Employment Rights Bill

Lord Hendy Excerpts

Committee stage
Thursday 5th June 2025 Lords Chamber

Moved by

[Lord Hendy]

152: Schedule 4, page 195, line 4, leave out from “matters” to end of line 8 and insert “in relation to school support staff which relate to or are connected with any of those set out in section 178(2) of the Trade Union and Labour Relations (Consolidation) Act 1992”
Member’s explanatory statement
This amendment is intended to make the Negotiating Body a collective bargaining body rather than a consultative body by leaving it to the industrial parties to determine the matters which require to be collectively bargained (within the statutory definition of collective bargaining in s.178) and so partially fulfils the requirements of the ILO for free and voluntary collective bargaining.

[Lord Hendy (Lab)]

My Lords, I will speak to Amendments 152 to 179, which are intended not to undermine but to improve the SSSNB.

First, I will say a word about collective bargaining relevant to these amendments and to later amendments dealing with that subject. The term was coined by Beatrice Webb in 1891. It means negotiations between one or several trade unions on the one side and one or more employers or employers’ associations on the other, with a view to agreeing rates of remuneration and other terms and conditions of employment for a defined group of workers. The term is defined in Section 178 of the Trade Union and Labour Relations (Consolidation) Act 1992, which sets out various matters which may form the basis of such negotiations—not just pay, terms and conditions, but including dismissals, allocation of work, union facilities, dispute resolution machinery, and so on. The International Labour Organization—ILO—has a similar, but less detailed, definition in Convention 154.

Collective bargaining may be on a sector-wide basis across a particular industry or it may be confined to a particular enterprise. Where there are sectoral agreements setting minimum terms, they are usually improved upon by enterprise agreements with individual employers in the sector. The UK was the first country to establish widespread collective bargaining coverage. By 1948, the then Prime Minister could say in a broadcast to the nation that:

“We have built up in this country a system of collective bargaining without parallel in the world”.


That coverage was built upon two pillars: the statutory wages councils introduced by Winston Churchill in the Trade Boards Act 1909, latterly regulated by the Wages Council Act 1979, and the voluntary joint national councils, or Whitley councils, pursuant to the reports of the Reconstruction Committee after the First World War by JH Whitley. Governments of all persuasions were committed to the promotion of collective bargaining, particularly because of its very positive effect on productivity in both world wars. In consequence, collective agreement coverage of UK workers was in excess of 80% between 1945 and 1980.

Significantly, the proportion of workers covered by only an enterprise-level collective agreement was almost insignificant and had grown to only 9% by the late 1970s. The dismantling of sectoral collective bargaining since 1980 has produced a steady downward curve in the coverage, which was not halted by the introduction of the recognition machinery for enterprise-level bargaining in 2000. The percentage of workers whose terms are negotiated now is likely to be around 25%. The remaining three-quarters must take what they are offered.

The staggering decline from over 80% coverage to 25% has had a devastating effect on workers. The stagnation in the real value of wages and the meteoric rise in zero-hours contracts and job insecurity can be attributed, at least in part, to that dramatic decline. To achieve the growth and improvement in living standards rightly sought by the Government necessitates restoration of extensive collective bargaining coverage.

There are considerable benefits to that. A few years ago, the Supreme Court of Canada pointed out that:

“The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work. Collective bargaining is not simply an instrument for pursuing external ends ... rather [it] is intrinsically valuable as an experience in self-government ... Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the rule of law in the workplace”.


It has also been said that collective bargaining

“is the mode in which employees participate in setting the terms and conditions of employment, rather than simply accepting what their employer chooses to give them”.

Workers enjoy the benefits of increased wages and improved minimum terms and conditions. Trade unions can negotiate on a sector-wide stage without diminishing their ability to negotiate better terms locally.

The benefits of sectoral collective bargaining extend to employers too. Sectoral collective bargaining prevents undercutting and steadies labour costs. Employers in the same sector must compete instead in investment, innovation, efficiency and productivity—the fields of competition which foster growth. Employers, especially SMEs and micro employers, benefit from not having to research or negotiate wages with their workers. Instead, the minimum terms and conditions for their sector are contained in the sectoral agreement.

Employers profit from the increase in consumer demand, consequent on increased earnings generally. Governments enjoy increased tax from higher earnings and the diminished need to fund social security payments to subsidise low wages. Sectoral collective bargaining has proved to reduce inequality, not just between high and low earners but between women and men, and to reduce the pay gap suffered by disabled and ethnic-minority workers.

There is much research from academic institutions to support these conclusions, as well as from the ILO, OECD and IMF. In 2024, the European Union went so far as to adopt a directive requiring member states that have less than an 80% coverage of collective agreements to put in place an action plan to achieve such coverage.

A letter in last week’s Financial Times pointed out that Sweden—notwithstanding its conversion over the last 30 years from neosocialism to neoliberalism—preserved, at the insistence of employers and unions, the very extensive sectoral collective bargaining that characterises Nordic industrial relations.

Collective bargaining, and in particular sectoral collective bargaining, is not just desirable in itself; international law requires the UK to promote and encourage it. That is a subject I will return to in the next group.

It is unclear why the Bill does not stipulate the creation of collective bargaining bodies. The UK’s long and successful experience of statutory wages councils and voluntary joint national councils provides fine precedents. There are many other such precedents as well.

With that introduction, I turn to the proposition that the SSSNB is not the collective bargaining forum it should be, and which many unfamiliar with the detail of the Bill assumed it would be. To save time, I will also refer to the adult social care negotiating body—I wish the Government had chosen easier acronyms—since the Bill’s proposals and the arguments about them are virtually identical.

The relevant features are these. First, the Bill expressly states that nothing in the SSSNB is to be regarded as collective bargaining as defined by Section 178 of 1992 Act, and that any agreements reached are not to be regarded as collective agreements. The ASCNB is slightly different, in that the relevant Minister is given power to exclude the application of Section 178.

Secondly, the Bill defines a negotiating body, but its functions do not include negotiation. The parties have no power to decide for themselves the matters they wish to discuss and are confined to the four subjects permitted to each by the Bill, plus any additions conferred by the Minister. The very limited subjects so far permitted exclude, for example, work organisation, diversity and inclusion, eradication of pay gaps, health and safety, deployment of new technology, formulation of a dispute resolution procedure and the legal status of workers in the sector.

Thirdly, the Bill gives the Minister power to make regulations as to the nature of the consideration the negotiating body must give to the authorised subjects, with power to direct specific factors the body must take into consideration and any conditions that must be met in reaching agreement. Matters can be discussed by the SSSNB only with the permission, or on the direction, of the Minister, who can also specify matters that may not be discussed.

Fourthly, if the body reaches an agreement, the Minister can override it and require reconsideration, specifying factors that must be taken into account and conditions that must be met to reach a reconsidered agreement acceptable to Minister. Ultimately, the Minister can override agreements of the negotiating body.

Fifthly, if the negotiating body fails to agree, the Minister has the power to assume its functions and impose a settlement, regardless of the wishes of the parties, who may, of course, prefer their own dispute resolution procedure, or conciliation, mediation and arbitration by a third party in whom they have confidence.

Sixthly, terms agreed and approved, or simply dictated, by the Secretary of State will be set for all relevant workers. Consequently, any genuine collective agreement for more favourable terms will be void. Far from promoting collective bargaining, the effect of this provision is to preclude it.

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[Baroness Smith of Malvern (Lab)]

I am desperately searching for the note in my folder on yachts. I may have to write to the noble Baroness on that issue later.

I thank my noble friend Lord Hendy for his introduction to these amendments. As others have said, it was an interesting and important history of the progress that has been made in this country through a recognition of the strength of the collective voice of workers represented through the trade union movement, which is, of course, the basis of our party on this side of the House. Although I will not be able to go as far as my noble friend would want me to go in this, I hope I can reassure him that I think these proposals for the SSSNB make considerable progress in recognising the need for the voice of school support staff to be properly heard in bargaining about pay and conditions and improving the training and development options for those staff.

I know my noble friend Lord Hendy has had the opportunity to meet with my noble friend Lady Jones to talk about these principles. I hope he recognises, as I certainly do, the phenomenal work that she and other members of the team have done in this House in taking forward this piece of important legislation for the Government and the difference it is making to the rights of workers across this country. Those of us on this side of the House are proud of this piece of legislation and the work that has gone into it.

I can also reassure my noble friend that this Government support the work of the ILO, value its role in upholding and enhancing workers’ rights globally and remain committed to upholding international standards. In fact, the UK is in full compliance with all our international obligations on collective bargaining.

I turn to the SSSNB and the associated amendments in this group. I know my noble friend is here for the other elements of negotiating bodies that my noble friend Lord Hendy referenced, but first I shall speak to Amendments 152, 154 to 158, 161 and 173 to 179, which relate to collective bargaining, the role of the Secretary of State and concerns about the remit of the SSSNB.

The existing remit is broad. It covers the areas that will help to address the recruitment and retention challenges that state-funded schools are facing for support staff. As it is a negotiating body, employee and employer representatives will be able to meaningfully negotiate on pay and conditions as well as advise on training and career progression. As I spelt out in the previous group of amendments, this is a major step forward in the process for supporting our school support staff, who play such an important role in our schools.

As it is a statutory body, it is essential that agreements reached by the SSSNB can be imposed in contracts only through ratification by the Secretary of State, and that the interests of the Secretary of State are represented on the body with a non-voting representative. I agree with the noble Baroness, Lady Barran, that the current wording provides the appropriate specificity on the remit for this body, appropriately involving the Secretary of State in the statutory role of the body but making a major step forward in enabling employees and employer representatives to negotiate on those areas.

I turn to Amendments 153, 159, 160, 162, 167 and 170, which relate to those who work under a contract that is not a contract of employment—in other words, to the remit of the employees covered by this body. The vast majority of school support staff are employed by local authorities, governing bodies and academy trusts as employees. The remit for employees is consistent with the approach taken in the 2009 legislation that first established the SSSNB and the current remit of the NJC. I hope that answers the question asked by the noble Baroness, Lady Barran, about the definition. We are content that the policy intent of the SSSNB provisions is met through the current remit, so the amendments are not required. They would broaden those under the auspices of the SSSNB in a way that would distort its role and responsibility, and they would introduce the sort of complexity that other noble Lords have talked about.

The remainder of the amendments in this group—Amendments 163 to 166, 168, 169, 171 and 172—relate to the protection of more favourable terms in staff contracts. As drafted, the Bill does not require regulations ratifying agreements of the SSSNB to impose limits on the terms and conditions under which school support staff can be employed. The intention is for support staff in all state-funded schools in England to benefit from a core pay and conditions offer, while providing the flexibility to respond to local circumstances above minimum agreements reached, and with more favourable pay and conditions for individuals protected.

We are taking concerns about the protection of individuals and room for innovation seriously. We will be consulting on the remit of the SSSNB and calling for evidence on terms and conditions in the summer. I therefore have some sympathy with those who might express concerns about whether there is sufficient protection for individuals, and I hope we will be able to clarify that.

I will not be able to go as far as my noble friend Lord Hendy asks the Government to go in his amendments, but I hope he will recognise that, in line with the progress of the collective representation of workers that he identified in his speech, this development under this Government represents a considerable improvement in the position of our vital school support staff. I hope that, on that basis, he will feel able to withdraw his amendment.

[Lord Hendy (Lab)]

My Lords, I am most grateful to the noble Baroness, Lady Jones of Moulsecoomb, for her fulsome support of the amendments.

I am of course shocked that the noble Baroness, Lady Barran, and I have reached a point of disagreement, and will make one or two points arising from what she said. She thinks that I was wrong to refer to zero-hours contracts. Of course, I accept what she said, that there presently are no zero-hours contracts in the school sector, but, as I am sure she is aware, there are zero-hours contracts in the university sector, and the fear is that they might then be introduced into the school sector.

The noble Baroness was worried about the reference to non-employees—that is, self-employed workers. Again, the problem is not so much the existing situation but fear of the future. The self-employed sector now has 5 million workers, who, on average, earn a lot less than employed workers. It is a growing sector, and the fear is that employers will resort more to the device of self-employment to avoid the consequences of employment.

I am grateful to the noble Lord, Lord Sharpe of Epsom, for his thoughtful contributions. He said that he thought the inclusion of the self-employed would bring ambiguity and be unworkable, but I respectfully disagree. The point is this: if people are doing similar work but with a different legal status, similar terms should apply to them. If there are few people, or none, in that category, I cannot imagine for a moment that the negotiating body, unions or employers will wish to say anything about it. What I am suggesting by enlarging the remit of the bodies is not that they should be compelled to negotiate all the matters under Section 178, but that it is an option open to them if those parties feel that it is profitable for them to negotiate those things.

The noble Baroness, Lady Barran, was uncomfortable with my opposition to the Minister’s power to override agreements, or indeed disagreements, in the negotiating body. I point out that, in truly voluntary and free collective bargaining, it is always possible to have tripartite collective bargaining between the Government, employers and unions—but that is not what this body is. This body is bipartite, but with the addition of third parties and the power in the Minister to override any agreement that is reached. That does not seem to be compatible with proper collective bargaining.

I know your Lordships want to move on, so I will not deal with any more detail, but will make just one more point. The noble Lord, Lord Sharpe, was against the inclusion of dispute resolution procedures, including arbitration. I make the point again that the purpose is not to impose this on the parties but to enable them to choose their own means of resolving disputes—whether that is conciliation, arbitration or some other means—and not to leave it to the Minister.

I am very grateful to my noble friend Lady Smith of Malvern for her thoughtful and full response. She is right, of course. I do not think she goes as far as I would like her to, but I understand the reasons she does not. I agree that what is proposed in the Bill for the SSSNB is a “considerable improvement”, to use her words, on what exists. I accept too that it is a step on the road to proper collective bargaining in due course. I am very grateful for the two meetings I had with my noble friend Lady Jones of Whitchurch. I was honoured and grateful to be allowed to spend time discussing my concerns with her. On that basis, I am very happy to withdraw my amendment.

[Lord Sharpe of Epsom (Con)]

Can I seek a point of clarification on the noble Lord’s clarification, which I am very grateful for? Was his argument that extending and future-proofing—I think those were his words—this for the self-employed is because he feels that there will be more self-employed people as a consequence of this Bill?

[Lord Hendy (Lab)]

No, not at all. Growing self-employment has been a trend for the last 20 years, which has perhaps accelerated a bit in the last 10 years. The worry is that school employers may adopt the device of allocating work to the self-employed, rather than to employed persons. If that is the case, there ought to be room for the negotiating body to deal with that issue and the consequences of it. I beg leave to withdraw my amendment.

Amendment 152 withdrawn.

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Moved by

[Lord Hendy]

181: Clause 37, page 62, line 3, leave out from “Body” to end of line 4 and insert “to be selected by agreement between the union officials and employers’ representatives who are members of the Negotiating Body and, in the event of a failure to agree, chosen by ACAS;”
Member’s explanatory statement
This amendment is one of several intended to make the Negotiating Body a bilateral collective bargaining body, in this instance to allow the industrial parties to select the Chair instead of it being a ministerial choice.

[Lord Hendy (Lab)]

I apologise to noble Lords for inflicting my voice on them again. The amendments in this group are intended to convert the ASCNB into a collective bargaining forum and achieve the purpose we have already discussed for the SSSNB.

I mentioned earlier that there is some relevant international law. I propose now to deal with it. The UK is bound by the international treaty provisions it has ratified. That applies no matter the subject matter of the treaty obligation—whether it be trade, security, environment, labour, extradition or whatever. The obligation of conformity is not confined to the black letter of the treaty provision. It applies also to the decisions of the bodies on which the treaty has constitutionally bestowed the power of deciding whether or not a state is in compliance. If a state does not like the treaty provisions or decisions made under it, it has the right to denounce the treaty and cease to be bound by it.

The great jurist Lord Bingham made state compliance with international obligations his eighth principle of the rule of law. He said in his seminal book on the subject that

“the rule of law requires compliance by the state with its obligations in international law as in national law”.

Consistently with this, the current Ministerial Code binding on British Ministers places on them an

“overarching duty to comply with the law, including international law and treaty obligations”.

The point was reinforced by the noble and learned Lord the Attorney-General in this House on 26 November 2024, when he said of compliance with international law:

“We should all be immensely proud of it, and this Government will seek at every turn to comply with our obligations”.—[Official Report, 26/11/24; col. 680.]


He developed the point in a lecture to the Royal United Services Institute last week.

The relevant international law is based on two legal instruments. The first is the ILO, which since its founding in 1919 has acknowledged collective bargaining as an instrument of social justice. The 1944 ILO Declaration of Philadelphia, part of the ILO constitution, recognises the obligation to further

“the effective recognition of the right of collective bargaining”.

The 1998 ILO Declaration on Fundamental Principles and Rights at Work reiterates that

“all Members … have an obligation … from the very fact of membership in the Organization, to respect, to promote and to realize … the principles concerning the fundamental rights”,

which include the effective recognition of the right to collective bargaining.

ILO Convention 98, Right to Organise and Collective Bargaining Convention, 1949, was ratified by the United Kingdom almost 75 years ago on 20 June 1950. It is one of the fundamental conventions, binding, regardless of ratification, as a consequence of membership of the ILO. Article 4 imposes the following obligation on states:

“Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements”.


The Government were recently reminded of that obligation by the decision earlier this year of the ILO tripartite Committee on Freedom of Association, on which the UK is represented, on a complaint against the UK arising out of the Supreme Court judgment in the case of Deliveroo in 2023. The committee had previously stated in the case of the United Kingdom that

“whereas governments are not under a duty to enforce collective bargaining by compulsory means, they are under a duty to encourage and promote voluntary collective bargaining in good faith between the parties”.

The Bill is the opportunity to fulfil that obligation. As yet, it does not.

Turning from the global to the European, I refer to the European Social Charter of 1961. Article 6, headed “The Right to Bargain Collectively”, materially provides:

“With a view to ensuring the effective exercise of the right to bargain collectively, the Parties undertake … to promote, where necessary and appropriate, machinery for voluntary negotiations between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements”.


The Parliamentary Assembly of the Council of Europe, on which a number of your Lordships sit, elects a supervisory body of jurists called the European Committee of Social Rights, which regularly includes eminent UK nominees, with the purpose of examining compliance by member states with the provisions of the charter which they have voluntarily ratified. Decisions of that committee are reported to the Committee of Ministers, which includes the UK Foreign Secretary.

The European Committee of Social Rights has held of the obligation of states under Article 6.2 of the charter that

“if the spontaneous development of collective bargaining is not sufficient, positive measures should be taken to facilitate and encourage the conclusion of collective agreements”

and that

“where only 30% of the total number of employees are covered by collective agreements, voluntary negotiations are not sufficiently promoted in practice”.

The level of collective bargaining coverage in the UK is now significantly below 30% but, in any event, it is clear that spontaneous development of collective bargaining is not occurring in fields that desperately need it, such as social care. The duty on the UK to promote collective bargaining, at least in these sectors, is thus triggered. The committee has also held:

“States Parties should not interfere in the freedom of trade unions to decide themselves which industrial relationships they wish to regulate in collective agreements”.


That is a matter to which the ILO Committee on Freedom of Association has also turned:

“It is for the parties concerned to decide on the subjects for negotiation … Matters which might be subject to collective bargaining include the type of agreement to be offered to employees or the type of industrial instrument to be negotiated in the future, as well as wages, benefits and allowances, working time, annual leave, selection criteria in case of redundancy, the coverage of the collective agreement, the granting of trade union facilities, including access to the workplace beyond what is provided for in legislation etc.; these matters should not be excluded from the scope of collective bargaining by law”.


Yet in the subsectors of adult social care and school support staff, this Bill proposes to violate than principle. The subject matter which the two negotiating bodies are permitted to discuss is limited to that specified in the Bill, to which the Minister may unilaterally add. Indeed, as we have already discussed in relation to school support staff, their negotiating body is not permitted to discuss even the matters within its statutory remit, unless directed or expressly permitted by the Minister.

Both the social rights committee and the ILO have made it clear that self-employed workers should not be excluded from collective bargaining machinery, a matter which we discussed earlier.

I also draw attention to Article 6.3 of the charter, which I did not mention earlier. It requires that

“conciliation, mediation and/or arbitration procedures must be introduced to facilitate the settlement of labour disputes”.

The European Social Rights Committee has held that

“recourse to arbitration should be voluntary (subject to the agreement of the parties) … All arbitration systems must be independent, and the outcome of arbitration may not be predetermined by pre-established criteria. Any form of compulsory recourse to arbitration is a violation of this provision”.

Yet, under this Bill, the remit open to negotiating bodies does not permit them to agree any kind of dispute resolution procedure. Quite the contrary: as we have seen, the Minister has power to override both the agreement of the industrial parties or their disagreement, and to impose an outcome on them—in my view, a wholly impermissible form of compulsory arbitration.

There is no disputing that the UK permits collective bargaining. However, the duty on states ratifying this provision of the charter, as the UK did on 11 July 1962, is not merely to permit; the duty is to promote collective bargaining machinery. It is true that we have legal recognition machinery in the 1992 Act, Schedule A1. However, there is no mechanism in UK law to establish or support sectoral collective bargaining. This Bill is the opportunity to establish that in the many sectors crying out for it, including social care.

I turn to my amendments in this group. Amendment 181 would allow unions and employers to choose their own chair. Amendment 182 would restrict membership to persons nominated by unions and employers. Amendment 183 would restrict third parties to those agreed by unions and employers, and to ensure that they will be in a minority. Amendment 184 would allow discussion of Section 178 matters. Amendment 186 would add training and career progression dispute resolution machinery, discipline and grievance procedures, and anything else the unions and employers want to discuss, to the list of permitted topics. Amendment 187 would broaden the definition of social care worker to that in Section 20 (3) of the Courts and Criminal Justice Act 2015.

Amendment 191 would substitute, where there is failure to agree, a dispute resolution machinery in place of the unilateral power of the Minister to substitute his decision. Amendments 193, 194, 198 and 199 mirror Amendment 192 from the noble Baroness, Lady Noakes, making the output of the process a minimum floor permitting subsequent or indeed prior agreements for more beneficial terms. Amendment 197 would bring in the self-employed, so the arguments are much the same as we have already covered.

As your Lordships will have noted, I also seek to oppose Clause 51 standing part. It gives power to permit the Minister to disapply Section 178 to the adult social care body. I will not repeat the arguments. I beg to move.

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Finally, the noble Lord, Lord Hunt, said that he felt that the remit of the negotiating body was not appropriate for the social care sector, as a one-size-fits-all approach will not work. The remit, as I have said, is stated in the Bill: pay, terms and conditions and other matters. Our discussions with stakeholders will enable us to get it to the right place. I emphasise again that we should welcome this as a novel and direct approach to improving the pay, conditions and status of care workers, which is something we all want to do. I hope the noble Lord will feel able to withdraw his amendment and I maintain that Clause 51 should stand part of the Bill.

[Lord Hendy (Lab)]

My Lords, I thank everybody who has participated in this debate. In particular, I thank the noble Baronesses, Lady Browning and Lady Ritchie, for their Amendment 185. I completely support the idea that training and education should be part of the remit of the adult social care negotiating body. As the noble Baroness, Lady Browning, touched on, training and career progression are expressly part of the remit of school support staff and it seems inexplicable that they are not part of adult social care as well.

I agree with the noble Lords, Lord Palmer and Lord Prentis, that the adult social care negotiating body, in establishing minimum terms and conditions, will play a key part in the improvement of the provision of social care and of course the improvement of the lives of those who provide that care. I was moved by the fact-filled description by my noble friend Lord Prentis of the need for the adult social care negotiating body in that sector.

I realised the other day that the noble Lord, Lord Hunt, and I have known each other a lot longer than I remembered. He mentioned going to the retirement dinner of Albert Blighton, formerly legal officer of the Transport and General Workers Union, and I was there too, but I had forgotten. Of course, I do not agree with much of what the noble Lord has said today.

As for the noble Baroness, Lady Jones, and a certificate in relation to the European Human Rights Convention, I have not argued that there was any incompatibility with that convention. My arguments were about incompatibility with ILO provision and the European Social Charter—two very different things. States cannot pick and choose which of the obligations binding on them they wish to abide by.

With the greatest of respect to the noble Lord, Lord Hunt, I think he misunderstands the nature of collective bargaining—not that I have done much of it myself, but I have been present when it happens and have had a lot to do with its consequences. It is not necessarily a confrontational process; it works collaboratively. That is why it has been so successful for decades—indeed, centuries—now. I was not suggesting—and do not think it ever is—that it is a legalistic process; it is an informal process.

The noble Lord, Lord Hunt, also perhaps misunderstood what I was saying. I was suggesting not a dominant role for trade unions but a balanced role, where trade unions and employers have equal power. It is in their mutual interests to agree future terms and conditions and so on. I say to the noble Lord, as I said to the noble Lord, Lord Sharpe, that I am not suggesting that the subject matter for negotiation should be confined to Section 178 matters, but simply that those should be permissible matters for discussion, and that parties should be allowed to resolve whatever differences may occur between them by negotiation or by a dispute resolution mechanism chosen by them.

In relation to non-employment, or the use of my word “engagement” rather than “employment”, the purpose of that is to ensure that self-employed workers in the adult social care sector are covered by the benefits of whatever negotiations emanate from the social care negotiating body. Why not? Why should they not have the benefit of minimum hours, terms and conditions, and so on? In this sector, there are a lot of self-employed workers, because employers have resorted to that device.

I am grateful to my noble friend the Minister for her full response. I disagreed with one or two points that she made. I do not think it is right to say that Section 178 of the Act is confined to local agreements; that provision in the legislation, of very long standing, applies to all collective bargaining, sectoral or local. I noted that she did not say anything about the international law obligations on which my speech centred. Nevertheless, I am happy to beg leave to withdraw the amendment.

Amendment 181 withdrawn.

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Moved by

[Lord Hendy]

203: After Clause 54, insert the following new Clause—
“Sectoral collective bargaining(1) The Secretary of State may make regulations for the establishment of Statutory Joint Industrial Councils.(2) The regulations shall provide that—(a) a Statutory Joint Industrial Council shall be composed of equal numbers of—(i) nominees of employers’ associations (or nominees of employers) which appear to ACAS to represent employers in the sector, and(ii) nominees of independent trade unions which appear to ACAS to represent workers in the sector,(b) a Statutory Joint Industrial Council shall have the function of conducting collective bargaining to—(i) establish levels and rates of remuneration (including pensions), terms, conditions and other benefits for those who work in the particular sector of the economy;(ii) determine any other matter within the scope of section 178(2) of the Trade Union and Labour Relations (Consolidation) Act 1992 (collective agreements and collective bargaining);(iii) formulate its constitution and procedural arrangements including a dispute resolution procedure; (iv) resolve any other matter which the Statutory Joint Industrial Council desires to consider,(c) any agreements reached by a Statutory Joint Industrial Council shall apply to the workers and employers in the relevant sector save to the extent that a previous or a subsequent contract or collective agreement makes more favourable provision,(d) it is for the Secretary of State (in the light of advice from ACAS) to determine what constitutes a sector of the economy for the purposes of establishing a Statutory Joint Industrial Council, and(e) a Statutory Joint Industrial Council may only be made following consultation with—(i) nominees of employers’ associations (and/or nominees of employers) which appear to ACAS to represent employers in the sector, and(ii) nominees of independent trade unions which appear to ACAS to represent workers in the sector.”Member’s explanatory statement
This amendment is intended to enable regulations to be laid for sectoral collective bargaining in particular sectors of the economy. The concept of the Statutory Joint Industrial Council is taken from s.90 and Schedule 8, Employment Protection Act 1975, reproduced in Part II of the Wages Councils Act 1979.

[Lord Hendy (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Jones of Moulsecoomb, and the noble Earl, Lord Clancarty, for supporting my Amendment 203. It is designed to give the Secretary of State power to establish, after consultation, a national statutory joint industrial council in any sector of the economy which appears to him appropriate. The noble Baroness, Lady Jones, asked me to give her apologies to the Committee for having had to leave.

Amendment 203 is not intended to be mandatory; it is purely discretionary, leaving it up to the Secretary of State as to whether or not he or she wishes to institute a statutory joint council. The negotiating bodies that we have already discussed this afternoon are, without doubt, an improvement on the current situation, especially in light of my noble friend Lord Prentis’s earlier speech on adult social care.

In these circumstances, I regret that I take the role of Oliver Twist and ask for more. But the fact is that many sectors are crying out for sectoral minimum terms set by negotiation—social care and not just for adults, agriculture in England, hospitality, office cleaning, food delivery, parcel delivery, warehousing, garment manufacture, seafaring, bus services, and so on. There are other groups, such as teachers, where there is established collective bargaining across the sector but not on pay. The omission from the Bill of a power to establish sectoral collective bargaining in any sector seems inexplicable.

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[Lord Hendy (Lab)]

My Lords, I am grateful to all noble Lords who have spoken in this debate, in particular my noble friends Lord Barber, Lady O’Grady and Lord Monks for their Amendment 322, which I support. I support any machinery for extending the hearing of the worker’s voice. My preference would be for collective bargaining rather the negotiating body model in the Bill, but if we cannot have the first, let us have the second.

I had the pleasure of spending time with the JIB, which was referred to by the noble Lord, Lord Barber. It is a good example of successful sectoral collective bargaining. Earlier this afternoon, I tried to outline the benefits of collective bargaining. No one in the House has so far denied those benefits; indeed, the noble Baroness, Lady O’Grady, described the disbenefits of not having collective bargaining, which are, I think, acknowledged by my noble friend the Minister. Instead, the defence is that collective bargaining is unworkable or too burdensome. However, the JIB and other extant joint national councils of a voluntary nature, as well as the Whitley councils in the public sector, show that they are not unworkable or burdensome and that sectoral collective bargaining works.

I make two points to the noble Lord, Lord Palmer. First, collective bargaining, even at the enterprise level, benefits non-unionists as well as unionists. Collective bargaining may be reached between a trade union representing only a proportion of the workers in a bargaining unit, but the output covers all workers in the bargaining unit. Secondly—this is a point that I need to make in relation to the contribution from the noble Lord, Lord Sharpe—collective bargaining has been proven not to create unemployment; academic studies and, indeed, studies by the OECD have demonstrated that. In response to the noble Lord, I make the point, in terms of the EU comparison, that unemployment differs from one European country to another. However, one thing is absolutely clear: unemployment in European countries is not caused or related to the extent of collective bargaining coverage.

The noble Baroness, Lady Meacher, asked about the non-membership of trade unions. Tangentially to that, I will make one point: one of the reasons for falling membership of trade unions in this country—and, indeed, in other countries—is the decline in collective bargaining. People will not join trade unions when they know that the trade union will not have a voice in setting their terms and conditions. They would be paying a contribution as just a gesture, without any hope of getting anything back.

I will not deal with all the points made by the noble Lord, Lord Sharpe, but there was one point about the definition of sectors. That has always been problematic, but it has always been resolved. For decades, there have been arguments about the definition of sectors for the purposes of wage councils and joint national councils, but, ultimately, they were all resolved.

In response to my noble friend the Minister, I want to pick up one small point in relation to the proposal that ACAS should have restored to it the duty to promote collective bargaining. ACAS had that duty for decades, and it did not mean that ACAS was partisan in any way. ACAS has always been respected as impartial and independent; having that duty again, in my respectful opinion, would not open it to that sort of criticism.

I recognise, as my noble friend the Minister asked me to, that what is proposed in this Bill is a major step forward. There can be no doubt about that. I acknowledge her commitment to go further; she knows that I would of course prefer to go further now, but I respect her commitment to support sectoral collective bargaining. On that basis, I beg leave to withdraw the amendment.

Amendment 203 withdrawn.

--- Later in debate ---

My noble friend’s amendment does not seek to prejudice outcomes or impose immediate regulatory burdens; rather, it calls for a measured review to examine whether the law as it stands adequately reflects the realities of digital casting platforms and whether performers are appropriately protected in this rapidly evolving environment. I therefore hope that the Government will look favourably on this modest and proportionate proposal. Such a review could, in time, help to ensure that this vital part of our creative economy operates with the clarity, fairness and legal certainty that all participants, performers, casting professionals and platform operators deserve and require.

[Lord Hendy (Lab)]

My Lords, I added my name to this amendment, and the noble Earl, Lord Clancarty, and the noble Lord, Lord Freyberg, have said everything that I wanted to say. I just want to add that it has been a pleasure working with them and with my noble friend Lady McIntosh to endeavour to understand the nature of this dispute. It occurs to me, in the light of what we have been discussing this afternoon, that a good dose of collective bargaining and negotiation might come to the assistance of the parties.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I had not expected to speak at any point during this Bill, and I will do so now only very briefly to express my thanks to the noble Earl and his colleagues for praying my name in aid in relation to this amendment. I really just want to say that I may be the only person in the House—and I am certainly, I think, the only person in this Chamber—for whom a casting directory was the bible of my life for many decades. Therefore, I know exactly how important it is to performers that there should be a trusted published work of some kind to which they can refer their information which can then be the source of potential employment through the work of casting directors and other industry professionals.

I just say to the Minister, when she comes to consider this amendment—which, by the way, I do support, and I have nothing to add or anything I wish to contradict in what has been said so far—that it is important to recognise that this is an extremely delicate ecosystem in which there are many, many people who need to avail themselves, and have done over decades, as we have been told, of the kind of service that a casting director and a casting directory provide. Frankly, for most of all of our lives, it has been Spotlight, but it could be others. The people who need to avail themselves of that service are many in number, and the people who need to use it in order to find out about those people are much fewer in number—mostly casting directors. It is very important that they have a trusted source, that performers can rely on their information being carefully curated, looked after and protected in the way that the noble Earl and the noble Lord, Lord Freyberg, have already outlined, but that we do not disturb the particular delicate relationship between those two aspects of the way that the business works. While I am not in favour of exceptionalism on the whole, I think we do have to understand that this industry operates not always perfectly but certainly in an unusual kind of way, and it is necessary that it continue to do so with the right protections in place.

--- Later in debate ---

[Lord Jackson of Peterborough (Con)]

My Lords, I will speak very briefly to my Amendments 212 and 213. Naturally, I wholeheartedly agree with the excellent points made from our Front Bench by my noble friend Lord Hunt of Wirral, particularly on Amendments 210 and 213B.

My two amendments are probing amendments, essentially, and I think they are very sensible and reasonable. The perhaps slightly more contentious one would restrict these powers to businesses with over 250 employees. I cannot and will not rehearse the arguments my noble friend made about disruption, interference and taking resources and time away from the main job of work in the business. Interestingly, it could be “one or more” trade union officials, so it could be one but it could be 25 going into a small business. We do not know because the clause is drawn very widely and is very permissive. That is Amendment 213.

Amendment 212 is basic good manners and common sense. If you want to facilitate a good relationship between the trade union representatives—properly elected and appointed by the workforce—and the employers, you want an agenda and an objective place that you wish to reach. That might be to avoid industrial action, to look again at a pay offer, to discuss a suspension of a worker or something like that. But what is wrong with giving 24 hours’ notice? It takes the heat out of the potentially disputatious nature of the relationship that you might have between the employer and the trade union representative. I think it is just basic good manners and would make things work better. It does not diminish the role of the trade unionists and it does not undermine their integrity or their bona fides; it just says, “Let’s give 24 hours’ notice to enable a more fruitful and productive relationship to be expedited between the two sides”. For those reasons, I would like the Minister to at least consider the amendments, perhaps with a view to looking at them again on Report.

[Lord Hendy (Lab)]

My Lords, my Amendment 214 is designed to provide an effective remedy against an employer which defies an order of the CAC to provide trade union access. This is a situation where the trade union has applied to the employer for an agreement for access and been refused. The trade union has then gone to the CAC and succeeded in obtaining an order for access, which the employer has defied. The employer has had the opportunity to appeal to the EAT and has either declined to appeal or has had its appeal refused. In that situation, the Bill merely provides that a union can apply for a fine to be paid, not to it but to the CAC. That is no real deterrent and no incentive either for the union to enforce the CAC award, knowing that it will not result in compulsion for the employer to obey the order of the CAC. My amendment provides enforcement by way of a High Court injunction. That is an established procedure often used against trade unions for breach of their obligations in relation to industrial action. Some equivalence is surely justified here.

[Baroness Lawlor (Con)]

I support Amendments 212 and 213 in this group tabled by my noble friend Lord Jackson. I agree that a 24-hour notice period is necessary, particularly for small businesses, because access to the workplace by third parties can be disruptive. Visitors calling unannounced can disrupt a carefully organised schedule between an employer and his or her employees. The 24-hour notice period would allow employers to prepare for a visit and to reschedule certain tasks. I support exempting smaller businesses from some of these arrangements, because it is very hard to organise smaller businesses with third-party interruptions.

Employment Rights Bill

Lord Hendy Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Lord Monks (Lab)]

My Lords, I do not doubt that critics of this part of the Bill speak with a lot of personal experience as well as commitment to their employees and the way they run their affairs. However, let me remind people that the argument that is really coming from the other side—that the qualifying period would be damaging to employment—is the argument as has been used against just about every bit of progressive employment legislation from the Factory Acts onwards. If noble Lords think that that is hyperbole, they should remember the national minimum wage and the campaign that was run against it. None of that came to anything like what was forecast from that side of the House. I have risen briefly to ask the other side of the House to remember that it was wrong on the minimum wage and to consider whether it might be wrong on this as well.

[Lord Hendy (Lab)]

My Lords, I get the impression that there is a bit of a misunderstanding around the nature of employment tribunals. I spent the first half of a long career at the Bar doing employment tribunal cases, many of them unfair dismissal cases. In fact, the first case I ever did—pro bono, by the way—was an unfair dismissal case in 1972, under what was then the very new unfair dismissal legislation. Unfair dismissal cases are difficult for employees to win. Most cases that go to a full hearing result in the employer being vindicated.

I want to make two points. The first is that employment tribunals now have robust procedures for weeding out vexatious cases; such cases never go to a full hearing. Secondly, I remind your Lordships of the law on unfair dismissal in Section 98 of the Employment Rights Act 1996. The test is in two parts. First, the employer must demonstrate that the reason for the dismissal is capability, qualifications, conduct or redundancy or the fact that the employment is in breach of some enactment. Once the employer has shown that that is the reason, the test for the tribunal—I shall read it out—is whether the dismissal is fair, which,

“depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee”.

So all the factors that one would expect to have to be taken into consideration are taken into consideration.

The tribunal then has to determine that,

“in accordance with equity and the substantial merits of the case”.

The Court of Appeal has added yet another burden. When the tribunal decides whether the employer acted reasonably or unreasonably, it is not about what it considers was reasonable or unreasonable; it is about whether it considers that the dismissal fell within the band of responses of reasonable employers. It is at two stages removed. It is not like an ordinary negligence case where the court decides whether an employer was reasonable or not reasonable in putting a guard on the machine. It must decide. Even if it thinks that the decision was unreasonable, if it finds that, nevertheless, reasonable employers would say that it might be possible that the reason was fair, that would be legitimate.

[Baroness Noakes (Con)]

The noble Lord referred to the likelihood of cases succeeding if they got as far as the tribunal. Does he accept that the vast majority of cases that are initiated never get as far as a tribunal because there is a huge incentive in the system for employers to settle? The costs of taking a case right the way through are huge—not just in the monetary cost of employing clever employment lawyers but, in particular, in the diversion of management effort within the organisation. I have seen this in large organisations, where swathes of the management team can be tied up for long periods of time. Employers cannot afford that in the broadest sense. If you put that in the context of smaller organisations, they absolutely cannot cope with it.

Whatever happens at the tribunal and whatever the law says, the mere initiation of an action nearly always results in an economic decision, made by the employer, to settle. That is one of the most difficult aspects and is why extending that into the early period of employment causes so many worries for employers.

[Lord Hendy (Lab)]

I absolutely agree that most cases never get to a full hearing; only a tiny minority ever do. The noble Baroness is right that many cases settle, of course. Many are conciliated, because there is now compulsory conciliation by ACAS, but many are withdrawn by the employee. You have to visualise it, as I am sure the noble Baroness does: most employees bringing an unfair dismissal claim are completely unrepresented. They are on their own, so all the expense, research and preparation that have to be done must be done by them personally. That is a huge disincentive. Many claims—tens of thousands of them—are simply not brought because it is not worth the employees’ while to do it.

[Baroness Verma (Con)]

My Lords, does the noble Lord accept that the case is exactly the same for small employers? They too will be in the position of having to deal with tribunals in the same way—hence why, as often as not, the settlements are taking place.

[Lord Hendy (Lab)]

Of course; that is always the way whenever there is litigation. Whatever the subject matter, people do not want the burden of defending the case and the people bringing the case do not want the burden of bringing it. That is just the reality of litigation.

I will say one last thing before I sit down. The argument that the noble Lords and noble Baronesses opposite have put forward is all about what they perceive to be the consequences of this matter, which my noble friend Lord Monks just addressed. But nobody can seriously advance the case that employers should have the right to dismiss anybody unfairly and without recourse to the law.

[Lord Vaux of Harrowden (CB)]

Does the noble Lord accept that these are not simply arguments that people around this Chamber are putting forward but matters that are in the Bill’s impact assessment? It is the Government’s own statement that the Bill will have these impacts. It is not being made up by any of us: the Government accept that this will be the impact.

[Lord Hendy (Lab)]

That may very well be, but it still does not remove the fundamental point: what is being proposed is a category of worker who can be dismissed unfairly for the most extreme reasons without resort to any justice.

Employment Rights Bill

Lord Hendy Excerpts

Committee stage
Monday 19th May 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

Well, the noble Baroness will not be present at every employment tribunal and hear and adjudicate every case. As my noble friend Lord Young of Acton has said, there is a significant threat of inadvertent issues arising from this legislation, which, as my noble friend Lady Cash has said, is very poorly drafted. As subsection 2(a) of the proposed new clause sets out, it is important to look through the prism of free speech at Clauses 19 to 22.

It is also important to look at the likely costs to employers. This is the central point of my remarks: we do not know what those costs will be. It is certainly appropriate that Ministers be required to tell Parliament what the ramifications are in terms of cost. This is a Government who are committed to growth and to supporting businesses in all their endeavours. Therefore, it would be sensible to consider a review of how these issues impact on businesses.

On proposals for mitigations, there have been no ideas, no protocols, no concordats, and no policies put in place to give any guidance to smaller businesses—I am not necessarily referring to the smallest micro-businesses—to cope with the problems deliberately arising because this Labour Government have chosen to put these encumbrances and burdens on businesses. They are not giving any support to businesses to help cope with this. The costs will fall on the shareholders, on the businesses, and ultimately on the workforce—and it will cost jobs. For that reason, I support the amendment. It does not detract from the important commitment to protect ordinary working people, who deserve to be able to go to work without being bullied, harassed or treated unfairly or egregiously. We all agree with that, on which there is a consensus. It would not detract from that to make an amendment that would provide extra protections against people who are vexatious or malicious, or who cause difficulties in the long run, for no apparent reason. It is a sensible amendment that would protect business and would also protect the workforce.

[Lord Hendy (Lab)]

Can the noble Lord indicate what he thinks the value of an impact assessment is that does not weigh the benefits that ensue from the legislation but only the costs?

Employment Rights Bill

Lord Hendy Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Baroness Carberry of Muswell Hill (Lab)]

My Lords, I follow on from the excellent points that have been made by my noble friends on this side of the Committee by addressing, perhaps more specifically, the letter of Amendment 1. I preface my remarks by saying that I might be new to this, but I am a bit puzzled because I thought that the Benches opposite did not like purpose clauses. In the past, when Labour proposed such clauses, there was some push-back, and this side has been accused of poor practice and of risking provoking unintended consequences.

My main problem with the proposed new clause is that the list provided is not exhaustive and understates the Government’s ambition with this Bill. If we were to put our heads together to produce an exhaustive list of purposes, perhaps we might include the purpose that the Bill helps give effect to the Government’s manifesto promise to make work pay. We might also want to add that the ambition is to help stimulate economic growth, building on the extensive international evidence we have that shows that labour market protections lead to improved economic outcomes, including higher productivity. We might also want to mention that the Bill aims to end exploitative practices and redress the balance between employer and worker, and that it seeks to modernise trade union legislation.

My general point is that perhaps we do not need such an extensive list. I invite the noble Lord, Lord Fox, to clarify for us in his response in what way a non-exhaustive list, as provided in this amendment, is any better in advancing understanding of the intentions of the Bill than no list at all.

[Lord Hendy (Lab)]

My Lords, I too rise to address Amendment 1. It is a pleasure to follow my noble friend Lady Carberry. I am not clear about the purpose of Amendment 1. It seems to me that the Government have laid out the purpose of the Bill in the Long Title. It has been given a very Long Title that sets out its ambit.

What I am clear about, however, is the need for this Bill. Last August, a report by Professor Deakin and Dr Barbakadze of Cambridge University, Falling Behind on Labour Rights, stated that

“on almost every measure of employment protection, the UK is significantly behind the average for other countries in the Organisation for Economic Development and Cooperation (OECD), 38 countries generally understood to be those with a high level of economic and social development globally … As they stand, labour laws in the UK are barely half as protective as those found in France and significantly below other notable European countries … This strongly suggests that there is significant scope for improvement before British labour law is even close to matching that of our nearest neighbours”.

My noble friend Lord Monks mentioned inequality in the United Kingdom in comparison with other countries. The OECD has also considered that. It currently ranks Britain as the eighth most unequal of 40 major economies in terms of income inequality. Among EU member states, only Bulgaria and Lithuania are more unequal than the United Kingdom. The European Participation Index ranks the degree of worker participation in business decision-making in different European countries. The UK is rated 26th out of 28, with lower participation than all countries except Latvia and Estonia.

There are many other metrics by which the current state of play can be judged, and the status quo is simply not acceptable. I will not mention them all, but I will mention just three. First, median pay in this country is currently just over £600 a week. Median does not mean average; it means the pay point of half the working population. In other words, half of workers earn less than just over £600 a week, although half earn more than that. Secondly, of those on universal credit, 37% are actually in work. Thirdly, we find that 6.8 million people are in insecure work; three-quarters of them—that is, some 5 million workers—are in what is described as “severely insecure” work.

The Bill does not do all that I think it should. I had the honour to serve as the legal adviser on the working party that drew up A New Deal for Working People. It is clear that there are major differences. In later debates in Committee, I will seek to move some amendments to redress some of what I consider to be the shortcomings. Overall, however, the need for the Bill is simply unarguable. We cannot go on in the way that we are at present, with workers denied a voice at work, working in insecure conditions and on extremely low pay. The Bill will go a long way to assist in putting that right.

[Lord Empey (UUP)]

My Lords, I hope this Bill does not turn into a Punch and Judy show between employers on one side and organisations and trade unions on the other, because it obviously has a number of meritorious proposals. However, the forensic introduction to the amendment by the noble Lord, Lord Fox, illustrates that this piece of legislation is a work in progress. I understand why the Government deem it so important, but they have to concede that a lot of it is being done on the hoof, which is undermining the Government’s position.

I had the privilege of being Employment Minister in Belfast for three and a half years, and I worked very closely with business and trade unions during that period. The last piece of legislation I did had the racy title—I am sure the Minister would be very happy to adopt it—of the Employment (No. 2) Bill. It is the sort of thing that lets the blood course through your veins. But the one area where we have failed as a country for years and years is skills. We talk about it, we have apprenticeship models, we have this, that and the other, yet we still have not solved the problem. We got rid of the old-style tecs, colleges and so on, and we have been stuck in a rut ever since.

It is obvious that there have been abuses and insecurity, and there is no point in trying to deny that; I listened carefully to what the noble Lord, Lord Monks, had to say. However, there is something that I feel a bit concerned about. We live in a world where, by and large, the major trade unions operate with large employers, whether it is the public sector or big organisations, but the bulk of the industry—the bulk of the growth in employment and everything else—comes from small businesses and micro businesses, and they do not have the capacity or the risk-taking capability in how and when they employ people.

It strikes me that there is a risk of issues creeping into what we are trying to do in this country that could have the unintended consequence of making it less likely for people to employ individuals. We have to look at the international situation. We cannot ignore what is going on. There is a revolution taking place that is having a negative effect. We also have the employer national insurance contribution. We cannot ignore that either; it is a big deal.

--- Later in debate ---

[Baroness Carberry of Muswell Hill (Lab)]

My Lords, I am sorry that I find myself disagreeing for the second time today with the noble Lord, Lord Fox, specifically on the proposition that the right to be guaranteed regular hours should be replaced by a right to request.

My noble friend Lord Barber reminded us that this proposal originally came seven years ago from the Low Pay Commission. In that room were nine commissioners, who produced a unanimous report. There were three independent labour market experts, three representatives of workers and senior representatives from the Federation of Small Businesses, the CBI and big business, and, as I say, the recommendation was unanimous. In that discussion, the Low Pay Commission considered, in the words of the noble Lord, Lord Fox, whether a right to request could operate more effectively than a guaranteed offer on the ground and in the workplace, and the conclusion was that a right to request would not be a better option. That was primarily because you would be asking workers who have the least power in the labour market—the most vulnerable workers—to assert their rights. As we have been reminded, the vast majority of those workers who at the moment request guaranteed hours are turned down.

Another problem, from my point of view, with the group of amendments that are suggesting that there should be a right to request is that they are all silent on the consequences of a denied request. That is a major problem with the propositions in the amendments. In this context, I suggest that a right to request is no effective right at all.

[Lord Hendy (Lab)]

My Lords, I have a small point on Amendments 7 and 11 to 13, which seek to extend the reference period from the current 12 weeks in the Bill to 26 weeks. Last year the Chartered Institute of Personnel and Development published some figures showing the number of workers who stayed in their job for a three-month period, which I take to be some 13 weeks rather than the 12 weeks in the Bill. Some 1.3 million workers worked for less than that period of time, meaning that under the Bill 1.3 million workers will never reach the end of the reference period in order to claim the right. The figures show that if the period were extended to 26 weeks, as the amendments propose, that would cover some 8.9% of all employees, which comes to 2.7 million workers. So the effect of those amendments would be to exclude a further 1.4 million workers from ever being covered by the reference period.

Steel Industry

Lord Hendy Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Hendy (Lab)]

My Lords, the Government are to be congratulated on acting decisively and promptly. Like, I think, the noble Lord, Lord Hunt of Wirral, I came here thinking that we were going to be debating the nationalisation of the steel industry; I confess that I am disappointed to find out that we are not. However, the Bill that the Government have put forward buys space and time for them to put forward a real plan for the saving of the steel industry. I hope that the ultimate decision will be to nationalise the steel industry. It is a national asset, as many speakers have described today—and by “national asset” I do not just mean the blast furnaces, the presses, the cranes and the buildings: the workforce also form a national asset and they deserve to be protected.

The Bill that the Government have put forward demonstrates the complete failure of the privatisation of this industry. I hope the Government will conclude that nationalisation is the answer and I hope, too, that they will consider that remedy for Grangemouth, the water industry and, of course, the energy industry, whose profiteering has done so much damage to the steel industry.

Employment Rights Bill

Lord Hendy Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I congratulate my noble friend the Minister on her elegant exposition of the Bill in opening today’s debate. I also congratulate our four maiden speakers on their excellent contributions. Like the noble Lord, Lord Balfe, I enjoyed the contributions of no less than three former general secretaries and one former AGS of the TUC.

In this debate I appear as Oliver Twist. Although, like others, I express gratitude for the Bill in place of the starvation rations given to workers by the previous Government, I ask for more.

The Bill will confer many benefits on our 34 million-strong workforce, but it is a long way short of the full—but hardly gastronomic—menu in Labour’s Green Paper, A New Deal for Working People, drafted by a committee to which I had the honour to be legal adviser and which was chaired by Andy McDonald MP. A New Deal for Working People was adopted by the Labour Conference in 2021, reaffirmed in 2022, reiterated in Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People, and referenced in both the election manifesto and the King’s Speech.

Time permits me to raise only two of the many items left off the bill of fare. Both are essential to increase pay, and hence demand, in the economy. Both are vital to substitute negotiation for litigation. The first is sectoral collective bargaining: in other words, collective bargaining between unions and multiple employers to reach a collective agreement setting minimum terms across a particular sector called a “fair pay agreement”. A New Deal for Working People committed to introduce them across the economy. Labour’s Plan to Make Work Pay promised to

“start by establishing a new Fair Pay Agreement in the adult social care sector”.

The election manifesto referred to this fair pay agreement as a “sector collective agreement”. In contrast, the Bill makes no provision for sector-wide collective bargaining in any part of the economy. Instead, it expressly provides that the School Support Staff Negotiating Body does not constitute collective bargaining, and that its outputs are not collective agreements. For the Adult Social Care Negotiating Body, the Minister has regulatory power to so rule.

In any event, ministerial control over these bodies’ membership, terms of reference and manner of working, with unfettered power to override any agreement or disagreement, completely negates the definition of free collective bargaining, both in statutory and international law.

My second issue is the right to strike. The Bill sweeps away the minimum service level Act, and most of the Trade Union Act 2016; it simplifies notice and extends ballot mandate. The Government are to be congratulated. But the Bill does not remove the anti-union legislation of the 1980s, which hamstrings unions and has led to a near collapse in collective agreement coverage. That legislation is incompatible in a number of respects with our ratified obligations under ILO Convention 87 and Article 6(4) of the European Social Charter. This is not a matter of opinion. The supervisory bodies have so held consistently since 1989, as my noble friends Lord Barber and Lady Bousted have mentioned. A new deal committed this party to bringing our law on industrial action into line with our international legal obligations. It is a rule-of-law issue. The Bill will need to be amended accordingly.

Nevertheless, the grace and eloquence of the Minister make her singularly ill-fitted to play Mr Bumble.

Code of Practice on Dismissal and Re-Engagement

Lord Hendy Excerpts

Monday 25th March 2024 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, I am confident that the Minister will have read the Second Reading debate of my noble friend Lord Woodley’s Employment and Trade Union Rights (Dismissal and Re-engagement) Bill. I too do not intend to repeat the speech I made then, but I make no apology for repeating the most important points, because they were designed to expose whether the code will be the deterrent that the Government think it will be. I am personally extremely sceptical about that, for two very clear reasons, which I will repeat by way of explanation.

First, while this debate is ostensibly concerned with this somewhat anaemic code of practice, it engages much larger questions of access to justice, the balance of power between employers and workers, and, fundamentally, whether the code does what it purports to do and will shield workers from manifest injustice. Given that the introduction of this code was announced in response to P&O Ferries instituting mass redundancies in March 2022, I think it is legitimate to look back at what the Government said then. The then BEIS Minister, Paul Scully, explained the Government’s new commitment to introduce a statutory code of conduct. He did so in highly emotive and, one might say, colourful language. He described the practice of firing and rehiring as “deceitful” and “disgraceful”, labelled the actions of P&O “appalling” and “unscrupulous”, and vowed that the Government would “stand up for workers” against the flagrant disregard shown by companies that use sudden mass dismissal as a negotiating tactic.

Having raised these expectations, it is no wonder that there is manifest disappointment with the glacial emergence, over two years, of a code of practice that will impinge upon employers only at the point a case reaches tribunal. Testing whether or not that will be a deterrent is what I want to draw the Minister’s attention to. I did this in my contribution to the Second Reading debate, drawing attention to the issues of delay and the coming imposition of fees for tribunals. The Minister who responded to that debate, the noble Lord, Lord Johnson of Lainston, was unable to pick up on those points in his winding up of the debate and offered to write—and, true to his word, he did write. I thank him for attempting to ease my anxieties but I confess that his letter was not wholly successful. Indeed, it was the opposite: it raised the temperature of my anxieties.

The letter began by admitting that there remains a backlog of 32,000 cases in the tribunal system, asserting that reducing outstanding caseload is the key to bringing down wait times, before revealing that:

“Employment Tribunal timeliness data has not been published for some time due to the Employment Tribunal changing their case management system in 2021”.


That was three years ago. We have an assertion that bringing down wait times is essential, followed by a confession that, owing to a change in the case management system three years ago, we are today unable to gauge whether or not wait times are falling.

The viability of this code of practice is entirely contingent on a tribunal system that is effective and can prove timely redress. The fact that we currently, by the Government’s own admission, have no access to the data that would tell us whether it delivers timely redress is absurd, if the Government are to rely upon that as being the ultimate deterrent against this behaviour by the people they described with those very colourful adjectives.

The letter also engaged the question of the Government’s consultation on reintroducing fees at this time, of all times, for those who wish to bring a case before an employment tribunal. I thank the Minister for outlining, in his letter, the details of the help with fees remission scheme, but I remind your Lordships’ House that I raised the case of R (UNISON) v the Lord Chancellor in my speech on Second Reading. It is not mentioned at all in the letter, and I can understand why, because the judgment in this case was unambiguous. It concluded that levying fees was unlawful. It cited the Leggatt report, which specifically identified the absence of fees as one of the three key elements that made tribunals successful, and concluded that fees, however modest, have the effect of preventing access to justice. That was the principal point that I raised in that aspect of my speech, and it was just ignored in the letter I got back from the Government.

I understand the fees coming under consideration are appreciably lower than they were previously, but they will certainly not encourage victims of fire and rehire to have recourse to the tribunal system and may well act as a further discouragement. This is yet another case of the Government telling us that they understand the existence of an injustice, assuring us that their heart is in the right place and they are seeking to right a wrong, but then again balking at doing the needful. We are all familiar with the cases of Tesco, Jacobs Douwe Egberts and Carnival and the other cases that seem to be appearing by the day, some of which the noble Lord, Lord Woodley, referred to, and the way in which employers and others weaponise the power advantage they have and exploit their workers. Rather than institute a non-legally binding code of practice that tells employers what they already know, I believe a more fitting course of action would be to enshrine good practice into law and offer clear redress to workers when they are victims of injustice.

[Lord Hendy (Lab)]

My Lords, I share the regrets expressed by my noble friends. I intend to address the second element in the regret amendment put down by my noble friend Lord Woodley, and that relates to the International Labour Organization, which your Lordships will recall is a tripartite body, consisting of Governments, employers and workers. The United Kingdom was a founding member in 1919; it was the first signatory of the fundamental convention on freedom of association—convention 87—in 1949; it is a member of the governing body; and it is represented on the Committee on Freedom of Association.

The relevance of that is that, on 8 November last year, the governing body approved the 404th report of the Committee on Freedom of Association, which reported on the P&O Ferries saga of St Patrick’s Day 2022. Your Lordships will recall that 786 seafarers were dismissed on that date and only 100 were subsequently reinstated. The other jobs were given to agency staff. The Committee on Freedom of Association, as approved by the governing body, made three substantive recommendations, none of which, so far as I can see, is reflected in the code of practice.

The first recommendation related to collective bargaining. The committee said that it

“urges the Government, with the social partners, to ensure mutual respect for the commitment undertaken in collective agreements, which is an important element of the right to bargain collectively and should be upheld in order to establish labour relations on stable and firm ground”.

In many of the instances of fire and rehire mentioned by my noble friend Lord Woodley, there have been established collective agreements and established collective bargaining. That was the case with P&O Ferries, where collective agreements stretching back nearly 100 years were flouted.

Employment and Trade Union Rights (Dismissal and Re-engagement) Bill [HL]

Lord Hendy Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Hendy (Lab)]

My Lords, it is a pleasure to follow my noble friend Lady O’Grady. I too compliment my noble friend Lord Woodley on securing the Bill. I declare my trade union interests as in the register.

Fire and rehire is widespread, as my noble friends Lady O’Grady and Lord Woodley and the noble Lord, Lord Balfe, have demonstrated. It places workers in an awful dilemma: they must accept a cut to their standard of living or face unemployment. The anguish of that horrible choice needs little elaboration at a time when real wages have been stagnant since 2007.

The Office for National Statistics reports that median regular pay in November 2023 was as low as £27,588 per annum, which means that half the working population —16 million workers—earn less. Indeed, a quarter of the UK’s workers earn less than £16,068 per annum. No wonder the Joseph Rowntree Foundation, in its report UK Poverty 2024, estimates that 14.4 million people were in poverty in 2021-22 and nearly 3.8 million people experienced destitution,

“an extraordinary 148% increase over just five years”.

That is significant, because TUC research shows that fire and rehire is used predominantly against the lower paid, and disproportionally represented among the lower paid are, naturally, women, ethnic minorities and those with a disability.

The use of the tactic is not just bad for the workers on whom it is inflicted; it is bad for the economy. According to the ONS, the UK’s economy grew by 0.1% last year and has declined since. Reducing the spending power of workers shrinks the economy still further. That is a powerful reason to address this obnoxious practice.

Currently the tactic is lawful so long as the employer gives the employees the minimum notice of dismissal—contractual or statutory, whichever is the longer. The risk of a successful unfair dismissal claim is minimal for the employer that can show an economic need to reduce labour costs—what the legislation calls “some other substantial reason” for the dismissal. Even if that defence fails, the employer can argue that the offer of reduced terms was reasonable in the circumstances, and that dismissal for rejecting it was not unfair. So in effect the potential 25% uplift on compensation under the proposed code of practice is useless, as my noble friend Lord Woodley said and as the P&O Ferries scandal to which my noble friend Lady O’Grady referred shows, in relation to statutory capped compensation.

Fire and rehire is currently lawful because the law allows both the employer and the employee to give notice to terminate the contract of employment. For that fundamental reason, it is impossible to ban the practice, yet the tactic is plainly unacceptable where it is deployed simply to exploit managerial power in circumstances where the business faces no existential threat.

Its use may at least be understandable, if still not acceptable, in the rare situation where a business faces a dire and sudden crisis. The Bill allows for that so, as my noble friend Lord Woodley has pointed out, it does not ban fire and rehire. Instead, it imposes modest procedural obligations on employers seeking to reduce labour costs in this way. It applies only to establishments with 50 or more employees. It applies only where there is shown to be a real threat to continued employment or to contractual changes likely to affect 15 or more employees. In those circumstances the Bill imposes two obligations on employers. The first is to consult with a view to reaching agreement to avoid dismissals or contractual changes. Those consultations will be, as elsewhere in the legislation, with representatives of recognised unions or elected representatives. The second obligation is to disclose the information necessary to have meaningful negotiations and as required for good industrial relations.

There is an exception for information whose disclosure would seriously harm the undertaking or be contrary to the interests of national security. Any disputes over disclosure can be referred to the industrial relations expertise of the Central Arbitration Committee. Likewise, a dispute over whether there is proper consultation or proper disclosure can be referred to the CAC, which can then either refer the complaint to ACAS for conciliation or determine the complaint itself and make an order. In the case of non-compliance with a CAC order, a worker’s representative can seek a court injunction to compel compliance or to render void any dismissals or contractual changes in breach of the order.

Alternatively, a worker offered re-engagement on different terms may obtain an employment tribunal declaration if the tribunal concludes that the employer breached the Bill’s requirements of consultation and disclosure. In that case, “just and equitable” compensation may be ordered in respect of losses attributable to the dismissal or contractual changes. An employment tribunal may also declare that any “less favourable” variation of a contract of employment is void if brought about by the threat of dismissal where the consultation and disclosure obligations have been breached.

Where an employee is dismissed for refusing a contractual variation, “some other substantial reason” will no longer serve as a justifiable defence; and the two-year qualifying period for unfair dismissal protection will not apply. Dismissal in breach of a CAC order or a collective agreement will render a dismissal automatically unfair. The remedy of reinstatement or re-engagement is strengthened by the Bill in these circumstances.

The Bill will also relieve trade unions of the procedural burdens in relation to industrial action in response to an employer’s proposal to vary terms and conditions under threat of dismissal. The Bill provides that the Secretary of State must be notified of situations giving rise to the obligation to consult, and it will be an offence on the part of the undertaking and of any responsible director or manager not to do so.

By these means, so long as the employer does its reasonable best to consult and disclose, it has nothing to fear from litigation and can achieve variation of terms and conditions, if necessary by compulsion. I commend my noble friend Lord Woodley’s Bill to the House.

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

Lord Hendy Excerpts

Tuesday 19th December 2023 Lords Chamber

[Lord Offord of Garvel (Con)]

Well-run companies can operate only with the consent of their workforce. Well-run bosses run companies well with the consent of their workforce. Therefore, no well-run company wants to be a position where there are disputes with its workforce except in extremist situations. Bringing in agency workers is never a panacea, and is quite often more expensive. Well-run companies would not want to do that. It would be only in extreme situations where I could ever envisage this happening.

[Lord Hendy (Lab)]

My Lords, on 20 June 2016, the relevant committee of the International Labour Organization called on the Government to review the proposal to revoke Regulation 7 with the social partners—that is to say the unions and employers’ associations—bearing in mind that

“the use of striker replacements should be limited to industrial action in essential services”.

The Government’s response was to undertake to the ILO that they would conduct such a review. However, by 13 July this year—seven years later—in the judgment to which the noble Lord refers, the Government had not done so. Will they do so now?

[Lord Offord of Garvel (Con)]

To be very clear, the appeal was put forward on two bases: the first was on the lack of consultation and the second was on the merits of Article 11. The court did not find on the second, only on the first. Therefore, the consultation is being done between now and mid-January, with a view to collecting views from all registered parties so that a decision can be made in the future or not.

Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023

Lord Hendy Excerpts

Wednesday 13th December 2023 Grand Committee

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, on 12 May 2023, the Government launched a consultation on three areas that could benefit from reform and where we could remove unnecessary bureaucracy: record-keeping requirements under the Working Time Regulations; simplifying annual leave and holiday pay calculations in the Working Time Regulations; and consultation requirements under the Transfer of Undertakings (Protection of Employment) Regulations—the TUPE regulations. The consultation sought views on proposals for these areas of retained EU employment law to ensure that they are tailored to the needs of the UK economy.

I turn first to the record-keeping requirements. The Working Time Regulations are derived from the EU working time directive and create various entitlements for workers, including minimum rest breaks and maximum working hours, as well as an entitlement to paid annual leave. While the regulations provide important protections to workers, they can also place disproportionate burdens on business in relation to recording working hours and other administrative requirements. That is why we consulted on removing the effects of a 2019 judgment of the Court of Justice of the European Union, which held that employers must have an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured. Our proposed regulations make it clear that employers will not be required to keep burdensome and disproportionate records of daily working hours of each worker. Instead, employers will need to keep adequate records to demonstrate compliance with their working time obligations—I stress that point. This clarification could help to save businesses around £1 billion a year, without changing workers’ rights.

I assure noble Lords that people will continue to be able to enforce their rights under these regulations. Workers can take a case to an employment tribunal where they feel they have not been permitted to exercise their rights under the Working Time Regulations, including the rights to annual leave and to daily and weekly rest. The Health and Safety Executive, other state enforcement bodies and local authorities can also directly enforce maximum working hours and record-keeping requirements. It is important that employers comply with the Working Time Regulations and that they are held to account if they do not.

I turn to the Transfer of Undertakings (Protection of Employment) Regulations 2006. Before a TUPE transfer, the current employer and the new employer need to consult the affected workforce’s existing representatives or arrange elections for employees to elect a new representative if they are not already in place before the transfer. We want to simplify the process for businesses where worker representatives are not already in place. Currently, micro-businesses have the flexibility to consult directly with workers rather than hold elections. The SI would extend that flexibility to small businesses, with fewer than 50 employees, undertaking a transfer of any size and to businesses of all sizes involved in transfers of fewer than 10 employees if there are no existing employee representatives in place. That means that they will not be required to undertake the time-consuming process of arranging elections for new employee representatives.

This reform will simplify the TUPE process, while ensuring that workers’ rights continue to be protected. It does not erode the role of trade unions in the work- place. We are only proposing changing the consultation process in instances where businesses do not have employee representatives to consult. Where employee representatives, including trade unions, are in place, employers will still be required to consult them. I make it clear that the reforms will not change the requirement for businesses to consult employees on transfers; they will only change the requirement to elect employee representatives if they are not in place. Clear guidelines remain in place for employers regarding what they must consult employees on. Employers who fail to properly consult their employees about TUPE transfers could be taken to an employment tribunal.

The regulations also introduce reforms to holiday entitlement and pay. We have defined irregular-hours and part-year workers in these regulations to ensure that they are clear to employers and workers to whom some of the reforms apply. How a worker is classified will depend on the precise nature of their contractual working arrangements. We encourage employers to ensure that working patterns are clear in their workers’ contracts. We recognise that there are a vast number of different working patterns. The definitions seek to take all of these into account, so that the regulations are relevant for modern working practices. We will keep them under review.

I turn now to the holiday accrual method for irregular-hours and part-year workers. The regulations respond to the 2022 Harpur Trust v Brazel Supreme Court judgment. This resulted in part-year workers being entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year. To address this disparity, the regulations introduce a simplified method to calculate holiday entitlement for irregular-hours and part-year workers. This will be calculated as 12.07% of hours worked in a pay period, in the first year of employment and beyond. This accrual method was widely used before the Harpur Trust judgment and better reflects what workers actually work in a leave year. The introduction of this accrual method could save businesses up to £150 million over the long term.

The regulations also introduce a method to work out how much leave an irregular-hours or part-year worker has accrued when they take maternity leave, family-related leave or sick leave. Introducing a 52-week reference period will allow employers to look back and work out an average of hours worked across that period. Employers will need to include weeks not worked and not on maternity leave, family-related leave or sick leave so that leave is proportionate to the time actually worked. This will ensure that workers are not unfairly disadvantaged when on maternity leave, family-related leave or sick leave. For example, if an irregular-hours worker goes on maternity leave, her holiday entitlement is reflective of how much she worked in the 52 weeks prior to going on maternity leave.

We are also legislating to allow the introduction of rolled-up holiday pay for irregular-hours and part-year workers. Rolled-up holiday pay is where an employer includes an additional amount with every payslip to cover a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave. We consulted on introducing rolled-up holiday pay for all workers. However, taking into account stakeholder feedback, rolled-up holiday pay will be introduced as an additional method of calculating holiday pay for irregular-hours and part-year workers only. Employers do not have to use rolled-up holiday pay for these workers if it does not suit their business; they can continue to use the 52-week reference period to calculate holiday pay.

Employers that use rolled-up holiday pay will calculate it based on a worker’s total earnings in a pay period. This will avoid the complexity of applying the rolled-up holiday calculation to different rates of holiday pay. Despite the fact that it has been unlawful since the 2006 European Court of Justice case of Robinson-Steele v RD Retail Services, rolled-up holiday pay is already used in a lot of sectors due to the simplicity that it offers to calculate holiday pay for irregular-hours workers. Allowing holiday pay to be paid as an enhancement to a worker’s pay at the time that the worker performed work instead of when they are on holiday will ensure that the worker’s holiday pay is as closely aligned as possible to the pay that they would have received. Rolled-up holiday pay also ensures that a worker receives the holiday pay that they are due even if they work for that business for only a short period of time. For example, an irregular-hours worker who works for a company over a period of three months will receive holiday pay as part of each payslip.

We note the concerns that allowing rolled-up holiday pay may disincentivise workers from taking leave. Compared with full-time workers, people who work irregular hours and part-year contracts are already likely to have periods when they are not working and, as a result, these concerns are less applicable. We also consider that existing safeguards are proportionate in addressing these concerns. For example, employers are already required to provide an opportunity for workers to take leave and we have heard through our stakeholder engagement that this is taking place. We also have safe- guards in relation to the 48-hour working week, where a worker cannot work more than 48 hours a week on average, unless they choose to opt out.

I turn now to the issue of retaining two rates of holiday pay and distinct pots of leave. We consulted on a further reform: the introduction of a single annual leave entitlement with a single rate of pay. We will not introduce this as part of the package. These regulations maintain the two distinct pots of annual leave and the two existing rates of holiday pay, so that workers will continue to receive four weeks at the normal rate of pay and 1.6 weeks at the basic rate of pay, totalling 5.6 weeks. Following a review of case law in this area and engagement with stakeholders, we are legislating to restate the case law in respect of the four weeks of leave. This is to ensure that workers continue to receive pay for those weeks at their normal pay rate, rather than having the whole pot paid at the basic rate, which for some workers can be a reduced amount. The intention is for workers to continue to enjoy the same rates of holiday pay from 1 January as they do now. We would like to assess the take-up of rolled up holiday pay and then consider more fundamental reforms to the rate of holiday pay. This will allow employers to continue with their current payroll systems, while providing clarity on what elements form part of normal remuneration.

I turn to restatements and revocations. In addition to these reforms, the statutory instrument revokes the European Cooperative Society (Involvement of Employees) Regulations 2006 and the Working Time (Coronavirus) (Amendment) Regulations 2020. The main European co-operative society regulations were repealed in 2021 and the regulations on involvement of employees therefore no longer have any effect in practice. The Covid regulations referred to in the statutory instrument were introduced as temporary legislation intended to prevent workers from losing annual holiday entitlement if they were unable to take it due to the effects of Covid. Therefore, these regulations are clearly no longer needed.

The scope of the statutory instrument is limited to Great Britain, other than the revocation of the European Cooperative Society (Involvement of Employees) Regulations 2006, which extends to Northern Ireland. Employment law in Northern Ireland is a transferred matter.

In addition, the statutory instrument mitigates the risk that the removal of interpretive effects on employment law could lead to a reduction in workers’ rights by restating the following three principles: the right to carry over annual leave where an employee has been unable to take it due to being on maternity or other family-related leave or sick leave; the right to carry over annual leave where the employer has failed to inform the worker of their right to paid annual leave or enable them to take it; and the rate of pay for annual leave accrued under regulation 13 of the working time regulations.

Northern Ireland has its own employment legislation. Accordingly, any secondary legislation on this would be for the Northern Ireland Executive, or the Northern Ireland Civil Service in their absence, to decide, with support from the UK Government to legislate if needed.

Although interpretive effects will cease from the end of 2023, the Government’s position is that the UK will remain in compliance with our international obligations under Article 2 of the Windsor Framework. The REUL Act’s restatement powers are available until June 2026. Therefore, the UK Government and the Northern Ireland Civil Service will keep all decisions on restatements under continuous review in both Northern Ireland and Great Britain.

As mentioned, the Government’s approach to restatements seeks to mitigate the risk that the removal of interpretive effects on employment law could lead to a reduction in workers’ rights. We undertook an analysis of the employment law, including domestic and EU legislation and case law, to assess the full extent of the risk that certain principles would be lost. Our assessment concluded that the three principles we are restating carried a high level of risk of being lost because they are largely or wholly dependent on the special features of EU law that are removed by the 2023 Act with effect from 1 January 2024. Therefore, the instrument will restate the three principles before the end of 2023 to ensure these employment rights continue, notwithstanding the removal of the special features of EU law by the 2023 Act. We are confident that these changes comply with our international legal obligations, including those in the EU-UK Trade and Cooperation Agreement.

In conclusion, under this Government we have seen employment reach near record highs. The number of payroll employees for September 2023 was 30.2 million, 370,000 higher than this time last year and 1.2 million higher than before the pandemic. Through Brexit we regained the ability to regulate autonomously, and we are using these new freedoms to ensure that our regulations are tailored to the needs of the United Kingdom economy. In addition to providing cost and administrative savings for businesses, these reforms aim to provide clarity on complex holiday pay legislation so that it is simpler for employers to follow and comply. Approximately 5.1 million workers will be affected by the holiday pay reforms. By simplifying the legislation, workers will receive the holiday entitlement and holiday pay that they are entitled to, and the restatements of the three principles mentioned above will retain existing rights. I beg to move.

[Lord Hendy (Lab)]

My Lords, this draft statutory instrument is the tip of the iceberg which noble Lords on this side of the House warned would appear over the horizon during the debates on the Retained EU Law (Revocation and Reform) Act 2023. Workers’ rights are on a collision course with it. We said that the Act would be used to remove workers’ rights. We moved amendments to try to protect those rights, but they were all rejected by the Government. For example, the then Minister, the noble Baroness, Lady Neville-Rolfe, said:

“I should say straightaway, as my noble friend Lord Callanan already has, that this Government have no intention of abandoning our strong record on workers’ rights, and nor are the delegated powers intended to undermine the UK’s high standards on workers’ rights.


Our high standards were never dependent on our membership of the EU. Indeed, the UK provides for stronger protections for workers”.


She then gave some examples.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

As always, I thank noble Lords for their valuable input in this crucial statutory instrument debate. I also join in the thanks to the noble Viscount, Lord Stansgate, and welcome him to his position.

I will try to go through the various points raised, beginning with those of the noble Lord, Lord Hendy; by answering some of his questions, I will have a chance to answer others as well. The point about rolled-up holiday pay is important because, if you are an irregular-hours contractor and you work for an employer for a very short period of time, for example, it would be impractical for you to take a fraction of a day’s holiday paid in that way. It is much more reasonable, useful and suitable for the employee to have their holiday pay rolled up into the work they are doing.

This is important, and we consulted on whether we should bring it in for all employees in the UK. We decided that that was very much not the right thing to do, precisely for the reasons raised by the noble Lord: it is essential, in many respects—in order to have a good and functioning workforce—that holiday is taken at the right time and that people have the right level of rest, let alone in relation to the implications for health and safety. As a result, this only applies to part-year and irregular-hours workers. Whether the employees wish to receive their pay in that way is at the discretion of the employer, in consultation with them. From my point of view—I have been an employer—this strikes me as eminently reasonable. It does not necessarily change anything significant; it just clarifies the important point about how that can be rolled up. We also brought in important clarifications between part-year workers’ holiday entitlements and irregular hours workers’ holiday entitlements, which now bring them into line. Again, this is about fairness, which I know that the noble Lord is keen on.

On record-keeping, it is relevant to mention the court case that has been referred to: CCOO v Deutsche Bank—I will use the acronym “CCOO”, rather than try to pronounce the full name. It is important to note that we are not changing anything at all. I am not sure whether noble Lords realise that this was never implemented in the UK, so the point is that we will not implement it in the UK and it is currently not implemented. Tomorrow morning, or whenever the statutory instrument comes into effect, there will be no change in employment systems for any company—no one would see any difference—because we are not implementing this necessity to track every minute of every worker’s day. Instead, employers will have the rights that they have today, so if we are comfortable—which we are—with the obligations that employers have to confirm under the working time directive, we should be very comfortable with where we are.

We believe very firmly that bringing in this necessity would in many instances be unnecessary. This does not relate to making sure that irregular-hour workers, workers in part-time roles or those who work complex shifts, and so on, have worked the right amount of time. In most instances, this is for regular office-hours workers who work roughly nine to five; to have them clocking in and out, and having complex systems monitoring them, is entirely unnecessary. We do not do it now and do not see why we should do it. We think that the cost to industry in this country could be much as £1 billion in terms of new systems and familiarisation.

The noble Baroness, Lady Brinton, mentioned Ukraine. The consultation referred to the fact that in a cost of living crisis, and with other global headwinds and challenges, it would seem unnecessary and wrong to impose burdens on businesses that we are not already imposing on them. There is nothing to lose. It is important to be reassured that employers’ obligations have not been changed. There are no changes as a result of this instrument. It simply ensures that we do not have to conform to unnecessary and restrictive paperwork-oriented activities.

The noble Baroness, Lady Brinton, also raised an important point about the use of AI and technology. I completely agree with her raising those points. I do not think it is in doubt that employers will want to use AI to ensure that they are conforming to their obligations and that their workforces are properly managed, but we should not forget that it is important that we respect small businesses in this country, which may not have the time or capital to invest in such systems. In most of these instances, we think it is unnecessary. I believe that, collectively, we are doing a sensible act in not implementing this judgment, by keeping things as they are and ensuring that workers are protected. Employers have obligations and we are allowing the system to function appropriately.

The third point covered by noble Lords was on TUPE. I know that the noble Lord, Lord Hendy, has been described as the barrister champion of the trade union movement, and it is a title of which he should be proud, but this relates to organisations with fewer than 50 employees—currently, it relates to organisations with fewer than 10 employees—who do not have a representative force in place. While he is indeed the barrister champion of the trade union movement, it may surprise him to know that some companies do not have trade union movements or representative organisations in them. We find ourselves in a bizarre situation where small companies with few employees are obliged to have elections for representative organisations that do not exist. Even in the world of the noble Lord, that would seem bizarre, unnecessary and indeed unkind to small businesses. It does not at any point derogate the rights of employers when it comes to TUPE transfers where there are representative organisations.

The noble Lord, Lord Leong—perhaps it was the noble Baroness, Lady Brinton, or the noble Lord, Lord Davies—rightly raised whether this can be used as a way round, so that large companies transferring small units to other companies could do it piecemeal, say 10 employees at a time. I do not believe that that would be the case. The obligations of an employer under TUPE regulations—the liabilities accruing to them—have not changed in any material way whatever. Tribunals where they could be found at fault would clearly see through such a plan. I am sure noble Lords know that when you buy businesses that are relevant in terms of team transfers to other companies, it simply does not work in that way, so I do not believe there can be an abrogation of rights.

Let me give an example, which I am sure noble Lords will agree is common sense: if you are transferring a small unit of two people, I understand that you are currently obliged to have an election and a representative for two people who are not members of a union and do not have a representative organisation. That does not mean they cannot receive external advice; of course, we would always advise people to receive the advice they need. In this instance, we are clarifying the situation, simplifying it and making it completely reasonable. At no point are we rolling back on any of the workers’ rights that we hold so strongly in this country and which we are committed to, either through trade agreements with Europe or any agreements that we have undertaken.

Genuinely, I have looked very carefully at each aspect of this statutory instrument and think it is a welcome tidying-up of paperwork and bureaucracy, alleviating burdens on businesses while at the same time simplifying the rights of workers and ensuring that the economy can function effectively. I commend this instrument to the Committee.

[Lord Hendy (Lab)]

I wonder whether the Minister would care to say something about the trade and co-operation agreement. If he does not want to, that is for him.

[Lord Johnson of Lainston (Con)]

I am always delighted to talk about the trade and co-operation agreement, as it is one of my favoured specialist areas, but I am not sure what the noble Lord wants me to refer to. If he is relating this back to the relationship with the CCOO v Deutsche Bank SAE case, the important point is that we have not brought this into effect as it stands, in any event, so I am not sure what the relevance there is. I cannot really see how his comments on the need to protect workers’ rights in terms of derogation of input production capabilities in relation to our European colleagues are relevant here. These are paperwork changes; they do not negatively change the rights of any workers in the UK.