The Posting of Workers

The Committee consisted of the following Members:

Chair: Katy Clark 

† Clappison, Mr James (Hertsmere) (Con) 

† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op) 

† Hopkins, Kelvin (Luton North) (Lab) 

† Luff, Sir Peter (Mid Worcestershire) (Con) 

† McDonald, Andy (Middlesbrough) (Lab) 

† McKechin, Ann (Glasgow North) (Lab) 

† Murray, Ian (Edinburgh South) (Lab) 

Simpson, David (Upper Bann) (DUP) 

† Swayne, Mr Desmond (Vice-Chamberlain of Her Majesty's Household)  

† Uppal, Paul (Wolverhampton South West) (Con) 

† Whittaker, Craig (Calder Valley) (Con) 

† Willott, Jenny (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

† Zahawi, Nadhim (Stratford-on-Avon) (Con) 

Nicholas Beech, Committee Clerk

† attended the Committee

European Committee C 

Thursday 3 April 2014  

[Katy Clark in the Chair] 

The Posting of Workers

11.30 am 

The Chair:  Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the documents to this Committee? 

Mr James Clappison (Hertsmere) (Con):  It is a pleasure to make a statement on behalf of the European Scrutiny Committee, but before I do, may I say what a great pleasure it is to serve under your chairmanship, Ms Clark? 

EU rules on the temporary posting of workers to another member state have been in place since 1996. They serve a dual purpose: facilitating labour mobility in the EU and the cross-border provision of services, which, in turn, is intended to strengthen the competitiveness of the internal market. The rules, set out in a 1996 directive, include safeguards to ensure that posted workers are entitled to a minimum set of terms and conditions of employment in their host state—the one to which they have been posted—covering such matters as working time, annual leave, health and safety at work, and, where applicable, a minimum wage. 

Despite those safeguards, and the fact that posted workers account for a very small proportion of the overall EU labour market, the perception has grown in some member states that posted workers constitute a form of social dumping, exacerbating wage differentials or undermining local terms and conditions of employment. That perception is inevitably greater in member states experiencing high levels of unemployment. 

The Commission believes that such concerns can be addressed by more effective monitoring and enforcement of the 1996 directive. It has therefore proposed an enforcement directive, which is intended to help member states determine whether a posting is genuine, clarify the terms and conditions of employment applicable to posted workers and ensure that businesses comply with them, and to make it easier to recover unpaid wages in cases involving subcontracting chains, particularly in the construction sector. The draft directive also seeks to strengthen co-operation between member states’ enforcement authorities. 

The Government’s consultation on the draft directive, published in October 2012, revealed that business organisations and trade unions were sharply divided on a number of the draft directive’s provisions, notably articles 9 and 12. Article 9 concerns the administrative and control measures a member state may apply to businesses posting workers to its territory, and article 12 envisages the introduction of a limited form of joint and several liability. 

The Government voted against a general approach agreed by the Council last December, on the grounds that the outcome on article 12 was “not ideal” and not in line with their negotiating objectives. Despite those

concerns, they supported the general approach as the basis for a compromise agreement with the European Parliament during trilogue negotiations. Those negotiations concluded on 27 February. The European Parliament is expected to endorse the compromise text at its forthcoming plenary in April. The proposal will then return to the Council for formal adoption. 

The draft directive has polarised opinion across the EU to varying degrees, with some wishing to reopen and strengthen the provisions of the 1996 directive and others arguing for minimal regulatory intervention. Today’s debate provides an opportunity to consider the concerns underlying both approaches, as well as the overall impact that the draft directive is expected to have. 

I hope that the Minister will be able to tell us why the Government appear to have moved from a position of resistance to the draft directive in December to one of acceptance now. I would also welcome further information on the following issues: first, how the Government intend to implement the draft directive’s provisions, particularly articles 9 and 12; secondly, their assessment of its likely impact on employment conditions for UK workers posted to other member states, as well as for incoming posted workers; and finally, the resource implications for Government and business of better monitoring and enforcement of existing rules on posted workers. 

The Chair:  I call the Minister to make an opening statement. 

11.34 am 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott):  It is a pleasure to serve under your chairmanship for the first time, Ms Clark. 

The purpose of the proposal is: first, to facilitate competition in the single market; secondly, to clarify and limit the administrative requirements member states can impose on business; and thirdly, to strengthen access to the protections for workers contained in the 1996 directive, which was mentioned by the hon. Member for Hertsmere. The Government remain focused on supporting economic growth at home and in Europe, whether by removing barriers for business or facilitating employment. 

I should start by setting out what we mean by a posted worker. These are workers who are employed in one member state and sent temporarily to work in another. They are not the same as economic migrants who independently seek work in the UK. As the hon. Gentleman said, the numbers are relatively small, particularly in the UK. He also said that the 1996 directive ensures that posted workers have access to the statutory minimum employment rights in the member state to which they are posted. They cannot, therefore, undercut the wages of the domestic labour force. 

We are still in the process of negotiation on these proposals. The negotiations have been somewhat protracted, and I thank the European Scrutiny Committee for its patience as we dealt with some of the challenging issues. It was extremely difficult to achieve agreement, with our blocking minority falling apart at the last minute. Although the deal reached in the European Employment Committee did not represent our ideal position, as the hon. Gentleman highlighted, it is a genuine compromise between the two sides of the argument. Given those

challenges, it was important that the trilogue between the European Parliament, Commission and Council did not impose any additional burdens on business. The Government therefore sought to persuade the European Parliament to accept the Council’s general approach. 

While the negotiations may have made front-page news across Europe, where approximately 1 million workers are posted each year, the issue has barely touched the consciousness of the UK. Why? It is partly because we post and host very few workers, but it is mostly because we already have a solid raft of protections in place for everyone who works here, whether posted or not. Therefore, there are currently far fewer problems in the UK than elsewhere in Europe, and we have a system that generally works. 

Our starting point in negotiation gave us room to make a genuine compromise to get the best deal possible for the UK. That included some movement on our initial opposition to the imposition of any form of joint and several liability. As the hon. Gentleman highlighted, negotiations concluded on 27 February, when provisional agreement was reached on a compromise text, which was approved by the Committee of Permanent Representatives on 5 March. Final voting will take place later this month. 

There have been mixed views on the process. Some claim that it was rushed through, while others were frustrated by slow progress, but what really matters is that we now have a set of proposals that make sense. The Government endorse the text now on the table because it increases awareness of core rights for workers; improves co-operation, collaboration and the exchange of information to support cross-border enforcement; and highlights how workers can enforce their rights. For businesses, it clarifies their responsibilities and helps them to avoid falling foul of employment laws in other member states. For the UK economy, it provides reassurance that companies can freely operate across Europe. 

The Government are committed to working closely with our stakeholders to ensure we take the directive forward in a way that works for the UK. We will take our time to get that right—it is important to get the detail right—and we will seek to implement changes in the lightest way possible, utilising the flexibility that we have secured in the text. I therefore commend the proposal to the Committee. 

The Chair:  We now have until 12.30 pm for questions to the Minister. May I remind Members that these should be brief? It is open to Members, subject to my discretion, to ask related supplementary questions. 

Ian Murray (Edinburgh South) (Lab):  It is always a pleasure to serve under your chairmanship, Ms Clark. May I ask all my questions at once, or should I perhaps divide them into two sections, if that would be better? 

The Chair:  It is very much a matter for yourself. 

Ian Murray:  I will break them into two because that might be easier. 

I am grateful to the Minister and to the European Scrutiny Committee for bringing this matter to us. First, will the Minister clarify what recent action the Department has taken to understand the levels of posted

workers in the UK? Secondly, does she agree that the lack of monitoring from the Government should be looked at because cases of migrant workers being used to undercut pay and conditions of domestic workers may be occurring? Is there any information on that? Thirdly, as high-risk sectors, what discussions has she had with the agriculture and food processing sectors on the issue of posted workers? Can she inform the Committee whether there have been any discussions with the groceries code adjudicator with regard to the sectors or, indeed, with the Gangmasters Licensing Authority? 

Jenny Willott:  It is important to separate the issue of posted workers from that of migrant workers. The directive relates simply to posted workers who are employed by a company in one member state and temporarily transferred to work in another member state. A number of the issues that the hon. Gentleman highlighted are more likely to involve migrant workers, who are covered by different laws. 

In terms of speaking to different sectors, the Government take very seriously the enforcement of employment regulations, such as the national minimum wage, to ensure that employers are not behaving in an exploitative way—exploiting their workers and undercutting competitors who are acting in a completely complaint way. We monitor the issue regularly. The Department for Business, Innovation and Skills works extremely closely with Her Majesty’s Revenue and Customs to ensure that all complaints about non-payment of the national minimum wage are properly identified and investigated and that, if somebody has been underpaid, they get their arrears. In fact, we have just increased significantly the penalties on employers who behave in such a way. The penalties will be charged per worker rather than per employer, and we have beefed up significantly the naming and shaming to try to tackle the issues the hon. Gentleman highlighted. 

On posted workers, under the system we use in the UK, employment rights apply to everybody, no matter what their employment status. That is quite different from a number of other member states across the EU. Migrant workers, posted workers and UK nationals have the same employment rights in the UK, and their rights are enforced in the same way. That gives workers in the UK more protection in a lot of areas than in other member states. Enforcement therefore applies across the board, whether people are posted workers, migrant workers or whatever. 

Once the directive is finally agreed and signed off at all the different points after the end of this month, we will look to consult across the board with the industries where the directive applies to ensure we identify the most effective way of implementing it. That point was also raised by the hon. Member for Hertsmere. We believe a lot of the issues in the directive are already covered by British law. There are some areas where we may need to legislate, but we want to identify carefully the best ways to do that, and we want to follow a light-touch approach to regulation to ensure we do not impose significant and unnecessary burdens on business. 

We will also monitor the levels of posted workers. The latest figures we have show there are about 37,000. The numbers are very small—about 0.01% of the employed work force—so they are much lower than in other parts

of the EU, where this is a much greater issue, but the Government will monitor them. Indeed, part of the directive will ensure that we do. 

Ian Murray:  I am grateful to the Minister for that extensive response. She actually covered two of my other questions, so I will ask just my final question. Has the Department any analysis of the mechanisms that may be being used, such as bogus self-employment, to circumnavigate the posted workers directive? I appreciate that 37,000 is a small number, but I wonder whether it hides any other issues. Will the Minister consider the issue of deeming someone as being employed or a worker—this applies particularly in the construction sector—unless it can be proven otherwise? That may allow some of the issues around the circumnavigation of the posted workers directive to be addressed. 

Jenny Willott:  The issue of bogus self-employment is picked up under article 3 of the directive. It is certainly a concern in some member states, which appear to have much more of an issue than we do in the UK. I recognise that bogus self-employment is a concern, particularly in the construction sector. The intention of article 3 is to have a definition of a posted worker and, within that, to highlight that this is not bogus self-employment, as it were, and that someone who fits that category is not covered by the directive. That was an issue of debate. We are quite content that it is mentioned. Workers in that category need to be signposted to other areas of both EU and domestic law where protections exist for them. If they are self-employed, they are specifically not covered under this legislation but count, more generally, as migrant workers. Given that the protections are the same in the UK for employed workers, whether or not they are posted, some of these issues are slightly less prevalent in this country than in other member states. The Government are, however, aware of this and it was discussed in the negotiation of the directive. 

Kelvin Hopkins (Luton North) (Lab):  It is a particular pleasure to serve under your chairmanship, Ms Clark. The TUC has serious concerns that posted workers’ rights are not effectively enforced and that they do not have access to documents in a routine way. They simply might not know their rights and it is therefore difficult for them to seek to have their rights enforced. 

Jenny Willott:  The hon. Gentleman is right and that is particularly an issue in countries where people have different rights depending on their employment status. In those cases, it can be extremely complicated for posted workers to find out what their entitlements are. It is somewhat easier under British law, because they have the same rights to the minimum wage and other protections as other workers. 

The directive covers the information that companies must hold and must provide to ensure that employees can identify their rights. There is, more broadly in the UK, an issue about ensuring that, for example, people who are entitled to the national minimum wage are aware of that, are aware of its level and know how to enforce their employment rights if they are not receiving it. It is important, therefore, that the issues highlighted

by the hon. Gentleman are taken up across the board. For example, work is being done by the Department for Business, Innovation and Skills with HMRC on national minimum wage legislation enforcement to identify how we can ensure that all workers have a much better understanding of their entitlements, and that they get those protections. That would cover posted workers and workers with another status. 

Kelvin Hopkins:  The TUC also suggests a registration scheme to monitor the flow and location of posted workers, so that they can be targeted to ensure they know their rights under British law. This also begs the question whether migrant workers and British nationals working in Britain have their rights enforced, particularly their right to the minimum wage. 

Jenny Willott:  I agree with the hon. Gentleman on his last point. I was trying to say in my previous answer that there is an issue about ensuring people know what they are entitled to and how to enforce it. For example, awareness of the pay and work rights helpline is not as high as I think we all, in this room, would like to see. There is a broader piece of work around enforcement to ensure that workers, whatever their status or nationality, know what they are entitled to and how to enforce it. 

Registering posted workers to ensure the Government know about them is a measure in the directive, and we will look at how to ensure we have more accurate information about who is posted into the UK and who is posted overseas. That is covered by the directive, so after the final text is agreed we will look at the most appropriate way to implement it in the UK in order to get the information highlighted by the hon. Gentleman. 

The Chair:  If no Members wish to ask any further questions, we will move on to the motion. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Document No. 8040/12 and Addenda 1 to 3, a draft Directive on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services; supports the Government’s efforts to ensure protection for workers posted to the UK from other Member States and for UK workers who are posted to the EU; and further supports the Government’s active co-operation with other Member States to ensure that there are limits on the administrative burdens on UK businesses who post or receive posted workers, whilst encouraging growth within the single market.—(Jenny Willott.)  

11.49 am 

Ian Murray:  We all heard the Minister’s opening statement, and I will be relatively brief. I hope everyone in the Committee has read the documents and I will be disappointed if they have not. Perhaps I should pose a few questions to test whether Members have read them. Incidentally, this is not my speech I am holding—these are all the documents relating to the Committee. I am grateful to the Minister for her comments. I think the whole House agrees with the posted workers directive of 1996. The posting of workers is important for filling labour supply and skills shortages, for the single market and for the free movement of labour across Europe, including all the member states. It is also important that migrant workers come to the UK. That issue is separate from the issue of posted workers, but we need to ensure

that migrant workers who come here are also protected, even if they come here for short periods. It is important to emphasise that, although this debate is about posted workers. 

More fundamentally, the directive is important to prevent “social dumping”—that was mentioned by the hon. Member for Hertsmere—where existing workers are undercut by cheap, migrant labour. The directive is just part of ensuring that migrant workers are not disadvantaged or exploited as a result of being posted or, indeed, of immigration. There is a host of other issues around agency workers directives and the loopholes in the Swedish derogation. There are issues around national minimum wage enforcement. We must ensure that workers—whether they be posted, migrant or UK workers—are not exploited. That is why there has been some concern from the European Scrutiny Committee, and, indeed, from the some of the questioning here; the posted workers directive has to be fit for purpose and ensure that the enforcement directive, which is slightly less of a directive than we wanted, is implemented properly at UK level to tackle those abuses. 

The issue has not been helped by the cases in the European Court of Justice—cases we all know about such as Viking and Laval. That is why we need to ensure that, although the enforcement directive falls short of being able to amend the actual directive, it is applied properly and consistently not just in the UK but across all member states. I was interested when the Minister said that some people have criticised the directive for going through too quickly and others have criticised it for going through too slowly. It has been one of the top priorities in the current European Parliament, which is just about to come to an end. Progress was slow, but recently the progress has been so quick—to get the measure through in the wash-up perhaps—that there are perhaps some issues around whether it will be implemented properly. That is why there are concerns across member states. The TUC briefing welcomes the fact that the issue has been looked at, but the directive has not really gone far enough on some of the issues that the TUC has raised. 

It is worth reflecting on what the directive does and on the debate between Nigel Farage and the Deputy Prime Minister last night about what Europe has provided for the country—some of the social aspects are very important indeed. If we run through the list of what the directive does in terms of enforcement, we can reflect on how important the EU is to this area. The directive deals with maximum work periods and minimum rest periods; minimum rates of pay, including overtime rates; conditions of hiring out workers, in particular the supply of workers by temporary employment firms; health, safety and hygiene at work; protective measures with regards to conditions of employment of pregnant women, women who have recently given birth, and children and young people; and equality of treatment between men and women and other non-discriminatory provisions. 

That list shows that it is really important the posted workers directive works and works very well. There are few case studies around, which may be a reflection of the fact that it probably works relatively well in the UK. Indeed, the numbers we have heard about this morning are quite small. But it is worth reflecting on two case studies that I was able to find, to highlight where some problems arise. 

The first, which we will all know about, was back in 2009; it was very high profile at the time—a dispute at the oil refinery in East Lindsay over whether Italian and Portuguese posted workers had been paid in line with the terms of the collective agreement negotiated through the National Joint Council for the Engineering Construction Industry, which sets pay and conditions for the sector. Domestic workers were concerned that the use of posted workers had led to an undercutting of the agreement and would drive down industry-wide pay and conditions. Protests took place at that refinery and at other refineries across the UK until the issue was resolved. That gives Members a flavour of some of the issues that arise. 

More recently, in February 2012, a group of Polish posted workers working on the main construction contract at Uskmouth power station made a successful employment tribunal claim of more than £250,000—quite significant. That followed a discovery by the GMB union that unlawful deductions had been made for lodgings and incorrect payments had been paid into their bank accounts. 

The posted workers at Uskmouth were employed by a Polish subcontractor who left the UK soon after the issue was raised and initially denied liability once they were tracked down. That second point highlights that the posted workers directive can be used exploitatively, by bringing workers across through a subcontractor. Thankfully, the employment tribunal was able to find against those organisations in that case. 

As my hon. Friend the Member for Luton North has said, there are still a number of outstanding concerns related to improving the monitoring and investigation of the scale of the use of posted workers in the UK, and of any abuses associated with article 9. That is why I asked what the Government will do to make sure that they monitor the matter properly to ensure that the directive is properly implemented, because I am not sure that we know the true scale of the problem, given that there is not much case law or tribunal law on the matter. Indeed, some of the European Court of Justice cases have been almost singularly unhelpful in trying to determine whether the posted workers directive works. 

As we have discussed, there are also concerns across the EU that some agencies are using bogus self-employment to circumvent the basic rights afforded to posted workers under the directive. In the UK, self-employed workers are exempt from the most basic of employment rights, and we read out the list that the posted workers directive deals with, including the national minimum wage. We are grateful to the Government for increasing the fines to £20,000. Of course we want them to go further, and we have had that debate already. We look forward to the Bill in the Queen’s Speech that will implement the primary legislation to cover every worker. I am looking to see whether we might get a nod of the head to indicate that such a Bill will be in the Queen’s Speech— 

Jenny Willott:  That is above my pay grade. 

Ian Murray:  That is absolutely fine. We will ask the Queen when she arrives in early June. 

The agricultural and fresh food processing sector, which is a high-risk sector, has raised concerns. While the much pared down Gangmasters Licensing Authority looks after the rights of migrant workers—my hon. Friend the Member for Luton North spoke of migrant

workers and the undercutting of posted workers—if the people who are being posted or migrant labour do not know their rights, there is not much point of having the directive at all, because they have to be able to enforce it in some way. That is why the information that goes to posted workers must be clear. In some of the high-risk sectors, such as agriculture and fresh food processing, there is no such information. That is the also case in construction. I have come across many cases where people were bogusly self-employed and knew that, but they concluded that they were simply fortunate to have a job in the construction industry and therefore they did not want to press the enforcement of the directive. There are issues with that, and I hope that the Government will reflect on the need to understand the scale of the problem and to ensure that the appropriate information is available. 

I want to return to the Minister’s response regarding article 3 and the question of whether its definitions go far enough. The TUC has legitimately raised the concern that the definitions have been diluted compared with what they were when the original discussions started. It asked whether the definitions go far enough to ensure the proper enforcement of the posted workers directive. We want to see the completion of the single market, but it is not completed by a race to the bottom on pay and conditions, but by a race to the top with high skills and pay, and by ensuring that people who travel cross-border, whether migrants or posted workers, are not exploited in any way. I hope that the Government will use this opportunity to improve the directive, fully implement the control measures within it, and ensure that, if there is an opportunity as part of the process to go further to ensure that people in the UK are protected, they will take it. 

11.59 am 

Kelvin Hopkins:  I obviously endorse everything that my hon. Friend the Member for Edinburgh South has said. 

The Opposition are keen to see the enforcement of workers’ rights at the fore, and not so much emphasis placed on what has been described as burdens on business, as mentioned by the Minister. If we look at the issue in that light, clearly paying the right wages, having rights at work, allowing time off for trade union duties and all sorts of things cause, in some sense, a burden on employers. However, the issue is not just about employers. Some countries have much stronger rights at work than Britain, and things have a changed a great deal, especially since the defeat of the Labour Government in 1979. We also have the problem that, in Britain, we depended on trade unions to secure workers’ rights and not on law. If we have law, we require enthusiastic Governments who are prepared to uphold and enforce that law, with sufficient inspectors to check that small employers are, for example, paying the minimum wage. 

In the private sector, something like only one in seven workers now belongs to a trade union. Many people come to my surgeries and say that they cannot join a trade union because, first, one is not recognised and secondly, if they did, they might be discriminated against by their employers, because they are nervous about trade union membership. 

Trade union strength has been severely undermined in the private sector, owing in particular to the growth of companies and employers who are smaller in scale. Large-scale employers are still quite comfortable with trade unions; I am glad to say that at Vauxhall Motors in Luton we still have strong trade unions who have a good, strong relationship with management, with workers rights that are properly enforced. Trade union rights are important. 

We have seen some disturbing judgments made by the European Court of Justice in employment law cases, which has found in favour of employers, when, according to the rights as defined in the European Union, we would argue that it should have found in favour of the employees. Indeed, Lord Monks, who was chair of the European Trade Union Confederation when some of those judgments were given—he is a great Euro enthusiast, unlike me, but he is a great friend and we used to work together at the TUC—was disturbed that the ECJ was finding in favour of employers when he and many others thought that it should have found in favour of employees. 

The legalistic approach to enforcing rights is not enough. We need strong trade unionism as well to ensure that workers are protected at work. I want to see—potentially by a future Labour Government—the re-establishment of stronger trade union and worker rights in all sorts of ways and a substantial improvement in the minimum wage. I do not believe that that would cause serious problems for the economy, as other countries have higher minimum wages than we do and some of those are quite strong economies—it is not always the weak economies that have higher minimum wages. 

The TUC made a number of recommendations, such as the registration scheme to monitor the flow and location of posted workers we mentioned earlier. It says: 

“Companies posting workers to the UK should be obliged to retain hard and electronic copies of employment contracts and pay slips in the UK.” 

It also says: 

“Joint and several liability rules should be introduced not only in the construction sector but across the UK labour market. These should ensure that all subcontractors throughout the supply chain comply with their employment law obligations. It would also assist workers to enforce their rights— 

where— 

“a subcontractor becomes insolvent.” 

There are particular problems, such as those mentioned by my hon. Friend the Member for Edinburgh South, where, for example Polish subcontractors are employing people from their own country as migrant workers or posted workers who do not necessarily speak English. Those people are therefore even more dependent on their employer and can be exploited in that community. Indeed, among those in the migrant communities who are residents and British citizens, that sort of thing goes on. 

We cannot be certain that the minimum wage and employment rates are enforced among small employers from, for example, the south Asian sub-continent. In my constituency, people are employing their own people from Pakistan and Bangladesh—Bangladesh in particular—who may not speak English and are therefore heavily dependent on their employer, who may be family

members. Can we be certain that they are being paid the minimum wage and receiving trade union and worker rights in other ways? 

I want to see that reinforced and to bring back a strong culture of trade unionism as well as the legalistic rights of work. The TUC recommendations are good in as far as they go, but I would like to go further. I hope that next year we will have a Government of a different flavour and colour—more red than blue—and that we will see some of the trade union rights that we have lost re-established, which will help the enforcement of rights for posted workers as well. 

12.4 pm 

Jenny Willott:  We have had a good debate today, which has raised some really important issues. The hon. Member for Edinburgh South highlighted the rights contained in the original 1996 directive. It is important to remember that those are basic, important rights for all workers to have. That is what we are debating today. There can be no dispute whatsoever that posted workers should have access and entitlement to those rights, which should be enforced. Sometimes it is important to go back to brass tacks and remember what we are talking about. 

The hon. Member for Edinburgh South raised concerns about article 3, which is about defining a posted worker and assessing whether the posting is genuine. We supported a list of indicative measures to help establish whether there is a genuine posting situation. Some parties wanted to use this enforcement directive as a vehicle to define self-employment as a way to tackle illegal working practices, which we have already discussed in our question session. I recognise that this is an issue on a larger scale in some member states. The issue of self-employment and the illegal practices that may or may not be going on in that area is out of scope of this directive, but we do recognise that it is an important issue for some member states. We supported a concession that acknowledged the benefit of having this test and signposts those in that situation to more appropriate legislation which applies to that set-up. That concession is included in article 3. We supported that, to make sure that workers and employers affected are signposted to the appropriate legislation. It is an issue for some, so that is covered in article 3. 

The hon. Member for Luton North talked about the issue of burdens on business and so on. Minimising the burden on business and improving worker protection is not a zero-sum game. It is perfectly possible to do both. We want to see businesses that are able to create jobs, export and work across the European Union. That is clearly good for the business, it is good for the British economy and it is also good for the workers of that business. It creates new jobs and new employment. 

Kelvin Hopkins:  I think it is the phrase “burdens on business”. If it were “requirements of employers”, it would have a different flavour. 

Jenny Willott:  I will take up the hon. Gentleman’s point with my colleagues. Clearly, there are some regulatory requirements on business that are absolutely critical for a business to operate effectively within the law and to ensure that workers have the protections they need—the

basic rights that everybody should be entitled to, such as those highlighted by the hon. Member for Edinburgh South. We are trying to make sure that we do not, at the same time, make it too difficult for smaller businesses. That is what we would have concerns about if the regulation becomes too complex—that it would make it very difficult for small businesses to get involved in work across the European Union. The big businesses are always going to be able to employ lawyers and whatever else they need to ensure compliance, but a large part of the British economy is small and medium-sized enterprises. We want to make sure that they are able to take advantage of opportunities available to them across the EU. That is good for the British economy as a whole but it is also very good for those people who get work as a result. We want to make sure that those workers have the protections that are essential but that we do not make it impossible for small and medium-sized enterprises to get involved, grow and create more jobs. The issue is getting the balance right. I take the hon. Member for Luton North’s point about the wording used. It is a fair point well made. 

The final deal on the table is a good deal for the UK. It is good for workers because it will make it easier for them to have an awareness of their rights, as was highlighted by the hon. Member for Luton North. Awareness of rights is an important element of this. As a result of the measure, much more information will be shared, and hopefully there will be much tighter co-operation among member states to ensure that rights are enforced across borders, so that employees get the rights to which they are entitled and businesses that operate in an exploitative fashion cannot undercut businesses that operate in a fair and just manner towards their employees. 

It is also important that workers are aware of how they can enforce their rights. That is laid out in the text of the proposal. It is a good deal for workers, and it helps businesses by clarifying their responsibilities, including what information they must hold and provide. However, as I said, it will still enable small and medium-sized businesses to start operating across Europe without excessive regulation making it difficult, while maintaining protection for workers. All those things are important for the UK economy. We need employees to have their rights and we need those rights to be enforced meticulously, but we also need to ensure that businesses can grow, operate and create more jobs. 

Hon. Members have raised issues about the enforcement of employment rights in the UK. That is critical. The hon. Member for Luton North raised some important points about it, and I completely agree. It is important for employees, but also for businesses. Those that comply with the law are being undercut by those that do not and that exploit their workers, which does not benefit any of us. We want employers who are honest, who behave within the law and who treat their employees well to benefit from that honesty and uprightness, and we want employees who are being exploited to know what their rights are and how they can enforce them. 

HMRC plays an important part in enforcing the national minimum wage. Hon. Members and I have highlighted the changes that we are making to ensure that enforcement of the national minimum wage is tightened up and the penalties for employers who do not pay the minimum wage are significantly increased.

The hon. Member for Edinburgh South also highlighted the role of employment tribunals in enforcing employment rights, which have a key role to play. I was glad to hear, in the example that he mentioned, that the employment tribunal came good and resolved the issue. That is a good illustration of the importance of the employment tribunal system, which has worked extremely well in the UK for many decades. 

One way that the Government are driving and encouraging good behaviour is by introducing significant penalties for rogue employers, so that they must pay additional fees if they do not pay up following a tribunal. Again, that is to ensure that we give the advantage to employers who comply with the law and treat their employees fairly and well. 

Ian Murray:  I know that the Committee is considering posted workers. Enforcement is key to ensuring that the case law is maintained, as well as individual rights. However, I am sure that the Minister and the Committee will be as concerned as I am by the dramatic drop in the number of employment tribunals—by as much as 80% in some areas of the country, including the area of the country that I highlighted in the example from 2012—due to the introduction of fees. Will she consider that? If people do not know their rights and cannot enforce them, there is no point having the rights at all. 

Jenny Willott:  The hon. Gentleman highlights an important point. We are monitoring that. It is still early days, so we do not know exactly how it will pan out. One recent change that will hopefully make a significant difference in that respect is the introduction of early conciliation using the Advisory, Conciliation and Arbitration Service; I think it becomes compulsory on Monday. We know that going through an employment tribunal process can be incredibly painful and stressful for both employee and employer. If early conciliation is used well and effectively—ACAS has an extremely strong record on that—in many cases an agreement can be negotiated between the parties that avoids the need for an employment tribunal. 

It is much cheaper, but it is also much better for both parties not to experience the stress and strain of an employment tribunal if they do not need to and if an agreement can be reached beforehand. I hope that the introduction of that formal part of the process will make it less daunting for people to go to an employment tribunal. An easier step before the formal tribunal will make it easier and less stressful for people to enforce their employment rights. 

I agree with the hon. Member for Edinburgh South that all the rights in the world on the statute book are no good if they are never enforced. We need the system to be effective and fair, and easy for people to access. Early conciliation will make a difference to the attractiveness of the prospect of enforcing one’s rights. 

Kelvin Hopkins:  To add to what my hon. Friend said about tribunal rights, I chaired a meeting in this building about the Government’s changes on fees, with trade unions, understandably, and with lawyers—but also with the CBI. The CBI was strongly opposed; big employers’ organisations were also opposed to the Government at that time. As my hon. Friend the Member for Edinburgh South said, the reduction in the number of tribunals has been deeply worrying. 

Jenny Willott:  It is still early days, and as I have said I hope that the introduction of early conciliation will encourage people. However, we will monitor things to see that the system works effectively, so that meritorious cases go through the employment tribunal, businesses that behave exploitatively or inappropriately are taken to task, and employment tribunal judgments are enforced. That is important, and the CBI feels strongly that businesses that are found by an employment tribunal to have been in breach of the law must not be allowed to get away with ignoring the judgment and paying nothing. We are aware of the importance of follow-up enforcement and are monitoring that. 

I agree about the need to raise awareness, so people know what their rights are, and that they have the right to enforce them. That is particularly relevant to more vulnerable groups, mentioned by the hon. Member for Luton North, who may not have easy access to information. We need to pay attention to that, so that people know their rights and the route they should take. Some elements of today’s proposal will tackle that for posted workers, but it is an issue more broadly across the economy, for other workers. 

The UK has worked hard with other member states to get the right balance in the directive between protecting workers and helping businesses to provide services across the single market. We have had an interesting discussion about the role and importance of rights, and how to enforce them well. Although the directive relates to a small proportion of the work force, the debate has highlighted issues that apply more broadly across the economy. I am sure that the House will return to those issues fairly regularly. 

Question put and agreed to.  

12.18 pm 

Committee rose.