Claire Costello, Helen Dickinson OBE and James Lowman gave evidence.

We will hear oral evidence from Claire Costello, chief people officer at the Co-op, Helen Dickinson, chief executive of the British Retail Consortium, and James Lowman, chief executive of the Association of Convenience Stores. We have until 12.10 pm for this panel. Would the witnesses be good enough to introduce themselves for the record—very briefly, as we are pressed for time?

Claire Costello:

I am Claire Costello, chief people and inclusion officer for the Co-op. For those who do not know the Co-op, we are a retailer, funeral care provider, insurance provider and legal services provider. We employ 55,000 people. I am very happy to be part of this process.

Helen Dickinson:

I am Helen Dickinson, chief executive of the BRC. The BRC is the lead trade body for the retail industry. Our members cover larger businesses like the Co-op and many others, down to smaller businesses. We also have in our membership some trade associations that represent independent retailers.

James Lowman:

I am James Lowman, chief executive of the Association of Convenience Stores. Our members are the people who operate local shops in villages, estates and high streets up and down the country. There are about 50,000 of them in the UK.

Good morning to the witnesses. This quite far-reaching Bill will have a significant impact on your direct employees and the employees of the businesses you represent. We heard evidence in previous sessions that some of the Bill’s measures will make many businesses more reticent to take on new employees, and certainly more reticent to take a risk on someone who might deserve a chance, or a second chance, in life. Do you share that assessment? Are you concerned about the direct implications of this legislation on hiringQ91 ?

Claire Costello:

We are very supportive of the opportunity provided by the Bill. As a co-operative, and a very old co-operative at that, the health and wellbeing of our colleagues is incredibly important to us. We are very supportive of the principles of what we are looking to drive for here, but the challenge around the detail needs to be looked at.

For example, what does it mean to have a probationary period that enables a colleague to join you and ensures, first, that you give them the right opportunities to develop and grow and, secondly, that, if they are not suitable, you have the opportunity to enable them to leave the business? I will give you a couple of stats. Of our leavers last year, 75% had been with us for less than two years, and 36% of the people we asked to leave the business had been with us for less than three months. That is a really good example that shows that it just does not work out sometimes.

Could the probationary period be a barrier with unintended consequences? Yes. Are there things you can do around that to minimise it? I would say so, but again, we need to make sure the detail of the Bill does not drive unintended consequences. It must leave enough flexibility for employers within the broader groups represented on the panel and for us. We want to support people from disadvantaged backgrounds and bring ex-offenders into the organisation. We are working very hard to support them across a number of areas, so we do not want that to be an issue. We would work really hard to make sure that it is not an issue at the Co-op, but ultimately, on a broader footprint, it is something to be mindful of.

What would be the idealQ probationary period?

Claire Costello:

I think it is more about the fact that the Bill will drive more tribunals if people feel that they have a route to do that, so that might make people a bit reticent. There is also the timescale. We have a three-month probationary period, so nine months is fine, but there is a point about day one rights to leave. That does not stop you supporting a new starter into the business and, if it does not work out, being able to manage that exit, but it is about doing it without incurring significant costs at every single level. That does not mean just the formalised cost of going through an employment tribunal, but the time it takes to hear a case within the business. Good organisations make sure it is heard at different levels, and then a grievance is raised and you have an appeal. It is very time consuming to do it in the right way, but that is what we want to do. Again, it sucks up time, resource and cost within an organisation, when what you want is to spend the time enabling people to be successful, and driving productivity and driving the benefit for the business you work in.

Q Has the Co-op done any modelling of what the provisions in this Bill would cost the whole business?

Claire Costello:

Not yet, because there is not enough detail for us to do that. We are really keen to see what the more detailed asks look like.

Q This is my final question for you, and then I will bring in the others for the same set of questions. Do you believe, in principle, that the Bill will cost the Co-op money?

Claire Costello:

Yes, there will be on-costs from the Bill. Do I think it is the right thing overall? Again, we are broadly supportive of where it is heading, but there will be on-costs in there.

Q Thank you. Helen Dickinson?

Helen Dickinson:

Thank you very much for this opportunity. We are probably going to end up violently agreeing with each other, but let us see how we go.

There is real alignment on the objectives of the Bill: to improve working practices, have the right culture between employees and businesses, and weed unscrupulous employers out of the system by targeting them. It is great to have the opportunity to talk to you. I am sure that, from a Co-op and a wider retail industry point of view, many responsible businesses are already undertaking some of the processes in lots of parts of the Bill—things like the right to flexible working—and I think everybody is supportive of and aligned on proposals like a single enforcement body.

Building on Claire’s comments, the challenge comes in certain areas where the devil is in the detail. Claire mentioned probation periods; what does the guidance and the framework for a fair dismissal process look like? I have a list: guaranteed hours, union recognition and collective consultation. In all those areas, there is some detail that we can delve into to see where the challenges might sit. It is about making sure that the implementation does not end up in the scenario where too much cost is added, or too much process is put in place that disincentivises employing people from a disadvantaged background or in the entry-level jobs that the industry is so good at providing. Part of that is in the Bill, but a lot relating to how some of these things will get implemented will be done through the consultation process that comes after. Shall I dip into guaranteed hours, as an example?

Please do.

Helen Dickinson:

A reference period is conceptually a good idea—the question is whether it is too short. I know that some people who appeared in front of the Committee earlier this week suggested that it should be slightly longer. I think requiring a business to offer the hours of that reference period in every single circumstance does not really take into account the peaks and troughs, the flexibility that retail businesses need or that lots of people who work in retail already have, and how the actual implementation could be framed to give people the opportunity to opt out or to have the right to request, as opposed to the right to have.

That is an example of where the implementation could be very onerous, very expensive and disincentivising, or, if it is implemented in a way that actually works for businesses and employees—because a lot of people value that flexibility—can create the win-win that the framework and the objectives of the Bill are seeking.

James Lowman:

I agree with much of what Claire and Helen said, so in the interests of time, I will not repeat that. To give a bit more flavour on convenience stores, we see ourselves as an exemplar of flexible, local, secure working—98% of colleagues have a contract, and zero-hours contracts are used very little. More than a third of our colleagues walk to work. We are the ultimate local, flexible employer. Most requests for flexible working, whether in the formal, legislative framework or not, are agreed to, because if you have good people, you want to keep them in the business and you want to accommodate what are usually other responsibilities, which are often about care for children or older relatives.

Specifically on probationary periods and early rights, 84% of people who work in our sector have been there for more than one year. Most people who have been there for that period of time stay on. Half of people working in our sector have been there for more than five years, so we have a longevity of employment, but there is a spike of people who move on quite quickly because it is not right for them. Seasonality, of course, could cause that. There is a particular challenge when we are talking about encouraging our members, as we do, to look at bringing in people from typically underutilised backgrounds, whether that is care-experienced people, ex-forces or ex-offenders. We produced a document with the Retail Sector Council last year looking at opportunities for those people.

For everyone starting a business, there is always a chance that it just does not work out. It just does not transpire that it is the job for them. Sensible probationary periods—they do not have to be too long—will allow that to play out without undue risk to the employer.

The final point I would make is that in an independent business—we represent some large businesses, but 71% of convenience stores are independently operated—the person running the business is the finance director, the buying director, the marketing director, the operations director and the HR director. No specialist resource is being called on, so additional processes to manage someone leaving the business are particularly burdensome for smaller organisations who do not always have people like Claire and her colleagues to help them through that.

There has been a lot in the media, and I have seen this in my constituency, about workers in retail and convenience stores facing unacceptable abuse. Shoplifting is particularly problematic in many places at the moment. Do you think that some measures in the Bill will add to the difficulties in recruiting to the sector, because people are that bit more nervous about coming face to face with an abusive customer or shoplifter?Q

James Lowman:

There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.

There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.

I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.

Q Good morning, everyone. Like a number of other witnesses who have spoken, I think you are generally supportive of and positive about the impact of the Bill. Do you feel that it will help to raise standards across the board and create the level playing field that we are trying to achieve?

Claire Costello:

As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.

Helen Dickinson:

I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.

At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.

James Lowman:

I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.

It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.

Helen Dickinson:

So does sickness.

James Lowman:

And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.

Q Claire, you have said that a lot of the things in the Bill are things that you do already. Could you expand on why these are things that you have done already, above and beyond your legal requirements? Is it about improved worker wellbeing? Retention? Productivity? What are the benefits that you see from taking these steps?

Claire Costello:

All of the above. We pride ourselves on being as forward thinking as we can be. There is always an affordability in there, but we tend to listen very clearly to our colleagues. We work closely with our unions as well. We have focused on areas that our colleagues have told us are important to them. If I look at the bereavement policy in the Bill, for example, we built that in. We worked with Cruse, a charity that is significant in that sector, and have done something pretty unique in terms of support.

The Bill is a great development for industry. There are things that we have done, which were already quite different, in there. We do not insist that it is within the first 50 days; we ask for them to use it flexibly, because it could be a significant birthday or date. We also do not limit it to direct family members because, in today’s modern family and society, it is not always your parents who are the closest to you. We have made it based on the relationship that you have with the person that has passed, and therefore what bereavement means to you may be different.

You might want to take a week off at the beginning. It may be that you want a couple of days, and then four or five weeks later you need a couple of days, or even a year later you need to take time off because it is an anniversary and you need to support people. Things like that are where we have written policies and worked with our colleagues to do something that works for them. It is to drive retention. It is to drive engagement. It does mean that we have, hopefully, a happy group of people who want to work with us. As a member-based organisation, that is important to us.

Another good example on the bereavement policy is that I noticed that it did not cover pregnancy loss. Again, that is a policy that we have worked really hard on and I think that is an opportunity to put something slightly different into the Bill, because bereavement is bereavement. How do we make sure that it covers all aspects of it in the right way?

Q Thank you. Helen and James, is there anything you want to add to that?

Helen Dickinson:

No, the overarching point is exactly as has been said. The most successful retail businesses are ones that have highly engaged workforces that are aligned to the objectives of the business and feel part of the success of a company. People who feel like that are going to work harder and the business is going to be more successful. It is all part of a reinforcing system. If it is done well, from an individual company point of view, the exemplars are the more successful businesses. It comes back to ensuring that the Bill targets those at the bottom of the pile, those that are not engaging in the right way in having forums for employee engagement or having a two-way dialogue on flexible working or whatever it might be. It should be a win-win, but I think the risk is big in terms of making sure that we do not end up with those unintended consequences.

James Lowman:

Retail is based on respect for colleagues and customers. That is how businesses work, and I think that the Bill and the principles here are very much in line with that.

I know from conversations that I have had with businesses in my community that the Budget is set to have a significant impact on employers. Although there is a lot to welcome, broadly, in the Bill, would taking a more staged approach to its implementation be of help, or are you confident that your businesses could take this in one big bang?Q

Helen Dickinson:

That would help. I am jumping straight in, because I feel quite strongly about this one. I do not want to rerun some of the challenges of the Budget, but the pace of additional costs that have come in for every business—particularly for retail, because of the nature of flexible work, with a lot of part-time contracts and the changing of the threshold—means that every single retailer in the country needs to look very hard at their investment plans and workforce plans, and everything that sits around that.

I think that everybody sort of breathed a sigh of relief with the clarity that the timetable was for 2026, but even now, looking at the scale of the proposals, it would be great to have more visibility over the sequencing of the different consultations, so that the industry can gear up in the right way to be able to respond effectively to them, and to make sure that we have longer than six-week periods to respond, with four consultations all going on at the same time, because that all makes it quite a challenge.

Coming back to the direct point of your question, in terms of implementation, if there are changes that need to be made in companies, I think that a run-in, or an implementation period that is workable and that gives those companies the chance to make any changes to processes, is a necessity for ensuring that the Bill lands in the right way and that we do not again end up with some of those unintended consequences. I think the Budget has unfortunately made the backdrop that much more challenging, just because of the things that people already need to deal with now and over the next six months.

Claire Costello:

I will add to the piece around implementation timing: it is really easy to think of this as, “Oh, it’s straightforward; it’s about writing a policy, then, once you are in a business, sharing that with your colleagues, making sure that your line managers know what is expected of them, and landing it.” Much of what we are talking about here will require businesses, certainly larger businesses, to think about how their systems are set up as well. It changes your payroll system; it changes your workforce management system. All that is doable, but it is at the same time as other changes that organisations will be working on in the background as well. That is what we need to factor in.

On top of that, where we then have colleagues who are themselves impacted by the changes, it is about making sure that you have time to make sure that they understand that and what it means to them. It is about that run-in. It is about more than the cost; it is quite significant from the point of view of process, understanding and implementation. That is the ask, really—it is the detail and the time.

Helen Dickinson:

I am sure that James will have points from a sort of one-establishment type business, but, for multi-site businesses, you could be talking about 10, 100 or 1,000 stores and distribution centres up and down the country, so we should not underestimate the significance of the need for up-front visibility of the changes.

James Lowman:

The other change that has happened with the Budget and those additional significant costs on businesses is about how retail businesses respond to them. In maybe a medium-sized business—among our medium-sized members—they might have had to take out layers of management. That might include, for example, HR functions and things like that, and losing that support. In an individual store, with an independent retailer, that retailer is probably working more shifts behind the counter and in the store themselves, rather than working on the business and managing the business. That will be a consequence.

Decisions are being made to cut back shifts to compensate for those significant additional costs, so the ability and the time available for businesses of all sizes—particularly some of the smaller and medium-sized ones —to implement these changes is less than it was before the Budget, or before April. That is the reality of it.

Again, yes, it is partly about timing—that is very important and I align myself with what Helen and Claire have said about that—but that also makes it even more important that the guidance and regulations are absolutely right, so that those already increasingly and additionally stretched businesses are not spending more time in employment tribunals and having to deal with complex interpretations with their colleagues, or struggling to fill shifts and therefore having to work more hours themselves.

Please be brief, Mr Darling; we have a lot of people wanting to come in.

Q I will be brief. Tackling harassment is a really important duty and a really important part of this Bill to me. I would welcome your reflections on how the Bill could be strengthened to support employers in this area, which in Torbay hits hard, particularly for young women.

James Lowman:

We need absolute clarity on what “reasonable steps” means. Those reasonable steps should not be onerous, given the reality of 15 million people coming to the store every day, whose behaviour we unfortunately cannot control—believe me, if we could, we would. Having clarity and reasonableness in all reasonable steps is the thing to do, and there is an opportunity to build on that; the ShopKind campaign, for example, has been very successful. That is one way we could channel those steps to promote good behaviour among customers.

My questions are for Claire. I should declare that I am a Co-op member and a member of the Co-operative party. You mention having a positive relationship with your unions. I was an employment lawyer before I came to this place, advising businesses up and down the country. In terms of your view on the provisions around union recognition in this Bill, what do you think the benefits to business are of having a positive relationship with the trade unions that represent your employees?Q

You also mention an increase in employment tribunal claims. We would hope that most employers would follow the new legislation and therefore avoid those claims, but we both know that there are a small number of bad-faith actors who will always try to find a claim. There are already claims that individuals can bring from day one, but do you think you will see a big increase in bad-faith claims, or do you think they are already there in the system?

Claire Costello:

I will take the point about unions first. The strong relationship we have with the union means that we can work in a very collaboratively challenging way together—do not get me wrong; it is not without having difficult conversations, but that is the point. A healthy relationship is like a healthy marriage. You do not just give up on each other. You have those difficult conversations with each other and face into issues and look for solutions. The key for me is looking for solutions. Having very progressive relationships means that you can talk about the direction of the business and what you need to do, and work together on finding solutions. That is what we have found with our relationships. It is not always easy, but it is absolutely the better way of going forward.

In terms of employment tribunals, I think you are right. The reason we think it would go up is that, as with all things, when something becomes more available, by virtue of that fact there will be more people who want to use it. We do not have the absolute evidence to say it, because it is not there today, but the reality will be that if you can take their employer to court, why would you not? There will be more individuals who would wish to do so. We have said before that it is about having clarity and making sure that we understand what reasonable looks like and what the steps are that would be expected. It is more about the onus of extra work that this will bring to each of the areas. As I said, we follow all of the processes very strictly, and we try to make sure that we have a very fair and open conversation with all of our colleagues. The challenge will always be that you cannot make everybody happy all the time.

Ms Costello, you mentioned some statistics on those leaving your organisation quite early on after starting. Could you reflect on the impact on productivity of the day one rights and probationary period?Q

Claire Costello:

Gosh, that is a good question. I do not see why it would make a difference to productivity itself, because at the end of the day you are still bringing someone new into the organisation. I think it would be a longer-term impact. If we did start to see more people raising a grievance because they want to leave or because we have said, “Actually, this is not the right role for you.”, it would be the time perspective that would be drawn on. That is more your line managers, store managers and leaders around the organisation that would draw on to that resource. I kind of see it as more of a longer play in terms of productivity.

Q On that longer-term point, if you have more employees raising more grievances, it takes up more staff time and manager time, and therefore it would have a detrimental impact on productivity.

Claire Costello:

Absolutely, and I think that was what James was referring to as well, when you think about the smaller stores within the convenience sector. But for us, it absolutely is about the time that it takes for line managers and regional managers. Do not forget that we are not just a retail provider, so it would be within our funeral homes, when we should be out looking after clients at the most difficult times in their lives, and our insurance organisations, as well as legal services. It is across the whole organisation for us.

But yes, it is the line management time that goes into following these processes, doing them well and making sure that everybody is having the right hearings that they should be having. It is a time-consuming process. It is right because, absolutely, we want to make sure that everybody has a fair hearing and that the right decisions are being made for the right reasons. However, it is time-consuming and that is the concern.

Mr Lowman, do your members guarantee hours and provide reasonable notice of shifts, or make some payment when they cancel shifts at short notice? If not, what do you think the effect is on their employees—in other words, do the employees struggle to pay their bills?Q

James Lowman:

By and large, we set out shifts; we have clear shifts that are worked to. It would be rare that a shift got cancelled at short notice. With convenience stores, fundamentally we are open for those hours; we need to fill those hours. It would have to be something pretty extraordinary that would lead to a cancellation, for example a massive disruption to delivery. We would be bringing in extra colleagues to deal with a delivery, which then gets cancelled, so that work is not there for them to do. However, even that is relatively rare, so we provide consistency of hours.

It is more common that the challenge is dealing with sick leave and then having to fill shifts, and additional shifts coming in. That is when you might get some later changes and later notice, because someone has phoned in sick that morning, so you need to fill the shift that morning; you need to have a person in the store, or—worst case—the store could not open. Again, however, a lot of that is done colleague to colleague, in terms of filling those shifts.

Regarding the impact, there are a whole range of people working in our stores, for some of whom it is a second income in their household. But for many, it is the first income in their household, so it is very important that we provide that local, flexible and secure work to people. In many ways, this Bill is enshrining and codifying things that are already common practice in our sector.

My constituency has an enormous number of what I would call small businesses or even microbusinesses; the obvious ones are in retail and hospitality, but there are also innovative manufacturing businesses. We have mentioned the fact that some of these rules are quite onerous for very small businesses that only have three or four members of staff. Is there any scope for some exceptions to some of these rules for businesses under a certain size?Q

James Lowman:

We probably do not support the idea of exemptions. We think the rights should apply whoever you work for, and we do not want small businesses to be cast as being less good employers, with fewer protections for their colleagues.

However, the guidance needs to be applicable to and usable by businesses of all sizes. The guidance and regulations cannot be drafted from the perspective of, “What is your HR director going to do? What is the machine of the business going to do?”, when that is not the reality. For the vast majority of businesses in this country, the process will be much more driven by individuals having conversations, in order to encourage not only that flexibility and clarity, but practicality.

With good guidance and regulations, there should not be a need for exemptions. As I say, we do not want small businesses to be viewed in any way as being worse employers; in many ways, they often have advantages that allow them to be better employers.

I call Michael Wheeler to ask a very brief question, which should receive a brief answer.

Thank you to the panel for your evidence so far.Q

I will just circle back to guaranteed hours. Although I appreciate that flexibility is of value in the sector, if the hours are there in the business and regularly being worked, would you not agree that that demonstrates there is a need for those hours in the business to be worked, and therefore, in the interests of fairness and financial security for workers, should those hours not be guaranteed for them?

Helen Dickinson:

Again, it comes back to how. A lot of people who work flexibly want to vary their hours because they have other commitments, either family commitments or caring commitments. From an employee perspective, they should absolutely have the right to request flexibility, or to be able to have future hours that reflect something that they have over whatever reference period it is, whether it is 12 weeks or longer. If the regulations end up requiring that reference period—and, by definition, requiring employer to offer whatever that period is to the employee, just by process—peaks and troughs around peak trading periods and employees’ other commitments will cause the company to end up in a continual process of changing people’s hourly patterns, all the time and for a lot of people. When a company has multiple locations, and tens of thousands or hundreds of thousands of employees, it could be quite difficult.

I think we are absolutely agreed on the principle. The question is how you implement it, and whether there is a way to implement it that gives the employee the right to request, rather than putting the onus on the company to put in a whole load of process that actually, at the end of the day, might not be what the employee wants.

Order. I have to bring this session to an end. We have run out of the allotted time, and sadly, there are some Members of the Committee who did not get the opportunity to ask the questions that they wanted to ask. However, I thank the witnesses for the time they have spent with the Committee.