16:27 - Division on Amendment 1 - Ayes: 264 / Noes: 158 - Amendment 1 agreed.
16:57 - Division on Amendment 10 - Ayes: 267 / Noes: 153 - Amendment 10 agreed.
18:44 - Division on Amendment 31 - Ayes: 65 / Noes: 170 - Amendment 31 disagreed.
19:23 - Division on Amendment 42 - Ayes: 232 / Noes: 137 - Amendment 42 agreed.
20:17 - Division on Amendment 43 - Ayes: 161 / Noes: 191 - Amendment 43 disagreed.
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”.
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.
“(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.
“(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.
“(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.
“(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.
“(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.
Lord Sharpe of Epsom
“(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.
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.
“(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.
“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.
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.
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.
Member’s explanatory statement
This amendment is consequential on my amendment of clause 18 at page 41, line 39.
“(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.
Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.
“(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.
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.
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—
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.