Employment Rights Bill

Lord Londesborough Excerpts

Report stage
Monday 14th July 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, it is a genuine pleasure to follow my noble friend Lord Wolfson, who speaks with genuine authority and deep experience on this important subject.

Amendments 2, 3, 4 and 5 stand in my name and that of my noble friend Lord Hunt. I shall start with Amendment 2, about which we have just heard, which is also signed by my noble friend Lord Wolfson. Clause 1 requires employers to offer guaranteed-hours contracts to low-hours workers after a reference period, but, as we have heard, the Government still have not defined what low hours actually means. That is not a minor technicality, because at this stage it makes the policy unworkable.

We are hearing that the Government prefer to define low hours as 16 hours per week, but we have also heard that is too high. We saw some different data. According to the British Retail Consortium, only 5.5% of retail workers are on below eight-hour contracts, while nearly 20% work between eight and 16. Raising the threshold to 16 hours would mean that employers are forced to repeatedly make contractual offers to one in five workers, most of whom are in regular, stable, part-time work. It is a dramatic expansion, with, as we have heard, very major consequences. As we have also heard, some of those consequences are higher employment costs, increased complexity, particularly for small businesses, and, inevitably, job losses.

Retail, hospitality and leisure businesses will respond rationally to risk. That means fewer short shift roles, fewer flexible contracts and less tolerance for marginal labour hours. Some will restructure and some will reduce headcount, but others—especially small businesses—will just close. If the Government define low hours at 16, they will directly accelerate redundancies and reduce employment opportunities for those with caring responsibilities, students and others who depend on part-time jobs. We have also just heard very powerfully about the effect on entry-level employment, illustrated with some very stark statistics.

This is not speculation; it is how businesses operate. A badly defined threshold forces risk-averse behaviour and the effect will be the opposite of what is intended. An eight-hour threshold would limit the burden to genuinely casual contracts. That is a workable, proportionate and sensible approach. Anything beyond that is unmanageable and would be economically reckless. The Government need to listen.

On Amendments 3, 4 and 5, the Government have indicated that they are considering setting the reference period for guaranteed hours at 12 weeks. During Committee on 29 April, I asked the Minister which businesses support a 12-week reference period; at that time, she was unable to name a single business. It is now nearly two and a half months later, and I am confident that she will still be unable to provide an answer as to how many businesses, particularly small businesses, support a 12-week reference period.

The reality is that no meaningful business sector has endorsed this 12-week period. It is simply out of touch with the realities of running a business, especially in sectors such as retail, hospitality and leisure, where work patterns fluctuate widely with the seasons, weather and customer demand.

A 26-week reference period is far more practical. It would better capture seasonal cycles, provide clarity and stability for employers and employees alike and significantly reduce the administrative burden of constantly reassessing guaranteed hours. Without a longer reference period, employers will simply reduce hiring on 12-week contracts to avoid triggering this costly and complex obligation. That will not protect workers; it will diminish their opportunities and increase their precarious nature. I therefore urge the House to support the amendments put forward by me and my noble friends. We have set the reference period at 26 weeks. This is sensible, it is a workable compromise, and it will protect workers’ rights while respecting the operational realities of businesses.

To turn lastly to Amendment 1 in the name of the noble Lord, Lord Goddard, which my noble friend Lord Hunt of Wirral and I were happy to sign, it makes no sense to require employers to offer guaranteed hours to employees who do not want them. The Government appear to misunderstand or simply disregard the autonomy of the individual worker. Imposing this administrative burden, especially on small employers, to calculate and offer guaranteed hours where they are neither wanted nor needed is an unnecessary and unavoidable cost. We therefore strongly support the right to request amendment proposed by the noble Lord, which better respects worker choice and employer flexibility.

[Lord Londesborough (CB)]

My Lords, I support all the amendments in this first group, but I shall speak briefly to Amendment 9 in the name of the noble Baroness, Lady Noakes, which, as she explained, is an amendment to the Government’s Amendment 8, and Amendment 22. I want to interrogate the wording of the Government’s Amendment 8. We have a 309-page Bill. There is a lot of concern outside, at the coal face, from businesses about definitions and what the Bill means. This is a good example:

“In exercising the power under subsection (6) the Secretary of State must, in particular, have regard to … the desirability of preventing this Chapter from having a significant adverse effect on employers who are dealing with exceptional circumstances”.


Can the Minister explain how these exceptional circumstances are defined, and how significant does the adverse effect need to be for it to be regarded by the Secretary of State?

I ask that mindful of the latest survey from the Federation of Small Businesses, just a couple of days ago, which surely signals significant adverse effects for the majority of small and micro-businesses. For the first time in its history, the FSB reports that more UK small firms expect to shrink, sell up or shut down over the next 12 months than anticipate growth. The FSB’s Q2 small business index shows that 27% of small businesses expect to contract, close or be sold, outstripping the 25% which are planning for growth, and it marks the first time that the balance has tipped towards pessimism since the index began. As the noble Baroness, Lady Noakes, points out in her amendment, there is no need to layer “exceptional circumstances” on to already significant adverse effects on employers. It would be far neater, of course, to exempt small and micro-businesses from Clause 1, as I and many others argued throughout Committee.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I first thank your Lordships’ House for the extensive engagement, debate and scrutiny that this Bill received throughout Committee. Indeed, we have held over 50 engagements with noble Lords from across your Lordships’ House since the Bill left the other place. As we progress Report, I need to remind noble Lords that the Government were elected on a manifesto commitment to make work pay. This Bill marks the first phase in delivering that commitment. Once implemented, it will raise the minimum floor of employment rights, provide a level playing field for businesses which are already engaged in good practice and raise living standards across the country. Alongside the new industrial strategy, the Bill will support our mission to increase productivity and create the right conditions for long-term, sustainable, inclusive and secure economic growth.

Turning to the amendments, I have listened carefully to the comments of the noble Lord, Lord Goddard, on Amendment 1. I remind noble Lords that as of March 2025, there are around 1 million people on zero-hours contracts in the UK. About 33% of them have been with their current employer for less than 12 months and 51% for less than two years. These are the most vulnerable individuals in the workforce. The Government are therefore committed to ending exploitative zero-hours contracts, which the noble Lord, Lord Goddard, quite rightly describes as “precarious employment”.