Written submission from Dr Anke Winchenbach (ERB0011)

Written evidence submitted by Dr Anke Winchenbach, University of Surrey

I welcome the inquiry into the Employment Rights Bill by The Business and Trade Committee and am making this submission in an academic capacity as expert in decent and fair work in tourism. I welcome the opportunity to provide oral evidence.

I am a senior lecturer in hospitality and tourism management and the Co-Director of the Centre for Sustainability and Wellbeing in the Visitor Economy at Surrey Business School, University of Surrey and work as an independent sustainability consultant. My research and consultancy primarily focus on dignified, fair and decent work, labour and human rights and measuring social impact. I hold Fellowships at Surrey’s Future of Work Research Centre and of the Institute of Sustainability. I am an advisor to UN Tourism and University of Oxford to develop an ESG framework for tourism businesses, a working group member of the UN Tourism Statistical Framework for measuring tourism (MS-SFT) and currently serve as the elected co-president of the Research Committee 50 International Tourism (RC50) of the International Sociological Association. Prior to academia, I worked in sustainability consultancy and travel and tourism management.

Currently, I am co-leading the England ‘Fair Work in Tourism and Hospitality’ survey which is part of an international collaboration of members of the Global Hospitality Research Alliance comparing fair work across 20+ countries.  I recently wrote the report ‘Why the S in ESG Matters: Social Sustainability and Labour and Human Rights in Travel and Tourism” that was commissioned by the International Transport Federation (ITF).

Summary

The following main points are addressed in my submission:

• Costs associated with implementing the bill are less expensive than public costs for work related ill health
• The proposed Bill has great potential to safeguard hospitality and tourism workers, especially women, low paid and zero-hour contract workers
• Regulation is needed to stop bogus self-employment
• The government needs to protect migrant workers and review immigration policy, especially tied visa regulations
• Supply chain and sub-contracted workers need to be included in the Bill
• Mandating monitoring, reporting and auditing of direct and supply chain working conditions, aligned with the new European Sustainability Reporting Standards (ESRS), will strengthen enforcement through the Fair Work Agency, provides transparency for financial investors and consumers.
• Upgrading trade union legislation is essential to uphold collective bargaining rights and negotiations on decent work. Collaboration between businesses, unions and government is key for developing constructive relationships.
• Improved working conditions will help tackle current staff shortages in Hospitality and Tourism and benefit hospitality and tourism businesses
• Overall positive business impact of the bill through risk reduction across multiple business areas, including recruitment, investment, customer demand, competitiveness and stronger social contracts
• The government should establish a tourism and hospitality taskforce to advise on the bill, including unions, academic advisors and NGOs
• Collaborate closely with workers, unions, business and charities to set up national and global multi-stakeholder collaborations and partnerships
• Provide Government funding for research on the impact and effectiveness of the Bill on tourism workers, businesses, unions, and other stakeholders

Positioning of travel and tourism and decent work

In 2023, the UK was the world’s fifth most valuable travel and tourism market[1], contributing $295.2 billion to the UK economy, with about one in nine workers in the UK working in the Travel & Tourism sector. Severe staff shortages, accelerated by the Covid-19 pandemic, are the primary concern for UK and global tourism and hospitality businesses. Recent ONS figures show 98,000 vacancies in the food and accommodation sectors currently available[2], and that 30% of workers leave within the first 90 days because the job doesn’t match their initial expectations. This has forced UK hospitality businesses to cut capacity, losing economic opportunities. Our research shows that improved working conditions in travel and tourism enhance workers’ lives and help businesses attract talent and remain competitive.

Decent Work as per the International Labour Organisation (ILO), sums up dignified working conditions and the aspirations of people in their working lives. It involves opportunities for work that are productive and deliver a fair income, health, safety and security, social protection, prospects for personal development, social integration, freedom of expression, organising and collective bargaining, and equality of opportunity and fair treatment for all people.

Addressing the terms of reference 

Does the Employment Rights Bill adequately safeguard the workers it seeks to protect?

The Employment Rights Bill is a significant and much needed step forwards to align with international conventions such as ILO’s Decent Work, UN Global Compact and Goal 8 Decent Work and Economic Growth of the UN Sustainable Development Goals. The Bill has great potential to improve workers’ rights, including those of the UK’s 3.5 million tourism and hospitality workers. Our research highlights ongoing high-risk for worker exploitation in tourism and hospitality. Hospitality workers are amongst those who are most likely to experience severe insecure work, including low and variable pay, involuntarily temporarily or on casual contracts, reliance on universal credit, suppression of workers representation through unions and exposure to abuse and harassment. Examples of the severe multi-level and chronic vulnerability of tourism and hospitality workers include recent collective redundancies of 1500 workers at hospitality firm Whitbread , redundancy of 150 Virgin Hotels workers in Glasgow and sexual abuse claims by McDonalds workers . In another example, a 2019 report by the Walk Free Foundation found that 76% of all hotels operating in the UK failed to meet the minimum requirements of the UK Modern Slavery Act for protecting employees, agency workers and workers in their supply chains from forced labour and/or sexual exploitation.

By improving working conditions, the Bill will improve worker’s health and reduce public health costs. Several studies have linked insecure work to depression, exhaustion, anxiety, and self-reported ill health and there is a link between lower incomes and an increased likelihood of experiencing unemployed mental health. This will also have potential to positively impact the UK economy as in 2021, mental health problems cost the UK economy at least GBP 118 billion a year, and the combined economic, human and health and care costs for mental ill health in England alone are 300 billion in 2023.

Changes proposed in the current Bill are particularly significant for low paid hospitality workers, women and people on zero hour contracts as they will likely benefit most from increased job security:

Low paid workers:

-          The bill will adequately protect low paid workers in tourism and hospitality. This is important because:

-          Hospitality workers’ median full-time salaries are £24,000, compared to £34,963 for all full-time workers across the UK.

-          In hospitality, while the number of employees has reduced by 95,000, the number of workers in severely insecure work has increased by 76,000.[3]

-          9.5% of workers in the accommodation and food sector are on Universal Credit, compared with 1.8% in professional, science and technical sectors. Of the 150,000 workers who are on Universal Credit in accommodation and food, 125,000 are in severely insecure jobs.

-          Resolution Foundation research found that low-paid workers are:

• most affected by a lack of unfair dismissal protection as they were twice as likely to have lost their jobs involuntarily during the past two downturns as high-paid workers;
• least likely to receive support when sick, with 1.1 million low-paid workers currently ineligible for statutory sick pay; and,

Women workers:

-          The bill will adequately protect women workers in tourism and hospitality. This is important because

-          Women are overrepresented in low-paid and more insecure sectors and jobs. In hospitality, as of July 2024 approximately 877,000 women compared to 756,000 men were employed in the accommodation and food services sector in the UK.

-          Women workers are 2.3 times more likely compared to men to experience severely insecure work with 60% of newly insecure workers being women.

-          While sexual harassment can affect all workers, the obligation to prevent sexual harassment, training and reporting are particularly relevant for women in hospitality as sexual harassment by guests, and co-workers occur frequently

People working on zero hours contracts:

• I support ending zero hours contracts as zero hours contracts can negatively affect workers mental health. Women are more than ten times as likely to be on a zero-hours contract as high earners, with one-in-twelve currently employed on one.

Are there weaknesses or loopholes in the Bill that could be exploited or have unintended consequences?

Regulations to stop bogus self-employment, where employers wrongly misclassify workers as self-employed rather than direct employees, must be included in the Bill. For example, in the airline industry, the practice of hiring airline crew and maintenance workers through self-employment contracts is a growing concern and has severe consequences. Unintended consequences include 1) Insecure working conditions and no social protection 2) Insurance issues, 3) Increased safety risk for crew and passengers through lack of training and fatigue from unregulated working patterns 4) unfair competitive advantage to airlines, 5) financial burden to state: an Irish study found that bogus self-employment could be costing the state €1 billion per year

Migrant workers are essential across all areas of the tourism industry such as transportation, accommodation, and food services. A significant proportion of the hospitality labour force are migrant workers who are particularly vulnerable to potential abusive labour practices.  The government needs to review immigration policy that since Brexit has increasingly issued tied visas, which mean that an employee is tied to a specific employer. Tied visas have been found to enable exploitative and abusive employment practices.

The Bill does not include specific mandates for monitoring and reporting by employers across all areas, leading to a lack of transparency and accountability, and missing the opportunity for continuous improvement for businesses. Consequently, it is impossible to assess the impact of the Bill on workers, businesses and wider stakeholders. Further, businesses in countries and areas that mandate sustainability reporting as well as investors and customers are missing important information for decision making and might shun business partnerships due to perceived high risk in violations of workers’ rights.

Can the measures in the Bill be adequately enforced?

Enforcement strategies are an integral part to the new Bill and a Fair Work Agency as enforcement body is welcome as it is critical to improving job security. However, it will need financial backing and legal mandate to properly uphold labour laws. To strengthen the Bill, mandates for measuring and reporting decent and fair work, auditing and on-site third-party inspections, for example through union representatives, are needed. Enforcement can be strengthened by aligning UK legislation with the new European Sustainability Reporting Standards (ESRS), especially ESRS1 direct workforce and ESRS2 supply chain workers. These standards apply to all companies that are subject to the Corporate Sustainability Reporting Directive (EU CSRD).  

Will the proposed trade union reforms improve working relationships between workers and businesses, and hence, productivity and enable voice at work?

The trade union reforms will enable improved working relationships between workers and businesses and union participation in decision making. Upgrading trade union legislation will support and protect all tourism and hospitality workers’ rights as unions provide a collective voice to safeguard fair wages, safe and healthy working conditions, collective bargaining rights and equal treatment. This is important as there is a history of anti-union sentiment and union busting in the industry. Collaboration between businesses, unions and government is key for developing constructive and productive relationships.

Impact on businesses and economic growth

Our research shows that improved workers’ rights reduce business risks and make business sense for all businesses and wider economic growth. The Bill, if enforced properly, can support businesses in the following areas:

• ATTRACTING AND RETAINING TALENT – With the current labour shortage in hospitality and tourism, there is urgent need to attract and retain talent. Surveys amongst Gen Zs show that 49% of Gen-Zs and 44% of millennials said they based career and employer choices on their personal values, including employment practices.  
• EQUAL OPPORTUNITIES - Research has shown that a more diverse companies are more innovative, have greater employee satisfaction and find it easier to attract future talent. Studies also indicate that female leadership and younger CEOs produce higher ESG scores.
• LEVERAGING SOCIAL DIALOGUE - Research shows that unionised businesses have increased productivity, better health and safety performance, better staff engagement and retention, reduced absenteeism, a more equitable, diverse, and inclusive workplace, and higher skills and training development. For example, a study in the UK hospitality sector found that increased union density can lead to an increase in productivity. Trade unions can also play an important role in identifying labour and human rights violations in the supply chain, such as in the case of the fashion retailer H&M. The case for improved company risk management through union collaboration is explicitly supported by some global investment firms, as  unionisation reduces material investment risks.
• SUPPLY CHAIN RISKS –Companies are responsible for working conditions in their supply chains.  Companies who collaborate with their suppliers, provide training and collect data on supply chain workers’ working conditions can prevent negative legal and reputational consequences. For example, EasyJet’s Supplier Code of Conduct mandates suppliers to fair and respectful working conditions, and they are implementing a stronger social auditing process.
• FINANCIAL INVESTMENTS  - Travel and tourism investment is forecast to increase by an average 9.4% per annum over the next decade. 85% of investors state that businesses’ investment in employees is an important factor in their decision-making.
• SOCIAL LICENSE TO OPERATE - Travel and tourism businesses and other organisations rely on being granted a social licence to operate or, in other words, on getting approval by different stakeholders (such as employees, regulators, local communities, investors and customers) to conduct their business. Stakeholders’ expectations usually go well beyond legal compliance – they scrutinise businesses against potential risks and benefits they bring to the destination or community, including employment opportunities and conditions of those.
• REPUTATIONAL RISKS – Social washing refers to the contradiction between displaying a positive image and hiding underlying social issues. Giving misleading information about human rights abuses or poor working conditions can lead to ‘social washing’ with severe reputational damage, consequently affecting competitive advantage, customer loyalty, financial investment, recruitment and retention. Enforcing the new bill and mandatory reporting will reduce reputational risks.
• CUSTOMER EXPECTATIONS – A study found that the percentage of people saying they are prepared to pay more for a holiday with a company that can evidence better environmental and social impact has doubled from 19% in 2011 to 38% in 2021. A recent Deloitte survey found that 21% of holidaymakers are concerned about staff wages/conditions.
• COMPLIANCE AND REGULATORY RISKS – with the new ESG regulations are coming into force in the EU and elsewhere, it becomes critically important for businesses to adhere to ESG requirements to remain competitive and conduct international business. Only those businesses, whether large or small, that can evidence how they reduce risks for direct and supply chain workers as set out in ESRS S1 and S2 will be able to do business with EU based companies in future. Considering the largest source market for the UK are European visitors, the new bill helps preparing for compliance with EU reporting regulations on labour issues becomes critical for competitiveness.

To what extent could the Employment Rights Bill cause businesses to offshore employment and continue with weaker workers’ protections abroad?

Outsourced, sub-contracted, casualised and agency workers need to be included in the Bill. There is evidence that hotel-chains increasingly subcontract employment, which leaves workers at higher risk for labour exploitation and lower protection levels compared to direct employment and permanent contracts. Not considering supply chain workers imposes business risks to UK companies. For example, reporting on conditions of workers in the supply chain are also mandatory as part of the new EU CSRD, which affect all businesses that have business relations with EU registered companies.

What solutions or actions are required by Government, businesses and workers to effectively support the labour market while boosting productivity and protecting workers’ rights?  

Recommendations for action by the Government:

If the UK is serious about improving working conditions and wants to remain competitive internationally, the following actions are recommended:

1. Establish sector taskforces to implement change in problem sectors – such as social care, retail, and hospitality – working with Fair Pay Agreements as they are established. This will improve work quality and progression opportunities for insecure workers.
2. Make businesses accountable for direct as well as supply chain workers impacts. This enables businesses to manage and mitigate labour and human rights risks and unlock business opportunities.
3. Mandate measuring and reporting on fair and decent work. Unlike comparable countries and regions that mandate measuring and reporting on direct and supply chain workers as per ESRS1 and ESRS2, UK businesses are currently not required to report on fair and decent working conditions. There is a strong case for legislating reporting on decent and fair work in accordance with the UN Global Compact, ILO Decent Work indicators and the UK Modern Slavery Act.
4. Establish an employment Status Investigation Unit to focus solely on false self-employment and misclassification of workers.
5. Strengthen protection for self-employed workers by expanding right to written contract and social protection.
6. Ensure appropriate financial and legal backing for the creation of the Fair Work Agency, which will ensure the new rights are properly enforced which is critical to improve job security. Implement labour inspections that are up to standard to effectively prevent exploitative practices.
7. Collaborate closely across Government bodies with the proposed new Fair Work Agency to ensure data on decent and fair work is used in enforcement activities.
8. While the Bill includes a welcome focus on reducing the gender pay gap, its proposals on reporting requirements don’t go far enough to tackle the root causes of workplace inequality. In particular, the provisions on gender pay gap reporting for outsourced workers could entrench low wages in female-dominated sectors, like cleaning, instead of pushing for fairer, in-house pay practices.
9. Collaborate closely with workers, unions, business and charities to set up national and global multi-stakeholder collaborations and partnerships and create MoUs to ensure that decent and fair work issues are jointly addressed, progress is monitored closely, and impact is evaluated using clear indicators.
10. Provide Government funding for research on fair and decent work tourism employment and the impact of the Bill on tourism workers, women, low paid workers, businesses, unions, and other stakeholders which will be critical to evaluate the success and effectiveness of the Bill and enable policy adjustment as and when required.

November 2024

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