Private Equity (Transfer of Undertakings and Protection of Employment) Bill

Like the hon. Member for Shipley (Philip Davies), I congratulate my hon. Friend the Member for Nottingham, East (Mr. Heppell) on his success in the ballot. I have taken part in it for 11 years without success, but that experience does not dim my pleasure at my hon. Friend's success and his choice of Bill, which I am pleased to support today. I support the Bill in a framework of fairness. Admittedly, my focus is on the fairness of the treatment of the work force, whose very livelihoods are at stake during the transfer of an undertaking. However, more widely, I should also say that I do not come to this debate with any bias for or against any particular form of enterprise. There is also fairness in the world of business, if there is—to use the cliché—a level playing field between businesses in respect of how they compete to take over other businesses. What is unfair at present is that the work force of a company that changed hands for £100 would be protected by the 2006 TUPE regulations, but the work force of a company whose shares changed hands for £100 million would not. That is the unfairness that I want us to address in this debate. It is true that the TUPE regulations protect a work force of one business that is sold to another from the automatic termination of their contracts as a result of the transfer; at common law, they would all be dismissed as a result of the transfer, but the TUPE regulations continue their employment. If, however, simply the shares in the employer are sold, there is no transfer of the business and therefore no common-law termination of the contracts. In that one regard, it is fair to say that as far as the work force are concerned, there is no difference between TUPE and a private equity purchase. The TUPE regulations give protection from automatic, unfair dismissal related to a transfer of employer; such protection is not given when there is a transfer because of the sale of shares to a private equity business. The final point about information and consultation has been a subject of great debate today. It is important to point out that the TUPE regulations give a specific right to the work force to have information on and be consulted about the transfer long enough before it takes place. There is no such protection for the work force under general law or other forms of general regulation about consultation and information. That point is crucial to my hon. Friend's Bill. There are subsidiary points in the TUPE regulations about collective trade union agreements and acquisitions from insolvency which the Bill also seeks to apply to such cases; they are significant, but of a lower order than the rights that I have already mentioned. My hon. Friend's undertaking to the House today is important. It is to reassure people who might previously have objected to the Bill on the grounds that it would extend the protection given by the TUPE regulations. That is not his intention, and he has made that clear today, which is helpful. In an intervention, I made a point that I want to repeat now. Given that sovereign wealth funds are beginning to wash up on this country's shores, there will be significant changes of ownership in the coming years. If we allow one form of ownership, buying up the shares, to have less legal impact for the people who make that decision than the other, buying the company and obliging those involved to follow the 2006 TUPE regulations, when people start to choose the easier route for them—and the harsher one for those who work in the businesses targeted with those funds—I predict that our constituents, the media and hon. Members will start to ask why we did not close that loophole when we had the opportunity. My hon. Friend the Member for Nottingham, East has given us such an opportunity today, and I hope that we will take it. Our constituents will want to know that there is transparency in the arrangements for buying up companies, that there are not distortions in the working of the market, and that employees have protection in such situations. We have the opportunity to make that happen today. When the TUPE regulations were first introduced into law in 1981, at that stage they did not protect outsourced services such as catering and cleaning. The 2006 regulations did extend to those areas, so we have made changes in the past to ensure that workers are properly protected. I argue that we should make another change to protect another group identified today. If some people say, ““The law is clear, they are not covered, and that is that,”” I ask them to consider the case to which the Library research paper refers, Millam v. Print Factory (London) 1991 Ltd., a Court of Appeal decision last year. In that case, a company did indeed think that by buying all the shares it avoided its obligations under the 2006 TUPE regulations—and the Court of Appeal told it that it was wrong. Because of the way in which the company conducted itself after it bought all the shares, it was caught by the regulations. Retrospectively, it found that it should have been obliged to follow the regulations.