Employment Rights Bill

Debate between Baroness Jones of Whitchurch and Baroness Noakes

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

I will talk about the impact assessments in more detail shortly, but the noble Lord will know that it is a lot easier to identify the costs in impact assessment than the benefits. We have worked with academics who are looking at this subject. I reassure the noble Lord that we have looked at this and are confident that the benefits in this particular case will outweigh the risks.

I will pick up the point made by other noble Lords about cultural fit and other reasons why an employer might want to dismiss somebody during their probationary period. Dismissal for “some other substantial reason” is a catch-all category designed to allow employers to terminate an employment contract where no other potentially fair reasons apply. There can be cases where dismissal is legitimate and reasonable; “some other substantial reason” dismissals depend on the facts and circumstances of the employment relationship. “Some other substantial reason” is broad, and case law supports personality clashes in workplace teams or a business client refusing to work with an employee being a potentially fair reason for dismissal. The Government do not believe that an employee not being a cultural fit within an organisation should be a fair dismissal per se. We would expect an employer to be able to dismiss someone fairly only if any cultural misfit was relevant in a reasonable manner to the employer’s business objectives and the needs of the workplace.

The noble Baroness, Lady Noakes, mentioned employees with spent convictions. I gently point out to her that dismissing an employee solely for having spent convictions is currently unfair and potentially grounds for an unfair dismissal claim—

[Baroness Noakes (Con)]

I never mentioned spent convictions; I referred merely to the risk of employers taking on ex-offenders. I cannot think of a point I could have made in relation to spent convictions. The issue is these categories of potential employees who a represent higher risk in terms of judgment to employers, and I was using former offenders as one example of that.

[Baroness Jones of Whitchurch (Lab)]

I apologise if I misunderstood the noble Baroness’s point. I can only reaffirm the point I was making: with all these issues, there can be reasons for fair dismissal during the probationary period, and we have set out quite clearly what the grounds for that would be.

Amendment 107A was tabled by the noble Lord, Lord Lucas. As always, he thinks outside the box and comes up with interesting ideas, including the idea of a probationary period here in your Lordships’ House, which I am sure we all have strong views about. Going back to the specifics of his proposal, the Government have expressed an initial preference for a nine-month statutory probationary period. We intend to consult with stakeholders and the wider public before committing to a duration, which will be set by the Secretary of State through secondary legislation after this consultation has taken place. Maintaining this flexibility allows the duration and calculation of the statutory probationary period to be adapted in light of future changes in employment practices.

Amendment 108, tabled by the noble Lord, Lord Vaux, would also amend Schedule 3 to the Bill. It is of great importance to this Government to get the length of the statutory probationary period correct. The Government have already stated in Next Steps to Make Work Pay their preference for the statutory probationary period to be nine months in duration. However, this is subject to consultation, and I hope that this reassures the noble Lord, Lord de Clifford, on that matter.

On Amendment 334, tabled by the noble Lord, Lord Vaux, while I recognise what the noble Lord is seeking to achieve with his amendment, I reassure him, and the noble Baroness, Lady Meyer, that the Government have no intention of removing the two-year qualifying period until the regulations setting out the statutory probationary period are in force. We will, of course, give businesses time to prepare, and we are engaging with them already. These provisions will not commence before autumn 2026, which will give time to prepare. I hope that this reassures the noble Lord, Lord Goddard.

I move on to address Amendments 103 and 123, from the noble Lords, Lord Sharpe and Lord Hunt, in respect of their mandates for further impact assessments. The Government have already produced a comprehensive set of impact assessments, published alongside Second Reading, and based on the best available evidence of the potential impact on businesses, employees and the wider economy. Our analysis includes an illustrative assessment of the impact on employment tribunal cases, which we intend to refine over time by working closely with the Ministry of Justice, His Majesty’s Courts & Tribunals Service, ACAS and wider stakeholders. I am grateful to my noble friend Lord Hendy for setting the record straight about the impact of tribunals, and the thorough ways in which they conduct their proceedings. Many cases settle in advance, and we want to encourage more cases to reach a settlement with proper advice and support. I am also grateful to my noble friend Lord Barber for putting the scale of the problem in perspective, with only 5,000 cases referred to ACAS in 2023-24.

We will publish an enactment impact assessment once the Bill receives Royal Assent, in line with the requirements of the Better Regulation Framework. This will account for ways in which the Bill has been amended in its passage through Parliament, to the extent that those changes significantly change the impact of the policy on the enforcement system. This impact assessment will then be published alongside the enacted legislation.

To follow up on the impact of this, we acknowledge that the policy is expected to benefit close to 9 million employees, driven by well-being benefits arising from increased job security for those with under two years of tenure. There will be costs to businesses, including familiarisation and compliance costs, from this change. However, businesses could benefit through improving their people management and hiring practices, which could deliver medium to long-term benefits, such as higher labour productivity. In addition, increasing employee well-being could increase worker productivity. These benefits will be tested further during consultation.

The Government have also pledged to conduct a consultation on unfair dismissal policy, to collect feedback from employers and employees. Specifically, the Government have outlined that we will consult on the length of the statutory probationary period, and the potential cap on compensatory awards for unfair dismissal occurring during the statutory probationary period. I can reassure the House that there is no need for the Bill to require the Government to undertake further assessment of the impact on tribunals before commencement. We will be updating our impact assessments in any case, alongside the consultation on implementing the various provisions in the Bill.

I turn to Amendment 113, tabled by the noble Lord, Lord Sharpe of Epsom. The Government are not proposing to expand the five potentially fair reasons for dismissal that have been a central part of employment law for decades. An employer’s decision to dismiss an employee in the early stages of their employment or otherwise will have to be underpinned by a fair dismissal reason, such as capability or conduct. It stands to reason that these would be the most likely dismissal reasons when employees fail their probation.

I am grateful to all noble Lords for tabling these amendments but, for the reasons set out, the Government cannot support them. I therefore ask that Amendment 103 be withdrawn.

Employment Rights Bill

Debate between Baroness Jones of Whitchurch and Baroness Noakes

Committee stage
Monday 19th May 2025 Lords Chamber

[Baroness Noakes (Con)]

My Lords, can the Minister explain why Clause 21 gives power to the Secretary of State to make provisions in relation to reasonable steps only for sexual harassment and not non-sexual harassment? I think she said something about it being an area in which there is evidence that this would be useful—I cannot remember her exact words. I cannot understand why the Government have not extended the logic of giving assistance in this area to tribunals beyond sexual harassment, especially given the broadening of the extent of non-sexual harassment by including third parties.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I can say only that it is for the reasons I have outlined previously in my speech. We want to make sure that where we broaden the protections, it is done on a very careful basis and achieves the desired effect.

[Baroness Noakes (Con)]

We are not talking about broadening protections; we are talking about setting out what constitutes reasonable steps in the case of sexual harassment, which is included in Clause 21, and other kinds of harassment, which, incomprehensively, are not included. I am simply asking why the Government have gone down that particular route.

[Baroness Jones of Whitchurch (Lab)]

My Lords, the easiest thing is for me to write to the noble Baroness to explain this. It is obviously based on previous experiences of case law and so on. I will write to the noble Baroness.

Her previous question was about the Bill’s jurisdiction over overseas employees. While I cannot necessarily speak to the example that she raised, the Bill does not broaden the jurisdiction of employment tribunals beyond their current jurisdiction over any overseas employees. The situation will remain as it stands.

[Baroness Noakes (Con)]

Can the Minister explain what the current jurisdiction is? What is the current territorial extent for all tribunal cases?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I presume that it is where employees are based here in the UK, but if I am wrong I will write to the noble Baroness and clarify that.

In conclusion, I am grateful to all noble Lords for tabling these amendments but, for the reasons set out, the Government cannot support them. The Government are on the side of workers, not abusers. We will ensure that workers have the fair protections at work that they deserve. I therefore ask that Amendment 83 is withdrawn and that Clause 20 stands part of the Bill.

Employment Rights Bill

Debate between Baroness Jones of Whitchurch and Baroness Noakes

Committee stage
Tuesday 13th May 2025 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, as noble Lords have identified, we are now continuing the important debate on statutory sick pay and specifically to address the impact of these measures on businesses.

It is important to highlight that the statutory sick pay system, and the changes that we have brought about as part of this Bill, is designed to balance providing support for the individual with minimising the costs to the employer. This group of amendments, Amendments 74A, 74B and 74C, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require impact assessments on absenteeism, enhanced sick pay schemes, occupational health, and short-notice shift working.

As I mentioned earlier, and as the noble Lord, Lord Fox, has already identified, the Government have already undertaken a regulatory impact assessment which considered the likely direct business impact of SSP changes. This included considering the impact on small and medium enterprises and sectoral impacts.

Overall, in the regulatory impact assessment, the Government estimated that the cost of delivering these measures would be approximately £15 extra per employee, a relatively modest amount when compared to the positive impacts that these changes will have for employees and overall productivity. I thank the noble Lord for the three amendments tabled in this group, all of which would require impact assessments. I look forward to debating those with the other 23 or so requests for impact assessments that the Opposition have already tabled. We have a plethora of requests for impact assessments. I reassure the noble Lord that we are at the same time updating our regulatory impact assessment and operating a post-implementation review of the measures—so the Opposition’s requests are probably not necessary.

On the noble Lord’s Amendment 74A, requiring an assessment of the impact of the changes to SSP in the Bill on absenteeism, we acknowledge that overall sickness absence may increase as a result of this Bill. This is not a loophole, nor are the Government not considering businesses; rather, it is the very objective of these changes to enable the lowest-paid employees to take time off when they are sick. Under the new system, employees will be able to take the time that they need to recover from short-term illness without struggling through work and often risking the spread of infectious diseases such as influenza. Similarly, employees with long-term or fluctuating conditions should feel able to take a day of sickness absence to manage their condition to prevent it worsening. The noble Lord, Lord Hunt, suggested that employees might be encouraged to misuse the system. However, if employers have the right policies and practices in place, the risk of inappropriate absenteeism can and should be mitigated.

Additionally, the noble Lord’s amendment would be quite difficult to deliver in practice. There is not a standard measure of absenteeism versus legitimate sickness absence, and in many instances, it would depend on whether you asked the employer or the employee. The Government intend to build on the regulatory impact assessment and, as I have said, we intend to conduct a post-implementation review of the measures in the Employment Rights Bill.

I turn to Amendment 74B, to assess the impact of the reforms in the Bill on employers’ ability to continue offering enhanced sick pay and occupational health services, particularly in low-margin sectors such as retail. I appreciate the noble Lord’s concern about the potential impact on this matter, and the Government certainly agree that it would not be in anyone’s interest for there to be a rollback of occupational sick pay or occupational health provision. However, the Government’s view is that these changes will serve only to strengthen the link between the workplace and the employee. I question why any business would want to use these changes as a reason to reduce the support that they provide their employees to help them stay in, and return to, work.

The noble Baroness, Lady Fox, asked about the Government’s policy on getting people back to work, and she was right to raise the issue. We are talking about a balance here; when people are sick, they should have the right to be off sick. I also accept the point that she made that being at work can in itself be a healing experience, and we should not lose sight of that—that there can be a positive health impact from being at work.

I once again draw noble Lords’ attention to the Keep Britain Working review. As I set out earlier in the debate, Sir Charlie Mayfield will consider recommendations on how the Government can support and enable employers to promote healthy and inclusive workplaces and support more people to stay in or return to work from periods of sickness absence. That review is expected to produce a final report in autumn this year. I believe that much of what the Keep Britain Working review is doing will address the noble Lords’ concerns, and I hope this reassures them that the Government are taking this matter seriously. We look forward to the results of the review.

Finally, I turn to Amendment 74C, which seeks to review the effects of the SSP changes on shift management and short-notice scheduling in the workplace. As discussed in relation to Amendment 74A, the number of sickness absences may go up as a result of these changes. This is because it would enable employees to take time off when they are sick.

I again reassure noble Lords that the Government are committed to understand the impact of these changes on businesses. We intend to conduct a post-implementation review of these measures in the Employment Rights Bill within five years of implementation. Additionally, as I set out in the earlier debate, the Department for Work and Pensions conducts regular employer and employee surveys and will continue to do so, providing further monitoring of the impact of SSP changes on a range of employers and employees.

However, this amendment would require the Government to collect a significant amount of data from businesses on what noble Lords will understand is quite a wide range of issues. We believe that this would be administratively challenging for them to provide, particularly in less than six months. This is the very thing that the noble Lord is seeking to avoid—the extra bureaucracy that he has talked about. For example, asking employers, including SMEs, to accurately record and report to government the frequency of shift cancellations and redeployments because of sickness absence is not practical or reasonable.

We have had a worthwhile, short debate on these issues, but I hope I have persuaded noble Lords that we are on the case and therefore that the amendment can be withdrawn.

[Baroness Noakes (Con)]

My Lords, the Minister said during her remarks that there would be a cost per employee of £15; I think she said that in the earlier group as well. Can she provide any more information on this? It seems counterintuitive. If the average number of sick days per employee is around eight, which is what the most recent survey data showed, that implies that employers are already bearing the cost of something like seven and a half days and are going to pay only for an extra half day. That does not seem to be consistent with the evidence of the nature of absences that also exist, which implies that most are at the shorter end and probably are going to be below the level at which they are currently being reimbursed by statutory sick pay.

It has been troubling me for some time, but I hope that the Minister will be able to provide some further information. I do not expect it from the Dispatch Box, although I would be delighted if it were to come from the Dispatch Box right now, but if she could write to me, I would be most grateful.

[Baroness Jones of Whitchurch (Lab)]

I suppose the simple answer to that is that it is in the regulatory impact assessment, which the noble Lord, Lord Vaux, acknowledged was one of the things that we got a fair rating for. I refer the noble Baroness to that, which I think will give more details.

--- Later in debate ---

[Baroness Noakes (Con)]

I have read it. There is no more detail in that impact assessment on the £15. That is why I am asking whether the Minister can provide further detail on how that £15 was arrived at.

[Baroness Jones of Whitchurch (Lab)]

I am happy to write to the noble Baroness.