Written evidence from the Association of Licensed Multiple Retailers (WOW 63)
 

The Association of Licensed Multiple Retailers welcomes the opportunity to submit evidence to the Business, Energy and Industrial Strategy’s inquiry into the world of work and rights of workers.

The ALMR is the UK trade body representing pubs, restaurants and nightclubs. By way of background, our 230 members operate around 23,000 venues employing over 650,000 staff. Our members range in size from independent single site operators to the largest national chains including well known brands such as Slug & Lettuce, Wetherspoon, All Bar One, Greene King, Café Rouge, Cote, TGIF and Carluccio's, Tiger Tiger, Walkabout and Ministry of Sound. Just under half our members are small independent companies operating 50 outlets or fewer under their own branding, predominantly high street casual dining restaurants and community pubs.

Market Overview

Licensed hospitality is one of the UK’s primary economic sectors and is a resilient part of the economy even through a recessionary period – adding jobs and increasing productivity and turnover over the last two years. The eating and drinking out industry makes a positive contribution to high streets and local economies in the following ways:

• Generating £66 bn in turnover – 6% of GDP and 8% of all UK firms
• Collectively, we are big business, but we are also an industry of entrepreneurs – 70% of licensed premises are SMEs
• Employing 10% of the UK workforce and generating 7% of all net new jobs
• Increasing the number of apprentices on the Licensed Hospitality Framework by 6% in the last year and 900% in the last 5
• Each outlet generates £209k GVA for its local economy
• Serving 20 million meals a week, 3.6 million cups of coffee and 15 million customers

We are a responsible employer and community stakeholder, keen to play our part in the challenges we face collectively as the economy grows its way out of recession – improving wages, tackling employment issues such as pensions and training and addressing social harms.

Answers to questions

1. Is the term 'worker' defined sufficiently clearly in law at present? If not, how should it be defined?

• What should be the status and rights of agency workers, casual workers, and the self-employed (including those working in the 'gig economy'), for the purposes of tax, benefits and employment law?

The current definition of 'worker' as set out in numerous pieces of employment legislation is sufficiently clear. It captures concisely and clearly the sorts of working arrangements that can and do exist between workers and employers without meeting the full criteria of employment. These definitions both reflect and have withstood a significant body of legal, judicial and political scrutiny and help to underpin the vital flexibility of the UK labour market. This flexibility, which benefits both workers and employees, has been largely responsible for the boom in job creation since 2010.

The ALMR believes that the current law around the status of agency, casual and self-employed workers is fit for purpose. Agency and casual workers have fewer obligations at work than employees and fewer duties and responsibilities towards their employers, while self-employed workers pay reduced rates of National Insurance and so do not qualify for all the benefits funded by the tax. There are benefits for both employers and employees in terms of flexibility and choice of work.

2. For those casual and agency workers working in the 'gig economy', is the balance of benefits between worker and employer appropriate?

Although the hospitality industry has utilised and will continue to utilise seasonal and casual labour, the ALMR does not consider the hospitality industry to be part of the 'gig economy' which is defined by total or near-total reliance on self-employed individuals. The vast majority of staff working in British pubs and restaurants are employees or workers and we believe that on the occasions where self-employed staff are used the current arrangements are adequate as they reflect the tax advantages accruing to self-employed individuals.

3. What specific provision should there be for the protection and support of agency workers and those who are not employees? Who should be responsible for such provision – the Government, the beneficiary of the work, a mutual, the individual themselves?

The ALMR believes that the current legal framework provides sufficient provisions to protect agency and other non-employee workers as evidenced by recent court cases which have seen rulings against employers. Abusive practices must be prevented and the current system provides sufficient protection to ensure this. The responsibility for such provision should remain the individual's, though there should not be – and we are not aware that there are any – impediments to a third party such as a union assisting an individual asserting their rights.

4. What differences should there be between levels of Government support for the self-employed and for employees, for example over statutory sick pay, holiday pay, employee pensions, maternity pay?

• How should those rights be changed, to ensure fair protection for workers at work?
• What help should be offered in preparing those people who become self-employed (with, for example, financial, educational and legal advice), and who should be offering such help?

The ALMR believes that the current system ensures fair protection for workers at work and therefore that no changes are needed to ensure this. The difference in legal status between employees and the self-employed is finely-balanced and reflects differing levels of obligations. Self-employed workers pay reduced rates of National Insurance contributions and so can receive significantly higher take-home pay than their employed colleagues for the same job. Because of this reduced tax contribution, they are unable to access every benefit funded by that tax. Self-employed individuals also have fewer obligations at work. The ALMR believes that the current arrangements benefit both employers and workers by providing greater labour market flexibility and allowing people to fit their careers around their lives as needed. This flexibility would be greatly diminished if all workers were required to be treated identically as, for example, individuals would lose the right to refuse work and be required to accept a significant tax increase.

If any specific assistance is offered to newly self-employed workers it should be provided by JobCentrePlus which has experience and knowledge of local and national markets and is well-placed to help self-employed workers. However, the ALMR does not believe that the provision of such training is necessary or desirable and would suggest that the government instead focus on expanding its efforts to inform and educate new entrepreneurs about the significant regulatory barriers that they will be facing as their businesses grow.

5. Is there evidence that businesses are treating agency workers unfairly, compared with employees?

We cannot speak for other sectors, but we have seen no evidence of abusive practices in pubs, bars, restaurants and nightclubs. Agency workers in the licensed hospitality sector are relatively well-paid compared to their employed colleagues – 91% of hospitality employers indicate that they pay agency workers average or above-average rates – and as there is strong competition for their services from hospitality venues there is no incentive for employers to mistreat them. The fact that a majority (54%) of employers have gone on to hire an agency worker as an employee reflects the mutual benefit enjoyed by both employers and workers by agency working.

6. Should there be steps taken to constrain the use by businesses of agency workers?

No. Agency workers are crucial to meeting shifting demand and the casual and seasonal employment patterns of agency work greatly benefit workers who would otherwise be unable to fit work around other commitments or responsibilities. Furthermore, agencies serve to pool demand for labour and therefore enable workers to access the maximum possible amount of work. An agency worker might work 4 shifts in a week, all in different venues; the agency ensures both maximum availability of work and a convenient and consistent point of interaction for the worker.

7. What are the issues surrounding terms and conditions of employees, including the use of zero-hour contracts, definitions of flexible contracts, the role of the Low Pay Commission, and minimum wage enforcement?

'Zero-hours contract' is not a legal term and is widely misunderstood and misused particularly in the popular press. A "zero-hours" contract is an arrangement with no fixed or guaranteed hours and commensurately no obligation to accept work when offered; nobody on such a contract could be classed as an employee. Where companies have attempted to treat zero-hours workers as employees, for example by disciplining them for refusing work, tribunals have consistently ruled that such interactions violate the requirement that zero-hours workers must be able to refuse work without consequence. The contracts are widely, beneficially and successfully used by a variety of businesses in the licensed hospitality sector. They benefit both workers and employers by providing greater labour market flexibility and allowing people to fit their careers around their lives as needed. Since the banning of exclusivity clauses and detriment resulting from other employment in 2015, the major problems associated with the contracts have been eliminated and research shows that a significant majority (66% in 2016) of zero-hours workers are satisfied at work, only slightly below the figure for permanent staff (68%).

The Low Pay Commission's role is to recommend to government the level of statutory wage rates that will not negatively impact employment. We are particularly pleased that the government has acknowledged this once again with the announcement in the Autumn Statement that the LPC has been given control over the level of the National Living Wage. The ambition of 60% of median earnings by 2020 will be extremely difficult for many businesses and it is heartening to know that any adjustments will be free of short-term political interference.

The current minimum wage enforcement regime is effective and has successfully driven down non-payment in recent years. A National Audit Office investigation in 2016 found that "In 2014-15, HMRC received 3,180 referrals (worker complaints and third party intelligence), a 40% increase from 2013-14. However, for the period April to December 2015, this trend has reversed with 1,340 referrals compared to 2,327 for April to December 2014, a 42% reduction. The volume of intelligence from third parties has also reduced by the same proportion from 485 to 281. Third party calls are 21% of the total number of referrals." Funding for enforcement is now 147% higher than in 2010 (£20m from £8.1m). HMRC is now covering twice as many workers and over £1.6m of penalties were imposed compared to £0.9m in 2014-15.  Penalties have increased every year since their introduction in 2009 regardless of the number of workers covered or the average amount of arrears identified. The NAO further recognised that "Both BIS and HMRC are cautious in using prosecutions as a sanction because they believe that criminal sanctions against companies mean that employees, the ultimate beneficiaries, end up waiting longer for their arrears to be paid back, or may not receive the arrears at all if prosecution puts the company out of business. Both Departments question whether prosecutions provide value for money because of the cost of court proceedings."

8. What is the role of trade unions in representing the self-employed and those not working in traditional employee roles?

This is not an area of particular relevance to our organisation; hence we shall not tender an opinion.

December 2016