Examination of Witnesses (Questions 80
THURSDAY 19 APRIL 2007
TYRRELL QC AND
Q80 Lord Trefgarne:
You have made much in some of the documents that we have seen
and elsewhere of what is described as the "gold-plating"
of EU regulations when transposed into British legislation. Can
you give us some additional examples of that and also perhaps
explain how they have thus damaged the small business sector?
Is the problem similar in other Member States?
Mr Tyrrell: I can attempt to give some examples.
Last year, in 2006, we produced a book, Burdened by Brussels
or the UK together with the Foreign Policy Centre, a study
of "gold-plating" which we can provide to members if
they wish. One of these eight studies deals with part-time workers
and that is the first one here. It is rather a complex thing to
try to put across in a meeting of this nature. If I might deal
with it in a nutshell and not do justice to exactly what happened,
the Part-Time Workers Directive, as passed by the European Union,
Q81 Lord Trefgarne:
Is this the Working Time Directive?
Mr Tyrrell: No; part-time working which came
out of the Social Dialogue. It provided that part-time workers
should be treated not less favourably than other workers employed
by the same employer under the same contract. The UK Government
transposed that in regulation from "under the same contract"
into "any contract", so that means that a part-time
worker who is there on a fixed-term basis, maybe because they
are standing in for someone on maternity leave, would be able
to claim compensation on the same basis as a permanent worker
in the firm and that enlarged the scope of the directive very
considerably and has made it quite difficult for small businesses
to take on part-timers safely, indeed it has given rise to quite
a lot of difficulty. Then the other extension in that particular
directive was that whereas the directive provided that Member
States need not apply this directive to casual workers, the UK
has applied it to casual workers. There are two other topical
ones. The Age Discrimination Directive which came into effect
in 2006 dealt with the vexed question, the complicated question
of retirement age and retained the Commission's directive position
that it is open to Member States to have a default retirement
age which has been fixed in this country at the age of 65. However,
the UK imported something that is not in the directive at all,
"a duty to consider". In order to retire an employee
at the age of 65 a procedure has to be gone through. A letter
has to be written to the employee no more than 12 and no less
than six months in advance stating the proposal to retire and
then there is a procedure for listening to an application not
to and an appeal procedure and so on. This "duty to consider"
is an entire gold plate. Other Member States do not have it to
the best of our knowledge and it means that retirement has become
quite a major problem for this reason, that if you retire someone
without going through the procedure to the letter, the six months,
12 months to the letter, the dismissal is automatically unfair,
which can be a very expensive business for a small business employer.
That is a second example. May I just comment on the side that
retirement is not a problem in small business? 80 per cent in
the August survey to which Lucie already referred did not, before
the regulation, have a retirement policy because it was all done
by agreement; every individual was looked at separately. If it
was somebody whose job was foreman of a building company and the
owner thought that he was really no longer fit to go up ladders
on account of his age and general health, he could deal with the
matter on a basis that did not take account of any particular
age. Lots of small business employees went on working into their
70s quite happily in the past. So that is the gold-plating part
of it. I alluded to the third one already. The Working Time Directive
provided that there should be 20 days' minimum holiday a year
and commensurate for part-time employees. Those 20 days were translated
from the directive into UK law under the working time regulations
of 1997 and 1998 and there they have stood until now when they
are being amended to grant an extra eight days leave putting up
the 20 days to 28 days. That is gold-plating. I am not suggesting
it is surreptitious gold-plating, indeed it was in the Labour
Party manifesto at the last election. It is not surreptitious,
but gold-plating it is and they increased from 20 to 28 and most
other countries probably did not; certainly our competitors in
Asia did not. There is a great sense of grievance about this because
the costs are going to be quite inordinate to allow a small firm
to take on temporary staff to enable employees to have an extra
eight days. I may say that it applies to 37 per cent of our members,
as the others give over 20 days anyway voluntarily, but for those
37 per cent it might be a make or break matter.
Q82 Baroness Morgan of Huyton:
Turning your argument the other way up, is there a set of basic
labour laws to which your members subscribe or are you basically
against all forms of labour law and protection for workers?
Mr Tyrrell: No, we are not against all forms.
We have been supportive of the national minimum wage for some
years. We have a lot of criticisms of it but we support the principle.
We support unfair dismissal and we have always supported redundancy.
Q83 Baroness Morgan of Huyton:
But issues relating to maternity, flexible working, all of those
you are opposed to, are you?
Mr Tyrrell: We are saying that small businesses
should be separately treated in respect of those.
Do you have a list or a paper which explains the difference between
the two categories which have emerged as a result of Baroness
Morgan of Huyton's question? It is difficult for us, who are not
small business employers, at least I am not a small business employer,
to grasp where the line is, the line that you draw between what
is acceptable and what is not acceptable. I do not want to put
words in your mouth; I am talking off the cuff. Do you have anywhere
where that is available to us in some broader form as it were,
a paper which has been written or something of that sort?
Mr Tyrrell: No, we do not have that.
Mr Tyrrell: We could locate areas where we have
asked for small business exemptions or special treatment, but
we do not have a paper that sets it out en bloc.
Chairman: If you could do that without
causing you too much trouble, then that would help the Committee
to understand the problems that you are delineating.
Q86 Lord Trefgarne:
May I just ask two supplementaries that flow from that? Firstly,
where a regulation is introduced by the Government implementing
an EU directive but going much further and is nonetheless made
under the European Union Act which provides for Orders in Council
to have a swift passage, if that Order is actually going much
further than the regulation requires, I suppose it is for consideration
as to whether it should be introduced under that Act and therefore
enjoying a swift passage to the statute book because there is
of course a difference in procedure. If you are not implementing
something under the EU Act, there is a 40-day process and all
sorts of things you can do to query it. Have you considered briefing
parliamentarians in that way? Or maybe I am wrong, maybe even
if it is a gold-plating regulation, it still enjoys the privileges
of the EU Act?
Mr Tyrrell: To the best of my knowledge, we
have not; certainly not on employment law matters while I have
been chairman we have not.
Q87 Lord Trefgarne:
May I ask you to consider that and perhaps you would like to let
us have a note.
Mr Tyrrell: Thank you very much. This is education
not by me but to me.
Q88 Lord Trefgarne:
One of the ways of actually meeting the difficulties, and I very
much agree with what Baroness Morgan of Huyton was saying, that
we have to make sure that we are not portrayed as opposing everything
to do with EU regulation as it applies to employment, but nonetheless,
it is very burdensome and vexatious for the very smallest businesses
which you represent and therefore perhaps we should be arguing
for a larger sized company to be exempt from some of these, not
all, but some of these regulations. A company which appoints three
or four people is surely going to be extremely burdened by, say,
having to provide extensive maternity leave for an employee? Have
you thought of arguing for a higher level of exemption for the
very smallest companies?
Mr Tyrrell: Yes, we have thought of it. We have
not conducted a campaign about it.
Q89 Lord Trefgarne:
It might be worth it.
Mr Tyrrell: Yes, it might.
Q90 Baroness Howarth of Breckland:
If you are a charity, if you are under a certain level, you are
exempted from certain areas of the Charity Commission's hard work
so it is quite useful to think about those sorts of structures.
I really want to go on to talk about employment security and this
curious "flexicurity' word which has been developed, but
one of the things that the Green Paper talks about is outsiders
and insiders and they describe the insiders as those people who
have a good job and it is full time or part time but regular and
on the full payroll and others who go in and out of bits of employment.
The evidence we have had so far from other witnesses is that that
is not really the distinction. The distinction is between those
who are employedand some people would wish to be employed
in short bursts for their own requirementsand those people
who are unemployed and would like to be employed but just are
not employed. I wondered what in your view the best way would
be in the small business sector for this area of labour market
disadvantage to be addressed. What we have heard is that what
are really needed are skills; that is what enables people to get
into what we would see as the insider role, being able to get
a job as and when they want it. To what extent do small businesses
have the capacity to help people to gain skills for the 21st century
and what could enhance their future security in employment in
the way we have described it just now?
Mr Tyrrell: As far as skills are concerned,
we do regard it as the duty of the Government to make sure that
everyone can read and write and we do not think we can do very
much for those who cannot. Once they can, of course, the world
is at their feet if they want it to be and if they have the ability
to make use of it. There was quite a dramatic debate at our annual
conference last year. A motion selected by ballot from the floor
for a debate dealt with the whole problem of skills and there
was a great deal of criticism of the lack of available courses.
Small business owners are willing to allow time off for workers
to go on day release or even a two- or three-week full-time course,
but there just are not any courses available and that problem
is being addressed by our Skills Committee which is trying to
put forward some kind of proposals that would cover it. Small
businesses cover such an enormous range of activities themselves
that it is very difficult to put forward a comprehensive strategy.
That is being tackled by us in certain areas.
Q91 Baroness Howarth of Breckland:
Do you see your position as lobbying the Government and other
organisations to provide courses? Will your Skills Committee define
some of the areas in which courses should be provided?
Mr Tyrrell: That is the idea, but it will be
on a sector-by-sector basis and not on a comprehensive, across-the-board
Q92 Baroness Howarth of Breckland:
I know this can work because I have worked in the Food Standards
Agency where the Food Standards Agency provided funding for small
businesses in the catering industry to be able to develop their
skills in hygiene but that was partly because the industry pressed
clearly for the kind of skills that were needed; that might be
Mr Tyrrell: Yes, it might. I have not heard
of that one myself.
Q93 Baroness Greengross:
We know that there are more and more calls on temporary staff
working really through agencies and you will know that there was
a proposal some time ago by the Commission for an EU directive
on minimum standards for temporary agency workers. I just wondered
whether you had a position on who should be considered the legal
employer of such workers. Would it be the agency, would it be
the business, would it be one of your members? Do you use a lot
of agency workers?
Mr Tyrrell: We do, yes, but the majority of
agency workers are self-employed. They are self-employed by choice.
They work under contracts for services not contracts of service.
They might have their name down with a number of different agencies
and go from one to another, depending on who is offering the most
profitable or interesting work and most temporary workers are
temporary workers because they want to be and they prize that
position of being able to take a week off whenever they like really.
Q94 Baroness Greengross:
If that went on, would that mean that if there was an EU directive,
they would not be subject to it if they were self-employed?
Mr Tyrrell: They would not be covered by EU
employment law, no, but they would be covered by English temporary
workers' legislation which provides for quite a wide raft of rights,
about 11 different rights, tailored simply to temporary workers
who are self-employed temporary workers; one group of self-employed
who get very real protection from Parliament. As far as Europe
is concerned, the temporary workers directive was thrown out by
the European Parliament in the last European Parliament before
the elections. The central provision of that was that they were
to be comparable in pay and conditions with permanent employees
and that provision was excised from the directive by the European
Parliament. We saw the person working for the Commission, the
civil servant responsible for that, soon afterwards and her view
was that the whole thing was dead and that was also the view of
the President of the European Union Commission, President Barroso,
who announced a list of 80 proposals for legislation that were
being withdrawn and this was one of them. So I was a bit surprised
to see it rear its head again in the Green Paper, but we certainly
want the status of self-employment to be enhanced and reinforced
rather than reduced. The course we would prefer to take is the
one in fact the United Kingdom started to take way back in 1973,
but it has been developed a lot since then, in providing various
rights for temporary workers. The last big amendment was in 1996
and that seems to have settled down now pretty happily; both the
agencies and the workers seem to be satisfied with it. That is
the route that the Commission ought to be following, if any.
Can you just clarify? Are you saying that in the sort of companies
which your organisation represents the temporary employees may
well be self-employed? Is that a distinction between those who
are self-employed and those who are employed by the agency which
supplies the temporary employee?
Mr Tyrrell: Yes. The large majority of temporary
workers are people like actors who have their names down with
a number of agencies, nurses also usually have their names down
with different agencies and that condition can continue. As far
as our members are concerned, yes, we are quite big users of temporary
workers, we have to be and it is getting worse in the sense that
maternity leave means that the demand for temporary workers is
increasing, and holiday leave is going to do the same to it. The
quid pro quo is that all these rights that temporary workers
have been given by Parliament against the agencies with whom they
work mean that the agencies are carrying quite heavy financial
responsibilities now for the temporary workers and that means
that their prices have gone up and temporary workers are in danger
of being priced out of the market.
Q96 Baroness Morgan of Huyton:
Obviously we are all aware of the number of workers coming in
as a result of EU accession and what we are interested in is what
the impact has been of that movement on small businesses, if any,
and whether it has been a positive or a negative. Related to that,
are there any advantages or disadvantages that your members would
see in introducing a level of EU legislation that was about uniformity
of employment rights? Would that be a positive or a negative again
in terms of your members?
Mr Tyrrell: I do not think uniformity of rights
is practical irrespective of whether it is desirable or not. We
are not a political organisation so I would not move into that
area. The divergence of the economies is so great that one simply
cannot say the terms and conditions of employment of one Member
State must be the same as another. This is particularly poignant
in the case of the new Eastern European countries who have recently
joined, where they think nothing of working 12 hours a day for
only half what they would get in France or Germany. We would discount
Q97 Baroness Morgan of Huyton:
I was not thinking so much about terms and conditions: I was thinking
about employment rights. Obviously we are not suggesting for a
minute that terms and conditions as such could be negotiated across
the EU, but in terms of the sort of directives that have been
coming through which are applicable across the EU, what is the
impact of those sorts of directives as far as you can see in terms
of workers from the accession countries?
Mr Tyrrell: We have not had any particular problems
arising out of that at all. I think 84 per cent have not employed
anybody from outside the European Union, so we are not really
involved in that. What we are going to be very much involved in
are the new migrant regulations which are at present under preparation,
which is going to impose heavy burdens on employers to check that
someone who they take on has the right to work. That is causing
many problems because there is no simple way of finding out.
I am reluctant to keep us here any longer. The last question on
the legal status of employees and self-employed people is potentially
quite complicated. I wonder whether you would be so good as to
send us a written answer to that question.
Mr Tyrrell: Yes.
Q99 Earl of Dundee:
The UK is recognised in Europe for fair mindedness in its approach
towards labour law. Yet the UK may still not be thought to show
best practice. Which other countries are?
Mr Tyrrell: Each country has its own mixture
of strengths and weaknesses.
Q100 Earl of Dundee:
Lord Wade of Chorlton referred to the productivity test. The absence
of red tape is another one. Both reflect good practice and attitudes
towards small businesses in certain countries. Which European
states may then be better than us at minimising red tape and encouraging
productivity as far as small businesses are concerned?
Mr Tyrrell: I am afraid I just cannot answer
that, because each country has its strengths and its weaknesses.
The Germans and French have an admirable system of protection
for workers but it has made them particularly inflexible. The
Danes and the Swedes have a high quality, but on the other hand
they have heavy taxes. It is not easy to answer that question.
We firmly believe that each Member State should look after its
own in this respect and the role of the Commission should be to
deal with the cross-border aspects of it, having workers employed
in one country but actually working in another. That is where
the Commission law should come in, to deal with that situation,
not to impose what the substantive law is, but to say which law
it is that should be applied.
Chairman: That in itself raises another
series of discussions which I have had in other parts of the Select
Committee business which I have been working on. Thank you very
much for coming to us today. We have had a very interesting session
and if you could write us an answer to that last question and,
as I said before, if there is anything you feel you did not get
across properly or something that you would have liked to have
said and did not, we are very happy to get supplementary evidence
from those witnesses who have come before us. Thank you once again
for being with us and I hope you have also found it an interesting