Employment Rights Bill

Debate between Lord Londesborough and Lord Sharpe of Epsom

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.

Employment Rights Bill

Debate between Lord Londesborough and Lord Sharpe of Epsom

Committee stage
Monday 16th June 2025 Lords Chamber

[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.