Monday 16th June 2025
(4 weeks ago)
Lords ChamberEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 81-IX(Corrected)(b) Amendments for Committee (Supplementary to the Corrected Ninth Marshalled List) - (16 Jun 2025)
Lord Sharpe of Epsom
“(3A) A person may not be appointed as an enforcement officer under this section unless they—(a) possess professional qualifications relevant to the enforcement of labour market legislation;(b) have undergone prescribed training in the exercise of statutory powers, including rights of entry, inspection, and seizure.”Member’s explanatory statement
This amendment ensures that enforcement officers possess appropriate professional qualifications, training, and suitability.
Lord Sharpe of Epsom (Con)
I will speak to Amendments 263ZA, 263ZB, 263B, 263C and 271ZA in my name. I will also briefly refer to Amendments 268 and 271 tabled by my noble friend Lord Holmes of Richmond who sends apologies that he cannot be here this evening.
Amendments 263ZA and 263ZB go to the heart of what it means to enforce employment and labour rights in a manner that is consistent with the values of competence, fairness and democratic accountability. They correct a notable deficiency in the current drafting of the Bill and help to align the enforcement regime with the expectation of the workers it is meant to protect and the legal and moral standards of the state that commissions that protection. The role of an enforcement officer is not merely administrative. It is a position of public authority. It carries with it the power to enter workplaces, examine records and question individuals and in some circumstances to impose sanctions or refer matters for prosecution. These are not trivial tasks. They are functions which, if carried out poorly, inconsistently or abusively, can cause serious harm, not only to employers but to vulnerable workers who may already be in a precarious or marginalised position.
Under the clauses currently drafted, there is no explicit requirement for enforcement officers wielding these powers to possess any formal qualifications or specific training. That silence is troubling and perplexing. We would not allow an environmental health inspector to carry out food safety inspections without the requisite public health training, we would not permit a planning enforcement officer to issue legal notices without understanding the statutory framework in which they operate, yet here we are contemplating giving substantial and often intrusive powers to individuals without requiring that they meet even a basic threshold of professional competence. This amendment seeks to address that omission in a way that is clear, proportionate and entirely consistent with how enforcement is handled in other regulatory spheres. It is not enough to presume that competence will arise through experience alone or that the Secretary of State will voluntarily set high standards through policy or guidance. Experience in other areas has shown that when qualification and training requirements are not embedded in statute, they become vulnerable to erosion, particularly when budgets are tight or political pressures arise.
The second amendment proposing new subsection (4A) is of equal importance. It would require the Secretary of State to ensure that enforcement officers maintain records of all enforcement actions, that they provide written notice to the persons affected by those actions explaining the reasons for the intervention and that they submit activity reports to an independent oversight body. Again, this is not a matter of administrative detail but a fundamental principle. Enforcement that is opaque is enforcement that is liable to error, inconsistency and, in the worst cases, abuse. The powers under this part of the Bill are extensive and potentially disruptive. They can lead to business interruptions, reputational damage and personal distress. For these reasons, it is only right that enforcement activity be recorded, explained and subject to independent scrutiny.
The requirement to maintain accurate records of enforcement action is essential not only for the protection of those being investigated, but for the proper functioning of the enforcement system itself. Without such records there can be no effective auditing of performance, no analysis of systemic trends and no evidentiary basis for defending an action should it be challenged in the employment tribunal or the courts. Similarly, the obligation to provide written notice to those affected by enforcement actions is a basic requirement of procedural fairness. It ensures that individuals and businesses understand why a given action was taken and gives them the opportunity to challenge it if they believe it to be unjustified or disproportionate. It is a protection against not only state overreach, but the perception of arbitrary or unfair behaviour by agents of the state. Perhaps most importantly, the requirement for regular reporting to an independent oversight body injects an essential layer of democratic accountability into what is otherwise a closed executive process.
The oversight body would not be tasked with micromanaging individual cases. Rather, its function would be to ensure that the enforcement regime as a whole operated in a manner consistent with the rule of law, with proportionality and with respect for the rights of those subject to state power. The amendments would protect businesses from inconsistent or poorly executed interventions, and they would protect the integrity of the enforcement regime itself from reputational damage and legal challenge.
Lord Stoneham of Droxford (LD)
My Lords, my noble friend Lord Goddard is disappointed that he is unable to speak on this group this evening. Given the multiple groups of amendments concerning the fair work agency, we will restrict our comments to this group. The Department for Business and Trade has set out the rationale for the fair work agency, suggesting the current system of employment rights enforcement is fragmented and inefficient. We agree. This fragmentation causes confusion for both workers and employers and leaves many breaches, such as underpayments, unchallenged. The Bill aims to establish the fair work agency and will consolidate existing bodies responsible for enforcement, abolishing those authorities and transferring their functions.
However, there remains some uncertainty about the agency’s precise scope and responsibilities, how it will relate to existing organisations, the level of funding it will receive, how it will access and use data, and the mechanisms for compliance and oversight. Although the Bill includes data-sharing provisions and the Minister has highlighted further detail, these issues will be key in determining the agency's effectiveness.
On powers and oversight, many enforcement powers currently held by other bodies will be transferred to the fair work agency, including powers of entry. New powers, particularly in relation to HMRC, will also be introduced. Oversight of these powers is planned to be provided through independent policing standards authorities, but it is important that the limits to these powers are clear and that they are exercised proportionately.
Regarding resourcing, it is understood that around £600 million is currently allocated across the authorities being restructured into the new agency. I am sure that discussions with the Treasury on the appropriate level of funding are ongoing, but is the Minister confident that this figure will provide the resources needed to meet the scale of the agency’s mission?
Bringing enforcement functions together in the fair work agency should improve the Government’s ability to tackle labour market abuses, including serious issues such as modern slavery. It is also acknowledged that previously, fragmented responsibilities caused confusion, duplication and ineffective enforcement, so this consolidation aims to provide a clearer, stronger enforcement framework.
I will not speak at length on the amendments put forward by the noble Lord, Lord Carter, but what he said was very wise. He raised important questions about the advisory board’s composition and enforcement powers which deserve further consideration by the Minister and the Government. Given the wide-ranging powers the agency will have—from workplace inspections to civil penalties and criminal enforcement orders—it is only right that Parliament has a clear opportunity to scrutinise how these powers will be used in practice.
Before the agency becomes operational, there should be clarity around its remit, resourcing and relationship with other enforcement bodies, and around the structures of accountability that will apply. This is particularly important for small and medium-sized businesses, which often lack the internal capacity to navigate complex regulatory frameworks. Advance scrutiny and a clear published framework would offer reassurance to both workers and employers that the agency’s approach will be proportionate and well targeted. We would welcome the Minister’s further explanation of how the Government intend to maintain transparency and accountability, to ensure balanced representation on the advisory board, and to keep Parliament informed throughout the phased implementation of the fair work agency.
Finally, I seek clarity on the Government’s timeline for the agency’s full implementation and how they plan to keep Parliament updated on progress. These are significant institutional changes and deserve close attention. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I am grateful to all noble Lords who have tabled amendments in this group, all of which pertain to the governance of the fair work agency and its relationship with government. While I appreciate and respect the spirit in which they have been made, I must set out why the Government do not believe they are necessary or appropriate.
Amendment 263ZA in the name of the noble Lord, Lord Sharpe, has good intentions; however, in practice, it introduces unnecessary rigidity into a system that already works effectively. Currently, enforcement officers undergo extensive training; for example, HMRC officers complete an 18-month programme that equips them with the skills and knowledge they need. This is a robust and proven process. There is no evidence that adding a legislative requirement for qualifications would improve outcomes. Moreover, this amendment would reduce flexibility. It would impose a legal burden that could hinder recruitment, especially when enforcement needs evolve rapidly. Finally, it is important to note that Clause 87(6) already gives the Secretary of State the power to specify which powers an officer may exercise in the appointment. This ensures appropriate oversight and safeguards without the need for additional legislation.
Similarly, Amendment 263ZB, also tabled by the noble Lord, Lord Sharpe, is, in practice, unnecessary and creates duplication. The powers granted under the Bill already require enforcement officers to provide written notices such as a notice of underpayment. These are not optional; they are embedded in the operational framework. Moreover, current enforcement bodies such as the Employment Agency Standards Inspectorate already maintain detailed records of inspections. Officers also operate with a strong emphasis on consent and co-operation, often arranging visits in advance and documenting their findings thoroughly. Introducing a statutory requirement for additional reporting and oversight risks creating administrative burdens without adding meaningful value. It could divert resources away from enforcement and into bureaucracy. This amendment seeks to legislate what is already standard practice; it is not needed in the Bill, and I urge noble Lords to reject it.
Turning to Amendment 263C, the Bill already provides limitations on what powers officers can exercise through letters of appointment. I appreciate the noble Lord’s desire to ensure that enforcement officers exercise powers in a way that minimises disruption and harm to individuals and businesses, particularly as they will be extensive powers. This includes their powers to enter premises to determine whether there has been non-compliance. However, while these powers are by nature disruptive, they will be required to be exercised proportionately and reasonably, and, where possible, officers will carry out their duties on a consensual basis. In practice, this means officers will correspond with a business in advance to arrange a reasonable time and date before they visit, and they will also generally enter during business hours.
It is also worth noting that we are setting up the fair work agency as an executive agency of the Department for Business and Trade. Enforcement officers will therefore be civil servants who are subject to the usual standards of public life and will be required to operate in line with the Civil Service Code. The fair work agency will take a balanced approach to carrying out its role. This is in everyone’s interests.
Baroness Verma (Con)
I want to ask the Minister a question. It may be that I have missed the answer, although I have tried really hard to listen to every word that she has said. If a business wants to appeal against a decision by an enforcement officer, where does it seek that appeal?
Baroness Jones of Whitchurch (Lab)
I did cover that, but now I have forgotten what my answer was. I will write to the noble Baroness, but I think it was in my earlier contribution.
I reiterate on the small business question that businesses that comply with their obligations should not see any increased burden from enforcement activity. The fair work agency will target only the minority of employers engaged in illegal practices, so including specific carve-outs could create loopholes that bad actors might exploit. In fact, businesses of all sizes stand to benefit from a fairer labour market where exploitative practices are actively addressed as this will create a level playing field for all.
Let us not forget that we are creating the fair work agency to deliver an upgrade to the enforcement of workers’ rights. If we created a carve-out for businesses based purely on size, we would be creating a two-tier system for enforcement. This is unfair for workers and businesses.
Amendment 268 risks compromising the balanced representation of the advisory board. The current drafting has been carefully chosen to reflect the social partnership model that has served the Low Pay Commission and ACAS well for many years. The noble Lord, Lord Sharpe, asked on behalf of his noble friend Lord Holmes whether representatives of labour market standards would be on the advisory board. The Secretary of State will appoint individuals if they are considered to be independent experts. That recruitment and selection process will include a thorough assessment of the applicant’s qualifications, experience and potential conflicts of interest.
Vulnerable workers have been waiting for the fair work agency for years. It will deliver the worker protection enforcement authority that was proposed in the Liberal Democrat 2024 manifesto and the single enforcement body that was the policy of successive Conservative-led Administrations. It now forms a key plank of the plan to make work pay, a key manifesto pledge upon which this Government was elected. Bringing together the fragmented labour market enforcement landscape has been a policy aim for successive Governments. We cannot let this critical policy be delayed any more. I therefore ask the noble Lord to withdraw Amendment 263ZA.
Lord Carter of Haslemere (CB)
I am very grateful for what the Minister said in response to my amendments. I think she said that the framework document will state that enforcement officers will have complete operational independence from Ministers, which is reassuring to know. Presumably, therefore, it would be possible for the terms of appointment of enforcement officers under Clause 87(6) to state the same thing. Clause 87(6) states that:
“A person appointed under this section may exercise any powers of an enforcement officer to the extent specified in the appointment”.
There is another perfect place in which to reassert that they are operationally independent of the Secretary of State.
Baroness Jones of Whitchurch (Lab)
I said earlier in my contribution that the letters of appointment made to these people will spell out their duties. Obviously, their relationship to the Secretary of State will be spelled out in the letter of appointment. I have said several times now that they will be operationally independent, so that could be a key message in those letters of appointment.
Lord Sharpe of Epsom (Con)
I am very grateful to the Minister for her extensive answer and to my noble friends Lady Noakes and Lady Coffey, the noble Lords, Lord Carter of Haslemere, Lord Londesborough and Lord Stoneham, for their contributions to this short but very interesting debate.
As we come to the end of our discussion on these amendments to the Employment Rights Bill, I express my thanks to noble Lords who have contributed with such clarity and conviction and my disappointment with the Government’s response. Amendment 269, tabled by my noble friend Lady Noakes, fits very neatly with the requirement on the Secretary of State to produce annual reports under Clause 92. The Secretary of State has a duty to consult the advisory board, so I simply cannot understand why the Government would reject the idea of just combining the two and getting on with it. Equally, I do not understand why they would not want to take the suggestions of my noble friend Lady Coffey to tighten up the requirement. Nothing under those terms for the advisory board or the reports that need to be produced by the Secretary of State require a great deal of external information.
We have tabled amendments that are measured, constructive and rooted in principle. We have not sought to gut the Bill or to frustrate its aim of enforcing fair and lawful treatment in the labour market. On the contrary, we have sought to strengthen it and to ensure that the powers that it grants are effective and accountable, that enforcement is robust and fair and that ordinary businesses, especially small and micro enterprises, are not crushed under the weight of uncertainty, disproportionate penalties or faceless bureaucracy.
The noble Lord, Lord Carter, made excellent points about accountability. Enforcement is about not just force but legitimacy. It is about trust, and trust is only sustained when those who wield power are subject to oversight, transparency and to reasonable limits. That is not red tape. It is just a democratic principle. That is why we ask for qualifications and training to be made a prerequisite for enforcement officers, an obvious step given the serious powers that they will be entrusted with.
The Minister rejected my amendment introducing that notion, saying that it was not necessary because of Clause 87(6), just referred to by the noble Lord, Lord Carter. I note that Clause 87(3) says:
“In this Part ‘enforcement officer’ means a person appointed by the Secretary of State under this section”—
note that it says, “a person”, not necessarily “a qualified person”—whereas Clause 87(6), on which the Minister replied, says:
“A person appointed under this section may exercise any powers of an enforcement officer to the extent specified in the appointment”.
As the noble Lord, Lord Carter, informed us, there is no notion in there of independence, skills or anything else. That argument as to why our amendment is not necessary falls based on what is in the Bill.
Baroness Jones of Whitchurch (Lab)
Just before we move on, I wanted to clarify to the noble Baroness, Lady Verma, that I have now found the note in my speaking notes. I confirm that I did say that the fair work agency will have a clear and transparent complaints procedure modelled on the procedures of the current bodies, including the Gangmasters and Labour Abuse Authority.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
I advise the Committee that if this amendment were agreed to, it would not be possible for me to call Amendment 264A for reason of pre-emption.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendment in this group and for her introduction. I will speak to Amendments 266 and 267 in my name. These amendments are not presented in opposition to the spirit or general objectives of the Bill. Indeed, we fully support the aims of enforcing employment rights and ensuring that bad employers do not undercut fair ones. These amendments respond to a real and serious concern about the breadth of the power that the Bill currently gives to Ministers—a power that, if left unchecked, would allow a future Government to expand the remit of the fair work agency with far-reaching consequences but only the most minimal parliamentary oversight.
Paragraph 35 of Schedule 7 allows the Secretary of State to add to the list of enactments that fall under the enforcement remit of the fair work agency by way of regulations. That list, set out in Part 1 of Schedule 7, includes a range of statutory rights covering pay, working time, sick pay and protections against exploitation. The current drafting allows for the addition of any enactment that relates to employees, workers, employers or trade unions. That is an extraordinarily broad formulation. It would allow the Secretary of State to bring into the fair work agency’s scope virtually any area of employment or labour law, potentially even those governing union recognition, industrial action or collective bargaining, by secondary legislation and with no meaningful boundary in statute.
Amendment 266 seeks to address this by narrowing the scope of this delegated power. It would limit the types of enactments that can be added to those that relate to hours, pay or holidays. These are, after all, the core minimum terms and conditions of the employment relationship. They are well understood, capable of objective enforcement and already subject to statutory minima in other parts of the Bill. They also reflect the matters over which the recognised trade unions typically have statutory bargaining rights. There is, therefore, a clear and principled rationale for limiting the fair work agency’s enforcement jurisdiction to these domains.
We put forward this amendment on the grounds that it is both reasonable and proportionate. It would still allow Ministers to respond to emerging issues in labour markets, such as new forms of pay abuse or evasion of working time rules. It would, however, prevent this power being used to draw the FWA into controversial or contested areas of employment law, or into territory where individual enforcement through tribunals is more appropriate than systemic enforcement by a regulator. It would preserve the coherence of the agency’s function and protect against mission creep over time.
We anticipate that Ministers will argue that this amendment is too prescriptive and does not allow sufficient flexibility to bring in related rights that may not neatly fall into the categories of pay, hours or holidays, but that are none the less important for fair work—for example, information rights, certain protections from detriment or emerging contractual abuses not yet addressed by current law. The Government may say that drawing such hard lines in primary legislation is undesirable and that a degree of discretion is necessary for effective future-proofing.
If the Government do not accept Amendment 266 on the grounds that it is too narrow, it follows that the strength of Amendment 267 becomes even more essential. This amendment would require that any regulations made under paragraph 35 be subject not merely to the affirmative resolution procedure but to the super-affirmative resolution procedure, which I know the noble Baroness, Lady Jones, is fond of, as defined in Section 18 of the Legislative and Regulatory Reform Act 2006.
The super-affirmative procedure is not some theoretical or obscure mechanism. It exists precisely for circumstances such as this, where Parliament grants the Executive a broad power to amend the application of primary legislation by secondary means. The procedure ensures that Parliament is properly consulted, that draft regulations are subject to scrutiny before they are laid and that there is an opportunity for representations to be made, considered and reflected in the final statutory instrument.
The two amendments offer a choice. If the Government agree with us that the power to amend Schedule 7 should be tightly confined, they can accept Amendment 266. If they prefer to retain flexibility, they must accept that that comes with the responsibility of subjecting that power to a higher standard of parliamentary scrutiny, in which case Amendment 267 is the minimum safeguard necessary. What would be constitutionally unacceptable is for the Government to reject both amendments, leaving in place a broad and undefined power exercisable by ordinary affirmative resolution. That would be to hand the Executive a blank cheque over the shape and scope of labour-market enforcement in this country, without adequate safeguards in place.
To conclude, I urge the Government to consider carefully the implications of paragraph 35 as currently drafted. It is not enough to say that Ministers do not intend to use this power in a wide-ranging or politically contentious way. We are legislating not just for the current Secretary of State but for future ones, too. If the Government want discretion, Parliament must have oversight, and if they want latitude, we must have safeguards. The amendments give the Government the opportunity to make a choice: define the limits of this power clearly or accept the heightened scrutiny that wide powers properly demand.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for tabling Amendment 264ZA, which concerns the fair work agency’s remit. I also thank the noble Lord, Lord Sharpe of Epsom, for Amendments 266 and 267, which seek to alter the delegated powers in Part 2 of Schedule 7.
Amendment 264ZA would seriously restrict the fair work agency’s ability to tackle labour exploitation of a more serious nature where the threshold does not meet the requirement under the Modern Slavery Act. There are no other enforcement provisions in the Bill that would cover this scenario. Currently, a number of Gangmasters and Labour Abuse Authority investigations have to be abandoned when the modern slavery threshold is not met. Since 2023, 104 cases have been dropped. That is bad for labour abuse victims and for taxpayers.
We are adding elements of the Fraud Act to the fair work agency’s remit precisely to address this issue. It will allow the fair work agency to investigate cases of financial fraud by abuse of position. That has specifically been included within the Bill following extensive discussions with stakeholders, including the Gangmasters and Labour Abuse Authority and the Home Office. Removing the Fraud Act offences from the fair work agency’s scope would truly limit the agency’s effectiveness, and I must therefore respectfully resist this amendment.
Amendment 266, tabled by the noble Lord, Lord Sharpe, would drastically narrow the scope of the power. This would undermine the very purpose of the fair work agency, which is to simplify and consolidate the enforcement of labour market legislation. The fair work agency will be greater than the sum of its parts as its remit is further expanded. This will relieve pressure on a struggling employment tribunal system, which I have heard many times from noble Lords across the aisle.
The power to expand the fair work agency’s remit has appropriate safeguards and limitations. Any expansion of its scope will be informed by the advice from the agency’s tripartite advisory board, and with consideration of the overall enforcement strategy. Furthermore, any changes to the remit will be through affirmative-resolution regulations that will be laid before Parliament and, where relevant, will require the consent of the relevant Northern Ireland department. This power is crucial to the long-term flexibility of the fair work agency. By enabling the remit to expand over time, it can respond to developments in the labour market. If we were to restrict the power to such a narrow range of issues, we would be tying our own hands.
Amendment 267, also in the name of the noble Lord, Lord Sharpe of Epsom, would require that a super-affirmative resolution procedure be used when the Secretary of State exercises the delegated power in Part 2 of Schedule 7. In my almost three years in this House when the party opposite was in government, I never heard them bring any super-affirmative resolution in any of the Bills they brought before this House, so I do not understand the sudden change of heart.
This amendment is unnecessary. The Bill provides for appropriate parliamentary scrutiny as use of this power will be subject to the affirmative resolution procedure. I also highlight that the recent report by the Delegated Powers and Regulatory Reform Committee did not raise any concern with this power as currently drafted. The additional scrutiny this amendment calls for would place unneeded burdens on parliamentary time, which is currently stretched. With this point in mind, I ask the noble Baroness to withdraw Amendment 264ZA.
Member’s explanatory statement
This amendment is consequential on the definition of “worker” being inserted into Part 5 by my amendment of clause 148 at page 147, line 9.
Baroness Jones of Whitchurch (Lab)
My Lords, I beg to move Government Amendment 264A, and will speak to Government Amendments 265A, 271A, 272A, 273M, 273P, 273S, 279A, 279B, 279C, 279D, 279E, 279F and 279G. I thank all noble Lords who attended the all-Peers briefing on these amendments that I gave on 8 May. As was explained at that time, the amendments aim to make the creation of the fair work agency effective, including by ensuring a smooth transition from the current arrangements, and they are not new policy.
Without the correct information-sharing gateways, the fair work agency will not be able to do its job; Clause 132 is vital to making sure that it can. Government Amendment 273M makes a minor drafting change to Clause 132(3). Specifically, it clarifies that information obtained by the fair work agency in connection with an enforcement or civil proceedings function under Part 5 of the Bill can be used for other functions under Part 5. This change ensures that the benefits of bringing together responsibility for enforcing a range of rights are fully realised.
Government Amendment 273P adds the Security Industry Authority to the list of persons in Schedule 9. This will enable the fair work agency enforcement officers to disclose information obtained under the enforcement functions in Part 5 of the Bill with the Security Industry Authority, where that information relates to its statutory functions. Any disclosure will be subject to other restrictions in the Bill and existing safeguards. For example, a disclosure will not be authorised under Clause 132 if it would constitute a breach of data protection legislation or is otherwise prohibited by certain provisions of the Investigatory Powers Act 2016.
Government Amendment 279A clarifies that the information captured by the definition of “HMRC information” in Clause 134 will be subject to appropriate safeguards regarding onward disclosure where specified conditions are met. This will ensure that there will be continuity as we set up the fair work agency and that all information is handled with the appropriate sensitivities.
Government Amendment 271A is a minor technical amendment to Clause 111. It sets out that where a liable party has failed to comply with the requirement in a notice of underpayment to repay arrears to an individual, the fair work agency can make an application to court for an order. Sub-paragraph (6) defines “a court” for the purposes of this section. This amendment clarifies that summary sheriffs can also have jurisdiction to hear these applications in Scotland.
Baroness Jones of Whitchurch (Lab)
My Lords, I agree with the noble Lord that in good legislative processes it is not ideal to have technical amendments at this stage. However, it is better to identify them now rather than later in the process, and we have bent over backwards to engage Peers to explain why they are necessary. In a previous role on the Opposition Benches, I spent a lot of time in secondary legislation sessions correcting technical issues that should have been identified in primary legislation by the previous Government, but that debate may be for another day. In the meantime, of course we aspire to better legislative processes in future, and I agree with the noble Lord. I beg to move.
Member's explanatory statement
This amendment is consequential on the definition of “worker” being inserted into Part 5 by my amendment of clause 148 at page 147, line 9.
Baroness Coffey (Con)
My Lords, I will also speak to Amendments 267ZA, 267AA and 267AB in my name in this group. Schedule 7 tries to bring together a whole bunch of legislation in a meaningful and sensible way so that it can handily be used in future. I could have extended some of these amendments, but I decided to focus Amendment 266A on paragraph 35(5)(b) of Schedule 7, which relates to Clause 89 on the delegation of functions. I could have considered a whole number of these, because this is a classic Henry VIII clause—put something in primary, shove something through regulations and, hey presto, a whole Act can change before our very eyes. In particular, Clause 89(6), which I address in Amendment 267AB, stood out to me.
My concern is that we start off with this agency, the enforcement officers and all these different things, but Clause 89(1) says:
“The Secretary of State may make arrangements with a public authority”.
I do not think “a public authority” is defined anywhere else in legislation at all. This is the first time I have seen it defined, as
“a person certain of whose functions are functions of a public nature”.
That could be a whole bunch of people. What does it really mean? Are they seeking to act in the public interest, or in a different way?
The Explanatory Notes do say what they are, but, as the Minister and the Committee will know, they are not part of legislation. One of the reasons for bringing this out is to try to understand from the Minister precisely what it means. The consequence of these bits of the legislation is that, by statutory instrument, this novel area that we are getting into could be changed very quickly, away from what might have seemed a sensible agency, though I appreciate that the noble Lord, Lord Carter of Haslemere, would rather have operational independence.
This is why I have peppered through my amendments in this group the very specific point that it should be a public authority that has civil servants in it and is not a non-ministerial department. I think that there are about 24 non-ministerial departments. Perhaps really only two—the Supreme Court and the Crown Prosecution Service—should be non-ministerial, recognising the accountability that, understandably, Parliament and the public expect.
The difference of a non-ministerial department is that it is accountable to Parliament. The device to do that is principally through the Select Committee in the House of Commons, perhaps the Public Accounts Committee, not so much in the House of Lords. Therefore, significant parts of the work being done are left to an occasional accountability meeting, whereas if civil servants are not in a non-ministerial department, the Secretary of State is directly responsible and can be held to account by Parliament and can hold those civil servants to account. I am therefore very nervous about how easy it will become to change Clause 89(6) and what that then means. It would be better for the Government to have more in the Bill about what it is.
As we are starting to get into Part 5, could it be that the public authority starts to become not-for-profit groups of solicitors who start to have these enforcement functions? Could arms of trade unions suddenly start enforcing and be able do all these different elements and to take employers to court so this starts to spread? The reason for my amendments is to try to get better legislation about what this is supposed to be. I am desperately trying to make sure that the only people to whom these things can be delegated will be civil servants who honour what the Government have set out in Part 5 and that the variety of enforcement officers and the fair work agency will be directly accountable and have the executive powers of the Secretary of State. That can be done only if people are civil servants and they are not in a non-ministerial department. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendments that comprise this group, and I speak in support of them. They bring much needed clarity and constitutional discipline to the question of to whom the Secretary of State may delegate important public functions.
Clause 89, as drafted, grants the Secretary of State, as my noble friend has explained, broad discretion to delegate enforcement and other key responsibilities to a public authority. However, the current definition of that term is overly expansive. It could include not only departments under direct ministerial control, but also non-ministerial departments and other bodies with a degree of operational independence from the Government, which raises fundamental issues of accountability.
If enforcement powers, which could be potentially intrusive and far-reaching, are to be delegated, they should be exercised by those within the direct chain of ministerial responsibility. They are civil servants who operate under the authority of Ministers and who are, in turn, accountable to Parliament. Amendment 267ZA, therefore, rightly confines the scope of Clause 89 to public authorities that are comprised of civil servants and are not non-ministerial departments. That would ensure such functions are not handed to bodies that lack clear ministerial oversight or democratic accountability.
Amendment 267AA serves as a necessary consequential safeguard because it ensures that any legal substitution of the Secretary of State with another authority in the eyes of the statute is similarly limited to such core public bodies. Without this clarification, we risk a situation where statutory references to ministerial powers are extended, potentially without scrutiny, to entities with a more ambiguous constitutional status. This is not about casting aspersions on the competence or integrity of non-ministerial departments. Many do good work, but they are deliberately designed to operate at arm's length from Ministers. They should not be the recipients of powers that the public rightly expects to be exercised under ministerial responsibility.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for Amendment 266A, 267ZA, 267AA and 267AB.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lords, Lord Sharpe and Lord Jackson, and the noble Baroness, Lady Noakes, for tabling their amendments. This Government are committed to ensuring a fair playing field for all employees and businesses. This is why the Secretary of State will have the power to bring proceedings in place of a worker: it will mean that all employers are held to the same standards.
Amendments 267A, 271B, 271C and 272ZA have been tabled by the noble Lord, Lord Sharpe of Epsom. While I appreciate the noble Lord’s intentions behind them—seeking fairness, clarity and accountability—I believe that they undermine those objectives. I have major concerns about Amendment 267A. A fundamental principle of the fair work agency is that it will have operational independence. As we have debated, the Secretary of State’s involvement will be at strategic level only. This amendment would undo all that; it would explicitly make any use of the civil proceedings powers dependent on a political decision. This goes against the whole thrust of what we have been debating up to now, and we therefore cannot support the amendment.
Amendment 271B would exclude legislation, such as on family leave, unfair dismissals or redundancies, from the scope of this power. These issues can have a substantial impact on people’s working lives and they are part of the employment package. It is right that the fair work agency has the discretion to support enforcement in these areas and to ensure that employees get what they are entitled to.
Amendment 271C is unnecessary. The Bill already builds in appropriate safeguards to prevent cases being relitigated. In considering whether a worker will bring proceedings, the Secretary of State will have to consider whether a worker has already contacted ACAS. If they have, it would serve as a strong indicator that they are contemplating proceedings. Therefore, where a settlement is being discussed, or has already been reached through ACAS, it is highly unlikely that the Secretary of State would pursue a claim. This amendment would create a rigid prohibition that may have unintended consequences. The Government would be restricted from acting where new evidence shows that a settlement was reached under duress.
On Amendment 272ZA, tabled by the noble Lord, Lord Sharpe of Epsom, the Bill already makes it clear that any reference to a worker in proceedings brought by the Secretary of State should be read as including the Secretary of State. In practice, this means that, while it is for the tribunal to decide whether or not to award costs, a costs order could be made only in respect of a party to the case. This would be the Secretary of State, where they are the party that has brought this case. Therefore, this makes this amendment unnecessary.
On Amendment 272, tabled by the noble Baroness, Lady Noakes, in the worst cases of serious exploitation and intimidation, a worker may want to bring proceedings but fear the repercussions they may face from the employer should they be de-anonymised. Allowing the Secretary of State to take a case forward without consent would make it harder for employers to attribute blame to individual employees and also ensure that action could be taken against exploitation. Ultimately, I agree with the noble Baroness that this will take place only in exceptional circumstances, not least because it is more difficult to argue a case without the assistance of the worker. Nevertheless, where there is a breach of employment rights, there should be consequences. The fair work agency will decide the most appropriate route of enforcement, and it is important that in the most serious cases we allow this power as an option.
Finally, on the Amendments to Clause 114 from the noble Lord, Lord Jackson, the existing drafting of Clause 114 states:
“The Secretary of State may assist a person”.
This drafting was carefully thought through and is deliberately broad and inclusive. It includes both natural and legal persons, so it already covers both employers and their legal advisers. This amendment does not alter the substance of the clause, but merely restates what is already covered and therefore risks introducing confusion.
On the noble Lord’s Amendment 272C, Clause 114 has been carefully monitored against the provisions found in Section 28 of the Equality Act 2006, which also provides for any other form of assistance. This language has been used to ensure flexibility and inclusivity in the types of support that may be provided. This is neither novel nor excessive and is limited to assistance in the context of civil proceedings. To narrow the clause in the way this amendment does would compromise its effectiveness and undermine its accessibility. On that basis, I hope noble Lords will not pursue their amendments and I ask the noble Lord, Lord Sharpe, to withdraw his Amendment 267A.
Lord Hunt of Wirral (Con)
My Lords, I thank my noble friend Lady Noakes for providing an important guardrail: the idea that the Secretary of State has to pass a public interest test. I do not think the Minister gave us a direct answer to that suggestion. So far as my noble friends Lady Coffey and Lord Jackson of Peterborough are concerned, there are huge concerns about the way this will affect small businesses in particular. Again, I do not think the Minister addressed that particular point. I regret the fact that the Minister has not acknowledged the importance of these significant gaps in the Bill.
It is concerning that the challenges inherent in delegating the Secretary of State’s enforcement functions to others who may lack the necessary competence or accountability are not being fully recognised at the present time. How does such delegation genuinely serve the interests of workers if it risks inconsistent decision-making and a lack of clear responsibility?
Moreover, the Bill fails to address the very real issue of claims that have already been settled. Employment tribunals are already struggling with an overwhelming backlog, and reopening settled cases would only exacerbate this problem. Surely, we have got to avoid a situation where the Secretary of State is empowered to reopen disputes that workers and employers believed were finally resolved. This not only causes unnecessary anxiety and uncertainty for all parties involved but threatens to damage the fragile trust and relations between employers and employees. If this Bill is to be truly effective and fair, it has got to acknowledge these realities: —ignoring them will only undermine the very goals it seeks to achieve. In the meantime, I beg leave to withdraw the amendment.
Baroness Coffey (Con)
My Lords, I shall speak also to Amendments 267BA, 267BB and 267D in my name. This is where we get to the composition of the board. In this group of amendments, the most important that I have tabled is probably Amendment 267D. It would remove the words “trade unions” but would insert “employees”. I am conscious that, of course, trade unions represent employees, but I was surprised by the composition of the board: that the word “employee” did not turn up as to who the members of the board were supposed to represent. To that end, one reason why I laid Amendment 267D is that we should remember that only 22% of UK workers belong to a trade union. That leaves 78% who, at the moment, may not necessarily be represented in the consideration of the advisory board. I think it is important that we rectify that.
It is possible that independent experts and others may be involved. By the way, this happens on a variety of other bodies—I think it is so on the Health and Safety Executive. Usually, the organisations representing employees are trade unions, but the point is made that it does not have to necessarily be trade unions. It could be professional associations—that has happened in the past as well, from my recollection.
In looking at the composition of the board, I noticed that my noble friends on the Front Bench have come up with a slightly different approach. Mine has tried to be pretty straightforward and to, in effect, insert an independent chair, who should be put forward to the relevant committee in the House of Commons for consideration before their appointment.
Deliberately, I have put in some specifications as to who should chair the board. Recognising that this is all going to be about enforcement of legislation, considering a wide range of issues including taking legal action when it has not been requested by people, by workers, I have specified that we should consider this board, which is going to be very important to the Secretary of State because there are a number of situations where the legislation says that the Secretary State “must” consult the advisory board. To that end, it would be worth while to have somebody who is a qualified barrister, a KC, but who shows a particular level of accomplishment without needing to look to tribunal judges or similar to chair that board. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I shall speak to Amendments 267B, 267C and 268A standing in my name, and I also thank my noble friend Lady Coffey for introducing her amendment, and, of course, my noble friend Lady Noakes for signing them. Amendments 267B and 267C are not mere technicalities; they are a matter of principle. They are a matter of representation and ensuring that the new fair work agency advisory board truly reflects the full diversity and complexity of the modern UK labour market.
As drafted, Clause 90(4) proposes a tripartite board composed equally of individuals representing trade unions, employers and so-called independent experts. While the intention of the balance is commendable, the provision as it stands is both overly simplistic and insufficiently representative of the contemporary workface. As my noble friend highlighted, trade unions, for all their historic importance, now represent only 22.4% of employees across the United Kingdom, 12.3% of the private sector—so the bulk of those are in the public sector.
As my noble friend also pointed out, that leaves a staggering 77.6% of working people whose voices, interests and concerns are not captured through union representation. To restrict employee representation on this advisory board solely to trade union nominees is to exclude the overwhelming majority of the workforce. That is neither democratic nor representative. It is outdated.
This amendment seeks to rectify that imbalance by introducing a more inclusive and nuanced structure. It proposes that the board includes two representatives from the trade unions, rightly acknowledging their important role; three representatives of employees beyond the trade union movement, an expansion that ensures that the voices of non-unionised workers, gig economy participants, freelancers and precarious workers are also heard; five employer representatives to be appointed only after the Secretary of State has sought advice and recommendations from recognised business representative organisations, a process that will ensure that these appointments are rooted in sectoral legitimacy rather than political expediency; and three independent experts to provide critical objective insight grounded in academic, legal or practical labour market expertise. That structure would do three things. It would broaden representation, professionalise appointments and future-proof the board against the ever-evolving nature of work.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to all noble Lords for tabling these amendments. I will begin by addressing Amendments 267AC and 267BB, which relate to the chair of the advisory board. The Bill already provides for a strong and credible chair, and we are confident that appropriate appointments can be made under the current drafting. These amendments would significantly narrow the pool of qualified candidates and exclude highly capable candidates. There is no precedent for such restrictions among similar bodies.
For example, the current chair of the Equality and Human Rights Commission is the noble Baroness, Lady Falkner of Margravine. She brings deep expertise in public policy, regulation and public service to the role, but she is not a practising barrister. The focus should be on appointing the best candidate through a rigorous merit-based process, not restricting eligibility by profession. Moreover, there is no precedent for these amendments. Similar bodies, such as the Low Pay Commission and the Advisory, Conciliation and Arbitration Service, do not impose this level of restriction or require parliamentary approval. These models work precisely because they allow the Secretary of State to appoint individuals with diverse and complementary expertise. We fully support a strong, credible chair, but that is best achieved through a robust and flexible appointments process, not through rigid statutory constraints or exclusions.
On Amendments 267B and 267BA, tabled by the noble Lord, Lord Sharpe, and the noble Baroness, Lady Coffey, we have no objection in principle to a larger advisory board, but this should be balanced against an increased cost to the taxpayer. In practice, we anticipate there will be nine members of the board mirroring the make-up of the Low Pay Commission, which has operated successfully for 25 years. The current drafting provides flexibility so that the Secretary of State may appoint more than nine members, but it is unwise to lock a specific number into primary legislation without operational justification. The amendment would create a fixed number of advisory board members. Clause 90 already provides for what the amendment seeks to achieve.
Turning to Amendments 267C and 267D, these amendments risk compromising the balanced representation of the advisory board. The current drafting has been carefully chosen to reflect the social partnership model that has served the Low Pay Commission and ACAS well for so many years with a mixture of employer, union and independent representation. Amendments 267C and 267D also seek to broaden employee representation on the advisory board by reducing the emphasis on trade unions. Let me be clear: trade unions serve to protect and advance the interests of all workers, and they are best placed to represent workers’ interests on the advisory board. Moreover, the Secretary of State has broad discretion to appoint members with relevant expertise as independent experts. The Government are also committed to ongoing engagement with relevant stakeholders through a variety of formal and informal means, so the advisory board is only one part of the landscape.
This leads me on to Amendment 268A, also in the name of the noble Lord, Lord Sharpe. The independent experts are intended to bring deep subject matter expertise and a perspective not already captured by the other members of the advisory board. The existing drafting already protects against partiality, as an independent expert is a person who does not fall within the groups mentioned in Clause 94. The Bill already provides a sound and balanced framework for the board’s composition, one that is adaptable, proportionate and future-proof. I must therefore resist these amendments.
I must also respectfully resist Amendment 269, tabled by the noble Baroness, Lady Noakes, which risks undermining the very purpose of the advisory board. Transparency in governance is vital, and the Government share the commitment to ensuring appropriate parliamentary scrutiny. Placing a statutory duty on the advisory board to publish its advice could compromise that level of confidentiality and flexibility which we believe is essential for it to carry out its role effectively. Mandating a separate annual report also risks formalising what should remain a responsive advisory relationship, potentially limiting the board’s ability to offer genuine, timely and informal guidance on emerging issues.
Introducing even more reporting requirements would place a confusing and unnecessary reporting burden on enforcement teams, potentially diverting staff and resources away from front-line inspection and enforcement work, where they are most needed.
With this in mind, I therefore ask the noble Baroness to withdraw Amendment 267AC.
Lord Sharpe of Epsom (Con)
My noble friend Lady Coffey and I raised the increasing statistical irrelevance of the trade unions. I do not think the Minister addressed that point. She also seemed to write off the idea of the advisory board amendments that we proposed, on the basis that they would be expensive to the taxpayer. But Clause 90(6) says:
“The Secretary of State may pay such remuneration or allowances to members of the Board as the Secretary of State may determine”.
They could determine to pay nothing, presumably, so why would that be an expense to the taxpayer?
Baroness Jones of Whitchurch (Lab)
I thought I covered those points. As I said, we anticipate that the advisory board will have nine members, but we are building in some flexibility. We were trying to avoid locking a specific number into the primary legislation without any operational justification. I think that answers that point.
On the point about the unions, of course, if we stick with the social partnership model, they will be in a minority anyway. They will have the expertise and the knowledge to represent all employment issues on behalf of the workers.