Employment Rights Bill

Lord Leong Excerpts

Committee stage
Monday 16th June 2025 Lords Chamber

To give the Minister due notice, I tabled an amendment to the commencement clause such that commencement is delayed specifically in respect of SMEs, as defined by the Small Business, Enterprise and Employment Act, to allow them to understand what is in the Bill and plan accordingly. I very much hope that the Government are in listening mode.

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

My Lords, I thank all noble Lords who contributed. I will pick up the points that the noble Baroness, Lady Verma, and the noble Lord, Lord Leigh, made about SMEs. Last Wednesday, I gave a speech at an event on the Commons Terrace to a group of SMEs. Most of them were B Corp companies. I think there were about 2,000 of them. I spoke to them about what we are doing with this Bill. I must say, the atmosphere in the room was actually very supportive. Every one of them said that they welcomed the Bill. In fact, some of them said they would do more than what the Bill is doing. So what the noble Lord, Lord Leigh, said about the Government not talking to SMEs is basically not true. We are in constant, regular conversations, whether it is me, Minister Jones or the Secretary of State; we have meetings, including with officials, with all kinds and sizes of business on a daily basis.

I thank the noble Lord, Lord Sharpe, for his amendments, which were spoken to by the noble Lord, Lord Hunt. The Bill provides that a number of clauses related to the repeal of the Trade Union Act 2016 will commence two months after Royal Assent. This includes clauses related to the notice and mandate period for industrial action, trade union political funds and simplification of industrial action notices, which the Government consulted publicly on from October to December last year. We have been clear about our intention to repeal the great majority of the Trade Union Act 2016—it was a manifesto commitment—which places unnecessary red tape on trade union activity that works against their core role of negotiation and dispute resolution.

More generally, the Bill provides for a number of provisions in Part 4 to come into force on or two months after Royal Assent, while other provisions can be commenced via regulations. These amendments would frustrate those intentions by allowing no part of Part 4, covering all of the provisions regarding trade unions and industrial action, to commence until a report following consultation on the effects of the provisions in Part 4 has been published. The further consultation suggested is not required, given that the Government regularly engaged with business, employers, members of the public and unions in advance of introducing the Bill.

The plan to make work pay was established in collaboration with businesses, trade unions and business organisations, and the Government continue to undertake comprehensive engagement. Furthermore, we have been continuing to provide many opportunities for everybody to input into the development of the Bill. For example, we ran a public consultation with all stakeholders—unions represented only 16% of the respondents on specific trade union-related measures in Part 4—from October to December last year. That was open to all to enable the consideration of their views. The Bill will, of course, continue to be subject to parliamentary scrutiny in the usual way, and we will also be conducting further public consultation.

[Baroness Verma (Con)]

Can the Minister tell me what percentage of the consultation was among BME businesses?

[Lord Leong (Lab)]

I thank the noble Baroness for her question. I do not have the figure, but I will find it out and write to her.

The Bill will, of course, continue to be subject to parliamentary scrutiny in the usual way. We will also be conducting further public consultation on certain parts of Part 4 where there is detail to be set out in secondary legislation or codes of practice. Further consultation of the kind envisaged by these amendments before Part 4 can come into force is therefore not required.

These amendments run counter to the Government’s manifesto commitments, as I said earlier. They seek to delay the commencement of essential parts of the Employment Rights Bill with no valid justification and would hinder the delivery of improved workers’ rights. I therefore ask the noble Lord, Lord Sharpe, to withdraw his amendment.

[Lord Leigh of Hurley (Con)]

Will the Minister clarify something? In relation to the jolly reception he went to on the Terrace where the delegates were rapturously applauding the introduction of the Bill—in fact, going further—did he say that they were all from B Corp companies, with all the ramifications that brings?

[Lord Leong (Lab)]

I would not say all, but most of them were members of B Corporations.

[Baroness Noakes (Con)]

Further to that point, will the Minister clarify whether he is talking about medium-sized companies, which might just about cope with the bureaucracy of being a B Corp, or about the vast majority of businesses in this country, which are small and micro companies? There is a big difference between companies with fewer than 50 employees, or fewer than 10 in the case of microcompanies, and those that run up to 250 employees. The issues are quite different.

[Lord Leong (Lab)]

I thank the noble Baroness for her question. I am very clear about micro-businesses, medium-sized businesses and small businesses. At the event I attended, we had everybody. Not all were B Corps. We had owner-run businesses, businesses with just one or two employees and medium-sized businesses as well.

[Lord Hunt of Wirral (Con)]

My Lords, I am disappointed that the Minister does not wish to engage in responding positively to this amendment. My noble friend Lady Coffey put it very much in context, and my noble friend Lady Verma stressed again the complexity of what we are talking about so far as small and medium-sized enterprises are concerned. My noble friends Lord Leigh of Hurley and Lady Noakes further put questions to the Minister, to which I do not think he has responded positively.

I say once again that I cannot see why the Government cannot accept this amendment. On trade union recognition, for instance, there has been no consultation at all. Yet this is a major change. It is the “etc” in Part 4 that I get worried about. Part 4 is described as:

“Trade unions and industrial action, etc”.


There is so much here that has not been consulted on. I agree with the Minister that there has been some consultation, but have the Government really listened to the results of that consultation? Why have they not consulted more widely, particularly on trade union recognition? I think this is an aspect to which we will have to return on Report. In the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Hunt of Wirral (Con)]

I always have tremendous respect for the noble Lord, Lord Davies of Brixton, in particular his knowledge of pensions, because he, like me, is an actuary. Whereas he is a true actuary, I am just an honorary fellow of the Institute and Faculty of Actuaries, so I always respect his views.

I am not sure there is very much I can say in intervening between him, his Secretary of State and the Minister. All I will say is that his amendments represent a shift from a consultative culture to a more legalistic and punitive model. That would be a shift at great cost. Like him, I believe that people are entitled to proper pensions and proper security. Like him, I fought on many occasions to ensure that that is an enforceable right.

I do not want to anticipate what the Minister will say, but we have to consider the employer’s perspective. We all want to see businesses offer generous, flexible benefit schemes—things such as pension contributions, healthcare and travel allowances—but if those are brought into tight regulatory definitions and packages, and enforcement frameworks, I worry that some employers might feel discouraged from offering them at all. I await the response of the Minister.

[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Hunt, for his contribution, and my noble friend Lord Davies of Brixton for tabling Amendments 264, 265 and 324.

I respect my noble friend’s concern for upholding rights relating to pensions. The power in Part 2 of Schedule 7 would allow us to extend the fair work agency’s remit to cover enforcement of pensions legislation in the future, but it would not be appropriate to make this expansion to the fair work agency’s remit at this time. Changing how pensions are enforced would be a significant undertaking, requiring careful consideration, consultation and planning, not least regarding how the fair work agency would interact with the current Pensions Regulator. Therefore, I must respectfully resist these amendments.

Amendment 324, also in the name of my noble friend Lord Davies of Brixton, seeks to ensure that pension arrangements are covered by the definition of remuneration. While I understand my noble friend’s concern here, this amendment is not necessary and its introduction would have far-reaching implications across the Bill. While pension arrangements are already covered by some of the provisions in the Bill, it brings forward issues around sectoral collective arrangements, which I am sure my noble friend would not want to frustrate. So while I appreciate the intentions of my noble friend Lord Davies of Brixton, I respectfully ask him to withdraw Amendment 264.

[Lord Davies of Brixton (Lab)]

I thank my noble friend the Minister for his remarks. I am unpersuaded but, at this stage, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lady Coffey for her amendment in this group and for her introduction. I will speak to Amendments 266 and 267 in my name. These amendments are not presented in opposition to the spirit or general objectives of the Bill. Indeed, we fully support the aims of enforcing employment rights and ensuring that bad employers do not undercut fair ones. These amendments respond to a real and serious concern about the breadth of the power that the Bill currently gives to Ministers—a power that, if left unchecked, would allow a future Government to expand the remit of the fair work agency with far-reaching consequences but only the most minimal parliamentary oversight.

Paragraph 35 of Schedule 7 allows the Secretary of State to add to the list of enactments that fall under the enforcement remit of the fair work agency by way of regulations. That list, set out in Part 1 of Schedule 7, includes a range of statutory rights covering pay, working time, sick pay and protections against exploitation. The current drafting allows for the addition of any enactment that relates to employees, workers, employers or trade unions. That is an extraordinarily broad formulation. It would allow the Secretary of State to bring into the fair work agency’s scope virtually any area of employment or labour law, potentially even those governing union recognition, industrial action or collective bargaining, by secondary legislation and with no meaningful boundary in statute.

Amendment 266 seeks to address this by narrowing the scope of this delegated power. It would limit the types of enactments that can be added to those that relate to hours, pay or holidays. These are, after all, the core minimum terms and conditions of the employment relationship. They are well understood, capable of objective enforcement and already subject to statutory minima in other parts of the Bill. They also reflect the matters over which the recognised trade unions typically have statutory bargaining rights. There is, therefore, a clear and principled rationale for limiting the fair work agency’s enforcement jurisdiction to these domains.

We put forward this amendment on the grounds that it is both reasonable and proportionate. It would still allow Ministers to respond to emerging issues in labour markets, such as new forms of pay abuse or evasion of working time rules. It would, however, prevent this power being used to draw the FWA into controversial or contested areas of employment law, or into territory where individual enforcement through tribunals is more appropriate than systemic enforcement by a regulator. It would preserve the coherence of the agency’s function and protect against mission creep over time.

We anticipate that Ministers will argue that this amendment is too prescriptive and does not allow sufficient flexibility to bring in related rights that may not neatly fall into the categories of pay, hours or holidays, but that are none the less important for fair work—for example, information rights, certain protections from detriment or emerging contractual abuses not yet addressed by current law. The Government may say that drawing such hard lines in primary legislation is undesirable and that a degree of discretion is necessary for effective future-proofing.

If the Government do not accept Amendment 266 on the grounds that it is too narrow, it follows that the strength of Amendment 267 becomes even more essential. This amendment would require that any regulations made under paragraph 35 be subject not merely to the affirmative resolution procedure but to the super-affirmative resolution procedure, which I know the noble Baroness, Lady Jones, is fond of, as defined in Section 18 of the Legislative and Regulatory Reform Act 2006.

The super-affirmative procedure is not some theoretical or obscure mechanism. It exists precisely for circumstances such as this, where Parliament grants the Executive a broad power to amend the application of primary legislation by secondary means. The procedure ensures that Parliament is properly consulted, that draft regulations are subject to scrutiny before they are laid and that there is an opportunity for representations to be made, considered and reflected in the final statutory instrument.

The two amendments offer a choice. If the Government agree with us that the power to amend Schedule 7 should be tightly confined, they can accept Amendment 266. If they prefer to retain flexibility, they must accept that that comes with the responsibility of subjecting that power to a higher standard of parliamentary scrutiny, in which case Amendment 267 is the minimum safeguard necessary. What would be constitutionally unacceptable is for the Government to reject both amendments, leaving in place a broad and undefined power exercisable by ordinary affirmative resolution. That would be to hand the Executive a blank cheque over the shape and scope of labour-market enforcement in this country, without adequate safeguards in place.

To conclude, I urge the Government to consider carefully the implications of paragraph 35 as currently drafted. It is not enough to say that Ministers do not intend to use this power in a wide-ranging or politically contentious way. We are legislating not just for the current Secretary of State but for future ones, too. If the Government want discretion, Parliament must have oversight, and if they want latitude, we must have safeguards. The amendments give the Government the opportunity to make a choice: define the limits of this power clearly or accept the heightened scrutiny that wide powers properly demand.

[Lord Leong (Lab)]

My Lords, I thank the noble Baroness, Lady Coffey, for tabling Amendment 264ZA, which concerns the fair work agency’s remit. I also thank the noble Lord, Lord Sharpe of Epsom, for Amendments 266 and 267, which seek to alter the delegated powers in Part 2 of Schedule 7.

Amendment 264ZA would seriously restrict the fair work agency’s ability to tackle labour exploitation of a more serious nature where the threshold does not meet the requirement under the Modern Slavery Act. There are no other enforcement provisions in the Bill that would cover this scenario. Currently, a number of Gangmasters and Labour Abuse Authority investigations have to be abandoned when the modern slavery threshold is not met. Since 2023, 104 cases have been dropped. That is bad for labour abuse victims and for taxpayers.

We are adding elements of the Fraud Act to the fair work agency’s remit precisely to address this issue. It will allow the fair work agency to investigate cases of financial fraud by abuse of position. That has specifically been included within the Bill following extensive discussions with stakeholders, including the Gangmasters and Labour Abuse Authority and the Home Office. Removing the Fraud Act offences from the fair work agency’s scope would truly limit the agency’s effectiveness, and I must therefore respectfully resist this amendment.

Amendment 266, tabled by the noble Lord, Lord Sharpe, would drastically narrow the scope of the power. This would undermine the very purpose of the fair work agency, which is to simplify and consolidate the enforcement of labour market legislation. The fair work agency will be greater than the sum of its parts as its remit is further expanded. This will relieve pressure on a struggling employment tribunal system, which I have heard many times from noble Lords across the aisle.

The power to expand the fair work agency’s remit has appropriate safeguards and limitations. Any expansion of its scope will be informed by the advice from the agency’s tripartite advisory board, and with consideration of the overall enforcement strategy. Furthermore, any changes to the remit will be through affirmative-resolution regulations that will be laid before Parliament and, where relevant, will require the consent of the relevant Northern Ireland department. This power is crucial to the long-term flexibility of the fair work agency. By enabling the remit to expand over time, it can respond to developments in the labour market. If we were to restrict the power to such a narrow range of issues, we would be tying our own hands.

Amendment 267, also in the name of the noble Lord, Lord Sharpe of Epsom, would require that a super-affirmative resolution procedure be used when the Secretary of State exercises the delegated power in Part 2 of Schedule 7. In my almost three years in this House when the party opposite was in government, I never heard them bring any super-affirmative resolution in any of the Bills they brought before this House, so I do not understand the sudden change of heart.

This amendment is unnecessary. The Bill provides for appropriate parliamentary scrutiny as use of this power will be subject to the affirmative resolution procedure. I also highlight that the recent report by the Delegated Powers and Regulatory Reform Committee did not raise any concern with this power as currently drafted. The additional scrutiny this amendment calls for would place unneeded burdens on parliamentary time, which is currently stretched. With this point in mind, I ask the noble Baroness to withdraw Amendment 264ZA.

[Baroness Coffey (Con)]

I thank the Minister for that comprehensive response to my amendment. To be candid, if that had been in the Bill’s Explanatory Notes, it might have made life easier. As the Minister knows, the creation of this fair work agency, with the novel powers it is going to have, is one of the reasons why my noble friends on the Front Bench have been pushing for the super-affirmative procedure. We will briefly get into a bit more discussion about the advisory board, but it is those elements—recognising the novel powers—that we are concerned about. With that, I withdraw my amendment.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lady Coffey for her amendments that comprise this group, and I speak in support of them. They bring much needed clarity and constitutional discipline to the question of to whom the Secretary of State may delegate important public functions.

Clause 89, as drafted, grants the Secretary of State, as my noble friend has explained, broad discretion to delegate enforcement and other key responsibilities to a public authority. However, the current definition of that term is overly expansive. It could include not only departments under direct ministerial control, but also non-ministerial departments and other bodies with a degree of operational independence from the Government, which raises fundamental issues of accountability.

If enforcement powers, which could be potentially intrusive and far-reaching, are to be delegated, they should be exercised by those within the direct chain of ministerial responsibility. They are civil servants who operate under the authority of Ministers and who are, in turn, accountable to Parliament. Amendment 267ZA, therefore, rightly confines the scope of Clause 89 to public authorities that are comprised of civil servants and are not non-ministerial departments. That would ensure such functions are not handed to bodies that lack clear ministerial oversight or democratic accountability.

Amendment 267AA serves as a necessary consequential safeguard because it ensures that any legal substitution of the Secretary of State with another authority in the eyes of the statute is similarly limited to such core public bodies. Without this clarification, we risk a situation where statutory references to ministerial powers are extended, potentially without scrutiny, to entities with a more ambiguous constitutional status. This is not about casting aspersions on the competence or integrity of non-ministerial departments. Many do good work, but they are deliberately designed to operate at arm's length from Ministers. They should not be the recipients of powers that the public rightly expects to be exercised under ministerial responsibility.

[Lord Leong (Lab)]

My Lords, I thank the noble Baroness, Lady Coffey, for Amendment 266A, 267ZA, 267AA and 267AB.