Employment Rights Bill

Debate between Baroness Noakes and Baroness Coffey

Monday 14th July 2025 Lords Chamber

[Baroness Noakes (Con)]

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

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

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

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

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

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

[Baroness Coffey (Con)]

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

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

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

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

Employment Rights Bill

Debate between Baroness Noakes and Baroness Coffey

Committee stage
Thursday 8th May 2025 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I support the amendments in this group in the names of my noble friends on our Front Bench. I have a number of concerns about the guaranteed-hours provisions in the Bill, one of them being that they are drafted almost wholly from the perspective of workers and pay little heed to the needs of employers. I do not believe that is a good way to create employment law to underpin a healthy economy.

On our first day in Committee, the noble Lord, Lord Barber of Ainsdale, who is not in his place today, and the noble Baroness, Lady Carberry of Muswell Hill, both spoke about the work of the Low Pay Commission on zero-hours contracts. I was grateful to them for being pointed in that direction. I have a great deal of time for the work of the Low Pay Commission, which is always balanced and very careful, so I went back and looked at the 2018 report. Unsurprisingly, I found that it does not provide the copper-bottomed support for the Bill that noble Lords opposite have claimed—I should also say that the employment bodies represented on the Low Pay Commission have told us that as well.

The Low Pay Commission did indeed recommend that workers should be offered guaranteed-hours contracts, but, importantly, it also recognised that there would be circumstances in which it would not be reasonable for the employer to have to do that. There is not a trace of that in the Bill. The Low Pay Commission was clear that the Bill should set out specific circumstances in which the employer would not have to offer guaranteed hours. The commission cited with approval some equivalent legislation which was at that stage going through the Irish parliament, which provided, among other things, that adverse changes in the employer’s business or the existence of temporary factors would allow employers not to offer guaranteed hours.

Like the noble Lord, Lord Londesborough, I believe that Amendment 19A is eminently reasonable in that context. It does not give an employer carte blanche to ignore guaranteed hours but allows for some genuine business circumstances to be taken into account by the employer when looking at whether guaranteed-hours contracts should be offered.

At the end of the day, if we do not have successful businesses, there will not be any jobs on any kind of contract available. As I said on our first day in Committee, I am particularly concerned, as is the noble Lord, Lord Londesborough, about small and micro-businesses, which really need to be allowed the flexibility if we are to protect the work opportunities of around half the private sector workforce.

Even if those small and micro-businesses survive the incredible bureaucracy associated with these guaranteed hours, they will potentially not survive the substantive impact of the hours if they are required in all circumstances to offer guaranteed-hours contracts. Of course, this is particularly the case in the hospitality sector, the largest user of zero-hours contracts; my noble friend Lord Hunt spoke about the problems in that sector. There are also very large numbers of small and micro-businesses in that sector.

Recognising some very limited flexibility, my noble friend’s Amendment 19A is actually very modest. It would go some way towards making this new requirement to offer guaranteed hours work in the context of businesses that have to face difficult circumstances, and at the moment the Bill pays no attention to that.

[Baroness Coffey (Con)]

My Lords, I support the amendments tabled by my noble friends. I am just thinking of my career. I have had quite a conventional career in many ways, but I have also had many extra roles, particularly when I was a student—I am conscious that we will come to Amendment 19B separately later. It is important to reinforce the challenges in starting up or expanding a particular business. It is well said that a coffee shop will know within the first week whether it will succeed. You could argue that there are different factors, but within the first month a business will certainly know whether the footfall and the sale per customer justify the number of people it is employing and adapt accordingly.

As my noble friend Lord Hunt of Wirral mentioned, there is also this extended element about things such as holidays. It may surprise your Lordships to know quite how many jobs are, frankly, based on whether it rains and people cancelling going out to do different things. That is one of the reasons why, in particular but not exclusively, many hotel chains have started having a price differential: basically, you get a better deal if you book up front, but you cannot cancel or get your money back. Indeed, it is why even more restaurants are, effectively, starting to pre-charge an amount of money that is expected so that people do not cancel. Having lived in touch of the coast for most of my life, I can assure your Lordships that the fluctuation in how many people actually turn up to a resort for the day in a town is real, and what that means for temporary jobs.

That is why I think my noble friend Lord Hunt has found a good way of trying to help the Government to consider some of the everyday decisions that employers have to make as to whether they open up in the first place, whether they try to expand, and whether they try to get the growth. If I go further on to Clause 20, at the same time that the Government are trying to encourage businesses to go into artificial intelligence and see all that can be embraced in that regard, they need to bear in mind that businesses will not invest in such technologies if they are concerned that the other costs will be so detrimental to them.

We keep having this Catch-22 situation: if the Government want growth, they need to recognise the success where employers have been given the chance to scope and to be flexible, although I understand entirely the Government’s intent that the employer should be reasonable with the people that they take on. It is for these reasons—and I will speak more in the next group—that I believe that the Government should seriously consider how they operationalise this. We keep hearing about more and more consultations. We have heard people from the British Retail Consortium, from retailers and from hospitality saying that these are the real issues. We are almost doing their consultation for them by putting forward these amendments, so I hope that the Minister will look on them carefully in his consideration.