Employment Rights Bill ignores umbrella companies, warns REC chief

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A lack of umbrella company and agency worker references in the Employment Rights Bill is a ‘major lacuna’, Neil Carberry, head of REC, tells MPs

In the latest stage of the Business and Trade Committee hearings on the upcoming Bill, MPs questioned witnesses from the Recruitment and Employment Confederation (REC), Frasers Group and USDAW (Union of Shop, Distributive and Allied Workers), with all agreeing loopholes should be closed.

Liam Byrne, chair of the Committee and Labour MP for Birmingham Hodge Hill and Solihull North kicked off the session with questions for Lillis about the union’s view of the Bill.

‘The hard work starts now trying to put this into legislation,’ said Paddy Lillis, USDAW general secretary, but it is important ‘no one is taken advantage of’.

Lillis said: ‘It’s going to be transformational for millions of workers across the UK, really pleased to see it, but firstly, the hard work starts now trying to put this into legislation.

‘The main issue for us is low hours contracts and zero hours contracts, but it’s not just that, you’ve got day one rights around sickness absence.’

Lillis added that the low hours contract addition in the Bill should not be there as companies will expose this as a loophole to exploit employees. However, he said implementation of the Bill should be relatively ‘smooth’ if the legislation is ‘tight’.

While the exchange with USDAW went relatively smoothly, there was more kickback when REC boss Neil Carberry was questioned.

Sonia Kumar, Labour MP for Dudley turned her attention to Carberry, chief executive of REC, asking him how businesses can implement low and zero hours contracts.

Carberry replied that the real challenge is going to be how to apply the rules to agency workers, as these workers ‘will typically be signed up to multiple agencies’ which have multiple clients.

Carberry said: ‘For me, one million people went to work as agency temps this morning, the articulation I’ve heard from government of why agency temps might be covered by these powers is “we want to avoid bad direct employers using agency workers as a loophole”.

‘I’m not sure those million temps should be taken for granted like that, I think we need to think that agency workers are protected by their own Act’.

He suggested that agency worker regulations should be strengthened but also shared his fear that there is a ‘real risk’.

Carberry continued: ‘This Bill has nothing to say about the primary thing that my members think the use of this Bill should regulate, which is the use of umbrella companies, and that is a major lacuna.

‘If you look at the definition of the employer in the Bill, it probably reads as “maybe includes umbrella companies”, but we’ll find out as we always find out, which is in seven or eight years’ time when Paddy [USDAW] or one of his colleagues supports a worker to bring a claim and the claim gets to Supreme Court, it’s not really where we want to be.

‘It may feel like extending these to agency workers is an easy step, and actually in those long assignments as long as the relationship remains with the agency, and it doesn’t transfer to the hiring company, probably we could make it work, it’s the impact on the service buyer we are worried about.’

Byrne then asked what Carberry’s ideal number of weeks for an agency worker assigned to one business would be, and was laughed at by Committee members when he referenced talk that businesses want 52 weeks.

The number of hours worked in a week to consider someone on a ‘low hours’ contract was then discussed, with Carberry not moving on from umbrella companies who use ‘annualised contracts’, which average around seven hours per week according to REC figures.

At this point, Lillis stepped in, saying he believed anyone on 10 hours or less per week should be considered a ‘low hours contract’ but believes the term low hours contract should be replaced with part time, as companies could look to take advantage of the maximum hours on one of these contracts.

Byrne asked Carberry: ‘If you were writing the Bill, what would you have liked to have seen on umbrella companies?’

Payroll practice was the main factor Carberry mentioned as being ‘pretty poor’, saying: ‘We would like to see the kind of regulation of the Employment Agencies Act, and the employment regulations brought to employment businesses brought to umbrella companies as well.’

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