Employment Rights Bill

Monday 14th July 2025 Lords Chamber

Report (1st Day)

Relevant documents: 20th and 29th Reports from the Delegated Powers Committee and 7th Report from the Constitution Committee. Scottish and Northern Ireland legislative consent granted, Welsh legislative consent sought.

15:32

Clause 1: Right to guaranteed hours

Amendment 1

Moved by

[Lord Goddard of Stockport]

1: Clause 1, page 2, line 9, at beginning insert “If requested by an employee,”
Member’s explanatory statement
This amendment changes the provisions in the Bill from a requirement for an employer to offer guaranteed hours to a right to request guaranteed hours by an employee.

[Lord Goddard of Stockport (LD)]

My Lords, I welcome the opportunity to open the debate on this group. I intend to be brief, as is appropriate on Report—I have said it, Minister, I cannot do any more. I begin by saying that there is clear cross-party agreement that exploitative zero-hours contracts must come to an end. Indeed, we on these Benches unequivocally believe in the need to address the problems of exploitative zero-hours contracts, which leave too many workers in precarious employment circumstances. That said, our amendment reflects that shared objective, while offering a more practical and balanced view.

The amendment would change the obligation under the legislation to offer guaranteed hours to a right to request them. Further, it maintains that when such a request is made, the employer must grant it. This would allow workers to acquire guaranteed hours if they wish, providing greater security and stability, while enabling them to make a personal choice. At the same time, it would reduce the administrative burden on employers, especially in sectors that rely on flexibility.

Although we recognise that some workers do not want precarious zero-hours contracts, this should not come at the expense of sectors where flexibility is essential and many workers are content with those arrangements. This would balance security for workers with necessary flexibility for employers in sectors that rely on flexibility. These include seasonal, tourism-related and agricultural workers, as well as hospitality, retail, theatre and other industries where work patterns are inherently dynamic and demands fluctuate. The amendment would ensure that the new provisions are adaptable enough to function effectively across all those employment settings.

In Committee, Members raised understandable concerns about what would happen if a request for guaranteed hours were simply denied. Let me be clear: under this amendment, if a worker makes a formal request, the employer must make a guaranteed hours offer. It would not be optional or discretionary; all workers who wanted greater certainty would be empowered to secure it. At the same time, the amendment avoids placing a universal obligation on all employers to offer guaranteed hours in every instance, which could place undue strain on sectors that rely on that flexible staffing model. In doing so, it would deliver a fair and workable solution that respects the rights of workers while acknowledging the operational needs of these industries.

We also recognise the Government’s amendments since Committee. In particular, we welcome the steps taken to clarify how new obligations will apply to agency workers once the legislation is enforced. These changes will help, and the framework is clear, consistent and better understood by all those affected.

That said, the Government are asking industry and business, whose support is vital for this, to prepare ultimately to comply with this provision and with the wider Act without providing any critical detail, such as reference periods for guaranteed hours and other key elements. This lack of clarity, which seems to run throughout the Bill, makes it challenging for employers and workers to understand their rights and obligations. Hindering effective implementation and planning is not acceptable. Such clarification, particularly for reference periods for guaranteed hours, is critical if the industry is expected to prepare. We on these Benches have consistently raised concerns throughout the Bill about the uncertainty caused by leaving key details, such as qualifying periods for guaranteed hours, to be declared by some later regulation. Although we agree that some flexibility is needed, it is a question of how it is implemented. We believe that clearer rules in the Bill itself will help both workers and employers to better prepare for the challenge.

Finally, as I stated at the beginning, we fully recognise the damage that exploitative zero-hours contracts can cause. However, addressing this issue must not come at the expense of sectors where flexibility is essential and many workers are content with arrangements. Our amendment seeks a fair balance, protecting workers from exploitation while preserving the flexibility that is crucial for many industries to function. I look forward to the Minister’s response and I beg to move.

[Baroness Carberry of Muswell Hill (Lab)]

I will make a brief comment on Amendment 1, which would replace a right to have guaranteed hours with a right to request. I very much fear that it undermines the purpose of the Bill, which is trying to deal with the problem of zero-hours contracts where employees do not have predictability over their hours.

I appreciate that the desire of the amendment is to reduce the burden on employers in working out what the guaranteed hours would be, only to find that an employee declines the offer. However, I do not think that that is likely to happen very often. Obviously, it is impossible to know what proportion of employees would turn down such an offer, but we do know from surveys—and most recently from a poll that the TUC did last year—that the majority of workers on zero-hours contracts consistently say that they would prefer to have guaranteed hours. It is therefore very unlikely that large numbers of them would turn down an offer once it has been made.

Perhaps more seriously, the amendment does not take account of the imbalance of power in workplaces and the characteristics of employees who are working on zero-hours contracts. The latest figures from the ONS tell us that zero-hours contract workers are much more likely to be young and to work in elementary occupations. They are much more likely to be working part-time and in low-paid sectors. These are the least empowered workers in the workforce; they are unlikely to understand their rights, even if the employer has complied with the requirement to find information. They are the least likely to be represented by a union and the least likely to know how to exercise their rights. The right to request guaranteed hours, in those circumstances, is not a real right at all.

How many of those workers, vulnerable as they are, might come under pressure not to press for guaranteed hours? The vast majority of employers do right by their employees, but many do not. The formulation of the amendment leaves open the path for some of the worst employers not to offer guaranteed hours to workers on zero-hours contracts. I do not think that the amendment does the intention to serve those workers any favours at all.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I support all the amendments in this group, but especially Amendment 1. As we start Report, and the first of several groups focusing on zero-hours contracts—although I will speak only on this group—I want to emphasise why getting the wording and balance right in this part of the Bill is important for proportionality and to avoid unintended consequences.

Many of us were originally supportive of the Bill’s commitment to tackle the rise of zero-hours contracts, especially in retail and hospitality—and tackling the way in which they have been used exploitatively is certainly welcome. But in Committee the Government acknowledged that there needs to be the offer of some flexibility, which is what certain cohorts of workers want.

On Amendment 1, the TUC briefing on the Bill complains that the vast majority who ask for guaranteed hours are turned down. Surely the point of Amendment 1 is the requirement that they will not be turned down. What is actually happening here is that there is a shift to a right to request guaranteed hours on to the employee, which I would have thought reassures the TUC. It empowers the employee but avoids an overrigid imposition of the Bill’s requirements on businesses, regardless of the situation. These sorts of details matter, now that we are finalising what will be in the Bill. I am not sure how helpful it is that, for example, some in trade union and government circles have briefed recently that getting into the details amounts to being, to quote the Deputy Prime Minister,

“on the side of bad bosses, zero-hours contracts and fire-and-rehire”.

We are here to make law, not to make headlines, and law means accepting that the devil is indeed in the detail. The Government know that there are lots of worries about unresolved aspects of the Bill. Indeed, Jonathan Reynolds, the Business Secretary, quoted in the FT recently, assures us that he is “absolutely certain” of addressing businesses’ concerns over the statutory probation period. Pertinent to this group of amendments, he says there is “more than enough room” to reach an agreement on guaranteed hours. He says:

“I have to have the bill passed first before we go into the implementation”,


but I suggest that is the wrong way around. If there is more than enough room to reach agreement on things such as guaranteed hours, let us put this in the Bill.

In other words, in trying to pin down how a new right to guaranteed hours should be framed in regulations, these amendments bring clarity. They are meant to help the Government. I am worried that too many important details are being kicked down the road, hence avoiding democratic debate and scrutiny and creating a real mood of uncertainty among employers. We have had warnings from business about the Bill harming an already fragile economy and so on, but these kinds of concerns are trickling down to workers too.

I work with a lot of young people at the Academy of Ideas, and the initial warm enthusiasm for the Bill has gone rather cold. I have been talking to one young man who wrote a missive for us on hospitality and how much it has done for him. Omar is concerned that what he thought was going to be in his interests might turn out not to be. He says: “Hospitality is an industry that has been flexible enough to rely on youth employment and allowed many of us a way into work. It has taught me many useful lessons, and has built my confidence as a person. Now I fear that the legislation will reduce the opportunities and misses the mark”. On this amendment, he just wants the right to be able to ask for hours, but he does not want anything that disrupts the flexibility of hospitality in doing so. That echoes the balanced way in which the noble Lord, Lord Goddard of Stockport, moved the first amendment in this group.

15:45

Finally, the noble Baroness, Lady Carberry of Muswell Hill, asked us to consider the balance of power. She says that young workers are least likely to understand their rights or be able to exert them. She has not met any of the young people I know—in fact, Omar is sitting below Bar there, before he goes on his shift in hospitality. I can assure her that he is more than capable of asserting and understanding his rights. The danger is that we patronise and impose on those young workers, on the basis that they will not be able to cope. That is paternalism and underestimates the young. This would give rights to young workers and would not disrupt an industry on which many of them are dependent, which is exactly the kind of proportionality that I hope the Government would welcome.

[Lord Ashcombe (Con)]

My Lords, this first group of amendments, in the names of the noble Lord, Lord Goddard of Stockport, and my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral, is significant and I am pleased to support it. I declare my interest as an employee of Marsh Ltd, a large insurance broker. Noble Lords might think that this will therefore not have much effect on me. They would be right, but I have other views.

Many individuals, for a wide variety of reasons, do not wish to have a permanent contract with guaranteed hours. While the Government might like to think that everyone wants guaranteed work, that is simply not the case. Flexibility for employees who desire zero-hours contracts is surely what everybody wants. In my experience, happy employees inevitably are more productive than those who are not. This goes directly to the heart of what the Government are trying to achieve—growth.

At the same time, many others would welcome the certainty and stability of fixed-hours contracts. It is essential, therefore, that we provide clarity in this legislation where ambiguity might otherwise lead to dispute or, worse still, legal action. That is why I welcome Amendment 2, which introduces a clear definition of a threshold below which it is not reasonable for an employee to request a guaranteed-hours contract. Setting this threshold at eight hours a week—essentially a day’s work—offers helpful clarity. It strikes a sensible balance between flexibility and fairness.

On Amendments 3 to 5, there also needs to be fairness in any arrangement, otherwise it will not stand the test of time. Therefore, it is entirely reasonable to allow a reference period during which both parties can assess the suitability of the arrangement before any request for a fixed-hours contract is made. This period of mutual assessment is not only practical but necessary. Mistakes can be made on both sides, and both employer and employee should have the opportunity to part ways without undue burden if the relationship is not the right fit. The 26-week period proposed in these amendments is an appropriate length of time for such assessments to take place.

As mentioned before, unhappy or mismatched employment arrangements serve no one. They can harm the individual’s well-being and morale and, in time, may undermine the company’s productivity, particularly for smaller businesses, where every member of staff has a significant impact—the smaller the company, the bigger the impact. We must remember, as we were reminded in Committee, that small businesses make up the majority of the companies in this country, unlike those I work for. For these reasons, I support the inclusion of a minimum number of hours’ work per week for a clearly defined reference period before the employee may request a guaranteed contract. I believe these amendments strike a fair and practical balance that will benefit both employers and employees.

[Baroness Noakes (Con)]

My Lords, in this group I have Amendments 9 and 22, both of which seek to amend government amendments in identical ways. I shall speak to Amendment 9, which seeks to amend government Amendment 8, but my remarks apply equally to Amendment 22, which seeks to amend government Amendment 21. Before doing so, I offer my support to the other non-government amendments in this group; other noble Lords have already spoken well in favour of them.

My Amendment 9 is based on the premise that the Government should be trying to balance employee rights with the need of businesses to be successful and to grow. The Government want to end what they call “one-sided flexibility” but that would not be a good thing if the outcome was to destroy the labour market flexibility which is the hallmark of the UK’s international competitiveness and has been a major contributor to the country’s overall economic resilience.

Government Amendment 8 amends the provisions of Clause 1 which would have allowed the Secretary of State to create exemptions from the duty to offer guaranteed hours on a very broad basis. That power was a glimmer of light in a part of the Bill that was otherwise quite dark, especially for those employers whose businesses could be harmed by the new duty. It is clear that the Government wanted to use that new power very sparingly but it was drafted in a broad way and would therefore have offered the Government an elegant solution if they discovered that certain types of businesses simply could not stay in business if the duty applied to them.

Unfortunately, the Delegated Powers and Regulatory Reform Committee of your Lordships’ House, for which I generally have a high degree of respect, declared that this power was “inappropriately broad”. I suspect that if the DPRRC had attended some of the debates on the Bill earlier in its passage, it would not have been quite so quick to damn this power. Even more unfortunately, the Government have chosen to respond to the DPRRC’s recommendation by making the power virtually useless.

My little glimmer of light has been virtually extinguished by the Government’s Amendment 8. This now requires that when the Government try to use the regulations to create exemptions, they have to take account of two things. The first is the benefits of workers receiving a guaranteed-hours offer. I would have absolutely no problem with that if it were balanced by an equivalent need to avoid having adverse effects on employers, but Amendment 8 goes further and says that the needs of the employers concerned can be taken account of only if they are dealing with “exceptional circumstances”. I do not know what “exceptional circumstances” means but it is probably something like a pandemic; it would not deal with those businesses which face fluctuating demand patterns as part of their natural business model. Unpredictable work demands are therefore difficult to see as exceptional circumstances.

When we debated this clause in Committee, my noble friend Lady Verma, who is not in her place, talked about the need for employers providing domiciliary or home care to be responsive to the actual fact pattern of demand for care. I suspect that would not count as exceptional, even though it is an intrinsic part of the business model of those who provide home care; nor would it, I suspect, apply to any of those businesses that are affected in any way by seasonal demand patterns, as has already been mentioned. Therefore, the ordinary everyday needs of businesses will be ignored if Amendment 8 is accepted without amendment. In practical terms, all the Secretary of State can take account of is the benefits to workers of receiving a guaranteed-hours offer.

Therefore, my Amendment 9 removes the constraint of needing to satisfy the exceptional circumstances limb; the Secretary of State would simply be having regard to, on the one hand, the benefits for employees and, on the other, the adverse effects on employers. I hope in that way a proper balance would be achieved in the Bill and that the Government will be prepared to rethink their Amendments 8 and 21.

[Lord Wolfson of Aspley Guise (Con)]

My Lords, Amendment 2 stands in my name. I declare my interest as a shareholder and the chief executive of Next plc, a job I have held for 24 years. I should add that Next employs nearly 50,000 people in the UK, of whom around 20,000 are part-time.

I hasten to add that the company I work for does not use, and never has used, zero-hours contracts. I am not in favour of them. As the noble Lord, Lord Barber, said at Second Reading, eliminating bad employment practices serves the interests of good employers. He was right. As I said in Committee, I support the Government’s aim of eliminating the unfair practices associated with zero-hours contracts. The problem with this section of the Bill is not the tight regulation of zero-hours contracts; nor is it the understandable intention to extend those protections to low-hours contracts, preventing employers from circumnavigating zero-hours provisions by offering token contracts. The problem is the failure to define what low-hours contracts are for the purposes of the Bill or give any hint as to what that limit might be.

Amendment 2 aims to address this problem by placing a reasonable cap on the discretion of the Secretary of State to define what low-hours contracts should be at eight hours a week. This is important because it materially changes the nature and scope of the Bill; if this number is set too high, the provision will profoundly change the working arrangements of 8.5 million part-time workers in the UK.

I can assume only, having read through the provisions of the Bill, that the Government have not really understood the near impossibility of managing the process they are proposing if it extends to millions of people. Employers will have to track their low-hours employees’ extra hours every day of the year, and at the end of every employee’s individual reference period, businesses must offer those employees a new permanent contract. These hours will have to be offered in a compliant way, with no hint as to how you comply with the Bill itself. They will have to be offered the hours regardless of whether those hours are actually needed.

This process creates two problems. The first is the problem of complexity of implementation, and the second is that businesses, if they comply with the Bill, risk being chronically overstaffed. To start with complexity, I estimate that in the company I work for, it will take us at least a year and several million pounds of systems development to develop a system to adequately cope with the implementation of the Bill. I work for a company that has more than 1,600 systems and software professionals. Small businesses will find this process almost impossible to manage. I would be very grateful if the Minister could share any details as to the cost and scope of work that will be required to be undertaken by councils, hospital trusts and other public sector employers for the purposes of developing these systems.

The second problem is that, even if an employer successfully implements a system, they will have to offer contracts regardless of whether there is any work for those people going forward. Your Lordships will not be surprised to hear that restaurants, shops and pubs simply cannot afford to have the same number of people working in their establishments in February as they have in December. Nor can we take the risk that the extra hours required to cover many different seasonal peaks and sale events become permanent costs for the rest of the year.

The complexity of implementation, along with the risk that businesses leave themselves overstaffed, will mean only one thing, and it is very important that the Government understand this: businesses simply will not be able to offer additional hours to workers on low-hours contracts. Instead, they will be forced to employ temporary staff to cover those peaks, depriving loyal and skilled employees of income at times when they need it. Whose interest does this serve? Neither business nor employees, and certainly not a Government that I believe are genuinely interested in promoting growth.

16:00

If it is not clear who will benefit, it is very clear who will suffer. It will be those who choose part-time contracts, such as parents with childcare responsibilities, students balancing their studies with earning and often taking their first step into employment, carers for elderly relatives or those seeking a transition into retirement—those for whom a fixed income provides a meaningful supplement for their household or student income, but who also value the opportunity to earn extra income as and when it suits them.

In terms of where that limit might be set, I heard the Minister in Committee when she said she thought four hours was not enough. Amendment 2 therefore proposes eight hours as a ceiling for low-hours contracts. I believe that eight hours is the right number for two reasons. First, as an annual cost of over £5,000, it is more than enough to deter employers from using these contracts as zero-hours contracts by proxy and disguising a zero-hours contract. To that extent, it achieves the ostensible purpose of this section of the Bill. Secondly, at £5,000 a year, it is enough to represent a meaningful and valuable source of income as a household supplement to those who cannot or do not wish to commit to more hours of work in the working week. It is a real asset for people, particularly students and parents with school-age children.

Even at eight hours, a very large number of people would be affected. From the information available to me, I estimate that between 20% and 25% of the UK’s part-time workers would be affected by this measure. To push that number higher would be to take a wrecking ball to the part-time working practices of millions of people in shops, restaurants, care homes, pubs and many other consumer-facing businesses which, by their nature, have peaks and troughs in demand.

This impediment to flexibility in the UK’s workforce and its earnings could not come at a worse time. We are already seeing the beginnings of what could become a crisis in the availability of entry-level work. The drop in vacancies, the recent spike in unemployment and the words of warning from the Governor of the Bank of England all resonate with me. However, it is interesting how experiencing these things on an anecdotal level is so much more powerful. For our end-of-season sale, we always take on temps; this year, the ratio of applicants to vacancies rose by 25% in one year, to 61 applicants for every job. It varies regionally—one shop in Birmingham had 1,200 applications for four jobs. In my view, there is something of a crisis coming in entry-level employment and, if Amendment 2 is not accepted, this Bill could significantly exacerbate that problem.

I struggle to see why the Government would not accept this amendment. The Government are going to have to give us this number at some point; why not now? There are three powerful reasons why they should. First, the uncertainty the Bill creates will in itself be unproductive. We cannot plan in a vacuum. Secondly, failure to give any indication on the definition of low-hours contracts sends a very powerful message to business to prepare for the worst, and that preparation will not be pretty. If the Government are planning to set a number at a manageable level, then please tell us as soon as possible. Finally and most importantly, the definition of low-hours contracts is not a minor, technical detail to be sorted out later in secondary legislation; it is fundamental to the scope, impact and nature of this legislation and the numbers of people it will affect. By leaving this crucial definition to secondary legislation, Parliament is being asked to approve potentially far-reaching changes to our labour market without proper debate, scrutiny and parliamentary consent. That is not how good law is made.

If the low-hours contract threshold is set at the right level, this section of the Bill can and will succeed. It can end potentially exploitative zero-hours contracts without taking a wrecking ball to the employment practices that work well for our economy, for our businesses and, most importantly, for millions of hard-working people in the United Kingdom. It is in that spirit that I commend this amendment to your Lordships’ House.

[Lord Sharpe of Epsom (Con)]

My Lords, it is a genuine pleasure to follow my noble friend Lord Wolfson, who speaks with genuine authority and deep experience on this important subject.

Amendments 2, 3, 4 and 5 stand in my name and that of my noble friend Lord Hunt. I shall start with Amendment 2, about which we have just heard, which is also signed by my noble friend Lord Wolfson. Clause 1 requires employers to offer guaranteed-hours contracts to low-hours workers after a reference period, but, as we have heard, the Government still have not defined what low hours actually means. That is not a minor technicality, because at this stage it makes the policy unworkable.

We are hearing that the Government prefer to define low hours as 16 hours per week, but we have also heard that is too high. We saw some different data. According to the British Retail Consortium, only 5.5% of retail workers are on below eight-hour contracts, while nearly 20% work between eight and 16. Raising the threshold to 16 hours would mean that employers are forced to repeatedly make contractual offers to one in five workers, most of whom are in regular, stable, part-time work. It is a dramatic expansion, with, as we have heard, very major consequences. As we have also heard, some of those consequences are higher employment costs, increased complexity, particularly for small businesses, and, inevitably, job losses.

Retail, hospitality and leisure businesses will respond rationally to risk. That means fewer short shift roles, fewer flexible contracts and less tolerance for marginal labour hours. Some will restructure and some will reduce headcount, but others—especially small businesses—will just close. If the Government define low hours at 16, they will directly accelerate redundancies and reduce employment opportunities for those with caring responsibilities, students and others who depend on part-time jobs. We have also just heard very powerfully about the effect on entry-level employment, illustrated with some very stark statistics.

This is not speculation; it is how businesses operate. A badly defined threshold forces risk-averse behaviour and the effect will be the opposite of what is intended. An eight-hour threshold would limit the burden to genuinely casual contracts. That is a workable, proportionate and sensible approach. Anything beyond that is unmanageable and would be economically reckless. The Government need to listen.

On Amendments 3, 4 and 5, the Government have indicated that they are considering setting the reference period for guaranteed hours at 12 weeks. During Committee on 29 April, I asked the Minister which businesses support a 12-week reference period; at that time, she was unable to name a single business. It is now nearly two and a half months later, and I am confident that she will still be unable to provide an answer as to how many businesses, particularly small businesses, support a 12-week reference period.

The reality is that no meaningful business sector has endorsed this 12-week period. It is simply out of touch with the realities of running a business, especially in sectors such as retail, hospitality and leisure, where work patterns fluctuate widely with the seasons, weather and customer demand.

A 26-week reference period is far more practical. It would better capture seasonal cycles, provide clarity and stability for employers and employees alike and significantly reduce the administrative burden of constantly reassessing guaranteed hours. Without a longer reference period, employers will simply reduce hiring on 12-week contracts to avoid triggering this costly and complex obligation. That will not protect workers; it will diminish their opportunities and increase their precarious nature. I therefore urge the House to support the amendments put forward by me and my noble friends. We have set the reference period at 26 weeks. This is sensible, it is a workable compromise, and it will protect workers’ rights while respecting the operational realities of businesses.

To turn lastly to Amendment 1 in the name of the noble Lord, Lord Goddard, which my noble friend Lord Hunt of Wirral and I were happy to sign, it makes no sense to require employers to offer guaranteed hours to employees who do not want them. The Government appear to misunderstand or simply disregard the autonomy of the individual worker. Imposing this administrative burden, especially on small employers, to calculate and offer guaranteed hours where they are neither wanted nor needed is an unnecessary and unavoidable cost. We therefore strongly support the right to request amendment proposed by the noble Lord, which better respects worker choice and employer flexibility.

[Lord Londesborough (CB)]

My Lords, I support all the amendments in this first group, but I shall speak briefly to Amendment 9 in the name of the noble Baroness, Lady Noakes, which, as she explained, is an amendment to the Government’s Amendment 8, and Amendment 22. I want to interrogate the wording of the Government’s Amendment 8. We have a 309-page Bill. There is a lot of concern outside, at the coal face, from businesses about definitions and what the Bill means. This is a good example:

“In exercising the power under subsection (6) the Secretary of State must, in particular, have regard to … the desirability of preventing this Chapter from having a significant adverse effect on employers who are dealing with exceptional circumstances”.


Can the Minister explain how these exceptional circumstances are defined, and how significant does the adverse effect need to be for it to be regarded by the Secretary of State?

I ask that mindful of the latest survey from the Federation of Small Businesses, just a couple of days ago, which surely signals significant adverse effects for the majority of small and micro-businesses. For the first time in its history, the FSB reports that more UK small firms expect to shrink, sell up or shut down over the next 12 months than anticipate growth. The FSB’s Q2 small business index shows that 27% of small businesses expect to contract, close or be sold, outstripping the 25% which are planning for growth, and it marks the first time that the balance has tipped towards pessimism since the index began. As the noble Baroness, Lady Noakes, points out in her amendment, there is no need to layer “exceptional circumstances” on to already significant adverse effects on employers. It would be far neater, of course, to exempt small and micro-businesses from Clause 1, as I and many others argued throughout Committee.

[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 first thank your Lordships’ House for the extensive engagement, debate and scrutiny that this Bill received throughout Committee. Indeed, we have held over 50 engagements with noble Lords from across your Lordships’ House since the Bill left the other place. As we progress Report, I need to remind noble Lords that the Government were elected on a manifesto commitment to make work pay. This Bill marks the first phase in delivering that commitment. Once implemented, it will raise the minimum floor of employment rights, provide a level playing field for businesses which are already engaged in good practice and raise living standards across the country. Alongside the new industrial strategy, the Bill will support our mission to increase productivity and create the right conditions for long-term, sustainable, inclusive and secure economic growth.

Turning to the amendments, I have listened carefully to the comments of the noble Lord, Lord Goddard, on Amendment 1. I remind noble Lords that as of March 2025, there are around 1 million people on zero-hours contracts in the UK. About 33% of them have been with their current employer for less than 12 months and 51% for less than two years. These are the most vulnerable individuals in the workforce. The Government are therefore committed to ending exploitative zero-hours contracts, which the noble Lord, Lord Goddard, quite rightly describes as “precarious employment”.

16:15

The duty to make a guaranteed-hours offer should lie with the employer. This is the best way to ensure that all qualifying workers benefit from the right to guaranteed hours when they want them. If a worker on an exploitative zero-hours contract had to request a guaranteed-hour offer, they might feel less able to assert their right to those guaranteed hours, and they would lose out as a result. I agree with my noble friend Lady Carberry that it is quite right to highlight the imbalance of power in the workforce for those individuals. This is particularly true when workers take up a new job.

The noble Lord, Lord Goddard, said that some sectors are inherently more flexible. We understand that, but this would be reflected in the number of hours offered when the guaranteed hours were assessed. A “right to request” model could create undesirable barriers, making it especially difficult for vulnerable workers on exploitative zero-hours contracts to access their right to those guaranteed hours, especially as many workers are younger and often in their first job. As the Bill is drafted, after receiving an offer from the employer, qualifying workers will be empowered to decide based on their individual circumstances. If a worker wants to retain their zero-hours contracts, as many will, they can do so by rejecting the offer.

Turning to Amendments 3, 4 and 5, tabled by the noble Lord, Lord Sharpe, as I have highlighted previously, we expect the length of the initial reference period to be 12 weeks. This balances the need for qualifying workers to be offered guaranteed hours reasonably soon after they start a role with the need for a reference period long enough to establish the hours that they regularly work. If the length of the initial reference period was set at 26 weeks, workers experiencing one-sided flexibility and unpredictability in their working life would have to wait six months to access their right to guaranteed hours. This is too long. Subsequent reference periods are a necessary component to ensure that all workers on exploitative zero-hours contracts will have continuous access to their right to guaranteed hours. If, for example, a worker failed to qualify during the initial reference period, or changed their mind after rejecting an initial offer, without subsequent reference periods they would not be able to access their right to guaranteed hours in the future.

We have considered the concerns that noble Lords have raised about the potential administrative burden that subsequent reference periods may place on employers. This is a pro-worker and a pro-business Bill. We want to ensure that the right to guaranteed hours works for both parties. We intend to consult on the timings of the subsequent reference periods. Consulting will help us to understand the impact of different options on both businesses and workers. The length of the initial and subsequent reference period and the frequency of subsequent reference periods will be set out in regulations, providing the appropriate flexibility for changes to be made in response to emerging evidence or changing work practices.

Turning to Amendment 2, tabled by the noble Lord, Lord Sharpe, I have also listened to the comments of the noble Lord, Lord Wolfson. The road map that we published set out our commitment to introduce a phased basis for implementation, to allow businesses to prepare. For example, ending the exploitative use of zero-hours contracts will not be introduced until 2027. The hours threshold is a vital part of the novel right to guaranteed hours and it is important that we get this right. The hours threshold is designed in part as an anti-avoidance measure, as it will prevent employers moving workers from zero-hours contracts to contracts guaranteeing a very small number of hours to avoid the duty of making a guaranteed-hours offer. Workers guaranteed a very small number of hours might experience one-sided flexibility in the same way as a zero-hours worker.

We believe it is necessary to retain the ability to set the hours threshold in regulations, giving the flexibility to respond to changing circumstances, invoking working practices and emerging evidence about how the new right is working in practice. I will say to noble Lords that we have not said what the hours threshold should be—we intend to consult on it. By setting it in the Bill, we would lose the ability to consider the valuable input of businesses, trade unions, workers and other relevant stakeholders.

[Lord Wolfson of Aspley Guise (Con)]

Would the Minister accept that setting a cap on the number of hours still gives the Secretary of State flexibility to determine exactly what the number of hours is, while giving industry the security, comfort and certainty it needs to carry on investing in its shops, pubs, restaurants and care homes?

[Baroness Jones of Whitchurch (Lab)]

My Lords, we intend to consult on this, and of course we will take the comments and concerns of business into account; it is our absolute intention to do that. What we do not want to do is pre-empt that by setting out the conclusions of the consultation in advance. I hear what the noble Lord says, but I do not think that fits with our model of wishing to take this and consult further on it. But of course we will take business views into account.

I turn to the amendments tabled in my name. We listened to concerns raised by parliamentarians and business stakeholders, and responded promptly by amending the Bill. The Bill allows regulations to specify circumstances in which the duty to offer guaranteed hours does not apply or for a guaranteed offer once made to be treated as withdrawn. We expect that this power will be used narrowly in response to changing circumstances to address situations where the measure would have significant adverse impacts. The Delegated Powers and Regulatory Reform Committee recommended restating this power with greater precision.

In response, we have tabled amendments to constrain the use of this power. Our amendments require that, in exercising this power, the Secretary of State must have regard to both the benefit to workers of receiving a guaranteed-hours offer and the desirability of preventing the provisions having a significant adverse effect on employers who are dealing with exceptional circumstances. Where this power is exercised and the duty to offer guaranteed hours does not apply, a further amendment clarifies that the exception will operate in relation to a single reference period, rather than being open-ended.

Circumstances specified in regulations would need to be specific, factual and narrow enough so that it is crystal clear that the duty then does not apply or no longer applies. There will be no room for discretion from the employer or the worker. The Government will consult on any use of this power. This way of constraining the exercise of the power still allows flexibility to determine the specific circumstances once all interested parties have had a chance to input.

Corresponding amendments are made to the provisions for agency workers. In addition, under the Bill’s current provision, an agency worker who accepts a guaranteed-hours offer from an end hirer becomes directly engaged by the hirer. The worker could then be entitled to another initial reference period as a directly engaged worker. Amendments 6 and 23 clarify that agency workers who accept a guaranteed-hours offer will not benefit from a new initial reference period. This aligns their rights with directly engaged workers and eases employer burdens.

Regarding Amendments 12 to 19, the Bill usually requires a guaranteed-hours offer to be made to a qualifying agency worker on no less favourable terms and conditions taken as a whole than those under which the agency worker was engaged during a relevant reference period. We have heard concerns about instances where agency workers are paid a significant premium in recognition of, for example, the temporary and insecure nature of their work. As the Bill stands, such pay premiums could be carried over into a guaranteed-hours offer, putting those agency workers at an unintentional advantage compared with directly engaged workers in similar roles. This could also cause employers to move away from hiring agency workers in the first place. These amendments will allow less favourable terms and conditions relating to pay to be proposed in guaranteed-hours offers to agency workers, to ensure alignment with comparable directly engaged workers, maintaining flexibility for businesses and supporting consistency in treatment of the workers.

I turn to Amendments 9 and 22, in the name of the noble Baroness, Lady Noakes, which seek to amend the amendments in my name that I have just justified. I listened carefully to the noble Baroness’s points, but accepting her amendments and removing the reference to employers dealing with exceptional circumstances would not address the DPRRC’s criticisms regarding the breadth of the power. It would also not be clear what the Secretary of State would need to consider when setting out the specified circumstances. I reassure the noble Baroness that, once the Secretary of State has considered these matters, he can still decide to make regulations to set out the circumstances in which the duty to make guaranteed-hours offers does not apply, which may not relate to exceptional circumstances.

I therefore ask the noble Lord, Lord Goddard of Stockport, to withdraw his amendment. We very much share his objective to address the imbalance of power, and I hope he has heard our case about why we believe that what is currently in the Bill is the best way to do that. I also commend to the House Amendments 6 to 8, 12 to 21 and 23 in my name.

[Lord Goddard of Stockport (LD)]

I thank noble Lords who took part in this debate. The number of amendments in this group shows the depth of feeling on zero-hours contracts. I think it was the same story from the noble Baroness, Lady Carberry of Muswell Hill—for whom I have the highest regard—and the Minister. It was not a defence; it seemed to me that they were saying that giving employees this extra power would somehow not help them in asking for those contracts, as the employer might not like it.

That is the point of it. The Bill is supposed to address what employers and employees like. This is not an either/or; it is an “extra for”—an extra protection for workers. As the Minister herself said, 1 million people are on zero-hours contracts, many of which are exploitative. That should not remain after all this debate has taken place. All we are asking for is clarity and detail and all we are getting is consultation and manna tomorrow. That is not acceptable. There are 1 million people looking at this today, wondering what we are going to do. In my mind, what we should do, which I wish to do, is test the will of the House.

16:27

Division 1

Ayes: 264

Noes: 158

16:38

Amendment 2 not moved.

[The Deputy Speaker (Viscount Colville of Culross) (CB)]

I need to warn your Lordships that if Amendment 3 is agreed to, I cannot call Amendments 4 to 6 by reason of pre-emption.

Amendment 3 not moved.

Amendments 4 and 5 not moved.

Amendments 6 and 7

Moved by

[Baroness Jones of Whitchurch]

6: Clause 1, page 3, line 24, at end insert—
“(6A) See paragraph 5(3A) of Schedule A1 for provision about when the initial reference period is not a reference period in relation to a worker who is a former agency worker and that worker’s employer.”Member's explanatory statement
This amendment is consequential on my amendment to Schedule 1 at page 160, line 33.

7: Clause 1, page 9, line 34, after “apply” insert “in relation to a reference period”
Member's explanatory statement
This amendment clarifies that, where the power in new section 27BD(6) of the Employment Rights Act 1996 is exercised so as to make provision for the duty in new section 27BA(1) not to apply, the exception will operate in relation to a reference period.

Amendments 6 and 7 agreed.

Amendment 8

Moved by

[Baroness Jones of Whitchurch]

8: Clause 1, page 9, line 36, at end insert—
“(6A) In exercising the power under subsection (6) the Secretary of State must, in particular, have regard to—(a) the benefit to workers of receiving a guaranteed hours offer under this Chapter, and(b) the desirability of preventing this Chapter from having a significant adverse effect on employers who are dealing with exceptional circumstances.” Member's explanatory statement
This amendment sets out a non-exhaustive list of matters that the Secretary of State must have regard to in exercising the power in new section 27BD(6) of the Employment Rights Act 1996.

Amendment 9 (to Amendment 8) not moved.

Amendment 8 agreed.

Clause 3: Right to payment for cancelled, moved and curtailed shifts

Amendment 10

Moved by

[Lord Goddard of Stockport]

10: Clause 3, page 23, line 44, at end insert—
“(5A) Where notice of cancellation has been given in advance of the short notice period as defined by subsection (6), the employer is not required to make payment under subsection (1).”Member’s explanatory statement
This amendment and another in the name of Lord Goddard defines “short notice” as at least 48 hours before a shift is due to start, and clarifies that if this notice is given, the employer will not be required to make a payment under section 27BP.

[Lord Goddard of Stockport (LD)]

My Lords, coincidentally, both the amendments in this group are mine. They seek to address the rights of workers to receive payments following a short-notice shift cancellation and provide clarity. I would like it on record that we recognise what the Government are trying to achieve with these provisions and that workers should be compensated when shifts are cancelled at short notice. In recognition of that provision, I have Amendment 11 in my name. This is especially important, given that such cancellations often disproportionately impact those workers in hospitality, retail and other sectors where shift incomes can be crucial to meeting everyday financial needs.

My amendment seeks to address this by defining “short notice” as at least 48 hours before a shift is due to start. By doing so, they would provide much-needed clarity and certainty, helping people and businesses, particularly smaller businesses, without expensive legal and administrative resources to plan for and effectively implement their requirements.

Importantly, the amendment would maintain the principle that, if a shift is cancelled within 48 hours of that window, the employer is still required to provide compensatory payments to the worker. That would protect workers from a sudden loss of income caused by last-minute cancellations, which can be devastating for those relying on shift work to support themselves and their families. The amendments would strike a fair balance, ensuring that workers are compensated fairly for genuinely short-notice cancellations while supporting practical and manageable implementation by employers across the sector with fluctuating and dynamic working patterns.

This amendment is important because a persistent problem with the Bill is a lack of clarity in key provisions such as short-notice cancellations. The Bill does not define what constitutes “short notice” and instead leaves this Government to determine that through future regulation. This creates uncertainty for businesses and workers alike. It appears that the Government wish to maintain flexibility on this provision by leaving the definition of regulation, but for businesses of this kind that causes limbo, leaving them uncertain and unable to adapt for practical efficiency.

Without clear rules, employers, especially small businesses, face real difficulties in preparing for their legal obligations, which could lead to inconsistent application and confusion in the workplace. I sincerely ask the Minister why this important detail has yet to be clarified. We are on Report in this House and the Bill has already completed its Commons stages. Given that we have numerous government amendments here, just as we had in Committee, I hope the Minister will be able to provide some clarity and answers on these important questions. I beg to move.

[Lord Ashcombe (Con)]

My Lords, I support Amendments 10 and 11 in the name of the noble Lord, Lord Goddard. We all understand that in shift-based work there is an expectation that, if someone is on the rota, the shift will go ahead, but life is not always so predictable. In my experience, unexpected changes happen, often without warning or obvious reason. So the question we must ask is: should an employer still be obliged to pay a worker when there is no work available? I can already hear the instinctive response “Yes”, and I understand why, but we must also ensure that the rules we put in place are fair and reasonable for all parties.

The amendments propose a balanced solution. If an employer needs to cancel a shift, they should provide notice. I entirely agree with noble Lords opposite that, if notice is given only an hour before the shift begins, that is clearly unreasonable. By that time, the worker will likely have made arrangements, be they childcare, travel or even turning down other opportunities to be available for work. In such cases, they deserve to be paid as if they had worked the shift.

As it stands, the Bill does not seem to specify a minimum notice period before a shift is cancelled. That gap needs addressing. The proposed 48-hour period in the amendments would strike a reasonable balance. It would give workers enough time to make other plans and give employers and, particularly importantly, the small business community some flexibility, while avoiding the unfairness of telling someone at the last minute, “You’re not needed today”, and leaving them unpaid. With that in mind, I am happy to support the amendments.

16:45

[Lord Hunt of Wirral (Con)]

My Lords, I thank the noble Lord, Lord Goddard of Stockport, for his amendments. I agree very much with the approach my noble friend Lord Ashcombe has taken. We are fully in agreement that workers deserve reasonable notice of shifts. That is a fair and modern expectation. What we cannot accept or support is the way the Government have approached this issue. It is, in effect, vague in definition, burdensome in practice and, yet again, deeply disconnected from the operational realities faced by employers.

The term “reasonable notice” has been left entirely undefined in the legislation. That is not just an oversight; it creates legal uncertainty and leaves both workers and employers unclear about their rights and responsibilities. The result is a framework where expectations are high but there is no guidance; guidance is absent. I hope of course that the Minister will reassure us on this. It would be a very good move on the part of the Government to accept Amendments 10 and 11.

The real concern is how all of this interacts with other government-imposed obligations, especially, as the noble Lord, Lord Goddard of Stockport, pointed out, for small businesses, which form the backbone of our economy. The Minister knows this well as he has unrivalled experience in that sector. Let me just spell it out. The current proposals amount to what is virtually a threefold financial cost to the employer in the event of an unavoidable change, such as an employee calling in sick on the day of their shift. First, the employer will be required to pay statutory sick pay from day one—a new obligation introduced without sufficient support or transition for small businesses. Secondly, under these proposed rules, the original shift could not simply be cancelled without consequence. The employer would be expected to pay the sick worker for the shift they can no longer cover, even though it is not worked. Thirdly, and most significant of all, the employer would then need to pay another employee to come in and cover the shift. In effect, the employer is paying twice for the same shift, on top of sick pay. That is not just inconvenient; it is, for many small businesses, financially unviable.

Let us take a common example of a pub with a garden space, with staffing that depends very much on the weather forecast. If rain is expected, the manager may need to scale back staffing. Under these rules, they may be required to pay the original shift, notify the worker within a fixed timeframe and compensate them if notice is too short. These decisions are often necessarily made on the morning of a shift, based on changing conditions. The flexibility that currently exists, therefore, is lost and replaced with what amounts to bureaucratic process and financial risks.

These are not hypothetical scenarios. In hospitality and retail, rotas are often agreed through informal co-operation: workers swapping shifts with each other, or managers responding to customer demand or staff illness in real time. What the Government now propose would stifle that practical environment, replacing it with a rigid system that suits neither party. Yes, we of course support the principle of fair notice, but fairness must apply to both sides. Businesses need clarity, practicality and financial sustainability; workers need predictability and respect. These goals, surely, should not be mutually exclusive. They will be undermined, not advanced, by unclear obligations and rules that are unworkable. That is why we support a clearer, more defined approach to notice periods: one that will give employers confidence, support workers’ rights and reflect the real dynamics of modern shift work.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to the noble Lords, Lord Ashcombe and Lord Hunt of Wirral, for their contributions and I thank the noble Lord, Lord Goddard of Stockport, for tabling Amendments 10 and 11.

The Bill currently sets out that eligible workers will be entitled to a payment when their shifts are cancelled, moved or curtailed at short notice. Setting the short notice period for cancellation at 48 hours, as stated in the amendment, would mean that only workers whose shifts are cancelled less than 48 hours prior to starting will receive payments for short notice. Our analysis showed that 2.4 million workers could be eligible for zero-hours contract rights. Furthermore, analysis from the CIPD—the Chartered Institute of Personnel and Development—suggests that approximately 48% of the UK’s employers do not provide compensation to a worker if they cancel their shift with less than 24 hours’ notice. The Government remain concerned about the impact that this may have on an individual’s ability to plan their life—as we all do—and knowing what money they will have for fundamental things such as housing costs, travel and paying for childcare and commuting.

We intend to set up the period of short notice in regulations following consultation. I recommend that all noble Lords read our road map for implementing this Bill, which sets out exactly what we intend to do. However, we have said in the Bill that “short notice” will not be more than seven days. The Government are committed to continuing to work closely with businesses and trade unions in carefully considering the right approach to this matter. It is right to consult on this in order to fully establish the impact of different proposals. For example, a 48-hour requirement could have the effect of a worker not being entitled to a payment if they found out late on a Friday evening that their Monday morning shift was cancelled. The impact and fairness of different options must be assessed.

We believe that seeking views on this and setting out the position in regulations is the right approach. This will allow the Government to minimise the amount of administrative detail in the Bill, while retaining the flexibility to respond to changing circumstances, in the light of the novel nature of this measure, without the need for further primary legislation. This approach also allows the Government to account for other important provisions in the Bill, such as a potential super-short notice period, without pre-empting consultations, so decisions can be taken together.

It is worth emphasising that a short notice cancellation period will only be due when the employer cancels a shift. A payment would not be due if a worker called in sick. Noble Lords should also be aware that there is a power in the Bill to make exceptions under new Section 27BR so, in some circumstances, an employer would not be required to make any payment.

The Government cannot promise to cover all the circumstances that have been raised by noble Lords, as we are keen to further engage with stakeholders before making the final call, but we hope this provides some reassurance. Further, Amendment 10 is not needed, as the Bill already provides that payment is due only where short notice is given, and therefore payment is not due when longer notice is given.

In response to the question from the noble Lord, Lord Goddard, about business uncertainty, I can safely say to him that we are in regular contact with business representative organisations. Businesses know about our implementation road map, so they know when certain provisions in the Bill will come into force. This particular section of the Bill does not come in until 2027.

I turn to reasonable notice, asked about by the noble Lords, Lord Ashcombe and Lord Hunt. After consultation, we will set in regulations what period of notice should be presumed unreasonable. We will also set out factors for tribunals to take into account when considering whether a notice is reasonable. On this basis, I ask the noble Lord, Lord Goddard, to withdraw his amendment.

[Lord Goddard of Stockport (LD)]

I thank the Minister for making another manly fist of that defence from the Government. I genuinely think that they are doing their best. I have met Ministers in this House many times, and I get the feeling that they are dealing with one hand tied behind their back. There are people in the other place who have a different agenda than this revising Chamber, which has tried to make something more fair, honest and transparent than perhaps what has come from the other place. I feel for the Minister in trying to pass that to us. However, there are far wiser minds than mine in this Chamber today, and they can see the blindingly obvious: the number of people looking to us to ensure that the Bill is treated with respect and clarity.

As we say up north, what is in the tin is what it says on the front of the tin, and that has to be that people are protected. With this 48-hour short notice, we are dancing on the head of a pin. Why do the Government not just accept this as a starting point and move forward? This would remove doubt and worry, not for the big companies—the Nexts of this world—but for the small companies employing five, 10, 15, 20 or 25 people, which are now are in limbo again because it is all about legislation coming in 2026, 2027 and 2028. They need to know and plan now. They cannot afford an HR department or lawyers; they just want to run companies, make modest profits and employ people. I thought that was the name of the Bill: it is an employment law working in partnership to deliver benefits for all. On that basis, I wish to test the will of the House.

16:57

Division 2

Ayes: 267

Noes: 153

17:08

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

I understand that it has been agreed that Amendment 11 is consequential on Amendment 10.

Amendment 11

Moved by

[Lord Goddard of Stockport]

11: Clause 3, page 24, line 3, leave out “a specified amount of time” and insert “48 hours”
Member’s explanatory statement
This amendment and another in the name of Lord Goddard defines “short notice” as at least 48 hours before a shift is due to start, and clarifies that if this notice is given, the employer will not be required to make a payment under section 27BP.

Amendment 11 agreed.

Schedule 1: Agency workers: guaranteed hours and rights relating to shifts

Amendments 12 to 20

Moved by

[Baroness Jones of Whitchurch]

12: Schedule 1, page 156, leave out lines 27 to 35 and insert—
“(b) must propose terms and conditions of employment relating to pay that comply with paragraph 2A, and(c) must propose terms and conditions of employment relating to additional matters—(i) that, taken as a whole, are no less favourable than the terms and conditions relating to additional matters that the qualifying agency worker had when working for and under the supervision and direction of the hirer during the relevant reference period,”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

13: Schedule 1, page 157, line 11, at end insert—
“(7A) For the purposes of sub-paragraphs (6)(b)and (7B), terms and conditions of employment relate to “pay” if they relate to any sums payable to a worker in connection with the worker’s employment, including any fee, bonus, commission, holiday pay or other emolument referable to the employment, whether payable under contract or otherwise.(7B) For the purposes of sub-paragraph (6)(c), terms and conditions of employment relate to “additional matters” if—(a) they are not terms and conditions that are required by or under sub-paragraphs (1) and (2) or sub-paragraphs (1) and (4);(b) they do not relate to length of employment;(c) they do not relate to pay.”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

14: Schedule 1, page 157, line 20, at end insert—
“Requirements relating to a guaranteed hours offer: terms and conditions relating to pay
2A (1) Terms and conditions of employment relating to pay that are proposed by a guaranteed hours offer made by a hirer to a qualifying agency worker in respect of a relevant reference period comply with this paragraph if any of conditions A to D is met in relation to those terms and conditions.(2) Condition A is that the terms and conditions of employment relating to pay are no less favourable than the most favourable terms and conditions relating to pay that the qualifying agency worker had when working for and under the supervision and direction of the hirer during the relevant reference period.(3) Condition B is that—(a) the terms and conditions of employment relating to pay do not meet condition A but are no less favourable than the least favourable terms and conditions relating to pay that the qualifying agency worker had when working for and under the supervision and direction of the hirer during the relevant reference period, and(b) the proposal of those terms by the hirer constitutes a proportionate means of achieving a legitimate aim. (4) Condition C is that the terms and conditions of employment relating to pay are no less favourable than—(a) where there was only one comparable worker in relation to the qualifying agency worker at the end of the relevant reference period, the terms and conditions of employment relating to pay that the comparable worker had at the end of that period, or(b) where there was more than one such comparable worker, the most favourable terms and conditions of employment relating to pay that a comparable worker had at the end of the relevant reference period.(5) Condition D is that, where there was more than one comparable worker in relation to the qualifying agency worker at the end of the relevant reference period—(a) the terms and conditions of employment relating to pay do not meet condition C but are no less favourable than the terms and conditions of employment relating to pay that at least one comparable worker had at the end of the relevant reference period, and(b) the proposal of those terms by the hirer constitutes a proportionate means of achieving a legitimate aim.(6) If a hirer relies on any of sub-paragraphs (3) to (5) when making a guaranteed hours offer to a qualifying agency worker, the hirer must give a notice to the qualifying agency worker that—(a) states that the hirer has done so, and(b) where sub-paragraph (3)(b) or (5)(b) applies, explains how the proposed terms and conditions constitute a proportionate means of achieving a legitimate aim.(7) A notice under sub-paragraph (6) must be given by no later than the same day, and in the same form and manner, as the guaranteed hours offer (see paragraph 2(8)).(8) For the purposes of this paragraph a worker is a “comparable worker”, in relation to an agency worker who works for and under the supervision and direction of a hirer, if—(a) the worker is employed by the hirer to do the same or broadly similar work as the agency worker, having regard, where relevant, to whether the worker and the agency worker have a similar level of qualification and skills, and(b) the worker is employed by the hirer to work at the same place as the agency worker or, where there is no worker employed by the hirer at that place who does the same or broadly similar work as the agency worker, at any other place.(9) Paragraph 2(7A) (when terms and conditions of employment relate to pay) applies for the purposes of this paragraph as it applies for the purposes of paragraph 2(6)(b) and (7B).(10) References in this paragraph to terms and conditions relating to pay that an agency worker had when working for and under the supervision and direction of a hirer are references to any sums payable to the agency worker in connection with that work, including any fee, bonus, commission, holiday pay or other emolument referable to the work, whether payable under contract or otherwise.”Member’s explanatory statement
This amendment inserts a new paragraph into new Schedule A1 to the Employment Rights Act 1996. It sets out requirements for the terms and conditions of employment relating to pay that are proposed by a guaranteed hours offer made by a hirer to a qualifying agency worker.

15: Schedule 1, page 157, line 23, leave out from “to” to end of line 24 and insert “additional matters that the qualifying agency worker had when working”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

16: Schedule 1, page 157, line 28, leave out from “employment” to “that” in line 29 and insert “relating to additional matters”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

17: Schedule 1, page 157, line 31, leave out from “to” to end of line and insert “additional matters”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

18: Schedule 1, page 157, line 37, leave out from “to” to “that” and insert “additional matters”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

19: Schedule 1, page 158, line 9, at end insert—
“(5) Paragraph 2(7B) (when terms and conditions of employment relate to additional matters) applies for the purposes of this paragraph as it applies for the purposes of paragraph 2(6)(c).”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

20: Schedule 1, page 159, line 13, after “apply” insert “in relation to a reference period”
Member’s explanatory statement
This amendment clarifies that, where the power in paragraph 4(6) of new Schedule A1 to the Employment Rights Act 1996 is exercised so as to make provision for the duty in paragraph 1(1) not to apply, the exception will operate in relation to a reference period. It is equivalent to my amendment to clause 1, page 9, line 34.

Amendments 12 to 20 agreed.

Amendment 21

Moved by

[Baroness Jones of Whitchurch]

21: Schedule 1, page 159, line 15, at end insert—
“(6A) In exercising the power under sub-paragraph (6) the Secretary of State must, in particular, have regard to—(a) the benefit to agency workers of receiving a guaranteed hours offer under this Part of this Schedule, and(b) the desirability of preventing this Part of this Schedule from having a significant adverse effect on hirers who are dealing with exceptional circumstances.”Member’s explanatory statement
This amendment sets out a non-exhaustive list of matters that the Secretary of State must have regard to in exercising the power in paragraph 4(6) of new Schedule A1 to the Employment Rights Act 1996. It is equivalent to my amendment to clause 1, page 9, line 36.

Amendment 22 (to Amendment 21) not moved.

Amendment 21 agreed.

Amendment 23

Moved by

[Baroness Jones of Whitchurch]

23: Schedule 1, page 160, line 33, at end insert—
“(3A) Where, by virtue of sub-paragraphs (2) and (3), a qualifying agency worker and a hirer are treated as entering into a worker’s contract on a day, and accordingly from that day the qualifying agency worker becomes a worker and the hirer becomes that worker’s employer, Chapter 2 of Part 2A applies in relation to that worker and that employer as if in section 27BA (employer’s duty to make a guaranteed hours offer) subsections (4)(a) and (5) (which provide for the initial reference period to be a reference period and define the initial reference period) were omitted.”Member’s explanatory statement
This amendment produces the effect that where a qualifying agency worker accepts a guaranteed hours offer from a hirer under Part 1 of new Schedule A1 to the Employment Rights Act 1996, so that (respectively) they become a worker and an employer for the purposes of new Chapter 2 of Part 2A of that Act, there will not be a new initial reference period in relation to the former agency worker.

Amendment 23 agreed.

Clause 5: Collective agreements: contracting out

Amendment 24

Moved by

[Lord Sharpe of Epsom]

24: Clause 5, page 31, line 36, at end insert—
“(3A) For the purposes of this Chapter, references to a “relevant collective agreement” shall be treated as including an agreement in writing between an employer and an employee representative body or staff association that—(a) has been formally established for the purposes of consultation or negotiation with the employer,(b) represents either a defined group of the employer’s workers or the workforce generally, and(c) operates independently of the employer in its decision-making.”Member’s explanatory statement
This amendment ensures that, for the purposes of this Chapter, agreements made with independent employee representative bodies or staff associations — where formally constituted and independent — may be treated as equivalent to collective agreements.

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to Amendments 24 and 25 standing in my name and that of my noble friend Lord Hunt of Wirral. As we highlighted in Committee, the Government appear to hold an implicit bias in favour of the trade unions, as though they are the only legitimate bodies capable of making rational decisions on behalf of workers. That is clearly not the case. One needs only to look at the chaos of the Birmingham bin strikes to see that unions are not always acting in the best interests of employees, and nor are they always representative of them.

In Committee, during the debate on Clause 5, the noble Baroness, Lady O’Grady, remarked that

“the whole point of a trade union is that it is a democratic organisation of working people”.—[Official Report, 8/5/25; col. 1744.]

If that is so, surely workers should be free to choose whether to be represented by a union or by another independent body—choice is the essence of workplace democracy. If the noble Baroness and the Government are so committed to democratic representation, I wonder whether she also supports the Government’s proposal to remove the 50% ballot threshold for strike action—a move that clearly undermines democratic standards rather than upholding them.

On Amendment 25, the law must have no gaps, no shadows and no hiding places where the old habits of industrial bullying can take root and flourish. Every loophole we leave open becomes a wound in the body politic of free employment. Every ambiguity we permit becomes a tool for those who would turn the noble art of collective bargaining into a weapon of exclusion. That is why I speak in support of this amendment and why I urge the Government not to dismiss it on the tired ground that closed shops are already unlawful.

Yes, closed shops are illegal on paper, but we are not here to legislate for the perfect world of statutory textbooks; we are here to legislate for the real world and, in the real world, pressure to join a union can exist. This amendment simply states what most of us would regard as common sense: that no worker should be treated differently under a collective agreement based solely on their union membership status. It would prohibit making membership a condition for the agreement’s terms to apply. It would ban imposing any disadvantage on non-members and prevent contract terms being automatically imported purely because someone happens to hold a union card. In other words, it restores balance. It would ensure that collective agreements function as they ought to—as negotiated protections for the workforce—not as a gatekeeping tool for union organisers. It does not therefore weaken unions; it strengthens fairness. I beg to move.

[Lord Jackson of Peterborough (Con)]

My Lords, I will speak very briefly to Amendment 25 in the name of my noble friend Lord Sharpe of Epsom. I reiterate his key point that the imperative is to make it clear that the closed shop is not coming back and that the Government are committed to free but fair bargaining.

Let us remember that the closed shop has never actually been that popular. In the United States, the Taft-Hartley Act of 1947 outlawed the closed shop, and in the UK—even before I was born—in 1964 Rookes v Barnard involving the British Overseas Airways Corporation began the fightback against the closed shop when that organisation sacked a worker who refused to join a trade union. As noble Lords will know, in effect the closed shop was made illegal by the Employment Act 1990 and the Trade Union and Labour Relations (Consolidation) Act 1992.

The fact that we accept that the closed shop is damaging and an anachronism is, as much as anything, a reflection of the different working regimes in which the 40-odd million working people, or potentially working people, in this country exist. The closed shop was very much of a time when heavy manufacturing, manual labour and a heavily unionised workforce were prevalent, and that is now different. The working environment of young people particularly is a much more modern, diverse, dynamic and disaggregated labour market where the closed shop is a throwback and an anachronism.

There are good reasons why it is important to put in primary legislation that even this Government—who are legislating in a very negative way, which will cost jobs and opportunities and force people not to hire workers—will not go back to the bad old days of the 1970s and institute a closed shop. Labour market flexibility is reduced by the closed shop because the capacity of employers to employ the best-qualified candidates—regardless of union membership—is reduced. That inevitably leads to a misallocation of labour resources, higher business costs, higher prices and, ipso facto, a lower number of jobs.

17:15

It also is an offence, of course, against freedom of association and freedom of conscience, and that has been established over many years. With this, we get into the issue of compelled speech and the rights of association. I am not saying it is common or universal, but my noble friend Lord Sharpe alluded to examples of bullying and abuse by union officials. With the closed shop, you have a much more restrictive and exclusionary regime in the workforce, which means that those union officials are going to be less responsive if they know everyone has to be a member and people do not have a free choice to join—or not join—a union.

On Amendment 24, I speak as someone who was a member of Lloyds Banking Group staff union, which was a small staff association that did a fantastic job for me in somewhat tricky circumstances many years ago. My point is that you do not have to be a big union—Unite, UNISON, Prospect or any of those—to deliver demonstrable benefits for your membership.

Obviously, the closed shop potentially has an impact too on innovation and merit. I am not saying that collective solidarity is not important because of course it is, and it is important that we continue to move forward in improving workers’ rights. But that cannot be at the expense of individual rights, individual performance and merit-based advancement. I believe that the closed shop is against that.

I will conclude with the German example. Germany exists very successfully not with a closed-shop system but with a system of works councils, collaborative work between employers and employees and voluntary unions. For all those reasons, it is vital that we explicitly and emphatically rule out the closed shop.

This is an excellent amendment, and I hope, in the spirit of the collaboration and support across parties we have seen this afternoon, that our friends on the Liberal Democrat Benches may support this amendment as well. The closed shop is not popular with any group of voters—including Labour voters—and it is certainly not popular with Liberal Democrat voters. I hope that they can find a way to support this amendment, which is very sensible, does not undermine the Bill and stands up to scrutiny. For that reason, I am happy to support Amendments 24 and 25.

[Baroness Lawlor (Con)]

My Lords, I support Amendment 25 in particular, although I also support Amendment 24. This is about the freedom to be represented by people who represent you and your stance. Only 22% of employees in this country belong to a trade union, so surely it is right, as my noble friends Lord Sharpe of Epsom and Lord Hunt propose, that a relevant collective agreement for the purposes of Clause 5 will be invalid unless it is open to being struck with a body which is independent of a trade union and which is not just a trade union. Given that many workplaces, particularly small businesses, do not have trade union representatives and some 80% of employees do not belong to a trade union, there really is not a case, in terms of freedom, for restricting who should conduct the collective bargaining. It is important to send a signal that we believe in a free workforce and respect the freedom of working people to join, or not to join, a trade union.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I have listened to the noble Lord, Lord Sharpe, and his explanation for Amendments 24 and 25, and note that these are similar to the amendments he tabled in Committee, but with some of the safeguards and requirements removed. While I respect the noble Lord’s views in this area, I feel this is going in the wrong direction. Staff associations and employee representative bodies can of course be a very positive way for staff and employers to engage. However, we are not convinced they are the suitable vehicle for deciding whether to modify or opt out of statutory employment rights. While many maintain a good balance between positive engagement and constructive challenge, we are not persuaded that they will, in all cases, argue as robustly as a trade union on behalf of workers. In addition, without a trade union representing them, workers will not have as many protections if their employer does not deliver promised benefits.

This is nothing to do with a closed shop or industrial bullying. Under our proposals, employees will continue to have the right to be, or not to be, a member of a trade union. The issue here is the right to be represented by a body that is truly independent. We remain of the view that agreements of this type are best made by trade unions which have been through all the steps to become listed and certified as independent. I would encourage any staff association or employee representative body that wants to negotiate on behalf of its members to register as a trade union and go through the steps to obtain a certificate of independence from the certification officer.

The second part of the noble Lord’s amendment sets out that a relevant collective agreement shall not be treated as valid if it meets conditions such as imposing detriment or disadvantage on a worker who is not a member of a trade union and terms being incorporated into a worker’s contract solely by reason of union membership status. We believe that these provisions are unnecessary. The Trade Union and Labour Relations (Consolidation) Act 1992 already provides sufficient protection by ensuring that workers cannot be subject to detriment for the purpose of compelling them to join a trade union. Furthermore, the application of the terms of collective agreements to workers generally depends on incorporation of them into their contracts, either expressly or by implication, in line with well-established contract law, rather than on the basis of a trade union membership.

I turn to Amendments 26 and 27 in my name. Currently, when the terms of a collective agreement cease to be incorporated, the worker’s initial reference period and initial information period recommence the next day. However, in some cases, there could be quite a gap between these terms ceasing to be in force and the worker next being employed by the employer to work. We heard the strength of feeling around business burden in Committee and, where it is possible to make tweaks, we will do so. In this case, we believe it makes more sense for the reference period to start the next time the worker is employed by the employer. This avoids businesses having to consider making a guaranteed-hours offer before it is sensible and necessary to do so.

We are also tabling a minor and technical amendment to new Section 27BY(8) to reflect that the duty relating to the information right in the existing provisions will be on agencies to inform potential eligible agency workers about the right to guaranteed hours in any relevant information period.

Finally, Amendment 27 ensures that the zero-hours measures in the Bill apply as appropriate to special categories of workers. This follows a long-standing precedent that these categories of workers should be treated as distinct, as they do not have a typical employment relationship or undertake a unique type of work. In line with this precedent, the amendment ensures that House of Commons and House of Lords staff, Crown employees and mariners benefit from the crucial protections the Bill provides on zero hours. It also ensures that duties made under provisions in the Bill do not apply where this would not be appropriate; namely, in relation to service personnel in the Armed Forces and police officers. I therefore ask the noble Lord to withdraw Amendment 24 and commend Amendments 26 and 27.

[Lord Sharpe of Epsom (Con)]

I first thank my noble friends Lord Jackson of Peterborough and Lady Lawlor for their comments. Employee representation must be plural and not monopolised by trade unions. There are many workplaces across the country where independent staff associations or employee bodies are trusted, respected and effective. These organisations are not lesser simply because they are not unions. In fact, they are often more in tune with their colleagues’ needs, less politicised and more flexible in resolving workplace issues—yet disappointingly, the Minister says they are not “suitable”.

The idea that only a union can be trusted to negotiate terms is a fiction—we just have to look at Birmingham to see the results of that belief. This amendment simply recognises reality: that employee voices come in many forms and the law should not shut out legitimate and independent associations.

Secondly and just as crucially, we cannot allow this legislation to leave space for any form of closed shop, not in name or in practice. It is true of course that compulsory union membership is already unlawful, as the Minister pointed out, but this amendment would ensure that there were no back doors. We do not think the law should have any ambiguity on this. No agreement should ever impose a detriment on a worker simply because they choose not to join a union, and as my noble friend Lady Lawlor pointed out, the majority choose not to—in fact, in the private sector, I think that the proportion who choose not to join a union is 87.7%. No terms should be granted only by virtue of membership. That is not freedom; that is coercion.

We therefore say again that collective bargaining should not become collective exclusion. These amendments would uphold freedom of association in both directions: the right to join and the right not to, but for now, I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendment 25 not moved.

Amendment 26

Moved by

[Baroness Jones of Whitchurch]

26: Clause 5, page 33, line 40, leave out from beginning to end of line 5 on page 34 and insert—
“(b) in relation to a worker and the worker’s employer—(i) section 27BA(5)(a) has effect as if for sub-paragraphs (i) and (ii) there were substituted—“(i) where the worker is employed by the employer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(ii) where the worker is not so employed, the first day after the effective day on which the worker is employed by the employer, and”, and(ii) section 27BF(3) has effect as if for paragraphs (a) and (b) there were substituted—“(a) where the worker is employed by the employer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(b) where the worker is not so employed, the first day after the effective day on which the worker is employed by the employer.”,(c) in relation to an agency worker and a hirer for and under the supervision and direction of whom the agency worker works, paragraph 1(5)(a) of Schedule A1 has effect as if for sub-paragraphs (i) and (ii) there were substituted—“(i) where the agency worker is working for and under the supervision and direction of the hirer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(ii) where the agency worker is not so working, the first day after the effective day on which the agency worker is working for and under the supervision and direction of the hirer, and”, and(d) in relation to an agency worker and the work-finding agency with which the agency worker has a worker’s contract or an arrangement by virtue of which the agency worker is (or is to be) supplied to work for and under the supervision and direction of a hirer, paragraph 6(3) of Schedule A1 has effect as if for paragraphs (a) and (b) there were substituted—“(a) where the worker’s contract or arrangement is in force on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(b) where it is not in force on the effective day, the first day after the effective day on which it is in force.””Member's explanatory statement
This amendment ensures that the gloss in new section 27BY(8) of the Employment Rights Act 1996 operates effectively.

Amendment 26 agreed.

Schedule 2: Consequential amendments relating to sections 1 to 5

Amendment 27

Moved by

[Baroness Jones of Whitchurch]

27: Schedule 2, page 191, line 31, at end insert—
“18A In section 192 (armed forces), in subsection (2)(e), after “103” insert “, 104BA, 104BB”.18B (1) Section 194 (House of Lords staff) is amended as follows.(2) After subsection (2)(a) insert—“(aza) Part 2A, apart from Chapter 1 of that Part,”.(3) In subsection (2)(c), for “and 47E” substitute “, 47E and 47H”.18C (1) Section 195 (House of Commons staff) is amended as follows.(2) After subsection (2)(a) insert—“(aza) Part 2A, apart from Chapter 1 of that Part,”.(3) In subsection (2)(c), for “and 47E” substitute “, 47E and 47H”.18D (1) Section 199 (mariners) is amended as follows.(2) In subsection (8), for paragraph (b) substitute—“(b) Part 2,(bza) Part 2A, apart from Chapter 1 of that Part,(bzb) Parts 2B, 3 and 5,”.(3) After subsection (8) insert—“(9) In the application of subsection (7) to the provisions mentioned in subsection (8)(bza), the reference in subsection (7)(b) to a contract of employment is to be read as a reference to a worker’s contract.”18E In section 200 (police officers), in subsection (1)—(a) after “8 to 10,” insert “Chapters 2 to 4 of Part 2A,”;(b) after “47C,” insert “47H,”.”Member's explanatory statement
The paragraphs inserted into Schedule 2 by this amendment make amendments of Chapter 1 of Part 13 of the Employment Rights Act 1996 (particular types of employment) that are consequential on clauses 1 to 5.

Amendment 27 agreed.

Clause 10: Statutory sick pay in Great Britain: removal of waiting period

Amendment 28

Moved by

[Lord Hunt of Wirral]

28: Clause 10, page 38, line 12, leave out paragraph (b) and insert—
“(b) in subsection (2), for “four” substitute “two”.”Member's explanatory statement
This amendment preserves a minimum one-day waiting period for statutory sick pay, by reducing the qualifying threshold from four days to two, rather than introducing a day-one entitlement.

[Lord Hunt of Wirral (Con)]

My Lords, Amendment 28 simply asks for a degree of common sense. It would preserve a minimum one-day waiting period for statutory sick pay by lowering the qualifying threshold from four days to two, rather than removing the threshold entirely, as the Government now propose.

We have heard a great deal from the Benches opposite about bad employers, and indeed there are some, but the Government must also acknowledge the other side of the coin. Just as some employers abuse the system, so, too, do some employees. To pretend otherwise is disingenuous and undermines the credibility of the entire framework.

In fact, before the Government’s recent and embarrassing U-turn on benefits reform, Ministers rightly spoke about the perverse incentives created by aspects of the welfare system. The logic there was sound, and the same logic applies here. If we remove all barriers to claiming statutory sick pay, even for a single day, and do so without checks or balances, we create a system that is not only vulnerable to abuse but risks becoming a disincentive to return to work.

Let me be absolutely clear. This is not about denying support to people who are genuinely unwell. It is about preserving the integrity of statutory sick pay so that it remains sustainable, trusted and workable for businesses, particularly small ones. A one-day waiting period is a modest safeguard, not a punishment. It would discourage spurious claims, uphold personal responsibility and give smaller employers a fighting chance in a tight and unpredictable labour market.

17:30

I also raise a specific concern regarding agency workers and statutory sick pay abuse, which was addressed to some extent in a recent letter from the Minister, for which we are very grateful indeed. While we appreciate the clarification offered, the current drafting of the Bill, and indeed of paragraph 2(f) of Schedule 11 to the Social Security Contributions and Benefits Act 1992, does not fully address the issue.

Let me clarify. The problem is not with legitimate statutory sick pay claims from individuals working multiple jobs. It is with the lack of safeguards that would allow a worker to, first, go off sick with one employer and begin receiving statutory sick pay; then start working for another employer while still drawing statutory sick pay; and then, potentially, repeat this behaviour with others. There is no proper oversight mechanism, no way to cross-reference national insurance numbers across employers, no effective way to prevent simultaneous claims for statutory sick pay. This is, I believe, a serious loophole with real financial implications, particularly for the agency sector and for smaller businesses already struggling to absorb rising costs. Even retaining a short waiting period specifically for agency workers would be a minimal step to help reduce the opportunity for abuse while ensuring that the system remains targeted at genuine need.

Amendment 29, which stands in my name and that of my noble friend Lord Sharpe of Epsom, would introduce a very simple principle. Where an employer already provides a contractual sick pay scheme that pays at least 80% of normal weekly earnings, they should be exempt from the statutory sick pay provisions introduced by this Bill.

The reason for this is straightforward. We must acknowledge that the costs of these new sick pay provisions will fall disproportionately on small and micro businesses: those least equipped to absorb them. Paradoxically, the Bill would also apply these requirements to employers who already go above and beyond, voluntarily, in supporting their staff through illness. According to the latest figures, 27% of businesses already offer generous contractual sick pay arrangements, many of them paying far more than the statutory minimum. These are overwhelmingly medium and large businesses, which provide such schemes in response to competition. There is huge competition for talent, retention and reputation. That is how good employment standards should develop: through innovation and market competition. What the Bill proposes is a levelling down, sweeping in companies already providing 90% or even 100% pay, and subjecting them to unnecessary bureaucracy, as though the Government know better than the employer and employee what is fair or workable.

It is deeply ironic that, in their eagerness to legislate for protection, the Government are undermining precisely the competitive mechanisms that have driven better employment practices in the first place. Competition raises standards; compulsion often flattens them. I beg to move.

[Baroness Noakes (Con)]

My Lords, I support Amendment 28, which has been so well moved by my noble friend Lord Hunt of Wirral. My main problem with the statutory sick pay clauses in this Bill is that the Government are proceeding without a reliable evidence base. The Government do not collect data on sick leave taken by employees. Instead, they have relied on some modelling by the Department for Work and Pensions, and that modelling in turn rests on some surveys that are carried out by the DWP. Those surveys have some problems, which the DWP itself owns up to, in terms of statistical quality. The Office for National Statistics also published some data on sickness absence. These data are labelled “statistics in the course of development”, and we all know that the ONS currently has major problems with its labour market statistics.

Nevertheless, the Government have used these data and made some challengeable assumptions of their own, such as that there will be no increase in sickness days taken off if the changes in Clauses 10 to 14 go ahead. They have come up with an additional cost to business of £420 million, which they then calculate as £15 per employee. I do not think that £15 passes the common-sense test. It implies that employers will bear the cost of not much more than an extra half a day of statutory sick pay at the rate that is specified in the Bill.

Part of the problem is that the Government’s calculations average those costs over 24 million employees, which is roughly the size of the whole private sector workforce. Within that, nearly a half of employees are employed in large businesses, many of which have their own sick pay arrangements and do not rely on the statutory sick pay arrangements that my local friend Lord Hunt outlined. I tried to find the complete set of costs for small and micro businesses. It looks as if the costs for the smaller end of the scale of businesses are roughly double the amount per employee, but it is very difficult to tie it down, because the dataset is incomplete—certainly the one that is available in public. As my noble friend has already pointed out, the Government’s own assessment has owned up to the fact that these costs will disproportionately bear on small and micro businesses.

Even if we double the £15 per employee to £30, I am not sure that even that is a realistic estimate of the costs that will fall on individual businesses, because it amounts to just a bit over a day of statutory sick pay at the new rate in the Bill. That does not seem to me to make any sense at all. The Government should have done proper studies of current sickness patterns and costs for the various businesses that are affected by these clauses before going ahead. In particular, I believe that the costs to small and micro businesses should have been evaluated before the clauses were proceeded with. The only thing that we know for sure about these clauses is that the impact on small and micro businesses will be disproportionately large.

However, I recognise that the Government would probably have gone ahead with these provisions even if they had gold-standard data and analysis, and even if that analysis showed that the cost was 10 times the amount that the Government currently estimate. That is the reason I support my noble friend’s Amendment 28, with a one-day waiting period and a qualifying threshold of two days, which would go some way towards reducing the impact on smaller firms. Survey data shows that nearly 60% of sickness absences are for one or two days. The small change that my noble friend’s amendment seeks could have a major impact on businesses and the bureaucratic burdens that they would have to bear.

I support Amendment 30, which would reintroduce a statutory sick pay scheme. I would have confined it to small and micro businesses, because that is where the greatest harm is, but, in this uncertain economic environment, with costs being piled on businesses in all directions, businesses deserve protection from the Government’s policies. For that reason, I support Amendment 30.

[Baroness Coffey (Con)]

My Lords, I have added my name to Amendment 30, tabled by the noble Lord, Lord Goddard of Stockport, which builds on something that I raised in Committee. I have been asked to do a statement for the Covid inquiry regarding the economic response and so have been going through a variety of notes from five years ago. One of the most successful things that we did then was to support employers in the deployment of statutory sick pay by ensuring that people could stay at home and not be spreading coronavirus at work.

For me, that reinforced something that made sense for the country as a whole and its public health and was fair. It was fair to businesses that, while the country was being asked to do something and they were being asked to do something as employers, the Government helped with the cost.

Part of this entire debate is the fair work agency and it being fairer for employees—and apparently it will be fairer for employers, around productivity. I do not want to repeat all that I have said on this but I recall that, when there used to be a rebate, it was recognised that this was the bare minimum, with many employers paying a lot more than the statutory sick pay rate. It was about co-working and recognising that, as a mature country, we believe that people should continue to be paid when they are off ill, and that the Government have an interest in that too. That is why I was particularly keen to sign Amendment 30, although I am conscious that some of its finer details could be worked out further.

Amendment 28 was tabled by my noble friends on the Front Bench. Of the variety of changes that are happening through this Bill—many of which, I remind the House, could have been done through statutory instruments—statutory sick pay from day 1 has come up time and again with most of the employers that I have met or heard from. The impact is genuinely worrying, particularly for people in the hospitality sector, the retail sector and so on. Going straight to day 1 is a step too far backwards. That is why I am supporting my friends on the Front Bench.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, in the evidence and analysis document that the Government very helpfully gave us last week, it notes that up to 1.3 million employees will get a new entitlement to statutory sick pay and that that will increase the amount of sick pay that workers receive by around £400 million a year. At face value, this is in many ways a very positive step forward. However, that same document brought up some cultural issues. I would like the Minister to reflect on whether day 1 statutory sick pay will help to tackle those issues.

The document notes that

“stress, depression or anxiety accounted for 17.1 million working days lost in 2022/23, equivalent to a loss of £5.2bn in output per year”.

Is there a danger that an unintended consequence of day 1 sickness pay would be people being encouraged to too easily see themselves as not fit for work? Can the Minister answer that? The same document says that:

“Measures to improve worker wellbeing will result in happier, healthier and more productive workers, which could be worth billions of pounds a year”.


That seems rather far-fetched. It might mean that people will more easily go on the sick, not because they are shirkers but because we are creating a culture where that is the norm.

17:45

Following on from the noble Baroness, Lady Coffey, I thought that the point about lockdown was that we encouraged young people in particular to think that, if they had the slightest hint of illness, they should not go into work. We somehow have created a situation of making it okay for people not to go to work. One of the shocking statistics that came out recently, in a different context, was that, last year, 63,000 students went straight from university to long-term sickness benefits, while the number of 24 to 34 year-olds on incapacity benefits has risen by 69% in five years. My concern is that young people are now being inculcated into imagining that they cannot cope with going to work.

I know that the Government know this—I have listened to both debates on welfare reforms and heard the Health Secretary, Wes Streeting, say very similar things. If the Government are successful in encouraging those young people who are wasting their potential to get a job, those young people will then turn up at work to find that, on day 1, they can go back on the sick. Having got them off the sick, the Government would then be putting them in a position where they can go on the sick again. That is not joined-up thinking. Can the Minister comment on some of the unintended cultural consequences of something that looks like a good idea but might be disastrous?

[Lord Goddard of Stockport (LD)]

My Lords, I will speak on the important topic of statutory sick pay, particularly in relation to amendments in this group. I thank the noble Baroness, Lady Coffey, for signing the amendment. I listened to her very closely in Committee; she may have got a flavour of what I am about to say, because she has an excellent overview of these matters, and I think the House does listen. I also thank the noble Baroness, Lady Noakes, for her forensic examination of the financial cost, which should never be underestimated—these things are emotional, but there are costs to anything that anybody does. It is important that we understand where the balance lies.

I will speak predominantly to my Amendment 30, which is a probing amendment. We recognise that there are challenges in creating a two-tier employment system with different obligations depending on business size. For that reason, we will not press for a Division on this amendment. However, this amendment highlights the importance of recognising the potential impact that this might have on small and medium-sized enterprises due to the costs that they incur from statutory sick pay. SMEs form the backbone of our economy. It is essential that government policy takes full account of the financial pressures that businesses face.

Expanding statutory sick pay is an important and welcome goal, but it must be done with careful consideration of how the additional costs affect the viability and growth prospects of SMEs. That is why meaningful consultation with these businesses throughout the implementation process is critical. The Government should actively engage with SMEs to ensure that their concerns are understood and addressed, so that any changes to statutory sick pay are substantial and do not inadvertently place undue burdens on the very common businesses and people who are trying to drive the economy.

I will ask the Minister to confirm that, as the Government continue their thorough consultation as part of the implementation of the Bill, they do so directly and in close alignment with small and medium-sized businesses, not during the passage of the Bill but throughout its full implementation. Can the Minister provide reassurance that SMEs’ voices will be heard, and their concerns addressed, as the policy is rolled out? Because it is only through partnership with the SME community that we can ensure the statutory sick pay system is both fair for workers and sustainable for business. I look forward to the Minister’s response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have contributed. I will start with Amendment 28, which looks at retaining the waiting period for one day. The Government believe that removing the waiting period is essential in ensuring that all eligible employees can take the time off work they need to recover when sick. That is why we committed to it in the manifesto. This is particularly true for employees with long-term or fluctuating conditions, who should feel able to take a day of sickness absence to manage their condition or prevent it worsening. The noble Lord, Lord Hunt, said that the one-day waiting period that he was proposing should not be a punishment, but that is exactly what it would be under the proposals before us.

It is also worth saying that 25% of all employees receive only statutory sick pay, and many are forced to choose between their health and the genuine financial hardship during the first three days of sickness absence when they are not paid. Removing the waiting period will make a tangible difference to ensuring that the safety net for sick pay is available to those who need it most.

I understand that the noble Lord is concerned about the wider impacts on businesses of these changes, but, without the removal of the waiting period, many employees will be forced to continue to come into the workplace when they are sick. The pandemic exposed how damaging this can be for businesses and individuals, with WPI economic modelling telling us that presenteeism can lead to up to 12% of the workforce becoming sick from the illness of a single employee. By reducing such presenteeism, businesses may benefit from the overall productivity increase, which can also contribute to a positive work culture that better helps recruit and retain staff.

Of course, as we have debated before, employers will need to manage sickness absence, as they do at the moment. I listened to the noble Baroness, Lady Fox, on the cultural issues, and, yes, some of the things she identifies are real issues. We are addressing them across government, and she will have heard many of my ministerial colleagues set out how they plan to do that. But that does not alter the fact that, in this Bill, what we are proposing makes good sense for the lowest paid.

I also remind noble Lords that the additional cost to business of the statutory sick pay reforms is about £450 million annually—a relatively modest £15 per employee. It was quite rightly pointed out that these figures were modelled by the DWP, but it does have a reasonable track record of doing such modelling, and I do not think that the figures should be dismissed.

Amendment 29 seeks to exempt employers from having to pay the rate of statutory sick pay outlined in Clause 11 if they already provide a contractual scheme that pays at least 80% of normal weekly earnings. The rate of statutory sick pay is set out in the Bill as the lower of 80% of an employee’s weekly earnings, or £118.75. This already means that no employer will have to pay more than 80% of an employee’s normal weekly earnings. Therefore, an employer already paying 80% of an employee’s weekly earnings would be compliant with the statutory minimum set out in the Bill. As such, I am unclear on the intended impact of this amendment on employees or employers, as it does not appear to change the statutory sick pay entitlement.

I turn to Amendment 30 in the name of the noble Lord, Lord Goddard, and I appreciate what he said about it being a probing amendment. As I have mentioned, the changes we are making to statutory sick pay will cost businesses around £15 per employee. This relatively modest amount compares with projected costs of up to £600 million a year to government of a rebate for the full amount of statutory sick pay for SMEs. I accept the arguments made by the noble Lord that this cost will of course depend on the size, scope and complexity of a rebate scheme. However, we have experience of administering such schemes. We previously delivered statutory sick pay rebate schemes such as the percentage threshold scheme. A review found that the employers underused it and found it was complex and time-consuming to administer. Any rebate system that maximises opportunity for business take-up, which I envisage would be the noble Lord’s intent in this amendment, would collectively be costly for the taxpayer as well, whereas the cost saving for individual employers would be small and a new administrative burden would be placed on them.

Previous statutory sick pay rebate schemes also did not incentivise employers to support their employees back to work or invest in their health and well-being. This, in turn, can affect overall productivity and staff retention. We know that employers have responsibility for paying sick pay, and that helps maintain a strong link between the workplace and the employee, with employers encouraged to support employees to return to work when they are able. I would also like to add that the Government have asked Sir Charlie Mayfield to lead the Keep Britain Working review, which will consider recommendations on how employers and the Government can work together to promote healthy and inclusive workplaces. A final report with recommendations is expected in the autumn.

I therefore do not believe that a rebate scheme is the best way to support our SMEs at this time, but, in response to the noble Lord, Lord Goddard, I say that of course we are continuing to have a dialogue with SMEs, and we take their concerns very seriously. I therefore ask the noble Lords, Lord Sharpe and Lord Goddard, not to press their amendments.

[Lord Hunt of Wirral (Con)]

My Lords, I would like to thank all noble Lords for their contributions to this important debate. I am particularly grateful to my noble friend Lady Noakes for reminding us all that one of the great difficulties we have in debating a subject such as this is the lack of a reliable evidence base, and that is particularly relevant to the debates on these amendments. The noble Baroness, Lady Fox of Buckley, quite rightly drew our attention to the unintended cultural issues, which worry us all so much and to which the Minister has just referred.

I remain wholly unconvinced by the Minister’s response when debating the removal of the waiting period for statutory sick pay. To remove any waiting period at all, and to introduce a day one entitlement without qualification, is not just a step too far but an unnecessary one. Having at least one waiting day does not undermine the Government’s stated intention to support those who are genuinely unwell. It is a modest safeguard that reflects the balance they claim to seek, and its removal creates perverse incentives at a time when we should be doing all we can to encourage people back into work.

On the issue of agency work and statutory sick pay, the Minister’s response is equally unconvincing. I did try to outline a scenario where individuals go off sick, claim SSP and then begin new assignments, while continuing to receive sick pay from another employer. I do not believe that the Minister adequately addressed that point. I suggest that perhaps we ought to put our heads together and try to find another solution. Having listened carefully to the debate, a system-wide mechanism, possibly administered by HMRC, to cross-check SSP claims across employers could serve as a much-needed safeguard. Perhaps she might reflect further on that on that idea, because I believe that such a mechanism would not target those with legitimate dual employment. We recognise that some workers genuinely hold more than one job in a given week, but it would introduce a basic layer of validation—a simple tool to distinguish between valid and dishonest claims. Without it, businesses, particularly small and agency employers, would remain exposed to fraudulent or inadvertent overclaims that could cost them thousands of pounds, all in the name of a policy that currently lacks real oversight.

I thank my noble friend Lady Coffey and the noble Lord, Lord Goddard of Stockport, for their important probing amendment. It has been a useful and interesting debate, but we still search for the solutions that will meet the problem. I urge the Government, in their phased consultation, to listen to businesses from across the board as they highlight their concerns. In the meantime, I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

18:00

Clause 11: Statutory sick pay in Great Britain: lower earnings limit etc

Amendment 29 not moved.

Amendment 30 not moved.

Amendment 31

Moved by

[Lord Palmer of Childs Hill]

31: After Clause 17, insert the following new Clause—
“Kinship care leave(1) The Employment Rights Act 1996 is amended as follows.(2) After section 80EI insert—“Chapter 5AKinship care leave80EJ Kinship care leave(1) The Secretary of State must make regulations entitling an employee to be absent from work on leave under this section if the employee satisfies conditions specified in the regulations as to an eligible kinship care arrangement with a child.(2) The regulations must include provision for determining—(a) the extent of an employee’s entitlement to leave under this section in respect of a child;(b) when leave under this section may be taken. (3) Provision under subsection (2)(a) must secure that—(a) where only one employee is entitled to leave under this section in respect of a given child, the employee is entitled to at least 52 weeks’ leave;(b) where more than one employee is entitled to leave under this section in respect of the same child, those employees are entitled to share at least 52 weeks’ leave between them.(4) An employee is entitled to leave under this section only if the eligible kinship care arrangement is intended to last—(a) at least one year, and(b) until the child being cared for attains the age of 18.(5) For the purposes of this Chapter, “eligible kinship care arrangement” means—(a) special guardianship,(b) a kinship child arrangement,(c) a private fostering arrangement, or(d) a private family arrangement,within the meaning given by section (Meaning of “kinship care”) of the Employment Rights Act 2025.(6) The regulations may make provision about how leave under this section is to be taken.(7) In this section—(a) “special guardianship”, “kinship child arrangement”, “private fostering arrangement” and “private family arrangement” have the same meanings as in section (Meaning of “kinship care”) of the Employment Rights Act 2025.(b) “week” means any period of seven days.80EK Rights during and after kinship care leave(1) Regulations under section 80EJ must provide—(a) that an employee who is absent on leave under that section is entitled, for such purposes and to such extent as the regulations may prescribe, to the benefit of the terms and conditions of employment which would have applied but for the absence,(b) that an employee who is absent on leave under that section is bound, for such purposes and to such extent as the regulations may prescribe, by obligations arising under those terms and conditions (except in so far as they are inconsistent with subsection (1) of that section), and(c) that an employee who is absent on leave under that section is entitled to return from leave to a job of a kind prescribed by regulations, subject to section 80EL.(2) The reference in subsection (1)(c) to absence on leave under section 80EJ includes, where appropriate, a reference to a continuous period of absence attributable partly to leave under that section and partly to any one or more of the following—(a) maternity leave;(b) paternity leave;(c) adoption leave;(d) shared parental leave;(e) parental leave;(f) parental bereavement leave.(3) In subsection (1)(a), “terms and conditions of employment”—(a) includes matters connected with an employee’s employment whether or not they arise under the contract of employment, but(b) does not include terms and conditions about remuneration. (4) Regulations under section 80EJ may specify matters which are, or are not, to be treated as remuneration for the purposes of this section.(5) Regulations under section 80EJ may make provision, in relation to the right to return mentioned in subsection (1)(c), about—(a) seniority, pension rights and similar rights;(b) terms and conditions of employment on return.80EL Special cases(1) Regulations under section 80EJ may make provision about—(a) redundancy during or after a period of leave under that section, or(b) dismissal (other than by reason of redundancy) during a period of leave under that section.(2) Provision by virtue of subsection (1) may include—(a) provision requiring an employer to offer alternative employment;(b) provision for the consequences of failure to comply with the regulations (which may include provision for a dismissal to be treated as unfair for the purposes of Part 10).80EM Chapter 5A: supplemental(1) Regulations under section 80EJ may—(a) make provision about notices to be given, evidence to be produced and other procedures to be followed by employees and employers;(b) make provision requiring employers or employees to keep records;(c) make provision for the consequences of failure to give notices, to produce evidence, to keep records or to comply with other procedural requirements;(d) make provision for the consequences of failure to act in accordance with a notice given by virtue of paragraph (a);(e) make special provision for cases where an employee has a right which corresponds to a right under section 80EJ and which arises under the person’s contract of employment or otherwise;(f) make provision modifying the effect of Chapter 2 of Part 14 (calculation of a week’s pay) in relation to an employee who is or has been absent from work on leave under section 80EJ;(g) make provision applying, modifying or excluding an enactment, in such circumstances as may be specified and subject to any conditions which may be specified, in relation to a person entitled to take leave under section 80EJ;(h) make different provision for different cases or circumstances;(i) make consequential provision.(2) The cases or circumstances mentioned in subsection (1)(h) include—(a) more than one child being subject to the same eligible kinship care arrangement, and(b) a child being subject to an eligible kinship care arrangement on two or more separate occasions,and regulations may, in particular, make special provision regarding the applicability and extent of the entitlement to leave in such circumstances.(3) The Secretary of State may by regulations make provision for some or all of a period of kinship care leave to be paid.””Member’s explanatory statement
This amendment inserts provision which sets out an entitlement to kinship care leave.

[Lord Palmer of Childs Hill (LD)]

My Lords, Amendments 31 and 32 in my name relate to the often-ignored subject of kinship care. The amendments seek to introduce—at last—kinship care leave as a paid entitlement and to establish a legal definition of kinship care, which is something many people do not even think about. It is time to address the current lack of formal employment rights and protections for kinship carers.

It is long overdue that we legally recognise and reward the grandparents, aunts, uncles and other relatives who step in as carers. More than 130,000 children in the UK are in kinship care, which is, amazingly, three times the number who are in foster care. When family crises occur—and they do occur—it is often kinship carers who step up to the plate, preventing children from being swept up into the formal care system.

Amendments 31 and 32 would allow families breathing space in order to adjust and, most importantly, support the well-being of the child. Support of kinship care is cost effective, as it reduces pressure on an overtasked care system. It is time to be compassionate for everyone’s long-term benefits—and I may well ask your Lordships to vote on this at the end of the group.

The Government’s Amendment 34 extends bereavement leave to include pregnancy loss. I commend this amendment to the House.

We are not debating or voting on Amendment 97 now, because it has been degrouped. It is in the name of the noble Baroness, Lady Grey-Thompson, and gives a statutory right to paid leave for working parents who are forced to stop working to care for a critically ill child over 28 days old. This is described as Hugh’s law, after one who suffered in this way. I commend this amendment, which we will get to when we get to its degrouped place; it was originally in this group.

The other amendment in my name, Amendment 104, is on statutory carer’s leave. We owe a great deal to unpaid carers, who are the backbone of our society. Their support is worth a staggering £184 billion a year to older, ill or disabled relatives or friends—support without which society would collapse. The reality, however, is that this comes at a cost to them. Around 600 people a day give up work to care, and 1.2 million face poverty and financial hardship. Research shows that the majority do not have a choice about caring, because there are no care alternatives available. Employers are losing skilled labour every day because of caring, at a cost to their productivity. For some small employers, which we have spent a lot of time talking about, losing skilled workers can have an even bigger impact.

This amendment in my name would provide for the Government to publish regulations that would recompense employers, particularly small employers. There is insufficient social care and health services to plug the gap. Supporting carers to stay in employment is cost effective, and many carers have told Carers UK that they want to stay in work. Polling carried out by Carers UK found that 88% of unpaid carers of working age said that they needed paid carer’s leave.

The amendment that we brought forward in Committee has been refined, I hope for the better, having received comments from the Minister that the original drafting would have been different to that for other entitlements. We have therefore aligned the entitlements to pay for statutory carer’s leave with other similar statutory entitlements. This is very modest and yet would reflect a critical step forward for unpaid carers. The modest entitlement would normally be up to only five days of paid leave. It is described as a week, and a week is—amazingly—described as up to five days. This is how it is set out in the Carer’s Leave Act.

The Government could set the rate of statutory pay. The cost of statutory carer’s leave, based on estimates from Carers UK, is between £5 million and £32 million per annum. That is based on actual take-up rates of carer’s leave with employers. Centrica has two weeks of paid carer’s leave at full pay, with a further two weeks of matched leave. The Carers UK report says that just 3.4 days, on average, are taken by employees as carer’s leave. The Government’s estimate of the cost of carers’ inability to work is £37 billion. The personal cost is even greater if carers have to give up work, as they do, in order to care.

In advance of the Bill, Carers UK has been talking to carers about what paid carer’s leave would mean. One carer, who is a bus driver, has not had a holiday in seven years because of caring. He takes annual leave first, because it is paid, then unpaid leave if he has to. Work is extremely important to him, as he said that it “keeps him going” but that it is hard caring for two people without a break. He has been to his council, but does not get much support. He is still waiting, because the more trained care workers who his son needs are not available.

Another carer, who works in the NHS, is struggling to work and care, but she does not have paid carer’s leave. This leaves her burned out and exhausted, and she has to take her annual leave. We cannot afford to lose valuable NHS staff as a result of providing unpaid care. Paid carer’s leave is vital for those who cannot afford to take unpaid leave. What hope can the Government give to people like this who juggle every day and who need support such as paid carer’s leave, so that they can keep caring and working?

Will the Government go one step further and commit to building on the Carer’s Leave Act 2023 in introducing paid carer’s leave? Given that a parental leave review has been published for consultation and engagement, can the Minister tell the House what the Government’s message to unpaid carers and the review of carer’s leave are? Will the objectives, timetable, report and engagement be published? Carers are a valuable resource, but they are not appreciated. It is time that we in this House started appreciating them. I beg to move.

[Baroness Coffey (Con)]

My Lords, I speak to the two amendments that I have tabled. The loss of any foetus or potential child is a massive grief, and I entirely understand why this provision has been brought forward. My right honourable friend Jeremy Hunt commissioned the independent review into pregnancy loss several years ago, and a variety of actions have taken place, particularly in thinking of people with miscarriages. By law, a stillbirth is anything from 24 weeks onwards, but being able to register a birth such that, in effect, people who lose their foetus after 24 weeks can have a birth certificate in the same way was a good thing to do.

I am speaking today to try to get clarity on what the Government are proposing. If the Bill specifically mentioned miscarriage or ectopic pregnancy or molar pregnancy, I would not be speaking, although I would still want to get some understanding through Amendment 35. Perhaps I will start with that first.

I would be very grateful if the Minister could explain the new Section 80EA(3A)(b) of the Employment Rights Act 1996, to be inserted by Amendment 34. It says that a person is bereaved if

“the employee satisfies specified conditions as to relationship with … a person who has suffered a pregnancy loss … or … a child who had been expected to be born had a pregnancy loss of a specified kind not occurred”.

It would be useful to understand why it is not being put in the Bill who it is expected that this will extend to—I do not know whether it is the father, a donor, a sibling, a grandmother, a grandfather and so on. I completely understand why, at such a difficult moment, we might want to extend bereavement leave, and not just for the mother, but it would be useful to get a further sense of that from the Government.

The main reason I am speaking today is my Amendment 41. It is an amendment to Amendment 40, which inserts a new paragraph into Clause 18 that defines “pregnancy loss” as

“the ending of a pregnancy after less than twenty-four weeks of pregnancy in any way other than a live birth, or (b) the failure of an embryo to become implanted following a transfer carried out in the course of providing treatment services within the meaning of the Human Fertilisation and Embryology Act 1990”.

I am conscious that these recommendations were made by a Women and Equalities Select Committee report, but I want to understand what is in the Government’s mind today. It is quite a moment to choose to, in effect, use the Employment Rights Bill to define what a pregnancy is, particularly with regard to IVF. I know many people who have been through IVF, who of course have disappointment if it does not work that month or that year, and will try again. The fact that roughly 30% of IVF treatments are successful—I have shared those statistics previously—leaves a whole range of situations where a transplant has not happened. As I said, I am somewhat concerned at what is almost the redefinition of “pregnancy” when we are considering the body of a woman.

Furthermore, when it comes to

“the ending of a pregnancy … in any way other than by a live birth”,

the latest statistics published by the Department of Health and Social Care stated that there were around 250,000 abortions in this country in 2022. That was up 17% from the year before. Meanwhile, although I can entirely understand aspects of foetal anomaly or risks to the health of the mother, according to Department of Health and Social Care statistics that were published and referenced in the Commons Select Committee report, there were around 3,300 abortions for those reasons. There is a very significant difference between 3,300 and 250,000 but, as it stands, anyone who had a legal abortion will be counted in that statistic. I am not aware that the Department of Health and Social Care has yet decided how it will count in its statistics the number of abortions from pills through the post. At the moment, it does not even count the number of pills issued.

I am trying to get clarity from the Government. Is it really their intention that a person who has an abortion—up to 250,000 people a year—will be entitled to bereavement leave? That is what this primary legislation is saying.

On other issues in the Bill, all sorts of things are put into Henry VIII powers or regulations or other conditions. I seek to understand why the Government feel that this should be in the Bill. Obviously, every loss undoubtedly brings horrific grief. I know that, having had had to care for people in that situation and similar, and I understand why this is going ahead. Despite the potential for sickness leave being open, I recognise that under the Equality Act any discrimination would be against the law. I understand the steps the Government are taking, but I would be grateful for a genuine and huge level of detail on what they are setting out today in primary legislation. I commend my amendments to the House.

18:15

[Baroness Lister of Burtersett (Lab)]

My Lords, I will speak to Amendment 104, to which I have added my name. I do not intend to repeat the case I made in Committee for paid carer’s leave, and which was put very fully by the noble Lord, Lord Palmer of Childs Hill, but I am still unclear as to why the Government now, in effect, question that case, having made a commitment to paid leave on a number of previous occasions, as was demonstrated by the various quotes from Front-Bench spokespeople that I and the noble Lord, Lord Young of Cookham, presented in Committee.

My noble friend Lord Katz rejected an earlier amendment in Committee, as we have heard, on the grounds of the costs to business, especially small business, and that it would create a situation of differential treatment. The present amendment, although detailed, simply commits the Government, as I understand it, to the principle of paid carer’s leave—a principle that had previously been accepted. It leaves to regulations the details of how paid leave would be designed. As regards the costs to business, as I said in Committee, many employers are very supportive and a CIPD consultation of its members found that support among SMEs was not much lower than among large employers.

Although it is welcomed that the Government are reviewing carer’s leave to see whether further support is needed, surely there is already more than enough evidence that, to be effective in supporting carers, the leave needs to be paid, and thus any review needs to focus on how that is best done rather than on whether it is needed. That said, can my noble friend the Minister tell us more about the review? To echo in particular the noble Lord, Lord Palmer, what are its terms of reference and objectives? What is the timeline? Will the outcome be published and debated in Parliament? The paucity of information about the review contrasts poorly with the recent Statement about the parental leave review.

In conclusion, if my noble friend the Minister is unable to accept the amendment, will he—I am not quite sure which Minister will reply—at least put on the record the Government’s commitment to paid carer’s leave as set out in Labour’s New Deal For Working People? Will he provide us with the requested information about the review of the Carer’s Leave Act?

[Baroness Tyler of Enfield (LD)]

My Lords, in speaking to Amendment 104, in the name of my noble friend Lord Palmer, to which I too have added my name, I must apologise that I have been unable to speak at earlier stages of the Bill. I also strongly support Amendments 31 and 32 regarding kinship carers. I have spent a lot of time on the Children’s Wellbeing and Schools Bill, where we have spent a lot of time talking about the importance of kinship care. We need to see join-up between that Bill and this Bill, so that kinship carers, who play such a critical role, get the support they need.

On Amendment 104 and the proposal for paid carer’s leave, which was set out admirably by my noble friend Lord Palmer, it is clear that it is both a modest proposition and incredibly important to unpaid carers trying to juggle work and caring. As we have heard, it would, in effect, turn the current provision—normally up to five days leave within 12 months, as set out in the Carer’s Leave Act and so already a clearly defined right—into a statutory pay entitlement. If you have supported a relative who needs care and worked at the same time, which many of us have, including me, you will know how time poor you are, that it is an incredible juggling act, and that paid carer’s leave can make a real difference.

I have spoken directly to carers who do not have paid carer’s leave in the workplace. They say that taking annual leave is exhausting and they never get a proper holiday. Unpaid leave was a useful step forward and it is right and important, but the unpaid nature of the leave can be challenging. As we have heard, a number of employers have already voluntarily embraced paid carer’s leave because they understand the beneficial impact it has, particularly on productivity and staff retention.

There are all sorts of examples of good employer practice. We have already heard about Centrica. The Phoenix Group offers two weeks of paid carer’s leave and recently added five days of unpaid leave. Some 6% of colleagues took up the offer, with an average rate of 2.64 days. We are not talking about an open cheque here. The employer said: “We have had extremely positive feedback from our colleagues and there have only been benefits to the business as a whole”. Paid carer’s leave would support workers of all ages, from young carers to adult carers and older workers. It would be a positive all-age and all-gender policy, but the reality is that women are more likely to be carers and at risk of working part-time with lower incomes in retirement, so paid carer’s leave is a positive equalities policy.

The final point I want to make is about what is happening internationally. There is a move to deliver more paid carer’s leave support, recognising ageing societies, a greater proportion of retired population to workers and the imperative for people to work for longer. Australia and Germany have 10 days of paid carer’s leave, and Germany has longer-term provisions as well. It is seen in those countries as an important strand of reducing economic inactivity, something we badly need to do here, as the Treasury quite rightly reminds us. With a shortage of social care and carers taking on more hours of care, there is a huge need to ensure that unpaid carers are supported to juggle work and caring responsibilities. It is not a “nice to have”; it is essential.

I will finish with the real-life example of Michelle White from the TSB, who was happy to have her name quoted. She said, “Paid carer’s leave provides a vital lifeline in my ability to care for my sister, often at short notice, and we would both struggle without it. This important measure allows me to provide support during an emergency. I can be there when it matters, with peace of mind that my career will not be jeopardised simply because I am a carer. I cannot speak highly enough about paid carer’s leave and the need for all carers to be supported in this way. Working for a business like TSB that recognises carers and offers this type of support is priceless”.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords for their contributions in this debate, in particular the noble Lord, Lord Palmer of Childs Hill, for his thoughtful introduction. These amendments raise an issue of deep humanity, that of kinship carers—family members, friends or relatives who step up, often at short notice and with immense personal sacrifice, to care for a child who cannot remain with their parents. There is no doubt in anyone’s mind that kinship carers perform a vital role, and often without the financial or legal support that accompanies formal fostering or adoption. These proposals seek to address that gap through the creation of a statutory kinship care leave entitlement, mirroring in some respects existing entitlements such as maternity or adoption leave. It is a serious and thoughtful contribution to the long-standing challenge of how we support informal family networks caring for vulnerable children and this is a cause worthy of respect and policy consideration. However, although the underlying issue is important, we must also take account of practicality and timing. We have similar concerns to those expressed by others about the cumulative burdens placed on businesses by this Government, particularly small and medium-sized enterprises.

We are debating these amendments in a broader context in which the Government have already imposed or are proposing to impose a series of costly new obligations on employers. We were talking in the last group about day-one rights to statutory sick pay and compensated cancelled shifts with undefined notice periods, and now we are talking about potentially a new category of leave which may extend up to 52 weeks with full employment protections and return-to-work guarantees. Each of these measures in isolation may be defensible and even commendable, but taken together, they represent a heavy financial and administrative load, particularly for small businesses in the retail, hospitality and service sectors, many of which are still struggling in the wake of the pandemic with ongoing and increasing cost pressures. In the case of kinship care leave, the details are vague and defer to regulation, leaving employers in the dark about how it will work in practice. What counts as evidence of an eligible arrangement? Will the leave be paid and, if so, by whom? What safeguards exist to prevent abuse? These questions must be answered before we can impose another legal obligation on employers.

We also have to be honest about timing. The economic climate remains fragile. Many small businesses operate on margins of just a few per cent. For a family-run corner shop or a café with six staff, the unexpected loss of one employee for several months could be devastating, particularly if there is no clear mechanism for support or to backfill that position. We respect and admire the intent behind these amendments, but we must weigh them against the real-world pressures facing employers. This is not the right time to impose new, poorly defined and potentially costly statutory entitlements, especially without clarity on how they will be funded or implemented. We need to support kinship carers, but let us do so in a way that is targeted, workable and fair to employers as well as families.

On government Amendment 34, my noble friend Lady Coffey has raised some important questions and I am looking forward to the answers. Does this amendment cover just termination on grounds of foetal anomaly or for medical reasons? Or is the rest of the subject taken in by that rather catch-all phrase,

“pregnancy loss of a specified kind”?

Can the Minister give us some information as to what he thinks the meaning of “a specified kind” is?

Finally, I note that the noble Baroness, Lady Lister, has asked for details about the review, citing a paucity of information. Having been present throughout all these debates, I know that “paucity of information” is a recurring theme with regard to this Bill. I am also keen to hear what the Minister has to say in due course.

[Lord Leong (Lab)]

I am grateful to all noble Lords who have spoken: the noble Baronesses, Lady Coffey, Lady Lister, and Lady Tyler, and the noble Lord, Lord Sharpe of Epsom. Turning first to Amendments 31 and 32, tabled by the noble Lord, Lord Palmer of Childs Hill, on the important topic of kinship care leave, I begin by giving my thanks to the right honourable Sir Ed Davey MP, leader of the Liberal Democrats, who has powerfully shared his personal experiences of kinship care and of being a carer himself. This has brought much-needed attention to the importance of kinship care and of supporting caregivers across the United Kingdom. It is important for me to address that.

The Government greatly appreciate the role that kinship carers play by offering loving homes for children who cannot live with their parents. I am sure your Lordships’ House shares these sentiments. We also know the current system needs improvement, because it does not support working families as well as it could. This is why we have already begun work to improve the system of kinship carers, starting with the Children’s Wellbeing and Schools Bill, as alluded to by the noble Baroness, Lady Tyler of Enfield, which will create a legal definition of kinship care to ensure consistency in how local authorities identify and support kinship families. That is why we have to work across government in this area.

I am pleased to say that the Government have announced a £40 million package to pilot a new kinship allowance, which is due to commence later this year. This is the single biggest investment made by government in kinship care to date. The Government’s recently launched parental leave review also presents a much-needed opportunity to consider our approach to the whole system of parental leave and pay. The noble Baronesses, Lady Lister and Lady Tyler, also asked about the terms of reference and how long this review will be. The terms of reference are published online, and the review is expected to last 18 months so that we can speak to stakeholders and various charities and come to some form of decision at a much later stage.

All current and upcoming parental care and pay entitlements will be within scope of the review. It will also consider the needs of other working families who do not qualify for existing leave and pay entitlements, such as kinship carers. Creating an entitlement for kinship carers would pre-empt the review before it had had a chance to consider support for kinship carers in the context of wider parental leave and the pay landscape.

18:30

Amendment 104 in the name of the noble Lord, Lord Palmer of Childs Hill, would introduce a statutory entitlement for unpaid carers to receive a fixed and earnings-related amount of pay while taking carer’s leave. The noble Lord, Lord Palmer, spoke with passion during debates on the Bill about the contributions made by millions of unpaid carers. We recognise the tireless work by him, Sir Ed Davey MP and the Liberal Democrats to keep this important issue on the agenda.

I am clear that this Government are committed to supporting those providing vital support to loved ones in addition to their working lives. Although we recognise the changes to this amendment since it was previously brought before the Committee, there remain significant concerns. First, it gives no consideration to eligibility—to who would be entitled to paid carer’s leave, which may need to differ from current eligibility for unpaid carer’s leave—and what evidence may need to be supplied to justify that entitlement. There is also a lack of clarity, as indicated by the noble Lord, Lord Sharpe, around who will bear the cost brought on by the amendment. In its current form, the proposal appears to suggest that businesses would need to cover this paid leave entitlement. Considering the lack of clarity regarding eligibility and evidence, the cost to business is unclear, and we need to ensure that potential impacts, particularly on small businesses, are carefully considered.

More work also needs to be done to establish what forms of support are most beneficial to help unpaid carers balance care and work. We know from engaging with carers and carers’ charities that unpaid carers are not a homogeneous group who all require the same support. During our series of round tables this year, we heard a range of asks ranging from longer unpaid leave and career breaks to improved workplace awareness and paid leave. We also see the specific ask of an on/off care life and support for those caring for seriously ill children. It is clear to us that different carers have different needs, and we must work out which interventions will be most effective before we legislate.

The Government cannot support the amendment for that reason, but we are fully committed to ensuring that unpaid carers can combine work with their caring responsibilities. That is why we are reviewing the implementation of carer’s leave and considering whether further support is needed, including potential options for paid leave, while being mindful of the impact of any change on small employers. We must allow that review to run its course to ensure that we make a considered, evidence-based decision about what further support would most benefit unpaid carers.

However, we appreciate the depth and strength of feeling on this issue in your Lordships’ House, as demonstrated by the contributions of several noble Lords today. We have listened carefully to these debates and understand that this is an issue on which carers and employers want further clarity. As a result of the powerful and persuasive arguments made in this House, I can say now that we will take steps to formalise and enhance the transparency of, and information available about, the review by setting out a clear timeline for the remainder of the review in autumn this year.

We will also run a public consultation in 2026 on employment support for carers balancing work with care. This will provide the public, including carers, charities and businesses, with the opportunity to directly share their views on how employers should best support carers in the workplace. I hope this assurance to the House demonstrates our willingness to engage openly and honestly with all stakeholders throughout the review. I reiterate that this Government are wholly committed to supporting unpaid carers, and as such have offered new opportunities to ensure that all views on that support are carefully considered.

[Baroness Lister of Burtersett (Lab)]

Before my noble friend sits down, I very much welcome what he said about the review now being more transparent. Did he say that clear terms of reference would be set out, and did he give a commitment to publish the outcome of that review and allow us to debate it in Parliament?

[Lord Leong (Lab)]

I thank my noble friend for that point. As I said, the terms of reference are available. The review will last for 18 months and anyone who wants to contribute to it may do so. We hope to publish that review in due course.

[Baroness Lister of Burtersett (Lab)]

Sorry, I think that is the parental leave review. I am talking about the carer’s leave review, which my noble friend just said, at the end of his speech, would be more transparent. Could he say a bit more about that?

[Lord Leong (Lab)]

Sorry. We will address that as and when this legislation has Royal Assent. We will formalise the terms of reference soon and we will ensure that that information is made public so that everyone can have a look at the review. However, the amendment poses a number of challenges and presupposes the conclusion of the ongoing review.

I turn to the exceptionally important topic of bereavement leave for the loss of a pregnancy. The amendments that this Government have made extend bereavement leave to provide a day-one right to protected time off to grieve a loss before 24 weeks of pregnancy. I am grateful to the Women and Equalities Committee for its important work highlighting the gap in support for those who experience a pregnancy loss before 24 weeks. I pay tribute to my friend and colleague Sarah Owen MP for her work campaigning on this issue and for sharing her personal experiences in impassioned debates in the other place.

The loss of a baby at any stage is incredibly difficult and tragic. The Government recognise that pregnancy loss is a bereavement for many families and fully accept the principle of bereavement leave for pregnancy loss. The amendments will ensure that all employees can have time away from work to grieve and recover when they need it most. In line with bereavement leave, the amendments provide for a minimum of one week’s leave, a minimum of a 56-day window to take the leave and protections around redundancy and dismissal. The Government’s amendments allow for the types of pregnancy loss that will be in scope of the entitlement to be explored in consultation and specified in regulations. IVF embryo transfer loss is specifically referenced in the definition of pregnancy loss to ensure that there is the power to include that in secondary legislation if decided after consultation.

On Amendment 104 in the name of the noble Baroness, Lady Coffey, removing the definition of pregnancy loss entirely would mean that we would not be able to consider providing for certain scenarios such as IVF embryo transfer loss or to consult properly with all affected. No definition in the Bill would lead to uncertainty about what could possibly be captured in regulations—that includes abortion—and limit our ability to consult on a full range of scenarios. We know that all types of pregnancy loss can be experienced as a bereavement.

The Government can therefore not accept the amendment as it is vital that we consider the full range of scenarios that could be in scope in partnership with those impacted. Other details of entitlement, including eligibility, total duration of leave and the types of pregnancy loss in scope, will be defined in secondary legislation. Due to the sensitive and personal nature of bereavement for pregnancy loss, it is important to consult stakeholders on the specifics of the entitlement to ensure that the policy properly reflects and is sensitive to the needs of employers and employees.

Regarding eligibility, the Government’s amendments include provisions to ensure that there is the ability for entitlement to apply also to partners or surrogacy arrangements, if found to be appropriate after consultation. The noble Baroness’s amendment would remove this definition, which would significantly narrow possible eligibility to only those who have directly suffered the pregnancy loss. We know from testimony to the Women and Equalities Committee the devastating effect that pregnancy loss can have on fathers, partners and families. Grief in these situations is not confined to the woman carrying the baby. We therefore cannot accept the amendment as it is only right that it is considered in consultation and conversation with those affected.

By defining details such as eligibility in secondary legislation following consultation rather than in the Bill, we can ensure that the entitlement considers those impacted and a wide range of views in its development and has the flexibility to be updated over time as the legislative landscape and society evolve.

The Government’s amendments recognise the profound impact and heartbreak that can accompany pregnancy loss, while also acting to address the stigma that often accompanies it. The Government are setting a floor for businesses that will ensure all employees have a right to bereavement leave. Bereavement is not an illness or a holiday, and it needs its own special category of treatment. With that, I must ask the noble Lord, Lord Palmer of Childs Hill, to withdraw Amendment 31.

[Baroness Coffey (Con)]

The Minister was very helpful in saying who he felt would be in the scope of other people to be specified—the partner or somebody involved in surrogacy. He has not talked about what he thinks would be the scope of the abortions. Is he looking to make this the 250,000 or are we talking more about the 3,300 where there is a foetal anomaly? If the Minister has already made an indication on one, hopefully he will have considered the other.

[Lord Leong (Lab)]

I thank the noble Baroness for that. I did say that the review will look at that, and hopefully it will cover what noble Lords are asking for. I will be moving Amendments 33, 34 and 36 to 40 shortly.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister and the Government Benches, particularly for the kind and very true words about the activities of Sir Ed Davey in highlighting carers’ value to society. I thank my noble friend Lady Tyler, who explained—better than I did—about kinship carers and paid carer’s leave. I thank the noble Baroness, Lady Coffey, for asking for clarity from the Government because I do not think there is clarity. As usual, I thank the noble Baroness, Lady Lister, for stressing that we need the principles of carer’s leave and being very practical and asking for the terms of reference, which I think are not clear.

The noble Lord, Lord Sharpe, focused on the cost of these amendments. On paid carer’s leave, the amendment provides for employers to pay, but then they can be recompensed via HMRC by the Government. It would be a cost to the Government in the end, but it could lead to a happier workforce and people can gain more from it.

When we talk about kinship care or paid carer’s leave, it is not in isolation. The NHS is under considerable stress. If you do not have the input of carers, and give them some recompense for that care, the NHS will collapse even more than it is collapsing now. This is not just something that is being generous. It is practical to make the NHS better, make caring better and make the work of grandparents, uncles, aunts and others appreciated in some way. I thank the Minister for saying that there is a review and things will change. I hope this debate will focus the Government’s mind on it. On that basis, I wish to test the feelings of the House.

18:44

Division 3

Ayes: 65

Noes: 170

18:54

Amendment 32 not moved.

Clause 18: Bereavement leave

Amendment 33

Moved by

[Baroness Jones of Whitchurch]

33: Clause 18, page 41, line 24, leave out “conditions specified in the regulations” and insert “specified conditions”
Member’s explanatory statement
This amendment is consequential on my amendment of clause 18 at page 41, line 39.

Amendment 33 agreed.

Amendment 34

Moved by

[Baroness Jones of Whitchurch]

34: Clause 18, page 41, line 27, at end insert—
“(ca) after subsection (3) insert—“(3A) For the purposes of subsection (1) an employee is also a “bereaved person” if—(a) the employee has suffered a pregnancy loss of a specified kind, or(b) the employee satisfies specified conditions as to relationship with—(i) a person who has suffered a pregnancy loss of a specified kind, or(ii) a child who had been expected to be born had a pregnancy loss of a specified kind not occurred.”;”Member’s explanatory statement
This amendment and my other amendments of clause 18 would enable the entitlement to bereavement leave conferred by section 80EA of the Employment Rights Act 1996 to be extended to cases involving pregnancy loss.

Amendment 35 (to Amendment 34) not moved.

Amendment 34 agreed.

Amendments 36 to 39

Moved by

[Baroness Jones of Whitchurch]

36: Clause 18, page 41, line 28, leave out “for “child” substitute “person”;” and insert “omit “in respect of a child”;”
Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

37: Clause 18, page 41, line 28, at end insert—
“(da) in subsection (5), before “a child” insert “the death of”;”Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

38: Clause 18, page 41, line 31, leave out from “section” to “the” in line 32 and insert “otherwise than in respect of the death of a child,”
Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

39: Clause 18, page 41, line 34, leave out “for “child’s” substitute “person’s”;” and insert “for “the date of the child’s death” substitute “the specified day”;”
Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

Amendments 36 to 39 agreed.

Amendment 40

Moved by

[Baroness Jones of Whitchurch]

40: Clause 18, page 41, line 39, at end insert—
“(ga) in subsection (9)—(i) in the definition of “child”, after “stillbirths” insert “after twenty-four weeks of pregnancy”;(ii) after the definition of “child” insert— ““live birth” means the birth of a child born alive;“pregnancy loss” means—(a) the ending of a pregnancy after less than twenty-four weeks of pregnancy in any way other than by a live birth, or(b) the failure of an embryo to become implanted following a transfer carried out in the course of providing treatment services within the meaning of the Human Fertilisation and Embryology Act 1990;“specified” means specified in the regulations;”;”Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

Amendment 41 (to Amendment 40) not moved.

Amendment 40 agreed.

Amendment 42

Moved by

[Lord Hogan-Howe (CB)]

42: After Clause 18, insert the following new Clause—
“Special constables: right to time off for public duties(1) The Employment Rights Act 1996 is amended is follows.(2) In section 50 (Right to time off for public duties), after subsection (1) insert—“(1A) An employer shall permit an employee who is a special constable, appointed in accordance with section 27 of the Police Act 1996, section 9 of the Police and Fire Reform (Scotland) Act 2012 or section 25 of the Railways and Transport Safety Act 2003, to take time off during the employee’s working hours for the purpose of performing their duties.(1B) In section (1A), “duties” means any activity under the direction of a chief officer of police.”.”Member’s explanatory statement
This new clause gives employees who are special constables the right to time off to carry out their police duties.

[Lord Hogan-Howe]

I thank noble Lords for the opportunity to speak to this amendment in my name and that of the noble Lord, Lord Evans of Rainow, whose support I appreciate. This amendment seeks to extend the group of people in the criminal justice system who have the right to time off to fulfil their duties as a special constable.

In 2018, Section 50 of the Employment Rights Act 1996 was amended to include lay observers in prisons, and immigration visiting committees for immigration centres and short-term holding facilities. This added to the right of magistrates and justices of the peace to take time off from their employment. Each of these volunteering groups is of course essential to the effective functioning of the criminal justice system, but so are the special constables who have existed since being created by the Special Constables Act 1831—although today’s version was created by the Police Act 1964.

In my view, special constables are special by name and special by nature. They are unpaid volunteers. They have all the powers of regular constables: to arrest, to search and many more things a constable has the power to do. They also take all the risks that their colleagues take, including being stabbed or assaulted and people abusing them. Basically, they put their lives on the line in the same way that people such as those in the RNLI do on our behalf too. They are not paid, except for expenses, but this of course covers their outgoings—they make no profit.

After being trained, they are usually expected to be on duty for at least four hours a month, but most do very much more than this. Some work every weekend and some during breaks in employment; at such times, they work almost full-time hours. They were designed to be a contingency for war, backfilling for the police officers who would be expected to join the Armed Forces. We might think that particularly apposite at the moment, given the situation in Ukraine and the general threat from Russia. Only last week, the Government published a resilience plan to prepare our emergency and civil defence response for a higher level of threat from the multiple risks that exist. Specials are part of that national contingency when we deploy our Armed Forces.

Special constables are a visible representation of community policing, giving of themselves without payment to stop crime and keep order. For me, they have always been a way to have the community in the police station, holding their regular colleagues to account and not captured by the prevalent police culture—almost a pre-body-worn video. The Government have a commitment to neighbourhood policing, with a promise to deliver 13,000 more neighbourhood officers in the next few years. This comprises regulars, community support officers and special constabulary. If they cannot recruit or retain “free” special constables, they will need larger funding for police officers and police community support officers.

Yet presently their numbers are dropping dramatically. In September 2023, there were 6,330 and, by September the following year, they had gone down to 5,818. But, 10 years ago, there were around 15,000, and in the Met at that time there were around 5,000. So there has been a very significant drop in their numbers.

As far as I can determine, no other police force in the world has this sort of arrangement. If you talk to Americans or New Zealanders, they think it is amazing that people will be police officers, taking all the risks, without being paid. So this is a remarkable thing that we have. They have achieved an awful lot as they have done all the things that we need them to do over the years. In this context, on the grounds of equity with the other volunteers in the criminal justice system, surely we need to enhance the volunteer offer to encourage the recruitment, retention and diversity of the people in the special constabulary.

19:00

Some say that this will be a burden on small businesses, but I do not accept that. Section 50 in the Act gives the right to leave for volunteering to criminal justice members, and it has a reasonableness clause. A business of three people may struggle to give any time off, whereas a business of 10,000 people may have far more flexibility. It is not reasonable for an employee to take time off consistently when the business particularly needs them or if it does not have sufficient people to backfill. But of course they get back a better trained, more confident and more rounded individual who has just a few more experiences of life, which might benefit them in their employment and society in general.

The Government may say that, if we do this for this group of volunteers, we may have to do it for others. I understand that and we have to consider it, but in the end I do not accept it. This reform is long overdue. It is supported by the National Police Chiefs’ Council and the specials’ own representative body. There is a huge gap in recruitment and retention, and for me the time to do something about it is now. I call for Members of this House to support this amendment and therefore back the special constabulary after the over 100 years that it has been backing us.

[Lord Evans of Rainow (Con)]

My Lords, I rise to support the amendment from the noble Lord, Lord Hogan-Howe. This gives me an opportunity to pay tribute to him and his public service as police commissioner and in the Merseyside Police. It also gives me the opportunity to mention the service of my colleague, my noble friend Lord Sharpe, in the Hong Kong police back in the day.

I declare that I was a special constable in the 1980s. In those days we had a number one uniform and that was it, so it was rather hot on a hot sunny day. We also used to have capes, which we used to put around us and which were quite handy. Nobody quite knew what we had our hands on: it could be a torch, it could be a truncheon or it could be fish and chips. We used to run towards danger with nothing more than a truncheon down our trouser legs. So I pay tribute to special constables, past and present.

As the noble Lord said, it was as a contingency of war that special constables came into being, in the First World War, as many police officers joined the Army to fight over in France and elsewhere. But they have all the legal powers. I remember the Police and Criminal Evidence Act 1984—the old salts were really quite upset with that new Act, because it meant that they could not carry on doing what they had been doing previously. But, for us new boys and girls, it was quite interesting, and I thought we embraced the change in the spirit that it was meant.

We were all unpaid volunteers serving local communities, including our local community in Macclesfield, serving in the Cheshire Constabulary. I worked at an aircraft factory, working on the nuclear deterrent at the time. I used to work during the day and go out at night to do a full shift, from 6 pm until 10 pm, and perhaps even later: if there was a road traffic accident or if somebody went missing, it could end up going into the early hours. I got up the next day to go to work, and I was proud to do that—I was a very young man and was fit and healthy enough to do it.

The strategic defence review Making Britain Safer: Secure at Home, Strong Abroad mentions the importance of:

“Home defence and resilience: a whole-of-society approach”.


My noble friend made the excellent point that now is the time to consider the threats to our country and the role of civil defence, and indeed of special constables. A “whole-of-society approach” includes “protecting critical national infrastructure”. But the wider point is that we are reliant on reservists more than ever. If you are in the Army, the Navy or the Royal Air Force, there is provision, from your employer, for you to go and serve the nation, but that does not apply to special constables. So I agree with the noble Lord: this is the right place and the right time to give the same treatment to special constables that we give to our Armed Forces reservists.

[Lord Harris of Haringey (Lab)]

My Lords, I say briefly that the principle in the amendment from the noble Lord, Lord Hogan-Howe, is absolutely right. He has made a cogent case for why special constables are indeed special, and for their contribution. Some 25 years ago, when I chaired the Metropolitan Police Authority in London, we reversed a situation in which the number of special constables was declining, and we started to increase the number—both because of the ability to put more people on the street but also in terms of public engagement with the process.

I will pick up the point made by the noble Lord, Lord Evans of Rainow, although I will probably use it in a slightly different direction. He referred to the strategic defence review. That document, the national security strategy and the resilience action plan published last week all talk about a new mechanism of homeland defence and security, and the importance of using more people—more civil resources—to protect the community.

It is quite clear that we are facing a world in which we are confronted with more and more perils—some of them organised by hostile states and others simply the result of the nature of the world in which we live. Therefore, although the principle that the noble Lord, Lord Hogan-Howe, sets out here is extremely laudable—people should be encouraged and given the opportunity for time off if they are doing this sort of public service—I would like to understand the context in which this will happen. Will we be able to say, in a year or two, that we have identified how we will use volunteers and the public in the defence of our nation, in terms of supporting the police and our armed services, in a much more proactive way? I suspect that that should be done holistically, rather than simply in terms of this single amendment to the Bill. Having said that, the principle is absolutely right: those people who give that service should be encouraged to do so and should be given the opportunity of time off.

[Lord Paddick (Non-Afl)]

My Lords, I draw noble Lords’ attention to my registered interest as a paid non-executive director of the Metropolitan Police Service. I fully support the amendment from the noble Lord, Lord Hogan-Howe. Special constables have all the powers of regular officers, and some are even trained in public order, able to engage in policing marches and demonstrations where violence is feared, reducing abstractions of regular community officers from their beats, to give one example.

In answer to the comment of the noble Lord, Lord Harris of Haringey, about whether this should be part of a broader look at the issues, I say that, at a time when there is cross-party consensus that there should be more visible community policing—and cross-party consensus that there is not enough money to fund the number of police officers we should ideally have—placing special constables’ time off from their employment on a statutory footing, at a cost of only expenses, deserves cross-party support.

[Lord Remnant (Con)]

My Lords, I support this amendment in the name of the noble Lord, Lord Hogan-Howe, and my noble friend Lord Evans. In doing so, I feel that I am following modestly in a family tradition. I suspect that the noble Lord is not aware that my great-grandfather in the other place introduced successfully, but against much opposition, a Bill guaranteeing members of the police force one day of rest, off duty, in every week. Until that date some 115 years ago, the police had no such entitlement. This amendment is less momentous than that Bill, but it is a proportionate suggestion that gives suitable recognition to voluntary service and strengthens policing. It should also find ready acceptance with employers, who would be able to fulfil their civic duties while suffering minimal disruption.

[Lord Bailey of Paddington (Con)]

My Lords, I support this amendment from the noble Lord, Lord Hogan-Howe. I want to come at it from a slightly different angle. This could be a vital piece to help the police with one of their weakest areas—representation in the community. I have been a youth worker for over 38 years now, and most of the most committed and professional people from my community already have employment so cannot join the police force, but they would love to be involved in representing our community in said police force to help the relationship between our community and the police force. This kind of initiative could be deeply helpful in allowing that to happen.

[Lord Goddard of Stockport (LD)]

We will support the noble Lord, Lord Hogan-Howe, if he pushes this to a vote, for a number of reasons, eloquently given by a number of speakers. It comes back to how we value people, whether they are volunteers, kinship people or carers, and where they sit in society. I listened to a couple of the speeches about the days of yore, when the policemen just wandered around the streets, cuffed young boys around the ear and sent them back to school. Those days are gone now, and these special constables are just as much at risk as any other police officer on duty. The people who are coming out and causing trouble, whether they are on drugs or whatever, have no idea, conception or care whether it is a real policeman or a special constable.

Why we are debating the right to time off and reasonable expense is beyond me. Certain things should be blindingly obvious, and this is one of them. Way back in the mid-1990s when I was vice-chair of the Greater Manchester Police Authority, some of the things I saw and heard about what happened to police officers did not always make the press. Special constables and community officers bring the cohesion and bring communities together, and the more that we can get that togetherness without vast expense to the police budget that the Government are trying to control, the better and more settled our society will be. It is a small price to pay for a lot of benefits for a lot of people.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Hogan-Howe, for bringing forward this amendment. I particularly thank my noble friend Lord Evans of Rainow for his very kind words. I strongly support the amendment, which would provide a clear statutory right for special constables to take time off from their regular employment to fulfil their duties under the direction of a chief officer of police.

This amendment would provide a modest but crucial right, protected time off to serve. It would bring special constables in line with other categories of public service, recognised under Section 50 of the Employment Rights Act 1996, such as magistrates and school governors. At a time when police forces are under sustained pressure and when public trust in law enforcement depends on a strong and visible local presence, supporting the contribution of special constables is not just the right thing to do but essential. We rely on these volunteers to keep our communities safe; the least we can do is to ensure that they are not penalised in their day jobs for answering that call.

I hope that the Government have heard the strength of feeling around the House on this issue. I think all speakers spoke favourably about this amendment and, in particular, the noble Lord, Lord Paddick, and my noble friends Lord Remnant and Lord Bailey made some excellent points, albeit slightly different. The noble Lord, Lord Harris, asked an incredibly good question, and I am very keen to hear the answer, although, as the noble Lord, Lord Paddick, pointed out, I am not sure that context is particularly necessary in the case of the specials, because of course they already exist, so they operate in their own context already. However, I am interested in the homeland security dimension, not least because I might even volunteer.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I thank the noble Lord, Lord Hogan-Howe, for tabling Amendment 42, which seeks to permit a special constable to request reasonable unpaid time off from their employer to perform their public duty. In so doing, I pay tribute to the noble Lord for his service, as well as to many other noble Lords, whose service we were either aware of or not so aware of—not just the noble Lord, Lord Paddick, but the noble Lord, Lord Evans of Rainow, who had some interesting tales of his truncheon, and from across the Dispatch Box the noble Lord, Lord Sharpe of Epsom, himself.

The Government recognise and value the role that special constables play in keeping our communities safe, as very ably described by a number of noble Lords in the debate, not just the noble Lord, Lord Hogan-Howe, but the noble Lords, Lord Remnant, Lord Goddard and Lord Bailey of Paddington.

19:15

The noble Lord, Lord Evans, spoke about civic defence, which sits well alongside the commitment and the details that the Prime Minister announced earlier this year of the neighbourhood policing guarantee, which commits to recruiting thousands of additional neighbourhood officers, boosting visible policing and strengthening community engagement. Some £200 million has been made available to all forces in England and Wales in 2025-26 to fund additional policing personnel into neighbourhood teams. Delivery plans have been confirmed for that year with all police forces across England and Wales, with up to 3,000 more neighbourhood officers expected to be in post by the end of the year, including more than 300 special constables.

The contributions that we have heard from noble Lords on the matter of special constables during this debate and in Committee have been highly valuable. Indeed, it was helpful to hear from my noble friend Lord Harris of Haringey about the role of specials when he chaired the Metropolitan Police Authority. Outside this place, we have greatly appreciated conversations with the noble Lords, Lord Hogan-Howe and Lord Paddick, on this matter.

Furthermore, the noble Lords, Lord Hogan-Howe and Lord Paddick, have done a great service to this House by highlighting a broader question about the duties that employers are able to request in terms of unpaid time off work under Section 50 of the Employment Rights Act 1996. The list of qualifying public duties was introduced almost 50 years ago, with only minor changes made since then. It has not been comprehensively reviewed, despite significant changes in the public service landscape. To pick up on the comments of my noble friend Lord Harris of Haringey, we must consider the wider context of the changing and evolving role of public duties in terms of civic defence and other activity.

As a result of the able championing and advocacy of the noble Lords, Lord Hogan-Howe and Lord Paddick, I am very pleased to say that the Government have listened on this matter and have already commenced an internal, official-led review into the list of duties entitled to reasonable time off work. This review is considering whether the current list of eligible roles remains fit for purpose, including the case that noble Lords have put forward to add special constables to the list, and whether any further changes should be made. We need to consider whether any changes to this list will deliver the intended support for public services and understand the nature of the impact on businesses. As such, a holistic review is the best route for assessing this proposal.

We believe that any changes to the entitlement to time off for public duties should be made holistically, not on a role-by-role piecemeal basis, especially as we have not undertaken such a review for around half a century. That is why we are undertaking this review. The review will consider the case for including special constables alongside other roles, such as on-call firefighters and coastguard rescue officers. It will also look at bodies that no longer exist in the form mentioned in the legislation, such as the General Teaching Council for Wales, known as the Education Workforce Council since 2015 and currently included on the list of qualifying public duties.

I understand that the noble Lord is concerned about the speed at which action can be taken on this. We have listened, and I can confirm that officials will undertake the review at pace. The review will be undertaken over the next six months, and we intend to publish a summary of the review’s findings in the first half of 2026. If changes to the list of roles are needed following the review, the Government already have powers to make these changes through secondary legislation. Therefore, primary legislation is unnecessary.

I hope it reassures the noble Lord, Lord Hogan-Howe, that, should the review deem action necessary, the Government could take that action quickly through statutory instruments. Given the action that the Government have taken, given that we have listened to the noble Lords, Lord Hogan-Howe and Lord Paddick, and others who have made the case for special constables, and given the importance of taking a holistic approach to reviewing the list of public duties, I ask the noble Lord to withdraw Amendment 42 and hope he will do so.

[Lord Hogan-Howe (CB)]

My Lords, I thank all noble Lords who have spoken, particularly the Ministers, the noble Baroness, Lady Jones, and the noble Lord, Lord Katz, for all the time they have given us on this very long Bill with many amendments. I and others involved in this appreciate their time, as we know it is not straightforward.

The noble Lord, Lord Evans, mentioned the cape; I thought only I remembered that in this Chamber, but clearly not. More importantly, he made a good point about equivalence with the Armed Forces. Reservists are in a slightly different position, but it is one that we should be drawn back to as a matter of conscience as we consider this.

The noble Lord, Lord Harris, made a very good point about the strategic defence review. He accepted the principle in this case but wanted the role to be fleshed out. I agree, but that should not stop us making progress on this point. The noble Lord, Lord Paddick, drew attention to the fact that it is not just general patrol. Some become very specialist; we have traffic officers, public order specialists and some very good forensic accountants who do their job professionally every day and then come in at the weekend to help the police recover criminal assets—a great public service for which the police probably could not afford to pay.

The noble Lord, Lord Bailey, mentioned diversity and community. About one in four specialists in London is from a visible minority community, which is far better representation than the Met has. The Met is hidebound by the fact that two-thirds of the people it recruits are from outside London, so there is always the challenge of getting that representation, but specialists live and work in the community they serve. Frankly, when the police are not paying them, they cannot afford to travel to an adjacent county, so a specialist constabulary always better represents the community it serves.

The noble Lord, Lord Remnant, mentioned his father. I did not know that, but it was a good thing; I was grateful for that day off—and a few more. Many officers go through their careers with extended periods of working during large numbers of public protests, to the point where they cannot get their days off, so that would be very much appreciated.

The noble Lord, Lord Goddard, said one of the things I like best to hear, which is that this is blindingly obvious. Of course, I agree with that. I also appreciate that the noble Lord, Lord Sharpe, with his professional background, supported it, particularly today.

The Minister was kind enough to offer a review. All of us in this place know that reviews can be a bit vague and go on a while—I think this is the second one offered in the last hour. I have lost count in my short time in this place of the number of reviews of which someone has said, “Where did that get to? Has it been delivered? Has anything happened?” It is not a personal matter with the Minister, but I am not entirely convinced by reviews. I go back to the spirit of what the noble Lord, Lord Goddard, said. You can sometimes spend a thousand words trying to change something, or you can just do something. The “doing” here would be that the regulation could be changed and special constables could be brought into a group that already exists. For that reason, I would like to divide the House.

19:23

Division 4

Ayes: 232

Noes: 137

19:33

Clause 20: Harassment by third parties

Amendment 43

Moved by

[Lord Young of Acton]

43: Clause 20, page 43, line 24, at end insert—
“(1D) Subsection (1A) does not apply to indirect harassment, so employers only have to protect their employees from non-sexual harassment by third parties that is directed at them.” Member’s explanatory statement
This amendment means employers only have to protect their employees from non-sexual third-party harassment if it is directed at the employee, meaning employers would not have to take all reasonable steps to protect their employees from overheard conversations, remarks or jokes.

[Lord Young of Acton (Con)]

My Lords, I refer noble Lords to my register of interests. I ask noble Lords, when considering my amendments, to spare a thought for the great British pub. A year ago, the Chancellor promised to “turn the page” for British pubs. As she pulled a pint in the Humble Plumb in Southampton in June 2024, Rachel Reeves said that Labour would revive this “important institution”—I think we can all agree that pubs are important institutions.

Yet no sooner had she said this than she raised national insurance contributions for employers and lowered the threshold at which they are paid from £9,000 a year to £5,000. At the same time, she announced that business rates relief for hospitality brought in during Covid would be cut, while the minimum wage would rise by 6.7%. UKHospitality, which represents pubs, bars and restaurants, has estimated that the total extra cost for its members from the Budget measures announced last autumn will be £3.4 billion a year. This impact has already been felt, with 69,000 hospitality jobs lost since last autumn. According to the British Beer and Pub Association, roughly one pub is set to close every day this year—the Campaign For Real Ale is even more gloomy. If BPPA’s forecast comes to pass, it would take the number of pubs in Britain to its lowest level in a century.

What are the Government doing to save what they call an important institution? Gareth Thomas, the Business Minister, has said:

“We are determined to make the UK the best place in the world for businesses to start and succeed, and that includes our great British pubs”.


He went on:

“We’re working with industry to slash red tape … to ease the pressure on pubs and help them grow as part of our Plan for Change”.


Yet, far from slashing red tape, Clause 20 will add a whole new ream of it. As I am sure noble Lords are aware, Clause 20 amends the Equality Act to make employers liable for the harassment of their employees by third parties, for example, customers and members of the public. It does not cover third-party sexual harassment, mind you—employers are already liable for third-party sexual harassment thanks to the worker protection Act—but non-sexual third-party harassment. I have called this the “banter ban” because I believe it will mean employers will be liable for jokes, remarks and expostulations overheard by their employees—banter—that they find offensive or upsetting by virtue of their protected characteristics.

Why do I say this? We know from the way that the definition of harassment has constantly been expanded by the employment tribunal that it now encompasses overheard conversations—you can now sue your employer for failing to protect you from overhearing something uttered by another employee. The Minister will argue that Clause 20 requires employers only to take “all reasonable steps” to protect their employees from harassment, and expecting employers to protect their employees from overhearing remarks made by customers or members of the public is not reasonable. In short, the Government will argue, the tribunal will not hold employers liable for indirect, non-sexual harassment of their employees by third parties. This is a false alarm, faux outrage.

I wish I shared the Minister’s confidence about that, and note that UKHospitality is not so sanguine, which is why it supports Amendment 43, which would absolve employers of liability for indirect third-party harassment. If the Minister really believes that indirect third-party harassment—overheard remarks, banter—would be out of scope, why not accept my amendment? This would be a huge relief to beleaguered publicans who will not have to worry about employing “banter bouncers” to eavesdrop on customer conversations and will help reduce the increased insurance premiums which Clause 20 will inevitably mean.

The Minister will say that plenty of service providers and businesses already ask customers to treat their employees with respect and to not say or do anything that could be construed as harassment. The vast majority of customers follow this advice, I agree, but the fact that these guidelines are being voluntarily observed is a reason to not make them mandatory, not a reason to make them mandatory. Is it not preferable that customers should observe good manners out of consideration for workers, rather than fear of being penalised for non-compliance?

If noble Lords cannot bring themselves to support my amendment, or at the very least abstain on indirect harassment, I hope that they will consider seriously Amendment 44, which would create a carve out for

“conversation or speech involving the expression of an opinion on a political, moral, religious or social matter, provided the opinion is not indecent or grossly offensive”.

How could any noble Lord possibly object to that? Do we want people in pubs to be constantly looking over their shoulders and lowering their voices if they express an unfashionable or contentious point of view, or do we want them to enjoy the same right to speak openly and freely on political, moral, religious or social matters that we enjoy in this House?

Every pub is a parliament; let us not turn every pub into a library and accelerate the disappearance of this beloved institution. Let us remember what Samuel Johnson said about the Great British pub:

“As soon as I enter the door of a tavern, I experience oblivion of care, and a freedom from solicitude. There is nothing which has yet been contrived by man, by which so much happiness is produced as by a good tavern or inn”.


I beg to move.

[Baroness Fox of Buckley (Non-Afl)]

In the Mirror newspaper last week, Clause 20 hit the headlines. Deputy Prime Minister Angela Rayner claimed that reforms protecting employees from third party harassment would not chill free speech, and she rubbished claims that innocent workplace banter is the target. She said:

“Nobody should be abused while doing their job, but we’ve seen a horrific rise in violent abuse and harassment of shop workers and other public facing staff”.


She went on to describe those of us worried about the unintended consequences of this clause as resorting to

“spreading made-up nonsense”.

I feel the need to counter this misinformation because I fear Angela Rayner may herself be influenced by misinformation about what is in her own Bill.

I was especially alarmed when the TUC general secretary Paul Nowak told the newspaper that those of us opposing Clause 20 are

“insulting people’s intelligence by pretending that protecting workers from harassment is the same as banning banter”.

But actually, it is—and that is not my decision. It is present in the way equality law has been interpreted in employment tribunals, as has just been described, associating harassment with banter. Whatever the Government, Angela Rayner or the TUC think is in the Bill, it does not set out what constitutes harassment or, rather, what does not.

Therefore, in Committee, the Minister directed us to the definitions of harassment used in equality legislation, which is then interpreted in employment tribunals. It is important to note that under the Equality Act, as interpreted, harassment includes indirect harassment, which, as the EHRC guidance states, can include the following: spoken words, jokes, written words and posts on social media, physical expressions and gestures and, yes, banter.

As we have heard, employment tribunals hear many cases relating to workplace banter, with 57 cases in 2024. If we look at human resources literature, we see that it is full of advice to employers on managing banter in the workplace between their employees. One horrendous suggestion put out to employers was to monitor conversations and attempt to pick up or pre-empt any problems. Another suggestion was to send people on—wait for it—appropriate conversation training sessions. I have just been sent the details of a consultant—there is always a consultant behind all this—who is an inclusive language and banter specialist and runs workshops at £495 a shot. One of his first workshops is “What does the term transgender mean to you?”—I will not say what it means to me out loud or I might get done by the banter police. Anyway, cisgender is a term that I do not think we want to be put into the hands of the banter police.

We are not raising this issue to cause a fuss. The problem is that it is in the Bill. I have always argued against this broad and elastic definition of harassment; it is problematic because it undermines free speech, as I have made the case for many times in this House and in Committee. I also want to emphasise that it risks trivialising genuine cases of harassment and diluting the impact of genuine anti-harassment policies that require serious attention.

19:45

I believe the Government have been driven to introduce Clause 20 because they want to deal with serious issues of harassment, but they have not drawn the conclusion—by looking at how employment tribunals understand harassment under the Equality Act—that banter is part of it. Whether the Government or the Deputy Prime Minister like it or not, Clause 20 means that casual remarks made by third parties are in scope as indirect harassment.

I hope that the Government will welcome Amendment 43 in the name of the noble Lord, Lord Young, with open arms. It would simply clarify that Clause 20 will not apply to indirect harassment or overheard conversations. Therefore, in that instance, Angela Rayner can concentrate on the nasty abuse stuff and not have this picked up unintentionally. Employers can focus on protecting employees from harassment which directly targets them, which is very different to what is in the Bill.

To take the Government at face value, which I am prepared to do, there is absolutely no intention of undermining free speech in public-facing workplaces in this clause, because it is not about policing informal conversations of members of the public in workplaces that some employees could say are offensive. If I take that at face value, then I ask the Minister to accept Amendment 44, because this would mean that the definition of harassment would not and could not include conversation or speech involving the expression of an opinion—political, moral, religious or on any other social matter.

However, while these mitigating amendments are useful, I still most strongly support Amendment 45, which would leave out Clause 20 entirely. In addition to arguments previously raised in Committee, the Law Society has now got involved and has identified that employers must take all reasonable steps to prevent their staff experiencing harassment by third parties. The Law Society—not me—notes that while employers will be familiar with the notion of taking “reasonable steps”, inclusion of the word “all” runs the risk of setting an unreasonably high bar for employers to clear.

For example, an employer might design policies and action plans to take reasonable steps to prevent harassment by third parties and put together what appears to be a comprehensive package of measures—though I note how much energy even reading that takes, never mind doing it. None the less, if the employee can point to any single additional reasonable means that the employer could have taken but did not, then the claim could be upheld even if the employer had attempted to do all they could to comply—talk about making workplaces jump through hoops.

Clause 20 could be a recipe for spiralling lawfare, which seems to contradict one of the aims of the Bill, as stated in the Government’s evidence and analysis paper: to reduce workplace conflict, which, we are told by ACAS, costs £30 billion a year. Clause 20, however, will mean that the number of employment tribunals goes up. They will become a source of tension and more conflict.

One danger is that it sets up another conflict: a toxic relationship between public-facing workplaces and the public. Employers will be forced to treat the public as a source of potential problems—to be managed, to be shushed in case they say the wrong thing—and to encourage their employees to see customers, often their fellow workers, as the enemy. In sectors where customer relationships are crucial, such as retail and hospitality, this could strain interactions between staff and patrons. Customers often appreciate friendly, personable service, which includes light-hearted conversations, jokes and banter. If they perceive that such casual conversations are being policed, that will diminish the social interaction of both sides.

If employees are restricted from engaging in exchanges due to fear of violating policies, that could lead to sterile and impersonal experiences of service, devoid of any spontaneity. It might actually deter customers from returning. It will affect revenue and reputation—what a loss. Earlier today, I referred to Omar Loubak, who is also concerned about Clause 20. He works in hospitality and notes that working in that sector has enhanced his skills, precisely because it has encouraged his people skills. He has gained in confidence and grown into a young man who can now communicate so well precisely because he was exposed to the lively public square that is the pub, or any other place of hospitality. However, it is now seen through the prism of harassment and it does Omar, the place of hospitality and the customers a great disservice to see it only in that way.

I believe that the Government think they are helping workers fight harassment with this clause. It is not doing that. It will lead to the chilling of free speech and will be a disaster for the public square. Minister, please do not do it.

[Lord Moynihan of Chelsea (Con)]

My Lords, I support this very important amendment moved by the noble Lord, Lord Young of Acton, and endorse everything that the noble Baroness, Lady Fox of Buckley, said. Noble Lords will be pleased to hear that they covered so much of the ground that needs to be covered that I will not have to speak for too long.

To tease out some of the truly important aspects of what the noble Lord and noble Baroness said, key to this clause is the word “harassment” and the phrase

“to take all reasonable steps”.

Words can have various meanings and people can interpret them differently. For example, “I banter” but “He harasses”; “He, she or it is a social predator and should be prosecuted to the full extent of the law”. To make a truism, that is what we are doing here: making laws. Laws get interpreted and used to prosecute. People who see an advantage in using the law can take their employer to court, and we will have yet more things being banned, and more opportunities for lawfare, as the noble Baroness said, and to shut down our national life.

In the Economist, which is not a particularly dry magazine, as your Lordships know—it supports all sorts of liberal ideas—an article about two weeks ago said that all these people who talk about how civilisations die have got it wrong. There is one thing that is common to civilisations that die, whether it is the Song Dynasty in 1200, the Venetians at a not dissimilar time, the Romans or whoever. Why did they have a tremendously successful society that collapsed over a number of years? The Economist said that they banned things; they said, “We won’t have this. You won’t be allowed to do that. You won’t be allowed to import these things. We will put tariffs on goods imported and, above all, we will ban various types of speech”. That is what the Economist said leads to the decline of societies.

We are British; we have things like banter. For centuries, we have been able to live at ease with each other and say amusing things. I have had people say things to me that I did not particularly like, but it was banter and I went along with it—we can all go along with it. If we insist on shutting down the most harmless kinds of remarks, which courts will interpret as being justiciable within the framework of this clause, we risk going further down the path that the Economist warned against.

I plead with noble Lords, in a most kind way, to think very hard about this amendment. Please vote for it, because it is not trivial—it is very important.

[Lord Ashcombe (Con)]

My Lords, I support this group of amendments in the name of my noble friend Lord Young. If these amendments are not accepted, I worry that we will see a sharp increase in cases going to employment tribunals, adding more pressure to a system that is already stretched. It is not hard to imagine how these disputes may play out. We will likely see countless cases built around the old “Yes, you did”, “No, I didn’t” argument, disagreements over who said what to whom, and in what context—not only the genuine cases mentioned by the noble Baroness, Lady Fox. It is messy, time-consuming and, frankly, avoidable by agreeing to these amendments.

Much of the debate on this issue so far has rightly focused on the hospitality, retail and entertainment sectors, where these challenges are particularly acute. However, it is not only these sectors that have an issue coming to them; it goes much wider than that. By way of example, I work for a large insurance broker, Marsh Ltd. We regularly host clients from around the world at our offices in the City of London. These visitors often come from countries and cultures very different from our own. Now imagine a scenario in which an employee overhears a private conversation between two overseas clients in our lobby—perhaps just in passing—and takes offence. That could lead to a complaint and, potentially, even to legal action, despite my employer having no direct involvement. Why should any business, large or small, be held liable for that kind of situation?

We need to remain an attractive destination for global business, whether in insurance or any other sector. Welcoming international clients to the UK supports jobs, drives growth and benefits us all, but if businesses feel they are constantly at risk of ending up in tribunal—or are under the threat thereof—over things beyond their control, that creates a real disincentive to continue. For smaller companies, the stakes are even higher. The financial and reputational cost of defending against such claims could be devastating.

This is a matter of common sense and balance. These amendments do not take rights away from workers; they simply provide clarity and fairness for everyone involved.

[Lord Lucas (Con)]

My Lords, has the Minister consulted the Clerk of the Parliaments about how he would apply this clause to this House, should it be passed? What would be the rules in, for instance, the Peers’ Dining Room about discussing politics and religion? The fact that we might think it unreasonable that we should not be allowed to discuss that does not make it unreasonable. What makes it unreasonable, under the words of the Bill, is that it would be something it would not be reasonable to do. It is clearly within the scope of the organisation of this House to say that no potentially offensive conversations should be held in spaces where employees are likely to be present. This is what the Bill says at the moment. I can see that noble Lords opposite find it ridiculous, but this is the legislation that their Government have drafted.

[Lord Goddard of Stockport (LD)]

My Lords, I wish to state clearly that we on the Liberal Democrat Benches do not agree with Amendments 43, 44, 45 and 193 or their intentions. Throughout Committee, the noble Lord, Lord Young, consistently framed his amendments on this subject around the defence of what he terms banter, suggesting it as a justification for remarks that can be harmful in the workplace.

To us on these Benches, it is clear that the debate on this issue has been shaped by a somewhat misleading portrayal of the Bill’s aims. The amendment rests on a narrow and simplistic view of harassment that risks undermining protection for workers by focusing on policing private conversations rather than addressing the real problems of bullying and harassment.

I must also express concern over the repeated invocation of banter as a shield for inappropriate behaviour. Too often, the phrase has been used to excuse sexist, racist or otherwise discriminatory conduct. To say otherwise is discourteous.

If we undermine the protections the Bill offers, especially through amendments that narrow employers’ duties, we risk signalling that the experiences and well-being of their workers are of little consequence. We cannot and must not dismiss their right to a safe and respectful working environment.

20:00

I also express our fondness for Amendment 173 in the name of the noble Lord, Lord Holmes, which calls for the Secretary of State to establish a group to examine why employment levels for blind and partially sighted people remain low and below the national average. Regardless of whether that provision is included in the Bill, I sincerely hope the Government will give serious consideration to taking this important work forward.

Finally, we recognise the importance of clarity and hope the Government will be able to offer the clarity needed on the contents of regulations under this section of the Bill ahead of them being brought before the House. It is no secret that the level of scrutiny given to secondary legislation is, to put it mildly, wanting. This is a key element that will determine how effectively the protections in the Bill will operate.

I also reiterate a crucial question raised by my noble friend Lord Fox, who has stopped falling off the Alps and has now almost recovered. In Committee, he asked for Members of this House to have sight of the draft regulations under this section, and a clear explanation of how the guidelines will function alongside regulations. Without that transparency, it is difficult to fully understand how the Government intend for these provisions to work and to be assured that the rights of workers will be properly safeguarded.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friends Lord Young of Acton and Lord Holmes of Richmond for their amendments in this group. I join the noble Lord, Lord Goddard, in his remarks about the amendment of the noble Lord, Lord Holmes, in particular, which addresses an important point about the employment opportunities for blind and sight-impaired people. Unfortunately, the measures in the Bill make it significantly more costly to hire all individuals, and this will hit those on the margins of the labour market the hardest.

My noble friend Lord Young has made some very compelling points in Committee and now on Report on Clause 20, and this is where the noble Lord, Lord Goddard, and I differ. If the Government do not accept my noble friend’s amendments, we must consider the logical—and potentially absurd—consequences of allowing unqualified liability for indirect harassment.

Imagine for a moment that the same principle was applied here in this House, as the noble Lord, Lord Lucas, just did, while making some very good points. Suppose for example a guest in the Public Gallery was to lean over and whisper something mildly controversial—perhaps a pointed remark about constitutional reform. A doorkeeper standing nearby happens to overhear it and finds it offensive. Under the logic of indirect third-party harassment liability, would the Lord Speaker be expected to issue a formal apology? Would Black Rod be required to eject the offender and impose mandatory sensitivity training on all future guests? What would the “banter consultant” mentioned by the noble Baroness, Lady Fox, say about that?

This illustrates the unworkability and overreach of the current drafting. No one would expect Members of this House to be held responsible for the spontaneous and overheard utterances of strangers in the Gallery, and nor should we expect publicans, shopkeepers or venue managers to be so, either.

As to Amendment 193 standing in my name, the Government have already decided to delay many of the measures in the Bill. Originally, we were told that these measures would come into effect by 2026, but the Government’s decision to postpone parts of the Bill is, I believe, an implicit admission that their consultation process was inadequate.

The Government have now begun to recognise the very real and unintended consequences that could follow from some of these provisions. Clause 20, which seeks to impose liability on employers for third-party harassment, is one such provision that warrants further scrutiny and, at the very least, a longer lead-in time. This clause, while we accept it is well-intentioned in its aim to protect employees, risks, as we have discussed, casting too wide a net. It opens the door to legal uncertainty and potentially frivolous claims based on subjective interpretations of overheard remarks or perceived offence. Therefore, the Government must reconsider how such a broad definition of harassment could be interpreted in real-world settings, particularly in the hospitality and retail sectors, where employees regularly interact with members of the public.

As my noble friend Lord Young of Acton pointed out, recent warnings from the British Beer and Pub Association, which has announced that Britain is now losing a pub every day, should be heeded. This is not simply a matter of economics; it is a cultural and social loss, as my noble friend pointed out. Pubs are part of the lifeblood of our national identity. They are centres of community, debate and tradition, yet now, in addition to facing tax increases, rising costs and staff shortages, pub landlords are being told they may be held legally responsible for comments made by their patrons, even if those comments are not directed at staff. To quote again from the noble Baroness, Lady Fox, this is not made-up nonsense; this is factual.

I urge the Government to take this opportunity to reflect, to consult more widely and to ensure that they do not impose a law which may undermine business, stifle free expression and expose employers to unfair liability.

[Baroness Jones of Whitchurch (Lab)]

My Lords, this Government have provided assurances to your Lordships’ House throughout these debates, time and again, that Clause 20 will not have the chilling effect on free speech that is being claimed today. Therefore, we will resist Amendments 43, 44 and 45, tabled by the noble Lord, Lord Young of Acton, in relation to third-party harassment.

I make it absolutely clear at the outset that this clause is about addressing harassment, not about banter. We have overarching legislation in the Human Rights Act 1998 which guarantees freedom of expression in a way that is legally and constitutionally stronger than any amendment the noble Lord could make to the current Employment Rights Bill. Therefore, we do not accept the argument that carve-outs are required or that new concepts should be introduced that would complicate the law unnecessarily.

Employers are already obliged under the Equality Act 2010 to protect employees from harassment in the workplace. That has obviously not led to “banter bouncers” in the workplace. Therefore, employers already have an understanding of how to apply these protections in practice. Our aim is not to burden employers or prevent free speech; it is to deliver on our commitment to create and maintain workplaces and working conditions free from harassment, including by third parties.

The question was raised as to whether cases would go to a tribunal for people being oversensitive. It is important to note that in an employment tribunal claim for harassment, if certain conduct has a humiliating or degrading effect on the recipient but that was not its intended purpose, the tribunal must consider whether it was reasonable for the conduct to have that effect. The reasonableness and the facts of the individual’s situation must always be considered. It is not a purely subjective test based on the view of the recipient. In addition, there is a seriousness threshold. Conduct that is trivial or causes minor offence will not be sufficiently serious to meet that definition of harassment.

The protection we have proposed is welcomed by a recent nationally representative survey of 5,000 people by the TUC, which found that eight out of 10 people—

[Noble Lords]

Oh!

[Baroness Jones of Whitchurch (Lab)]

I do not know what is funny about that, because I do not know that I have heard any polls from the opposite side. The TUC poll found that eight out of 10 people—79%—support the plan to protect workers from harassment.

I remind noble Lords that the Government will be publishing guidance so that employers are supported with these changes. We will make it clear that they are not required to take unreasonable steps and we will set out how they can continue to effectively prevent harassment and protect free speech. No business will be required to hire staff to monitor speech or diversity under this provision.

Many public-facing businesses, such as pubs, universities, sports venues and public transport, already have posters that signal a zero-tolerance approach to any form of harassment at their venue or site, including harassment of their staff. We would consider this a reasonable step.

The noble Lord, Lord Lucas, raised the issue of this building, and this very building has notices detailing the behavioural code, making it clear that everyone on the estate should treat one another with respect and that unacceptable behaviour will be dealt with seriously. This has not had a chilling effect on free speech in this place.

Harassment is taking place in many workplaces that is not banter and, in some cases, employers are simply not doing enough to protect or support their employees. In a poll of 16 to 35 year-olds in 2018, the TUC explored the experiences and the impact of third-party harassment. For example, a young woman complained of

“customers sexually harassing staff members and myself whilst drunk. It also occurs when they are sober. It happens every time I work. My managers think it’s funny”.

Another customer, a sales assistant aged 18 to 21, said that they were constantly being sworn up by customers for no reason and called racial slurs, and had witnessed people being hit. I do not know what the answer of the noble Lord, Lord Young, is to all of that, but we have an answer, which is to take steps against third-party harassment.

My noble friend Lord Leong shared a very personal story about when he worked in a pub in his student days and was harassed constantly, being called all manner of racist names. He complained to the manager, who dismissed it as banter, but it was not banter, and he still finds it very difficult to talk about it to this day. He left the pub after two weeks because he could not take it any more. We do not want people to have to do that in future. It is very important to us that future employees do not feel this way.

Diversity in businesses can be linked to benefits, including improved recruitment, employee engagement, more effective teams and improved understanding of customer wants and needs. We also know that companies with the most diverse leadership teams are more likely than ever to outperform less diverse peers on profitability. A customer service survey by Hospitality UK and CGA found that almost two-thirds of customers think that a venue’s equality, diversity and inclusion policy is important, and a third said that they would be more likely to visit a venue if it had policies to promote equality. We are, therefore, convinced that very few businesses, if they want to keep their customers, would support the amendments from the noble Lord, Lord Young.

I now turn to Amendment 193, tabled by the noble Lord, Lord Sharpe of Epsom. As set out in our road map for delivering Labour’s Plan to Make Work Pay, we intend to commence the Bill’s protections against third-party harassment in October 2026. It is important that we get implementation and the details right to ensure that employers and employees understand the new law, and that it can be as effective as possible in ending third-party harassment. The approach we have taken and the timeline set out allow the time required to deliver effective implementation.

I assure the noble Lord that there is no need to delay commencement of Clause 20 until October 2027 due to concerns relating to free speech or burdens on business. Over the coming months, we will be engaging with stakeholders to ensure that guidance is fit for purpose. This will build on the consultation held in 2019 on introducing protections against third-party workplace sexual harassment, as well as on responses to the recently closed call for evidence on equality law. This timeline therefore accounts for the need for stakeholders to prepare for changes, and we will ensure that they are supported in their preparations. I remind your Lordships that, if a woman is sexually harassed by a customer at work today, she cannot seek individual redress, and if an employee experiences racial or homophobic harassment from a third party at work today, they have no protections under the Equality Act 2010.

I hope that we can all agree that employees should feel safe at work and be free of harassment. Therefore, we should not delay introducing these important protections any longer, and I urge the noble Lord, Lord Young, to withdraw his amendment.

[Lord Young of Acton (Con)]

I would just like to clarify that, when I referred noble Lords to my entry in the register of interests, I was referring them specifically to my job as the general-secretary of the Free Speech Union, which has been campaigning on this issue. I thank noble Lords for all their excellent contributions to this debate, particularly the noble Baroness, Lady Fox of Buckley.

I will quickly respond to a couple of points made by the Minister. I do not think she can justifiably claim that Clause 20 will be for the first time protecting workers from being racially abused by customers or members of the public. If someone racially abuses another person, as I understand it, that would be a racially aggravated offence under Section 5 of the Public Order Act 1986. So it is not as if there are currently no legal protections for workers who are abused in that unacceptable way.

The Minister said that the Government intended to publish guidance. on what “all reasonable steps” employers would be expected to take to protect their employees from third-party harassment. But, as I understand it from my reading of the Bill, the Government are obliged to provide guidance when it comes to protecting workers from third-party sexual harassment. They will set out what all reasonable steps are with respect to that, but there is no comparable clause in which the Government commit to providing guidance on what all reasonable steps are when it comes to protecting employees from third-party non-sexual harassment.

The Minister said that it would introduce an element of confusion into Clause 20 to accept either Amendment 43 or 44, because the things these amendments are trying to rule out of scope are already out of scope. If that is the case, and if the Minister genuinely believes that indirect harassment is not within scope, that banter is not within scope and that this is an exaggeration, a faux outrage, and if she genuinely believes that good-faith conversations about moral, political, religious or social matters, provided that they are not obscene, are out of scope, why not accept Amendments 43 and 44?

Doing so would provide the hospitality sector, and publicans in particular, with some clarity about what reasonable steps they can be expected to take to comply with this new clause. As it stands, there is a great deal of confusion. They will feel that they must err on the side of caution to prevent the possibility of being taken to the employment tribunal by aggrieved workers.

Pubs are on their knees. I ask the House not to impose these additional burdens on publicans who are already struggling to survive and keep their businesses afloat. If the Government genuinely believe in growth, and if they genuinely believe that pubs are an important British institution and want to take steps to preserve them, at the very least they should give publicans the clarity that accepting Amendments 43 and 44 would provide.

I am afraid that I am not satisfied by the Minister’s answer and so would like to test the opinion of the House.

20:17

Division 5

Ayes: 161

Noes: 191

20:27

Amendments 44 and 45 not moved.

20:28

Consideration on Report adjourned until not before 9.08 pm.