Employment Rights Bill

Debate between Lord Fuller and Baroness Stowell of Beeston

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, I support the amendments in this group and endorse most of the arguments that have already been advanced. I will focus just briefly on tech scale-ups.

Noble Lords will, I hope, remember that the Communications and Digital Select Committee published a report just a few months ago on AI and Creative Technology Scaleups. These businesses are incredibly important to our economic growth. They represent the innovation that comes out of our universities and the talent that exists in this country, but they need a huge amount of support to get from being start-ups to scale-ups. However, if they are successful, the return that they then deliver to our economy is huge.

Our inquiry found that the UK is, in effect, an incubator economy. What we are seeing now is that increasingly the kinds of businesses that have the potential to turn into unicorns, or indeed become unicorns, are galloping away. They are doing so because of many things. Sometimes it is about access to capital growth and to highly competitive workforces. But one of the biggest challenges that we face is that our regime, whether it is regulatory or investment, is not supporting risk-taking. As my noble friend Lady Noakes said a moment ago, the measures in the Bill about day-one rights on unfair dismissal, along with many other things, are undermining risk takers.

As part of our inquiry—before the Bill was published—witnesses told us, in the context of hiring, that the costs of hiring and firing are already much higher in the UK than anywhere else, which is putting UK businesses at a disadvantage. In the context of the Bill and the day-one rights around unfair dismissal, the Startup Coalition, which represents the start-ups, talked in its briefing note about the chilling effect that these day-one rights around hiring and firing would have on start-ups, seriously undermining their potential for growth. TechUK, which represents tech businesses of all sizes, has raised a lot of concerns about some of these day-one rights, but in the context of unfair dismissal, one of its concerns, which I do not think we have heard much about so far, is the risk of fraudulent claims.

In the Government’s response to our report—while I am on my feet, I add a bit of advertising: the debate on the report is on Friday 13 June, so I urge any noble Lords who are interested in this to sign up and contribute—they referred a lot to their AI action plan and the forthcoming industrial strategy, saying that jobs will be “at the heart” of that strategy. If that is the case, I urge the Minister to think again in the context of what I have just argued. If jobs are to be at the heart of that strategy, and the Government are as keen to support tech scale-ups as they have declared themselves to be and have put this part of the economy centre stage in all their growth plans, but these kinds of measures are making it impossible or so difficult for these businesses to be willing to take the risks to hire in the way that they need to in order to scale, then the Government are introducing measures which are self-defeating and which will undermine their own objectives.

[Lord Fuller (Con)]

My Lords, I shall speak to Amendments 104, 105, 106 and 107, but particularly Amendments 107A and 108, relating to day-one rights.

Getting into work helps people make the best of their lives and reach their full potential. It is good for them and their families, and, of course, employment helps businesses and, through the taxes that everybody pays, helps sustain our state. You would expect that it was a core role of the state to incentivise the creation of jobs in pursuance of economic growth, personal fulfilment and a reduction in the costs of worklessness. It sounds so obvious, but the Government need to be reminded of those simple truths, because the facts are that the well-meaning and superficially attractive suggestion that employees should have full rights from day one is full of perverse consequences that will reduce the appetite to take on staff and will particularly benight those with few qualifications and limited experience. Furthermore, it does not reflect the way in which the economy is changing and the world of work is altering, as people choose to work in different ways.

Taking on new employees is not something that organisations do lightly. For the most part, there is an application and interview process, and we have heard about this from other noble Lords. For most employees, applying for and getting a new job is a well-trodden path, as someone builds a career, gains experience and seeks promotion. But that is not how it is for the part of the workforce that does not have formal qualifications. We have heard about ex-prisoners and people without experience or a strong track record in a particular field. People get on the ladder only when an employer takes a chance on them. The muddled thinking behind this Bill will result in the perverse outcome of increasing not only the cost of taking somebody on but the risk of getting it wrong. The consequence will be to make a business think twice before taking a chance on the person with limited experience, people at the beginning of their career, or those with an impaired employment record. These people need the greatest help.

It is not just the youngsters who may suffer from these well-meaning but counterproductive proposals. Many people prefer a portfolio of part-time jobs nowadays, because it suits their lifestyle. The facts are that the relationship between casual, agency and temporary work in the UK suits those engaged in it for a variety of reasons. The temporary agency, Adecco, tells me in a briefing that 79% of UK temporary and agency workers rate the flexibility it gives them most highly, and two-thirds say that temporary or part-time work helps their work-life balance.

Because much of the temporary work is variable and unpredictable, it is incompatible with some of those other day-one rights, such as the offering of guaranteed hours over a reference period. Some of the employment that might fall under this ambit is weather-dependent work—there is not much call for an ice-cream seller on a wet bank holiday weekend in a seaside town, for example. Seasonal work—harvesting, for example—often depends on the weather. It has been very dry recently, and harvest is going to be earlier this year. If you think about the reference period, there is more likely to be work up until 30 June, rather than in the normal quarter, which would have been the successive quarter reference period. There is casual work, such as waiting at a wedding or manning the turnstiles at a stadium concert or event, for example. All of these are temporary things, and it is going to be very difficult on day one for the employer to commit to some of these rights, because it is out of the employer’s control.

There is another perverse consequence that relates to the wider umbrella of agency and temporary work, such as supply teachers and supply nurses—I notice that the noble Baroness who was the chief nurse is no longer in her place—and locum and sickness cover, where the employee determines their availability, not the employer, as it suits them. We see that some of these rights are actually going to put the employee in a worse situation, because they are going to lose their bargaining power.

I will move on, because I am conscious of the time. All I will say is that codifying many of these things will make it harder for people to take advantage of temporary opportunities and will counterintuitively reduce their bargaining power, removing the labour market liquidity that makes the economy work for all parties, and particularly the taxpayer.