Written submission from Mitie (ERB0083)

Business & Trade Committee: Call for Evidence

Background on Mitie  

Mitie is Britain’s leading Facilities Management and Transformation partner. We work with over 3,000 organisations across both the public and private sectors, maintaining and transforming their buildings and property estates to create efficient, safe, clean, and sustainable spaces.

We are experts in engineering, security, building decarbonisation and cleaning & hygiene services. Our workforce of 72,000 exceptional colleagues provides essential services that keep the country running. From critical national infrastructure, to supporting railway hubs, airports, retailers and hospitals, over 7.5 million people pass through the sites we look after every day. 

We have a diverse range of colleagues representing 147 nationalities, from Cleaners and Security Officers through to Heat Pump Engineers, Data Analysts and in professional functions like Accountancy and HR.

As one of the UK’s largest employers, we ensure our colleagues have sustainable careers which offer opportunities to develop, learn and progress, with fair pay, terms and conditions. From addressing an ageing workforce and the gender imbalance in the engineering sector by championing graduates and apprentices, to pioneering cleaning, security, and cellular networking specific apprenticeships across our business, we are dedicated to offering opportunities to our workforce.

We look forward to engaging with the Government on this matter in the best interest of our people. 

Protecting workers 

Question 1- Does the Employment Rights Bill adequately safeguard the workers it seeks to protect?

1. The Government has set out an important agenda that it intended to give British workers more security, flexibility and enhanced protection.
2. As one of Britain's largest employers, we wholeheartedly agree that the Government's intention to formalise many measures that businesses are already taking to address neglected working conditions across the labour market is well-founded. At Mitie, we are steadfast in our ambition to create opportunities for our people and be a great place to work. As a champion of frontline workers, this includes offering a range of benefits that are unrivalled in our industry. We have over 1,300 apprentices in our business and also ensure that our people have a stake in the success of our business having given every colleague free Mitie shares for four years running. 
3. As highlighted by the Government, the new framework must strike a balance between the needs of both employers and employees; ensuring any additional legislation put in place enables today’s workforce to deliver business goals while building fulfilling careers. Given the decline in growth and productivity the country has seen, it is critical that the employment rights agenda is informed by practical insights from a range of businesses to ensure there is a long-term positive outcome, especially at a time when many businesses are already struggling with higher wage bills and escalating costs.
4. Whilst some trends persist throughout the economy and what is and is not working can vary from sector to sector and business to business, it is critical that any changes are proportionate and sensible to accommodate all sizes and sectors of our economy.
5. In its current form, the Bill proposes a ‘one-size-fits-all’ approach that goes too far in some areas, without acknowledging or addressing the unintended harm the Bill could inflict not just on SMEs, but also large businesses that contribute significantly to the UK’s economy.

Question 2 - Are there weaknesses or loopholes in the Bill that could be exploited or have unintended consequences?

6. The protections seem to be designed primarily to shield workers from unscrupulous conduct by employers, implicitly assuming many employers exhibit such behaviour. However, our belief is that the vast majority of employers aim to comply with their legal obligations towards their people, and we encourage the Government to consult with businesses about the commendable practices that numerous employers already deploy to support their employees, especially those earning lower wages.
7. As suggested above, the Bill sometimes proposes ‘one-size-fits-all’ approach to complex legal areas, which, if implemented as proposed, would cause unintended consequences for businesses. We’ve highlighted below several examples where the Bill may need to take a more balanced approach and ensure the proposals practically work in the long run:

Flexible work schedules

8. We understand the logic of providing guaranteed hours in specific situations. However, if all employers were required to ensure guaranteed hours, flexible employment could be undermined.
9. Some of our 72,000-strong workforce rely on flexible contracts to enable them to manage both their personal and business needs. This includes workers who seek temporary employment contracts, such as students, low earners, individuals with caring responsibilities, or low skilled workers, who may not meet the traditional entry requirements to apply as a direct applicant, or other people who have a preference to work for multiple employers. Flexible employment provides a genuine route to work for these groups and enables businesses to remain agile, which is critical for productivity. In certain cases, the Bill should consider exceptions to the duty to make an offer.
10. In addition, it is crucial to consider that shifts may change for various reasons, and the definition of "reasonable notice" could be subjective depending on the industry, job role, and individual worker preferences. For example, at Mitie, we employ around 100 Close Protection Officers (CPOs), who work with high-profile individuals, including Government ministers, who may have irregular schedules. As their clients' plans change, officers' shifts must be adjusted accordingly to ensure continued protection. As well, if new information regarding a threat or incident emerges, shifts may need to be altered to provide adequate coverage and protection for the customer.  We also have employees who are employed specifically as Relief Officers whose job is to provide short notice cover where needed (for example due to sickness absence). It is inherent within the role that any notice of a shift may be last-minute.
11. As well, before enshrining penalty fines in law, it is important that the Government outlines what is considered “short notice” for cancellation or curtailment. As the Resolution Foundation highlights, measuring the full extent of this problem is difficult, as well deciding what the optimum notice of shift changes should be for both employers and employees. It is important the Government works with businesses to understand the complexity of hours insecurity, as well as permitting some flexibility for employers that need to adapt to fluctuating demand.

Balancing trade union access with maintaining the safety, security and smooth operation of critical facilities

12. The new industrial relations framework must balance improving trade union access and representation with the imperative to maintain the safety, security and smooth operation of these critical facilities. 
13. Currently, bargaining units are often identified by their skillset, aptitude, and their role in the business. However, often, security clearance and making sure they have the right training to access certain sites is an important factor which must be taken into consideration. This allows employers to adhere to safety regulations and ensure any potentials risks are managed appropriately.
14. At Mitie, we work with over 3,000 private and public sector clients, with our colleagues based on a range of customer premises including sensitive sites such as nuclear facilities, hospitals, and some of the UK's most prominent landmarks. Trade union (TU) representatives seeking entry permissions to nuclear sites and other locations with stringent health and safety requirements present a unique set of challenges.
15. TU reps normally have to go through the Government’s Baseline Personnel Security Standard (BPSS) requirements, then Security Clearance or Developed Vetting. This can take between three to six months depending on the nature of the site. If access were to be allowed without the proper training, clearances and safety protocols, our customers would normally have a right to terminate the contract within 30 days.
16. Therefore, a more structured approach remains necessary, in which TU representatives work collaboratively with employers to gain the necessary clearances, participate in safety briefings, and follow the established guidelines for accessing specific locations within these sites. It is also important that certain sites could be made exempt. In these cases, the Government should source alternative solution for trade union access that which preserves the integrity of the safety and security measures in place.

Procedure for handling redundancies

17. Mitie strongly suggests that the Government retains the term "establishment" within the collective redundancy legislation. The concept of requiring collective consultation for proposed redundancies at an "establishment" level, rather than across the entire business, originates from European Union (EU) law and ensures consistency with regulations in other EU member states. To promote the competitiveness of UK businesses and attract inward investment, the Government should carefully consider any potential amendments to maintain alignment with EU regulations. Striking this balance would help safeguard the UK's standing in the global market by reducing regulatory divergence while fostering a favourable business environment. 

18. Using establishments as the basis for determining when collective consultation is required simplifies the process for both employers and employee representatives. Consultations can be organised at the local level, focused on the effected unit or department, allowing for more tailored and manageable discussions about the specific circumstances and potential alternatives to redundancy. Grouping together otherwise unconnected redundancy exercises for collective consultation process creates an administrative burden for employers without clear benefits for the employees involved.  

19. In addition, if the redundancy threshold were determined at the whole business level, some smaller establishments might be overlooked in the consultation process. Retaining the term "establishment" helps ensure that redundancies affecting employees at all levels are subject to an appropriate and meaningful consultation process. 

20. Rather than remove the requirement for redundancies to be at one establishment, we would suggest that clarifying what constitutes an establishment would be a better way of ensuring those redundancies within the business that are genuinely connected are subject to collective consultation where the numbers require this. 

Unfair dismissal

21. For day-one rights for unfair dismissal alone, the Government analysis predicts a 15% rise in employment tribunal claims. This will have a significant cost impact for businesses. In addition, most cases are outstanding for around 18 months – two years, without significant investment in the tribunal system they will be unable to cope with a 15% increase in workload.
22. As the Bill stands, it’s unclear how changes to unfair dismissal rights would work in practice, especially when interacting with a “statutory probationary period”.
23. For example, there could be a variety of “fair” reasons available to employers, or a different standard of proof for the general obligation to act “reasonably” if dismissing during the probationary period. It is also unclear whether employers will have any scope to extend probationary periods if a longer period is needed to assess suitability.
24. Whilst we support the need for employees to be treated fairly in the early stages of their employment, it is also important that employers get a reasonable chance to assess a new employee’s performance, capability and suitability for the role without the threat of litigation.  Employees already have protection if they are dismissed for a discriminatory or automatically unfair reason from day one of employment.    
25. We would suggest that aligning the probationary period with the qualifying period for unfair dismissal would better streamline the dismissal process, making it easier for both employees and employers to understand their respective rights and obligations. A shorter, six-month qualifying period would still provide employers with enough time to assess an employee's performance, capability, and suitability for the role. At the same time, it would offer employees increased protection against unfair dismissal at an earlier stage in their employment.  We believe this would balance the interests of employers and employees whilst still achieving the aim of the legislation.
26. However, if the proposal is implemented, as outlined in the Next Steps to Make Work Pay[1] policy paper, we encourage the Government to consult businesses on how this would work during ‘an initial period of employment’ and what the exceptions for dismissal should be.
27. Firstly, including “probationary reasons” as a potentially fair reason for dismissal enables employers to assess the suitability and capability of new employees within a reasonable time frame. A probationary period allows employers to determine whether an employee has the required skills, knowledge and attitude for the job, and to address any performance or conduct issues. During this period, employers can offer additional training, guidance and support to help the employee improve and adapt to their new role.
28. Moreover, probationary reasons as a potentially fair reason for dismissal would ensure that employers have the flexibility to manage their workforce in response to the changing requirements of their business. Whilst other potentially fair reasons for dismissal may apply during the probationary period, such as "capability", "conduct" or "illegality", creating a new category can ensure that employers can act efficiently in cases where dismissal may be necessary for the benefit of the overall organisation and that it is clear what process should be followed. As seems to be recognised in the Next Steps to Make Work Pay policy paper, it is appropriate that the process to be followed during a probationary period should be more “light-touch” than what would generally be required in order to satisfy the requirements of a fair conduct or capability process. Employers need the ability to respond to issues that could have significant negative implications for the business.
29. If the proposal is implemented as outlined in the Next Steps to Make Work Pay policy paper, we would also suggest including redundancy and business restructure as reasons for dismissal during the probationary period. Whilst this is not ideal for either party, companies may need to adjust their workforce based on fluctuations in market demand, financial constraints, or changes in business strategy. Including redundancy and business restructure as grounds for dismissal provides employers with the flexibility to adapt their workforce accordingly, ensuring the company's long-term viability.  For employees during their probationary period, it would seem proportionate that a more simplified process is available in these instances.

Statutory Sick Pay (SSP)

30. We would recommend looking at how this works in other countries and analysing the levels of success similar reforms have had in balancing improving employee wellbeing without having a detrimental impact on productivity.  

31. When deciding the percentage rate, the Government should also consider how changes to SSP compare with other financial support levers offered by the state. For example, people who are unemployed can receive up to £90.50 through the Job Seekers Allowance. SSP should not be significantly below this figure, as it may create an unhelpful situation where employees on long-term sick leave find it more financially beneficial to resign and claim Job Seekers Allowance instead. In terms of Universal Credit, it is also important to consider its impact on the overall financial wellbeing of employees. 

32. As well, we would also recommend linking the rate of SSP to the National Minimum Wage (NMW), as a % of NMW rather than a separate weekly rate, so that it maintains parity with movements in the NMW over time. Finally, we recommend SSP is defined as an hourly rate like NMW rather than daily rate which creates potential complexities for shift workers.

Question 3 - Are there areas of employment law not covered by the Bill that weaken workers’ protections?

33. The Employment Rights Bill has proposed significant changes to improve workers' protections; however, some areas remain unaddressed, creating potential loopholes that could weaken workers' protections, especially for self-employed and contract workers.
34. For example, an unscrupulous employer using a business model that relies on contractors could avoid both the increased employer National Insurance (NI) contributions and the enhanced employee rights provided by the Bill. Consequently, some businesses might be tempted to engage primarily with self-employed contractors to bypass these obligations.
35. This gap in the legislation could result in businesses that directly employ workers bearing the costs and burdens of the Employment Rights Bill, while those predominantly employing contractors remain unaffected. The absence of anti-avoidance provisions in the Bill could encourage companies to dismiss existing employees and rehire them as contractors, exploiting the lack of protection for self-employed and contract workers.
36. Furthermore, the Bill seems to have missed an opportunity to clarify worker and employment statuses, which would address issues arising from the evolving world of work. Although the Government had discussed plans to provide a more comprehensive solution to address worker and employment status before the election, these measures have not been incorporated into the Bill or the accompanying documentation.
37. To create a more equitable and comprehensive solution, it is crucial that the Government addresses these gaps in legislation and adapts employment law to the modern world of work.

Question 4 - Can the measures in the Bill be adequately enforced? What are the barriers to setting up a Single Enforcement Body (Fair Work Agency) and how can these challenges be overcome?

38. If the Government intends to see the Bill being adequately enforced, it must address the backlog of employment tribunal cases. Data this year reveals that the backlog of cases in the employment tribunal system is worsening, with outstanding cases increasing by 18% compared to last year[2]. Introducing the Bill with the (i) extension of existing rights and (ii) the creation of new ones will likely exacerbate these problems unless the government invests in redesigning the system or providing additional funding to address the issues.
39. Regarding establishing a Single Enforcement Body (Fair Work Agency), the principle behind this idea is commendable and could potentially simplify and streamline enforcement of regulations by centralising compliance efforts. However, the Government may face difficulties due to a lack of technical expertise, resources, and business understanding for certain breaches.
40. Currently, there are nine individual enforcement bodies which possess specialist knowledge and expertise tailored to specific regulations and industries. Consolidating these agencies into a single entity could dilute this expertise and reduce the effectiveness of addressing specific concerns or issues. The increase in bureaucracy could lead to slower decision-making, weaker enforcement, and inefficiencies in responding to violations of employment regulations.
41. Even with a broad range of agencies, compliance oversight has been difficult as observed in the enforcement of the National Minimum Wage (NMW). Over 15 years after the National Minimum Wage (NMW) was introduced, there is still an ever-increasing rise in the number of businesses being investigated for NMW offences due to commonplace practices such as salary sacrifice schemes which can increase the take-home pay of lower paid employees. HMRC has been intensifying its focus on breaches in recent years. Since 2016, its enforcement budget has more than doubled from £13.2 million, to £27.5 million and the number of NMW enforcement officers has risen from 330 in 2017 to more than 450 today[3].
42. Given the number of changes, combined with recent changes to the NMW and NICs, it is highly likely that any enforcement body would struggle with addressing non-compliance without a manageable transition period and the resources to discharge its duties.
43. Also, a single Enforcement Body may struggle to respond equally to the diverse issues and sectors under its purview. As a result, some violations or areas of concern may receive less attention and fall in priority compared to others, thus undermining the existing, specialised focus on individual areas of regulation. Given businesses are set to face such a vast change to the employment landscape, we would suggest simplifying legislation as far as possible.  It is our belief that the vast majority of employers aim to comply with their legal obligations.  However, certain areas (such as NMW and holiday entitlement and pay) have become so complex that it is (i) now unrealistic to expect employees to be able to easily understand their entitlement and (ii) easy for well-meaning employers to get it wrong.  This complexity increases the likelihood of disputes arising and decreases the likelihood of these being resolved internally.  . This confusion hinders the successful compliance with, and enforcement of, employment provisions in the future and distract from other areas that need proper attention.
44. Furthermore, it is crucial for the envisioned agency to adopt a collaborative, rather than punitive approach, working together with employers to address issues instead of focusing solely on auditing, investigating, and imposing penalties. This would encourage employers to welcome the agency's involvement and foster a more educational and improvement-oriented approach.  It is therefore important that the strategic aims of the Fair Work Agency support, and the measures of success do not undermine, such an approach

Question 5 - Will the proposed trade union reforms improve working relationships between workers and businesses, and hence, productivity and enable voice at work?

45. The Government has a clear and understandable goal – to improve representation and meaningful engagement in the workforce. The Government has set out a strong set of principles in the framework. We agree that it is critical to have a principles-based approach to any proposed legislative or regulatory framework to keep pace with the rapid technological transformation we are experiencing. In many cases, detailed and specific rules soon becomes outdated or do not match the needs and behaviours of future generations.
46. However, the Bill assumes that unions are always the primary and best channel for representation and engagement. Technological transformation has irreversibly changed worker representation and how workers can “have a voice”. The Bill should explore other routes for representation, such as giving additional rights or powers to a works council or considering different model of representation that could be more suitable for some sectors or SMEs. For example, at Mitie, we are able to review anonymised feedback from employees through our ‘MiVoice’ survey. Since 2018, engagement with the survey has almost doubled, increasing from 34-63%, with the results aiding our programme of employee listening sessions with senior management and our Chief Executive. Given this, the Government should ensure a new framework recognises that the old industrial organising model reflects a labour market of the past. Workers now have multiple routes for activism and engagement, focusing only on representation through an industrial action lens does not capture the broader picture or move industrial relations “into the 21st century”.
47. In addition, an industrial action lens obscures many of the positive changes this century has seen. CIPD research in 2022 shows that employers are mainly positive about the employment relations climate in their organisation, with 87% describing relations between managers and employees as ‘very good’ or ‘good’[4].
48. Finally, whilst the framework includes an extensive list of changes, more attention needs to be paid to turning what may work in principle into what can work practically. It is not clear how the reforms will lead to widespread positive change to employee relations or how the Government will have enough support and oversight to enforce some of the new rules. Whilst we recognise the desire to address a few bad actors, this should not at the expense of responsible employers and the wider economy.

Impact on businesses 

Question 6 - What impact will the areas covered by the Employment Rights Bill have on small, medium and large businesses?

49. As highlighted, the new framework must strike a balance between the needs of both employers and employees; ensuring any additional legislation put in place enables today’s workforce to deliver business goals while leading satisfying lives. Given the decline in growth and productivity the country has seen, it is critical that the employment rights agenda is informed by practical insights from a range of businesses to ensure there is a long-term positive outcome, especially at a time when many businesses are already struggling with higher wage bills and escalating costs.
50. Moreover, the Bill may hinder the Government's overarching goal of achieving economic growth by the end of this Parliament. Employers of all sizes may have a much smaller budget for pay rises, or in some cases, even need to make redundancies to offset the additional costs associated with the new regulations. The increased financial burden on businesses could directly impact their ability to invest in growth and job creation. Given the political and economic context, whilst we agree that alignment with other EU member states and high-growth countries will be crucial in maintaining a competitive edge for UK businesses, the Government must recognise that businesses are already grappling with considerable costly changes.
51. Despite this, in the long-term, we agree that reducing regulatory divergence increases the likelihood of attracting inward investment by presenting a more familiar regulatory landscape for investors from EU countries. A stable and harmonised legal environment inspires investor confidence, and by establishing employment regulations that align with EU norms, the UK can signal its commitment to fostering a business-friendly atmosphere. This, in turn, has the potential to drive economic growth, job creation, and greater prosperity in the long run.

Question 7 - What impact will these measures have on staff retention, hiring practices, probationary periods and wages?

52. Without a full assessment or sufficient information, the consequences of the proposed changes are unclear and need careful consideration, especially given the fragility of the economy at the moment.
53. As the Regulatory Policy Committee highlights[5], impact assessments are missing a comprehensive overview of the impact on businesses and associated risks, and inadequate monetisation in areas such as day-one unfair dismissal rights, trade union legislation reforms and flexible working. Furthermore, the direct impact on businesses does not account for potential wage adjustments or compensatory mechanisms that employers might use, ultimately affecting employees.
54. In some instances, alternative solutions have also not been explored. For unfair dismissal rights, the initial assessment has not explored options between the current two-year requirement and the proposed day-one rights in the Bill.  Nor, has there been here is no evidence to suggest that the length of the qualifying period serves as a deterrent for employees when considering a job change. Whilst reviewing the qualifying period is commendable, many in-house employment lawyers and other legal professionals have expressed a preference for a simpler approach, such as reducing the qualifying period to nine months (or whatever period is considered appropriate for the “initial period of employment”), arguing this would provide more clarity for everyone involved while addressing claims management concerns. A qualifying period of employment has existed since the introduction of the statutory right not to be unfairly dismissed in the 1970s and, as such, we believe is a concept that is likely to be familiar to, and accepted by, employers and employees alike.
55. In addition, removing the qualifying period altogether could have additional implications for certain demographics, such as, but not limited, to women returning to work after having children, individuals who have been out of work for an extended period, or younger applicants looking for their first role.  Such applicants may be viewed by employers as “riskier” hires in circumstances where an employer does not have the confidence that it will be able to manage the employee proportionately during the probationary period should things not work out.  Despite these concerns, there has not currently been a thorough review or comparative analysis of all the potential policy options for modernising dismissal rights.
56. Finally, all employers are aware that the effects on businesses and growth are ultimately felt by workers. Whilst most large employers are still trying to grasp the full implications of these measures. Small and medium businesses, particularly those without professional advisers or internal expertise, may face significant challenges navigating these changes.

Question 8 - How will other areas set out in the Plan to Make Work Pay impact businesses?

Question 9 - What impact will strengthened protections, such as day one rights, have on the hiring practices of businesses, UK employment rates and UK investment rates?

Question 10 - To what extent could the Employment Rights Bill cause businesses to offshore employment and continue with weaker workers’ protections abroad?

Economic growth and wealth creation 

Question 11 - How will the Plan to Make Work Pay impact: 

Economic growth?

Productivity levels?

Rates of investment?

Business start-up rates?

Supply of labour?

Employment levels?

Incomes?

Household wealth?

Question 12 - What solutions or actions are required by Government, businesses and workers to effectively support the labour market while boosting productivity and protecting workers’ rights?

57. As highlighted above, the Government should recognise that if the Bill as it stands is implemented, the already straining tribunal system will be under even further pressure. Data this year reveals that the backlog of cases in the employment tribunal system is worsening, with outstanding cases increasing by 18% compared to last year.
58. For proposals where the Government is not clear whether the outcome would be a significant improvement to compliance or the economy, it should consider whether the resulting outcome would be sufficiently impactful before adding even more pressure to the tribunal system.
59. One area largely missing from the Bill, that is the most important prerequisite to a strong, sustainable and satisfied workforce, is combatting ill health and improving peoples’ wellbeing. The number of people not working or taking time off due to ill health is at an all-time high, with 2.7million people out of work due to ill-health, an increase from 2.1 million pre-pandemic.
60. Whilst we understand that the Bill may not be the right place for mandating certain health provisions, we implore the Government to work with businesses who have taken great strides in improving occupational health to understand current gaps and opportunities for replication across the labour market. At Mitie, we proactively introduced carer’s leave and pledged support for those suffering from menopause and endometriosis following internal conversations with colleagues. We also have a free 24-hour virtual GP service for colleagues and those living in their households, we also offer enhanced psychological therapies through our Employee Assistance Programme (EAP), supporting colleagues with a range of mental health conditions, ranging from moderate to severe anxiety and depression to PTSD.
61. Prevention from ill health will be essential for boosting productivity and supporting our workers. Given this, we were pleased to see the Government’s Get Britain Working White Paper addressing the matter. We would recommend cross-department collaboration in reviewing employment reforms, ensuring we prioritise and invest in the most crucial areas for improvement moving forward.