Employment Rights Bill

Lord Leigh of Hurley Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 94, tabled by the noble Baroness, Lady Noakes, and Amendment 159, tabled by the noble Lords, Lord Sharpe and Lord Hunt, both of which I have signed. I also support the amendment in this group tabled by the noble Lord, Lord Leigh, which calls for some scientific and statistical significance in polling a representative group of SMEs on the impact of certain provisions in the Bill. This Government’s consultation with SMEs is, to put it politely, curious and opaque, lacking, so far, any meaningful numbers or quantified response, and with barely any names. Consultation carries little weight if it lacks statistical credibility.

The entirely sensible and pragmatic amendment tabled by the noble Baroness, Lady Noakes, seeks to hand the Secretary of State regulatory tools to bring in exemptions to Part 1 for certain groups or sectors, for specified periods of time, should he or she decide that these are appropriate.

Noble Lords may remember that the Government were offered similar powers of exemption by amendment in the NICs Bill earlier this year, voted through enthusiastically by Conservatives, Liberal Democrats and the majority of Cross-Benchers, only to receive the custard pie treatment in the other place under the cloak of financial privilege, which was a great pity. The noble Baroness has, very generously in my view, made the same offer again, and I hope it gets a more constructive response this time.

For there is broad consensus across business that Part 1 of the Bill will have a significant impact on the jobs market, especially for SMEs, but let us be frank: the degree or level of impact is highly unpredictable. If we see the sorts of outcomes suggested by membership surveys from such bodies as the ICAEW and the FSB, then the Secretary of State would be well advised to grab the option of these exemption tools with both hands rather than doggedly sticking to a one-size-fits-all mantra.

Turning briefly to Amendment 159, seeking the disapplication of certain provisions for small and micro-businesses with fewer than 50 employees, this gets my wholehearted support. I will spare the House a repeat of my arguments in Committee. But for the Government to argue, as I am sure they will, against this amendment, because they do not want to create a two-tier workforce, simply does not reflect economic reality or indeed the jobs market or the structure of businesses.

SMBs cannot compete with large businesses when it comes to pay scales, training, promotion opportunities, pensions and a whole range of other benefits. That is a reflection of their size, their culture and their stage of development, yet they succeed in delivering strong employee loyalty and identification. This is true of family businesses, start-ups and scale-ups. To apply all the provisions in this Bill, and specifically those listed in this amendment for disapplication, to a micro-business employing five staff as it does to a multinational employing 10,000 is wilfully indiscriminate and, I suggest, economically illiterate. That is why I put my name to the amendment.

[Lord Leigh of Hurley (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Londesborough, and, of course, my noble friend Lady Noakes. I shall speak to my Amendments 106, 153, 155 and 184. The main thrust of the first amendments is to force the Government to listen to real concerns of the SME community who, frankly, even at this late stage, are unaware of the effects of this Bill. They are too busy trying to keep afloat in a difficult economic environment, where the painful costs of NICs and other tax rises are kicking in.

I declare an interest as an adviser to many SME businesses in my career at Cavendish plc and, to the extent that it is relevant in union matters, as a Conservative Party treasurer. We have not yet heard from any Labour Party Back-Benchers today, but I am sure that, if we do, they will declare their interests in respect of union membership.

Turning first to Amendment 106, which relates to Part 1 of the Bill, we are constantly told by the Labour Front Bench that they want to consult with business—indeed, they repeated that today. They want to consult with business, but they fail to disclose who exactly they are consulting with, let alone what they are being told by those businesses and their representative bodies. I suspect that is because they are embarrassed by the backlash against the severity of this Bill from SME and micro employers, who will make it clear to the Government that this Bill will mean they are less likely to employ more people and much more likely to let people go as the burden of employment is ratcheted up. I am grateful to the noble Lord, Lord Vaux of Harrowden, for reminding us of the Labour Party manifesto’s commitment to consultation.

If the Government are so confident of the benefits of this Bill for all businesses, why not agree to engage with them? This proposal is really very modest: just 500 companies out of some 5.5 million in the UK. It is not unreasonable to ask the Government to be honest with us and tell us what the reaction of the SME community is and what are its concerns, particularly as we know there has been a shocking lack of impact assessments for this Bill. We know that the recent CIPD survey revealed that 79% of organisations expect these legislative changes to increase employment costs.

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[Lord Katz (Lab)]

I apologise for interrupting the noble Lord’s flow, but I feel that his comments on political funds go a fair way outside the scope of the amendments we are speaking to today. There will be plenty of time to discuss political funds next week on Report.

[Lord Leigh of Hurley (Con)]

With the greatest respect, I do not know if the noble Lord has read my amendment, but that is exactly the point. The point is that before the Bill is passed there should be consultation on these proposals, but there is no opportunity for consultation because they are implemented at Royal Assent. The Government keep telling us that there will be a consultation, but how can there possibly be consultation if the measures come in at Royal Assent?

Still, I am grateful to the noble Lord for that interruption because it proves the point. It also allows me to explain to him another payment from the Unite political fund, which he may not be aware of, to the Marx Memorial Library. I kid you not—you could not make it up. I am sure the members of Unite are thrilled to know that their hard-earned wages are going to support the Marx Memorial Library, but when the Bill becomes an Act, in a matter of months, they will no longer have the right to see that disbursement.

If that is what Unite wants to do then that is up to Unite, but surely it should not be covered up. All I am asking at this time is that proper consultation on the effects of Parts 4 and 6 should take place before this is ramrodded through on the statute book without any proper consultation and discussion with, as the Government like to call them, “relevant stakeholders”. It is on Amendment 106 that I will probably be seeking to test the opinion of the House today.

[Lord Howard of Lympne (Con)]

My Lords, I rise to support these amendments and declare my interests, as recorded in the register, as the chairman of three businesses that would undoubtedly qualify as small enterprises.

I was provoked into intervening in this debate by an observation made by the Minister when she replied to the last debate. She said to your Lordships that if an employer dismissed an employee for cause, as set out in the Bill, the employer would have nothing to worry about because the tribunal would find in their favour. Very long ago I practised in the field of employment law, and I saw at first hand the consequences—often very damaging, sometimes disastrous—for a small business of having to spend the time, trouble and expense involved in contesting a case at the tribunal, even if ultimately, it was successful. In the real world, faced with that predicament, employers often find themselves obliged to settle these cases, again at considerable expense, even if the application is completely unmeritorious and would stand scant chance of success, were it ever to come before the tribunal. That factor ought to be taken into account.

My question to the Minister, the noble Lord, Lord Leong, is this. Attention has been drawn today to the impact assessment, particularly by my noble friend Lord Sharpe of Epsom, who pointed to the increase in the number of tribunal cases that would be a consequence of the Bill. To what extent did that impact assessment take into account disputes that were not actually taken to the tribunal and were settled by the employer, who could not afford the consequences of contesting the case at the tribunal, but which would nevertheless involve substantial, damaging and sometimes disastrous consequences for the employer?

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[Lord Leong (Lab)]

My Lords, if the noble Lord starts throwing statistics around, I can throw statistics at him as well. As I said earlier, the Deloitte survey shows that the UK is the top destination for businesses. In fact, the Chancellor’s speech at Mansion House yesterday was very much welcomed by the City of London. All the financial services say that London will be the destination for fintech investment. Furthermore, KPMG’s recent consumer index says that people are feeling that they have more money in their pocket and are starting to plan holidays for the summer—good for them.

[Lord Leigh of Hurley (Con)]

I am sure the Minister will want to be very clear on this. I think the Deloitte survey he refers to was in respect of inward investment only, probably because the UK is regarded as a cheap place, given what has happened to us in the last month, whereas the chartered accountant survey is specifically on business confidence, which has fallen every quarter for the last four quarters. One wonders what happened four quarters ago to prompt that.

[Lord Leong (Lab)]

We got into government one year ago, after 14 years. Business confidence was very low then, and at the same time unemployment was on the rise. At the end of the day, we are making progress. The figures will take time to change, but I am confident that confidence will grow. Inward investment is coming in, which means more investment in business and growth. Furthermore, the FTSE index reached the 9,000 mark yesterday. What does that say? People have confidence to invest in British companies, so let us not talk down the economy.

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

My Lords, I want to take this opportunity to correct what I think has been a mischaracterisation of the TUC briefing, which makes it very clear that the right to be accompanied includes, yes, trade union reps but also workmates. I also want to correct what is a misunderstanding of the spirit of the right to be accompanied, which was very much about dealing with grievances, disciplinaries and procedures within a workplace. Hence, when a union is recognised by the employer and the worker is a member of the union and chooses their union rep to represent them, that is a good thing. Our experience is that that is about resolving issues at an early stage. Likewise, a worker may choose a workmate to represent them—somebody inside the organisation who can take a practical, common-sense view of dealing with a grievance and disciplinary procedure.

During the debates on the Bill, we have heard a lot about the worries of ending up in employment tribunals, disputes being protracted and lawyers and others who maybe want to make a pretty penny from representing workers in trouble. Noble Lords will find that many employers, like workers, want to keep resolution of those issues within the workplace because that is often the quickest, more effective and cheapest way that everybody concerned can sort out problems when they arise. Surely it is in resolving issues that we should all share an interest.

[Lord Leigh of Hurley (Con)]

I rise to say simply that, in my experience, I have found that employees want to bring with them family members, often parents—particularly women want to bring a parent—and I am not sure that this will allow that anymore.

[Lord Sharpe of Epsom (Con)]

I thank the noble Baroness, Lady Fox of Buckley, and the noble Lord, Lord Palmer of Childs Hill, for their amendments and their introductions. I speak strongly in favour of these amendments, which address a crucial gap in the rights currently afforded to workers.

At its core, this is about fairness, autonomy and dignity; it is about giving working people real choice and a real voice when it matters the most. As we have heard, under the current law, a worker facing a disciplinary or grievance hearing has the right to be accompanied, but only by a fellow worker or a trade union representative. What of the workers who are not in the union, which, as the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lord Ashcombe pointed out, is most of them? What of those who work in small businesses, where asking a colleague to attend is uncomfortable or perhaps even counterproductive? What of those sectors in which peer support simply is not realistic? We must not confine workers to a narrow and outdated list of whom they are allowed to bring into the room at a time of maximum stress and uncertainty. As the noble Baroness, Lady Fox, so powerfully illustrated with her real-world examples, that causes problems.

This amendment would bring common sense, compassion and modern flexibility into law. This is about worker autonomy, trusting people to decide whom they need in the room with them. If we are truly to modernise employment rights, either amendment should be accepted.

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Moved by

[Lord Leigh of Hurley]

106: After Clause 26, insert the following new Clause—
“Consultation on Part 1(1) The Secretary of State must initiate a consultation on the effects of the provisions in Part 1 of this Act.(2) As part of the consultation under subsection (1), the Secretary of State must ensure that views are specifically sought from at least 500 small and medium-sized enterprises (SMEs).(3) The Secretary of State must lay before each House of Parliament, within 18 weeks of the initiation referred to in subsection (1), a report on the outcome of that consultation, including a summary of responses received from SMEs.”Member's explanatory statement
This amendment requires the Secretary of State to undertake a consultation on the effects of the provisions in Part 1 and to ensure that at least 500 small and medium-sized enterprises (SMEs) are consulted as part of that process.

[Lord Leigh of Hurley (Con)]

My Lords, the Labour Party manifesto promised consultation; it has not happened. The Minister, when batting away amendments promises consultation, and it has not happened. The SME community of this country is petrified about provisions in Part 1 of the Bill. They want to be heard, and I think noble Lords do as well. I wish to test the opinion of this House.