it up. You say that an outright ban:
"would have a disproportionate impact upon flexibility within the economy, and potentially remove some employment opportunities."
What evidence is there to back up that claim?
Mr Evans: We had an extensive consultation, and we did feed the original consultation responses back to you. Also, we have talked to key stakeholder bodies; and, particularly from an employer perspective, they have argued strongly that this could compromise flexibility and competitiveness.
Mr Evans: We have talked to all bodies, those representing employers and employees. As I said, the Minister sees the proposals that he has set today as being a reasonable balancing of the interests and needs of employers and employees in the workplace.
Mr Flanagan: Do you have any evidence to back it up, or is it just hearsay from employers who do not want to pay workers a proper wage and give them a proper job?
Ms Walsh: We also looked at research that had been done by the Resolution Foundation, the Work Foundation and the Joseph Rowntree Foundation. In discussions with those organisations, they indicated to us that there are uses made of zero-hours contracts for the benefit of workers. They said that there are workers who want those types of contracts, for example students and older people who have retired and want to make a bit of extra money and so on. That is where we got those sources.
Mr Flanagan: I do not accept that a zero-hours contract is the right thing to do just because there are a small number of people who may want to avail themselves of few, or zero hours, a week. You can talk about students and retired people who want flexibility, but that does not mean that they want their rights eroded. People want access to a guaranteed number of hours a week.
Even where a pattern has been built up of working the same number of hours every single week, you have ruled out providing for the right of a worker on one of these zero-hours contracts to guaranteed hours of work. You are talking about the employee having the right to request it and the employer merely having to review it. That is a disgrace. You are supposed to be here to protect workers' rights and find a happy balance, but that is not a balance. That is saying to employers that they can exploit all the staff that they want and that you will do nothing about it.
Mr Evans: The Minister's view is that providing a right to request at a particular threshold, which has yet to be determined, and placing a requirement on employers to objectively justify either continuing with that contractual arrangement or to take a decision to move to offering a fixed-hours arrangement offers a very positive way forward.
"The Department found the arguments against an automatic right to guaranteed hours, persuasive. In particular, the potential to generate unintended and negative behaviours from employers who could decide to change working patterns immediately before the automatic right is triggered".
You are saying that, if we introduce a statutory regulation on employers to treat workers right, they are going to change their working behaviours so that they are bad in a different way. I do not find that acceptable. We have all accepted that employers are exploiting workers at the minute, and you are scared to introduce regulations to make them treat workers right in case they find a new way of exploiting workers. Can you please justify that to me?
Mr Evans: The proposals are for enabling powers that will introduce a right for workers to access a tribunal where they believe that they have suffered a detriment.
Mr Flanagan: So, it is up to the employee to prove that they have been exploited.
Mr Evans: In any employment contract, whatever it is, the tribunal is there for when a worker or an employee believes that they have not been treated fairly and their rights have been infringed. They have the right to go to a tribunal and seek redress through it. One of the proposals is that there will be access to a tribunal, and, again, the enabling powers that the Minister is considering would allow for penalties or compensation where somebody has suffered detriment as a result of the actions taken by an employer.
Mr Flanagan: Finally, trade unions in the South have successfully negotiated and secured banded-hour contracts as opposed to the zero-hours contracts that we see here. The situation here is much worse than it is in the South. Those contracts guarantee employees working hours that do not fall below the minimum for their band. Was this considered in this consultation or are you willing to explore it at this stage?
Ms Walsh: No, we were not aware of anything being secured legislatively in the South.
Mr Flanagan: So, none of the trade unions responded to you to reference the existence of banded hours and the opportunities to get away from zero-hours contracts to something far more progressive.
Ms Walsh: No. I am aware that they are reviewing the issue of zero-hours and low-hours contracts in the Republic and are about to undertake a study of them. My understanding is that legislative change for those types of contracts would be a good bit down the road in the South.
Mr Evans: We will continue to monitor what is happening across the water and in the Republic. If there are any good proposals coming from there, the Minister will want to actively consider them.
Mr Ramsey: You are very welcome. I am inclined to be on the same journey as Phil. I am surprised, to say the least, that we have not got very firm regulations, direction and guidance in the area to protect employees and inform employers.
Phil mentioned guaranteed hours, and I would have thought that it would be a very simple process of regulation so that someone would have guaranteed hours after 12 weeks in employment; that you would make a statutory ruling that after 12 weeks the employer must guarantee hours. Have you not considered that?
Mr Evans: In the consultation, we looked at the issue of moving to that after a period of time. One of the issues is that people on those types of contracts may work a couple of hours one week and 10 hours the next. The Minister believed that the better way forward was the twin-track approach that he has spoken about.
The detail of the thresholds has yet to be determined, and we will have to come back to the Committee on that. At this stage, it is about establishing the enabling powers to allow that to happen at a point in time following further consultation. We would have to consult with all the stakeholders on that.
Mr Ramsey: I want to home in on a subject that I raised during an earlier discussion. Presently, almost 40% of those on zero-hour contracts in Northern Ireland are aged between 16 and 24. In many regards, that covers those who are in the NEETs bracket and who are most vulnerable. Last time around, I asked that specific research and engagement take place with organisations that deal with young people. Has that taken place?
Ms Walsh: We have been waiting to have fixed proposals that we can discuss and can assess the impact of. After the last meeting, Include Youth got in touch with us and offered to meet us. We will certainly take up that offer. It is difficult to have a discussion when you are unclear about the direction in which you will go. Those impact assessments will most certainly take place.
Mr Ramsey: Include Youth is certainly one organisation that regularly attends the Committee and informs us.
On the basis and principle of looking at young people and others on zero-hours contracts who feel that they are not being looked after well, surely you need to have formal engagement with those who are working with young people across Northern Ireland. I do not know the date of our last meeting, but it was a certainly a considerable time ago. I find it extraordinary that you could not set enough time aside to meet one organisation, never mind a raft of organisations, with the role and function of learning and working with young people to try to provide them with a pathway for career choice an opportunities.
Mr Evans: This is part of a journey. At this stage, we are coming to the Committee with the Minister's initial proposals. We are very happy to pick up the issues you have raised. Through the consultation, we received responses from a number of organisations that deal with young people in the NEETs cohort. The proposals balance the views of those and other stakeholders. The Minister has been trying to find a balance between quite diverse views on the use of those types of contracts.
Mr Ramsey: On a similar point, you referred to people on zero-hours contracts working different hours every week. They are yo-yoing between work and benefits as well. The last time we met, I asked what formal contact or liaison has taken place with DSD to reflect on the difficulties experienced by people on zero-hours contracts. You did make that point latterly.
Mr John McKeown (Department for Employment and Learning): We met initially through our Department's client-facing staff in the jobs and benefits office. They are our contact with the Social Security Agency. We have had several meetings with the employment side of the jobs and benefits office and that is what got us our link through to the SSA. As we said, we have had to go formally through the Minister to establish a more formal working group to take matters forward. The initial indications are that there is a willingness on the DEL side and the DSD side to look at the customer journey, particularly for those on flexible contracts, to see how —
Mr Ramsey: Will you share that information with us once you finalise that?
Mr Ramsey: Finally, just in case I missed it, will parental leave for those on zero-hours contracts be established with these regulations?
Mr Evans: If people have a qualifying period of service — I think that it is 26 weeks; although that qualification has actually been removed. We can write back to you on that. I am sure that it should be available, but we could write back to you on that specific point.
On the previous point, we spoke to organisations who deal with those who experience difficulties. The Minister thought it was important to elevate that issue to ministerial level in order to get the buy-in from both Departments. I am not being critical of DSD and there is no indication that it has not been supportive. It was to make sure that there was ministerial buy-in and to look at the interface between flexible work contracts and accessing benefits. That is a positive way forward.
Mr F McCann: There are a couple of things. When we are dealing with issues like this, I always operate on the premise of asking whether I would work on a zero-hours contract and what protections I would have. It always amazes me. Every time we look at legislation in the private rented sector — and I take that as an example of difficulties — we always hear that it is better to have a soft touch or a light touch, and we then start to pick up the pieces of those light-touch regulations. This seems to be more of the same.
You talk about a journey. We started on this journey hoping that major protections would be put in place for people on zero-hours contracts. To be honest, I do not see that anywhere in the proposals. It is more of the same; it is light touch. It will probably leave a bad taste in many people's mouths, who expect more from us as legislators. There is a serious concern.
You talked about a joint committee between the Social Security Agency and DEL. I would like to know how that will be made up, when the letter was sent and when it is expected that that committee will be set up. It amazes me that, in the jobs and benefits offices, DEL operates on one side and the Social Security Agency operates on the other, and they very rarely meet or discuss anything. I would like to know how this will be put in place. The problems are there and have existed for quite a long time, and I am surprised that nobody has picked up on that in the past.
Mr Evans: The proposals are meant to be light-touch not in their rigour but in the administrative burdens they will place on others. As I said, this is the first time that the joint working between DEL and the Social Security Agency has been raised as an issue. It came out of the consultation. The Minister has sent a letter to Minister Storey on Monday to seek support on that. From that, a joint project group would obviously then —
Mr F McCann: What level will that be done at, Tom? Will it be at ministerial level, at senior civil servant level or at a local level?
Mr Evans: DEL would be leading on the work —
Mr F McCann: At what level would that be done in the Department? I am also on the Social Development Committee, and I intend to raise this at that Committee. At what level is that being done? You need a driver, and it would need senior people in the Department to drive this.
Mr Evans: If you are looking at senior civil servant level, our director, Colin Jack, would probably be the lead. However, because there is ministerial correspondence, they will already be aware of these issues at permanent secretary and under secretary level. The practical working of it would be led by us, working with our colleagues in DSD.
Mr F McCann: I ask that because, under neighbourhood renewal, we were promised, at ministerial level, meetings to ensure that it was working smoothly. Sometimes, those meetings were held only once a year. If you are going to deal with the difficulties and problems that exist here, the group needs to meet more often than once a year. It also needs people who can make decisions and ensure that they are followed through.
Mr Evans: A lot of practical work has to be done. It is not about just having meetings; it is about working at cohesive processes between the staff in DSD and our own staff.
Mr F McCann: Sometimes, it is about just walking across a corridor and having a yarn about problems.
Mr Evans: We want them to have a better understanding of what they can do to facilitate more real-time access to the benefits that they are entitled to. That is the issue here.
Mr Evans: As I said, the Minister has written to Minister Storey. We are waiting for a response and will take it forward from that.
Ms Sugden: Has any thought been given to support for people who have multiple zero-hours contracts or even just multiple contracts? If zero-hours contracts are going to be part of the future, I imagine that people will take any job, which will include zero-hours contracts. Even people in full-time roles that might not be enough to supplement their lives will need to take another job. Is there anything to give support to them so that, if they have commitments in another job, the employer who has them on a zero-hours contract will not penalise them for that? I studied at university part-time and had three jobs, and I was penalised because of other commitments. That is a real experience in a lot of people's lives, and I just wondered whether they are going to be supported if they have several contracts.
Mr Evans: Removing exclusivity clauses is so that people who cannot get sufficient revenue from one contract can work in other jobs. It suits some people to work for different companies because the nature of their work means they can have different work patterns. Introducing a code of practice will set out their rights, whether in a single or multiple contract. It is also about an employee having access to a tribunal if they can demonstrate that they suffered detriment. This is building in the same processes and support mechanisms that are available to employees, because, at this point in time, people on zero-hours contracts cannot access a tribunal. The Minister wants to move to a stage where that is possible.
If somebody says, "I would like to move to a fixed-hours contract," and suddenly the employer says, "I don't like that", and they do not get any hours, that person can say, "For six months or a year, I had an average of 15 hours a week, and suddenly I now have nothing. I believe I suffered a detriment because of me exercising my right to request". Such people should have access to a tribunal.
Ms Sugden: I am also thinking of the benefits they will receive, not just the detriment they might suffer. I am not sure if it is even appropriate, but has any thought been given to bringing the hours together or will each contract be treated autonomously?
Mr McKeown: Do you mean for benefit calculation?
Ms Sugden: Perhaps. Would they be entitled to holiday pay or statutory sick pay because they accrued a certain number of hours in separate contracts, or will each contract be treated separately? I am conscious that someone might work full-time hours over three or four separate jobs. Should they not have the same rights as someone who works full-time in one job?
Mr Evans: The reality is that that would be placing a burden on one employer for holiday pay that they —
Ms Sugden: Do we have to do that? Is there an opportunity to place the burden on all three? Is that too difficult?
Mr Evans: People have a core set of rights, and we set them out in the code of practice. They have rights to A, B, C and D. The rights of workers are set out in the consultation document. Some of them do not know that they have those rights. If you asked 100 people on a contract what their rights were, many of them they probably would not know. Funnily enough, employers were also quite uncertain in the consultation about how they were based and what their workers were entitled to. That is why we need a statutory code of practice that sets out very succinctly what employers must do and what the rights of workers are.
Ms Sugden: When those rights are communicated to the employee, will it be the responsibility of one employer or of each employer to ensure that they are doing that?
Mr Evans: Every employer would have the responsibility.
Ms McGahan: I have no questions; I will just comment. The arguments about workers' rights have been well rehearsed. In my constituency, there is a social enterprise, which hosts weddings for four or five months in the year. That is the only work it gets. That money is then used to keep an education centre open for young people with disabilities. Implementing these zero-contract hours would put them out of business. I am very protective of those people. My daughter works there, and I would not expect them to pay her for 12 months of the year. It is only a social enterprise model. We have to look very carefully at those examples as well.
Mr Evans: It is not an easy area. The Minister is looking for a middle way, which helps people without creating some of the constraints that would stop good experiences.
Ms Lo: I am sorry I missed your presentation. I think that it is a very well-balanced proposal, giving flexibility to the employer on the one hand, and protection for employees on the other. You may have covered this, but paragraph 34 of your submission states:
"the Resolution Foundation's report 'A Matter of Time' suggested that Universal Credit would bring about some improvement for zero-hours contract workers."
Can you elaborate on that?
Mr McKeown: As Tom said in his presentation, we received a lot of responses to our consultation expressing concern about current access to benefits and the potential for universal credit to make things worse. The report that you just quoted from indicated —
Ms Lo: That is the perception of most people.
Mr McKeown: That report indicated that it might make things better on two counts. The real-time assessment might be more timely. The problem at the moment is that, if someone works 10 hours this week, 20 the next and two the week after that, by the time they make a fresh claim and get back into the system, they have accrued another set of hours. There is always a time lag in their benefit claim. That is the kind of thing that we are hoping to address with our colleagues in social security. Under universal credit, variable hours will be assessed more quickly, so that, hopefully, the person will not be thrown out of the system and have to start all over again. I do not have the precise detail, but there is an issue with the 16-hour threshold. It will not have the same impact under universal credit that it has in the current benefits system.
Ms Lo: So, there is something good about universal credit then.
Mr Anderson: Thank you for your presentation. You and the Chair have touched on workers' rights and terms and conditions, and the statutory code of practice. How does that tie in with what you said about the statutory requirement for zero-hour contracts to be reviewed? The Chair talked about the trigger point being reached. What is to stop any employer from telling the employee that they are no longer required a week before the trigger point is reached and then employing someone else a week later? Is it possible to put something in place to prevent an employer from telling the worker that they no longer have any hours and then, within a certain timescale, employing someone else? Can something like that be done to give more protection?
Mr Evans: An employer will be required to consider at a point in time that has not been determined yet. It may be that an employer takes such a decision about somebody who has been working for them for a significant period, although that would probably work against the employer's business, because the person knows the work and is probably very effective. The reality is that, when people suffer detriment, they will have access to a tribunal. If somebody is able to put a claim to a tribunal saying that they worked for this employer and then suddenly, just at the point in time — It is a bit like agency workers' issues —
Mr Evans: Where they take some sort of pre-emptive action just before the trigger point, the worker will have the money they have earned, the time and the hours, and they can put in a claim to a tribunal and say that it happened suddenly, just at this point in time. It will be for the employer, then, to convince a tribunal that they did not require anybody. It is not for me to determine how a tribunal conducts its proceedings, but it would obviously look at the employer's actions leading up to the end of the contract and after it to determine whether they are able to demonstrate business rules.
It is bit like the Minister asking me in another review that we were working on what we were doing about vexatious claimants. This is about putting good practice in place. The vast majority of employers want to do the right thing; it is important to recognise that. This code of practice would set out everything clearly for them. We found that some employers were not sure of what they should be doing. They are focused on their business and do not have HR departments. I talked to HR consultants who advise small employers when we were introducing dispute resolution procedures. They said that we should not leave it as a non-statutory code, because employers would just ask whether it was law, and if it is not, they would just say, "We do not have to do it; it is guidance". But a code of practice sets out succinctly what the processes are. There would need to be in the code of practice the steps that an employer has to take when making a decision about whether a contract continues to be sustainable or whether they need to consider fixed hours.
Mr Anderson: How did you consult or what contact did you have with small employers? Their rights have to be protected as well in the code of practice.
Mr Evans: We have regular contact with some of the bodies that represent them. We met and continue to meet with the Federation of Small Businesses. It also met with the Minster. Representatives of the Engineering Employers' Federation also attended a number of events we ran. We continue to look at this. Deirdre talked about impact assessments, and there could also be an impact on employers. Obviously, we are a small employer economy, and the impact assessments deal with those issues.
Mr Anderson: Do you see the need for more contact and more consultation on this issue?
Ms Walsh: I was just going to say that the consultation also explored the issues for small employers, and we got quite a lot of commentary on those issues. The proposals that the Minister wants to take forward are informed by the view that they would not be detrimental to small employers any more than to large ones.
Mr Evans: We also conducted dedicated research into the problems that small employers have in fulfilling all their responsibilities under employment law. We have published research, and we are taking forward some of the measures identified through that. We talked to the Federation of Small Businesses before about the terms of reference, and it had a representative on the steering group. It accessed real small employers, not just policy people. That was very enabling research. A significant number of employers were contacted as part of that research.
Mr Anderson: Very often, the owner of a small business cannot get tied up in a lot of legislation and has not got the time to do that. They would have to be very much on board with whatever comes forward and well aware of what protects them and the worker in the workplace. There is an issue there to help those small employers.
Mr Evans: You are absolutely right. The Labour Relations Agency targets some other support material at accountants, because the small employer takes advice from them. Therefore, they have very regular dialogue with the professional body and the local accountants, and circulate the information, because they are the first point of contact.
The Chairperson (Mr Swann): Tom, coming out of this whole thing, my frustration and that of some members earlier was when you talked about employers — the employer who wants to do the right thing, the ethical employer — and how this legislation could help them. Our biggest concern with regard to zero-hours contracts is the unethical employer — the employer who does not want to do the right thing by their employees. That was what we, as a Committee, were hoping would be more enforced and more transparent in this piece of work. I know that you talked about codes of practice and all the rest, and, as Bronwyn said, there is going to be a lot of onus placed on the employee rather than the employer —
Mr Evans: Where the Minister is coming from, this is shining a light on employers. A code of practice sets out what they are required to do in law. The right to review the contract puts that they have to objectively justify it. There is then the access that somebody will have to do if they believe that they have suffered a detriment and the people have not followed it. The measures are there for the employers who act well and just need to have the direction and support. However, those measures equally apply in every other jurisdiction where there is employment law. I attended an event where a trade union representative rightfully got up and said, "There are employers here who are sacking people and doing terrible things". That was in an earlier review. I said, "That is what the tribunal is there for, and you should be supporting them if that is happening". So, access to the tribunal is a critical issue in enforcement measures.
The Chairperson (Mr Swann): If somebody on a casual-hours contract or a zero-hours contract takes an employer to a tribunal, you can be sure that they will not get many hours the next week.
Mr Evans: It is for that very issue. The worker will have an audit trail of what they were paid and when they were paid, and suddenly they have nothing.
Mr Evans: Chair, you raised the issue of holiday pay and said that you wanted a briefing. Do you want that now? We have a short brief. You had asked for a verbal update.
Mr McKeown: I will be very quick.
In November 2014, you asked us to detail any actions that were taken following the ruling of the Employment Appeal Tribunal on overtime being included in holiday pay. I will not rehearse all the detail of that ruling unless you want me to. Essentially, that ruling was impacted by legislation taken in GB on 18 December following the establishment of the task force in GB to discuss business concerns about the implications of the judgement. Business concerns were that employees might be entitled to significant back pay of arrears for underpayment of non-guaranteed overtime in the calculation of holiday pay. On 18 December, GB laid a statutory instrument, the effect of which will be to limit to two years how far back in time workers can apply for arrears.
While that two-year period is described as a backstop, it does not come into effect until 1 July 2015. Therefore, at the moment, employees would be able to claim as far back as they can, up until 30 June. Once 1 July comes in, the backstop kicks in and they can only claim back a maximum of two years. That was the GB Government's initiative to alleviate the concerns of business.
We have been asked by some representative bodies, and the Minister has been asked, whether we are going to replicate that backstop. In the last week, we have written out to key stakeholders to get a sense of what the potential impact of the Employment Appeal Tribunal ruling would be and to gauge their views on whether we should mirror the backstop rule. We have given a very tight turnaround time, because we are conscious that employers and employees are interested in this and anxious about the ruling. We have asked for responses by 4 March. Once those responses are in, we will update the Committee on where we have got to with the responses and our potential proposals to move forward.
Mr McKeown: As soon as possible after we get the responses back and after updating the Committee and discussing it with the Minister.
Mr Evans: We have not looked in detail at that. GB did not consult on this, and the Minister is mindful of that. The Minister wants to get a sense of the real impact and whether, at this stage, there is a need to take any action. He is reserving that judgement. If a fairly compelling case is made for some action, there may need to be further consultation, at least with the Committee. I imagine that any regulations would need to be debated in the Assembly, because it would be quite a significant issue.