Lord Offord of Garvel:

Moved by Lord Offord of Garvel

That the draft Code laid before the House on 19 February be approved.

Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee

My Lords, this code of practice, which I will refer to as “the code” for the remainder of this debate, will give legal force to accepted standards about how employers should act when seeking to change employees’ terms and conditions.

The purpose of the code is to ensure that dismissal and re-engagement is only ever used as an option of last resort. The code also seeks to ensure that, where an employer wants to make changes to an employee’s terms and conditions, the employer engages in meaningful consultation with a view to reaching agreement with employees or their representatives in good faith. Employment tribunals will have the power to apply an uplift of up to 25% to an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.

Between January and April 2023, the Government consulted on a draft code, enabling trade unions, employers and other interested parties to contribute their views. In accordance with the Trade Union and Labour Relations (Consolidation) Act 1992, the Secretary of State also consulted ACAS on a draft statutory code before publishing it. Careful consideration was given to those views and, as a result, changes were made to the draft code. An updated draft code was laid in Parliament on 19 February.

The Government have been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic by employers. When the Covid-19 pandemic led to cases of dismissal and re-engagement, the Government asked ACAS to conduct an evidence-gathering exercise to help us better understand the issue. That report was published in June 2021. The Government then went further and asked ACAS to produce new guidance to ensure that employers were clear on their responsibilities when making changes to employment contracts. That guidance was published in November 2021. ACAS has also published guidance for employees. The Government are now going even further to address the use of dismissal and re-engagement by bringing forward the code, aiming to ensure that this practice is only ever used as a last resort and that employees are properly consulted and fairly treated.

In all these discussions, we must balance protections for employees with business flexibility. There have been calls to ban the practice of dismissal and re-engagement and suggestions to legislate to restrict its use in a manner that amounts to an effective ban. This Government believe that we must preserve companies’ flexibility to manage their workforce in times of crisis. It is, therefore, right that we have mechanisms to enable us to save as many jobs as possible. The code is a proportionate response to dealing with controversial “fire and rehire” practices, balancing protections for employees with business flexibility. I know that the vast majority of employers want to do the right thing by their employees. For most employers, decisions to change terms and conditions are not taken lightly, nor is the choice to let members of their workforce go.

The UK is a great place to start and grow a business and has a strong labour market. Its success is underpinned by balancing labour market flexibility and worker protections. It is vital that we continue to strike the right balance, while clamping down on poor practice. If this code is approved by Parliament, it will be issued and brought into effect by the Secretary of State in accordance with the procedure set out in Section 204 of the 1992 Act. The Government intend for the code to be in effect by the summer.

I am aware that a regret amendment has been tabled by the noble Lord, Lord Woodley. I will respond to it later in the debate. I hope that your Lordships will support the code. I beg to move.