Employment Rights Bill

Lord Moynihan of Chelsea Excerpts

Committee stage
Tuesday 3rd June 2025 Lords Chamber

I conclude by saying that the net benefit to employees, I would argue, is minimal, but the cost to certainty and proportionality is high. The protective award is an important tool, but it must remain proportionate, targeted and fair. A 90-day cap already represents a significant financial consequence for non-compliance. Doubling it will not double the benefit; it will only double the risk.

[Lord Moynihan of Chelsea (Con)]

My Lords, good evening. I rise in support of Amendments 141BA, 141C and 142B, and it is a pleasure to support the noble Lord, Lord Hunt, on these amendments. I declare an interest as a businessman and as one who wishes to see the wheels of commerce and thus the economy moving smoothly and not unnecessarily clogged up.

As far as insolvency goes, this Bill presented an opportunity—one that I still urge the Government to grasp—to make insolvencies more efficient and less destructive of the economy. The law currently says that, in most cases where workers are to be made redundant, a 90-day consultation is required, regardless of insolvency or not. But, if a company is insolvent, consultation is necessarily spurious. The employees have lost their jobs, period, and the receivers have to move instantly, not wait 90 days to realise the assets. So, they do not wait 90 days and, because of this rule, they then break the law, because they are required to give 90 days. Two laws are in conflict with each other and one of them has to be broken. The more swiftly the assets of a failing organisation can be reorganised, the more likely it is that productive economic activity can be continued from these assets.

In the US, where these things are done much better, a study some time ago found that only 4% of assets were lost in a bankruptcy: 96% went on to be productive assets under a new organisation. Anyway, because the law has been broken, necessarily, in these cases, because the receivers are doing their duty to achieve a speedy liquidation, the lawyers move in.

The noble Lord, Lord Pitkeathley, who I am delighted to see is in his place, referred earlier to ambulance chasers. There are many lawyers in this House and every single one of them is, of course, honourable and valuable; but we are talking about no-win no-fee lawyers, who can be deeply pernicious in both practice and effect. These lawyers advise all affected employees that they have a case they can take to the employment tribunal because they have not been consulted, and that they will certainly win that case. These no-win no-fee lawyers refer to this case as “free money”: “Dear employee, you’ve got free money because you haven’t been consulted on a 90-day period”. These employees already get their redundancy money, their statutory sick pay, their holiday money and so forth. They get it all ahead of any other creditors. They are not disadvantaged.

This 90-day money that they get by going to the employment tribunal is three months’ bunce on top of everything else. I do not think that can have been intended, but it is certainly what the outcome has been. Who pays for this—because, as we know, there is no such thing as a free lunch? If the company was truly insolvent, there will not be enough money for everybody, so there will be losers when this money is paid to the employees: losers such as suppliers and HMRC, also known as the taxpayer, of course. And they will lose more as those workers get their 90 days’ pay.

I refer to one of many examples, Go-centric, a Glasgow-based call centre that suddenly went bankrupt on 19 December 2022, laying off around 600 employees just before Christmas. There is a whole story behind that that all of us can derogate. The receiver was faced with 600 employees who had to be laid off immediately. That is what receivers do, and they are honourable people running a very important economic activity for this economy. Enter the lawyers into this Go-centric situation, writing to redundant workers and advertising “free money”. That is what they actually wrote in the letters to employees, which the employees replied to. They went to the employment tribunal and the money was obtained for 200 workers who had already received all their statutorily due redundancy payments. I really do not think this can have been intended when the legislation was written, but so it was.

Now we have a wonderful opportunity in the Bill to rectify this, most likely unintended, clash of legislation by removing the 90-day consultation requirement in an insolvency, since, as we know, consultation is irrelevant, indeed impossible, in a liquidation. Have the Government wisely seized this opportunity? Have they rushed to validate their claims of fiscal prudence? They have not—far from it. Indeed, they have, bizarrely, proposed in the Bill to increase the 90 days to 180 days. A full six months of free money on top of statutory redundancy money, taking precedence over HMRC, suppliers and others. This all makes it more likely that their claims cannot be met, potentially precipitating further bankruptcies among suppliers. Noble Lords will have heard many pitiful stories of suppliers stiffed out of payments by a larger company going bankrupt and themselves then having to go bankrupt. This provision makes that more likely. There is no free 180-day lunch here.

We have a further problem, which may not have been considered by the Government in putting forward the Bill, which is that, if these payments fall short, which necessarily they will in many cases, the redundancy fund is called upon to pay moneys to workers. That is the redundancy fund that reports to HMRC, which reports to the Treasury. Have the Secretary of State and the Minister informed the Chancellor that they are legislating to increase the Treasury’s outgoings by a significant amount in future years, not to mention increasing the nation’s welfare bill, which the Government actually have a commitment to reduce? I suggest that the Government should speak to themselves and have a discussion about that.

The same concerns apply to the extension of the limit to 20 employees across an organisation to which the noble Lord, Lord Hunt, referred, and to encompass distressed businesses—businesses that are in distress, which are calling for financial advice, but have not yet gone into immediate insolvency. An opportunity is being missed to sort all that out.

Employment Rights Bill

Lord Moynihan of Chelsea Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

Amendment 21 makes an important clarification to ensure that employers retain the ability to make genuine redundancies where there is a legitimate business need to do so. I hope the Minister will carefully consider the amendment, because it would ensure that the introduction of a new right to be offered guaranteed hours does not inadvertently create a chilling effect where employers fear that normal restructuring processes would expose them to allegations of unfairness simply because guaranteed hours had been agreed. Let me make absolutely clear that this amendment does not in any way undermine the provisions being introduced; we just need that clarification. In conclusion, the amendment strengthens the Bill by giving businesses greater confidence to participate fully and openly in the new framework without hesitation or defensive practices. I beg to move.

[Lord Moynihan of Chelsea (Con)]

My Lords, I welcome back the Minister and the noble Lords, Lord Sharpe and Lord Hunt, for another day on this important Bill.

To some extent, we are thrown back to the previous day’s debate, when we talked so much about flexibility. These amendments are designed to try to give more flexibility to the poor business owner who sits up late at night after the working day is done, trying to figure out, “How am I going to win? How am I going to succeed? How am I going to keep going?” It is of particular poignancy when one looks at what is happening to the high street all over this country, with shop after shop, particularly small businesses, closing down.

In last week’s debate, there was an interesting comment about the minimum wage. I am afraid that my memory is not good enough, but a noble Lord said, “Well, they all said that the minimum wage would be a disaster, but here it is: a triumphant success”. I think we are united, as a House, in looking for economic growth—that is the big objective. Economic growth comes only from jobs and businesses growing, so a triumphant success would be that there was more employment and that employment did not drop down.

Both sides of this House went for this higher and higher minimum wage, so I am not making a partisan attack here, but the impact is unknowable because we do not know whether employment would have been higher or lower if we had had no minimum wage or a lower one. We cannot actually tell; it is one of those mathematical enigmas. In America, the states that have no minimum wage, or a lower one, have higher employment, and people move from one state to another to find employment in the states with higher growth—but here we literally cannot tell whether employment went up or down.

What we can tell—this is a very interesting point—is that the introduction of the minimum wage and the higher minimum wage led precisely to what we are debating today: zero-hours contracts. A businessperson may be thinking, “Shall I hire somebody?”, and they have three choices. One is, “Yes, I can afford this on the minimum wage”—and great: a new job is created. The second is that they say, “No, I can’t afford that”. Particularly with a gormless youth—I remember back to my own gormless youth, when I was almost unhireable by anybody—they will say, “No, I’m not going to do it. My business will be less profitable if I hire this person and have to pay the minimum wage”. The third is: “Well, can I hire them but in some other, more flexible way?”—and here comes this whole zero-hours thing. Everybody denigrates it, but we find that a lot of people who are hired on these contracts say it is what they wanted—but, God bless, we can have different ideological views on that. The point was that zero-hours contracts created flexibility, and that must by definition have led to higher employment and economic growth, the thing that we are all trying to accomplish.

--- Later in debate ---

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I was not intending to speak in this group and I am torn between both sides. I have some cynicism about the Opposition’s attempt at recognising non-trade unions and staff associations. I entirely understand the point that the noble Baroness, Lady O’Grady, has just made about employer-led staff clubs, which I have been, over the years, invited to join. While they have been very pleasurably good social forums, they are very different from trade unions.

However, I am afraid that there is a danger that we can romanticise what contemporary trade unionism is, based on the very fine history of 150 years of struggle. I do not actually think that trade unions at the moment should take for granted that workers will be loyal to them, because there have been far too many instances of trade unions not being fit for purpose. Indeed, there is often a huge gap between trade union leaders and trade union members. Many members are leaving unions or not joining them, and that is not always because of evil bosses in a kind of caricatured way.

At Second Reading, I made the point—and I am only repeating it here now—that, for example, the Darlington Nursing Union has been set up because the nursing unions have abandoned female members of staff who were nurses and who have been attacked by their HR departments and their employers for their political views in relation to gender and sex. As it happens, we now can appreciate that they were simply reiterating their right to privacy as biological women—something that the Supreme Court has now at least acknowledged is the law—but they have been harassed and bullied and so on, and the trade unions abandoned them.

I made a point about the Free Speech Union. I appreciate that it is not a trade union, and nobody, least of all me, is suggesting that the noble Lord, Lord Young, who is in his place, will become the noble Baroness, Lady O’Grady, of future negotiations. Despite the fact that that is an unlikely role for the noble Lord, Lord Young, the Free Speech Union has been forced into existence and has represented workers who have been done over by their employers when their trade unions have abandoned them. That is the point I am making.

The UCU is one example of a university union. I was a NATFHE rep for many years in the further education sector and I have watched in horror the way that that union has degenerated and sold out its members. So, for the record, I would prefer that we did not caricature each other in a way that does not represent the contemporary time. The trade unions today are not the trade unions of old. They could do with upping their game. Similarly, I do not think the trade unions are the evil enemy of employers, as is sometimes implied by people sitting closer to me on this side of the House.

[Lord Moynihan of Chelsea (Con)]

My Lords, I would like to add to what the noble Baroness, Lady Fox, said. We are having a good debate and I very much hope to keep it friendly. What the noble Lord, Lord Davies, and the noble Baroness, Lady O’Grady, said, was really rather flying pigs.

I, obviously not like most of the Committee, am old enough to remember the 1970s. I remember the destruction of the British automobile industry by the trade unions. London docks was destroyed by the trade unions. This led, through the 1970s, to the “winter of discontent”, which led to the necessary emergence of a Government under Margret Thatcher who sought to control the trade unions and do something about the destruction they were wreaking on the British economy. We all remember that; I am not fantasising about this. This 150-year story of the great things wrought by the trade unions is really difficult to let go by without saying something.

Right now, only 22% of workers in the UK belong to unions. Why is that? It is because of the destructive nature of those unions. Let us remember that, of that 22%, most are in the public sector. Public sector workers have a monopoly in the areas they occupy and in return are being rewarded by a Labour Government. We saw the sorts of rises, which were completely unjustifiable compared with what people in the private sector were earning, that the Labour Government awarded many public sector trade union workers when they came to power.

We saw how there is—I am not saying anything we do not all know—a wonderful relationship between the unions and the Labour Party. I saw a number—I do not stand here asserting it is true, but I saw it and it seems reasonable—that, since 2011 the trade unions have given £31 million to the Labour Party. Whether that is true or not, we know the figure is of that order. This is wonderful, but it increases the size of government, because of the deals the Labour Government have to make with these trade unions. It increases the cost and complexity of government, and it increases in general the cost of regulation to all employers.

All those things destroy the economic growth which, as the noble Lord, Lord Goddard, said earlier, we are all trying to achieve. I ask the Government please not to give us guff—I hope it is not unparliamentary to say that—about the positive effects of the trade unions. They are destructive.

[Lord Deben (Con)]

My Lords, I wonder whether we are having a discussion for 2025, or one that is deeply mired in history. I find myself in some difficulty listening to either side of this discussion. I say very strongly that trade unions have been, and are, very important, but I also hope that people who watched the annual conference of the National Education Union, all of whose officers have the support of the Socialist Workers Party, may ask why a union like that should have spent more time talking about Gaza than it did about school attendance. We cannot be entirely happy about the circumstances of all trade unions, and this Government are going to have to face those trade unions pressed from that way.

On the other hand, I deeply disagree with the attitude we have just heard about trade unions being destructive. Trade unions have been very constructive in many circumstances, and this is something we should recognise. My problem with the Bill, and my reason for coming to this debate to support my noble friend’s amendments, is related to what the noble Lord, Lord Davies of Brixton—who opened the Back-Bench remarks—said about trade unions: that they were not forced on anyone. They were created by people coming together to work for better attitudes, better conditions and better pay for working in those circumstances.

If people want to do that but want to be independent and not subject to their employers—as the noble Baroness, Lady O’Grady, fears—and if they do not want to be called a trade union, then we ought, in 2025, to give them the powers to make the same kinds of arrangements with employers as a trade union. If we do not do that, this is going to be the one area where this Government will say there shall be no competition or opportunity for people to make a different decision about their future.

We ought to give people that opportunity, and we ought to protect those people by making sure that it is given to them only if they are independent, pay for it themselves and have chosen that particular mechanism. I say to the Labour party Front Bench that none of us who work—as I still do, happily—right across the board with all kinds of companies can think of today’s industry and commerce as if it were like yesterday’s. There are new circumstances and new ways of doing things, and the Bill ought to recognise that. If all it does is solidify the past, we will have missed a great opportunity.