First Standing Committee on Delegated Legislation
Tuesday 2 November 1999
[Dr. Michael Clark in the Chair]
Draft Working Time Regulations 1999
4.30 pm
The Minister for Competitiveness (Mr. Alan Johnson): I beg to move,
That the Committee has considered the draft Working Time Regulations 1999.
A commitment to the creation of a flexible labour market, underpinned by decent minimum standards is central to the Government's approach to employment relations. We believe in fairness for all in the workplace. The working time regulations are an integral part of our employment legislative programme and contribute significantly to the Government's wider goal of promoting social justice and family-friendly employment.
Since their introduction on 1 October last year, the working time regulations have provided protection to the most vulnerable workers, ensuring that they are able to enjoy the same conditions as the majority of workers in the United Kingdom and the rest of Europe. Specifically, these rights are: no worker can be forced to work more than 48 hours a week on average; a right to paid annual leave--rising from three to four weeks later this month on 23 November; a right to rest breaks during the working day; a right to rest periods from work, including the right to a day off a week; special protection for night workers, including the right to health assessments; special protections for adolescent workers; and protection from unfair dismissal or detriment for asserting those rights.
While the Government belive that those rights and entitlements are appropriate, and indeed long overdue, we also recognise that businesses have to operate them, and we are sensitive to any unnecessary problems that they may cause. Our approach to implementing the directive has, therefore, been to maximise flexibility wherever possible, as long as that does not diminish the protection provided by the directive. Consequently, the regulations allow for arrangements to be made, through agreement between employers and workers, that are appropriate to particular workplaces, suit the workers themselves and maximise efficiency for employers.
The Government have been closely monitoring the effect of the regulations since they came into force. The feedback that we have received from workers has, not surprisingly, been positive, and in most respects the same has been true of feedback from employers. An Institute of Personnel and Development survey of employers found that an overwhelming majority of firms thought that the regulations were a good thing, did not feel that their business had been adversely affected and believed that the regulations would benefit their employees. However, recognising that this is new and complex legislation, we have kept an open mind as to how it can most effectively be administered. In that respect, we believe that there is scope to help business without reducing the protections that are extended to workers.
On 7 July my right hon. Friend the Secretary of State announced two proposed changes to the regulations, to cut the bureaucracy for employers and workers alike. The first amendment will dispense with the requirement to maintain detailed records for those who have voluntarily opted out of the working time limits. It will be replaced by a simple requirement to keep a list of those who have signed opt-out agreements. The Government consider that it is unreasonable to ask employers to maintain detailed records on members of staff who have decided entirely of their own volition to work longer hours. We do, of course, recognise that those who have opted out of the working time limit are still entitled to health and safety protection, but we do not believe that it is necessary to maintain records for such workers, unless the Health and Safety Executive considers them to be at risk. In that respect, the health and safety authorities will be able to obtain further information, including the keeping of records where appropriate, that is necessary to protect the health and safety of workers through the use of existing safety law.
Of course, workers receive protection from working excessive hours unless they choose otherwise. If their circumstances change after they opt out, or if they have a change of heart, they can choose to be covered by the working time limits again at any stage.
The second amendment relates to the unmeasured working time derogation, which disapplies the working time limits for so-called autonomous workers, for whom the duration of working time is not measured or predetermined, or can be determined by the worker himself or herself. The intention is to allow the derogation to apply to workers who have an element of their working time predetermined, for example by contract but who choose to work longer of their own volition.
The amendment would have the effect of disregarding some of a worker's time in respect of the working time limits. It does not exclude such workers from the entitlements to daily and weekly rest periods, rest breaks or paid annual leave. Those workers will also continue to be subject to the weekly working time limit in respect of time that they are required to work.
Let me be clear: having provided workers with safeguards from working long hours, we are not about to take those rights away from them. The amendments are there for those who put in more hours than their employer requires of them, because they want to, not because they are paid or required to. If the worker is required to work additional hours because of the demands of the job the amendment will not apply.
If workers are unclear as to the application of the new measure, they will need to consider a test that the amendment sets, which is that
"the specific characteristics of the job are such that, without being required to do so by their employer, the worker may also do work the duration of which is not measured or pre-determined or can be determined by the worker himself".
Some or none of a worker's working time may meet the conditions of the test. Any working time that meets those conditions will not count towards the 48-hour weekly working time limit. Simply put, unless the worker has voluntarily decided to put in extra hours the amendment will not apply.
Therefore, the amendment will not apply to the teacher who must do marking after school, the cleaner who is required to work longer than usual after a function, the paramedic who is tending the injured after the end of a shift or the shop worker who is stocktaking after work. Prior to the Secretary of State laying the draft amendments before Parliament on 19 October, a brief period of consultation on the proposals was undertaken with major industry and enforcement bodies including the Trades Union Congress, the Confederation of British Industry and the Health and Safety Commission. Those bodies have also been actively involved in our deliberations on the amendments. We have listened to the opinions of both sides of industry. Indeed, it is as a result of our discussions that we have decided to issue guidance on the amendments. That will provide clarity in a form that should leave no doubt as to their application and no room for ambiguity.
Ms Rosie Winterton (Doncaster, Central): I very much welcome the partnership approach that my hon. Friend the Minister has outlined. Real partnership needs to be inclusive of all sides of industry, as he said. He talked about the consultation that has taken place so far; can he reassure the Committee that there will continue to be consultation between the House, the CBI and the TUC about the implementation of the regulations?
Mr. Johnson: Yes, I can give my hon. Friend the assurance that she seeks. Until we actually get the regulations on the statute book we cannot produce the guidance. When we produce the guidance we shall have consultations over the following four weeks with the Health and Safety Commission, the TUC, the CBI and the other bodies that were consulted when the regulations were first laid.
When the amendments come into force we will re-publish guidance on the regulations, which will draw on the experiences and matters raised since they came into force. It will be in a user-friendly format providing clarity for both workers and employers. Again, that shows that the Government will provide as much help as possible to ensure that both sides of industry can operate the regulations effectively.
It is crucial to emphasise that the amendments affect only those workers who are voluntarily working long hours. Nobody can be forced into working long hours or signing away their working time protections. Even if they decide to sign the opt-out, they can choose to opt back in again at any time, without fear of recrimination from the employer. The amendments are designed to make an already effective piece of legislation operate more effectively. They cut red tape, but they do not cut the important protection that the Government have established for people at work. I commend the regulations to the Committee.
4.40 pm
Mr. Nick Gibb (Bognor Regis and Littlehampton): I welcome the Minister to the Front Bench. The regulations are the first that he has presented to a Committee, and as he is a member of the current Government, they will be the first of many. His Department has already issued 280 items of delegated legislation since the Government were elected, and no doubt many more will follow. I also welcome my hon. Friend the Member for Eddisbury (Mr. O'Brien) to his first delegated legislation Committee following his tremendous by-election victory.
I should like to reiterate the Opposition's concern about the lack of Parliamentary debate and scrutiny of the original working time regulations, which were sneaked out by the Government on the day before the House rose for the summer recess last year. They came into force on 1 October, while the House was in recess, and, because of moves made by the Opposition, were debated retrospectively in a one-and-a-half-hour debate held when the House resumed.
The regulations are not insignificant. They add £1.9 billion of costs to business in a year. Next year, they will add about £2.3 billion. They received minimal Parliamentary scrutiny and are rushed-through legislation. They also far exceed the regulations required by the original directive. Indeed, they are another example of the Government gold-plating European directives. The Minister is now seeking to tone down the regulations to a small degree, but they add hugely to the burdens faced by business. The unanimous complaint of businesses, large and small, is that they are drowning under an avalanche of burdensome regulations. The working time directive is commonly cited as the latest and most burdensome of all.
Indeed, the Institute of Directors has said that
"the Working Time regulations represent yet more costs and burdens on business. They restrict labour flexibility and impose costly new obligations on companies".
In contrast to the Minister's remarks, about half the respondents to a questionnaire distributed by the Institute of Directors in a survey of its businesses said that their overall business would be damaged by the imposition of the working time directive. A mere 3 per cent. said that their businesses would be helped. The businesses are right, which is why the Government's own regulatory impact assessment showed that the cost of implementing the regulations would be about £2 billion a year. The regulations will remove a mere £13 million a year--£13 million out of the £2 billion is barely significant, even with the rounding of the original estimate.
If the original regulations had had more Parliamentary scrutiny, and if the Secretary of State had listened to the Opposition and to my right hon. Friend the Member for Wokingham (Mr. Redwood), the Minister might not have had to return to the House just 12 months after their introduction to seek to amend badly drafted and burdensome regulations. In the one-and-a-half-hour Commons debate to which I have referred, my right hon. Friend said that we wanted the Minister to
"consider whether more exemptions would be sensible, and to come up with less onerous record keeping. Much of the cost will be in record keeping, not improving people's jobs but creating a lot of bureaucracy."--[Official Report, 27 October 1999; Vol. 336, c. 220.]
If the Government had listened then, hon. Members would not have to be here today. More importantly, businesses would not have had to struggle during the past year with what the Government now accept are unnecessarily burdensome--or, as the Minister put it, "unreasonable"--record-keeping requirements.
It is clear that the Government have begun to realise their mistake and that they are beginning to take on board the Opposition's exhortations and the concerns of business on the record-keeping element of the working time regulations. It was clearly absurd that when an employee agreed with his or her employer to opt out of the 48-hour limit on the working week, the employer had to keep detailed records of the hours that the employee worked. It is a welcome relief that the regulations remove that requirement. To the extent that the regulations attempt--in however small a way--to mitigate the burdens of the original regulations, the Opposition will not oppose them.
The record-keeping obligations have been the main source of concern for businesses. For example, the CBI said:
"The lack of clarity in many of the Regulations ... is posing problems for companies trying to implement them.
It went on to say:
"Areas of confusion include the definition of 'unmeasured working time'"
and "the record-keeping requirement."
Regarding who shall fall within the exemption for unmeasured time, the guide--a publication intended to clarify matters--says:
"It is not possible to specify a complete list of cases which would fall into the relevant category. The Regulations cite as examples 'managing executives or other persons with autonomous decision-taking powers, family workers or workers officiating at religious ceremonies in churches and religious communities'. However, it is important to note that these are for illustration only. It is the characteristics of a worker's activity that will determine whether they may be excluded."
That is of no help at all.
The Secretary of State acknowledged concerns about the matter in June when he said in a speech to the British Chambers of Commerce:
"We have been listening carefully to what business has to say about the complexities of the new working time regulations. We will be publishing revised and improved guidance on the regulations in the next few weeks."
I have sympathy for the Secretary of State--he inherited from his two Labour predecessors what a key Government supporter has called a dog's breakfast of a set of regulations. The confusion is added to, not reduced, by the guide issued by the Department of Trade and Industry, which he also inherited.
On page 25, the guide says:
"The employer would need to ensure that their means of monitoring workers' working time would be adequate to highlight instances of workers working in excess of the standard working hours. The employer may need to monitor the hours worked by such workers more closely".
That phrase seems to contradict completely what the Secretary of State said in his June speech, namely that
"the vast majority of individuals do not need to keep a specific record of the hours they work."
Will the Minister confirm that those misleading words will be removed from the revised guide? Will he tell the Committee whether the revised guide will be a completely reprinted version of the existing guide? If so, how much will reprinting and redistribution cost?
In June, the Secretary of State said that the revised guide would be issued in a few weeks. It is now November, and there is no new guide. Presumably, that is because the original draft regulations, published in July, have had to be withdrawn and replaced, in October, with the draft that we are debating. Will the Minister say whether the revised guide was reprinted before the latest draft regulations were placed before the House and before the original draft was withdrawn?
The regulations appear to have been withdrawn because of pressure from the Trades Union Congress and to help the Secretary of State to have a less rough ride at the TUC conference. The only difference between the previous draft regulations and this draft comes with regulation 5. That regulation states:
"35A.--(1) The Secretary of State shall, after consulting persons appearing to him to represent the two sides of industry, arrange for the publication, in such form and manner as he considers appropriate, of information and advice concerning the operation of these Regulations."
That situation is extraordinary, and can mean only one thing: that the interpretation of words and phrases in the amending regulations, which are still far from clear, will be determined by the Government--following the Committee's deliberations--in consultation with the Confederation of British Industry and the TUC. The regulations will then be published in the form of a revised DTI guide. That guide will take on the form of legislation, although it will not have been considered by the House. It is outrageous that the Minister should come before the Committee with regulations, the correct and definitive meaning of which he does not know because the regulations as drafted say that he cannot know their definitive meaning because he has yet to consult and publish a revised guidance.
We have all been issued with guidance that the Minister says in his letter to members of the Committee is still in draft form because the Secretary of State can discharge his statutory responsibilities to consult the two sides of industry only after Parliament has approved the regulations. That is a Catch-22: he cannot give a definitive definition of the provisions because he has a statutory duty to consult the two sides of industry on how the words will be implemented in practice, and he cannot hold that consultation until the Committee has passed the regulations. I find that extraordinary.
The Minister's letter goes on to say:
"The draft has been developed in the light of informal discussion with interested parties",
a point that he reiterated in his opening remarks. What a complete shambles. Even with my short time in the House, I know that that is not the way in which to handle 9 10 legislation. Will the Minister confirm that he cannot give the Committee a firm interpretation of the wording of the regulations because regulation 5 prevents him from so doing? If he cannot give that confirmation now, can he tell us why he is consulting only the CBI, the TUC and the Health and Safety Commission? What about the Federation of Small Businesses, the Institute of Directors or the British Chambers of Commerce? Why will he not officially consult those bodies, which also represent a side of industry, in the next four weeks?
Will the interpretation that the Minister gives the Committee today be subject to change as a result of the consultation required by regulation 5? The Secretary of State's letter of 7 July regarding consultation, to which the Minister referred, said that the new derogation will apply to paid overtime because
"it is measured and the duration is determined by the employer."
Will any paid overtime be included in the calculation of working time as set out in example A of the draft guidance? Will that be the case even if the overtime duration is determined by employees themselves? When I was a trainee chartered accountant, paid overtime was available but, as trainee professionals, we could decide how and when or whether we would work that overtime. Does the current guidance mean that those hours, even if they are voluntarily worked, would be regarded as part of the 48-hour working week just because they were paid?
Example E in the draft guidance deals with the employee who is keen to be promoted and says that "if it is established" that working additional time is a precondition for promotion, that time should be included in calculating the working time. My understanding of life in the real world is that if one wants to be promoted, one must work extra hours. Will the Minister confirm that that provision will apply in all cases where people who are keen to be promoted are working long hours? Will he explain what he means by the phrase "if it is established"? Will mere rumour be sufficient? What evidence will employers be required to maintain showing that such a requirement for long hours is not a precondition for promotion?
Example G involves an employee with a managerial role who decides how and when he works. Will the Minister elaborate on what the Government intend by that? What kind of managerial role do they have in mind and how is it distinguishable from
"managing executives or persons with autonomous decision-making powers",
as set out in what will now be regulation 20(1) of the original working time regulations? The distinction between those two different managerial roles matters because some elements of paid rest and holiday time are exempt from one and not from the other.
Furthermore, how is an employer to interpret example C, concerning the employee whose volume of work necessitates longer hours than those contracted for? Will it simply be a matter of whether employees themselves complain that they have too great a volume of work and cannot cope? What happens if another employee with a similar volume of work can manage to complete it within the specified time? Will the Minister confirm that the Health and Safety Executive may continue to require detailed hourly records to be kept for categories of employees who voluntarily opt out of the 48-hour week but who are considered to be at risk? Where in the regulations is the exemption from the exemption?
The amending regulations and examples in the draft guidance contain huge ambiguities, many of which will have to await tribunal cases before they are clarified, so placing a huge burden on business. It will help employers and business immensely if the Minister clarifies those ambiguities, but he may not be allowed to do so. In the Secretary of State's June speech to the British Chambers of Commerce, he said that the new guidance will give
"additional guidance on who is covered by the Regulations and what is meant by working time".
That is useful to know. We should be told what the new guidance will say because it has a direct bearing on our deliberations today. What is covered by the regulations and what is meant by working time?
What is the Government's policy on individual opt-out? Do they intend to remove it from the regulations, as required by the directive, in 2003? The original regulatory impact assessment forecast that the working time regulations would increase the work load of the industrial tribunal by an additional 3,000 to 6,000 cases a year. Has that transpired in the first year of the operation of the regulations? How many cases have there been? Finally, when will the long-awaited new Department of Trade and Industry guide be published?
Working time regulations are a complete shambles, and a phenomenally expensive shambles at that, adding £2 billion a year to business costs. Although the amending regulations attempt to scrape off a tiny sliver of confusion, uncertainty and burden, they merely add to the confusion. It is time for the Government genuinely to listen to the cries of business about over-regulation instead of just mouthing the words.
4.57 pm
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