Make Work Pay: Employment Rights Bill

Summary

The Government has announced a comprehensive overhaul of employment law in what it is calling the ‘biggest upgrade to workers’ rights in a generation. As part of this agenda, the Employment Rights Bill was introduced to Parliament on 10 October 2024 and is currently making its way through Parliament.

The Committee launched this inquiry to inform the Employment Rights Bill’s passage through Parliament and to assess whether it would achieve the aims set out by the Government. By publishing this Report before the next stage of the Bill’s consideration in the Commons, we hope to help inform Members of the House, as well as the wider public, and enable Members to table amendments to the Bill, if they wish to.

In particular we are calling on the Government to make changes to the Bill regarding zero-hours contracts: to define what is meant by reasonable notice of shifts, to provide more detail on compensating workers for cancelled, moved or curtailed shifts; and to remove the reference to a minimum number of hours. We highlight the importance of the Government prioritising bringing forward its proposals on worker status to ensure this area is not exploited as a loophole when the Bill reaches Royal Assent.

On industrial relations, we recommend that the Government develops a clear and long-term industrial relations strategy, and that the Bill includes more specific details and inclusions in order to ensure the intended enhancement of collective rights works in practice.

The report also highlights areas that the Bill does not cover, but that could be impacted by the introduction of it. In this regard the Committee is recommending that the Government: make amendments to Section 54 of the Modern Slavery Act to ensure better transparency and due diligence practices in the private sector; and to align UK requirements with similar global legislation on modern slavery and human rights due diligence as we do not want to see the UK become a dumping ground for products made with forced labour.

To ensure that the welcome new labour rights are properly enforced the Government must also ensure the new Fair Work Agency is properly resourced and has effective powers for enforcement.

This report is aimed at informing Members of Parliament and the public about the Employment Right Bill, its provisions and its consequences. The Committee’s work has been completed ahead of further legislative stages on the Floor of the House of Commons to enable Members to propose amendments to the Bill before it becomes an Act. The Committee hopes that this work therefore contributes to an effective law-making process and good scrutiny of the Bill.

1 Introduction

1. The Government has announced a comprehensive overhaul of employment law in what it is calling the ‘biggest upgrade to workers’ rights in a generation.’ The plan to ‘Make Work Pay’ sets out the Government’s agenda to boost wages, reduce insecure work and grow Britain’s economy.¹

2. As part of this agenda, the Government announced an Employment Rights Bill in the King’s Speech in July 2024. The Bill, which was introduced to Parliament on 10 October, seeks to:

• Ban exploitative zero-hours contracts;
• End ‘Fire and Rehire’ and ‘Fire and Replace’;
• Make parental leave and protection from unfair dismissal day one rights;
• Strengthen statutory sick pay;
• Make flexible working the default from day one;
• Strengthen protections for pregnant women and new mothers returning to work;
• Strengthen protections from sexual harassment at work;
• Strengthen legislation around the allocation of tips;
• Strengthen protections around collective redundancy;
• Introduce a new right to bereavement leave;
• Establish a new Single Enforcement Body, called the Fair Work Agency;
• Establish Fair Pay Agreements in the adult social care sector;
• Reinstate the School Support Staff Negotiating Body; and
• Upgrade Trade Union legislation.

Our Inquiry

3. The Committee launched this inquiry to inform the Employment Rights Bill’s passage through Parliament and to assess whether it would achieve the aims set out by the Government. We aimed to consider how the Bill would impact businesses and contribute to the Government’s stated growth goal, and whether it would adequately protect workers and ensure protection against exporting poor labour standards. We sought to complement the line-by-line scrutiny by the Public Bill Committee. By publishing this Report before the next stage of the Bill’s consideration in the Commons, we hope to help inform Members of the House, as well as the wider public, and enable Members to table amendments to the Bill, if they wish to.

4. We held three evidence sessions on 17 December 2024, 7 January 2025, and 14 January 2025. First, we heard from Amazon, BAE Systems, Jaguar Land Rover, and GMB and TUC on the expected impact of the Bill on industrial relations, and what a future industrial relations settlement might look like for the UK labour market.

5. We then took evidence from McDonalds, Tesco, the British Retail Consortium and Chinese global online retailers Shein and Temu. We also spoke to the Director of Labour Market Enforcement, Margaret Beels OBE and the Independent Anti-Slavery Commissioner, Eleanor Lyons. We asked how franchisers and retailers ensure labour rights and standards are upheld throughout global supply chains, especially where those standards do not operate locally.

6. Finally, we looked at the reality of employment status, the gig economy and zero-hour contracts. We heard from Union representatives as well as representatives from Sports Direct, Deliveroo, Evri and Uniqlo. We questioned whether the provisions of the Bill would make effective changes for workers and businesses, in a way that can counter any loopholes and unintended consequences for each.

2 Individual rights

Zero hours contracts

7. Zero hours contracts are a type of work contract where workers are not offered any guaranteed hours. They are used by businesses seeking to use the labour market flexibility and by workers seeking flexibility around their other commitments. Around a million people are reported to be on a zero-hours contract in the UK, which accounts for 3.1 per cent of people in employment. Those on zero-hours contracts are more likely to be aged 16–24, female, working part-time and employed in the accommodation and food sectors.²

8. Opinion on zero-hours contracts has been mixed. While some employers argue they are useful in meeting fluctuating demand for labour and affording convenience for workers who want to work flexibly, others have raised concerns that zero-hours contracts can lead to ‘one-sided’ flexibility and insecure conditions for the worker.³

9. The Employment Rights Bill seeks to address this one-sided flexibility by introducing new rights for workers. These are:

• A right to guaranteed hours;
• A right to reasonable notice of shifts; and
• A right to compensation for shifts that are cancelled, moved or curtailed at short notice.

Right to guaranteed hours

10. The right to guaranteed hours—set out in clause one of the Bill—would give employers a duty to offer their zero-hours workers a working pattern that reflects the hours they worked over an initial ‘reference period’, adjusted for subsequent ‘reference periods.’⁴ These lengths of these reference periods have not been set out in primary legislation, although the Government’s Next Steps to Make Work Pay suggests a twelve-week reference period.⁵

11. Views on how long this reference period should be varies. Trade Unions such as Usdaw agree with the Government’s suggested twelve-week reference period, citing it as an understood period among businesses that is in line with other forms of employment law, such as redundancy and parental leave.⁶ However others, such as the Recruitment and Employment Confederation (REC), believe twelve weeks could result in businesses being oversubscribed with workers if the reference period is calculated over periods of seasonal fluctuations, such as Christmas.⁷ When we spoke to Neil Carberry, the CEO of REC, he suggested a 26-week reference period would better reflect the actual working patterns of those on zero-hours contracts.⁸ We heard that a longer reference period is important to businesses who employ seasonal workers and whose busy period lasts longer than twelve weeks. For example, businesses open in the summer season that can last from Easter to mid-September. A short reference period could risk the viability of these businesses.

12. While there is no consensus on how long the reference period should be, the absence of clarity on the face of the Bill undermines the certainty that the reforms aim to achieve. Paddy Lillis, the General Secretary of Usdaw, specifically called for a twelve-week reference period to be on the face of the Bill to ensure that these reforms were securely embedded into law. This, he argued, would reduce the risk of the reference period changing at the whim of a future Government.⁹ Neil Carberry also agreed that businesses and trade unions would like more certainty, although he did note that more time was needed for the Government to fully consider the details.¹⁰

Right to reasonable notice of shifts and compensation for shifts that are cancelled, moved or curtailed at short notice

14. Clause two of the Bill gives workers on zero-hours contracts a right to be given reasonable notice of any shift they are asked to work. Similar to the right to guaranteed hours, what is deemed as reasonable notice would depend on the circumstances of the case, the details of which is not specified on the face of the Bill. Where shifts are cancelled, moved or curtailed at short notice, zero hours workers would be entitled to a payment from the employer, which is set out in clause three of the Bill. Again, the Government has yet to define key elements to this right including what is meant by ‘moved,’ ‘short notice,’ what groups of workers would qualify and the level of any ‘payment’ that employers would be required to compensate workers.¹¹

15. A 2022 report by the Chartered Institute of Personnel and Development (CIPD) found that 20 per cent of businesses gave less than a week’s notice of a shift. A further 19 per cent of businesses said that their notice periods varied too greatly or they did not know how much notice they gave to workers. Moreover, the same report found that just a third of employers compensated workers for shifts that were cancelled with less than 24 hours-notice.¹² When we spoke to Andy Brown, the Chief People Officer of the Frasers Group—a large retail group that owns household brands, such as Sports Direct—he said that in a ‘worst-case scenario’ workers may only receive one week’s notice of shifts despite managers being able to issue hours up to four weeks in advance, although their policy is to issue shifts with at least two-weeks’ notice.¹³ He also confirmed that workers do not receive compensation if a shift is changed, even within one week.¹⁴

16. Given all this, the Committee understands the need to legislate so that workers have more certainty with their incomes and working patterns. However, it is hard to scrutinise the effectiveness of these rights and the implications they have on both workers and the potential costs to businesses if key details of these reforms do not appear on the face of the Bill. Similar to the right to guaranteed hours, relegating important rights to secondary legislation creates uncertainties for businesses, workers and trade unions.

Agency workers

18. According to the Government, there are around one million temporary agency workers in the UK. The sector contributes around £34 billion to the economy.¹⁵ While the Bill’s reforms on zero hours contracts do not automatically apply to agency workers, clause four of the Bill would create a power for the Secretary of State to make regulations to extend equivalent rights to agency workers. The Next Steps to Make Work Pay sets out the Government’s intention to do this,¹⁶ and a consultation on this matter was held between October and December 2024.¹⁷ The Government is currently analysing the responses.

19. There have been differing views on whether agency workers should be included in these measures. Neil Carberry, for example, has called for agency workers to be exempt from the proposed zero-hours contract reforms, citing REC research that eight in ten temp agency workers say that their work provides an important need for flexibility.¹⁸ By contrast, Usdaw say any exclusion of agency work would ‘exacerbate’ the issue of insecure work and one-sided flexibility.¹⁹ There is a risk any exclusion of agency workers from protections against zero-hour contracts would directly counter the stated aims of the Bill, as employers could switch from direct employment to agency employment.

20. We have seen this in the case of Sports Direct, which has received significant scrutiny in the past of poor working practices among their agency workers on zero-hours contracts, particularly from their Shirebrook warehouse in Derbyshire. Sports Direct had previously committed to offering more full-time contracts in 2016 following this controversy. However Andy Brown, the Chief People Officer for the Frasers Group—which owns Sports Direct—confirmed in January 2025 that it still employs 4,000 agency workers in its Shirebrook warehouse and 1,200 directly employed workers.²⁰ This means over three quarters of their staff on this site are agency workers. An investigation by The Guardian in 2020 included an agency worker’s statement that full-time contracts were rare and typically given to those who had ten years of service.²¹

21. While agency workers have some employment rights—such as an entitlement to the National Minimum Wage, receiving payslips and protections against unlawful deductions from their pay—it is legal for their contracts to be terminated immediately with no notice.²²

22. While we respect peoples’ decision to have flexibility in their work, it is deeply concerning to us that an agency worker who has delivered years of service to a company could have their contract immediately terminated with no legal protections. It is also concerning that if agency workers were not included in the Government’s proposals around zero-hours contracts, businesses could easily side-step the Employment Rights Bill by hiring staff as temp or agency workers instead.²³

Low hours

25. The Employment Rights Bill also makes provisions for those on ‘low-hours’ contracts to have the same rights to a guaranteed hours contract as those on zero hours. For example, if a worker is on ‘low hours’ but regularly works more hours during a reference period, they would be entitled to a contract that reflected those hours.²⁴

26. The definition of what counts as low hours has not been put on the face of the Bill and will be set in future regulations. However it became clear that whatever the number set would be, as Usdaw’s Paddy Lillis warned us, that some companies may deliberately set contracts out of this boundary to avoid the Bill’s measures.²⁵ In order to avoid this loophole, Usdaw has called to remove the provision of low hours in the Bill.

Status of worker

28. The UK currently has a three-tiered system for employment status. How someone is defined determines whether they are eligible for any particular employment right.

• Employees have the full range of employment rights, including protections against unfair dismissal, redundancy pay and various kinds of parental leave.
• Workers have fewer rights although they still retain some basic entitlements such as the National Minimum Wage, paid holiday and protections against discrimination and whistleblowing.
• Self-employed independent contractors are not eligible for most employment rights, although they are still protected against discrimination and basic health and safety protections while on a client’s premises.²⁶

29. The 2024 Labour Manifesto said that a three-tiered system provides a lack of clarity for businesses and workers resulting in many workers not knowing their employment status and what their rights are. The rise of new technology and ways of working prevalent in the gig economy, has further exacerbated these problems, leaving people open to exploitative practices.²⁷

Government plans to tackle bogus self-employment

30. The Government has previously outlined plans to move towards a single status of worker and transition towards a two-part framework for employment status. They set out plans to:

• consult on a framework that differentiates between workers and the ‘genuinely self-employed,’ and how this could properly capture the breadth of employment relationships; and
• evaluate the way flexibility of ‘worker’ status is used and understood across the workforce.²⁸

31. Status of worker does not feature in the Employment Rights Bill, although the Government has committed to a consultation on the issue.²⁹ The Government has told us that it sees these reforms as a longer-term goal.³⁰ However, if reforms to employment status are delayed, lawyers and unions have warned that businesses could sidestep the Employment Rights Bill by hiring staff as self-employed contractors, temps or agency workers.³¹ This would mean those workers would not be entitled to the reforms laid out in the Bill. The Director of Labour Market Enforcement, Margaret Beels OBE, has gone further and said the Government needs to act to stop sham self-employment if it wants the Employment Rights Bill to succeed,³² having told the Committee that the Government can ‘consult until the cows come home’ on this issue.³³

Self-employed workers in the platform economy

32. The platform economy refers to self-employed work that is facilitated by a digital platform. Examples of some of these platforms include Deliveroo, Uber and Just Eat. It is a rapidly growing segment in the economy, employing many thousands of workers.³⁴ Gig economy workers using these platforms are classified as self-employed and are paid for each individual job rather than having an hourly rate or salary. As self-employed contractors, they have the freedom to sub-contract their work out to a substitute worker. But they are not entitled to the same rights as employees, such as the National Minimum Wage and holiday pay.

33. Gig economy workers are highly dependent on platform companies which supply them work. According to research by Centre for the Transformation of Work (CTW), 72 per cent reported being fully or partially reliant on gig work. Among these, 40 per cent said that they worked at least 40 hours per week, with 26 per cent exceeding 50 hours.³⁵

34. Paul Bedford, Group Director of Policy and Sustainability at Deliveroo, told the Committee that the self-employed work that Deliveroo offer is ‘incredibly attractive’ to people and facilitates more people entering into the labour market who would not have done so otherwise.³⁶ However the working conditions of Deliveroo have been the subject of some controversy in the past. In 2021, the Bureau of Investigative Journalism found that one in three riders made on average less than £8.72 per hour, which was the National Minimum Wage at the time. In one case, a cyclist was paid the equivalent of £2 an hour.³⁷

35. More recently, in autumn 2024, a raid on a Bristol caravan encampment found people in substandard living conditions, and without a right to work in the UK, being used as substitute riders for Deliveroo and UberEats. These workers alleged exploitation from Deliveroo and UberEats account holders, who were renting their legitimate accounts to these riders, taking a proportion of their substitute’s earnings and paying them below the minimum wage.³⁸ While Deliveroo has right to work checks for substitutes alongside other measures to prevent exploitation, such a facial recognition technology, Mr Bedford told us that other businesses in the platform economy do not have the same robustness of checks.³⁹ Further, given that the story of the Bristol caravan encampment came after Deliveroo’s checks were implemented, the Committee was not suffused with confidence that platforms currently and completely prevent abuse and exploitation. Facial recognition checks, for example, could be circumvented if the account holder was in proximity with their substitute.⁴⁰

Emerging use of freelancers in retail space

36. Gig economy working is spreading throughout the UK labour market. In December 2024, the Observer reported that well-known high street retailers, such as Uniqlo, Lush and Gymshark, were employing freelance workers via the apps Temper and YoungOnes to work on the shop floor over the busy Christmas period.⁴¹ Traditionally retailers would use fixed-term or agency workers—who have more employment rights—to fill in staff shortages during busy periods, rather than freelancers who have very few employment rights. When we spoke to Alessandro Dudech, Chief Operating Officer of Uniqlo, he told us that Uniqlo used the Temper app as a trial as they could not fill their staff shortages through agencies alone.⁴² Uniqlo—alongside Lush and Gymshark—ceased using freelancer workers on the shop floor.⁴³ The Committee was disappointed to hear that Uniqlo had not completed due diligence on employment law before using workers supplied through the Temper app.

Other gig economy workers

37. As part of our investigations into employment status we also looked at other forms of gig economy work, beyond the platform economy. We spoke to the delivery company Evri, which has contracts with around 20,000 self-employed couriers across the UK. Seventy per cent of its workforce is self-employed.⁴⁴ Unlike other companies, Evri has a Self-Employed Plus (SE+) scheme, developed with GMB, which provides SE+ couriers with guaranteed rates of pay, holiday pay and auto enrolment pensions.⁴⁵ This scheme was created to offer similar rights to someone classified as a ‘worker.’ Further, Evri argue that re-defining people as ‘employees’ would not be the ‘silver bullet’ in the battle to end bad practice.⁴⁶ While the Committee thought SE+ status seemed like a promising step to protect self-employed drivers, days before Evri was due to appear before the Committee we received multiple emails from whistleblowers accusing Evri of bad working practices. These allegations included:

• Employment misclassification and control: Although couriers are self-employed there were allegations that work was taken away from those who call in sick, have a family emergency or refuse to take parcels that are misclassified.
• Low pay: Some have suggested that many couriers report earning below the minimum wage due to low parcel rates.
• Wage disputes and other practices: There are allegations that delayed or unpaid holiday pay, and parcel misclassification leading to financial losses, are common.
• Unfair target mechanisms: There is a claim that couriers are penalised for working too quickly or slowly.

38. This does not paint a picture of the true autonomy and flexibility that self-employed workers should have. When we put these allegations to Hugo Martin, Director of Legal and Public Affairs at Evri, he told us that he did not recognise these claims.⁴⁷ While he said that Evri has a code of conduct, an anonymous whistleblowing number and employees and GMB representatives on site, the amount of whistleblowing testimony we have raises concerns that these measures are not enough to protect drivers.⁴⁸ Further to Mr Martin’s appearance, we received scores more whistleblower complaints.

Umbrella companies

40. Umbrella companies are intermediaries between workers and recruitment agencies and act as the employer for the worker. They provide workers with a number of benefits including a contract for employment; a pay passport when moving between assignments from different recruitment agencies; and a stand-alone consistent employment relationship, which is helpful for workers in relation to applications for loans and mortgages. However, they have also been subject to allegations of skimming wages, abuse of NI and pension contributions and commonly do not offer holiday pay. They are not defined in law and are generally unregulated.⁴⁹

41. The regulation of umbrella companies currently does not feature in the Employment Rights Bill. Neil Carberry told us that there are poor payroll practices in the umbrella sector and has called for the sector to be regulated to deter unscrupulous working practices.⁵⁰ This echoes the concerns of our predecessor Committee, which recommended that the Government at the time provide statutory protection from unscrupulous umbrella companies.⁵¹ The previous Government consulted on proposals to regulated umbrella companies in 2023 and the current Government has informed the Committee that it is currently considering how to proceed.⁵²

42. The Government is currently planning to introduce legislation—effective from April 2026—which will make recruitment agencies using umbrella companies legally responsible for accounting for PAYE on workers’ pay.⁵³ There is also guidance for employment businesses working with umbrella companies to ensure that non-compliant umbrella companies are excluded from their supply chains.⁵⁴ While these are welcome steps, more needs to be done to ensure good working conditions in the umbrella market.

Harassment and abuse

44. The ongoing crisis of sexual harassment and abuse at McDonald’s corporate-owned and franchised restaurants has underscored the importance of continuing to enhance the protections afforded to workers from harassment and abuse at work. The Committee acknowledges and welcomes that some important steps have been made through previous legislative reforms, including the sexual harassment preventative duty which came into effect as of 26 October 2024.⁵⁵ This new duty empowers the Equality and Human Rights Commission (EHRC) to take enforcement action where there is evidence of organisations failing to take ‘reasonable steps’ to prevent sexual harassment, including worker-on-worker and third-party sexual harassment. We further note changes proposed in the Employment Rights Bill which will extend this protection, requiring employers to take ‘all reasonable steps’ to prevent sexual harassment, and bring into play a new protection from third party harassment that applies to all types of harassment.

45. These measures require a stronger regime to appropriately tackle employers who may fail to take steps or even enable harassment—including harassment targeting individual protected characteristics. The enforcement role of the Equality and Human Rights Commission—which was described as “disappointing” in a 2019 report of the House of Commons Women and Equalities Committee—should be re-examined.⁵⁶ We echo the findings of the Women and Equalities Committee. Furthermore, we found in the case of sexual harassment and abuse in McDonald’s restaurants that statutory restrictions on the Commission’s ability to disclose relevant information frustrated legitimate inquiry into the effectiveness of its enforcement activities.⁵⁷

46. The Employment Rights Bill’s proposals to enhance protections for workers should strengthen safeguards against third-party victimisation of workers. This abuse has been highlighted particularly in retail and is often associated with crimes such as shoplifting. Research by the British Retail Consortium found a 50 per cent increase between 2023 and 2024 in incidents of racial abuse, sexual harassment, physical assaults and threats directed towards workers.⁵⁸ A key test for the long-term effectiveness of reform is to ensure that stronger duties on employers are accompanied with stronger action by public agencies to prevent places of business becoming targets of crime in the first place. We welcome Government’s proposal to consult on employers’ new third-party duties proposed in the Bill, and hope that further guidance will seek to strike a reasonable balance between the safeguards which are within the control of a given business, and safeguards which are the responsibility of public authorities.⁵⁹

Costs on businesses

48. We have heard evidence that the Government should be mindful about the risk of exacerbating the business costs at a time when National Insurance Contributions are rising. We have heard from the Institute of Directors, who submitted evidence to this inquiry, that the Bill will “severely hamper the Government’s ability to increase employment levels to its 80 per cent target.”⁶⁰ The Federation of Small Businesses have also submitted written evidence highlighting how the Bill’s measures may have a disproportionately negative impact on small employers.⁶¹ We note further that the Government has estimated the Bill will impose a direct cost of approximately £5 billion annually⁶² but the Regulatory Policy Committee has questioned the adequacy of this assessment.⁶³

3 Collective rights

50. The United Kingdom has witnessed a long-term and secular decline in trade union membership, down from 32.4 per cent in 1995 to 22.4 per cent in 2023.⁶⁴ This decline in overall trade union density has occurred unevenly. Public sector trade union density in 2023 is at a considerably higher level (49.2 per cent) than private sector employers (12.3 per cent), with employees in professional occupations more likely to be unionised than other occupational groups.⁶⁵

51. The United Kingdom has also seen increasing rates of industrial action. Working days lost due to strike action in 2023 were at their highest recorded levels since 1990. The wider costs of strike action on businesses and the wider economy are considerable with the ONS estimating around 2.5 million working days lost between June 2022 and December 2022.⁶⁶ This underlines the importance of a clear strategy for industrial relations, to sit alongside the Bill, to help articulate the values of collaboration, proportionality, accountability.

52. The Government’s impact assessment states that a key benefit of reform will be felt in improved relations and co-operation between unions and employers. However, the Regulatory Policy Committee has identified this benefit as ‘speculative.’⁶⁷ The Confederation of British Industry (CBI) has submitted written evidence of its finding that only “six per cent of employers believe that working with a trade union improves productivity.”⁶⁸ The CBI notes that recognition of a trade union in the workplace should come as a result of “positive choice rather than apathy” including through the preservation of pre-existing support and turnout thresholds.⁶⁹ The CBI urged the Government to do more to ensure that the lasting impact of reform is felt in a fairer and more productive settlement for managing collective rights at work. Other employers, such as BUPA Global, have submitted written evidence that encourages the full accounting of the potential costs that reform may introduce to other areas of the economy, such as cost increases to public sector goods and services.⁷⁰

53. Written evidence received in support of this inquiry has shown that employers, unions and professional associations all recognise the economic benefits that improved industrial relations bring, not least because in parallel the Government is proposing a new sectorally-based industrial strategy with new governance arrangements. This is therefore a golden moment of opportunity to align a long-term vision for Britain’s new industrial settlement to its wider industrial objectives.

Industrial relations strategy

54. Creating a new settlement that delivers value for unions and employers—and ultimately stronger collective rights for workers—will require embedding the proposed powers of the Employment Rights Bill within a wider industrial relations strategy, formed with social partnership as an explicit aim. This strategy should provide clear direction for future industrial relations policy and be clearly linked to the broader objectives set forward in the United Kingdom’s new industrial strategy, and overall ambitions for growth.

55. Written and oral evidence received in support of this inquiry has outlined the broad parameters of such a strategy:

• Principled: The Chartered Institute of Personnel and Development has endorsed the principles of the Government’s new framework for industrial relations, emphasising a focus on industrial collaboration, which should steer the allocation of resources, development of policy and execution of enforcement.⁷¹
• Impartial: Oral evidence received from Matthew Percival of the Confederation of British Industry noted that it is important that strategic efforts to improve UK industrial relations to do so in a manner that focuses on improving the value that a collective voice at work brings.⁷² Where possible, a strategy should seek to identify and include the different channels through which industrial dialogue may take place in different businesses, which include independent unions, staff and employers’ associations and other sector and cross-sector bodies.
• Integrative: The strategy should seek to integrate with the Government’s wider industrial strategy by identifying areas of improvement for social partnership within growth-driving sectors, supporting the development of sector bodies and providing opportunities for mutual employer and trade union action across areas such as skills, job quality and safety.
• Credible: The strategy should clarify the resourcing available to improve industrial relations and communicate a clear framework to guide the prioritisation of resources. The strategy should use public resourcing to crowd-in investment which deepens social partnership across the economy between employers, trade unions and sector-based trade associations.

Union workplace access

57. The Employment Rights Bill enables trade unions to request access to workplaces, allowing union representatives to meet workers, represent members and organise, including for the purpose of facilitating collective bargaining.⁷³

58. It is welcomed that the Bill introduces a clear process for employers to respond within a defined negotiation process, with the Central Arbitration Committee (CAC) empowered to decide on terms where agreement may not be possible. We have heard employer concerns about the lowering of requirements for recognition, turnout for industrial action, and a statutory right of access and concerns from trade unions,⁷⁴ which include:

• Digital access for unions: There is no explicit provision in the Bill for digital access, with ‘access’ defined in the Bill itself as denoting physical entry by a trade union to a workplace.⁷⁵ The organising environment for unions today is increasingly digitised with workers relying on digital forms of communication—such as messaging applications, email, online noticeboards and other tools—to receive information. The lack of clear authorisation for workplace digital access therefore stands as an area of concern which limits the future effectiveness of the new access regime to achieve its intended goals.

Transparency

60. Industrial relations in the United Kingdom would benefit from enhanced transparency, not least because as the Trade Union Congress observed, “unlike many Western European countries, the UK generally lacks a culture of formal information and consultation arrangements.”⁷⁶

61. The secrecy which shrouds industrial relations makes it harder for employers, trade unions and policymakers to make informed and strategic decisions about the evolution of collective rights at work. This lacuna might be remedied through enhanced central data collection.

62. The Workplace Employee Relations Survey (WERS)—which was cancelled in 2012—once provided a wealth of information about UK employment relations down to the individual workplace level, providing highly granular insight into a range of topics including employee representation, collective rights at work and workplace change. To date, the Office for National Statistics and The Economic Statistics Centre of Excellence at King’s Business School are collaborating to investigate the feasibility of developing new linked employer-employee datasets.⁷⁷

The recognition process

63. The Employment Rights Bill makes a number of changes to the statutory trade union recognition process, which applies where a union and employer may disagree on voluntary recognition of a particular bargaining unit.

64. Not all aspects of the recognition process governed by the Trade Union and Labour Relations (Consolidation) Act 1992 have been modernised within this proposed Bill. This includes paragraph 27B of Schedule A1 whereby parties to a recognition ballot are left with an effective window of 24 hours to lodge a formal complaint relating to alleged unfair practices.⁷⁸ Given the circumstances set out in the Trade Union and Labour Relations (Consolidation) Act 1992 whereby complaints relating to unfair practices may be upheld—including complex situations involving violence or intimidation—it is unreasonable that potential complainants have only a very short window of time to investigate, consider and report their concerns formally to the Central Arbitration Committee.⁷⁹

65. Also left unmodernised is the prohibition on unions seeking a recognition ballot of a proposed bargaining unit from the CAC if it falls within the last three years of the CAC accepting an earlier application.⁸⁰ This effectively locks unions out of seeking recognition, even if the ballot was only narrowly lost, for three years, despite stated Government policy in favour of union recognition. Given the anticipated changes to ballot threshold—including regulations relating to the admissibility threshold for the formation of a proposed bargaining unit—it stands to reason that other limitation periods defined in previous legislation (in this case paragraph 39(2) of Schedule 1A of the Trade Union and Labour Relations (Consolidation) Act 1992) might be best reviewed to ascertain whether a shorter lockout period is helpful to modernise industrial relations. This would enable the Secretary of State to make considered changes in the face of new conditions.

The committee heard significant evidence from the GMB about their experience of seeking access to Amazon’s Coventry warehouse prior to and during their 2024 recognition ballot.⁸¹ We have also heard concerns from stakeholders who are proposing some changes to the recognition process:

• Template access agreements: Employers and trade unions alike will benefit from union access agreement templates, reflecting established baseline expectations as to what reasonable requirements may be required to ensure access agreements during statutory recognition ballots are fair and effective. Where templates are used, it is expected that they should ease and speed the process of obtaining voluntary agreement for union access to the relevant workplace(s), tailored where necessary by the parties involved to reflect differences between employers and workplaces, or where disputes arise and require adjudication, help to ensure swift outcomes and mitigate the risk of protracted tribunal proceedings.
• Enforceability: While it is hoped that employers and trade unions will, on most occasions, be able to reach agreement on access either through voluntary agreement or adjudication, it remains possible that some parties may refuse to comply with the outcome of a CAC decision and therefore necessitate further proceedings. This behaviour risks undermining the fairness of a rules-based adjudication process while creating perverse incentives for some parties to withhold compliance to either disrupt or deter a legitimate access agreement from taking place. To address this, the Chartered Institute of Personnel and Development, has called for the CAC to “[have] the resources to assume responsibility for oversight of access agreements.”⁸² It is noted that other solutions may exist, including scope for agency enforcement.

Disclosure of spending

66. Trade unions and employers often spend money during recognition ballots to procure materials, consultants or services. Some jurisdictions, including the United States, require this information to be disclosed by employers through public filings to relevant labour market enforcement bodies, to ensure transparency where significant resource is being expended to ensure that a union does not win recognition. Understanding where resources are being allocated to oppose union recognition can help enhance overall understanding of poor labour market practice and therefore aid in the allocation of resources and policy attention.

4 International labour standards

69. International labour standards do not feature in the Employment Rights Bill. However, given the measures in the Bill are likely to be implemented alongside an increase in employers’ National Insurance contributions, there is a heightened risk that firms seek to offshore work to countries where labour standards are lower. Some businesses have started to threaten this. Currys—which employs 28,000 staff—has said hiring more workers overseas will be ‘inevitable.’⁸³ Given this risk it is important that businesses trading in the UK operate adequate due diligence checks to guard against the risk they are financing exploitative labour practices abroad.

Modern slavery act and statements

70. The Modern Slavery Act 2015 serves as a key legal framework for assessing forced labour issues in supply chains in the United Kingdom. Under section 54 of the Act, companies supplying goods and services with an annual turnover exceeding £36 million are required to produce a slavery and human trafficking statement each financial year. In this statement, companies must either set out the steps they have taken to ensure that slavery and human trafficking are not present in their business and supply chains; or declare that they have taken no such steps.⁸⁴

71. Section 54 currently identifies six areas that a company statement may cover, although there is no legal obligation to address all of them:

• The organisation’s structure, its business, and its supply chains;
• Its policies in relation to slavery and human trafficking;
• Its due diligence processes in relation to slavery and human trafficking in its business or supply chains;
• The parts of its business and supply chains where there is a risk of slavery and human trafficking taking place and the steps it has taken to assess and manage that risk;
• Its effectiveness in ensuring that slavery and human trafficking is not taking place in its business and supply chains, measured against such performance indicators as it considers appropriate; and
• The training about slavery and human trafficking available to its staff.⁸⁵

72. The objective of Section 54 is to encourage greater transparency within the private sector and to establish a level playing field between companies already adopting responsible practices and those that need to reform their policies and operations.⁸⁶ However, the provision’s effectiveness is undermined by the flexibility it grants companies in selecting which areas to address in their statements. This lack of uniformity makes it challenging to conduct meaningful comparisons and assessments of corporate efforts to combat modern slavery. The Government is currently considering how it can strengthen the Section 54 regime.⁸⁷

Different levels of transparency

73. As part of this inquiry, the Committee engaged with several companies, each demonstrating varying levels of transparency in their modern slavery statements. Representatives from Tesco and McDonald’s gave evidence to aid the Committee in understanding their corporate practices regarding human rights. Regrettably, both companies have recently been connected to modern slavery cases reported in the media. Notably, a human trafficking network forced 16 victims from the Czech Republic to work in the UK, either at a McDonald’s branch or a company supplying bread to major UK supermarkets, including Tesco. This exploitation persisted until 2019.⁸⁸ Furthermore, a recent documentary presented evidence suggesting that several own brand “Italian” tomato purees sold in UK supermarkets, including Tesco, may contain tomatoes grown and harvested in China’s Xinjiang Uyghur Autonomous Region, a region associated with allegations of forced labour.⁸⁹ Tesco confirmed to the Committee that it had exited its relationships with both implicated suppliers, while McDonald’s indicated that it had improved its processes since 2016–2019.⁹⁰

74. With respect to modern slavery statements, Tesco has demonstrated a more transparent approach by publishing the findings of its due diligence checks, revealing, in 2023, two to three instances of exploitation within its operations and 15 within its supply chains.⁹¹ In contrast, McDonald’s discloses only information on its due diligence approach without publishing the results of any audits in its statement.⁹²

75. The Committee also interviewed representatives from the fast-fashion company Shein and the online marketplace Temu, both of which face persistent concerns regarding the potential presence of forced labour in their supply chains. The US House Select Committee on the Chinese Communist Party warn of an ‘extremely high risk’ that products sold on Temu have been made with forced labour.⁹³ In 2022, Bloomberg News reported that laboratory tests identified cotton originating from China’s Xinjiang Uyghur Autonomous Region in two Shein shipments of garments sent to the United States.⁹⁴ Reuters noted that the testing company Oritan found that 1.7 per cent of Shein products tested contained cotton from areas where there is alleged forced labour, lower than the average prevalence of such cotton across its tests (6 per cent).⁹⁵

76. Shein asserts a commitment to responsible and ethical operations, publishing a range of policies and statements, including a human rights policy, code of ethics, workplace health and safety statement, supplier code of conduct, supplier responsibility standards, and a responsible sourcing policy. These statements include the outcomes of Shein’s due diligence checks, including proportion of supplier by audit ‘grade’ and reporting as two instances of child labour identified in its supply chain in 2023.⁹⁶ In correspondence with the Committee, Shein disclosed the locations of its supplier partner network in China as of September 2024, which did not include the Xinjiang Uyghur Autonomous Region. The company also outlined its “proprietary materials traceability system,” used to ensure compliance with US laws, including the UFLPA.

77. However, Shein confirmed that overtime pay accounted for an average of 37 per cent of the wages paid to employees of its suppliers, highlighting the challenging working conditions in the fashion sector. Moreover, when Shein’s Yinan Zhu appeared as a witness for this Inquiry, she declined on multiple occasions to confirm that the company did not use cotton from Xingjiang.⁹⁷ This failure to supply the most basic of information was and is a source of extreme concern to the Committee, constituting a failure to supply information reasonably requested by Parliament about a potential risk to workers in the supply chain.

78. Temu’s Senior compliance manager, Stephen Heary, described the company’s compliance programme to the Committee and confirmed that less than 1 per cent of products sold on Temu contain cotton.⁹⁸ However, it remains difficult for consumers to assess the risk of forced labour used to produce goods sold on Temu as it only publishes a three-page modern slavery statement, which has just three paragraphs on its approach to due diligence.⁹⁹

Other approaches to tackle modern slavery in supply chains

81. Different global markets have adopted various approaches to addressing forced labour in supply chains. The United Kingdom was a pioneer in this area, being the first country to introduce comprehensive modern slavery legislation with the enactment of the Modern Slavery Act 2015. However, other nations have since advanced their legal frameworks by introducing stronger reporting requirements and implementing bans on the importation of goods linked to forced labour. Juristictions such as the United States, the European Union, Australia, and Canada are among those leading these efforts. There is now a significant risk that the UK may fall behind unless additional measures are introduced to ensure robust and transparent compliance across industries.¹⁰⁰

82. In the United States, Section 307 of the Tariff Act of 1930 prohibits the importation of any products mined, produced, or manufactured through forced labour. Enforcement of the Act is carried out by US Customs and Border Protection (CBP). Furthermore, the Uyghur Forced Labor Prevention Act (2021) establishes a presumption that all goods originating from the Xinjiang Uyghur Autonomous Region are associated with forced labour and are therefore prohibited from entering the US under Section 307.¹⁰¹ According to the latest data, a total of 4,524 shipments have been denied entry under the 2021 Act.¹⁰²

83. The European Union is advancing its legal framework to combat forced labour with the upcoming EU Forced Labour Regulation, which, along with the EU Corporate Sustainability Due Diligence Directive, is intended to be in place by 2027. The Forced Labour Regulation aims to prohibit the sale and importation of goods made with forced labour into the EU market, irrespective of their country of origin, with enforcement carried out by national authorities in each EU member state. The prohibition extends to the entire life cycle of a product (and its components), meaning that goods will be banned if forced labour has been involved at any stage of their production, manufacture, harvesting, or extraction. The Forced Labour Regulation is designed to complement the EU Corporate Sustainability Due Diligence Directive, which will impose stricter due diligence obligations on larger companies with operations within the EU, requiring them to identify, address, and prevent, but not required to completely eradicate, risks related to human (and environmental) rights in their supply chains.

84. The UK currently does not have a policy that would prohibit the importation of goods produced using forced labour. The Government has told us that they view import bans like those set out in the US and EU legislation as part of a range of tools used to tackle forced labour in global supply chains and that they will continue to monitor the effectiveness of this.¹⁰³ The Independent Anti-Slavery Commissioner, Eleanor Lyons, however told us that if the Government does not introduce mandatory human rights due diligence then the UK will fall behind other global partners.¹⁰⁴ More concerning, Tesco’s Claire Lorains, warned the Committee that the UK is at risk of becoming a ‘dumping ground’ for products that cannot enter EU and US markets if there is not swift reform in this policy area.¹⁰⁵ We are shocked that the UK could end up being flooded with second-class products that are made using exploitative labour practices.

5 Labour market enforcement

87. Measuring the scale of labour market non-compliance is a challenging endeavour. Employers are unlikely to report unlawful behaviour, and some workers may not know the full extent of their employment rights. However, there has been a significant amount of research that suggests widespread labour market non-compliance. Non-compliant businesses account for over 10 per cent of Britain’s GDP.¹⁰⁶ The Low Pay Commission estimates that 20 per cent of those on national minimum wage were underpaid in April 2024.¹⁰⁷ This paints a worrying picture that needs to be addressed if the Employment Rights Bill is to have its desired positive effect. Given that many businesses, particularly small businesses, will be burdened with an increase in compliance costs in order to cope with the increased legal risk that comes with the Bill, it is especially important that enforcement is effective to ensure a level playing field for all businesses. As Neil Carberry told us in January, there is concern that the Government ‘passes laws but does not enforce.’¹⁰⁸

Landscape of labour market enforcement

88. There are two major frameworks for enforcing employment rights in the UK:

• Employment rights that can only be enforced when individuals bring claims before an employment tribunal and they are upheld.
• Rights are enforced by state bodies, which have the authority to investigate and take action on behalf of workers.

89. The UK currently has four key labour market enforcement bodies:

• Gangmasters and Labour Abuse Authority (GLAA), which covers labour exploitation, modern slavery and licencing for high-risk sectors like the agriculture sector;
• Employment Agencies Standards Inspectorate (EAS), which regulates employment agencies and businesses;
• The National Minimum Wage team within HMRC (HMRC NMWT), which seeks to enforce compliance with national minimum wage and sick pay law; and
• Health and Safety Executive (HSE), which covers workplace health and safety for higher risk sectors.¹⁰⁹

90. These bodies cover a wide spectrum of labour market non-compliance ranging from infringements of the National Minimum Wage to serious criminality. The fragmented nature of the UK’s enforcement regime means that it can be difficult for workers and employers to know where to go for help.

91. The previous Government committed to addressing the fragmented nature of enforcement and put forward plans in 2019 to bring together the GLAA, the EAS and the HMRC NMWT into a single enforcement body. However, this was not established before the end of the 2019–2024 Parliament. The new Government has also committed to establishing a single enforcement body, called the Fair Work Agency. The provisions to establish this are set out in the Employment Rights Bill, which would also give this body new powers.

Resourcing labour market enforcement

92. While the Committee welcomes the Government’s plans to reform labour market enforcement through the establishment of the Fair Work Agency, we are concerned that insufficient resources may be allocated to ensure its maximum effectiveness and efficiency. One way of measuring the UK’s investment in labour market enforcement is to compare our performance against the International Labour Organization’s (ILO) recommended benchmark of having one labour market inspector per 10,000 workers.¹¹⁰ The UK is currently not meeting this benchmark. Moreover, the Resolution Foundation has found that real terms funding for the enforcement agencies has largely been flat since 2014. It was equivalent to a total spend of under £10.50 per worker in 2022.¹¹¹

93. Given the proposed new powers, we are extremely concerned that the Fair Work Agency will be under-resourced. When the Director of Labour Market Enforcement, Margaret Beels OBE, appeared before us, she said that merely combining the current budgets of the three enforcement bodies would not be enough. A step change in resources available to the Fair Work Agency will be needed.¹¹²

Powers for the Fair Work Agency

96. As well as adequate resourcing, the Fair Work Agency must also have the right powers to properly enforce labour market compliance. The Government has said that the agency will have “strong powers to inspect workplaces and take action against exploitation,” as well as bring civil proceedings to uphold workers’ rights.¹¹³ However, the current behaviour of the state enforcement bodies shows that there are weak penalties for non-compliance. In the case of the National Minimum Wage, the maximum financial penalty that can be levied for non-compliant businesses is twice the arrears owed, which can be reduced to 100 per cent of arrears if the employer pays promptly. Analysis by the Resolution Foundation has found that there is no incentive to comply with minimum wage obligations unless there was a 200 per cent penalty and a third of all non-compliant businesses were caught.¹¹⁴ Even in the most egregious cases. the strongest powers that the state enforcement bodies have are rarely applied. For example, all bodies can impose some form of criminal sanction, yet they are rarely used, with only 21 employers being prosecuted for national minimum wage underpayment since 2007.¹¹⁵

97. If the Fair Work Agency wants to have a fighting chance of tackling non-compliance it will need to go further than the current scope of the three bodies.¹¹⁶ When we spoke to Margaret Beels, she told us that she found it ‘disturbing’ that currently the GLAA is not able to address any form of exploitation that falls short of modern slavery.¹¹⁷ The British Retail Consortium echoed these concerns and called on the Government to issue significant financial penalties to perpetrators of labour abuses and to disqualify directors who are implicated in serious incidents.¹¹⁸

Conclusions and recommendations

Individual rights

1. Without a reference period defined in primary legislation, there is a lack of certainty among workers, trade unions and businesses as to how the right to guaranteed hours will work in practice. To ensure certainty, the Government should define as soon as possible through regulations how many weeks the initial and subsequent reference periods should be. (Recommendation, Paragraph 13)

2. While the Committee welcomes the added security for workers that the Bill brings with measures to provide reasonable notice of shifts and compensation for cancelled, moved or curtailed shifts. But the lack of key details on the face of the Bill means that Parliament is at risk of signing a regulatory blank cheque for the Secretary of State without knowing the full impact it will have on workers and businesses. The Government must put in primary legislation through the Employment Rights Bill a definition of:

a. what is meant by ‘reasonable notice’ of shifts in clause two of the Bill; and

b. definitions of what is meant by ‘moved,’ ‘short notice’ and what groups of workers would qualify in clause three of the Bill. (Recommendation, Paragraph 17)

3. While the Committee understands that certain workers like the flexibility that comes with agency work and that it can be used as a legitimate short-term employment tool for many businesses, we are concerned about the impact long-term agency work could have on people’s security at work. We have heard evidence of misuse of agency workers’ contracts by some companies and believe there is a risk of unscrupulous companies side-stepping the reforms to zero-hours contracts by using agency workers. (Conclusion, Paragraph 23)

4. The Committee therefore urges the Government to use the delegated powers provided by the Bill to reform zero-hours contracts to enhance protections for agency workers as soon as possible. These reforms should not be at the expense of the important need for flexibility that eight in ten temp agency workers told REC that their work provides. (Recommendation, Paragraph 24)

5. Defining what counts as low-hours creates a loophole that can be exploited by companies to avoid their obligations set out in the Bill. We echo Usdaw’s recommendation that the reference to ‘a minimum number of hours, not exceeding a specified number of hours’ under section 27BA (3) should be removed from the Bill. (Recommendation, Paragraph 27)

6. While the Committee welcomes the Government’s plans to reform worker status and bogus self-employment, it must proceed at pace to turn ambition into action. If it does not, it risks more companies adopting a ‘self-employment’ model for their workforces to side-step the measures in the Employment Rights Bill. In the words of the Director of Labour Market Enforcement, the Government can consult until ‘the cows come home.’ It needs to act now if it wants the Employment Rights Bill to succeed. The Government must prioritise its review of employee, worker and self-employed status immediately, and as a priority address false self-employment, so that these reforms are rolled out alongside commencement of the Employment Rights Bill. (Recommendation, Paragraph 39)

7. While compliant umbrella companies can have many benefits to workers, there have been longstanding concerns across governments that the lack of regulation in the umbrella company market can lead to exploitative working practices. The evidence is overwhelming of the need for the Government to properly regulate umbrella companies. The Committee therefore asks the Government, in response to this report, to set out how it plans to regulate the sector and tackle non-compliance in the umbrella market. (Recommendation, Paragraph 43)

8. To ensure long-term enforcement of the new duties on employers introduced in the Employment Rights Bill, the Government should revisit the regime for enforcing equality law and harm against individual protected characteristics, including setting out how the Fair Work Agency will work with the EHRC where their responsibilities overlap. As part of its implementation of employment rights reform, we recommend that Government review and consult on the future of equality law enforcement with a targeted focus on areas where enforcement may be improved to better protect workers from harassment and abuse on the basis of protected characteristics. This targeted review and consultation should consider areas including (a) resourcing, (b) the scope of statutory powers; and (c) the role of new enforcement bodies. (Recommendation, Paragraph 47)

9. We recognise that there are a significant number of new employment rights that employers will need to understand and implement. We therefore call on the Government to consider how they use networks of employment support, both statutory and voluntary, to support employers in the implementation. We recommend that the Government task Acas with leading an information campaign to raise awareness of and promote compliance with good employment practice. (Recommendation, Paragraph 49)

Collective rights

10. The Government’s framework for industrial relations provides strong principles that can help to shape a future settlement based on productive engagement between trade unions and employers. To develop this ambition, we recommend that the Government develops a clear and long-term industrial relations strategy to ensure that implementation of those principles is credibly resourced and embedded through enforcement, policy and collaboration with unions, employers, Acas and other important stakeholders. (Recommendation, Paragraph 56)

11. More should be done to ensure that the new right of union access proposed in the Bill is protected against future changes to ways of working and the risk of non-compliance. We recommend that the Bill’s proposed definition of ‘Access’ should be expanded to make explicit mention of a union’s right of digital access. (Recommendation, Paragraph 59)

12. Given that an expected consequence of the Employment Right Bill may be greater recognition ballot activity within workplaces, it is essential that ministers amend section 27B of Schedule 1A of the Trade Union and Labour Relations (Consolidation) Act 1992 to provide longer than 24 hours for complaints about the conduct of recognition ballots to be heard and addressed. The Government should further commit to reform section 39(2) of Schedule 1A of the same Act to allow the Secretary of State for Business and Trade to significantly shorten the period of limitation covering proposed bargaining unit applications through regulations. The Secretary of State should agree to consult stakeholders on such changes as part of its future consultations on industrial relations reform.

We further note that the right of access during statutory recognition ballots should be further supported by the development of (a) relevant access agreement templates and (b) better resourcing to support businesses, especially small businesses, and for enforcement and compliance information support to tackle the risk of non-compliance with the decisions of the Central Arbitration Committee. (Recommendation, Paragraph 67)

13. It is important that the impact of reform to industrial relations is both measurable and measured. We recommend that the Government bring transparency around industrial disputes in line with best practice elsewhere, including the United States, and requires parties involved in a recognition ballot to disclose spend on materials, consultants and other payments. In addition, we recommend the Government secures an effective and long-term replacement to the Workplace Employee Relations Survey (WERS). (Recommendation, Paragraph 68)

International labour standards

14. Case studies reviewed by the Committee highlight a significant inconsistency in the transparency of Modern Slavery Statements. Although these statements may meet the requirements of the Modern Slavery Act 2015, the lack of standardisation hinders consumers from making informed purchasing decisions and assessing whether products are free from exploitative labour practices. (Conclusion, Paragraph 79)

15. The Government must review the Modern Slavery Act 2015 and make changes to Section 54 to improve transparency. In particular the Government should:

a. Change provision 54(5) such that the areas of reporting in modern slavery statements become mandatory.

b. Remove the provision in which companies are allowed to claim to have taken ‘no steps’ to address modern slavery.

c. Introduce penalties and name and shame scheme for companies not disclosing Modern Slavery statements.

d. Consider the creation of failure to prevent offences like those set out in the Economic Crime and Corporate Transparency Act 2023. (Recommendation, Paragraph 80)

16. The UK is at serious risk of becoming a ‘dumping ground’ for products made with forced labour if it does not keep up with our global partners on legislative reforms to tackle modern slavery. (Conclusion, Paragraph 85)

17. The UK Government must look to align with global legislation, prioritising the introduction of mandatory Human Rights due diligence, to avoid duplicated efforts for UK businesses. The Government should also consider newer levers such as import bans on products from regions where forced labour prevails, as being introduced in the United States and the European Union. (Recommendation, Paragraph 86)

Labour market enforcement

18. Laws are only as effective as those who enforce them. If the Government wishes to ensure workers are given strengthened employment rights, and that all firms benefit from a level playing field for labour standards, effective labour market enforcement must be prioritised. (Conclusion, Paragraph 94)

19. The Committee welcomes the Government’s focus on labour market enforcement to tackle non-compliance. However, if the Fair Work Agency (FWA) is to be given new powers it will also need more resource. Efficiencies made from combining current budgets will not be enough. The Government must set out to the Committee its target for funding the FWA so that our country reaches, as a minimum, the ILO’s benchmark of one labour market inspector per 10,000 workers by the end of this Parliament. The Government should set out a strategy and a timeline for delivering this resource. (Recommendation, Paragraph 95)

20. It is crucial that the creation of the Fair Work Agency does not result in a dilution of the powers currently held by the three existing enforcement bodies. (Conclusion, Paragraph 98)

21. The Government must ensure that the Fair Work Agency has the necessary powers to deter non-compliance. It must have the authority to investigate all forms of labour exploitation, up to and including modern slavery, and be adequately resourced to fulfil this remit. The Agency must build effective partnerships with the Police and the Home Office to tackle the most severe offences of modern slavery. We encourage the Fair Work Agency to make stronger use of the penalties it has across its remit to ensure better compliance. The Committee will be monitoring the effectiveness of the Fair Work Agency over the course of this Parliament. (Recommendation, Paragraph 99)

Formal Minutes

Tuesday 11 February 2025

Members present:

Liam Byrne, in the Chair

Antonia Bance

John Cooper

Sarah Edwards

Charlie Maynard

Gregor Poynton

Matt Western

Make Work Pay: Employment Rights Bill

Draft Report (Make Work Pay: Employment Rights Bill), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 99, read and agreed to.

Summary agreed to.

Resolved, That the Report be the Third Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available (Standing Order No. 134)

Adjournment

[Adjourned till Tuesday 25 February at 2.00pm]

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Tuesday 17 December 2024

Nicola Smith, Director of Policy, Trades Union Congress (TUC); Amanda Gearing, Senior Organiser, GMB UnionQ1–25

Matthew Percival, Director, Future of Work and Skills, Confederation of British Industry (CBI); Ben Willmott, Head of Public Policy, Chartered Institute of Personnel and Development (CIPD)Q26–43

Stuart Morgan, HR Director, Amazon Logistics; Jennifer Kearney, HR Director, Amazon UK and IrelandQ44–93

Dominic Johnson, Director of Employee Relations and Policy, BAE Systems; Beverley Fairbank, Industrial Relations and HR Director, Jaguar Land Rover; Murray Paul, Public Affairs Director, Jaguar Land RoverQ94–118

Tuesday 7 January 2025

Alistair Macrow, CEO, McDonalds, UK and Ireland; Claire Lorains, Group Quality, Technical and Sustainability Director, Tesco; Andrew Opie, Director of Food and Sustainability, The British Retail ConsortiumQ119–223

Yinan Zhu, EMEA General Counsel, SHEIN; Stephen Heary, Senior Legal Counsel, Temu; Leonard Klenner, Senior Compliance Manager, TemuQ224–298

Eleanor Lyons, UK Independent Anti-Slavery Commissioner; Margaret Beels OBE, Director of Labour Market Enforcement, Department for Business and TradeQ299–331

Tuesday 14 January 2025

Andy Brown, Chief People Officer, Frasers Group; Neil Carberry, Chief Executive, Recruitment and Employment Confederation (REC); Mr Paddy Lillis, General Secretary, Union of Shop, Distributive and Allied Workers (Usdaw)Q332–430

Paul Bedford, Group Director of Policy and Sustainability, Deliveroo; Hugo Martin, Director of Legal and Public Affairs, Evri; Alessandro Dudech, UK Chief Operating Officer, UniqloQ431–494

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

ERB numbers are generated by the evidence processing system and so may not be complete.

1ASLEFERB0071

2Acas (the Advisory, Conciliation and Arbitration Service)ERB0091

3Anti-slavery InternationalERB0079

4Ashton, Dr Heidi (Associate Professor, University of Warwick)ERB0039

5Association of British Insurers (ABI)ERB0097

6Association of Convenience StoresERB0019

7Atkinson, Professor Carol (Professor of Human Resource Management, Manchester Metropolitan University)ERB0046

8Beck, Prof. Vanessa (Professor of Employment Studies, University of Bristol); Magnus, Dr Levana (Research Associate, University of Bristol); Morris, Carolyn (Research Administrator , University of Bristol); Kamerāde, Prof. Daiga (Professor of Work and Wellbeing, University of Salford); Munoz, Miguel (Research Associate, University of Nottingham); Torres-Retamal, Dr Luis (Research Associate, University of Nottingham); Warren, Prof. Tracey (Professor of Sociology, University of Nottingham); and Fuertes, Dr Vanesa (Senior Lecturer, University of the West of Scotland)ERB0055

9Benenden HealthERB0045

10Brewis, Professor Jo (Professor of People and Organizations, The Open University); Boncori, Professor Ilaria (Professor of Organizational Behaviour and Human Resource Management, University of Essex); Davies, Professor Julie (Professor of Healthcare Management and Leadership Development, Brunel University London); and Middlemiss, Dr. Aimee (Research Fellow, University of Plymouth)ERB0024

11British Chambers of CommerceERB0087

12British Retail ConsortiumERB0028

13British Standards InstitutionERB0072

14Bupa Global, India & UKERB0021

15Busby, Professor Nicole (Professor of Human Rights, Equality and Justice , School of Law, University of Glasgow); and Cannon, Dr Catriona (Lecturer in Equality Law, School of Law, University of Glasgow)ERB0068

16Business Human Resources Solutions LimitedERB0074

17CBIERB0078

18CILEXERB0010

19Care EnglandERB0050

20Centre for Care - University of SheffieldERB0056

21Centre for Progressive ChangeERB0006

22Chartered Institute of Personnel and Development (CIPD)ERB0093

23Chartered Management Institute (CMI)ERB0054

24Collins, Dr Philippa (Senior Lecturer in Law, University of Bristol)ERB0026

25Deakin, Professor Simon (Co-ordinator, ESRC Digital Futures at Work Research Centre, University of Sussex Business School; and Director, Centre for Business Research, University of Cambridge)ERB0095

26Dencik, Professor Lina (University Research Leader in AI Justice, Department of Media, Communications and Cultural Studies, Goldsmiths, University of London); Gill, Professor Rosalind (University Research Leader in Inequalities in the Creative and Cultural Industries, Institute for Creative and Cultural Entrepreneurship, Goldsmiths, University of London); Musgrave, Dr George (Senior Lecturer in Cultural Sociology and Creative Industries, Institute for Creative and Cultural Entrepreneurship, Goldsmiths, University of London); Kivotidis, Dr Dimitrios (Lecturer, Department of Law, Goldsmiths, University of London); and Brand, Jessica (Research Assistant, Department of Media, Communications and Cultural Studies, Goldsmiths, University of London)ERB0049

27Dickinson, Jim (Associate Editor, WONKHE)ERB0009

28Domestic AngelsERB0015

29EdaptERB0034

30Edenred Reward GatewayERB0031

31EkōERB0003

32Employment Law Sub-Committee at the Law Society of ScotlandERB0088

33EvriERB0016

34FairworkERB0029

35Fatherhood InstituteERB0040

36Federation of Small BusinessesERB0085

37Food and Drink FederationERB0060

38Freelancer and Contractor Services AssociationERB0065

39Freelancers Make Theatre Work; and The University of EssexERB0012

40Gater, Mr Giles (Senior Lecturer and Course Leader, University of Staffordshire); and Thomas, Mrs Natasha (Senior Lecturer and Legal Clinic Manager, University of Staffordshire)ERB0058

41Greene KingERB0081

42HC-OneERB0036

43High Pay CentreERB0075

44Homecare AssociationERB0100

45Hughes, Dr Emma (Senior Lecturer in Human Resource Management, University of Leeds)ERB0082

46IPSE - The Self-Employment AssociationERB0070

47Institute for Public Policy ResearchERB0051

48Institute for Research into Work and Employment (iROWE) University of Central LancashireERB0030

49Institute of DirectorsERB0084

50Jewell, Profesor Sarah (Professor of Economics, University of Reading)ERB0037

51Jobs FoundationERB0061

52Koch, Dr Michael (Reader in Human Resource Management and Organisational Behaviour , Brunel University of London); and Park, Professor Sarah (Professor in International Business , University of Leicester)ERB0007

53Local Government AssociationERB0014

54London Chamber of Commerce and IndustryERB0092

55Mill End Hotel (UK) LtdERB0001

56MS SocietyERB0038

57Make UKERB0069

58Maternity ActionERB0052

59MencapERB0076

60Mendon, Dr Pedro (Associate Professor in Work and Employment, Centre for the Transformation of Work, Edinburgh Business School, Heriot-Watt University)ERB0017

61MindERB0096

62MitieERB0083

63National Bereavement Alliance; Cruse Bereavement Support; Marie Curie; Hospice UK; and Sue RyderERB0047

64National Care ForumERB0057

65OrganiseERB0048

66Pickford, Mr Rich (Manager, Nottingham Civic Exchange, Nottingham Trent University); Dixon, Darryl (Senior Research Fellow, Nottingham Trent University); Clark, Dr Ian (Professor, Nottingham Trent University); Hunter, Dr James (Principal Lecturer, Nottingham Trent University); and Sharma, Nidhi (PhD Candidate and Researcher, Nottingham Trent University)ERB0025

67ProspectERB0064

68ProtectERB0005

69Recruitment and Employment ConfederationERB0020

70Rights Lab, University of NottinghamERB0043

71Sang, Professor Kate (Professor of Gender and Employment Studies, Heriot-Watt University)ERB0090

72ScoutsERB0013

73SenseERB0094

74ShareActionERB0022

75Social Care Institute for Excellence (SCIE)ERB0035

76Society of Occupational MedicineERB0018

77The Adecco GroupERB0059

78The Fawcett SocietyERB0004

79The Investment AssociationERB0089

80The Law SocietyERB0086

81The Magistrates’ AssociationERB0032

82Trades Union Congress (TUC)ERB0073

83Trades Union Congress (TUC)ERB0101

84UKHospitalityERB0027

85UKactiveERB0077

86UNISONERB0066

87Unitemps WarwickERB0099

88Universities and Colleges Employers Association (UCEA)ERB0062

89University of Brighton Students’ UnionERB0042

90UnlockERB0002

91UsdawERB0067

92Veezu LtdERB0053

93Whalley, Mr Jack (0-hour part-time lecturer, University of Staffordshire); Braithwaite, Miss Chelsea (0-hour part-time lecturer, University of Staffordshire); and Lovatt, Mr Charlie (0-hour part-time lecturer, University of Staffordshire)ERB0041

94Winchenbach, Dr Anke (Senior Lecturer, University of Surrey)ERB0011

95Work FoundationERB0080

96Work Rights CentreERB0008

97Working FamiliesERB0098

98Workstyle Revolution CICERB0023

99World Afro Day CICERB0063

100World Wellbeing MovementERB0044

101Young Lives vs Cancer; and Anthony NolanERB0033

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2024–25

Number	Title	Reference
2nd	Priorities of the Business and Trade Committee	HC 423
1st	Post Office and Horizon scandal redress: Unfinished business	HC 341

---

Footnotes

1 DBT, Make Work Pay, gov.uk, 10 October 2024

2 House of Commons Library, Zero-hours contracts, Research briefing CBP-06553, 17 October 2024, page 5

3 House of Commons Library, Zero-hours contracts, Research briefing CBP-06553, 17 October 2024, page 4

4 House of Commons Library, Employment Rights Bill 2024–25, Research briefing CBP 10109, para 2.2

5 DBT, Next Steps to Make Work Pay, gov.uk, para 22

6 Q359

7 Recruitment and Employment Confederation (ERB0020)

8 Q341

9 Q334

10 Q337

11 House of Commons Library, Employment Rights Bill 2024–25, Research briefing CBP 10109, para 2.2.

12 CIPD, Zero-hours contracts: Evolution and current status, August 2022, pages 19–20

13 Q378

14 Q383

15 DBT, Consultation on the application of zero-hours contracts measures to agency workers, gov.uk, 31 October 2024

16 House of Commons Library, Employment Rights Bill 2024–25, Research briefing CBP 10109, para 2.2.

17 DBT, Consultation on the application of zero-hours contracts measures to agency workers, gov.uk, 31 October 2024

18 Recruitment and Employment Confederation (ERB0020)

19 Usdaw (ERB0067)

20 Q395

21 Simon Goodley, Have working conditions improved at the Sports Direct warehouse?, The Guardian, 23 July 2020

22 Q399

23 Delphine Strauss, Employers could sidestep upgrade of UK workers’ rights, government warned, Financial Times, 15 September 2024

24 Explanatory Notes to the Employment Rights Bill, page 18

25 Q352

26 House of Commons Library, Employment status, research briefing CBP 08045, 12 July 2024, page 8

27 Labour party, Labour Manifesto 2024, Page 7

28 Labour Party, Labour’s Plan to Make Work Pay: Delivering a new deal for working people, pages 7–8.

29 DBT, Next Steps to Make Work Pay, gov.uk, para 28

30 Letter from the Minister for Employment Rights, Competition and Markets to the Chair responding to the Committee’s letter on the Employment Rights Bill, 29 January 2025

31 Delphine Strauss, Employers could sidestep upgrade of UK workers’ rights, government warned, Financial Times, 15 September 2024

32 Delphine Strauss, UK’s labour market tsar calls for crackdown on bogus self-employment, Financial Times, 20 January 2025

33 Q300

34 Dr Pedro Mendonça (Associate Professor in Work and Employment at Centre for the Transformation of Work, Edinburgh Business School, Heriot-Watt University) (ERB0017)

35 Dr Pedro Mendonça (Associate Professor in Work and Employment at Centre for the Transformation of Work, Edinburgh Business School, Heriot-Watt University) (ERB0017)

36 Q463

37 Deliveroo riders can earn as little as £2 an hour during shifts, as boss stands to make £500m, The Bureau of Investigative Journalism, 25 March 2021

38 Tom Wall, Calls for investigation of Uber Eats and Deliveroo after raid on Bristol caravan camp, The Observer, 12 October 2024

39 Q462

40 Qq457–461

41 Tom Wall, UK retailers accused of recruiting young shop workers without rights over Christmas, The Observer, 15 December 2025

42 Q465

43 Letter from Uniqlo’s Chief Operating Officer regarding the use of the Temper app to Chair, 23 January 2025

44 Evri (ERB0016)

45 Evri (ERB0016)

46 Evri (ERB0016)

47 Q434

48 Q441

49 Business, Energy and Industrial Strategy Committee, Tenth Report of Session 2022–23, Post-pandemic economic growth: UK labour markets, HC 306, para 124–127.

50 Q356

51 Business, Energy and Industrial Strategy Committee, Tenth Report of Session 2022–23, Post-pandemic economic growth: UK labour markets, HC 306, para 127.

52 Letter from the Minister for Employment Rights, Competition and Markets to the Chair responding to the Committee’s letter on the Employment Rights Bill, 29 January 2025

53 Letter from the Minister for Employment Rights, Competition and Markets to the Chair responding to the Committee’s letter on the Employment Rights Bill, 29 January 2025

54 HMRC, Responsibilities for employment businesses working with umbrella companies, gov.uk, 30 November 2023

55 EHRC, EHRC publishes updated workplace sexual harassment guidance ahead of change to law, 26 Septemebr 2024

56 Women and Equalities Committee, Tenth Report of Session 2017–19, Enforcing the Equality Act: the law and the role of the Equality and Human Rights Commission, HC 1470, para 94.

57 Letter to the acting Chief Executive of EHRC relating to the welfare of workers at McDonalds, 16 November 2023; and Letter from the acting Chief Executive of EHRC relating to the welfare of workers at McDonalds, 29 November 2023

58 Sarah Butler, Violence and abuse against UK retail staff rises to 1,300 incidents a day, The Guardian, 14 February 2024

59 DBT, Factsheet: Employment Rights Bill overview, gov.uk, 18 October 2024, page 3

60 Institute of Directors (ERB0084)

61 Federation of Small Businesses (ERB0085)

62 DBT, Employment Rights Bill: Economic Analysis, October 2024, para 101

63 Regulatory Policy Committee, RPC Opinion: Employment Rights Bill, gov.uk, 25 November 2024, page 2

64 DBT, Trade Union Membership Statistics, UK 1995–2023, gov.uk, page 5

65 DBT, Trade Union Membership Statistics, UK 1995–2023, gov.uk, page 13

66 ONS, The impact of strikes in the UK: June 2022 to February 2023, 8 March 2023, section 1

67 Regulatory Policy Committee, Employment Rights Bill: RPC opinion (red-rated), gov.uk, page 14

68 CBI (ERB0078)

69 CBI (ERB0078)

70 Bupa Global, India & UK (ERB0021)

71 Chartered Institute of Personnel and Development (CIPD) (ERB0093)

72 Q37

73 Employment Rights Bill, as amended in Public Bill Committee, 70ZA(6)

74 UKHospitality (ERB0027), British Retail Consortium (ERB0028)

75 Employment Rights Bill, as amended in Public Bill Committee, 70ZA(4)

76 TUC, Taylor Review: Measures to improve transparency in the UK labour market: TUC response to the BEIS consultation, 27 June 2018, page 37

77 Economic Statistics Centre of Excellence, Developing a new Linked Employer Employee Dataset for the UK, accessed 13 February 2025

78 Trade Union and Labour Relations (Consolidation) Act 1992, 27B

79 Trade Union and Labour Relations (Consolidation) Act 1992, 27A, 119D, etc

80 Trade Union and Labour Relations (Consolidation) Act 1992, 39, 2(a)

81 Q5

82 Chartered Institute of Personnel and Development (CIPD), page 5 (ERB0093)

83 Daniel Woolfson, Currys to outsource staff to India after Rachel Reeves’s tax raid, The Telegraph, 15 January 2025

84 Home Office, Independent Review of the Modern Slavery Act 2015: Final Report, CP 100, May 2019, page 14

85 Modern Slavery Act 2015, s 54

86 Home Office, Independent Review of the Modern Slavery Act 2015: Final Report, CP 100, May 2019, page 39

87 Letter from the Minister for Employment Rights, Competition and Markets to the Chair responding to the Committee’s letter on the Employment Rights Bill, 29 January 2025

88 William McLennan, Phil Shepka and Jon Ironmonger, McDonald’s and supermarkets failed to spot slavery, BBC News, 30 September 2024

89 Mike Rudin and Sarah Buckley, ‘Italian’ purees likely to contain Chinese forced-labour tomatoes, BBC News, 1 December 2024

90 Q170, Q184

91 Tesco, Modern Slavery Statement 2023/24

92 McDonald’s UK, McDonald’s Restaurants Limited (McDonald’s UK) - Modern Slavery Statemenet for the 2023 Financial Year

93 Temu: Risk popular website sells forced labour goods, BBC News, 23 June 2023

94 Sheridan Prasso, Shein Cotton Clothes Tied To Xinjiang, a Region Accused of Forced Labor in China, Bloomberg, 21 November 2022

95 Katherine Masters and Arriana McLymore, Shein IPO raises fresh questions on alleged forced labor in supply chain, Reuters, 29 November 2023.

96 Shein, 2023 Sustainability and Social Impact Report, page 56

97 Qq224–265

98 Q266

99 Temu, Modern Slavery Statement 2024

100 Q221

101 House of Commons Library, UK supply chains and Uyghur and Turkic Muslim labour in China, Debate pack CDP-0142, 4 November 2024, page 13

102 US Cutoms and Border Protection, Uyghur Forced Labor Prevention Act Statistics, accessed 6 December 2024

103 Letter from the Minister for Employment Rights, Competition and Markets to the Chair responding to the Committee’s letter on the Employment Rights Bill, 29 January 2025

104 Q307

105 Q222

106 Ed Clowes, The shadow economy flourishes in lockdown, The Telegraph, 19 May 2020

107 371,000 workers may have been underpaid. 1.9 million workers are on minimum wage. Low Pay Commission, Compliance and enforcement of the National Minimum Wage in 2024, December 2024, page 4

108 Q346

109 House of Commons Library, Employment Rights Bill 2024–25, Research briefing CBP 10109, 23 October, page 71.

110 International Labour Organization, Strategies and practice for labour inspection, November 2006, para 13

111 Resolution Foundation, Enforce for Good: Effectively enforcing labour market rights in the 2020s and beyond, April 2023, page 40

112 Q312

113 Delphine Strauss, Labour’s new watchdog for workers will need real teeth, business warns, Financial Times, 4 October 2024

114 Resolution Foundation, Enforce for Good: Effectively enforcing labour market rights in the 2020s and beyond, April 2023, page 51

115 DBT, National Living Wage and National Minimum Wage: government evidence on enforcement and compliance, 2023, gov.uk, October 2024

116 Letter from Director of Food and Sustainability at the British Retail Consortium to Minister for Employment Rights, Competition and Markets regarding retailer support and expectations for the Fair Work Agency, 30 September 2024

117 Q312

118 Letter from Director of Food and Sustainability at the British Retail Consortium to Minister for Employment Rights, Competition and Markets regarding retailer support and expectations for the Fair Work Agency, 30 September 2024