Employment Rights Bill

Lord Goddard of Stockport Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

[Lord Marks of Henley-on-Thames (LD)]

The noble Lord has plainly given the Government solid pause for thought on that point, because of course any proceedings before a tribunal of first instance can be withdrawn by the litigants. The litigants in this case would be the Secretary of State and the other party—presumably the employer. If subsection (3) is given the interpretation that the noble Lord, Lord Pannick, suggests might be given to it, the worker would be treated as the litigant. That is a difficult point for the courts to resolve. It is a point that at Third Reading the Government really must resolve, and that I entirely accept.

[Lord Goddard of Stockport (LD)]

Follow that. I failed my Bar exam at 11 and I never retook it, so I am at a disadvantage to the House in trying to sum up the debate on this amendment. My noble friend Lord Marks made the case that this is not just an open-and-shut, bonkers piece of legislation; there is more to it.

Last week, I went for my health check, and I had my blood pressure and cholesterol checked. I recommend that the noble Lord, Lord Murray, keeps away from his doctor until probably next Wednesday, because his blood pressure will probably come down by then. That is meant in good spirit, because the noble Lord believed what he said and expanded on it.

For me, there is a different question here. This got a real going over in Committee too, where it all got a bit contentious with the lawyers. The noble Lord, Lord Pannick, always rises carefully and slowly and makes a forensic examination. Unfortunately, my noble friend Lord Marks tries to challenge that, and the noble Lord, Lord Pannick, has to have three or four more goes. However, we are not in the High Court, we are in the House of Lords, so we listen to the exchange.

The point that I am trying to make is that we have spoken to the Government. When somebody said, “We’ve spoken to the Government”, others went, “Ooh, no!” That is the point. There is the Bill and we should talk to the Government. We should raise our concerns with them and see what they have to say. But you do not do that because, “This is a good open goal. This is one we can really embarrass the Government with”. Well, you cannot—because the Secretary of State will have the power to look after somebody who needs looking after.

All those hundreds of years ago, when we had slaves, it was not the slaves who were petitioning to be freed; it was liberal-minded people who thought it was wrong that they should have no say and no place. That is what happens. Workers get jobs. They may be illegal or migrants, but whatever they are, they are human beings and they deserve support. Yes, the state is ultimately the last resort. When everything else fails—health, sickness, drug addiction or whatever it is—the state is the ultimate provider of care from the cradle. In my opinion, there is nothing wrong with the state saying—

[Baroness Falkner of Margravine (CB)]

My Lords, I too need to apologise to the House because I have not spoken previously on the Bill. I am therefore required, I am afraid, to add a few seconds of tedium in declaring my interest as chair of the Equality and Human Rights Commission. I am required to do that, but I emphasise that I am speaking tonight in a personal capacity.

I rise to question what was said by the noble Lord, Lord Goddard, and others who referred to the Government’s desire to protect those people who are vulnerable, who might be migrants or new arrivals, and who might not know their rights under the law. Of course that is a laudable aim. However, as someone who is a first-generation migrant—I came to this country in my own capacity—and who has slowly learned of my rights and my ability to exercise them, I can say to the noble Lord, Lord Goddard, that there is very good reason why those people need autonomy and privacy. They may not wish to be the subject of litigation because they have very palpable concerns about safety and their economic and familial status, particularly in a world with social media and high levels of media attention, if they are exposed as having done anything at all these days.

The reason that migrants and vulnerable new arrivals in our country keep a low profile, when they choose to do so, is very understandable. The idea that the state should pluck them, decide that they have been badly treated and use them as an example is pretty shocking and deleterious to their interests. It will not help them; they will hide under cover even more than they already do.

[Lord Goddard of Stockport (LD)]

I heard what the noble Baroness said, and I accept her premise. By the same rule of that premise, those people suffer or are treated badly until they become accepted in society and can then raise their heads above the parapet—if that is the logic of the argument the noble Baroness is trying to make to me. The noble Lord, Lord Marks, makes it quite clear that anonymity is absolutely four-square in this, so it does not happen that the media get hold of it or it appears on the networks and makes things different.

Where a case ends up with the Secretary of State and the evidence is there that somebody is in such a situation, why should the Government not intervene and say, “You have been treated so badly that we are going to stand up for you in a tribunal” or, “We are going to try to do something”? If you look at the bigger picture rather than the individual pictures, there is a way through this, without thinking that it is—this is the last time I will say it—a bonkers Bill. It is not bonkers. The theory behind it is sound. Perhaps it has not been explained clearly enough.

[Lord Murray of Blidworth (Con)]

How does the noble Lord envisage the Secretary of State knowing which cases to bring?

[Lord Goddard of Stockport (LD)]

I said at the beginning that I am not a legal person. But there must be something that will happen: a whistleblower or somebody will inform somebody of someone’s condition that they find intolerable, it ends up with someone and somebody has to deal with it. If you go to see the person and they do not want to get involved, are frightened, are unsure or do not know their rights, who scoops that person up and just asks the question? Maybe it is not worth pursuing, but what is wrong with just asking the question?

I ask the Minister to confirm this flexibility that we need to understand the powers. Will they be used proportionately and transparently? We need to hear that. The Government need to tell us how this legislation will work practically. If they can explain, and perhaps not allay all the House’s fears but begin to give some clarity to the thinking behind it, because this is something that has been thought out quite seriously, the House should listen to that.

[Baroness Fox of Buckley (Non-Afl)]

My Lords—

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[Lord Leong (Lab)]

Front Bench.

[Lord Goddard of Stockport (LD)]

No, I give up.

[Lord Hunt of Wirral (Con)]

My Lords, I do not believe that for a moment.

This has been such an important debate. I thank the noble Earl, Lord Clancarty, the noble Lord, Lord Freyberg, the noble Viscount, Lord Colville of Culross, and my fellow lawyer—not solicitor—the noble Lord, Lord Clement-Jones, for what has certainly been a long-standing advocacy on behalf of freelance workers. As my noble friend Lord Parkinson of Whitley Bay said, with all his experience as a Minister, there is no doubt that freelancers play a vital role in our economy and their interests deserve proper attention.

We on these Benches have also made the case that this issue is likely to become more urgent after the passage of the Bill. We cannot avoid the suspicion that the Bill is going to drive more workers into at least considering turning freelance. Time will tell, but as the noble Lord, Lord Londesborough, pointed out, the number could rise towards 3 million freelance workers.

We are all very grateful indeed to the Minister for organising an important meeting on this subject, because it was most useful. We welcome the Government’s intention to create a freelance champion, announced last month as part of the creative industries sector plan. That may be half a loaf, but it is a welcome enough commitment. We recognise the intent behind the amendment to establish a freelance commissioner, but at the moment, in the light of the assurances given by the Minister, we feel that the Government should have the benefit of the doubt for now, not least because we are not totally persuaded that the creation of another public body is the only solution.

What freelancers certainly need is clarity, simplicity and proportionate support. If the new champion can deliver that, all well and good. But we remain of the opinion, as came across in some of the contributions we had in Committee and just now, that socialists despise the very concept of freelancing. “How dare workers choose to avoid our elaborate structures?”, some of them say. So we will be watching with a very keen eye to see how this proceeds, particularly in the light of the speeches we just heard from the noble Lords, Lord Hendy and Lord Berkeley.

As we salute the expertise of the noble Earl, Lord Clancarty, on the creative arts, I take this opportunity to assure him that if he is unsatisfied that the Government’s measures adequately address the issues that have been raised, we will certainly be on his side. So I encourage him to remain vigilant and to keep the Government’s feet to the fire. In the meantime, we look forward with great interest to what the Minister will say in response to the many questions that have been raised in this debate, in particular about the urgency of this problem.

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[Lord Aberdare (CB)]

My Lords, I put my name to the two amendments in the name of my noble friend Lady Wolf because I entirely share her concern that the Bill as drafted could have a damaging effect on apprenticeships, especially for young people and especially in small firms.

I am very grateful to my noble friend for her kind words, but I do not think that in this particular debate I would be greatly missed, because she and the noble Baroness, Lady Garden, have said everything that I could possibly have said—so I am not going to add a great deal to that. It is just as well that I did not choose 24 July as my departure date because, if I had, I would turn into a pumpkin at midnight and apparently we would have to adjourn the House for me to continue my speech—it has been done in the past.

I very much welcome the fact that the Government are undertaking some important consultations in this area, including on employment status. It is very important that they should look at the issues impacting apprenticeships for young people and in small firms, and they should, I hope, come up with some evidence for what sort of action might be needed to address those issues and prevent the kind of impacts that my noble friend described. That may well involve recognising, as so many other countries do, the fact that apprenticeships are a different form of employment from other forms and involve commitments on behalf of both the apprentice and the employer that will make undertaking particularly the day-one employment rights much harder to live with for the small firms involved.

With that, I encourage the Government to look very seriously at this and to consider the possibility of a separate legal employment status for apprenticeships. I will look forward to some sort of positive response from the Minister before I turn into a pumpkin—or wave a white flag, like the noble Lord, Lord Goddard.

[Lord Goddard of Stockport (LD)]

My Lords, very briefly, I was a bound apprentice for four years, from when I was 17 or 18 on a council estate outside Greater Manchester. Apprenticeships are a little jewel in the employment Bill that have somehow been missed. We need to advocate the opportunities for apprentices and the pride that apprenticeships give to young people, especially NEETs, and there should be no one better to do that than a Labour Government who are trying to generate income, prosperity and jobs. There is a little place there and, with more consultation—I have spoken to Ministers, who are mindful to be supportive of that—if we can get this right for apprentices and take away the obstacles to creating apprenticeships, more people will take them on.

Apprentices tend to stay with a company. If you are an apprentice and you have been trained for three or four years, you will tend to stay with that company and repay the loyalty they have given you in giving you a skill that will carry you through your life. So we support the sentiment and hope that the Government will say some kind words tonight, at least to stop the noble Lord disappearing at midnight and looking for Cinderella’s glass slipper.

[Lord Sharpe of Epsom (Con)]

My Lords, there is really very little to say, but obviously I thank the noble Baroness, Lady Wolf of Dulwich, for bringing forward this very thoughtful and necessary amendment. She is right that apprenticeships represent one of the most important pathways into skilled employment and a vital investment in our nation’s future workforce. I agreed with everything that the noble Baronesses, Lady Wolf and Lady Garden, and the noble Lord, Lord Aberdare, said, and I wish the noble Lord well. I hope that the noble Baroness, Lady Wolf, gets the reassurance that she needs and, if she does not, she should probably test the opinion of the House.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Report stage
Monday 21st July 2025 Lords Chamber

[Lord Storey (LD)]

So I hope that the Minister will really consider this. It is a huge issue. We cannot see our schools have to face more costs, and we do not want to see any staff disadvantaged by a well-meaning move by the Government.

[Lord Goddard of Stockport (LD)]

My Lords, we are dancing on the head of a pin with these amendments. The noble Lord, Lord Hendy, is right that these are welcome amendments that begin to address something I never knew anything about, which is that support staff have never had a baseline figure. That should be addressed.

I spoke to the Minister the day before yesterday or today—time flies—and the fact is that there are 520,000 of them. That is 52% of everybody employed at schools. That is more than teachers. Those support staff have a whole range of duties and the majority are tailored to their specific needs, as other speakers have said. Government Amendment 114 provides that, where an SSSNB

“has been unable to reach an agreement about a matter and the Secretary of State makes regulations about the matter, the regulations cannot alter a person’s terms and conditions of employment to make the person worse off, and do not prevent an employer from offering more favourable terms and conditions than those provided for by the regulations”.

We agree with that.

All that the amendment by the noble Baroness, Lady Barran, would change is that it would prevent

“the SSSNB from blocking employers who wish to adopt new or improved employment terms and conditions”,

provided that they meet the standards of minimum support. What we are trying to say here is, where they cannot come to a negotiation, the Government can step in by regulation, if that is what they want to do, but, where a body comes to an arrangement, why should you stop somebody wanting to offer more, above the floor and above the base—there is no argument about that; we all agree to the base—and say, actually, why would an SSSNB want to block some employer offering an employee better terms? If the Government reject this amendment, that is the alternative to what we are arguing.

If somebody wants to pay somebody more, above the base, that is surely better for the employee. Surely that is better than somebody saying, “Well, you can’t”, which is what the Government might do. The difference is quite subtle. Sooner or later, somebody will have to work out the maths for 520,000 people and then go to all those local authorities, academies and private schools, all of a sudden, as I have said before, there are bound to be winners and losers, unless you make set the level at a sufficiently high so there are no winners and losers. I cannot imagine what that number will be, because it will be a high number.

If this is about empowering people and lifting society, I am all for that. But, again, there is a level of detail. This is not a small group of people; it is an enormous number of people. It is more than the number of teachers. The teachers have had pay, and more pay, and are now going on strike for more money. Support staff do not do that. Support staff are vulnerable. They do not have that power to take industrial action to fight their corner. They negotiate their terms individually with local authorities and academies and, by and large, none of these people is paid below the minimum wage or the living wage. So, this is a bit of a sledgehammer to crack a nut.

I get the principle. I understand that there has been no base figure, and that should be addressed. But, if the Government are addressing that, and it is a philosophical Labour belief, they must put a price tag on it, because people need to know what the costs are, not only for their local authority but for every local authority and every academy in the country. If the noble Baroness is willing to push this to a vote—I do not know whether she will or will not—we on these Benches will support her.

[Lord Sharpe of Epsom (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Goddard. I agree with pretty much all that he said. I thank my noble friend Lady Barran for her amendments. I thank my noble friend Lord Agnew for his interesting and timely perspective, and I salute the teaching assistant whom he mentioned.

Amendment 111B would ensure that the establishment of national frameworks does not, by accident or design, limit the ability of employers to go further in improving conditions for their staff. It makes it clear that, while national terms may set the floor, they must not become the ceiling.

As we have heard, we must leave space for innovation and ambition at the local level, particularly for those schools, academies and trusts that are actively seeking to lead in areas such as flexible working, staff well-being or enhanced support for recruitment and retention. This amendment does not undermine the national framework. On the contrary, it reinforces it, because it allows it to act as a strong foundation on which more can be built, where employers have the capacity and willingness to do so.

We should not inadvertently create a situation where the national body becomes a constraint rather than a support. I therefore welcome the clarity that this amendment brings. I commend my noble friend for bringing it forward and, if she decides to press it to a vote, we will support her.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Report stage
Monday 14th July 2025 Lords Chamber

Moved by

[Lord Goddard of Stockport]

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

[Lord Goddard of Stockport (LD)]

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

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

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

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

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

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

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

[Baroness Carberry of Muswell Hill (Lab)]

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

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

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

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

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[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.

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Moved by

[Lord Goddard of Stockport]

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

[Lord Goddard of Stockport (LD)]

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

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

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

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

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

[Lord Ashcombe (Con)]

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

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

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

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

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

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

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

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

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

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

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

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

[Lord Goddard of Stockport (LD)]

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

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

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Moved by

[Lord Goddard of Stockport]

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

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

[Lord Goddard of Stockport (LD)]

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

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

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

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

[Baroness Jones of Whitchurch (Lab)]

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

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

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

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

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

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

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

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

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

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[Lord Bailey of Paddington (Con)]

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

[Lord Goddard of Stockport (LD)]

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

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

[Lord Sharpe of Epsom (Con)]

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

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

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

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[Lord Lucas (Con)]

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

[Lord Goddard of Stockport (LD)]

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

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

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

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

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Wednesday 18th June 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, Amendments 277 and 328, which I expect the noble Lord, Lord Goddard of Stockport, to speak to shortly, are an interesting element. Amendment 277 talks about the review of the fair work agency. Considering that a number of questions have come up about this, that is a fair assessment, given that there is still a considerable amount of consultation to be done. Amendment 328 would basically strip out the commencement of any part of the Act until that review has been done and

“a Minister of the Crown has tabled a motion in both Houses of Parliament for debate … and the review has been approved by a resolution”—

not just regulations.

The reason I say this is that I continue to assert that some of the powers here are going to be novel. Even if the Equality Act 2006 may give powers to the EHRC, it has never used them to institute legal proceedings, only as an intervener or for judicial review, rather than taking on individual cases; I am conscious that there is a consultation there. The amendment from the Liberal Democrats is an interesting way to think about how we are looking at the details of what the new agency is going to do.

[Lord Goddard of Stockport (LD)]

My Lords, before I begin my comments about the various amendments, I have news from afar. Councillor Fox—sorry, not councillor; that is going back a bit. My noble friend Lord Fox wants to pass on his thanks to Members of the House from all sides who have sent best wishes for a speedy recovery. I signed his card today from the Lib Dem group with the sentiment, “Don’t hurry back. I fully enjoy sitting until midnight doing the employment Bill on your behalf”—which I think, with my noble friend’s irony, he will get. His amendments would require detailed review of the fair work agency’s remit, funding powers and accountability structures, and parliamentary overview before commencement.

We are fairly neutral on Amendments 271ZZA, 274 and 278 from the noble Lord, Lord Sharpe, which aim at transparency and reviews. They are broadly procedural, but I have some sympathy with the noble Lord’s three-year review, which could be quite sensible. He explains those two amendments with clarity and brings out the blindingly obvious—the lack of cost and the lack of understanding of how this thing will be set up and work in reality.

I intend to ask the Minister some direct questions as well as supporting my noble friend Lord Fox’s amendments regarding the implementation plan, the opportunity for scrutiny and further consultation. First, I turn to what the noble Baroness, Lady Coffey, has been talking about, the fair work agency. We debated its creation and power across several earlier groups and I will not labour that point today, but I want to speak clearly in support of Amendments 277 and 328 tabled by my noble friend Lord Fox, and again place on record my regret that he is not able to be with us today. These amendments are central to establishing a credible and accountable agency. Amendment 277 would require a full review of the agency’s remit, powers, funding and relationship with other enforcement bodies, and would be subject to review, as the noble Lord has said. Amendment 328 would link the commencement of the Act to that process.

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Moved by

[Lord Goddard of Stockport]

273: After Clause 115, insert the following new Clause—
“Legal aid in employment tribunals(1) The Secretary of State must, within six months of the day on which this Act is passed, lay before Parliament a report on the options for expanding the right to legal aid in employment tribunals.(2) The report under subsection (1) must consider—(a) the impact of employers’ compliance with measures contained within this Act, and(b) the impact on employees’ personal finances.”Member’s explanatory statement
This new clause would require the Secretary of State to report on the impact of expanding the right to legal aid in employment tribunals within 6 months of the passage of this Act.

[Lord Goddard of Stockport (LD)]

My Lords, for the sake of clarity, we on these Benches fully support the Government on expanding employment legal aid beyond discrimination cases to improve fairness and efficiency and also on the importance of maintaining the power of employment tribunals to ensure summary judgment, speed up proceedings and reduce unnecessary hearings. However, we have concerns over the existing backlog of employment tribunals, which we have debated several times on previous evenings, which is causing delays of up to two years and making the system very difficult to navigate.

I strongly support Amendment 273, tabled by my noble friend Lord Fox, which would

“require the Secretary of State to report on the impact of expanding the right to legal aid in employment tribunals within 6 months of the passage of this Act”.

This modest but important proposal recognises the reality facing too many claimants today. Legal aid in employment cases is currently restricted almost entirely to discrimination claims, leaving workers pursuing other serious issues such as unlawful deduction of wages, unfair dismissal and whistleblowing without any publicly funded legal support. These are not simple matters.

For claimants without legal training, navigating the tribunal process, understanding evidential requirements and articulating legal arguments can be incredibly challenging. This lack of access undermines both fairness and efficiency. If claims are poorly presented or inadequately understood, they are less likely to succeed and more likely to absorb more of the tribunal’s valuable time. Given the current backlog of employment tribunal cases in which claimants often wait for more than two years before their cases are heard, the process can feel effectively impossible to engage with. This amendment would, based on evidence, begin to build the case for change. I hope that the Minister will look on it constructively.

I also welcome my noble friend Lord Fox’s Amendment 323, which seeks to ensure that employment tribunals continue to have the power to make summary judgments in cases brought under this Act. Tribunals already use this mechanism to resolve matters early when one party has no reasonable prospect of success. It is an essential part of an efficient system that avoids unnecessary hearings and reduces pressure on the tribunal’s time. With the Bill creating new routes to claim and potentially increasing the volume of cases, the continued ability to make summary judgments in those procedures will be more important than ever. It provides certainty to respondents facing unmeritorious claims and reassures claimants that their cases will be dealt with proportionally and swiftly when they are clearly valid. I will be grateful if the Minister can confirm that this power will remain fully enforced under the new regimes and that guidance will reflect the continuing relevance of these points.

Lastly, I note that Amendments 279GA, 330ZA, 330D and 334A by the noble Lord, Lord Sharpe, are concerned with ensuring that the employment tribunal system has the capacity and resourcing to absorb these responsibilities. Those are legitimate concerns and considerations that the Minister should address. Tribunal delays are already a source of frustration for many users, and it is right that we consider how implementation will interact with the wider system. I urge caution, however, against any suggestions that reform must wait until conditions are perfect. A parallel process is needed, with sensible, targeted reform on one hand and sustained investment in the system on the other. I beg to move.

[Baroness Coffey (Con)]

My Lords, my Amendment 279GZA seeks to understand what “and, in certain cases” means in Clause 149. I would be grateful for an explanation. I looked extensively in Schedule 12 and saw only the insertion of a regulation to do with Northern Ireland. I would be grateful to understand that.

I am happy to support Amendment 323, which seems a sensible way of trying to ensure that justice is delivered effectively and people can still have fair access while also making sure that we make the best use of employment tribunal judges’ time.

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[Lord Goddard of Stockport (LD)]

I thank all noble Lords—a small but perfectly formed band on this group—for their contributions to the debate. The contribution of the noble Lord, Lord Sharpe, was reasonably complimentary on my noble friend Lord Fox’s amendment, and when I speak to my noble friend, I will mention the point about small and medium-sized companies; there is some mileage in that, if we have further discussions. The noble Baroness, Lady Coffey, is fast becoming my buddy again for supporting in essence these amendments—to my certain knowledge, she has never called any of our proposals “bonkers”, so she gets an extra bonus point for that as well.

We support the Minister’s amendment, which brings clarity. For me, it shows an understanding that the Minister gets it; sometimes in these debates on the Floor of this Chamber, such as in the previous debate about litigation and whether it was known about by somebody, some people do not get it and you need to bring it back to the real world. Tribunals are very stressful for people and very complicated, so the simpler and more efficient we can make it, the better. But that does come with a price. I honestly think that, working together, we can deliver this Part with a degree of certainty, because all parties want this to happen. On this occasion, therefore, I am happy to withdraw the amendment.

Amendment 273 withdrawn.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Wednesday 18th June 2025 Lords Chamber

[Lord Goddard of Stockport (LD)]

My Lords, these amendments collectively highlight the critical importance of supporting small and medium-sized enterprises as they adapt to the changes introduced by the Bill. We have raised this issue repeatedly throughout our deliberations. Night after night, this comes up in other parts of the legislation. It all comes back to small businesses. My biggest postbag at the moment is from small businesses concerned about their future—of no political persuasion at all. This is one of the few chances, in this small debate, where we get to talk about those challenges and the enforcement mechanisms, especially around things such as holidays. As alluded to by the noble Lord, Lord Sharpe, compliance can be complex and resource-intensive, although I do not fully agree with his complete doom-and-gloom scenario of this part of the Bill.

Recent data shows that SMEs employ around 60% of the UK workforce, yet many report that regulatory burdens can disproportionately strain their limited administrative capacity. The amendments proposed by the noble Lord, Lord Sharpe, such as Amendment 279ZZB, would place a duty on the Secretary of State to assess how effectively the SMEs can meet those obligations and to identify any practical barriers that they face. It is important to ensure that the Bill’s ambitions do not inadvertently disadvantage the very businesses that form the backbone of our economy. That the Government should have a means of tracking how the Bill’s implementation is impacting on the economy is vital.

I briefly turn to the reviews called for in Amendments 305 and 309, which seek to examine the Bill’s impact on employment, youth opportunities, job creation and regional labour markets, especially in the north-west of England, where my heart still lies and where the Industrial Revolution began. We are trying to embrace AI. We are trying to become ground-breakers again at Manchester University and other establishments. I know that these really affect the regional labour markets, but these are valid concerns, as we are still recovering from the recent economic shocks. The requirement for independent assessment would help us get a clearer picture of this legislation and how it affects businesses and workers. While amendments by the noble Lord, Lord Sharpe, and others are cautious in their approach, they reflect a genuine concern that implementation must be manageable for SMEs, without stifling growth for employment.

As we move forward, I look forward to hearing the Minister’s view on these amendments and would appreciate some remarks about how the Government intend to physically support SMEs throughout these changes and the unintended consequences. Because that is at the heart of this. You can have and develop the policies, but what businesses are asking me is, “What are you going to do? What can I see that helps me to embrace this legislation and to take people on, train them and employ more people?”—as opposed to the perception that the burden is against that, which is an unintended consequence of trying to do the right thing of giving everybody employment rights, and it is a fine line. We are politicians and we understand it a bit clearer than people in a small company employing 10 or 15 people. They are just concerned that something is going to overwhelm them: something is going to come that they cannot control.

I want the Minister to explain the following to me and members of my group. What practical things will the Government put in place to give those small businesses confidence to embrace this and to work with them to make employees more secure, safer and have better rights? Meanwhile, how can small and medium-sized companies, not the giant multi-million companies, carry on creating jobs, developing the economy and lifting us out of the doom and gloom? We have done it before, and we can do it again. That is the question that needs answering—whether or not the Minister can do so tonight, we need some clarity before Report, or we will be meeting other people. This is important. This is not just me grandstanding; small businesses are saying to me, “Just ask the Government what they are doing and how they can help us”. This is what I am trying, clumsily, to say as we draw to a close this evening: if the Minister can give me some hope that what we are doing and have put in place will help small and medium businesses, I will be satisfied.

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

My Lords, here we go again on impact assessment. I hope that the noble Lord, Lord Sharpe, will forgive me if some of my notes repeat what was said in previous debates, but I will answer some of the points here. First, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Goddard, for their amendments relating to impact assessment.

I refer to the point by the noble Lord, Lord Goddard, about what the Government are doing concerning SMEs. I have just recently been appointed as the spokesperson for the Department for Business and Trade, and my priority is to have regular communications with micro-businesses and small businesses. That is what I will be focusing on. Today, we appointed the Small Business Commissioner, who will start work very shortly in tackling late payments and some of the abuses that small businesses experience from big companies not paying them on time. We will be publishing a small business strategy very soon, and our industrial and trade strategy very soon as well, hopefully sometime next week or thereabouts. We are doing a lot—not only myself but the Secretary of State, my noble friend Lady Jones and all the Ministers in the department. We have regular contact right across the business community.

We have had extensive debate already on impact assessments related to this Bill. My commitment in an earlier debate to meet noble Lords to further discuss the impact assessments still stands. The Government have already published a comprehensive set of impact assessments based on the best available evidence on the workers likely to be affected by these measures. This includes an assessment on the economic impacts of the Bill, including on workers, businesses, sectors and regions. This package shows that there are clear, evidence-based benefits from tackling issues holding back the UK labour market. This analysis is based on the best available evidence and consultation with external experts and stakeholders, including academics and think tanks. Further analysis will be forthcoming, both in the form of an enactment impact assessment when the Bill secures Royal Assent and when we consult on proposed regulations to meet the Better Regulation requirements.

Before I conclude, I share with noble Lords some really startling statistics. We already know that healthier and happier workers are more productive workers. The Health and Safety Executive estimates that stress, depression or anxiety accounted for something like 17.1 million working days lost in 2022-23, which is equivalent to a loss of something close to £5.3 billion in output per year. In addition, close to 2 million employees report feeling anxious about hours worked or shifts changing unexpectedly. By increasing the job security of these workers, the Bill would have well-being benefits worth billions of pounds a year. The Bill will therefore create a healthier and happier workforce, which is not only the right thing to do but will help businesses by making the workers more productive as well as resulting in lower treatment costs for the NHS.

Earlier, the noble Lord, Lord Sharpe, asked me what we have done to support growth since getting elected. I am proud to share with the noble Lord that, since the election, 500,000 more people are in work. In recent weeks, we have had the strategic defence review with some 30,000 new jobs building submarines created, and the announcement of the Sizewell C project, which will create some 10,000 new jobs. So, we are creating new jobs.

In addition, we have people who are investing in this country and who have confidence in this Government. Jamie Dimon, who has run one of the largest US banks, JPMorgan Chase, for two decades, told the Financial Times:

“I’ve always been a believer in the UK’s inherent strengths as a place to do business and there’s much to like about the new government’s pro-growth agenda”.


Further, a couple of weeks ago, Jon Gray, president of Blackstone, one of the largest private equity companies in the world, which has invested close to £100 billion in the UK and employs some 50,000 people, told the Times:

“I would give the UK government a lot of credit for embracing business”.


This is not what the Government are saying, but what people with money who are investing in this country are saying to us. Further, every single day, £200 million is being invested in tech companies in this country. I do not call that a small sum, I call it confidence in the UK Government and what we are doing for business.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Tuesday 10th June 2025 Lords Chamber

If unions are to be relevant in the 21st century, they must learn engagement—and they have to learn it, not demand it. This amendment ensures that engagement remains a choice. That is what real solidarity looks like: freedom to act and freedom to opt out. I urge colleagues on all sides of the House to support this amendment, not to weaken unions but to protect workers, because, after all, that is what employment rights are. So I urge the Committee to adopt this amendment to put the rights of the ordinary worker before and ahead of the machinery of union politics. I beg to move.

[Lord Goddard of Stockport (LD)]

My Lords, I will speak briefly to Amendments 215 and 332, both in the name of the noble Lord, Lord Sharpe. Amendment 215 proposes a new clause to grant trade union members a statutory “right to switch off”; that is, to disengage from contact initiated by trade union representatives.

It raises the wider question of work/life balance and members’ autonomy. That is not a bad thing to raise and probe in this amendment. However, the caricature by the noble Lord, Lord Hunt, of a typical union member is a little fanciful. When I was a shop steward, I certainly would not be ringing up union members at 8 o’clock when England were playing football against somebody. I would have got very short shrift and probably would not have been the shop steward the following week. That is the power of trade unions: they can remove and add shop stewards on a whim.

We just need to be a little bit grown-up about the modern trade unionist. We are living in a different age now. It would be wrong for me to say that communication does not happen, but it is now via text, X and WhatsApp, and that is completely acceptable. Where the line is drawn is around giving people a statutory right to switch off, or not. I think it is down to individual members to decide whether they want to be able to be contacted. It should be for the members themselves to decide that, rather than there having to be some statutory right. It is not for me to pass judgment on the desirability or otherwise of it, but I would be interested to understand the rationale and the evidence underpinning the need for such measures.

Amendment 332 is more technical in nature, providing for the commencement of these provisions a year after the Act receives Royal Assent. This delayed implementation may allow for guidance to be prepared or for institutions to adapt. With that in mind, I would like to hear the Minister’s response to both these things—bearing in mind that, at the end of the day, trade unions exist because of their members; if members do not like a trade union, they can leave a trade union. That point has not been brought up anywhere in this House by anybody. You are free and able to join a trade union. You are also free and able to leave a trade union.

I know that, in 1973 and 1974, people did leave the GMB union over some policies that the union had. It was not an impossible thing to do. They were still treated fairly; they were given full consultation and assistance. It was for us to persuade them to come back into the union, which nine times out of 10 they did. It is not always a one-way street. I would hope that the Conservatives understand that unions are controlled by members.

We have annual congresses. One of the greatest things we used to do as the Lancashire region was to overturn the executive once a year in conferences; to us, that was the object of conference. It did not go down well with John Edmonds and the senior management team. I would stand there berating them for the poor pay of gas workers and objecting to a 2% pay rise, and I would get full support. Then I would have to go and see Mr Edmonds. The words he once said to me were, “You control the union for one week and we control it for the other 51 weeks, so I will let you have this week, David. Now leave”. I have deleted and added words there to avoid using any language that would be unfit for this House.

Again, it is a balancing act. I do hope that the Minister will address it in that manner and not just ignore amendments that come in from the Benches opposite. There is something behind the amendments. They are probing amendments and we are just trying to get the flavour of where the Government sit on membership and the unions, with regard to consultation. We spent a few hours—a lot of hours—the other night talking about union rights and members’ rights. I think this issue just touches on the end of that. I can see why it was not raised in that group, but it is still something that needs explaining a bit more clearly.

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

My Lords, I first thank the noble Lord, Lord Goddard, for his very entertaining contribution, and the noble Lord, Lord Hunt of Wirral, for speaking to Amendments 215 and 332 in his name and that of the noble Lord, Lord Sharpe.

The proposed new clauses would create a right in primary legislation for trade union members to switch off from contact from trade union representatives. As far as I am aware, there is not any demand to introduce such a requirement on trade unions. I have not heard this from my colleagues, or from trade union members, or from any worker, or indeed from any employer or employer organisation that I have spoken to lately.

It is difficult to see what benefit or purpose such an obligation inserted into membership contracts might serve. Currently, there is no obligation for a trade union member to reply to communications from their trade union, as was ably set out by the noble Lord, Lord Goddard. There is nothing stopping a member ignoring them or telling them to **** off.

This Government are committed to the well-being and positive work-life balance of all workers. The Employment Rights Bill is proof of this commitment, with relevant measures including making flexible working the default except where not reasonably feasible. This will help employees and employers to agree solutions which work for both parties.

I say politely to the noble Lord, Lord Hunt, that I reject his allegation of trade union influence and power interfering with people’s lives. As it stands, every member can ignore the messages and communications —whoever has approached them—outside work. There is no evidence that this is currently happening. I ask the noble Lord, Lord Hunt, to reflect on that and to be careful with some of the pretty harsh words he has said. I invite him to withdraw his Amendment 215.

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The existing arrangements are generous to the unions, which represent only one-fifth of the UK’s total workforce—a mere 6.4 million of 33.49 million workers. We should remember that, and the imbalance that exists between organised, unionised labour, who call the shots, and the small man and woman in the workforce: the millions of others. We should not take a step that excludes some of those small people from having a say and participating in a ballot if they happen to have joined the workforce after the application date. That is why I am supporting these amendments.

[Lord Goddard of Stockport (LD)]

My Lords, I rise to speak to the amendments standing in the name of the noble Baroness, Lady Jones. These proposals, while numerous and largely technical in nature, form an important part of the broader framework for trade union recognition and access. Although they are technical in nature, if you read the amendments—and there are quite a number of them—you will see that the Government are beginning to put a bit of meat on quite a small bone. This is the first time in the Bill that we have seen that kind of thing begin to be teased out. Notably, government Amendments 215A and 215F set out clear procedural timelines and information-sharing requirements between employers and the Central Arbitration Committee to help improve transparency and predictability for all parties involved. By establishing firmer timelines, such as a five-day window to provide workforce data and the 20-day period to agree access arrangements, these provisions aim to support a more orderly and informed recognition process, which I welcome.

I turn to the amendments tabled by the noble Lord, Lord Sharpe. I acknowledge the intention to reflect the workforce changes more accurately, but in our view, some of his proposals risk creating a little uncertainty. Amendments 215AZZB and 215AZZC, for instance, introduce provisions to include new and hired workers in the ballot, potentially undermining the principle that eligibility should be based on the state of the bargaining unit at the time of the application. It is like buying a lottery ticket after the lottery has finished, and then complaining if your numbers come up and you are not allowed to win—you literally have to be in it before it starts.

Similarly, the carve-outs from the three-year stability periods found in Amendments 216FA and 216FB could weaken the clarity and consistency that employers and trade unions require. We must be cautious about layering too many exceptions that could reopen settling matters and prolong disputes unnecessarily.

Finally, while the Government’s overall aim of modernising these areas of law is welcome, it remains vital that clarity and simplicity are not lost in that process. We need to ensure that the frameworks, particularly around recognition, access and enforcement, remain workable and intelligible for employers and workers alike. This is important in sectors characterised by high turnover and volatility. I therefore urge Ministers to consider refining these proposals with that principle in mind: that the system must support effective and fair collective bargaining without inviting further ambiguity.

These amendments are well laid and extremely well made. I thank the noble Lords, Lord Sharpe and Lord Hunt, for their clarity tonight in dealing with the issues. To everybody who has been sitting here for seven or eight long nights, I must say that business is not moving any more slowly, but clarity is much improved. I thank the Front Bench and the Conservative group for being more concise in speaking to the issues; I have appreciated that, and I know my group have too. I think the Minister might agree—through slightly gritted teeth—that this is the way forward.

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[Baroness Lawlor (Con)]

My Lords, I support the amendment of the noble Lord, Lord Burns, and the amendments seeking greater transparency for trade union members on where their money goes.

I support the retention of the status quo—so that people have to opt in—and maintaining the changes we saw made in 2016. I do so because these are moderate amendments. They do not attack the existence of the status quo or the political fund, which is, as is often announced on the websites of the unions, a campaigning fund. I agree with the noble Lord, Lord Prentis, that it is made clear by UNISON and Unite to new members, when joining, what their fees are for. Certainly, it is clear to the public that some members are affiliated to the Labour Party, and some of the funds of political campaigning will indeed go to the Labour Party. I think the noble Lord, Lord Hendy, said that 13 were affiliated; I had the figure of 11 in my head, but that is only a small difference.

None of that is under attack; that is a subject for another debate. I would like to stress to your Lordships why I support the noble Lord, Lord Burns. This area has been very contentious for a century, and every single attempt to reach a settlement has involved compromise. Although one may think that the opting-in arrangement of the 1927 Act was against the interests of the trade unions, one has to remember that that was in the wake of the General Strike of 1926 and that the Conservative Party, which was the party of government, would not follow the inclination of many of its Back-Benchers—and, I think, one of its Front-Benchers, but I will not say whom —to get rid of the political fund. The Prime Minister of the day said, “We will not fire the first shot”.

That was an attempt to find a compromise, so that the trade unions could keep their political fund, continue to contribute to the Labour Party—which was a founder party and recognised as such by the Conservatives—and continue to campaign on the issues they judged important for their members. I agree that they have done great work, through their membership fees, on pensions and so on. Much of the settlement on the national insurance system not only drew on trade union knowledge and experience in practice but used their funds to nationalise —which I think was a less good idea.

We should have a spirit of compromise and reflect the compromise that was made in 2016. If we go down the route that the Government propose, I hope that the party on my side will again seek to bring in a compromise, because the laws of this Parliament should be made in the interest of transparency for all those affected by them. That goes for trade unionists in the workplace, who should have to opt in to a scheme in the interest of transparency. I support the amendment from the noble Lord, Lord Burns.

[Lord Goddard of Stockport (LD)]

My Lords, I will be extremely brief, as the dinner hour is upon us and there are—as we say—strangers in the House.

While I recognise the importance of transparency to inform members’ choice regarding funds, this group of amendments raises serious questions about proportionality. Amendments 216YC and 216YD would introduce notably higher thresholds for political resolutions, requiring support from a majority of all eligible members, rather than just those voting, and mandating new resolutions every five years. These are significant changes from the current practice. Likewise, Amendments 221 and 223—expertly explained by the noble Lord, Lord Burns—seek to reduce opt-out notices from 10 years to one or two.

While the intention behind these proposals is clear, the impact warrants careful consideration. Other issues have been slightly sidetracked. There are fundamental issues that I would like the Minister to address head-on. These issues are at the nub of trade unions and political funds, so we need some clarity on them from the Dispatch Box.

[Lord Hunt of Wirral (Con)]

My Lords, what an important debate this has been. I think 14 noble Lords have participated, starting with my noble friend Lady Coffey. She dealt with Clause 58 in particular, whereas most of the rest of the debate has been around Clause 59.

I am very grateful to the noble Lord, Lord Burns. His speech dominated the debate, as he set out so clearly the history of what he described as the 2016 compromise—which in fact it was—that Clause 59 now seeks to overturn. I accept the points made by the noble Lord, Lord Prentis of Leeds, about the importance of campaigning and seeing full participation in that area. I am also very grateful to my noble friend Lady Finn for coming specially on her birthday to remind us all of the role she played on the Burns committee. Despite interruptions, she got across a series of key points about that compromise. Those who were interrupting her did not seem to realise that shareholders have to approve any political donations made by companies—but never mind.

I move on quickly to the noble Baroness, Lady Fox of Buckley, and my noble friends Lord Jackson of Peterborough and Lady Cash, who had a fascinating exchange with the noble Lord, Lord Hendy. I have to say to the noble Lord, Lord Hendy, speaking now as a practising lawyer, that my noble friend Lady Cash is right: if money is taken for any period without knowledge or consent, freedom of association has been removed—it does not matter whether it is for a week, a month or a decade. In a way, though, that was a side issue.

The noble Lord, Lord Monks, then took us way back in time. We all always benefit from the noble Lord, Lord Monks. I still have the guilty feeling that I caused a cartoon to be shown in the Guardian showing him getting into bed with me, in which his was the face on a huge cart horse. I was Secretary of State for Employment, and I was being accused by the Guardian of being too nice to the trade union movement by getting into bed with the noble Lord, Lord Monks—but we are not in the same bed tonight.

We heard from my noble friend Lord Johnson of Lainston, who really put the record straight and elevated the sort of smears that were thrown—usually from a sedentary position—from the party opposite in that context. My noble friends Lord Leigh and Lady Lawlor did the same. I thank the noble Lord, Lord Goddard of Stockport, for really trying to encapsulate what has been a very complicated and detailed debate.

Let us be clear on one thing—and it is up to the Minister to respond to all the very valid points that have been raised: Clause 59 says that workers will be presumed to consent to union political contributions unless they actively opt out. This is a fundamental shift. It reverses the presumption of consent in a way that would never be tolerated were it an employer imposing such terms on a worker. Where, then, is the Government’s concern for free choice, transparency and the dignity of the individual to act without coercion? Surely, if we are to be consistent in protecting worker autonomy, we must apply the same standards to trade unions as we do to employers. Anything less is not principle; it is partisanship.

The Bill includes provisions that would require employers to provide workers with written statements outlining their trade union rights on day one of employment and at other points that the Government see fit. But until Amendment 218 comes along, that principle appears to vanish entirely so far as political fund contributions are concerned. A worker can be enrolled into a union and begin contributing to political causes, most often aligned with one single political party, without ever being clearly and directly told what that money supports or how to stop contributing. I believe that to be a serious democratic deficit.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Thursday 5th June 2025 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

My Lords, what a pleasure to follow my noble friend Lady Lawlor. I support the amendments introduced by my noble friend Lord Jackson. I am assured by my noble friend Lord Leigh that he believes that Hansard will record that he referred throughout his speech to “the noble Lord, Lord Jackson”.

Employment is a precious coin. It is the many coins of employment that keep this economy going. When there are more coins, the economy grows, and this whole House is united in wanting that to happen. We are all on the same side on that. We want the economy to grow, certainly not to shrink. And, like any coin, it has two sides: the side of the employee and the side of the employer.

Sitting through the many days of this Committee, any poor, benighted individual who has been watching on Parliament TV might think that this Chamber contains two parallel universes, with two entirely incompatible ideas of what employment is about. On the one side they are hearing about greedy employers, grasping capital, and the need for trade unions to protect the poor employee. But what is this coin of employment? It is a place where an individual says, “I want work. I want to go to work and earn money for me, my family, and my future”, and where an employer says, “I want to provide work. I want to risk my endeavours and my capital, even my solvency since I might go bankrupt, in order to give you that employment”. And it is a fair bargain.

Most employers, particularly small employers, who start up a business and employ people are not thinking, “I’m going to exploit these poor workers”. The vast majority of workers are not the victims that we have heard described as the reason why this clause is necessary. The vast number of employees work harmoniously with their employer, and the vast number of employers work harmoniously with their employees. I imagine this poor person watching Parliament TV and possibly, if the camera cuts to the faces opposite, seeing the looks of doubt, irritation and disbelief when I say this. But I have been an employer on literally scores of businesses, large and small, and I know how it works. What the employer wants is to provide a good or a service and sell it at a slightly higher price than the cost of providing that good or service, so as to make a little profit and employ lots of people at the same time. That is what they want to do.

What they dread is law upon law that they have to spend all their time on and which bad actors can use to exploit them. We all know that in the human population it is said that 3% are what they call “dark triad” personalities—narcissistic, Machiavellian and sociopathic—who are very good at concealing their behaviour and coming across as caring individuals, by the way. They are found in the most caring societies, and on all sides of the Chamber. The employer dreads that individual joining their company and having a mechanism by which they can exploit the company and make money out of it, taking it to the employment tribunal or threatening it with that and getting paid off, not working hard or doing whatever.

We are saying here that some poor person who is going to hire, say, three, five or 10 employees is going to have to spend all their time understanding these laws, doing the things that the laws lay down and responding to employment tribunals when a bad actor comes into their company—as they do, from time to time, in every company—rather than doing what they are there to do, which is to provide great goods or services to their customers. That is what nearly all of them, employer and employee alike, want to do.

Barbara Castle, the great Labour politician, recognised the problems with trades unions and produced a paper called In Place of Strife. I suggest that the Bill—you can imagine the poor employer with three employees having to go through its 300 pages to figure out what they are going to have to do with it, even as it is passed —is creating strife in many places, and that even Barbara Castle might be turning in her grave when she sees how far this Government are prepared to go. I have sat here sometimes wondering whether the Government really believe the things they are saying.

[Lord Goddard of Stockport (LD)]

My Lords, I ask the noble Lord, Lord Moynihan, to address the amendment. These sound like Second Reading speeches being redelivered and redelivered. When is the noble Lord going to address the actual amendment? This is just a tour de force around the 1970s and 1980s, with anecdotes from the Back Benches again. We are trying to do business.

[Lord Moynihan of Chelsea (Con)]

I thank the noble Lord for his intervention, but I hope I am forgiven for thinking he has not been listening to what I have been saying. As I understand it, this clause is about reducing the number of people down to more or less nothing who are necessary in a company in order for a bunch of trades union mechanisms to be created. The amendment would remove that and tries to push up the number of employees below which this clause would not take effect. That is all that I have been talking about and I am startled to believe that a noble Lord of such eminence apparently has not been listening. I could finish fairly soon, if not interrupted much more.

My concern is that we are all people of good will. I am sure the noble Baroness, Lady O’Grady, is rightly proud of the many good things that trades unions have done, but surely she cannot be unaware of how the people of Birmingham might feel about the striking dustmen or about how the people of this great capital feel about striking Underground workers and the commuter trains that so often muck up their daily life. She must be aware that, on another coin of trade unionism, there is the good and the bad. We have employment tribunals with two years of delay to even get to a tribunal, but clause after clause, including this one, threatens to increase the number of references to employment tribunals.

This clause is going to increase the awful number that we have just seen today of 150,000 job losses. In the parallel universe that we are in, can it possibly be that the Government Benches believe that that loss of 150,000 jobs has nothing to do with this plan, with their NIC changes, as my noble friend Lord Lilley said, or with so many other changes that are detrimental to employment in this country?

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[Lord Ashcombe (Con)]

My Lords, I had no intention of coming here today to speak until I had dinner last night. Having put in a day’s work, I thought it was time to come here and express an opinion.

I would like to describe that situation last night. It follows on from a lot of what my noble friend Lord Leigh of Hurley said and the powerful words of the noble Baroness, Lady Lawlor. This friend of mine, whom I have known for 30 or 40 years, is a small businessman in Bath, down in the West Country. He said to me, “Mark, we have a major problem coming. I have friends in similar places who run small businesses”—he runs a business of some six or seven people. “We are all talking together, because that is how we transfer knowledge, and the number of us beginning to think about throwing in the towel is significant. I want you to know about it”.

If this change were to happen, it would affect the poor employees of these businesses. There is nothing inherently wrong with these businesses but there is, as we have heard, more and more legislation coming upon them. It is the employees who are going. The domino effect through local economies is too much for these businesses. These small guys have to employ lawyers, HR experts and so on. I work for a company where we have those in house. They are just getting to the end of their tether. They do not want to stop, but I hope that Amendments 205 and 207 will help prevent that sort of thing happening and another nail in the coffin for these small businesses, which are really struggling as they think about the hassle of going on.

[Lord Goddard of Stockport (LD)]

My Lords, this group of amendments concerns the provision of employment rights. The essence of the group is about requiring employers to provide workers with a written statement of their trade union rights. Even after seven hours, I enjoyed listening to the noble Lord, Lord Jackson of Peterborough, describe a romp through the 1970s and the bad old days of the Labour Party bringing the country to its knees and almost losing the car industry. He failed to skip into the 1980s, when the Government did destroy an industry—the coal industry—and did immeasurable damage to the trade union movement, which it has taken decades to recover from and is at the heart of the Bill. It is a direct result of actions taken by a certain Government in a previous life. In response to the noble Lord, Lord Moynihan of Chelsea, I have been here since the start of the debate and listening. As the Companion says, it is courtesy to be here at the start of the debate to listen to the opening speeches and then the winding up speeches. There seems to be real departure from that by Members, who just wander in, make contributions and wander out.

[Lord Moynihan of Chelsea (Con)]

I hope the noble Lord, Lord Goddard, is not saying I was not here for the start of this debate. Of course, the Labour Government closed down more coal mines than Margaret Thatcher.

[Lord Goddard of Stockport (LD)]

I did not imply that the noble Lord was not here—he was. He is assiduous in his attendance to this House and I enjoy 90% of what he says, much of which is quite amusing, but not much knowledge from it goes into my head.

I have one final point for the noble Baroness, Lady Coffey, for whom I have the highest regard. I thought she was an excellent Minister and makes excellent contributions. However, I have to gently remind her that I think she also made her contribution tonight a couple of nights ago, in response to my intervention about the reason behind the Bill. However, I enjoy the heart and soul that she puts into this. She is interrogating and pushing the Government, but I try to keep it to what we are trying to do here.

These provisions are intended to ensure that individuals are made aware of their right to join a trade union. I do not think there is anything wrong with that. It is a fundamental element of workplace democracy. The amendments in this group raise important and valid questions about how that requirement should operate in practice, especially for smaller employers—and, yes, it may put a burden on them. For example, Amendments 205 and 207 examine whether it is appropriate for those duties to apply universally, or whether the threshold should be considered to avoid placing disproportionate burdens on small businesses.

I am somewhat concerned about the amendment proposed by the noble Lord, Lord Sharpe, to remove the provisions from the Bill entirely. It risks sending the wrong signal about the importance of transparency around trade union rights. Although it is, of course, necessary to ensure that new obligations are proportionate and clearly drafted, deleting the entire clause at this stage could be seen as an overly blunt response. It would be preferable for the Government to engage with all the points raised tonight in these amendments and explore whether a more targeted approach could be achieved, with a fairer workable outcome that upholds workers’ rights without creating undue complexities for employers.

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[Baroness O'Grady of Upper Holloway (Lab)]

I am sure the noble Lord opposite would agree that those workers who joined a union and wanted to have a union voice at work to improve their pay and conditions deserve respect, too, and that union-busting techniques and approaches to avoid even meeting unions to come to an agreement is, frankly, unacceptable in a modern, civilised society.

[Lord Goddard of Stockport (LD)]

My Lords, I will be brief. This group of probing amendments relates to new provisions in the Bill concerning trade union access to the workplace. Amendments 208A, 209A, 210 and 210A would narrow the definition of access by removing or limiting references to communication with workers, including through digital channels. These changes would raise questions about how access is intended to operate in practice, particularly in light of evolving workplace models. It would be most helpful to hear from the Minister how these changes are expected to support the overall objectives of the Bill and whether they risk narrowing the scope of access in ways that may affect its effectiveness.

Amendments 209, 211 and 213 in this group would also address the application of provisions to small and medium-sized enterprises. Others, including Amendments 213AA and 213B, introduce specific considerations for sectors including healthcare—all very laudable and quite reasonable—or for the timing and method of access for those applications. These amendments appear to probe the balance between ensuring orderly access and managing operational pressures. Could the Minister clarify how the framework, as currently drafted, is expected to work in different types of workplaces as I have alluded to, and how it ensures that both the employers’ and employees’ work interests are taken into account?

[Lord Katz (Lab)]

I thank all noble Lords who have taken part in the debate on this group, and in particular I thank the noble Lords, Lord Jackson of Peterborough and Lord Sharpe of Epsom, the noble Baroness, Lady Noakes, and my noble friend Lord Hendy for tabling Amendments 208A, 209, 209A, 210, 210A, 211, 212, 213, 213A, 213B and 214.

Before we get into the detail, I will frame my remarks by pointing out that we have heard previously in this debate in quite heated tones a discussion of the role of trade unions in our society. From our perspective as a Government, and from my perspective—for what it is worth, I have been a member of a trade union all my working life—progressive legislation and reform, which we on this side have always tried to pursue through working with the trade union movement, have done much to improve not just the world of work and the rights of workers but the economy as a whole. We are proud of this progress and history. This Bill represents a further stride towards a successful, mature framework for employment relations in this country.

It is important when we talk about striking the balance between employers, unions and workers—in particular, between employers and workers—that we do not equate the two as having equality in terms of power dynamics. That is often missed from this debate. Many employees, whether they work in Amazon’s warehouses, an SME or a microbusiness, do not necessarily feel that they have the same equality of relationship with their employer as their employer has with them. That may be natural, but one of the roles of a trade union or employee representative is to level that playing field. It is always important when discussing trade union rights to bear that in mind.

In Amendments 209, 211 and 213, the noble Lord, Lord Jackson, and the noble Baroness, Lady Noakes, are seeking to exempt smaller businesses from Clause 56. The right of access is a key part of our wider commitment to strengthening workers’ voices in the workplace, enhancing their representation and ultimately improving working conditions through increased trade union membership, participation and dialogue. My noble friend Lady O’Grady of Upper Holloway ably illustrated why, in some cases, trade unions do not need any improvements to access because they have a perfectly good and amicable working relationship. It is worth noting that in roughly 30% of the cases referred to the CAC the applications have been withdrawn because there has been a voluntary agreement, and that is a very good thing to see. However, there are cases where there is not that level of co-operation and access, which is why the Government are legislating to provide it.

We have heard in debates on previous groups that noble Lords on the Benches opposite think that trade unions are a good thing and have a role in the workplace. I absolutely take them at face value on that. To have that role in the workplace, they need to have access to workers. We cannot be starry-eyed about this; not all employers behave as responsibly and open-mindedly as we all believe they should in creating access for employees to their representatives. That is why we are discussing these bits of the Bill tonight.

The policy we have developed has been designed to be fair, consistent and workable for all employers. We will consult on specific details of the framework before they are set out in secondary legislation, including with the CAC, and we encourage businesses and unions to share their views. I understand the points around legal ambiguity raised by the noble Lord, Lord Hunt of Wirral, but, in the previous group, we discussed the levels of granularity and specificity in a particular statement that it is proposed that employers should give to employees about their rights to join a trade union. I posit that, if we had had the level of detail that the noble Lord suggested, we would have had a similar level of discontent from Members opposite. That is of course their right, but I make the point gently that you cannot have it both ways.

I turn now to Amendments 212 and 213B. Amendment 212 would require that trade unions provide a request for access to a workplace in writing, and with more than 24 hours’ notice from the requested date and time that access would happen. Amendment 213B would introduce two additional factors for the CAC to consider when making a determination on whether access should occur: first, the method, frequency and timing of the access requested, and, secondly, whether the purpose of access could be reasonably met without physical entry into the workplace. The Secretary of State will, by regulations, be able to set the time period in which an employer is required to respond to a request for access from a trade union, as well as the form that the trade union’s request must take and the manner in which it is provided to the employer.

I will respond to the point raised by the noble Baroness, Lady Coffey, around the difference between this sort of trade union activity and organising for industrial action. As far as I am concerned, it is pretty obvious that this is about organising for recognition, where the legal conditions can be met, and indeed organising for recruitment and awareness for other very reasonable trade union activities, such as promoting health and safety at work, which we all agree is important and worthwhile.

The Secretary of State will also be able to set, through regulations, the circumstances the CAC must take into account when making decisions on access. These areas of detail will be subject to public consultation before the regulations are made, and we will invite all interested parties to provide us with their views on these matters when we launch our consultation. To pick up on the comments made by the noble Lord, Lord Jackson, he may find that 24 hours after the consultation is deemed to be just right, or indeed too short a period. That is the reason for this consultation, rather than just prescribing everything at this point in time. If we had prescribed it in the Bill, and it was less than 24 hours, I suspect that the noble Lord, Lord Jackson of Peterborough, would not be at all happy.

Amendment 214 was tabled by my noble friend Lord Hendy. The proposals in this amendment would make declarations by the CAC under new Section 70ZI(5) enforceable, as if made by the High Court, opening a greater possibility of an employer being found to be in contempt of court. I am happy to reassure my noble friend that new Sections 70ZH and 70ZK, which were introduced by the Government on Report in the other place, already provide for a strong remedy against employers who do not respect these new rights of access, mainly in the form of CAC orders but ultimately backed by serious financial penalties when necessary. As my noble friend Lady O’Grady of Upper Holloway said, these need to be serious financial penalties and they need to have heft. The new sections that were tabled on Report in the other place say that penalties can be linked to various metrics, such as annual turnover or, indeed, the number of workers employed in the liable entity. In the case of large companies, that would make a very serious penalty indeed. We do not want them to be fined; we want them to grant the access to trade unions and trade union representatives that their employees deserve. In our view, the available remedies are already powerful and proportionate. The Government do not consider it necessary to go beyond these.

Lastly, I turn to Amendments 210, 208A, 209A, 210A and 213A. The noble Lords, Lord Sharpe and Lord Hunt, are seeking in Amendments 210 and Amendments 208A to 213A to exempt digital forms of communication from the right of access policy. In response to the noble Baroness, Lady Coffey, that can be found in new Sections 70ZA(4)(a) and (b) in the Bill as it left the other place. This clause was designed for the modern workplace and with various working practices in mind. It is important that this clause provides for a digital right of access to ensure that unions can reach workers who may not work in a physical workplace, such as home workers or those who work in a hybrid manner. In my opinion, if I may be so bold, the noble Lord, Leigh of Hurley, answered his own point. As he acknowledged, in some businesses, it is not as simple—

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Lord Goddard of Stockport (LD)]

My Lords, there are two things that I can safely say. One is that I am unanimous in my comments tonight, and the other is that you cannot accuse the Liberal Democrats of extending the debate past a reasonable hour; we have done just over an hour on this debate. The debate has been quite sensible and both sides have ventured into the usual jousting, but the comments from the noble Baroness who just spoke were a bit disingenuous in saying, or intimating, that the real reason behind this measure is to increase union membership and generate money for the Labour Party. That could not be farther from the truth of what this Government are trying to do, whichever way you look at the Bill.

[Baroness Coffey (Con)]

Has the noble Lord read the later parts of the Bill that specifically say that? In the human rights assessment, there is a qualified comment from the Government that, basically, cites in particular the element about postponing any refunds until January. That is exactly what part of the Bill is designed to do.

[Lord Goddard of Stockport (LD)]

I will reply to that. Yes, it is a technical question, and perhaps that wording sits there, but any person with an ounce of common sense who sees the Bill can see what the Government are trying to do. I do not think that the Bill, with over 300 amendments to it, is geared to do what the noble Baroness is intimating. That is cheap political point-scoring, and I think it is beneath her.

I have carefully considered the amendments put forward by noble Lords in this group, particularly those seeking to remove Clause 23 and Schedule 3, including Amendments 23 and 334 from the noble Lord, Lord Vaux, the series of amendments from the noble Baroness, Lady Neville-Rolfe, and others relating to probationary periods, including Amendments 105 to 112. While I am not persuaded by those amendments or the case for removing the provisions or fundamentally changing the Bill, I recognise the need for greater clarity on probationary periods. Given the Bill’s current drafting, which relies heavily on future regulation, it is essential that the Government provide clear and firm guidance on how the provisions will operate in practice, especially for small businesses, which will find ambiguity challenging in difficult times.

Amendment 107A from the noble Lord, Lord Lucas, which proposes a default initial employment period but would allow the Secretary of State flexibility to amend that through regulation, offers a balanced concept that could be helpful in providing certainty while retaining adaptability. Likewise, Amendment 334 from the noble Lord, Lord Vaux, which calls for a retention of the current qualifying period until suitable regulations are in place, reflects concerns about the smooth transition, and that deserves attention. However, I am less convinced by the calls for further impact assessments or reviews of the proposals in Amendments 103 and 123, which I believe risk delaying the necessary reforms without providing clarity.

In light of those amendments, I urge the Government to seize this opportunity to give definition and definite practical guidance on the provisions that the Bill will implement. It would be better if the Minister could say in absolute terms the length of time for which probationary periods will be set in future regulation after the passage of the Bill. That would be particularly important for smaller employers that need certainty to comply. Providing that clarity would help to ensure that the reform worked as intended, and it would help to strike the right balance between protecting employees’ rights and allowing employers the flexibility to manage probationary employments effectively. On that basis, I look forward to the Minister’s response.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, and my noble friends Lady Neville-Rolfe and Lord Lucas for their amendments and their thoughtful contributions in this group. It has been a most interesting debate. I will speak to my Amendments 103, 113 and 123.

I completely agree with the noble Lord, Lord Vaux, that it would be much better to get this right now rather than pursuing Amendment 103 in particular, which returns to the Government’s insufficient impact assessment. The assessment that has been produced states that this provision will have one of the highest impacts, yet, as we have mentioned before, the Regulatory Policy Committee has given the Government’s analysis in this section a red rating. The RPC’s critique is not a matter of minor technicalities because it identifies serious deficiencies in the Government’s case for intervention in the options that they have considered and in the justification for the policy that they propose. The Government’s impact assessment admits that it lacks robust data on dismissal rates for employees with under two years’ service. To answer the question from the noble Lord, Lord Vaux, there is no evidence for that. It proceeds regardless, however, with only superficial reference to “asymmetric information” and without any substantive analysis of any market failure.

The RPC highlights the impact assessment’s failure to consider how long-serving employees might view the equalisation of rights for new joiners—an issue of fairness and workplace cohesion that the Government have ignored. The impact assessment itself mentions that options such as reducing the qualifying period to 18 months or one year were considered and rejected without detailed assessment. No real exploration of probation periods was provided. That is not a balanced appraisal of possible alternatives; it is a justification for a predetermined decision.

On the justification of the preferred option, the impact assessment is again found lacking. The RPC calls for clarity on the costs to businesses—the costs of managing performance, handling disputes and the increased settlements to avoid tribunal risks. It also questions whether the Government have considered evidence from existing unfair dismissal claims and how risks might vary across sectors or job types, particularly in roles where reputational damage from a claim might deter employers from hiring at all.

More significantly, the Government have not addressed indirect and dynamic labour impacts, such as whether day-one rights might lead to more cautious hiring, greater use of temporary contracts or weaker overall job security. These are not abstract concerns as they go to the heart of how this policy might reshape employment relationships across the country. Noble Lords might be interested in a real example. I was talking this morning to a senior executive at a FTSE 100 company. It is an exemplary employer in every way; for example, offering many day-one rights. But this year—partly as a result of the jobs tax but also in anticipation of the Bill—it has reduced its hiring by 84%. I repeat that for the record: 84%. This is not abstract or theoretical. This is real, this is now.

It is important to note that these likely labour market impacts are not accounted for in the £5 billion cost to businesses, so the real cost is likely to be significantly higher. The result is a policy with high ambition but little practical clarity, as the noble Lord, Lord Goddard, has just noted. How will unfair dismissal rights interact with a statutory probationary period? Will employers still have access to the same set of fair reasons for dismissal? Will there be a different threshold for acting reasonably during probation? Can probation be extended if needed? None of those questions has been clearly answered.

The noble Lord, Lord Leong, reminded us of the light-touch, nine-month proposal, but what does that mean in practice? My noble friend Lady Meyer asked that. At the same time, the Government’s own analysis predicts that granting day-one rights for unfair dismissal alone will result in a 15% increase in employment tribunal claims. Using the statistics given by the noble Lord, Lord Barber, that is an additional 750 claims per year, on top of the 50,000 backlog already waiting 18 months to two years. The noble Lord argued that this is, in effect, a statistical irrelevance, but it is not to the 750 business owners who are being dragged through courts. That is a substantial impact. It represents direct costs to businesses in terms of time, legal risk and, of course, the chilling effect on recruitment.

The tribunal system itself needs to be looked at. Without significant new investment it is hard to see how the system will cope with this 15% increase. The result could be longer delays, greater costs and justice deferred for all parties. In an earlier group we heard about a case that is going to take more than two years to come before a tribunal. Yet the Government intend to bring these changes into force in 2026. On what basis? There is nothing in the impact assessment that explains why 2026 has been chosen or how the system will be ready by then. Businesses will need time to revise contracts, restructure probation processes and train managers on the new rules. What assessment has been made of whether 2026 is realistic, with all those things in mind? What engagement has been carried out with employers, particularly SMEs, about what implementation will require?

It is not unreasonable to ask the Government to explain how the timeline was determined and whether it is genuinely achievable, given the lack of clarity in both the policy detail and the supporting evidence. We all agree that employees deserve fair treatment, particularly in the vulnerable early stages of employment, but employers must also have a reasonable opportunity to assess performance, capability and suitability without the immediate threat of litigation.

We have established that there is no evidence for any of this clause. In fact, when the noble Lord, Lord Hendy, was arguing his point, he said that it is very difficult anyway for employees to take a case to an employment tribunal. The noble Lord, Lord Barber, as I just mentioned, said it is, in effect, a statistical irrelevance. If there is no evidence, it is too difficult and it is a statistical irrelevance, why are we bothering at all?

I want to raise a final point that others, particularly my noble friends Lady Neville-Rolfe and Lady Noakes, have referred to. It is not just about the policy itself; it is a more troubling concern. The policy will create unintended incentives, but for whom? It is not just about employers scaling back hiring overall but about who they stop hiring. If we remove the qualifying period for unfair dismissal and provide no workable probationary mechanism, we tilt the hiring incentives away from risk-taking, as we have heard. It will, in effect, stop employers taking a punt.

Right now, a small business owner might be willing to take that chance on someone with no formal qualifications, or from a non-traditional background, or re-entering the workforce after a time away. That chance exists because the employer has a short window to assess their suitability—and vice versa, of course—before facing the full weight of employment litigation risk. If that safety net is removed and exposure begins from day one and the probationary period lacks clarity or legal protection, that same employer will think twice. They will play it safe.

Noble Lords opposite should pay attention to those of us who have employed people. It is a simple fact. Who is going to suffer? It is not the already advantaged candidate with a polished CV. It is the young person with gaps in education, the career switcher with no references, the working parent returning after years out of the labour market, or the person coming back to work after a long period of illness. Noble Lords opposite should reread the speech given by my noble friend Lord Elliott, with his experience of the Jobs Foundation. He explained this much more eloquently than I just have. Those are the people who benefit from flexibility and second chances and who may now find those doors quietly closed.

This goes to the heart of social mobility and genuine workplace diversity. I would like to ask the Government a rhetorical question: have they considered the incentives this policy creates? If they have not—both common-sense experience of real working life in the private sector and, indeed, the RPC suggest that they have not—we risk designing a policy that sounds progressive but, in practice, reduces opportunity for the very groups that we should be helping the most. We need a decent impact assessment, and my amendment would allow for it.

--- Later in debate ---

This Employment Rights Bill is an important update to employment law. Employees need employers to create jobs, so this Bill needs to find that difficult balance in protecting employees and giving them job security, protection of conditions and decent wages, while employers need to feel that, when things are not working perhaps for different reasons and circumstances, there is a fair and reasonable process to follow for both parties to either change or end a contract.

[Lord Goddard of Stockport (LD)]

My Lords, I wish to speak in support of the amendments put forward by my noble friend Lord Fox, who is unfortunately away today, on NATO business I believe. Tomorrow, no doubt, he will pore over today’s Hansard. I hope that the noble Lord, Lord Hunt of Wirral, will be available then. I cannot unsee the picture of him in a four-poster bed with the trade union man climbing aboard, and will have to try to explain down the telephone to my noble friend Lord Fox, “It was quite humorous”. We will see what happens with that tomorrow.

My noble friend Lord Fox’s concerns include his Amendments 116 and 121, which offer much-needed clarity and balance to the protections around contract variations and unfair dismissals. The issue of predatory fire and rehire, as seen in the widely condemned P&O Ferries case highlighted by the noble Lord, Lord de Clifford, is an unacceptable, serious and pressing concern that employment legislation rightly needs to address now. No worker should be threatened with dismissal simply to impose worse terms and conditions on that person.

My noble friend Lord Fox’s proposals to exclude routine non-detrimental contract changes from triggering automatic unfair dismissal protections, as in Amendment 116, and to safeguard reasonable flexibility clauses expressly agreed in contracts, as in Amendment 121, would help ensure that protection against abuse is balanced with the practical realities that employees face. His further clarification in Amendments 117 and 122—that dismissals linked to redundancy with offers of suitable alternative employment and the lawful use of fixed-term contracts should not be unfairly restricted—rightly recognise that not all contract variations are harmful and that employees must be able to operate flexibly and fairly.

The amendments in the name of the noble Lord, Lord Sharpe, would facilitate contractual changes for financial organisations or workforce-related reasons. Although the intention is understandable, it is crucial that the Government provide clear guidance to ensure fair protection for workers, particularly those in smaller businesses. The approach to seasonal and variable-hour workers also requires careful consideration to safeguard their rights. We will return to that in a later group.

These amendments collectively illustrate the careful line that the Government must tread. Although it is crucial to clamp down on unfair and predatory fire-and-rehire tactics, as addressed by my noble friend Lord Fox’s amendments, we must equally recognise the legitimate need for flexibility and contract review in a changing economic landscape. I commend my noble friend’s amendments for their clarity and fairness in this regard, and encourage the Government to consider how best to incorporate these protections. At the same time, I urge the Committee to approach other proposed changes—as in Amendments 115 and 115A, which seek to clarify reasonable adjustments and productivity improvements—with a measured and practical mindset, to support both workers’ rights and sustainable business operations. I look forward to the Minister’s comments.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. This Government are absolutely clear that the use of unscrupulous fire-and-rehire practices must end. Employers should not be able to impose contract changes through threats of dismissal, except in the most limited and justified circumstances. We recognise that, at times, businesses may need to restructure to survive and protect jobs. The legislation accounts for such cases where there is genuinely no alternative and a business faces immediate financial difficulty. Fire and rehire may be used, but only following a proper good-faith process, grounded in open dialogue and mutual understanding.

Let me begin by addressing Amendments 113ZA, 113B and 118 from the noble Lords, Lord Sharpe and Lord Hunt, Amendment 115 from the noble Lord, Lord de Clifford, and Amendment 116, spoken to by the noble Lord, Lord Goddard, on behalf of the noble Lord, Lord Fox. These amendments aim to exclude certain types of contract variations from the clause, such as those relating to terms other than pay, benefits, hours or location, or to allow changes made for good or operational reasons. When a change in contract is essential and the employee will otherwise become redundant—for example, due to a move in location—or where the changes are necessary to reflect a change in the law, the employer will still be able to explain to the employee when proposing these changes. However, such changes should always be a result of meaningful consultation. Employers and employees must reach mutual agreement, allowing both sides to understand and assess the impact of the proposed changes. Open dialogue is key.

I turn to Amendment 114 from the noble Lord, Lord Sharpe, and Amendment 115. These propose broadening the permitted use of “fire and rehire” to include changes that are reasonably necessary to improve workforce productivity. The Bill is the first phase of delivering our plan to make work pay. We are supporting employers, workers and unions to get Britain moving forward. Alongside this and a new industrial strategy, the Bill will support the Government’s mission to increase productivity and create the right conditions for long-term, sustainable, inclusive and secure economic growth.

The Government do not support these amendments. We believe this practice should be allowed only where an employer faces no reasonable alternative and is under imminent financial threat. The noble Lord, Lord Hunt, mentioned what happens if a company is facing insolvency. I am sure most noble Lords know that insolvency does not come straight away. There is a whole process, and it is during this that consultation should happen between the employer and employee. When it comes to the last resort, when until and unless something happens the company is going to go belly-up, there may be a practice of “fire and rehire”, but before that, there should be consultation along the way.

These amendments would significantly widen the exemption and make it necessary for employers to use “fire and rehire”. That is not our intention. While businesses can still agree changes to boost productivity, such changes must come through proper negotiation, not coercion, as I just mentioned.

I now turn to Amendment 119, also from the noble Lord, Lord Sharpe, which proposes allowing “fire and rehire” if the changes are reasonable and supported by a majority of affected employees. This issue here is subjective. What is reasonable for one employee may be deeply unreasonable for another. Our goal is to protect individual rights. Clause 26 is designed to reduce the use of “fire and rehire” as a means to push through significant changes without individual consent.

I will address Amendments 117 and 122 from the noble Lord, Lord Fox, and Amendment 120 from the noble Lord, Lord Sharpe. They focus on whether dismissals for redundancy or the end of a fixed-term contract should be considered automatically unfair under Clause 26. The Government’s position is that, where a role is no longer viable under current terms, employers should follow due process, including meaningful consultation to seek agreement to vary contracts. If employees do not agree, and if the employer no longer requires the work to be done, redundancy may still be appropriate. In such cases, redundancy procedures must be followed, including consideration of alternative roles. Where the principal reason for a dismissal is redundancy, the dismissal will not be automatically unfair under Clause 26.

Now I turn to Amendment 121 from the noble Lord, Lord Fox, which concerns variation clauses in employment contracts. I wish to reassure the House that existing case law already governs the enforceability of such clauses. This clause applies only where there has been a dismissal, and so would not apply where a lawful variation clause has been lawfully exercised. Courts and tribunals will not uphold variation clauses if they are oppressive and exercised unreasonably. This amendment is therefore unnecessary as a legal protection already exists.

I now turn to Amendments 120A and 120B, which relate to the factors a tribunal should consider when assessing the fairness of a dismissal under the clause exemption. It is appropriate that tribunals should consider where the employer offered the employee something in exchange for agreed-to changes. Fair contract variation should be built on dialogue, not pressure. It is right that the Secretary of State should have the power to specify additional relevant factors for tribunals to consider in future. These regulations would be subject to affirmative resolution procedure, ensuring full parliamentary scrutiny.

Finally, Amendment 113 from the noble Lord, Lucas, seeks to limit the clause to only substantial contract changes. We reject that. Even minor-seeming changes can have major consequences for individual employees. Individuals must be allowed to consider proposed changes without facing dismissal threats. That principle underpins the clause.

Employment Rights Bill

Lord Goddard of Stockport Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

Bad employers will be bad regardless of what the Government bring in because they will find ways of circumventing the legislation that is being introduced here. There needs to be more thinking around what we want to see as greater flexibility. I firmly believe in flexible working, but I believe that should be a contract between the employer and the employee; it should not be for government to mandate what needs to be done.

[Lord Goddard of Stockport (LD)]

My Lords, I will speak to my Amendment 7 in this group, as well as my Amendment 15. I also apologise for not being able to speak at Second Reading. I am walking somewhat of a tightrope this evening. For 15 years, I was a senior shop steward for the GMB as a national negotiator. I also have my own company with 20 employees. I do not think that I will be able to cope with the ramifications of some of this legislation. Also, I have some guests up in the Public Gallery: they are small business men who employ people. Dinner could get quite difficult if I say the wrong thing in the next 10 minutes, which I hope I will not do.

My first amendment would set the initial reference period for the right to guaranteed hours to 26 weeks, to give flexibility to industries that rely on a seasonal basis for operating and employing people. It would also give greater flexibility to the labour market itself. When Members see this amendment, they automatically think of seasonal workers as fruit and veg pickers harvesting crops, but nothing could be further from the truth. Work has changed. We are now essentially a service-led economy, with no more enormous factories employing thousands of workers every day, producing goods to export across the globe, clocking in and clocking out, as I did back in the 1970s. Flexibility is the key, and work/life balance for many is crucial. The days of the nine to five are well and truly over, in my opinion, especially for small businesses. That flexibility is not only for the agricultural industries but for tourism, retail, hospitality and events—things that bind our country together.

We welcome this Bill. One could argue that it is 30 years too late; that was probably the time when unions were most under attack, when our beloved Margaret was in charge. Perhaps that was when people should have risen up, but we are where we are. However, the Bill should be proportional and reasonable; those are the two things that we would wish to persuade the Government to embrace, through not only some of our amendments but those of other parties. Reasonableness and proportionality are what we are proposing. We will support the Bill, but its architects must accept that the labour market has evolved. Flexibility for workers and protecting workers’ rights go hand in hand.

I will now speak to my Amendment 15. Other amendments in this group have rightly raised challenges regarding the right to be offered guaranteed hours. My Amendment 15 strikes a necessary balance between protecting workers and allowing flexibility for genuine short-term employment situations. This amendment would not undermine the main principles of the Government’s legislation. Instead, it would make a reasonable accommodation for short-term contracts while maintaining safeguards through proper disclosure requirements and strict time limits.

For seasonal workers, this amendment offers significant advantages. It would increase their employability, as businesses could confidently offer work during peak periods without complicated hour guarantees that extend beyond the season. Many seasonal workers prefer concentrated work periods with higher hours, allowing them to earn more money during these limited timeframes. Additionally, this flexibility would enable workers in industries such as tourism, agriculture and entertainment to secure multiple seasonal positions throughout the year, improving their overall financial stability. Many industries in our economy, including agriculture and education, are connected to seasonal events. We need this practical provision.

I urge the Minister to consider this amendment, or at the very least be cognisant of the challenges these seasonally dependent sectors face. If this legislation is designed correctly, we can arrive at a set of provisions that will protect workers while acknowledging the realities of our diverse job markets.

Finally, my noble friend Lord Fox and I met Amazon a couple of weeks ago in Portcullis House. Amazon employs 75,000 people in the UK and is not unionised. It has evolved its own democratic in-house solutions. I am not commenting on that, but it shows that, sometimes, legislation is not the only way to protect people at work, guarantee earnings and pay reasonable rates. That is the kind of bigger picture thinking that this Bill is missing.

[Lord Barber of Ainsdale (Lab)]

My Lords, this group of amendments deals with the hugely important issue of zero-hours and short-hours contracts. As the noble Baroness, Lady Lawlor, said, well over a million people in the UK work on zero-hours contracts. In sectors such as retail, it is also common for workers to have a small number of guaranteed hours but to work the equivalent of full-time hours.

These arrangements are not a win-win for worker and employer. More than eight in 10 zero-hours workers want regular hours of work. Without guaranteed hours, workers do not know whether they will be able to pay their bills or organise their caring responsibilities. The flexibility is invariably on the employer’s side. Research has shown that more than half of zero-hours contract workers have had shifts cancelled at less than 24 hours’ notice. Many experience being sent home mid shift and very few are compensated. The vast majority of those who ask for guaranteed hours are turned down, so I fear a right to request would not resolve that issue.

There is also significant evidence that employers do not use zero-hours contracts just as stopgaps but will often park workers in these insecure arrangements long term. Two-thirds of zero-hours contract workers have been with their employer for more than a year, and one in eight for more than a decade.

As well as causing financial uncertainty and disrupting workers’ private lives, this distorts workplace relations, with workers fearful of challenging inappropriate conduct in case it leads to them losing their work. Recent accounts of poor behaviour at McDonald’s branches, where zero-hours contracts are prevalent, included a 17 year-old reporting that she had been asked for sex in return for shifts. Also, when employers rely on zero-hours contracts, what incentive do they have to invest in skills? The answer is: little or none, with predictable consequences for productivity.

The Bill implements measures first developed by the Low Pay Commission, with the support of both trade union and employer-side representatives. An employer will have to offer a contract based on a worker’s normal hours of work in line with a 12-week reference period. That gives a clear indication of a worker’s usual hours while evening out peaks and troughs. Any period longer than that, such as 26 weeks, would simply allow employers to park workers on a zero-hours contract for a prolonged period.

The Bill contains powers for Ministers to specify the notice period for shifts that employers must give to workers and compensation for cancelled shifts, and these are an essential part of the package. Currently, workers on variable-hours contracts bear all the risk of any changes in demand, and they are usually low-paid workers who can ill afford the sudden changes to income.

In the House of Commons, the Bill was amended to ensure that those rights also apply to agency workers. That is crucial in order to close the loophole that could have led to employers hiring zero-hour staff by agencies and entirely subverting the intent of the legislation. I know the TUC would strongly oppose any amendment that would exempt agency workers or fixed-term contract workers on variable-hours contracts from these provisions.

Employers will still be able to put in place arrangements for coping with fluctuations in seasonal work—for instance, via fixed-term contracts. What will change is that workers will not bear alone the burden, in reduced wages, of sudden changes in demand. The current situation allows manifest injustices to take place. It is time that we level up the labour market.