Employment Rights Bill

Lord Londesborough Excerpts

Report stage
Monday 21st July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I support all the amendments in this group but will speak specifically to Amendments 129, 131 and 145 tabled by the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, to which I have put my name.

Increasing the right of trade union access, as well as lowering the membership thresholds and the required percentages for action, is, as we know, applying right across the board, whatever the size of the business or organisation. It is Part 4 of the Bill, as the noble Lord, Lord Hunt, just highlighted, that is causing considerable alarm and nervousness among SMEs, particularly small, micro and family business owners. I know this through multiple meetings with business owners and the steady flow of emails into my inbox.

At this point I remind the House of my interests as a chair of, adviser to and investor in a range of small start-ups and scale-ups. One of the key issues that keeps being raised by entrepreneurs and business owners is workforce culture, performance and collaboration within teams, which are so vital to achieving productive, profitable and ultimately sustainable businesses.

These employers are not simply against any sort of unionisation of their workforce. In many cases they can see the merits, but they are very concerned about the enhanced provisions of access in the Bill and the potential impact on owner/employee relations, teamwork and, indeed, the increased time that will need to be devoted to changing induction paperwork, negotiating with staff and their unions, facilitating meetings and possibly having to work with the Central Arbitration Committee and the fair work agency, which will have the right of entry to their businesses and, indeed, to their records.

In an era when we as a nation desperately need to see real economic growth, especially per capita growth and productivity advances, this part of the Bill threatens to dampen those prospects and distract owners and management from this core mission. Among small businesses, there is also the danger of creating divisions unnecessarily between owner and workforce and, indeed, between members of the workforce itself. I know this is not the Government’s intention, but we run the risk of damaging these unique cultures that we see in start-ups and family businesses.

In short, whatever the Government’s rather confusing claims on consultation, the SME community—which, as we have heard, accounts for nearly 17 million jobs and £2.8 trillion turnover per annum—clearly does not feel that it is being heard, let alone consulted. Amendments 129 and 131, in particular, seek to address this, in what I believe is a considered and structured way.

First, we need to see structured and representative consultations across micro, small and medium-sized businesses, across the key sectors, and involving start-ups, scale-ups and family businesses, from those employing two to three staff to those employing 20, 50 or 150 staff. These are very different enterprises, not just in size but in stages of development.

Secondly, we need to see coherent impact assessments for each of these groups, not the one-size-fits-all approach that dominates so much of this Bill, and not just by size but by sector. From agriculture to technology and telecoms, they will be impacted in very different ways. As we have heard, SMEs will need time and fair notice—certainly not before April 2028—to be ready to deal with the potential consequences of these clauses.

None of this is unreasonable in my view. These amendments would help the Government to avoid damaging the SME ecosphere at a time when we need to proceed with care and caution, and especially if we want SMEs to be the engine of real economic growth.

[Lord Moynihan of Chelsea (Con)]

My Lords, I will speak to Amendment 130 in my name. It is purely an amendment to rectify a small perceived mistake in the legislation, whereby a trade union can, in theory, put in a demand to meet its members in a company immediately, without any delay or warning. This means that a company’s management must always be in fear of a sudden disruption to the company’s ongoing work.

I am sure that the Government did not intend to torment companies with this possibility. I have put forward this amendment with a view to giving the Government an opportunity to agree that some kind of advance notice—I am suggesting a delay between request and meeting of at least two days—is a good idea, and that the length of that advance notice should be put in the Bill.

We all agree that business is the engine of economic growth and the ultimate creator of jobs. Therefore, we all in this House must be agreed that helping business accomplish its ends is important. The Government want the economy and jobs to grow—they have told us so repeatedly. They do not want companies worrying unnecessarily about sudden disruptive swoops from the union. We can see at once that there are many circumstances where a request to meet immediately just would not work. Imagine, for example, the air traffic controllers having to suddenly down tools. Imagine a complex, just-in-time process of many interlocking parts suddenly being interrupted, with an appalling domino cascade of interruptions and failures as a result. Imagine a complicated safety audit being disrupted.

I am sure that the Government have no intention of this and I imagine that the Minister will tell us that it is not at all the intention. However, while it might not be the intention, the opportunity is there in the Bill for the trade unions to act in this way. Therefore, why not, in the Bill, prevent that opportunity?

We all agree that untrammelled regulation is a “boot on the neck” of business—we were assured that that was the case just last week by the Chancellor of the Exchequer herself—yet here in Clause 50 we have yet another regulator, not the first one that we have discussed that has been created for the Bill, with fining powers. Last week, in the same Bill, it was the FWA; now, we have the Orwellian-sounding central arbitration committee, again with fining powers.

Employment Rights Bill

Lord Londesborough Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I broadly support this group of amendments and, in particular, Amendment 49 in the names of the noble Lords, Lord Sharpe and Lord Hunt. My noble friend Lord Vaux’s more straightforward Amendment 50 would reduce the length of the qualifying period from two years to a minimum of six months, during which an employee may not claim unfair dismissal.

I am happy to agree with the Government that the current two-year period for effective probation, from my experience as an employer, is excessively long and merits revision. Like others, I understand that the Government are consulting on the length of the IPE, the initial period of employment, and that nine months is being suggested. However, given that most permanent employees have a formal annual review at 12 months, during which their remuneration and performance are reviewed, I think it is fair and transparent that the 12-month review also represents the end of the probationary or qualifying period. That provides clarity to both sides and, I believe, is sufficient time for the employer to assess the employee’s performance, competence and cultural fit.

I accept that, in the majority of cases, performance issues during probation surface within the first six months. A proactive employer should then step in to either articulate a performance improvement plan for the next six months, with clear markers and milestones, or come to an early conclusion that this is not going to work out and move on to dismissal. But if we overly squeeze the probationary period, we will deter employers, particularly entrepreneurs, from the creation of new jobs by reducing their appetite to take a risk on new recruits, as we have heard, which is surely not what the Government intend.

Clause 23 and Schedule 3 threaten to be a real menace for two groups of employer in particular. The first, as we have heard, is those sectors with naturally high staff attrition rates given the nature of their business, such as retail and hospitality. The second, perhaps less obviously, is those businesses that rely on particular job functions that carry higher risk and performance requirements, in particular sales, marketing and business development jobs that run across so many of our economy’s key sectors: everything from sales on the floor, in the park or in the kiosk, and, yes, telesales—which we all try to avoid—to those involved in B2B business development and client account management. I know from personal experience in advising start-ups and scale-ups that these are critical, revenue-generating roles with strong personal performance criteria where much of the remuneration comes—quite correctly—in the form of performance-related pay. We will do real damage to productivity and economic growth if we do not allow fair and proper time for assessment of these types of roles without the threat of unfair dismissal hanging over employers’ heads prematurely. That said, I will support Amendment 49 if it is put to the vote.

[Lord Ashcombe (Con)]

My Lords, I support the amendments tabled by my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral, as well as those proposed by the noble Lord, Lord Vaux of Harrowden. Throughout our debates, one thing has become clear: Clause 23 is one of the more troubling areas for the business community and therefore potential employees. That concern is reflected not just in what we have heard in this Chamber but in the Government’s own impact assessment.

When a company hires someone new, it takes a risk. No matter how impressive someone’s CV may be or how well they come across in interview, things do not always work out, as we have heard. That is why probation periods exist. They give both the employer and the employee a chance to assess whether it is the right fit. I have seen this at first hand in my own company, Marsh Ltd. For small businesses in particular, hiring someone new, especially during a period of growth, can be a major financial and operational commitment. When things do not work out, the company should not be left to carry all the burden because of a mismatch that is no one’s fault. Introducing a day-one right to claim unfair dismissal outside the already established exceptions places a heavy weight on employers. It could discourage them from hiring altogether. Worse still, it may lead to pressure being placed on existing staff, who are asked to do more because their employers are hesitant to take on new people.

In the Financial Times, the Chancellor said an excessive safety-first approach was not seen in any of Britain’s global competitors, adding:

“It is bad for businesses, bad for growth and bad for working people”—


a description of this Bill and Clause 23 in particular. These amendments offer a sensible middle ground. They would reduce the current qualifying period for unfair dismissal protection from two years to six months. That strikes me as fair and proportionate. It matches the length of the probation period used in many companies, and certainly in the one I work for. Six months should be enough time to determine whether someone is right for the role. These amendments would make it better for business, better for growth and better for working people. That is why I support them.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, Amendment 94 seeks to give the Secretary of State power to introduce exemptions from Part 1 of this Bill. I thank the noble Lord, Lord Londesborough, for adding his name to the amendment. In Committee and on Report, noble Lords have warned about the impact that this Bill could have on businesses. The right to guaranteed hours, the statutory sick pay changes and the day-one rights which we debated earlier all create problems for businesses, especially small businesses and micro-businesses. The Government are ignoring these concerns.

These provisions directly affect businesses, but noble Lords opposite should share our concerns that the real effect of these new rights will be fewer job opportunities. As we have heard, employees with risk factors, from the employer’s perspective, will find it harder to get work because of day-one rights and the statutory sick pay changes. These include young people, people with incomplete job histories, people with a history of illness and ex-offenders. People who value part-time flexible work—this particularly affects women and students—might find fewer opportunities because employers fear triggering the guaranteed-hours requirements.

The Government are introducing these changes at a time of great economic uncertainty. While the employment numbers continue to edge upwards, there are warning signs in a rising unemployment rate, falling job vacancies and falling average hours worked. Business surveys are consistently flagging a reluctance to hire among businesses and increased expectations of workforce reductions. Even the Governor of the Bank of England, not a man to be careless with words, has flagged a slowdown in the jobs market. Growth is virtually non-existent and our inflation rate is now the highest in the G7. This economic background increases the likelihood that this Bill will create real pain for some businesses, and that pain will inevitably end up being felt in the workforce.

In Committee, I argued for exemptions from Part 1 being hardwired into the Bill for small and micro-businesses. My noble friend Lord Sharpe of Epsom’s Amendment 159 in this group is similar. His Amendment 107 would exempt farm businesses of all sizes from some of the provisions. These are both great amendments, but my guess is that the Government are not yet psychologically ready to admit that some sorts of businesses would be so hard hit by this Bill that they should be exempt from its scope. The Government have rejected exemptions, citing the need to avoid creating a two-tier workforce, despite the fact that in an open economy such as ours, workforce tiering occurs naturally and is certainly a feature of the current UK workplace.

My amendment is a simple one. It does not require the Government to do anything. It is a reserve power which the Government can use to assist the UK economy if things turn out as badly as we fear. It gives the Government power to create exemptions from all or any of the Part 1 provisions to categories of employer as defined by the Secretary of State. It thus allows very targeted interventions if the Government believe that it is necessary.

Some of the potential pain points in the Bill can be dealt with in the way that detailed regulations are framed. Amendment 105 in this group helpfully requires the Secretary of State to have regard to seasonal work when making regulations. However, regulations cannot deal with removing burdens from, for example, small and micro-businesses, which are the focus of several amendments in this group in the name of my noble friend Lord Leigh of Hurley. They cannot address whole sectors, such as hospitality or agriculture, nor home in on subsectors of those sectors, such as the pub sector, which could be massively impacted by Clause 20, or particular types of farm.

It would do no harm to the Government’s position if they accepted Amendment 94. They can press ahead with plan A and see what happens. If, however, they discover real problems of the kinds that many noble Lords from across this House have described, it would give the Government a backstop power if they, and they alone, think that it is necessary. On this basis, I commend Amendment 94 to the Government and I beg to move.

[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.

--- Later in debate ---

[Lord Ashcombe (Con)]

My Lords, I shall speak to these amendments, to which I have added by name. What we are dealing with here is a basic question of fairness. Currently, the law recognises the importance of accompaniment at disciplinary and grievance hearings, yet it narrowly limits who that companion can be. Unless an employee has a supportive colleague or is a trade union member, they face these often-daunting proceedings alone. This creates a two-tier system, as the noble Baroness, Lady Fox, mentioned. How can it be right that two workers in the same workplace facing the same process are given different statutory rights based solely on their union membership?

This is not a hypothetical issue. In reality, 78% of UK workers are not in a trade union, which means most cannot count on the support of a trained companion in these hearings. I have no objection to trade unions; I am not a trade unionist myself, but I reject the idea that statutory rights should be tied to union membership. I have yet to hear a convincing argument and defence of the current system. This is why I support these amendments. Both aim to fix this imbalance in different, practical ways.

Amendment 98 in the name of the noble Lord, Lord Palmer, would widen the scope of acceptable companions. It would empower the Secretary of State to propose certifying bodies—for example, Edapt in the education sector—to approve trained companions, with Parliament having final say through secondary legislation via the affirmative procedure. This approach ensures fairness. Amendment 99 in the name of the noble Baroness, Lady Fox, goes further, removing restrictions altogether and allowing the employee to choose their own companion. This gives power back to workers, who are best placed to decide who can support them.

We return to the core issue of fairness, which seems to have cropped up many times throughout this Bill—not only fairness for workers navigating difficult circumstances but fairness for employers, too, who would benefit from clearer, smoother processes and reduced risk of costly litigation. Ultimately, these are not radical proposals. The amendments are sensible adjustments that reflect the modern workplace and the real choices workers are making. As the Government’s document Next Steps to Make Work Pay rightly states,

“all workers should be able to enjoy fair rights and benefits”.

I hope that the House agrees.

[Lord Londesborough (CB)]

My Lords, I have added my name to Amendment 99 in the name of the noble Baroness, Lady Fox of Buckley, which, to me, smacks of common sense, while also acknowledging that Amendment 98, tabled by the noble Lord, Lord Palmer, is a step in the right direction.

For those of us who have conducted disciplinary and grievance hearings—as an employer, I have conducted my fair share over the years—these are often stressful, time-consuming and sometimes very divisive, not only for the employee but often for the employer, the manager and the other team members who are involved. An officious approach, in which only a trade union official may accompany the worker into the meeting, makes this situation, if anything, more adversarial, more us versus them and, in my view, less likely to lead to a sensible compromise that works for both parties. This is particularly the case for small and micro-businesses in which trade union representation is lower and the worker very often does not have that option. To widen it out to other members, colleagues, friends or even family members, as Amendment 99 states, seems to me a sensible move.

[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.

Employment Rights Bill

Lord Londesborough Excerpts

Committee stage
Monday 16th June 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Caine. She made some terribly important points; they are literally about matters of life and death.

I have added my name to Amendment 259, alongside the noble Lord, Lord Freyberg, and the noble Earl, Lord Clancarty. I apologise to the noble Earl for not having also signed Amendment 287; I certainly would have done so, had I caught up with it sooner. I previously backed a similar amendment from the noble Earl to an earlier Bill under the previous Government.

I declare my position as beneficiary of the Authors’ Licensing and Collecting Society, with which the noble Lord, Lord Clement-Jones, is associated. I published one book with the society last year, and I have another one coming out this year.

Amendment 259 is about unionisation and collective bargaining in the arts and cultural sector, and it calls for alternative, appropriate models for the sector. I hope the Labour Government see sense and come back in support of the amendment. They believe—I hope—in the values of collective bargaining and of workers being able to get together to fight for appropriate conditions, whether it is health and safety, pay or work security.

I declare another position—or, perhaps, a situation—in that, 20 years ago, I reviewed a lot of London fringe theatre on my own website. Speaking to some of the actors and the other creatives involved in those performances, I learned that the conditions under which they were employed, or hoped to get paid, were often very precarious. I very much doubt that that situation has improved.

The noble Lord, Lord Freyberg, spoke about the insecurity of Covid and what followed it. The Republic of Ireland saw that situation and took a step to deal with it: it introduced the universal basic income trial, which ran from 2022-24 and paid creative workers a weekly stipend of €325 for three years. We still have not had the formal impact assessment of that, but I have heard a great many anecdotal reports about the more stability and reduced stress for creative workers. Realised from anxiety, they had time and headspace to open up new possibilities and create trajectories. They spent time researching, experimenting and taking risks and really saw the benefits in their creative practice. What we are proposing here is not going as far as a universal basic income but is a collective bargaining approach that strengthens the position of creative workers within their sectors and organisations, particularly freelancers. This would surely be a positive step at least heading in that direction.

Finally, it might feel as if we are addressing something that has been an issue for a very long time. There is a very famous painting called the “Poor Poet”, done in three versions by the German painter Carl Spitzweg. It shows a garret room with a leaking roof. There is no fire or bed, only a mattress on the floor, and the poet is tucked underneath every bed covering because he cannot afford to heat his room. That has been a long-term stereotype, but it does not mean we have to continue that.

More practically, in the reality of Britain in 2025, many people cannot even manage to access conditions such as that. There is a real issue—and no one else has brought this up yet—about access to the creative sector being open to a wide variety of people from a wide variety of groups in our society, not just to people who can access the bank of mum and dad when things go a bit wrong and can afford to work as an unpaid intern for years. If we are going to have a creative sector that truly harnesses the talents of all our society, opens opportunities and—if I have to put it this way—is great for the economy, then surely all the amendments in the group, but particularly the amendments on collective bargaining and the freelance commissioner, would take us some steps down that road?

[Lord Londesborough (CB)]

My Lords, I address Amendment 287 on the creation of an office for a freelance commissioner in the name of my noble friends Lord Clancarty, Lord Freyberg and Lord Colville of Culross, who has managed to beat our limited motorway system but arrived just too late to speak, sadly.

I am somewhat conflicted about this thought-provoking amendment, in that I have argued at Second Reading and in Committee against the overreach of the Bill and its sheer complexity and burden on employers, especially for small and micro businesses. On the noble Baroness’s comment, I do not want to be seen to be adding baubles to the Christmas tree. However, I agree that year by year the arguments grow for the establishment of a freelance commissioner, partly because the number of freelancers is growing and will continue to do so. The current 2 million plus freelancers will easily rise to 3 million within the next 10 years in the UK alone as employers shed staff from payroll, weighed down by the combination of increased national insurance contributions, national minimum wages increasing much faster than the rate of inflation and all the new rules and regulations coming in this very Employment Rights Bill.

Just look at the recent and alarming drop reported last week by the ONS of 274,000 workers coming off payroll during the past 12 months. We do not yet have the data to track how many of them are transitioning to freelance or self-employment. Indeed, as my noble friends have pointed out, the data on this area of freelancing and self-employment is poor and not up to international standards, and that is a real problem when we are trying to assess exactly what their contribution is to the economy.

I am going to muddy the water slightly, but you could argue that there is a need for an independent commissioner for the self-employed. We have been talking about freelancers, but there are 4.2 million self-employed people, including freelancers, in the UK. Those numbers are going to increase given the impact of technology, digital communications, AI and, particularly, the practice of working from home. I accept that there are key differences between freelancers and many self-employed people, for example, sole traders or those running their own businesses or partnerships, perhaps with just one or two contractors, but freelancers, although independent and project-based, are also self-employed and are treated just the same way for tax purposes by HMRC.

I accept that freelancers and the self-employed are not as valued or appreciated by Governments of all parties as they should be. This was brutally exposed during the pandemic with furlough and other schemes. If we want to develop a proper entrepreneurial spirit and environment in this country, we should do much more to value and look after those who create their own jobs and face up to all the risks and jeopardy that that involves. That includes freelancers, not just in the creative industries, but in other sectors where they are prevalent, which are as diverse as construction, professional services and agriculture. The Government need to give Amendment 287 serious consideration and, while doing so, think through how the interests of all the self-employed, not just freelancers, should be represented.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lords, Lord Freyberg, Lord Clancarty and, particularly, Lord Clement-Jones, for their valuable contributions and amendments in this group and for the thoughtful way they have introduced them. I am very grateful for their tireless advocacy on behalf of the freelance workforce, who so often find themselves on the margins of employment policy. I will speak in particular to Amendments 301 and 302, tabled the noble Lord, Lord Clement-Jones, which I was happy to sign.

Amendment 301 introduces a new clause which, for the first time in statute, provides a clear and much-needed definition of a freelancer. This definition acknowledges the reality of modern working life, where individuals are often engaged on short-term contracts, operating through their own companies or via intermediaries and managing their own tax and national insurance affairs. These individuals, who are distinct from employees or workers as defined under current legislation, are nonetheless a vital and growing component of our labour market, as the noble Lord, Lord Londesborough, has just pointed out. The amendment does not seek to blur the lines between employment statuses, but rather to draw a necessary and clarifying distinction that enables policy and legislation to recognise freelancers in their own right. The inclusion of the provision for the Secretary of State to issue guidance ensures that the definition can evolve with working practices and case law, and that is both sensible and future-proofed.

Amendment 302 builds on this by creating a duty—a statutory obligation—for relevant government departments to have due regard to the freelancer workforce when shaping new policy. Too often freelancers are treated as an afterthought, and they fall between the cracks of legislation designed for binary employment categories. This amendment seeks to correct that omission. It ensures that the realities of freelance working are considered proactively in policy design, not reactively after the damage has been done.

Furthermore, the amendment ensures that the freelance commissioner, a role established to advocate for and advise on matters affecting freelancers, is appropriately consulted in the policy-making process. That is a modest yet essential safeguard to ensure that expertise is brought to bear when policies may significantly affect freelance professionals, particularly in sectors such as the creative industries, technology and media, where freelancing is not the exception but the norm.

These are thoughtful and proportionate amendments. They do not create undue bureaucracy, nor do they entrench rigid definitions. They offer clarity, fairness, and recognition to a workforce that contributes enormously to our economy and cultural life, yet is often unprotected and unheard in legislative terms. These proposals are not about privileging one form of work over another. They are about ensuring that our legal and regulatory frameworks reflect the diversity of modern work. I commend the noble Lord, Lord Clement-Jones, and his cosignatories on bringing these matters before the Committee, and I urge the Government to give serious consideration to these amendments as practical and principled improvements to the Bill.

I will take this opportunity to speak more broadly regarding the wider group of amendments concerning the impact of this legislation on freelancers and the cultural and creative sectors. Amendment 285 proposes a temporary waiver for small and independent cultural organisations in financial hardship. This is a pragmatic and compassionate measure. We all support robust employment protections, but a one-size-fits-all rollout risks devastating unintended consequences: closures, lay-offs or the collapse of small institutions that are already on the financial brink. The idea of a grace period and progressive enforcement is a proportionate way of balancing worker protections with organisational survival.

Corporate Liquidations

Lord Londesborough Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Leong (Lab)]

My Lords, I assure the noble Baroness that we will publish our industrial strategy very soon, and it will definitely cover SMEs. As I mentioned earlier, compulsory liquidation is not something new. Companies go bust. We have seen big companies fail. Failure is a reality of business. Even major firms such as Ted Baker, The Body Shop and Wilko have collapsed. We should be thinking about how to support these corporate failures. We must have a more robust system, whether it is the credit system that needs reforming or even British banks. We must incorporate the American culture. Yes, we have to address failures, but more important is how we get up, dust ourselves down and get on to the business market again.

[Lord Londesborough (CB)]

My Lords, does the Minister accept that some of these business closures, particularly for SMEs—where payroll is their largest expense—were triggered not only by the scheduled increase in NICs but by the steep hikes in the national minimum wage? As the noble Lord pointed out, this was demonstrated by the very disturbing falls in payrolled staff and vacancies reported by the ONS. The resulting squeeze on their cash flow may cause a further spike in the rate of liquidations through Q2 and Q3. How does this sit with the Government’s claim to have “restored economic stability”?

[Lord Leong (Lab)]

The noble Lord makes an interesting observation that I do not share. First, there is no empirical evidence to suggest that NICs or business rates changes are primary reasons for any of these closures in the UK. I can give examples of businesses that are doing very well. Let us look at the hospitality business. I just looked at the latest results for JD Wetherspoon, which had revenue of £2.2 billion and EBITDA of £19.28 million. Stonegate, one of the largest pub companies in the UK, had revenue of £1.75 billion and EBITDA of £394 million. These are not companies that are in trouble. The picture is mixed. Yes, we have some contraction in the business sector, but businesses are thriving. Do not listen to me. Listen to people such as the president of Blackstone, who this week said:

“I would give the UK Government a lot of credit for embracing business”.

Employment Rights Bill

Lord Londesborough Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

These amendments are trying to preserve flexibility for the poor business owner. We all know that many business owners are having to close down. With some it is because of employment law, and with others it is because of the very high rates that they have to pay on the high street; there are many reasons. But here is an opportunity for them to preserve flexibility. I hope the Minister will give very careful thought to these amendments as we work our way through the Bill, because the alternative is lower employment, lower growth and people out of work because we have been too prescriptive.

[Lord Londesborough (CB)]

My Lords, I will speak briefly to Amendment 19A in the names of the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, and offer my support for Amendments 20 and 21.

My main concern, as I expressed on the first day in Committee, is over the impact of guaranteed-hours contracts on the small and micro-business sector, specifically those with fewer than 50 staff. Amendment 19A is particularly relevant to start-ups and scale-ups, and we cannot ignore their high-risk operational context. Again, I declare my interest as set out in the register: I chair, advise and invest in a range of start-ups.

Clause 1’s right to guaranteed hours will inhibit job creation but also job mobility and flexibility, as we have heard, if applied to such businesses, to the detriment of both employer and employee. Rigidity—I think the noble Lord, Lord Hunt, used that word—is especially dangerous in a flat economy environment such as we have at the moment.

Small business planning requires agility and flexibility when creating new jobs. As we know, business circumstances will change, often on a month-to-month basis, given the natural volatility around budgeting, forecasting revenues, forecasting bookings and indeed anticipating demand. When we talk about

“the reasonableness of entering into a limited-term contract”,

we simply cannot afford to ignore the early-stage development of these companies and watch them avoid risk-taking.

The Member’s explanatory statement to Amendment 19A quite rightly points to

“unforeseeable changes in business conditions”,

and that is especially relevant to small businesses. As I know through bitter experience, as both an employer and an investor, there is often a huge delta between entrepreneurs’ forecasts and the actual outcomes. This is about not just seasonality, events or the weather but unpredictable customer demand.

We should therefore not handicap entrepreneurial risk-taking, which this economy so desperately needs to encourage, and specifically the creation of new jobs, by applying such blanket restrictions on limited-term employment contracts. We need a more nuanced approach, as this amendment suggests, and I ask the Government to give it serious consideration.

[Baroness Noakes (Con)]

My Lords, I support the amendments in this group in the names of my noble friends on our Front Bench. I have a number of concerns about the guaranteed-hours provisions in the Bill, one of them being that they are drafted almost wholly from the perspective of workers and pay little heed to the needs of employers. I do not believe that is a good way to create employment law to underpin a healthy economy.

On our first day in Committee, the noble Lord, Lord Barber of Ainsdale, who is not in his place today, and the noble Baroness, Lady Carberry of Muswell Hill, both spoke about the work of the Low Pay Commission on zero-hours contracts. I was grateful to them for being pointed in that direction. I have a great deal of time for the work of the Low Pay Commission, which is always balanced and very careful, so I went back and looked at the 2018 report. Unsurprisingly, I found that it does not provide the copper-bottomed support for the Bill that noble Lords opposite have claimed—I should also say that the employment bodies represented on the Low Pay Commission have told us that as well.

The Low Pay Commission did indeed recommend that workers should be offered guaranteed-hours contracts, but, importantly, it also recognised that there would be circumstances in which it would not be reasonable for the employer to have to do that. There is not a trace of that in the Bill. The Low Pay Commission was clear that the Bill should set out specific circumstances in which the employer would not have to offer guaranteed hours. The commission cited with approval some equivalent legislation which was at that stage going through the Irish parliament, which provided, among other things, that adverse changes in the employer’s business or the existence of temporary factors would allow employers not to offer guaranteed hours.

Like the noble Lord, Lord Londesborough, I believe that Amendment 19A is eminently reasonable in that context. It does not give an employer carte blanche to ignore guaranteed hours but allows for some genuine business circumstances to be taken into account by the employer when looking at whether guaranteed-hours contracts should be offered.

At the end of the day, if we do not have successful businesses, there will not be any jobs on any kind of contract available. As I said on our first day in Committee, I am particularly concerned, as is the noble Lord, Lord Londesborough, about small and micro-businesses, which really need to be allowed the flexibility if we are to protect the work opportunities of around half the private sector workforce.

Even if those small and micro-businesses survive the incredible bureaucracy associated with these guaranteed hours, they will potentially not survive the substantive impact of the hours if they are required in all circumstances to offer guaranteed-hours contracts. Of course, this is particularly the case in the hospitality sector, the largest user of zero-hours contracts; my noble friend Lord Hunt spoke about the problems in that sector. There are also very large numbers of small and micro-businesses in that sector.

Recognising some very limited flexibility, my noble friend’s Amendment 19A is actually very modest. It would go some way towards making this new requirement to offer guaranteed hours work in the context of businesses that have to face difficult circumstances, and at the moment the Bill pays no attention to that.

--- Later in debate ---

At the very least, to test the water, can we not say that we will have an impact assessment on whether the Bill will be positive to sectors that are absolutely drowning, in many instances because of things that this Government and the previous Government have done? Surely we have to ensure that something that is well intentioned to help workers does not do more harm than good. Therefore, we should support an assessment of what the impact will be.

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 63. I agree that the impact of Clauses 1 to 8 will be especially felt by these three sectors: hospitality, retail and social care. But, to be frank, I would not stop there; I advocate expanding this impact assessment, not only to small businesses and micro-businesses—noble Lords would expect me to say that—but to all key sectors in the economy. There will be huge employment variations sector by sector, and they need to be analysed and understood. As we keep hearing, one size does not fit all—although the Bill has a different view on that—and we have the issue of “mind the gap”.

Two other industries that certainly deserve such assessments are the creative industries, which we will debate on another day, and the gig economy. Some very disturbing numbers are already coming out of membership surveys from bodies such as the Federation of Small Businesses and the Institute of Chartered Accountants. I will share two bits of data from the ICAEW’s latest quarterly business survey for the first quarter of this year. It says that 53% of its members expect that the Bill will

“reduce their plans to hire permanent staff”,

and that 40% anticipate greater use of outsourcing because of the Bill—that is a very significant number.

What does this mean? It means—it is already happening—that employees will be coming off payroll and going into freelance and self-employed roles. We have an amendment coming up in many days’ time, or probably weeks; I will not read out the names of my noble friends who are behind it, but it is Cross-Bench and Liberal Democrat-sponsored and relates to the establishment of a freelance commissioner office. I think the Government may have very little choice on this, because the demands for the services of that office are going to go up exponentially, partly because of this Bill and also because of the national insurance contributions Bill. I will not repeat all those arguments.

I come to the second unforeseen consequence—although, frankly, these are not unforeseen, are they? They are foreseen. We can actually say with some certainty that the Government are encouraging the offshoring of jobs from the UK. This trend has been going on for decades, but is it really the objective of the Government, particularly for lower-paid and entry-level roles, to see a percentage of those jobs going off to countries such as India, Vietnam, the Philippines, Romania or Moldova? I am not against offshoring, but I think you have to be very careful about being seen to be encouraging it, and I believe the Bill is guilty of that.

On the assessment, which we hope will happen, the area that should be looked at in greatest detail is the impact on part-time jobs. We have heard already about the young graduates and students, but I will speak up also for older workers. Those of us here who sit on the Economic Affairs Committee—I see the noble Lord, Lord Davies, here—will be aware that we are conducting an inquiry on the economics of an ageing society. If the Government are to achieve their noble objective of raising the economic activity rate from 75% to 80% across all age groups, they will have to tackle the 50 to 70 year-old cohort.

In order to get people back into work, not just those who took premature retirement but those who have been on benefits for a long time, we will have to be far more flexible about creating part-time work, and I am afraid that the Bill is likely to deter the creation of part-time roles. So that is another area that I believe the impact assessment should be looking at, which is not just by sector but by type of job.

I am told by my friends in the recruitment industry, if I can call them that, that there is already a shift in hiring from permanent to interim, and that trend started at the beginning of this year and is accelerating. Again, national insurance contributions have pushed employment in that direction and the Bill threatens to do the same.

My final point, talking about assessments, is that HMRC may well want to conduct one to discover that its projected national insurance contribution tax revenues will, as a result of the Bill, take a significant hit as employees start being taken off payroll and moved into self-employed, part-time or even offshored roles.

[Baroness Stowell of Beeston (Con)]

Perhaps I might intervene briefly on this group. I support Amendment 63 but, like the noble Lord, Lord Londesborough, I wonder whether it is too modest in scope. As I said when I spoke on the last day in Committee, I am sympathetic to the kinds of effects that zero-hours contracts or some of the different kinds of practices that we see now have on employees in these businesses, which are often at the lower end of the pay scale.

However, I am very struck, by listening not just to this debate but to the debates on the various different things that we have been discussing this afternoon, that what we do not seem to be taking account of—or rather, to be more specific, what the Government do not seem to have taken account of in bringing forward this legislation—is that a lot of the practices that they are trying to remove or mitigate are the consequence of other things that have been introduced in the past which have been well intentioned in support of low-paid workers but are now creating other things. For instance, although it is going back some time now and various other things have happened since, I think about the arrival of tax credits when Gordon Brown was Chancellor. That led to people wanting to reduce their contracted hours because of the impact on their various benefits.

So when I hear people say that some of these measures—or, rather, the removal of some of these practices and various other things in the Bill—start to disincentivise people either being offered more hours or whatever, I worry that, given the way in which the Bill has been introduced and what feels like inadequate assessment through the proper stages—Green Paper, and all that sort of thing—we are creating yet more problems, which will then lead to the need for yet more legislation, which will never get to the heart of what we are trying to do here, which is to create an employment economy that is fair for employees and people do not feel that they are being exploited but have the flexibility that they need, and where employers, too, have the freedom and independence that they absolutely need to be able to employ workers and grow their businesses to contribute to the fundamental agenda, which is a growing economy that is fair to everybody concerned.