Westminster Hall
Tuesday 22 January 2008
[Mr. Bill Olner in the Chair]
Home Workers
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watson.]
9.30 am
Mr. Fabian Hamilton (Leeds, North-East) (Lab): Allow me to welcome you, Mr. Olner. It is a pleasure to see you in the Chair. I am delighted to introduce the debate, as this subject is of huge importance to thousands of people in this country—predominantly women—who carry out work on behalf of employers in their own homes either because they prefer to work at home, or, as in the majority of cases, because they have no option other than to work from home.
Almost 100 years ago, on 22 July 1908, the House of Commons Select Committee on Home Work published a report under the chairmanship of Sir Thomas Whittaker. It may be useful—it is certainly relevant to today’s debate—to quote some of the report’s recommendations and conclusions. The first recommendation was that
“there should be legislation with regard to the rates of payment made to Home Workers who are employed in the production or preparation of articles for sale by other persons.”
The fourth recommendation—I am sure that you will be grateful, Mr. Olner, for the fact that I shall not read the whole report, which is 286 pages long—was that
“it should be an offence to pay or offer lower rates of payment to Home Workers in those trades than the minimum rates which had been fixed for that district by the Wages Board.”
“all Home Workers who are employed by other persons in producing or preparing articles for sale should be required to register their name, address and class of work at, and receive a certificate of such registration from, the offices of the Local Authority, and that the keeping of accurate outworkers’ lists by employers should be strictly enforced.”
“it should be an offence for any person to employ any Home Worker to produce or prepare any articles for sale by another person unless the worker produce a certificate of registration.”
I thought that quoting from the 1908 Select Committee would give a context for today’s debate, 100 years later. The Committee spent a good deal of time and effort investigating the way in which workers were exploited by unscrupulous employers who used outworkers, working in their own homes, to lower wage costs and increase profits, usually at the expense of the home worker, who struggled to complete the piecework in the time allocated. For many home workers, little has changed in the past 100 years.
There remains, in 2008, a pressing need to bring home workers into line with other workers in our economy who, thanks to the Government, have seen their terms and conditions at work dramatically improve. Add to that the National Minimum Wage Act 1998, which was strongly opposed by the Opposition at the time, and it is clear that workers’ rights and wages for the majority
who go to work in a workplace each day have been greatly enhanced. However, there remains a large group of workers who were clearly exploited in 1908 and remain in the same position today.
I wish not only to draw the Government’s attention to the plight of home workers, but to call for a further change in the law. Why does it matter? Thousands of workers in the United Kingdom are vulnerable to exploitation from unscrupulous employers. That continues either because they do not have full employee status, or because it is unclear whether they have employee status. Although uncertain employee status is a problem for all kinds of workers in the UK, it is a particular issue for home, agency and temporary workers. Home workers who have worked for a company for several years—often on low wages and taking on rushed orders at short notice at the company’s convenience—can discover, if they become pregnant or fall ill, or if their work simply stops, that they have no protection under the law, because they are not classed as employees.
There are three main types of employment status under current law: employees, workers and the self-employed. Qualifying hurdles and exclusions may apply, but in broad terms, employees are entitled to the full range of employment rights and protection in respect of unfair dismissal, redundancy, sick leave and pay, maternity leave and pay and the right to written terms and conditions. Workers, on the other hand, are entitled to a smaller range of basic protections, the most significant for home workers being the national minimum wage and holiday pay. The self-employed are free to negotiate their own terms with the people with whom they contract.
Many home workers do not receive full employment rights. If challenged, their employers can argue that they are workers and not technically employees. The only way in which that can be resolved is at an employment tribunal, which can be extremely stressful and highly unpredictable. Alternatively, home workers may be told by their employers that they are self-employed even when they do not have the independence or control over their work patterns that would enable them genuinely to negotiate terms. False self-employment is just another way for unscrupulous employers to avoid their obligations to employees.
David Taylor (North-West Leicestershire) (Lab/Co-op): In another life, as an accountant, I dealt with outworkers and self-employed people on some scale. Does my hon. Friend agree that the difficulties in defining the characteristics of self-employment that he describes need to be revisited by Her Majesty’s Revenue and Customs and other Departments? Individual employees who are being coerced into self-employment feel very vulnerable and are unlikely to pursue their employers with any vigour. There is a pressing need for some kind of class action on behalf of a group of employees to get them designated as employees, so that they benefit from the protection that he describes.
Mr. Hamilton:
I thank my hon. Friend for that intervention. As I shall describe, many of the more unscrupulous employers frequently force their workers to take on self-employed status, but their situation is clearly nothing like being self-employed. I have been self-employed and know that the self-employed have a lot of control over their lives. They may not have the
benefits of being employees, or a lot of employment protection, but they have much more control over what they do, when they do it and how much they charge for their labour. The big difference for those who are really home workers but are designated as self-employed is that they have absolutely no control over what they charge, when they do their work, how quickly it must be done, or how or whether they advertise. I therefore think my hon. Friend’s proposal is very helpful.
If unscrupulous employers try to avoid their obligations to employees, they can be challenged only at tribunal. That uncertainty can make it difficult for home workers to assert even their most basic rights to the national minimum wage and holiday pay. Workers can be deterred from demanding those rights through the very real fear that they may lose their work as a consequence. Without employment contracts, they have little protection against that sort of victimisation.
In 2002, the Government conducted a consultation exercise, asking whether
“there are any categories of working people currently excluded from statutory employment rights who require the protection provided by some or all rights and how they would benefit.”
Amongst many others, the National Group on Homeworking responded. It argued for the extension of all existing employment rights to all workers, particularly home workers who are not genuinely self-employed. Unfortunately, although the consultation raised hopes that the Government were intending to take action, their response, which was delivered only on 30 March 2006, was extremely disappointing. In the “Success at Work” strategy paper, the Government rejected calls for a change in the law. Furthermore, that 58-page document, which was intended to protect so-called vulnerable workers, made no specific mention of home workers.
The current situation is hugely complex and confusing, and the unpredictability of tribunal rulings on status benefits no one. Home workers have to negotiate their way through a maze of legal arguments, tests and obstructions, simply for a chance to gain the rights to which other employees are automatically entitled. The Government need to take swift and decisive action to grant full employment status and rights to all UK home workers who are working for another person and not genuinely in business on their own account.
On 21 November last year, together with my hon. Friend the Member for Keighley (Mrs. Cryer), I hosted in the House of Commons the launch of a report entitled, “Subject to Status”. It was written and researched by Nesta Holden and was published by the National Group on Homeworking, which is based in Leeds. It is the only national body that supports and helps home workers. Accompanying staff from the organisation and the author of the report were several home workers who came to Parliament to tell their stories in their own words to Members of both Houses.
One home worker’s story concerning her status amply illustrates the issues, which the report so ably highlights. Pamela James took her employer to a tribunal to establish that she is not self-employed nor does she have the rights and benefits of an employed worker—she falls between the two. But let her speak in her own words:
“I have nothing to advertise, I have no customers, I have no trade name, I am provided with work and I am told how to do it. I work as a courier by delivering parcels on behalf of a multinational company. The company tells me that I am self employed and that I need to use my own car and phone. Because of these costs I receive less than the minimum wage and I have never received an increase in my pay rates since I started with them, over five years ago.
I have tried looking for other work but being a lone parent I need some flexibility especially during school holidays. It’s not easy to find a job when you live some distance from the city, there are limitations, and I could never afford a childminder. Yet at present I feel that something is better than nothing.
According to an article in a national newspaper the company whom I work on behalf of made a one billion pound profit”—
“in 2004. That year I earned comfortably less than £3 per hour, if not £2 per hour, yet the company kept telling me that I am self employed and it hurts because I am struggling and they won’t listen.
Recently I took the company to the Employment Tribunal. There was a preliminary hearing to discuss my status. This hearing lasted 5 hours. In the courtroom the clerk put the Bible in my hand, I became distressed. I thought, does this mean that everyone in my position has to go to court to seek something so basic as the minimum wage? Other people have an automatic right to this, why can’t I?
If I was genuinely self employed I would have my own control, I could negotiate rates, I could advertise, I would have my own customers and my own profit and loss account. Despite all of this I lost the court case. This was mainly because of a small clause in the contract. Presently I am making an appeal to the courts because accordingly the clause is not genuine. I feel that the clause was a false label with the intention to save the company costs. A clause to enable them to offload their obligations onto others.
Even though I felt shut out the NGH have been of much valued support to me throughout all of this and they are still doing everything they can to help. I truly can’t imagine how I could have otherwise coped on my own.
An email response from the DTI”—
the Department of Trade and Industry, as it was then called—
“with regards to the loophole in the law, states that a change to the legal framework could damage labour market flexibility and result in a reduction in overall employment. I am wondering if they mean that if everybody paid as much money as the minimum wage would there be no employment? It is not consoling for myself or others like me who are locked out because of this loophole. It is also not consoling when the company whom I work on behalf of wrote a letter to the Inland Revenue which stated, ‘We do not believe that the minimum wage is appropriate for this population of workers.’
I assume they mean this population of workers are the loyal homeworkers whom do work on their behalf. My children are important to me, I believe that it is unfair that the minimum wage is not considered appropriate for us, and I know there are thousands out there like me who feel the same as I do. If I do belong to this population of workers, then I wish them to know that we are real people and I ask you to please help us and support our campaign to close this loophole in the law. I believe that every single homeworker deserves at least the basic employment rights.”
That powerful plea was made before Pamela’s most recent tribunal hearing, which took place at the end of May last year. Eight months later, she is still waiting for a decision. It would be helpful if the Minister, who I know cannot interfere with tribunal decisions, used his influence to get that decision, whatever it may be, as soon as possible.
David Taylor: I put it to my hon. Friend that it would be a public service if he placed on the record the name of the firm that has benefited in that disgraceful way from exploitation on that scale. Is he able to do that?
Mr. Hamilton: I thank my hon. Friend for that intervention. Unfortunately, I am unable to name the firm. We managed to get the testimony from Pamela James, but she does not want to reveal who the employer is, and I can understand the reasons for that. However, my hon. Friend is right: it would be helpful to know. There cannot be that many firms that do courier and delivery work and earn a £1 billion profit, so it might be easy to find out.
I am sure that the Minister will agree that eight months is far too long to wait to find out whether Pamela is a worker or not. It is two years since she started her campaign for a minimum wage, during which time she has lost her job and suffered real financial hardship.
I wish to illustrate one or two more cases through the words of home workers themselves. Gemma works from home sewing novelty items for retail to sports fans. She did various types of sewing work over the years in a factory before her son was born and now works from home. She is an experienced, multi-skilled machinist but has struggled to find decent work that uses her skills fully. Her problems include low pay—she is currently earning about £3 an hour—and the fact that the supply of work is irregular. She states:
“The times I have been out of work we do struggle with things like paying the bills and buying food. It is hard.”
When work is available, her boss expects it back very quickly. She says that it is
“sometimes impossible to get it done when they drop it off and expect it to be done yesterday. They (the suppliers) get it in the neck and it is always passed on to us even if the delay was at the printers or cutter before it reaches the homeworker, the buck always stops with us.”
Another home worker, Shazia, works from home sewing trousers. She is Pakistani and came to the UK more than 20 years ago. She speaks Punjabi and Urdu. Her main reason for working from home is that she looks after her children, but she also says that she does not like to work outside the home. She states:
“I feel we should get proper rates of pay with employment rights and regular work. We are contributing to the local economy and should be valued and recognised for it.”
Shazia is paid by piece rate and earns approximately £2.10 an hour. She has been working for the same employer for three years and has never had a pay rise. She says that, when she asked for an increase in the piece rate,
“he told me that it was up to me to work and if I was not happy with the work I could stop working.”
Zoe works at home packing small items, such as screws, into blister packs. She has two children—one below school age and one at school. She has been doing home work for four years. Although she received a pay increase when the minimum wage compliance unit visited the company that she works for, Zoe is still earning only £3.10 an hour. She receives no sick pay and has continued working throughout a serious health problem, because she could not afford to stop. She states:
“I had an eye infection which lasted for three months. Everything was blurry but I had to work through it because I could not get sick pay or income support. I did the work by feel, never any sympathy, I was always expected to get the work done.”
Of course, not all employers are exploitative and unscrupulous. Madison Hosiery of Leeds has shown that home workers can be treated ethically without the
company going bankrupt. It made a conscious decision to treat its home workers as employees with the same rights and rates of pay as those who come to work at its premises in the city. As a packing company, home workers are key to its business, and it uses proper systems for calculating piece rates. That results in far greater loyalty and, of course, better quality, as well as a decent wage for the home workers. However, Madison is an exception and, sadly, faces unfair competition from companies that do not actually break the law but certainly exploit its ambiguities.
As I said, the Government have done a great deal to make the lot of workers in the United Kingdom considerably better, but there is growing concern about vulnerable workers. Many are being denied rights to which they are legally entitled, while others are vulnerable because the existing legal framework does not provide them with adequate protections. The Government have acknowledged that there is a need to address the problems faced by vulnerable workers and have established the vulnerable worker pilots and vulnerable worker enforcement forum. The Government define a vulnerable worker as
“someone working in an environment where the risk of being denied employment rights is high and who does not have the capacity or means to protect themselves from...abuse. Both factors have to be present.”
By that definition, home workers are clearly vulnerable workers. The Trades Union Congress is highlighting the plight of vulnerable workers through the establishment of the Commission on Vulnerable Employment, which defines vulnerable workers as
“workers whose participation in the labour market places them at risk of ongoing and often extreme suffering, uncertainty and injustice resulting from an imbalance of power in the employer/worker relationship.”
The commission specifically and explicitly identifies home workers as a vulnerable group.
As we have said, home workers are vulnerable in a number of ways. They may need to work from home because of their caring responsibilities—often child care—or their language, disability or long-term health problems. They are isolated. Very few home workers join trade unions, and trade unions rarely recruit them. By the very nature of their job and the way that they work, home workers do not enjoy the company of fellow workers. Work is irregular and they live in fear of losing their jobs. When there is a problem, home workers are frightened to complain because the employer will probably just take the work elsewhere. Home workers also have an uncertain employment status, and addressing that issue would tackle one of the core problems of vulnerability.
In the Minister’s reply to a letter from Nesta Holden, the author of the report “Subject to Status”, he stressed that the Government are keen to ensure that
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