Employment Bill [HL]

moved Amendment No. 28: 28: Before Clause 18, insert the following new Clause— ““Contracts of service (1) The Employment Rights Act 1996 (c. 18) is amended as follows. (2) After section 230 (employees, workers etc.) there is inserted— ““230A Contracts of service (1) A contract of service shall exist between an employee and an employer only where the following conditions have been met— (a) the employee is under an obligation to provide the services personally; (b) the employee is subject to a right of direction and control as to the manner in which the services are provided; and (c) obligations exist both on the employee to continue performing the services and on the employer to continue remunerating the worker. (2) Subsection (1) above shall apply irrespective of— (a) any other express contract between the employee and the employer, whether oral or in writing, and (b) any intermediary through which the worker might provide the services to the end-user. (3) For the purposes of subsection (2) above ““intermediary”” means— (a) any person, partnership or unincorporated body through which the services are provided; or (b) an employment agency as defined by the Employment Agencies Act 1973 as amended.”””” The noble Lord said: This amendment is tabled in my name and that of my noble friend Lord Cotter. Here again we seek to widen the debate on the general provision set out in the Long Title of the Bill for the resolution of employment disputes. This is a probing amendment that asks the Government to think about what a number of people regard as a significant issue. The problem is that Section 230 of the Employment Rights Act 1996, which provides the framework within which employees can exercise their rights under the whole panoply of unfair dismissal legislation, simply defines a contract of employment giving employees those rights as a ““contract of service”” or an apprenticeship. In effect, the phrase ““contract of service”” is left to be interpreted by the courts. A large amount of case law has developed as to what a contract of service actually is, and a number of people feel that that leaves the issue in an unsatisfactory state. The failure to define clearly what employment status is causes problems in a number of areas. First, the Government have a targeted approach to employment rights so that these rights are given to people depending on whether they are workers, employees or self-employed. This often causes difficulties because it is not always easy to ascribe to individuals an accurate category so that they can access their rights. This is demonstrated by the fact that the Government have had to introduce tax measures to remedy the loss of income from workers who they say should be paying tax to employees; that is, the somewhat infamous IR35 argument which recognises that there are problems in defining the status of employment and who constitutes an employee. Secondly, it is clear that employment status can cause problems for vulnerable workers because unscrupulous employers often find it easier to disguise employment relationships as commercial relationships, thereby denying those workers their rights. The definition of employment status can cause problems for businesses where clients are increasingly tending to terminate contractors at 48 weeks or 11 months in an effort to avoid owing employment rights, even when there is still work to be done. Finally, the failure to define employment status properly can cause problems for freelancers, so professionals who wish to work on a commercial basis are finding their employment status confused in the eyes of both clients and the Government. I have no pride of authorship in this amendment; it may not be the best way to define employment status or the status of an employee. The thesis that I put forward for the purpose of the amendment is to ask the Government to take advantage of the Bill to see whether now is the moment to define better in statutory law the definition of a worker and an employee. I beg to move.