Examination of Witnesses (Questions 184
- 199)
WEDNESDAY 3 MARCH 2004
DR CATHERINE
BARNARD AND
MR RICHARD
HOBBS
Q184 Chairman: First, may I welcome you
on behalf of the Sub-Committee on Social Policy and Consumer Affairs,
with which you are familiar now. I think you are very much in
demand at the moment, Dr Barnard, and so we are glad to have you
here. Thank you also for the short extra document which summarises
to some degree the points from your report. I had a very long
breakfast this morning; that is to say, I re-read your entire
report this morning and so I am right up to date. We are very
pleased to have you here and it is a great advantage to us. This
session is open to the public and may be recorded for broadcasting.
The verbatim transcript will be sent to you for correction. In
due course, it will be published, after you have had a look at
it, with the Sub-Committee's report. We are trying to move quite
fast, as you know, because of the European Commission's deadline.
We like to get ahead of events. If you do make corrections, perhaps
you could do that fairly rapidly. The interests of the members
of this Sub-Committee are on the table in front of you. Would
you like to make an opening statement?
Dr Barnard: We are happy to take questions.
You have probably heard enough from us already in terms of looking
at the report.
Q185 Chairman: We have questions covering
quite a wide range of points, but if I could launch myself with
just one or two points of a general nature. We are very grateful
for a report which covers a lot of evidence and facts about what
is going on. Could you explain very briefly the structure and
methodology for the rest of us here, and why the case studies
were fairly limited in number? They did cover quite a number of
employees; I do understand that, but there was a fairly limited
number of case studies. Could you give us a brief word on that
first?
Dr Barnard: Just to give you a word of background,
the Commission put this report out for tender and we tendered,
along with, I gather, a number of other participants. We were
successful in the tender. We delivered exactly what the Commission
wanted, indeed slightly more than the Commission wanted. I should
make clear that it was a fairly small budget report. The Commission
wanted us to talk to the so-called social partners—so management
and labour plus the main institutional players, the DTI, ACAS,
HSE—as well as doing some more specific employer-based interviews.
We operated a tiered approach. We interviewed, first of all, the
public officials, and then we also interviewed representatives
of both the employers and employees: the main employers' groups
and also the main employee representatives. Those interviews gave
us some indications of appropriate case studies. We had agreed
with the Commission that we should take about five specific sectors.
We chose those sectors in a variety of ways. We sat down and thought
in what sectors the opt-out was most likely to be pertinent. Having
come up with a list ourselves—the sectors you see in front
of you like education, construction, financial and legal—we
then tried to find an appropriate mix of employers, and so our
mix was both small and large employers, unionised and non-unionised
employers, and public and private sector employers. What we hope
we achieved, and indeed the Commission said that they were extremely
pleased with what we did produce, was a report which was able
to map and represent the views of the different sides of industry,
plus sector-specific case studies. You alluded to the fact that
we used a rather small number of case studies. Once again, I want
to reiterate that the Commission's budget for this research was
extremely small. While of course the case study approach is not
representative, we hope we did, on the basis of our experience
and empirical work in related fields, get some useful case studies
and produce some useful information.
Q186 Lord Colwyn: It sounds like you worked
more that 46 hours a week?
Dr Barnard: It is astonishing that anyone who
has anything to do with the Working Time Directive always exceeds
the statutory maximum working hours. We have not signed up to
that.
Q187 Chairman: I wanted to ask one further
question and that is about the misunderstanding about applying
the Directive, not from yourselves but outside in business and
elsewhere. In your report there is quite a lot of reference to
that, and in particular to Regulation 20 and what is and what
is not an autonomous worker. We could have thought of some very
simple way of saying what is an autonomous worker, but we did
not. It does seem from your report, and working from your report
only, that there is quite a lot of difficulty among practical
people in applying the autonomous worker definition as a consequence
of the opt-out. Would you like to comment on that?
Mr Hobbs: Yes. There are some
grey areas as well as some specific derogations. You have alluded
to one, which is obviously the autonomous worker provisions in
Regulation 20 and Article 17(1) of the Directive. I think that
is a matter of concern to us, that the Commission's Communication
fails really to address this issue of the autonomous workers.
Perhaps we could cover that point in a little more detail during
the session. That is one area. Another grey area is that the law
says there should be an agreement in writing and it does not make
clear whether that agreement should be a separate agreement from
the contract of employment. We did find in one of our case studies
that the opt-out agreement was included as a standard term of
the contract. Our employment law practitioner, who has specific
experience of working in this field, said that in about 50 per
cent of cases he included the opt-out as a standard term in the
contractual package. As I say, it is debatable. It is a grey area:
should it be separate or is it allowed to be in the standard terms
of the contract? Another grey area was about the need to keep
up-to-date records. It is unclear what form those up-to-date records
should actually take. We found that in most case studies there
was no central record of people who had opted out. Obviously now,
the way the law is drafted in the UK, that implies that there
is no need to keep a record of hours worked once somebody has
opted out. We found that that was very much the case, that people
were not keeping this information. The Health and Safety Executive
did say that where enforcement action has been taken, it is about
record-keeping as much if not more than actual hours worked. Those
are some of the grey areas where there are difficulties. There
were also some specific cases where there were deviations from
the law. Some people had actually included an agreement to opt
into the 48 hour week, as much as to opt out of the 48 hour week.
In fact in an interview with one HR director, in talking about
this, she almost reversed the regulatory presumption by saying
that they would have to sign the agreement to opt in so that the
regulations would apply to them. There was a misunderstanding
there. Opt-out agreements have also included issues such as rest
breaks and night work as well as the 48 hour week. There was some
misunderstanding, as you say, about applying the regulations.
Dr Barnard: That means, and as
you know the opt-out is very narrowly drawn, that you can only
opt out from the 48 hour week. We did find evidence of employers
getting employees to sign to opt out of rest breaks, holiday entitlement
and so forth, which is absolutely unlawful. We also found that
the tribunals were having difficulty applying the regulations.
This stems from the rather rigid distinction in the Directive
and the regulations themselves between the concept of entitlements
and the concept of limits. As you know, there is a limit on working
time and a limit on night work, but only an entitlement to rest
breaks. The limits are enforced through criminal action, whereas
the entitlements are enforced through civil action, which creates
a lacuna for individual employees who would actually like to enforce
the 48 hour week but they are left with a criminal action that
is meant to be brought by the HSE or local authorities. To our
knowledge, only one single prosecution has ever been brought under
the working time regulations. So there is this lacuna for individual
employees who want to enforce their rights. Although in quite
an important case called Barber v RJB Mining, the High
Court said the 48 hour limit would become a term of the contract,
for rather important legal reasons it is difficult to enforce
that in the tribunal unless your employment has been terminated.
That is why tribunals, quite understandably, have been seeking
to give remedies to employees and workers who have been forced
to work in excess of the 48 hours, but, strictly and legally speaking,
that is actually in breach of the regulations and it is ultra
vires the powers of the tribunal. They have been giving compensatory
awards, admittedly quite small awards, of about £100.
Q188 Chairman: I did notice in your report
that you were explicitly illustrating that a number, one or two,
of the judgments of the employment tribunals were based erroneously
on Regulation 30. That was also the case in Watson v Swallow
Hotels. I totally agree with you but it does show, coming
back to my basic point, that there is quite a bit of misunderstanding
right through the system at the moment. We will probably find
that quite important when we come to the report.
Q189 Baroness Howarth of Breckland: I want
to talk a bit about the evidence base of the report. I cannot
claim, unlike the Chair, to have read every single word, although
I have read the summaries. I am informed, but not to the degree
of the Chair. I am interested, and it is reinforced by what you
have said about the budget and the level of the work, in the evidence
base. It is clearly empirical and it is a reasonable size but,
in terms of the whole work force, in percentage terms is not huge.
I just wondered what weight you think we could give to that and
whether you think there could be more analytical research carried
out if the resources were available and what would give us the
proper evidence about the uses and abuses of the system.
Dr Barnard: I think our methodology is totally
legitimate. Indeed, a lot of empirical research is done on this
basis, a relatively small number of case studies but done properly
or as properly as possible within the confines of resources. The
other possible approach, and one which the Commission absolutely
did not fund and was not requesting anyway, would be a much larger
statistically representative survey of perhaps 1,000 employers
sending out full questionnaires to employees and working on that
basis. The Commission absolutely did not want that and did not
fund it. However, the DTI commissioned parallel research at the
same time as we were doing our own. The CBI, the EEF and the Institute
of Directors have all done their own research, as much as they
can. It is important that we did what the Commission asked but
the Commission asked us as academics, being as impartial as we
could be, just to try and map and indeed tell the story of what
seems to be going on with the opt-out. Of course, it was not just
our report that the Commission was relying on. They received all
the evidence from these other groups, and indeed they cite some
of it in their own consultation document. I think it would be
a fair summary to say that if you look at the evidence as a whole,
both the DTI-commissioned work, the other employer organisations'
commissioned work and our own, you actually get quite a lot. The
story is largely the same, namely that there is quite a lot of
use of the opt-out; there is quite a lot of use of the opt-out
because it is so convenient, because the rest of the regulations
are so user unfriendly. There is quite a lot of use of the opt-out
where it is not actually necessary at all, but employers do it
to cover their backs. In certain circumstances, there is some
misuse or abuse of the opt-out. I know that the issue of the abuse
of the opt-out is one that you are concerned about. The question
is: what is meant by abuse? To what extent is it abusive to ask
me when I am starting my first job in one of the City law firms,
as in the case of the students that I deal with on a daily basis,
to sign the opt-out when I sign my contract? Is it abusive to
ask me to do that when I am informed that I can back in to the
48 hour working week? I sign this because I know that it will
help my career, because the culture in the City is long hours
and because ultimately I may well be made a partner, and one of
the ways of being made a partner is to show my commitment and
I demonstrate my commitment through long hours. Is that abuse
or is that just more indirect pressure because we know that is
the culture in which the work is being done?
Q190 Baroness Howarth of Breckland: The
next question is not on my list of questions but from what you
have just said: in your research, did you find that, by having
the pressure of the Directive, people were finding alternative
solutions to work problems rather than, as you were saying, just
being almost bullied into signing the document because that is
the way your career moves forward?
Dr Barnard: We found that because the opt-out
was the easy response to a lot of these really quite difficult
issues, employers resorted to the opt-out and thus did not try
to find more innovative solutions to the more structural problems
about why there is such a long hours' culture in British workplaces.
From that point of view, you could perhaps argue that the use
of the opt-out is a barrier to some form of innovative practices.
I think it is quite striking, in the couple of instances that
were reported to us where quite major reforms were put in place
to workforce practices, that that was because the HR person thought
that the opt-out was about to disappear. You could argue that
the opt-out to that extent might be a barrier to reform in some
circumstances.
Mr Hobbs: That was the case on a couple of occasions.
There were a couple of occasions in small engineering companies
where there had been radical change in the shift patterns for
economic reasons and so one of the firms had faced a 50 per cent
fall in demand and had been taken over by the French parent company.
They had moved from what they called a typical UK manufacturing
site of a day shift and a night shift and lots of overtime and
now they had a double day shift of 6 to 2 and then 2 till 10.
When there is an economic imperative, and perhaps firms believe
there is an economic imperative, they will probably innovate and
they will move. Perhaps they just do not see complying with law
as a sufficient incentive, if you like, for them to start innovating.
I think you said something about bullying of workers to sign an
opt-out. One of the union respondents said that it is almost as
much a conspiracy between workers and their employers and the
workers are quite happy to keep doing overtime when they get paid
time and a half for doing almost the same work. So they are happy,
not in every case, I agree, but in general to go along with this
and sign the opt-out to get the overtime pay as much as employers
like using the opt-out to have the flexibility and benefits that
they see coming from using the opt-out. It is not necessarily
a case of always bullying employees to use the opt-out.
Q191 Lord Colwyn: My suspicion would be
that the opt-out clause might either appear in very small print
so it was not terribly obvious, unless the workers are perhaps
in a more union-based situation where it is more obvious. Do you
feel that then it is going through without being really noticed
by the workers? Do you see contracts? Did you talk to workers
who knew they had signed the opt-out?
Mr Hobbs: We did see several opt-out
agreements but, we did not interview workers. From what employers
told us there was an occasion in one of the case studies when
the opt-out was a standard term of contract but in others they
said, "Yes, it is a separate agreement. We explained to them
that this is their right and they have a choice." We have
to take their word on that. In some cases the circumstances were
such as to raise questions such as when one employer had consistently
referred to the need to work long hours throughout the recruitment
process.
Q192 Lord Colwyn: When you take on a new
credit card, for instance, you know you should read the small
print, but you do not, do you? I just wondered whether it was
something similar to that?
Mr Hobbs: I think that happens on occasions.
It is hard for us to say from our evidence because we did not
speak to the workers as such. I would also say that where there
was a union presence in organisations, I do not think that made
any difference to people not signing it. The general view was:
we will have a chat about it with the unions as to how we shall
do this and shall it be a seven-day notice period or a three-month
notice period? They would agree that is all right, and the people
can sign it. Again, that is very much a generalisation; there
are specific examples where that was not necessarily the case.
Q193 Baroness Howarth of Breckland: I understand
you to be saying that the workforce generally thinks it is all
right, but the report was made before the amendment of the Directive
came in during August, and we heard a lot about the doctors and
particularly in relation to junior doctors. Would that amendment
change any of your report's findings, do you think, and are you
aware of any significant changes since your research was carried
out that would call for further analysis?
Dr Barnard: We do not think that the 2000 Directive
would make a significant difference to our findings. Of course,
we know that there is a serious problem with doctors. The Directive,
as you know, tiers the reduction of the working week. The problem
with doctors is what constitutes working time and the definition
of working time. This, of course, takes us to the judgments of
the European Court of Justice in SiMAP and Jaeger
where the Court of Justice gives quite a broad, generous definition
of working time; if you are on call and on the premises, that
time constitutes working time. Therefore, we imagine that there
is even greater pressure to use the opt-out for doctors, not just
junior doctors, and to make sure that there is no breach of the
law in respect of those doctors. I think it is very interesting
that the opt-out, when the basic 1993 Directive was introduced,
was taken advantage of only by the UK and Ireland and Ireland
phased it out, and it is now being introduced on a sectoral basis
in a number of countries to deal with this very specific problem
of what constitutes working time.
Q194 Baroness Howarth of Breckland: Can
you clear up one matter? Your article in the Financial Times
of 6 January suggests that you felt that your report had rather
inaccurate coverage in the media and elsewhere. Could you tell
us what that is about and where you think inaccurate coverage
has come?
Dr Barnard: When the Commission asked us to
write the report, they decided to make it a confidential document,
which meant that we were not allowed to talk about it to the press.
It also meant that the only way that people could gain access
to the document was by using the access to information procedures
under European Community law. To my knowledge, the Commission
has been willingly giving out our report to anyone who has requested
it, but we have not been able to give out our own report or talk
about it. That led to the fact that certain interest groups used
our report to support their own particular agendas. That caused
us certain difficulties because we felt that our report, which
had been commissioned to be as fair and balanced as possible—and
it is something the Commission said we had achieved well in their
view—was not being fairly represented. In the end, the Commission
agreed that we could write a piece to the FT to try and
say that the situation was more complex than it first appeared,
particularly on this question of abuse and what actually constitutes
abuse. It goes back to the question: to what extent is there arm-behind-the-back
direct form of pressure, of which we did not find that much evidence,
and to what extent is there also the indirect pressure in the
example I have given you about City firms where the expectation
is of long hours and so people sign the opt-out. Of course, it
depends how you define abuse.
Q195 Baroness Howarth of Breckland: Can
I ask you the obvious question: do you not think it would be better
if this was on the open market and the internet and everyone could
read it?
Dr Barnard: Yes, I agree.
Q196 Lord Harrison: On balance, what do
you believe the impact would be on UK competitiveness if the opt-out
were removed? In a way, I think Mr Hobbs touched on this in the
sense that he implied that there were other issues involved in
British competitiveness. Would you like to expand on that?
Mr Hobbs: Probably the findings from our study
are relatively inconclusive about the arguments for and against
using the op-out on business efficiency grounds. Yes, we found
that some employers said that if the opt-out goes, that was significantly
going to increase their costs and that will make them uncompetitive
against foreign competitors who are not in the EU. There was a
definite cost issue, and basically that was related to the need
for more labour but also indirect costs; you might need more plant
and machinery, cars and uniforms. There was an issue that it could
increase costs. There was another argument that it is actually
more efficient just to use existing workers rather than take on
new people so as to comply with a lower limit. That could be the
case for highly skilled employees and operating plant. It could
also be the case in law firms and investment banks where individuals
have critical knowledge and a key person relationship applies.
If the opt-out went, we could say that that might damage competitiveness.
Some said it provides operational flexibility. For a food manufacturer,
demand could increase by 50 per cent on a daily basis. They said
that to respond to that they have the opt-out that allows them
to increase their production and it would be difficult to plan
that into an annualised system. With financial services, the investment
banks said that when they had been doing merger and acquisition
deals, there was a need for people to work very intensely and
it is not easy to plan that sort of work into an annualised hours
system.
Q197 Lord Harrison: Could I press you on
this, in the sense that I think you are being good researchers
and describing the field as it was told to you but what I am trying
to press you on is: did you weigh up the kinds of answers that
you were getting so that you were able to come to a view, at the
end of the day, about whether any claim that competitiveness would
be hurt was a genuine one, more than just an anxiety? Was it your
then view, taking a bird's eye view, to say that that really is
something we should worry about?
Mr Hobbs: As I said, we did weigh the evidence
and we did balance the evidence that we were given. At the end
of the day, on balance it is quite a difficult decision to draw
from quite a limited field. The evidence on balance was inconclusive.
I have gone through some of the arguments that say if the opt-out
went, then, yes, it could be damaging to UK competitiveness. On
the other hand, I can give you arguments to say it is probably
damaging UK competitiveness to maintain the opt-out, to use the
opt-out and then maintain that the UK has a culture of long hours.
I could go through those arguments. My point is that we weighed
the elements, we balanced the evidence; we did not have to put
a conclusion like that forward in our report but our conclusion
would be that on balance it is difficult to say from our evidence.
Q198 Lord Harrison: You also mention, and
this is something that we had told us by the TUC, that there were
other issues which affect competitiveness but trying to work in
with WTD acted as a catalyst to further those other avenues, which
should have been gone down to increase competitiveness. There
have been some clear examples from the NHS with the "Hospital
at Night" project and so on. If all those are taken into
account, and in the one sense all those things should have been
done anyway, I would have thought by any enlightened management,
is there still on the edge this question of the length of the
working day, the working hours?
Mr Hobbs: I think it is very difficult to say.
If you remove the individual opt-out, how is that going to relate
to increased investment in capital machinery or capital investment,
and how is it going to relate to increased training because those
are very complex and big issues in themselves? We would say, on
the other hand, yes, we found evidence, for example from the CBI,
that there is an over-reliance on the opt-out where a change in
organisation or working practice is warranted. Yes, in some cases
it has been a barrier to innovation. In some cases I would say
it is damaging competitiveness and it has perhaps been easier,
as we have said, for some managers to say that they will just
use the opt-out rather than digging deep and looking at the whole
issue of work organisation. However, one important point here
is that it is very easy just to dismiss the view that, "Oh,
well, there is a culture of long hours working in the UK"
because employers' organisations and the unions themselves recognise
that there is a difficulty in reducing workers' hours if it is
going to mean reducing workers' pay. That is doubtless going to
involve an awful lot of tricky negotiations. Some organisations
were quite frank with us in saying that perhaps these are difficult
issues that they do not want to get involved with because it could
actually lead to more industrial disputes and more problems. In
the broader picture, you could say that that could damage competitiveness.
It is not easy just to say whether or not it is going to damage
competitiveness; it is a very complex issue. I think that is what
our report observed. I think the Commission recognised that as
well.
Q199 Chairman: Could I come on to the reference
period? Of course, this is linked with the fact that we have a
relatively low number of collective agreements in the UK; indeed,
we have not got many workforce agreements either because they
are too complicated or businesses do not want to get involved
in that. If you could get a situation in which the reference period
were extended, for example to 12 months, without the need for
collective agreements, do you think that would go some way to
solving our problems? There is some information from the DTI's
estimation of hours worked over a whole year, for example, in
your report. I would like your comment on that.
Dr Barnard: I think it would help because if
you are just calculating the 48 hours over a four month or 17-week
reference period, it is tricky and it is difficult to accommodate
peaks and troughs in demand. I do think that a 12-month reference
period would help. However, there is still a number of employees,
and I think the labour force survey indicated 1.8 million employees
or workers who would still exceed the 48-hour limit, even if it
was referenced over 12 months. It also would not help those areas
where they are dealing with labour shortages, skills shortages.
Even if the working week was referenced over 12 months, you could
not actually get other people in to do the jobs because there
just are not the skills there. Some companies told us of the problems
about the pressure on flexibility, that you cannot programme your
peaks and troughs in advance even over a 12-month cycle rather
than over a shorter period. Of course, finally, it would not help
to deal with the situation of those employed on very short, fixed-term
contracts. If you are employed under a four month or a six month
contract, having your working time referenced over a year would
not be of much use.
Chairman: I will ask Lord Colwyn to move
on to the point about junior doctors, about which we have had
quite a lot of evidence. That is going to be very disruptive and
a problem.
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