Examination of Witnesses (Questions 80
- 97)
WEDNESDAY 11 FEBRUARY 2004
Mr Martin Couchman, Ms Susan Anderson, Mr John Francis,
Mr David Frost and Mr Benjimin Burgher
Q80 Lord Harrison: Let me move on, then.
Firstly, has any assessment been made of the likely economic and
social consequences if the United Kingdom were to lose the opt-out,
and I was going to ask in a different fashion whether the WTD
or the WMD was for British business but I think you have already
said it is! Do you see the maintenance of the opt-out as a competitive
advantage for Britain?
Mr Burgher: As far as the Federation of Small
Businesses is concerned, not certainly. The platform for the employment
contract and the employment relationship in the United Kingdom
is individual. Over 22 per cent of firms have collective agreements
regulating their terms and conditions of employment, which is
in stark contrast to the position in the Member States, so they
have a different starting point when contracting with their employees.
Over and above that, there are the individuals. It is clear from
the Barnard Report that a common theme was that the employees
themselves wanted to maintain the opt-out so they could work longer
hours; it is the employees who want to earn more money; seven
out of ten of the employees would say they would not work longer
hours unless they could earn more money, so in those circumstances
it would be devastating for small businesses if they were not
able to maintain the opt-out.
Q81 Lord Harrison: I saw Mr Frost nodding
furiously and Martin Couchman was saying that his colleagues in
Holland, for instance, felt they were now locked in because of
national legislation. Is there not merit in the argument put forward
by the Commission that we are breaking the rules of the single
market because we have taken unto ourselves a competitive advantage
through this opt-out not enjoyed by others?
Mr Couchman: With respect, they have the opportunity
to take it up as well and the evidence suggests that more of them
are taking it up because they need it.
Ms Anderson: The other interesting thing is
that few Member States are being subjected to such scrutiny as
the UK. We would like to see a Barnard Report for many of the
other Member States because we do think that more of them are
using the flexibility available but in less overt ways. There
is some evidence that firms are using the opt-out for a safety
net. It does not mean to say they do not need it but they are
using it to ensure they will never fall foul of a court judgment.
If you have a system in the Netherlands or in Germany where you
define an autonomous worker as one who does not have to record
his hours, which is a bit of an odd way of doing it but sounds
rather good to us, then you are doing what we are doing, and if
you have got white collar, professional workers, whether in the
service sector or in the public sector or, indeed, in manufacturing
businesses, saying, "We are happy to work the hours that
we work and we are well remunerated", those sorts of workers
are treated pretty much the same. In the United Kingdom,
however, because of the uncertainty about the autonomous
worker regulations, we have this concept of unmeasured working
time which firms are a bit too fearful to use because it does
not give them the absolute confidence that the Dutch rule or the
German rule that I mentioned does.
Q82 Lord Harrison: Thank you. Finally, what
about the Commission allegation that British workers are frequently
coerced into working longer hours than they would wish or that
is good for them? I will give you the example of where the opt-out
is already scheduled into the contract that an employee might
be asked to sign. Is there not some hidden coercion there, albeit
my own feeling is the Commission have probably over-egged the
suggestion that there has been coercion? Can I also tack on to
that this idea not only of, "Here is a contract, the opt-out
clause is there", but FSB's idea of an opt-in on behalf of
the employee, and ask whether that implies a greater sense of
coercion in the sense that the worker has to make the effort to
invoke the law?
Mr Burgher: Perhaps I can deal with that head
on at the outset. The opt-in has the effect of enabling an employee
who wants to earn more money because of family working commitments,
who wants to ensure that his employer is not going to be in breach
of any relevant legislation, to take that positive step and say,
"I want to minimise, have a cap on my working hours",
so it is a positive decision on behalf of the employee instead
of the corollary where it would be the employer under the assessment
which is now suggested, the employer manipulating or abusing his
position in relation to the employees. It would remove the administrative
and financial burden upon small employers and it would also give
the employees who work for these organisations, most of which
are small, intimate, close-knit organisations where there is a
very, say, fluid relationship between employer and employee, to
have greater communication and satisfy the preamble for the Working
Time Directive which says that matters should be implemented in
a way which did not affect the development or creation of small
businesses.
Q83 Lord Harrison: You have explained that
very well indeed but there is still an element of "Sign this",
or "You need to sign into this in order to get the job".
Mr Burgher: Dealing with that point in the employment
law context it is not beyond belief or speculation that if there
is any detriment from the employee opting in they can pursue their
rights and entitlements before an employment tribunal. That would
be much more effective because the detriment would be much easier
to identify—"I am opting in" or "I have a
reduction" or "I have been sacked or less favourably
treated in some way"—as opposed to the other way round,
which it is now, where an employer has an opt-out and the employee
cannot attach a specific act or event from which he or she says
she is suffering detriment.
Q84 Lord Harrison: Finally, though, is it
not the case that you are all very good organisations whom I have
known for many years but you only cover a certain number of firms
and workers in this country. We have to confess there are cowboys
beyond, are there not, who do not always observe the kind of regulations
which you do?
Mr Frost: That is very fair and the tragic events
of the weekend clearly illustrated that. From our point of view
we cover over 130,000 businesses, and if you take a look through
any town or city or shire county within the country you find members
from the very largest to the very smallest, and the overwhelming
evidence is that that microcosm of businesses is a complete cross-section
of employees and that they are happy with the way things are working
at the moment in terms of the opt-out.
Ms Anderson: It is a mistake to assume or suggest
there is widescale abuse. Having read the Barnard Report a few
times in some detail, I do not think that is what it is suggesting.
Catherine Barnard wrote a piece in the FT saying that there was
"some" evidence of abuse and, interestingly, it was
not just the cowboy employers who were getting this wrong but
the good employers as well. Her report talked about an investment
bank that made it compulsory to opt-out, and I am sure those were
well paid, hard working employees but it got it wrong. I do not
think it was setting out to coerce or abuse people; it just did
not understand. So I think part of it is genuine misunderstanding
by otherwise good employers. I think there was some evidence of
abuse and, if an employer made it a condition of employment that
the individual signed an opt-out, clearly that is an abuse and
it ought to be wiped out and that is why we said we will sit down
with the Government and the TUC and see whether there are things
we can do. The other interesting point that came out of the Barnard
Report is that they had appended a lot of examples of working
time opt-out sheets, and some of these were inadvertently falling
foul because they did not clearly indicate to employees that they
could rescind their opt-out and opt-back in. There is, therefore,
some work to be done to ensure that employees are well informed
and employers are not misinforming people. I do not think it is
deliberate; it is just lack of thought. So there are some incidences
of abuse but on a small scale, and if you look at the evidence
from the tribunals we are not seeing enormous numbers of employees
phoning up ACAS saying, "My employer is abusing me";
the queries have been around holiday entitlements and rest breaks.
Some have opted back in and that has been fine. Again, the Barnard
Report indicates a number of cases where an issue about working
time has obviously been "saved up for a rainy day",
where an individual wants to take the employer to court and throw
everything at the employer, and working time has become one of
those issues put in the back pocket to make a case. So there is
some abuse, some of it is inadvertent, some is from cowboys, but
let's deal with that rather than saying, "The opt-out has
to go".
Chairman: We have to be attentive to
the fact that both in the Commission document but even more so
in the report of the Committee of the European Parliament, which
I have in front of me, it has strong language describing "widespread
and systematic abuse of the Directive". I do not think that
is shown by the Barnard Report at all so to use a phrase which
I do not often used it has been slightly "sexed up",
but we have to be attentive to it because sometimes there are
consequences when those things happen, as we know. But it is important
I think from the way it has been presented, as well as from the
reality, to keep that in mind.
Q85 Baroness Brigstocke: Have any of you
seen the Barnard Report because we have had a lot of talk about
it over this week and last and I have certainly never seen it,
although I am beginning to think I know a bit about it because
you have quoted it so clearly. From the little bits I have seen
when it has been quoted it seems to me that certainly there is
a feeling that matters are rather stringent and out of proportion
in the European Union, and I wondered what your opinion was about
the Barnard Report. Have you found it a helpful document or not?
Mr Couchman: I have read it. It is very long,
about 150 pages, and I have brought with me just the table of
employers. They only looked at 13 ranging from 150 up to 45,000,
and it was very thorough in relation to those but there was no
evidence of abuse from those companies. There is a great deal
of information in it about those companies but I did not get the
feeling it was a very thorough, across-the-board survey, and it
has certainly not been widely available. I happen to have a copy
but I am not sure how many people have ever been able to get hold
of it.
Ms Anderson: It is becoming part of the mythology
almost that somehow it substantiates the abuse. If you read the
detail it seems to be confusing the debate about productivity
with the debate about health and safety, and we have to recall
this was a Directive introduced in the name of health and safety.
For example, they make pejorative references to the fact that
in the United Kingdom we have this poor productivity and it is
all down to long hours and, therefore, we need to reduce long
hours in order to improve productivity. Now, we may or may not
need to do that but in terms of the Directive introduced on health
and safety that is not really the issue, so I think it is confusing.
In some areas it uses the labour market to make some assertions
about the quality of work. For example, it talks about men and
women working only a day a week or working at weekends, as if
somehow that is a sign of a low quality labour market. For some
people working at weekends is what they want to do. They only
want to work at weekends. The fact people work on a part-time
basis is also mentioned in a rather pejorative fashion. We think
working on a part-time basis suits employers but also suits employees.
So there is a strand running through the report which is about
reducing working time because it makes United Kingdom business
more competitive as if somehow United Kingdom business was not
able to manage its own affairs. But we should remember the Directive
was about health and safety and not about improving productivity.
If only the European Commission could legislate for improved productivity
I am sure the world would be a happier place, but unfortunately
I do not think they can!
Q86 Baroness Brigstocke: They might not
be so pleased in the Far East; it would mean more competition!
Mr Frost: We found one of the most telling comments
in the report to be: "For every employee who felt under pressure
to opt-out, we found others who wanted the right to choose what
hours they worked, what salary they wanted, status and job satisfaction
that they gained as a result." That is a far more balanced
report than perhaps has been portrayed by the Commission.
Q87 Baroness Brigstocke: The quotation that
I have seen emphasised that abuses were unusual.
Mr Frost: Absolutely.
Q88 Baroness Brigstocke: I was also interested
when you, Ms Anderson, were talking about people making false
deductions. What do you think about long hours working culture
making it difficult for what is called female participation? Personally,
and I have worked all my life and I have had children, it has
always annoyed me when I am put into a group as what I am going
to want and what I am not going to want and what hours I want
to work. I just wonder what evidence there is about all of this
and the way women work? It must be different for the women who
are working, as it were, at the lower level than those who are
in management.
Ms Anderson: If we look at the facts I think
we see that female participation in the labour market is actually
growing. Part of the reason it is growing is that women are being
offered the opportunity to work the hours that suit them. Often
that can be part-time or it can be term time working or whatever.
We have the third highest participation rate. If we also look
at where women are working, then women are now moving up the management
chain. I think the evidence is that we are getting more women
in management. The number was eight per cent of female managers
in 1990; on the most recent statistic available it is 22 per cent.
Clearly that is against a background of people who are taking
career breaks or working on a part-time basis. I do not think
the culture of long hours, which we have to confess we do have
in the UK, is actually holding women back. I think the strides
that we have made in other areas ensure that women, if we look
particularly at women, have been able to stay in the labour market,
perhaps move to part-time working for a certain period and then
moving back into full-time working and their careers are ever
onward and upward. The sectors that we have here, mainly service
sectors, are a testament to that fact, that we are seeing more
women moving into supervisory or senior management positions.
I do not know whether John has got practical experience of that
in Dixons.
Mr Francis: We have got oodles of it. A third
of our employees are part-time, that is classified as working
for less than 39 hours. If you consider the very nature of the
hours our stores trade, anyone who works in one of our stores
is a part-timer because the stores are open for 72 hours.
If you come to career opportunities, we do oodles for everybody
on that basis. We are into ability, retention, flexible working,
home working, all of those things that add value to where the
person wants to be in terms of their work. I do not think this
is an issue. Where it is not an issue there is an infrastructure
to support people. We could go into another debate about where
is the infrastructure to support women to come back into work
and retain them.
Q89 Baroness Massey of Darwen: Can I pick
up on the infrastructure issue. I want to ask if there is evidence
that women and working is tied up with good pre-school care or
child care because I think that child care in Europe is probably
better than in this country. Do you have any comments on that?
Mr Frost: There is clear evidence of that. We
have one of the highest participation rates amongst females of
working age in Europe but we have probably the lowest where children
are under five. I think that is an extremely relevant point, that
what is being cited is the relevant lack of child care provision
for children at a young age.
Q90 Chairman: I think we have covered the
great majority of our questions. I wanted to ask you one question
about the reporting requirements, not the principle but the actual
reporting requirements, because we did change those and the Commission
make express reference to that in their document. What do you
think the consequences for employers would be if those requirements
were tightened up? I expect you to say that you would not like
it, but I would like to get a little bit more of a feel for that
point because we have been criticised for not recording hours
of individuals but only noting the people who have the opt-out.
Mr Burgher: I think it would be very negative
to go back to the pre-amendment effect. The changes to the regulations
when the requirement to note hours of individuals was removed
was a positive step for small business. It enabled them to focus
on the effectiveness and efficiency of their organisations instead
of the administration before, the red tape which said they had
to comply with the pre-amended regulations. As far as small businesses
are concerned, it is very important that the status quo in that
respect is maintained.
Q91 Lord Howie of Troon: Is a time sheet
not a good thing, Chairman, if you want to find out where your
profit areas are?
Mr Couchman: In our industry, for example, something
like 80 per cent of the employers record everyone's hours but
they are largely going to be hourly paid people and in effect
you have to do that. There are increasing sectors, engineering
for example, where I understand there is a big move towards people
being paid on a salaried basis, and those people may well be opted
out, and the need to go back to recording all their hours just
seems unnecessary bureaucracy.
Q92 Lord Howie of Troon: Not really. You
want to know where your costs are in the firm internally.
Mr Couchman: They may well have arrangements
for that. It is the difference between good practice and statute.
Q93 Lord Howie of Troon: Yes, of course.
Can I ask one question? Who exactly is Catherine Barnard?
Mr Couchman: I believe she is a professor at
Cambridge University.
Q94 Chairman: Yes she is from Cambridge
University.
Ms Anderson: Senior lecturer in law.
Lord Howie of Troon: One of the provincial
universities!
Q95 Chairman: In contrast with the Scottish
universities, as we all know. I made my point about the requirements
for reporting because the Commission consultation document, which
is the start of all this, does make quite a lot it. I have it
in front of me here and it says: "How can compliance regarding
rest periods, breaks, weekly breaks, be monitored if there are
no records of the times actually worked by these workers?"
In fact, the way it is transposed and the way the workforce get
all their rights is quite a tricky point. I think it will come
up when the British Government has to respond to the consultation
document in due course. That is why I raised it. I am not saying
that I disagree with your point of view on it but I think it is
an issue which is raised in the consultation paper.
Ms Anderson: I think there is an issue there
but if we look at the examples we have quoted, if other Member
States' national statistics are demonstrating that people are
working more than 48 hours when they no opt-out then what is going
on? We are using the opt-out, and I think there is some evidence
of this, because it is the safest way of ensuring that you are
not, falling foul of the rules for professional workers. Other
EU states have more people under the autonomous worker derogation
operating in Germany because they are so secure that those people
are autonomous workers. In the UK we could not be sure and the
opt-out is giving you the security of not having to abide by a
lot of red tape or excessive regulation and recordkeeping. Partly
it is an issue that we would be bogged down with laborious recordkeeping
if we did not have the opt-out and that would put us at a competitive
disadvantage when we compared ourselves to, say, France or Germany.
Q96 Lord Colwyn: Can I ask a final, naïve
question? What is the bottom line on this? What are they on about?
Ms Anderson: I think partly it is an issue that
flexibility is seen as a bad thing.
Q97 Lord Colwyn: It is not health and safety,
is it, or is that what they are saying it is?
Mr Frost: It is perhaps about unfair competition.
Ms Anderson: It is also somehow a perception
that in the UK we abuse our workers, we have minimum rights and
flexibility is a bad word. The Commission's perception that part-time
working is abusive, fixed term working is abusive, agency temping,
anything that is not nine to five for a 40 hour week, preferably
in manufacturing, is not acceptable work, is not quality work.
I think that is the perception that always we are having to seek
to counter at the European level and it is not how we see it.
It is not how the average UK worker sees it either. We sometimes
feel a bit beleaguered as if the European Commission is out to
get us, whereas we look at other Member States and say "Okay,
they are using the opt-out, you have not done a big investigation
on what is happening in Luxembourg, you have not explored what
is happening in the hospitality sector in Portugal or Spain, how
come we are always the bad guys?" We are not actually the
bad guys but I think the Commission focuses its attention on us
because, as I say, they think that flexibility is a bad thing.
Chairman: Thank you very much. Thank
you very much indeed for coming along, that is really very helpful.
As I say, we will take account not only of your replies here but
also your documentation, which I found very helpful, it was very
clear, and no doubt some of it will be reflected in our report,
I would not be at all surprised about that. Thank you very much
indeed for coming along.
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