Employment Rights Bill

Lord Hunt of Wirral Excerpts

Report stage
Monday 14th July 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I thank the noble Lord, Lord Goddard of Stockport, for his amendments. I agree very much with the approach my noble friend Lord Ashcombe has taken. We are fully in agreement that workers deserve reasonable notice of shifts. That is a fair and modern expectation. What we cannot accept or support is the way the Government have approached this issue. It is, in effect, vague in definition, burdensome in practice and, yet again, deeply disconnected from the operational realities faced by employers.

The term “reasonable notice” has been left entirely undefined in the legislation. That is not just an oversight; it creates legal uncertainty and leaves both workers and employers unclear about their rights and responsibilities. The result is a framework where expectations are high but there is no guidance; guidance is absent. I hope of course that the Minister will reassure us on this. It would be a very good move on the part of the Government to accept Amendments 10 and 11.

The real concern is how all of this interacts with other government-imposed obligations, especially, as the noble Lord, Lord Goddard of Stockport, pointed out, for small businesses, which form the backbone of our economy. The Minister knows this well as he has unrivalled experience in that sector. Let me just spell it out. The current proposals amount to what is virtually a threefold financial cost to the employer in the event of an unavoidable change, such as an employee calling in sick on the day of their shift. First, the employer will be required to pay statutory sick pay from day one—a new obligation introduced without sufficient support or transition for small businesses. Secondly, under these proposed rules, the original shift could not simply be cancelled without consequence. The employer would be expected to pay the sick worker for the shift they can no longer cover, even though it is not worked. Thirdly, and most significant of all, the employer would then need to pay another employee to come in and cover the shift. In effect, the employer is paying twice for the same shift, on top of sick pay. That is not just inconvenient; it is, for many small businesses, financially unviable.

Let us take a common example of a pub with a garden space, with staffing that depends very much on the weather forecast. If rain is expected, the manager may need to scale back staffing. Under these rules, they may be required to pay the original shift, notify the worker within a fixed timeframe and compensate them if notice is too short. These decisions are often necessarily made on the morning of a shift, based on changing conditions. The flexibility that currently exists, therefore, is lost and replaced with what amounts to bureaucratic process and financial risks.

These are not hypothetical scenarios. In hospitality and retail, rotas are often agreed through informal co-operation: workers swapping shifts with each other, or managers responding to customer demand or staff illness in real time. What the Government now propose would stifle that practical environment, replacing it with a rigid system that suits neither party. Yes, we of course support the principle of fair notice, but fairness must apply to both sides. Businesses need clarity, practicality and financial sustainability; workers need predictability and respect. These goals, surely, should not be mutually exclusive. They will be undermined, not advanced, by unclear obligations and rules that are unworkable. That is why we support a clearer, more defined approach to notice periods: one that will give employers confidence, support workers’ rights and reflect the real dynamics of modern shift work.

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

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

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

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

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

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

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

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

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

--- Later in debate ---

Moved by

[Lord Hunt of Wirral]

28: Clause 10, page 38, line 12, leave out paragraph (b) and insert—
“(b) in subsection (2), for “four” substitute “two”.”Member's explanatory statement
This amendment preserves a minimum one-day waiting period for statutory sick pay, by reducing the qualifying threshold from four days to two, rather than introducing a day-one entitlement.

[Lord Hunt of Wirral (Con)]

My Lords, Amendment 28 simply asks for a degree of common sense. It would preserve a minimum one-day waiting period for statutory sick pay by lowering the qualifying threshold from four days to two, rather than removing the threshold entirely, as the Government now propose.

We have heard a great deal from the Benches opposite about bad employers, and indeed there are some, but the Government must also acknowledge the other side of the coin. Just as some employers abuse the system, so, too, do some employees. To pretend otherwise is disingenuous and undermines the credibility of the entire framework.

In fact, before the Government’s recent and embarrassing U-turn on benefits reform, Ministers rightly spoke about the perverse incentives created by aspects of the welfare system. The logic there was sound, and the same logic applies here. If we remove all barriers to claiming statutory sick pay, even for a single day, and do so without checks or balances, we create a system that is not only vulnerable to abuse but risks becoming a disincentive to return to work.

Let me be absolutely clear. This is not about denying support to people who are genuinely unwell. It is about preserving the integrity of statutory sick pay so that it remains sustainable, trusted and workable for businesses, particularly small ones. A one-day waiting period is a modest safeguard, not a punishment. It would discourage spurious claims, uphold personal responsibility and give smaller employers a fighting chance in a tight and unpredictable labour market.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

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

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

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

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

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

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

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

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

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

[Lord Hunt of Wirral (Con)]

My Lords, I would like to thank all noble Lords for their contributions to this important debate. I am particularly grateful to my noble friend Lady Noakes for reminding us all that one of the great difficulties we have in debating a subject such as this is the lack of a reliable evidence base, and that is particularly relevant to the debates on these amendments. The noble Baroness, Lady Fox of Buckley, quite rightly drew our attention to the unintended cultural issues, which worry us all so much and to which the Minister has just referred.

I remain wholly unconvinced by the Minister’s response when debating the removal of the waiting period for statutory sick pay. To remove any waiting period at all, and to introduce a day one entitlement without qualification, is not just a step too far but an unnecessary one. Having at least one waiting day does not undermine the Government’s stated intention to support those who are genuinely unwell. It is a modest safeguard that reflects the balance they claim to seek, and its removal creates perverse incentives at a time when we should be doing all we can to encourage people back into work.

On the issue of agency work and statutory sick pay, the Minister’s response is equally unconvincing. I did try to outline a scenario where individuals go off sick, claim SSP and then begin new assignments, while continuing to receive sick pay from another employer. I do not believe that the Minister adequately addressed that point. I suggest that perhaps we ought to put our heads together and try to find another solution. Having listened carefully to the debate, a system-wide mechanism, possibly administered by HMRC, to cross-check SSP claims across employers could serve as a much-needed safeguard. Perhaps she might reflect further on that on that idea, because I believe that such a mechanism would not target those with legitimate dual employment. We recognise that some workers genuinely hold more than one job in a given week, but it would introduce a basic layer of validation—a simple tool to distinguish between valid and dishonest claims. Without it, businesses, particularly small and agency employers, would remain exposed to fraudulent or inadvertent overclaims that could cost them thousands of pounds, all in the name of a policy that currently lacks real oversight.

I thank my noble friend Lady Coffey and the noble Lord, Lord Goddard of Stockport, for their important probing amendment. It has been a useful and interesting debate, but we still search for the solutions that will meet the problem. I urge the Government, in their phased consultation, to listen to businesses from across the board as they highlight their concerns. In the meantime, I beg leave to withdraw the amendment.

Amendment 28 withdrawn.